Wall Street Turmoil: McCain, Obama Offer Empty Slogans

Recent events, the bankruptcy of Lehman Brothers, and Merrill Lynch being swallowed up by Bank of America just ahead of its own melt down, have inspired the Presidential campaigns to make a show of outrage and consternation.  At a campaign event John McCain bellowed…

Too many people on Wall Street have been recklessly wagering instead of making the sound investments we expected of them.  If I am president, we are not going to tolerate that anymore.

Senator McCain forgot to explain how a President could force investors to make what turn out in hindsight to be “sound investments.”  How would a President or Congress or the bureaucracy know, in advance, before an investment is made, if it will turn out to have been “sound?”

For decades home mortgages, root of the all the recent turmoil on Wall Street, have been considered among the most sound of investments.  As lending standards were gradually relaxed from 2000 – 2006 the fraction of Americans who owned homes rose to the highest level in American history.   Who in Washington was willing to come out against that?  Nobody that we can recall.  Then Federal Reserve Chairman Alan Greenspan was all in favor of so-called “sub-prime” mortgages that gave people with marginal financial qualifications a shot at the American dream of home ownership.

On what basis would John McCain, had he been President, have determined in ’02 or ’03 or ’04, before it was too late to prevent the mortgage train wreck, that Wall Street investments in mortgages was something “we are not going to tolerate anymore?”  What new legal authority will President McCain require so he can empower a government bureaucracy to determine – in advance – which investments should be permitted and which should be banned?  Of course McCain has no answer for these obvious questions.

Barack Obama’s reaction was, as always to castigate President Bush and Senator McCain:

Make no mistake: My opponent is running for four more years of policies that will throw the economy further out of balance.

Since Obama doesn’t really know what, if any long term harm will result from the current upheaval he refers vaguely to an economy “out of balance.”  If the whole economy is now “out of balance” what Presidential action does Obama think would bring us to “in balance?”  What would an “in balance” economy look like?  How would we know if we reached that utopian state?  Clearly Obama hasn’t the slightest idea and can’t offer any answers.

Senator Obama’s campaign strategy is nothing if not the simplest possible appeal to the least informed voter:  He lists every kind of financial distreess anyone in America has ever suffered  and blames them all on President Bush’s “policies.” But he has never, not once, disclosed which “policies” of the Bush Administration he thinks have caused which problems, or how he would change those policies.  Apparently millions of voters are so ignorant, and so mesmerized by The One,  they accept on faith the claim that unidentified “policies” are the cause, and that his “change” will be just the right cure, even though he can’t say what he would change!

What about the media? Apparently the media are too busy with trifling details of Sarah Palin’s personal life to bother asking Obama for any specifics.  We recently learned from a breathless media that Governor Palin once purchased a tanning bed with her own funds.  Her expense reports, already routinely reviewed by staff auditors working for the State of Alaska, are now being audited by ignorant reporters with no knowledge of what expenses the Governor of Alaska is or is not authorized to submit for reimbursement.

Will the media, sometime before election day, grill Obama and find out if he knows anything about these unnamed Bush “policies” and what “change” he would implement?  Don’t hold your breath.