1 Boring Old Man

Fundamentally Speaking
Is there any excuse for McCain’s gaffe about the economy?
Newsweek
September 17, 2008

^{John McCain set off a firestorm yesterday when he said, "The fundamentals of our economy are strong," while also noting that these are tough times. McCain, for whom the economy is not comfortable terrain, was simply repeating a formulation he’s used before. In August, he told radio host Laura Ingraham: "I still believe the fundamentals of our economy are strong. We’ve got terribly big challenges now, whether it be housing or employment or so many of the other—health care. It’s very, very tough times."}

^{Commenting on the seaworthiness of the nation’s economic ship even as it is being swamped by gale-driven waves is a staple of the modern presidency. When there’s upheaval in the markets, or a discouraging run of economic news, the president or the treasury secretary trudges out to tell us to remain calm. On Monday, as Lehman Brothers was filing for bankruptcy, Treasury Secretary Henry Paulson  said, "Well, as you know, we’re working through a difficult period in our financial markets right now as we work off some of the past excesses. But the American people can remain confident in the soundness and the resilience of our financial system." After 9/11, President Bush told a press conference: "I want to assure the American people that the fundamentals for growth are very strong." Treasury Undersecretary John Taylor told reporters on Oct. 4, 2001, that "our basic fundamentals are very sound." In December 1991, with the economy stubbornly refusing to get out of its funk, President Bush the Elder declared in a speech: "I remain convinced America’s fundamentals are sound—not just the economic indicators that I mentioned a few moments ago, but the broad fundamentals that sustain American society." In October 1987, when the stock market crashed, Ronald Reagan reassured the public that "the economic fundamentals remain sound."}

^{It’s ironic that presidents (and would-be presidents) would continue to use such phrasing, because the president who seems to have minted the phrase is the one with the worst economic record of all time: Herbert Hoover. In the wake of a big stock-market downdraft, Hoover on Thursday, Oct. 24, 1929, proclaimed: "The fundamental business of the country, that is, production and distribution of commodities, is on a sound and prosperous basis." The worst Depression-era attempt to calm Americans came from plutocratic Treasury Secretary Andrew Mellon, in early 1930: "I see nothing in the present situation that is either menacing or warrants pessimism"…}

^{On the whole, however, a reasonable observer would have to conclude that, on balance, the fundamentals of the U.S. economy are less than sound. And even John McCain has recognized his mistake. After a day of withering criticism, he abandoned his previous position. Now he’s calling the situation "a total crisis."}

It’s because the whole thrust of the Republican message from Reagan to the present is that an unregulated economy is fundamentally sound. They characterized Democrats as a big government, big spender, high taxation, political party that strangles free market enterprise. And what’s happening is clear proof that that simply isn’t true. We’ve had crisis after crisis – Savings and Loans, Enron, WorldCom, terrible Mortgages with forclosures, corporate corruption, government corruption, wealth accumulation, outsourcing, unemployment, uninsured people, etc. The evidence that has accumulated over the last thirty years is overwhelming – the economic policies, the whole overall theory of government of the Republican Party is fundamentally flawed. Their lofty talk is nothing more than a cover for their real purpose – a party that gives free rein to the rich capitalists, the financial elite.

Scrambling to Clean Up After A Category 4 Financial Storm

^{What we are witnessing may be the greatest destruction of financial wealth that the world has ever seen – paper losses measured in the trillions of dollars. Corporate wealth. Oil wealth. Real estate wealth. Bank wealth. Private-equity wealth. Hedge fund wealth. Pension wealth. It’s a painful reminder that, when you strip away all the complexity and trappings from the magnificent new global infrastructure, finance is still a confidence game — and once the confidence goes, there’s no telling when the selling will stop. But more than psychology is involved here. What is really going on, at the most fundamental level, is that the United States is in the process of being forced by its foreign creditors to begin living within its means…}