Friday, March 28, 2008

Regarding the Economy: Does John McCain have a clue?

marjorie says...

Paul Krugman has a good point today about John McCain:

Mr. McCain is often referred to as a “maverick” and a “moderate,” assessments based mainly on his engaging manner. But his speech on the economy was that of an orthodox, hard-line right-winger.

It’s true that the speech was more about what Mr. McCain wouldn’t do than about what he would. His main action proposal, as far as I can tell, was a call for a national summit of accountants. The whole tone of the speech, however, indicated that Mr. McCain has purged himself of any maverick tendencies he may once have had.

This is in response to John McCain's statements on Wednesday that while he would "examine proposals" to help home-owners in danger of losing their homes, he generally does not support any government assistance to "...reward people who were irresponsible at the expense of those who weren’t.”

But he also says that the crisis is a result of "rampant speculation," and a "profusion of complicated and recently devised financial instruments “that weren’t particularly well understood by even the most sophisticated banks, lenders and hedge funds.”

So rather than recognize that a lot of lower-income people were duped or misled by the speculators, he writes them off as "irresponsible," lumping them right in with the speculators. He does, however, think bailing out Bear Stearns was a good move on the part of the Fed. This says a lot about John McCain.

He recognizes the necessity of ensuring that one investment firm doesn't take down our financial sector (which allows all those rich guys to keep on being rich) but does not recognize the drag on the economy that will occur if a significant portion of the population defaults on their loans (and he doesn't really care that letting them default will kick many first-time homeowners back down the economic ladder).

This seems to me a classic difference between R's and D's (generally speaking). R's think all individuals have the ability to act independently of the institutions and structures that order our when they get in trouble its their fault alone. D's recognize that there is a complex inter-relation between individuals and institutions...and that individuals rely on the advice and information provided by institutions, particularly banks.

McCain offers nothing to mitigate the bad advice given out to 1000s upon 1000s of the American middle class by banks. And on the question of fixing the mortgage lending induced national financial crisis as a whole, McCain simply says we should "...eliminate obstacles to the ability of financial institutions to raise more capital."

Is it just me, or doesn't the current mess have a lot to do with the lack of "obstacles" in the first place? Isn't the lack of regulation and oversight one of the reasons for the rampant speculation? Does John McCain even have a clue?

Krugman is right. McCain is completely orthodox...rigidly so. And this is the last thing we need, particularly now when we are stuck in a bloody war and have a teetering economy.