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So, the US bank, stock, real estate and insurance markets are unhappy right now. It seems the root of this unhappiness is the intermingling of these various markets. Back in the days following the Great Depression of the first half of the 20th century a whole slew of laws and regulations were written to isolate these economic spheres from each other, the thinking being that in the case of one industry stumbling the others would trundle onward unharmed.

The counter argument to this was that by restricting the freedom of businesses to participate in two, three or four of these spheres the regulations prevented potential economic growth. Which, frankly, is true.

The question became one of whether the reassurance of isolation was worth the restriction of trade. To one side the regulations were a straightjacket. To the other they were a three-point seat belt. Of course, as time took the nation further and further from the Depression the regulations seemed less and less crucial.

Well, the current situation underscores the issue nicely. Bear Stearns is gone, AIG is getting a massive bailout, Freddie Mac and Fannie Mae are for all intents and purposes now agencies of the federal government, Lehman Brothers and Merrill Lynch...etc., etc., etc.

Traditionally, during a national election strength in economics has been attributed to Republicans. This cycle Obama seems to have an advantage, if only because McCain was foolish enough to actually say he didn't know enough about the economy and needed to learn more. (It didn't help that his then-chief economic advisor, Phil Gramm, referred to the economic worries as the product of the USA being a "nation of whiners.")

This is kind of disingenuous on McCain's part. He's been an active participant in economic policy in the Senate for years. However, ignorance may well be the better tack to sail.


In 1999, "McCain had joined with other Republicans to push through landmark legislation sponsored by then-Sen. Phil Gramm (Tex.), who is now an economic adviser to his campaign. The Gramm-Leach-Bliley Act aimed to make the country's financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.

"That bill allowed AIG to participate in the gold rush of a rapidly expanding global banking and investment market. But the legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments."
(Quoted from the Washington Post)

McCain is now railing at the greedy CEOs who clamored after the dollar with no concession to safety. Really? CEOs working toward fiscal reward, despite risk? Bizarre, eh? This is coming from a member of the Keating Five, an experience which seems to have taught McCain little.


Obama's been on McCain's case about the economy, but the very legislation that made the current fiscal fiasco possible was legislation which McCain actively supported and which carried the name of McCain's main economic guru. McCain either knows the economy and believes that this is the way to run it, or he doesn't know the economy and still felt justified pushing legislation directly affecting it.

Either reality is pretty damning.



For the record, true Free Market advocacy means none of this phases you. All these failures are part of the market adjusting & shaking off the shackles of regulation, and eventually everything will correct itself and all will be right with the world. Any regulation, any, is merely hampering the market's ability to self-regulate in its natural, healthy way. It's actually close kin to Anarchism, in that the anarchists, the political theorists, not the bozos trying to blow up civil servants, feel that Law and Government get in the way of people dealing with each other, and in no small way prevent a better society from happening by alienating citizenry from their natural moral compass. Both systems require of the adherent either rose-colored glasses of Coke-bottle thickness or an utter disregard for human misery.

Date: 2008-09-18 03:06 pm (UTC)
From: [identity profile] snooks.livejournal.com
McCain's inclusion in the Keating Five seems more an more like less and less of an innocent mistake.

Date: 2008-09-18 04:39 pm (UTC)
From: [identity profile] snooks.livejournal.com
Consider: If Bush and McC had gotten their way and privatized Social Security, right now we'd all be entirely screwed out of our "pensions."

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