pay no attention to the men jumping from buildings, the economy is strong

Today was the worst day for American financial markets since 9/11. In the wake of the Lehman Brothers bankruptcy, and the announcement concerning the sale of Merrill Lynch, the Dow dropped over 500 points. I was going to make a joke. I was going to say, “I wonder if McCain still feels as though the fundamentals of our economy are essentially strong.”

You see, I thought that it would be a riot to suggest that, in the midst of this current economic crisis, McCain would repeat that stupid quote of his about our economic fundamentals being strong. I thought that it would be funny to suggest that he might be that out of touch with reality. I didn’t, of course, for even a minute, believe that he could still actually believe it to be true, though. But, amazingly, that’s just what he thinks.

This video wasn’t taken several months ago, or even last week. It was shot today.

And this, in stark contrast, is what Obama had to say in response:

…The challenges facing our financial system today are more evidence that too many folks in Washington and on Wall Street weren’t minding the store. Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression.

I certainly don’t fault Senator McCain for these problems, but I do fault the economic philosophy he subscribes to. It’s a philosophy we’ve had for the last eight years — one that says we should give more and more to those with the most and hope that prosperity trickles down to everyone else. It’s a philosophy that says even common-sense regulations are unnecessary and unwise, and one that says we should just stick our heads in the sand and ignore economic problems until they spiral into crises…

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17 Comments

  1. ytown
    Posted September 15, 2008 at 11:53 pm | Permalink

    Again, Mark you don’t have or care to look at all the facts! The Democrats are the major players into the Fannie Mae Freddie Mac collapse. You are a typical lamb in a flock, just follow and do what you are told. Do your own research, think for yourself and do be such a follower!

  2. mark
    Posted September 16, 2008 at 12:08 am | Permalink

    ytown, do you agree with McCain that the fundamentals of the economy are strong? I’m curious.

    And, if you could explain to me how the mortgage collapse and everything that’s happened since was the fault of the Democrats, I’d love to hear it.

  3. ytown
    Posted September 16, 2008 at 8:47 am | Permalink

    I tried to leave more information last night, but I kept getting an error message. I will try again. Sorry for the general post without support.

  4. ytown
    Posted September 16, 2008 at 8:58 am | Permalink

    Read these articles and see if your view changes. I do belive that there is bipartisan ownership of this mess, however I put most of the blame on Democrats Jamie Gorelick, Andrew Cuomo, Franklin Raines,Barney Frank and LBJ.

    http://www.villagevoice.com/2008-08-05/news/how-andrew-cuomo-gave-birth-to-the-crisis-at-fannie-mae-and-freddie-mac

    http://www.newyorker.com/talk/financial/2008/07/28/080728ta_talk_surowiecki

    http://atangledweb.squarespace.com/httpatangledwebsquarespace/fannie-mae-collapse-or-the-democrat-swindle-of-the-us-taxpay.html

    And guess who received the second largest amount of money from Fannie Mae/Freddie Mac? Your savior Obama!

    http://www.opensecrets.org/news/2008/07/top-senate-recipients-of-fanni.html

  5. Posted September 16, 2008 at 9:15 am | Permalink

    To blame either side to the financial woes of this country is rather misinformed since they both played their own part in creating the debacle. Clinton was the worst of all in what he actively did. Bush just fell asleep at the wheel.

  6. Oliva
    Posted September 16, 2008 at 9:46 am | Permalink

    But remember Jimmy Carter’s famous speech of July 1979 calling on Americans to look beyond short-term gains and at the future, stop supporting flimflam materialism, etc. People called it too pessimistic (dubbed it “the malaise speech”) and chose Reagan. And the train ride to greed and thoughtlessness became an American way of life.

    The overall tone of Carter’s “Crisis of Confidence” speech derived from his evangelical faith and his aversion to the sin of pride, which he believed had drawn the nation into a tornado of unsustainable materialism. In the months leading up to the July speech, Carter pursued conversations with a variety of public intellectuals, including Christopher Lasch, Daniel Bell, and Robert Bellah, each of whom had published books over the previous few years decrying consumer capitalism and warning that the nation was imperiled by the demise of traditional religious values and a collapsing ethic of hard work. Carter also received conceptual guidance from the pollster Patrick Caddell, who — in a 75-page April memo to the president — described a nation brought to spoilage by its status as “the first true leisure society.” Having conquered the problem of survival, Caddell suggested, Americans had abandoned a collective sense of purpose, while the political class had drifted far from any commitment to “rough consensus democracy.” Unless political leaders – that is, Carter himself – enunciated a new message of collective responsibility, the nation’s citizens would continue to lose themselves in a haze of narcissism, consumer debt, and vapid soft rock.

    –David H. Noon, http://hnn.us/roundup/entries/52381.html

    The speech, named “Energy and the National Goals: A Crisis of Confidence,” is available at http://www.americanrhetoric.com/speeches/jimmycartercrisisofconfidence.htm

  7. West Cross is the Best Cross
    Posted September 16, 2008 at 10:07 am | Permalink

    Regardless you blame for what’s going on, the troubling thing is that neither Bush or McCain are willing to acknowledge that there is even a problem. That’s either dishonesty or stupidity.

  8. nammeroo
    Posted September 16, 2008 at 10:10 am | Permalink

    The mortgage crisis and the related financial mess on Wall St. both started with unethical behavior and unmitigated greed. The mortgage industry sloughed off all of the ‘old-fashioned’ rules about who can qualify for a mortgage, and began approving mortgages to anyone for any amount. I remember one prospective lender who asked me if I needed more cash out from a refinancing – he knew an appraiser who would help make it happen (i.e. appraise our house for more than it was actually worth). We did not use that lender.

    People who borrowed beyond their means to buy more house than they needed, people who drove up housing prices through ‘flipping’ and speculation, and the lenders and brokers who enabled them; these are the sources of the mortgage mess.

    On Wall St., derivatives and creative ‘investment’ packages (such as packaging risky sub-prime mortgage loans into supposedly ‘safe’ investments with supposedly high returns for major banks and other institutional investors) created in recent years show the short-sightedness and greed that has infested some Wall St. boardrooms. I’m a big fan of free markets and limited regulation, so I am particularly incensed when stupid people abuse the system so blatantly. I would have no trouble seeing criminal charges brought against the Lehman Bros. and Bear Stearns CEOs/CFOs, just as happened with Enron.

    The financial mess is not a symptom of a bad economy; rather it is a man-made disaster that has wildly inflated and magnified what would’ve otherwise been a modest economic downturn typical of the economic cycles that come and go in this country.

    Our underlying national economy is strong, and the financial mess is impacting the ability of individuals and companies to borrow for expansion and new development. Until things shake out on Wall St., the financial mess will continue to be a drag on the economy.

  9. Scott K
    Posted September 16, 2008 at 11:07 am | Permalink

    I whole heartedly agree with nammeroos’ comments. It was greed that is at the heart of the crisis. All it takes is one area of the economy to throw the rest into turmoil. The stock market moves on investor feelings and guesses as to what could happen next. One issue can snowball to throwing the entire economy off. This is a correction just as the stock market corrected around 2000 after phenomenal growth. That also was due in part to the housing market as the bubble started to burst. McCain did acknowledge this is a serious time for the economy, but stated that the core of it, the entrepreneur ideals of Americans among other things, is still strong. What is up to debate is which solution is the correct one….taxing corporations or easing taxes on them. In theory both have their strong points.

  10. Meta
    Posted September 16, 2008 at 11:16 am | Permalink

    Flip

    Flop

    McCain changed his tune by the end of the day. He now says it’s a crisis.

    http://abcnews.go.com/Politics/story?id=5807951&page=1

  11. Paw
    Posted September 16, 2008 at 11:49 am | Permalink

    But how could this happen to Lehman with Jeb Bush as an adviser (http://www.wakeupfromyourslumber.com/node/8147)?

  12. Glen S.
    Posted September 16, 2008 at 12:02 pm | Permalink

    I agree the mortgage crisis is the result of unethical behavior and unmitigated greed, but you are forgetting the third leg of this rickety stool — extreme government deregulation and the corresponding lack of oversight.

    For more than 25 years, Republicans have insisted that government (and government regulation) is bad for the economy. If we simply freed the private sector from government interference, they told us, the economy would prosper and everyone would be “better off.”

    While free-market entrepreneurship is generally beneficial; recent events continue to prove that government (and independent) regulation and oversight is still absolutely necessary to protect workers, consumers, investors and citizens from the worst excesses of the free market.

    Contaminated food products, toxic toys from China, fuel price-gouging, millions of American’s without access to affordable healthcare, obscene compensation packages for CEOs of failing companies, etc. — all are examples of what happens when there is insufficient government regulation and oversight. The mortgage crisis and Wall Street meltdown currently unfolding is just the latest (and perhaps largest) example.

  13. nammeroo
    Posted September 16, 2008 at 1:02 pm | Permalink

    Glen S.,

    You’re right, government deregulation did play a huge part in the mortgage crisis. In 1995, President Clinton pushed for and got substantial changes to the regulations that implement the Community Reinvestment Act, a law pushed for by President Carter in 1977 that was intended to increase lending to low income and minority communities. The 1995 changes exponentially increased mortgage lending to low income families.

    As Wikipedia notes, “Part of the increase in the latter type of lending was no doubt due to increased efficiency in the secondary market for mortgage loans. The revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans started in 1997.” It is this secondary market and the re-packaging of sub-prime loans into marketable (and supposedly ‘safe’) investment securities that has so completely imploded.

    So, Glen, as you say – deregulation by the Democrats played a large role in the current financial mess.

  14. Curt Waugh
    Posted September 16, 2008 at 4:34 pm | Permalink

    Greed played some role. But then again, greed played a roll in the founding of Google and the creation of great works of art and all those Chinese companies that make all those things we use and in a whole bunch of stuff that doesn’t seem to bother anybody and makes our lives much better. (And guess what? Greed will play a role in the future unseating of China as the world’s production powerhouse.)

    Deregulation played a role. But deregulation (or lack thereof) also played a role in incredible growth of the tech and electronics industry in the past 30 years. Not so bad really.

    And both parties played a role, but they also play a (sometimes) role as a watchdog for each other. So, no pure evil there either.

    I think it’s easier to see this financial mess through a natural model. There are two wildfire management techniques in use in the world. There’s the American model where we do everything we can to keep every little fire from burning and we have these enormous fires every now and then where all these people lose their stuff and it’s a big mess. (Sound familiar?) Then there’s the natural model where they sort of let nature take its course and they have a lot of little fires that just burn and let the chips fall where they may. No big fires. Lots of ash-enriched soil. Please remember: YOU and me and everybody pay the cost of fighting these fires. How’s that workin’ for ya?

    We can take another natural model: I have an idea, let’s destroy all the coastal wetland hurricane barriers, build a bunch of stuff under sea level and get really mad when the rest of the country doesn’t feel like paying for the disaster. OR we can just leave the barriers where they are and not live there. Which is better?

    Which brings us to the financial “crisis”. We could take the natural model where we let lots of little financial experiments rise and fall with lots of small set-backs and some big successes that live on and let the money follow them. OR we could allow (this is where the government comes in) consolidation on a massive scale (aka, “MONOPOLIES”) to rise and let them do the most convoluted things imaginable. They can create stuff that even some sharp business minds can’t begin to understand (because they actually makes no sense). The cool part is that, when the biggest melt-down of all happens, we’ll let the biggest banks buy the biggest securities houses and have MORE consolidation.

    THIS is the recipe for future financial disaster. As these enormous piles of money consolidate into ever fewer hands, we are very precariously balanced. The government is no longer powerful enough to do anything to these entities. They’re just too rich to give a hoot. Hell, they’ll even take some of our wonderful tax money when they screw up, thank you very much. Am I the only one who got $20 million when I screwed up at my last job?

    Many of you are calling for regulation, but we know very well that regulating such huge entities will prove impossible. They will buy their way out of it as they have in the past. What in history makes you think otherwise?

    The U.S. is still strong. Less strong, perhaps, but financially strong. Maybe not forever, but certainly right now. And it remains, by far, the easiest place in the world to start a new business. (You can set up an LLC for $20 and get a space and a phone line in a couple days. Try that anywhere else in the world.) A recent study on NPR of rich people showed that the vast majority of them are newly rich. The aristocracy is still dead here, fear not.

    I still feel, in my heart, that one penny of bailout money is a waste. It’s not natural. Let these dinosaurs die. Let something new take its place. It’s called competition. Change is painful but necessary. Ask the Poles about shedding Communism. Ask the vacuum tube industry about shedding tubes in favor of transistors (and then again to micro-chips). It wasn’t easy, but they did it anyway. (In a few years, ask the auto industry about shedding petrol in favor of electricity or whatever is next. It’s gonna hurt for sure. This WILL happen some day.)

    My 2.5 cents.

  15. Jill
    Posted September 16, 2008 at 6:30 pm | Permalink

    Random thought: I’ve often thought of starting my own business but the main reason that I don’t is HEALTH INSURANCE. I don’t have a spouse that I can be considered a dependent of. If I started my own business, how the hell could I afford health insurance? It would be a lot easier to be an entrepreneur if one didn’t have to worry about being able to afford health care.

  16. Brackache
    Posted September 16, 2008 at 8:29 pm | Permalink

    As a grizzled old retired Ron Paul supporter, I like to sit around the house knitting, talking to my 73 cats, and telling people “Ron Paul told ya so” whenever any Federal Reserve-related economic bubbles start bursting. Please don’t deny me my simple pleasures; I’m politically impotent.

  17. Robert
    Posted September 17, 2008 at 11:30 am | Permalink

    Nammeroo, I personally like ytown’s blame attempt better. He outdid you big time. You only went back to 1995 (13 years) to place YOUR blame. Ytown jumped in and went all the way back to LBJ (40+ years) and blew you out of the water.

    Personally, I think it’s all Thomas Jefferson’s fault for starting the whole Democratic Party in the first place.

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