The government is doing the necessary thing. I think it will work. Calamity will be averted. Tough times will not. It will take years to climb out of the hole that’s been dug. The sun will come out tomorrow, along with some likely succession of inflation, recession, and stagflation, in what order and to what heights, depths, and angst I obviously don’t know. Meanwhile, the astounding updraft of technology will continue to improve most of our lives in many, resource-nonintensive ways. And if we’re smart, we’ll set people to work renewing our infrastructure and achieving energy independence.
I feel certain we will do better economically with Obama/Biden and the people who would run their Administration than with McCain/Palin.
AND HOW IS THAT HEARTBEAT, ANYWAY?
Now here’s a shock: John McCain has high blood pressure. (He’s not quite at the level of my pal Jim Cramer, whose head could explode at any minute, but close.) And it seems there is quite a bit more to his medical history his campaign doesn’t want voters to know about. Click here for a short video reviewing the Senator’s health.
Which is relevant, because if he were elected and something happened to him, Sarah Palin would be leader of the free world.*
*A job George W. Bush has proved requires more than self-assurance and a belief in low taxes.
For Governor Palin the line is that she can see Russia from her house.
For Senator McCain, the line may come from his promise to ‘take on the ol’ boys’ network.’
As Senator Obama put it:
‘Yesterday, John McCain actually said that if he’s President, he’ll take on the – and I quote – ‘ol’ boys network’ in Washington. I am not making this up. This is someone who’s been in Congress for 26 years – who put seven of the most powerful Washington lobbyists in charge of his campaign – and now he tells us that he’s the one who will take on the ol’ boys network. The ol’ boys network? In the McCain campaign, that’s called a staff meeting.’
This is a touchy subject, but being President of the United States arguably entails even more responsibility than being a brain surgeon or airline pilot – and it’s a four-year gig (you don’t get to hire him ‘on probation’ for the first 90 days as some employers do, to be sure they’ve made a good choice). So even though I have an obvious partisan bias, I don’t see how it’s not relevant to consider this post:
. . . I’m hardly alone in noticing the changes that have occurred in John McCain. People are whispering about his confusion, his slow delivery, his deterioration, but . . . it is not being openly discussed. . . .
The latest example was the gaffe over Spain. ‘Finally, Senator, let’s talk about Spain,’ says the interviewer. Would he be willing to invite President Zapatero to the White House?
In fairness to Senator McCain, she says Zapatero’s full name quickly – and it’s a mouthful.
But she did preface it very clearly with ‘let’s talk about Spain.’
So when Senator McCain answered as if Zapatero were President of Mexico or someplace to its south, it suggested he might not be as sharp as a U.S. President ideally would be. (‘McCain Proposes Sending Troops to South America to Invade Spain,’ Andy Borowitz reported.)
Same thing when, repeatedly, on separate occasions, he confused whether Iran is predominantly Sunni or Shiia (it’s Shiia). Or when Senator Lieberman had to help him get straight whom the Iranians were arming (the insurgents, not Al-Qaeda).
Here is a site that’s collected 16 foreign policy gaffes you don’t picture President Kennedy making. Or President Nixon or President Carter or President Bush 41 or President Clinton – or President Obama. But which you can picture President Reagan, especially in his second term, having made. There is little reason to think Senator McCain will get sharper under the stress of the Presidency.
McCAIN’S CHIEF ECONOMIC ADVISOR
One of the good ol’ boys Senator McCain has most confidence in is Phil Gramm (who told us this summer we’re a nation of ‘whiners’). It was he who quarterbacked the McCain economic plan.
I have previously noted that all Enron roads seem to lead to Phil Gramm. This post takes the story all the way to the current meltdown. In part:
How did we get here?
That’s pretty easy to answer. His name is Phil Gramm. A few days after the Supreme Court made George W. Bush president in 2000, Gramm stuck something called the Commodity Futures Modernization Act into the budget bill. Nobody knew that the Texas senator was slipping America a 262 page poison pill. The Gramm Guts America Act was designed to keep regulators from controlling new financial tools described as credit “swaps.” These are instruments like sub-prime mortgages bundled up and sold as securities. Under the Gramm law, neither the SEC nor the Commodities Futures Trading Commission (CFTC) were able to examine financial institutions like hedge funds or investment banks to guarantee they had the assets necessary to cover losses they were guaranteeing.
This isn’t small beer we are talking about here. The market for these fancy financial instruments they don’t expect us little people to understand is estimated at $60 trillion annually, which amounts to almost four times the entire US stock market.
And Senator Phil Gramm wanted it completely unregulated. So did Alan Greenspan, who supported the legislation and is now running around to the talk shows jabbering about the horror of it all. Before the highly paid lobbyists were done . . . every one from hedge funds to banks were playing with fire for fun and profit.
Gramm didn’t just make a fairy tale world for Wall Street, though. He included in his bill a provision that prevented the regulation of energy trading markets, which led us to the Enron collapse. There was no collapse of the house of Gramm, however, because his wife Wendy, who once headed up the Commodities Futures Trading Commission, took a job on the Enron board that provided almost $2 million to their household kitty. And why not? Wendy got a CFTC rule passed that kept the federal government from regulating energy futures contracts at Enron.
If John McCain gets elected and chooses Phil Gramm as his Treasury Secretary, which many politico types see as likely, they will be able to talk about the good old days when Gramm was in congress and McCain was in the senate and they were in the midst of the Savings and Loan crisis.
The S&L scandal, which may look precious when compared to our present cascade of problems, isn’t hard to understand, either. But it is impossible to take John McCain seriously on our current financial Armageddon since he was dabbling in the historic collapse of 747 S&Ls that occurred during Ronald Reagan’s era. In the early 80s under the Republican president, congress deregulated the savings and loan industry in much the same way that Gramm made sure there were no laws hindering our current financial malefactors on Wall Street. S&Ls simply lobbied until they had less regulation and then began making rampant, unsound investments.
The guy who was going the wildest with financial freedom was Charles Keating, who headed up Lincoln Savings and Loan of California. Because the S&L industry had managed to get congress to increase FDIC insurance from $40,000 to $100,000 on deposits, the irresponsible investing of people like Keating began to put taxpayer insurance funds at great risk of loss. Keating placed money in junk bonds and questionable real estate projects and because so many other S&Ls started acting the same way the Federal Home Loan Bank Board (FHLBB) began to push for a regulation that limited these dangerous speculative “direct” investments to 10% of an S&L’s assets.
And Keating didn’t like it; he called on a private economist named Alan Greenspan, who promptly produced a study saying that there was no danger in “direct” investments.
But that didn’t convince the FHLBB and as further scrutiny showed Lincoln Savings and Loan was making even more historically bad investment decisions, a federal investigation was launched.
So Keating called his home state senator John McCain.
McCain and four other US senators (known to history as the Keating Five) met with Edwin Gray, then chairman of the FHLBB. McCain had been hesitant to attend but had reportedly been called a “wimp” behind his back by Keating. The message to the FHLBB and Gray from the Keating Five was to lay off Lincoln and cool the investigation. Gray and the FHLBB did not relent but Lincoln stayed in business until 1989 when it collapsed with the rest of the S&L industry. The life savings of more than 20,000 elderly investors disappeared with the failure of Lincoln. Keating went to prison for five years.
Charles Keating was John McCain’s pal. They met in 1981 and Keating dumped $112,000 in the McCain campaign bank accounts between ’82 and ’87. A year before McCain met with the FHLBB regulators, his wife Cindy and her father, according to newspaper reports at the time, invested about $360,000 in one of Keating’s shopping centers. The Arizona Republic reported McCain and his wife and their babysitter took nine trips on Keating’s private jet to the Bahamas to stay at the S&L liar’s decadent Cat Cay resort. The senator didn’t pay Keating back for the plane rides until years later when he was under investigation.
McCain wasn’t found guilty of anything but bad judgment, which is an historic understatement. Republicans, who led deregulation of the S&L industry, delayed the bailout until after the 1988 election to make sure George H. W. won the White House. The cost to taxpayers for helping these 747 bad actors in the S&L industry was finally estimated at $1.4 trillion. If the bailout had begun in 1986 instead of after the presidential election, the cost would have been contained at $20 billion.
☞ That excerpt might be even more effective if the tone weren’t quite so angry. But you know what? We have a lot to be angry about.
ANOTHER OF McCAIN’S TOP ECONOMIC ADVISORS
Conservative economist Kevin Hassett is another of the Senator’s top advisors and a truly nice guy – I know him a little. He is the co-author of Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market, published in 1999, when the Dow was around 11,000. According to Business Week at the time, the book argued that the Dow was already worth 36,000, and should head there in three to five years. Nine years later, it is 11,000.
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