September 15th 2008
As Wall Street Melts, McCain Must Change His Message
I
t’s one of those times when great forces are at work, partly under the eye of institutional regulation, partly in pure chaos; forces that we know have the power to twist our lives around, yet we have no real power to do anything about it … except to cast a vote.
The bankruptcy of Lehman Bros., the sale of Merrill Lynch, the teetering of AIG, all following the Freddie and Fannie news of last week have combined into what Alan Greenspan termed a “once in a century” financial crisis.
Speaking personally, Lehman’s collapse may spell the end of my company’s chances to recover what is owed us by developer SunCal Companies, which used mostly Lehman money to finance its rapid expansion - becoming the largest private land development in the West, if not the nation, by capitalizing on miscalculations about how far the home market could expand. (I have to credit SunCal’s management with trying to do what they can in this complex situation to do the right thing by us.) If we lose all that money (and at a minimum we’ll probably lose most of it) is going to hurt, but at least I can measure it and I’ve been able to anticipate it for some time now - unlike whatever is ahead.
Politicking the Nightmare
The Obama campaign came out immediately, trying as Dems are wont to do, to seize on catastrophe. We know they were hoping for quagmire in Iraq and Katrina II on the Gulf Coast, so it’s no surprise they see what’s going on on Wall Street as an opportunity. It’s a rule of thumb: Glum people vote Dem; hopeful people vote GOP.
This morning, Obama blamed the crisis on the policies of George Bush (without any evidence in support) and said, “”This country can’t afford another four years of this failed philosophy.” But with Obama himself admitting that his proposed tax increases would be bad for the economy and might have to be postponed, what is he offering that could possibly help? His entire economic plan is based on wealth redistribution, and suddenly there’s not as much wealth around for him to get his Socialistic mitts around.
Obama had to come out swinging because the McCain plan is certainly the better economic plan, at least for anyone who is interested in the turn-around of economy. If ever there was a time to reduce taxes on corporations, this is it. From my little corporation all the way up to the top, we’re feeling a need for some relief from whatever nastiness is around the corner. Unfortunately, McCain’s first statement on the meltdown, issued this morning, isn’t the one I would have written:
“The crisis in our financial markets has taken an enormous toll on our economy and the American people — first the decline of our housing markets followed by the collapse of Bear Stearns, Fannie Mae, Freddie Mac and now Lehman Brothers. I am glad to see that the Federal Reserve and the Treasury Department have said no to using taxpayer money to bailout Lehman Brothers, a position I have spoken about throughout this campaign. We are carefully monitoring the financial markets, including the duress at Lehman Brothers that is the latest reminder of ineffective regulation and management. Efforts must also be focused on ensuring that the deposits of hardworking Americans are protected.
“It is essential for us to make sure that the U.S. remains the pre-eminent financial market of the world. This will be a highest priority of my Administration. In order to do this, major reform must be made in Washington and on Wall Street. We cannot tolerate a system that handicaps our markets and our banks and places at risk the savings of hard-working Americans and investors. The McCain-Palin Administration will replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street. We will rebuild confidence in our markets and restore our leadership in the financial world.”
Where is any mention of Obama’s economic plan? Nowhere! Yes, regulation and reform are viable McCain/Palin messages for all but those who insist on tying McCain to Bush, but we’re in an entirely new game now. As Wall Street (which most Americans cannot distinguish from the GOP) is reeling, many simply will not trust the GOP to “bring transparency and accountability to Wall Street.” They know that no one uses government to punish like the Dems, so cleaning up is not a good McCain message here.
Talk of how to recover has got to be his leading message. America’s economy will not recover if American business is to be the wallet Obama will be removing again and again from his hip pocket to fund his social programs. McCain needs to focus on the two candidates’ tax plans now as never before.
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September 15th, 2008 at 1:10 pm
Obama has raised a full $395,574 from employees of the now-bankrupt Lehman brothers, second only to Hillary Clinton. http://www.politico.com/blogs/bensmith/0908/Friends_of_Lehman.html?showall
Obama’s biggest donors: So much for the small contributor and not taking corporate money. His largest donors are from Wall Street firms. Guess they were hoping for an Obama bailout. Maybe Obama should return the money so they can stay afloat.
Goldman Sachs $691,930 University of California $611,207 Citigroup Inc $448,599 JPMorgan Chase & Co $442,919 Google Inc $420,174 UBS AG $404,750 National Amusements Inc $389,140 Microsoft Corp $377,235 Lehman Brothers $370,524 Sidley Austin LLP $350,302 Moveon.org $347,463 Skadden, Arps et al $340,264 Time Warner $338,527 Wilmerhale Llp $335,398 Morgan Stanley $318,070 Latham & Watkins $297,400 Jones Day $289,476 University of Chicago $278,885 Stanford University $276,038.He also received the second largest amount from Fannie and Freddie. He has quite a few of the high paid executives and former executives of Fannie and Freddie as advisors: Jim Johnson, Jamie Gorelick, Franklin Raines…The crisis is directly related to the subprime mortgage meltdown triggered by loosening HUD standards for loans.”
In recent history, HUD Director, Cuomo (during the Clinton years) pushed Fannie and Freddie into the risky sub-prime markets - the begining of the end:”[Andrew Cuomo] turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded “kickbacks” to brokers that have fueled the sale of overpriced and unsupportable loans. “http://www.villagevoice.com/2008-08-05/news/how-andrew-cuomo-gave-birth-to-the-crisis-at-fannie-mae-and-freddie-mac