“Bush’s greed killed the golden goose of the paper for oil economy.” ~ Stirling Newberry

The Zen Mistress nails it:

Expect all candidates to be spitting out the word “change” at machine-gun pace today. McCain and Palin will continue to talk about “cleaning up” Washington and, thereby, Wall Street. However, when McCain and Palin talk about “change” and “reform,” they are talking about cleaning up corruption, not changing the system. As I understand it, today’s crisis wasn’t caused primarily by corruption, in the sense of doing something illegal for personal gain. It was caused by the system.

The McCain-Palin campaign (or should that be Palin-McCain?) also opposes the very kind of “propping up” that the feds are doing. They’ve been calling the government takeover of Fannie Mae and Freddie Mac “spending the cookie jar.” The takeover is likely to cost the Treasury $100 billion to $300 billion. $300 billion is roughly equal to three years in Iraq War dollars.

Yes, this is seriously bad, but McCain-Palin are focusing on symptoms, not the disease. They continue to pledge allegiance to deregulation and Reaganomics.

The statements of the two campaigns seem to bear this out.  This thing didn’t happen because of greedy CEO’s breaking the law or regulators asleep at the switch — not all by themselves.  That would explain Enron, but not a collapse of the entire investment banking system.  This happened because greedy CEO’s and their hired guns in Washington Lobbyist firms wrote the laws that tied the hands of regulators because they weren’t satisfied stealing from the stockholders. 

Wall Street bought K-Street, which turned the Republican Party into a wholly owned subsidiary of the rich and powerful, offering nothing but pablum to the people they promised would share in the wealth as long as the wealthy were free to sqeeze as much wealth as possible from absolutely everywere.  It is still their motto, Drill Baby Drill, indeed. 

John McCain has a new explanation he’s pushing to absolve the fundamental philosophy of the conservative movement for any responsibility in this disaster.  Trying to show he’s not out of touch, now McCain says you and I represent those economic fundamentals he has claimed are strong as he ignored the gathering storm for years while most economists said, “huh?” 

According to Camp McCain, the hard working men and women of America are victims not of a bankrupt economic theory, but greedy and corrupt executives who broke the law and bureaucrats who didn’t do their jobs.  But John McCain supported every one of the deregulatory laws passed through the Senate over the last couple of decades while standing in the way of even retaining reasonable oversight and regulatory schemes the GOP has been hell bent on dismantling since the New Deal promised never to let this nation go through another Great Depression. 

It’s remarkably cynical that McCain now echos Barack Obama’s catch phrase from his Convention speech, saying, “Enough is enough” even though he failed to appreciate how troubled the country’s economy was until today despite the fact that we’re long past the first year of the housing bubble bust.  McCain’s “solution” might have rounded up folks like Ken Lay or exposed the accounting tricks at Arthur Anderson before too much damage was done.  But this one is not about corruption, it’s about systemic dysfunction.

Much like their Baghdad Bob routine that everything in Iraq was peachy when McCain could only stroll through a public market with a battalion of Marines and a fleet of helicopters protecting him — only to admit we were in the middle of a fiasco a year later once much of the civil war had run its course — they are again backtracking, saying his absurd claims that the economy was fundamentally sound really meant the American workers are fundamentally strong and the whole system rests on their backs. 

I got news for these financial geniuses.  Every economy, even a Marxist one rests on the backs of the workers — who have little choice but to work.  That is, if they can find a job as unemployment already at unacceptable levels only climb higher.

Here’s a confusing sentence from McCain’s one paragraph reaction to upheaval on Wall Street today:  “We cannot tolerate a system that handicaps our markets and our banks and places at risk the savings of hard-working Americans and investors.”  That’s straight from the patron saint of deregulation, former Senator and lobbyist Phil Graham, the guy McCain picked to be his chief economic adviser.

It wasn’t the market or banks that have been handicapped.  Quite the opposite.  Since Reagan and Newt Gingrich set out to remove any restrictions on the movement of capital this result has been looming.  They don’t want capital or corporations taxed.  They don’t want regulators looking over the shoulders of the financial wizards playing games with your pension funds.  And they don’t want to be blamed now that the curtain has been pulled back far enough for those that care can see at a glance the gears of the machine are broken no matter how well lubricated with the blood and toil of ordinary American investors and taxpayers.

Treasury Secretary Paulson says he needs new regulations and new authorities to police the markets, especially these new non-financial entities that have sprung up lately who were never allowed to meddle in investment securities before.  Where do you think the laws that kept the scavengers away went?  Who decided to take the roadblocks down?  Who thought is was a good idea to protect creditors over consumers making it nearly impossible to discharge bad credit card debt so people, en mass, would let their homes go into foreclosure instead.

Paulson also said that the Housing “correction” was a the root of the problem, which won’t be stemmed until it plays out — and he says the biggest part of that won’t be past for some months yet.  McCain said he’s glad that taxpayer money won’t be used to bail out Lehman Brothers like it was with Freddy, Fannie and Bear.  But he speaks of reforming the system to bring transparency to Wall Steet, not of the root cause of the lack of confidence in the financial markets that still has a ways to go before the bottom is reached. 

No one broke any law when they bundled up a bunch of debt and sold it as an asset.  No regulators are authorized to stop hedge fund managers from investing in the most risky of ventures.  No one was there to stop the predatory loan sharks who charge 350% per year on a pay-day loan or marketed mortgages like they were selling aluminum siding to people who couldn’t afford a conventional loan.  Underlying all of that was a basic trust in those absent rules and regs that these predators wouldn’t be allowed to sell them these loans if they really couldn’t afford it.  That naive assumption multiplied thousands and thousands of times across the country has proved fatal to the entire credit and investment structure.

Challenged to put it all into three sentences, the prize goes to Numerian commenting at an especially enlightening discussion at The Agonist.

A house divided cannot stand. For 25 years Republicans have told you to fear other Americans as if they were your enemies. We have real enemies abroad, and real economic troubles at home, but we will never solve our problems as long as we let the Republicans continue to divide us as a nation.

Bravo!