Wednesday, September 17, 2008

Campaigns Concentrate on Collapse Concerns

The messy meltdown at the New York Stock Exchange that rocked bourses in Europe and Asia, has not only made the economic situation the most critical issue in the campaign; but has also unmasked how the Republicans wrecked the economy. The chilling impact of the collapse of Lehman Brothers also removed much of the glitter in the skin deep appeal of Sarah Palin, as Americans have been awakened from a spell by the reality of very hard times in the immediate future. The generally accepted perception that the US is taking the wrong route has been reinforced, and John McCain will have greater difficulty extricating from the failures of this administration.

McCain sunk deeper earlier when he echoed the White House line that the economy was fundamentally sound, and praised the government for not wasting taxpayer's money on another bailout; but reversed himself later in the day saying the economy was in crisis. Perhaps he was fundamentally sound asleep in the earlier statement, but it reflected how fundamentally out of touch he was. He passed the task to Palin to blame Washington and Wall Street's liability for the financial carnage, with undertones of retribution for those responsible. However, Palin's empty bravado was gigantic in words but lilliputian in substance.

Senator Barack Obama described the Lehman debacle's impact on consumers contrasted against the profits to the top management of such companies which sacrificed the middle class Americans. However, he did not endorse any solution or new policy, nor oppose the actions of the US Treasury and the Federal Reserve. Either he failed to seize the momentum or he may be ill-equipped to understand how to untangle such a financial mess. While polls show that Democrats are more trusted with the economy, Obama has to present a concrete and substantive vision that will take America out of this predicament, to establish his advantage. As things stand, the American public remains disadvantaged as always, while Obama plays safe.

On Tuesday, the Federal Reserve announced the bailout of AIG fully supported by the US Treasury, who said it was done to protect taxpayers. This appears to be the reason for McCain's reversal - foreknowledge of the AIG bailout to support the Administration's decision, and to make him appear like he knows the means by which to restore stability in the economy. But this reverses the Republican position of less government and allowing free market forces to take its course. The administration spin on the bailout purports to alleviate the burden to taxpayers by saving the economy, without clearly stating why or how. The argument that AIG's collapse would have more disastrous consequences because of its varied investment activities globally than Lehman's may have some validity, but why the situation reached this point has not been answered nor has anyone been charged for anything. Who will Sarah Palin prosecute in Washington for this tragedy? Her tragedy is that she barked and growled for nothing. Like a mad pitt bull.....with lipstick.

The shift from individual buyers losing their homes and crushing their dreams to the biggest institutions like Freddie Mac, Fannie Mae, and now AIG (being taken over 80% and given $85 billion over a 2 year period) elevates the problem to a worldwide concern. They can now be forgotten because the focus is on a larger scale - plus they should be thankful they are still being saved - from heavier taxes should these monoliths be allowed to crash. It would be so unpatriotic to complain when they are being rescued from potentially bigger tax burdens. But these bailouts will cost them nonetheless, as it will increase the national debt which will be paid through taxes, together with inflation and dollar decline that will further erode their purchasing power.

Analysts in Washington and on Wall Street contend that the economy will recover strongly by next year which would reduce substantially the country's budget deficit. These are statements meant to restore confidence in the financial markets. It comes with the hope that these announcements, attributable to their equally worthless reputations, would be forgotten should it remain unchanged or gets worse. More realistic assessments indicate that the crisis will continue well into 3 years since no one can predict how deep the effects on the economy are, as well as how much the cost of the bailouts will actually be.

With all the global problems facing the next President, why anyone would seek the office and bludgeon himself further with this winless economic mess for several years defies comprehension. It would be idealistically immature to think that the winner will work as nobly as he would profess considering the nature of politicians and their ilk. But the need for a leader to inspire, protect, and restore America remains, and it falls on the shoulders of two men; one of whom is being positioned as a lameduck on his first term. Is it power and prestige? Or, our turn to be filthy rich and obnoxiously wealthy? These two go together well and are logically founded reasons.

Could it be messianic complex? Or pure altruism? Would it not be insanely unrealistic to seek the position solely for these reasons? If whoever wins does half of what he promised, or accomplishes a fourth of what is required, then the voters would have been only half as crazy or a quarter foolhardy electing him. Idealism is not dead, it is only gasping for breath.



Anonymous said...

Spinning the situation to make them look good is all that can be expected from the politicians. To ask for substantive solutions at this time is too much cramming for their narrow brains.

McCain will have to work out a miracle to remove the stigma of his support for the Bush Administration. Sarah Palin's bark is a toothless one which showed the depth of her capability - about 1 centimeter from the gutter. If they win, America is screwed.

Jena Isle said...

A very enlightening post Durano, very well outlined for the people to "see". I hope Americans will vote for the right man. may God give wisdom and discernment to them.

As ever, a superbly written article. Thanks for sharing.

Kim said...

well Durano...
it sounds like whoever ends up with the Presidency will certainly have a challenge...
people can be so fickle too...
there seems to be a distinct lack of loyalty nowadays...

Zhu said...

"The fundamentals of US economy are strong... strong... strong..."

This echoed in my head all week. Talk about bad timing!

durano lawayan a.k.a. brad spit said...

Hi Anonymous,

Thanks for your response which is obviously a vote for the Democrats.

There is the possibility that they don't want to get tied down to a particular solution, which is why they resort to motherhood statements that mean nothing.

Why they are so scared to commit themselves is beyond me - but that's giving them credit. Deep down, it might be that they really don't know what to do. :-) --Durano, done!

durano lawayan a.k.a. brad spit said...

Hi Jenaisle,

This is an improved performance from the politicians but far from realistic. At least voters will not be limited to seeing a pig sty with young piglets and aging hogs. LOL!

Discernment is important, and the blinders that both parties have successfully placed on voters are now removed - they are squinting at the new vision they see - and hopefully manage to separate the man from the pig. :-)

Unfortunately, the other candidate might only be half man/half pig. LOL! :-) --Durano, done!

durano lawayan a.k.a. brad spit said...

Hello Kim,

Whoever ends up as President will have power and prestige, and the ability to bluff other nations that they are still the richest and most powerful country on earth.

I'm afraid to say that what we're witnessing in the past 20 months are the beginnings of the fall of the American Empire.

If the better man is elected, America may have the chance to recover and delay this fall, or prevent it and preserve at least an equal footing with another power - like a stalemate with Russia during the cold war.

If the better man works half as much for this and the other half for his glorious retirement, it would still be okay. If he does the job 100% based on altruism, I'll consider him a god.LOL!

Thanks for the visit. :-) --Durano, done!

durano lawayan a.k.a. brad spit said...

Hi Zhu,

I hope you didn't make any new investments in housing nor insurance lately.

A good financial analyst will know what those fundamentals are and they are all doled-up to make them look good - just like the worthless securities they had in inventory which they sold all over the world.

Today, banks and security firms still hold consumer based debts from credit cards which are considered assets in their portfolios to keep a healthy balance sheet.This is an example of a "fundamental". Is it sound? They have not revoked the customers and are working to restructure, to stem off the defaults. These have not been accounted for yet and several banks may already be in deep trouble. Take care. :-) --Durano, done!

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