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"US Banking and McCain Campaign Both Under the Gun"
in partnership with www.poliziaineuropa.eu
"US Banking and McCain Campaign Both Under the Gun"
Liberal critics of the Bush administration had warned of the posibility of a financial crisis stemming from the carnival omortgage lending and spiraling real estate prices. Now that crisis openly threatens to collapse the US financial structure and send the economy it services into severe recession, or even depression, and it may severely impact the functioning of the highly globalized economies in which most of the world now lives.
In the whirlpool which may swallow up the market prosperity of the 1990s there is an interesting side eddy in which a dynamic has formed between the current political campaign and the politics of rescue from financial disaster. While the jury is out on both the financial and political consequences of yesterday?s record fall in the stock market, both the historical legacy of the Bush presidency and the candidacy of his would-be successor, John McCain, have been dealt serious body blows. It remains to be seen whether the pattern of McCain?s handling of the crisis is in fact a window onto future behavior and whether the damage to his political credibility is irreparable.
The first problem the McCain campaign has is the public perception that a prime factor in the crisis is the Republicans? mantra that the government that governs best governs least-- and by extension regulates less (e.g. banks and financial instructions, lending and mortgage practices). The second problem is that the government and the McCain campaign seem to have turned that ideological conceit on its head and now favor government-sponsored aid to the tune of $700 billion for a government take-over of institutions?in effect socializing the risks and debts of the financial community while allowing the ongoing privatization of the profits.
Increasingly, McCain has emerged as the personification of the irresolution, inconsistency and just plain fecklessness of the Bush administration, of which McCain in many respects is its heir apparent. The man who in the past has confessed to his tenuous grasp of economics has appeared erratic and out of touch in the past two weeks. McCain declared as late as September 15 that ?the fundamentals of our economy are strong.? Soon after, he shifted gears, announcing that the US financial system was no more than ?a casino? and characteristically shooting from the hip, threatened that as president he would fire Christopher Cox, the head of the Security and Exchange Commission. Apart from it being an empty and unjustified gesture given Cox?s limited responsibility for the crisis, the president as it turns out has no power to fire the SEC chief.
Along the way he blamed Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders when in fact private institutions provided the bulk of the lending. For good measure he then implicated Democratic candidate Barack Obama for campaign ties to the two institutions (which it was later revealed was even more true in McCain?s case) ?. All this is an unnerving reminder of the personality of the current occupant of the White House who too often substituted simplistic bluster for thoughtful consideration and sold swagger as decisiveness and strength.
The final misstep was strategic: McCain decided on a risky, high-profile role in Congress to convince fellow Republicans to approve the plan. He dramatically announced the temporary suspension of his campaign in order to run to Washington to help repair the financial health of the nation. However, it soon leaked out that while there, he was virtually silent in the discussions while Obama was peppering the principals and legislators with questions and that the plan of Treasury secretary Henry Paulsen-- which he pleaded he had not had time to read-- was all of three pages.
Then, after working to move the plan somewhat to the right to address concerns of Republicans, McCain announced on Sunday that the plan would move forward. In keeping with an increasingly worrisome campaign style of haphazard pronouncements on shaky foundations his top adviser Steve Schmidt boasted that McCain managed "to help bring all of the parties to the table, including the House Republicans, whose votes were needed to pass this."
As the world knows, the current version of the financial rescue plan crashed and burned on Monday along with US markets, mainly at the hands of refractory Congressional Republicans. McCain, having prematurely and unwisely taken credit for its success, now finds it difficult to scramble out from under the debris of ?Black Monday? 2008.
Strong opinions are welcome in leaders but they can become their undoing when decoupled from realistic and well-considered appraisals. Just as McCain had supported tying the prestige of the US to the uncertain and risk-laden adventure in Iraq, he had somewhat recklessly invested his aura of experience and leadership ability in the tumultuous cauldron of Congressional debate on a bailout plan. Obama wisely worked quietly and with less fanfare and in the end appeared to have his political troops more in line with him than McCain whose actions only underscored the weakness and division in his party.
Recent soundings by polling and press organization indicate that a majority of the US public believe that both the Democratic Party?and now Obama as well-- are better equipped to handle the economy and the current crisis than the Republicans and McCain. Perhaps this is just desserts for a party which had so cavalierly abandoned the fiscal responsibility and business common sense that was once its hallmark and electoral strong suit.
Robert Matthews,
Associate Researcher, FRIDE
Madrid
October 1, 2008