Eugene Robinson: Flunking Economics; McCain was right -- he's dangerously clueless about economics

[DeepModem Mom]

WP: Flunking Economics
By Eugene Robinson
Friday, September 19, 2008; Page A19

John McCain was telling the truth when he said that economics wasn't his strong suit. In response to what many economists have called the worst financial crisis since the Great Depression, the Republican nominee has sounded -- and let's be honest here -- totally, embarrassingly and dangerously clueless.

His now-famous remark Monday about how "the fundamentals of our economy are strong" would almost by itself be enough to justify my assessment. But he committed what was probably an even worse gaffe on Tuesday when, as the behemoth insurance company AIG teetered on the brink, McCain took a stand. "I do not believe that the American taxpayer should be on the hook for AIG," he said. "We cannot have the taxpayers bail out AIG or anybody else."

Within hours, the federal government had bailed out AIG to the tune of $85 billion. Treasury Secretary Henry Paulson and others who know how Wall Street works understood that if AIG were to collapse, much of the financial system might follow.

McCain quickly changed his tune, saying the government was "forced" to rescue AIG because of "failed regulation, reckless management and a casino culture on Wall Street." That sounds okay, but wait a minute. If he had any idea what he was talking about -- if he had any inkling of how big AIG is, or how central the company has become -- then why on earth would he have taken a stand against a bailout in the first place? Doesn't he have economic advisers who could fill him in?

Oh, I forgot. McCain's top economic guru, Douglas Holtz-Eakin, was busy explaining to reporters that McCain, as chairman of the Senate Commerce Committee, "helped create" the BlackBerry....

***

McCain, who told the Wall Street Journal in March that "I'm always for less regulation," now asks voters to believe he will be a champion of tough, unblinking oversight. He's shocked and outraged that Wall Street's preening Masters of the Universe threw a drunken toga party and smashed all the furniture -- but he helped buy the beer and told the cops to look the other way.

Here's something that really ought to grab everyone's attention: McCain supports George W. Bush's idea of channeling at least some Social Security funds into "personal accounts" that individuals would invest on Wall Street. Some of that money would have been entrusted to firms such as Bear Stearns (failed), Lehman Brothers (failed) and Merrill Lynch (sold at a fire sale). Imagine what this crisis would be like if Americans' Social Security benefits were evaporating along with their housing values and their 401(k) accounts.

This is the man who's going to reform the economy?

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/18/AR2008091803052.html?nav%3Dhcmodule&sub=AR