John McCain, Herbert Hoover, Deregulation, and ... Hooverball!

[Joanne98]

John McCain is a flip-flopper on the AIG nationalization/bailout:

U.S. Republican presidential candidate John McCain seems to have softened his stance on the government's $85-billion overnight bailout of American International Group.

The Federal Reserve rode to the rescue of the ailing company late Tuesday, offering a two-year, $85-billion loan to AIG, the country's largest insurer, in exchange for an 80 per cent stake in the company.

Although he flatly rejected the idea of a taxpayer-bailout for AIG on Tuesday, McCain said Wednesday the government had no choice, treating it as a necessary evil needed to help Americans.

"The government was forced to commit $85 billion," McCain said in a statement. "These actions stem from failed regulation, reckless management and a casino culture on Wall Street that has crippled one of the most important companies in America.


What this blogger knows is that John McCain has opposed regulation of markets for exotic financial instruments like derivatives and the fake insurance "products" known as credit default swaps that led to AIG's losses. Credit default swaps were traded in an unregulated market that was designed to be unregulated by the Republican Congress that passed the Commodities Futures Modernization Act in 2000. This bill* was sponsored by Former Sen. Phil Gramm, who has advised** the McCain campaign extensively on economics.

McCain is a champion of unregulated free markets. Otherwise, he would have been voting alongside Sen. Edward Kennedy rather than coordinating with former Sen. Phil Gramm and voting with his fellow Republicans in the Senate against regulation of financial markets.

McCain is not exactly telling the truth when he says that he approves of the bailout of AIG. McCain has opposed mere regulation for many years.

Had AIG been prohibited from trading more than a certain amount of derivatives and credit default swaps, it would be a private firm today.

The Republicans' zeal against any and all regulation has been a notable aspect of every Republican campaign since Ronald Reagan's in 1980. I've heard tirade after tirade against any and all regulation of any sort, even when it is a modest regulation intended to protect private enterprise by not allowing it to lose excessive amounts of money.

The irony of this all is that lack of regulation has led to a disaster that has resulted in America's first major financial nationalization.***

The irony is that if the Republicans had been a bit more moderate in their rhetoric against regulation, AIG would be a private enterprise today.

The candidate who is telling the truth on the current crisis is Barack Obama:

Obama blamed the Republican anti-regulatory fervour of recent years for part of the financial mess, saying the crisis is "a stark reminder of the failures of crony capitalism and an economic philosophy that sees any regulation at all as unwise and unnecessary."


Barack Obama has released a two-minute ad about the economic situation. There aren't a great many specifics in the ad, but it's clear that Obama favors a modest degree of regulation to protect the assets of individuals and enterprises.

Dick Polman of the Philadelphia Inquirer discusses the opportunities that Barack Obama has at this time.

Key among them is John McCain's statement that "The fundamentals of the economy are strong." This statement mirrors the remarks of George W. Bush, and, as Harry Reid noted today on the floor of the Senate,

It also mirrors Herbert Hoover's famous quote from October 15, 1929:

On Oct. 25, 1929, Herbert Hoover declared, "The fundamental business of the country, that is the production and distribution of commodities, is on a sound and prosperous basis."


This similarity between McCain's words and Hoover's famous remark has been noted by several people across the blogosphere, including Eric Rauchway, Daniel Gross, and flitedocnm at dailyKos.

In a similar 1930's vein, tonight's top post at dailyKos discusses the New Deal. Commenters discuss the difference between nationalization (what just happened with AIG) and regulation (the thing that has been missing that led to these financial problems).

Nationalization of a business is a far more drastic step than regulation of businesses that remain private.

The 79.9% effective nationalization of private firm AIG takes the wind out of the sails from the usual Republican smear tactic against Democrats that they are "socialists."

This blogger considers herself a moderate. My views usually correspnd with those of Democrats and sometimes with those of libertarians. In Europe, I would probably be conservative. The reason is that politics in Europe are somewhat to the left of the United States. The major difference is that there are far more "free market" believers in the United States than in Europe. On the other side of the spectrum, European countries have viable, large and active socialist movements and parties. These parties are very small in the United States.

In America, the word "socialist" has been used as little other than a smear word for the last 25 years or so.

American Democrats' have charted a different path from the Labour and Socialist parties of Europe. American Democrats have promoted regulatory activities by government to maintain a fair playing field in a mostly-free-market economy. Since 1945, with the exception of the failed attempt at national health care in 1992-1994, American Democrats have hardly proposed a change to government ownership of any type of currently private business or enterprise.

Given yesterday's nationalization of AIG by a Republican Administration, I would like to see every Republican who has ever used the term "socialist" as a pejorative against a Democrat stand up and apologize for the many repeated times you have done this. Rush Limbaugh, you may come to the podium first. Sean Hannity, you are second. Neal Boortz, you are third. Republican Senators, you have the fourth through fiftieth places.

Continued>>>
http://wesupportlee.blogspot.com/2008/09/john-mccain-herbert-hoover-deregulation.html