I have not directly commented on the debate last night between Barack Obama and John McCain because I did not watch the whole thing. I will, however, comment on the parts I watched.
In reference to his statement that the current credit mess is the result of the failed policies of George Bush and that John McCain would continue those policies:
1. The current credit mess is not the result of the so-called economic policies of the last eight years. You could fertilize a garden with what that statement is made of. The Community Redevelopment Act is one of the legs of the stool that is this crisis. This act was originally passed in 1977 to increase the amount of affordable housing. It seemed like a good idea, although the majority of bankers opposed it. Then the changes to the law came. The following information is taken directly from Wikipedia:
“In 1995, as a result of interest from President Bill Clinton’s administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators’ attention on institutions’ performance in helping to meet community credit needs.
These revisions with an effective starting date of January 31, 1995 were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans. These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for seven years. Thus in 2002, the regulators opened up the regulation for review and potential revision.
Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market.”
2. Another leg of this stool is the amount of campaign money paid to Chris Dodd, Barack Obama, Hillary Clinton, Barney Frank and others to prevent honest regulation of the subprime mortgage market. Any reforms were bottled up in the banking committee of the Senate by the Democrats. Also, many of the large bonuses paid to officers of Fannie Mae and Freddie Mac not only were based on fraudulent accounting practices–they were paid to Democrat party bigwigs. Many of the “Congressional Overseers” also received sweetheart mortgages from Countrywide Mortgage. This whole thing is corrupt, and people should be serving jail time for the things they did!
3. The third leg of this stool is the saga of Alan Greenspan and the interest rates. It was probably totally correct to cut interest rates after September 11, 2001. However, keeping interest rates low for as long as they were kept low helped create the housing bubble. It also weakened the U.S. dollar, driving up the cost of energy. That was probably an honest miscalculation and should be viewed as such.
These three legs of the stool created the perfect storm that we find ourselves in now. We don’t need to turn more money and power over to the people who are responsible for it–we need to provide insurance to help people with current needs and massive capital tax gains cuts to stimulate the market and begin the revitalize it.
My second comment on the debate has to do with body language. Barack Obama smirked and did all the things you would send a child to his room for. Let’s send this child to his room.
My third comment is not related directly to the debate, but about the political atmosphere we find ourselves in. Why is it that all the connections between Barack Obama and the Richard Daley Chicago political machine have been totally ignored by the media? Why are we not considering the arrangement with Tony Rezko that allowed Barack Obama to buy the house he lives in? If the ‘failed economic policies’ of the Bush administration were so bad, how come they allowed Barack Obama and his wife to become millionaires? Where do I go to find a failed business plan like that?
I am still not a huge John McCain fan, but at least he is a grown-up. I believe he will bring some basic maturity and respect to the office of the Presidency. I’m really not so sure about Barack Obama. I’m not sure we can afford him, in more ways than one!