This election really coming down to the economy again, as it was for Clinton the first time. It’s hard to lie about the economy to the American public, because people know what’s in their own wallet. I know I’ve been hurting for some time, as have many others. Then there’s the failure of so many major financial institutions at rates not seen since the Great Depression.
Meanwhile, McCain is looking very out of touch, and said the economy was fundamentally sound on Monday, even as Lehman Brothers went into bankruptcy and Merrill Lynch was sold.
So, what does he do Tuesday, but try to spin it (as noted in a NY Times editorial):
He said that by calling the economy fundamentally sound, what he really meant was that American workers are the best in the world. In the best Karl Rovian fashion, he implied that if you dispute his statement about the economy’s firm foundation, you are, in effect, insulting American workers. “I believe in American workers, and someone who disagrees with that — it’s fine,” he told NBC’s Matt Lauer.
Mmm, right, when we say you’re clueless about the economy, we’re attacking the American workers, Senator McCain? Wait a second, I am an American worker, that’s why I’ve known for a long time the economy was unsound, long before Wall Street. You can’t put lipstick on that bull, Senator.
As the Times went on to say:
In clarifying his comments, Mr. McCain lavished praise on workers, but ignored their problems. That is the real insult.
For decades, typical Americans have not been rewarded for their increasing productivity with comparably higher pay or better benefits. The disconnect between work and reward has been especially acute during the Bush years, as workers’ incomes fell while corporate profits, which flow to investors and company executives, ballooned. For workers, that is a fundamental flaw in today’s economy. It is grounded in policies like a chronically inadequate minimum wage and an increasingly unprogressive tax system, for which Mr. McCain offers no alternatives.
As Robert Scheer notes in Truthdig about McCain:
He voted for abolishing all of the significant rules put in place at the time of the Great Depression designed to prevent a repeat. The two main bills accomplishing that, bills which McCain enthusiastically supported, were the Commodity Futures Modernization Act and the Gramm-Leach-Bliley Act. The Gramm is former Sen. Phil Gramm, who was chair of the Senate Banking Committee when he acted as chief sponsor of both pieces of legislation. The same Gramm that McCain picked to co-chair his presidential campaign.
On the other hand:
Barack Obama has been way ahead of McCain in grasping the severity of the problem and back in March offered a scorching criticism of the deregulation mania, in particular the Gramm-Leach-Bliley law, which allowed the stockbrokers, insurance companies and banks to merge for the first time since the 1930s, ushering in this era of irresponsibility. But that was in the primaries, and now he has turned for advice to Robert Rubin and Lawrence Summers, who both served as treasury secretaries in the Clinton administration and talked the president into signing that wretched legislation.
I’d be lying if I said the last part doesn’t concern me. Even Obama seems to have trouble keeping the special interests out of the process. He is recommending some (hopefully serious) regulation, however; and all McCain is offering is to form a national commission to ignore, err, study the problem.
All these mergers, buyouts and bailouts are putting the financial institutions and the U.S. taxpayers who are bailing them out, on real shaky ground. As the New York Times noted:
During the Depression, Congress separated commercial banks, which take deposits and make loans, from investment banks, which underwrite and trade securities. The investment banks were allowed to do business with less oversight, while commercial banks operated with tighter supervision.
But after Congress repealed those Depression-era laws in 1999, commercial banks began muscling in on Wall Street’s turf. As the new competition whittled down profit margins, investment banks used more of their capital to trade securities and also began developing financial derivatives to fuel profits.
As Amy Goodman points out, this all came about because “President Clinton and his treasury secretary, Robert Rubin (now an Obama economic adviser), presided over the repeal in 1999 of the Glass-Steagall Act, passed after the 1929 start of the Great Depression to curb speculation that caused that calamity. The repeal was pushed through by former Republican Sen. Phil Gramm, one of McCain’s former top advisers.”
Those laws were passed for good reason during the Great Depression, now we’re back to where all that can happen again, aren’t we? Yes, we have the FDIC now, which insures accounts up to $100,000. Still, what happens when we have to actually have to use it at rates of bank failures approaching (or passing) Depression Era levels? Along with all these other bailouts, and are already huge debt? Can American declare bankruptcy? Will we be auctioned off to the highest bidder? China? Saudia Arabia?
OK, maybe my speculation is too far here, but, seriously, what happens? We definitely need someone in there to turn this around.
Locally, WaMu (Washington Mutual) is looking for a buyer, and some people are getting jittery and taking their money out of the bank. Actually, I took mine out and put it in a credit union several years ago over their $40 overdraft fees. WaMu’s stock price closed at $2.01 Wednesday. It turns out that was a 94% drop from where it had been one year earlier, of $35.96 a share.
Pretty scary. . .