While Bush Administration Begins To Grasp Failures Of Deregulation, McCain Wants More Of The Same
While Bush Administration Begins To Grasp Failures Of Deregulation, McCain Wants More Of The Same
In a speech this morning at the U.S. Chamber of Commerce, Treasury Secretary Henry Paulson forced conservatives everywhere to take a long, hard look in the mirror.
As Paulson laid out his prognosis for America’s mortgage crisis and last week’s disaster on Wall Street, he tossed aside the dogmatic, decades-long conservative tradition of promoting market deregulation:
”This latest episode has highlighted that the world has changed as has the role of other nonbank financial institutions and the interconnectedness among all financial institutions,” Paulson said. ”These changes require us all to think more broadly about the regulatory and supervisory framework that is consistent with the promotion and maintenance of financial stability,” he added.
While some conservatives grasp the failures of deregulation, John McCain wants more of it. In McCain’s major housing crisis speech last Tuesday, he continued to highlight an inadequate plan to resolve the problems on Wall Street by making this assertion:
“Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.”
Perhaps McCain’s archaic logic comes from his advisers (as we all know that McCain is no expert on the economy). Paul Krugman rightly notes that “his chief economic adviser is former Senator Phil Gramm, a fervent advocate of financial deregulation.” “I’d argue that aside from Alan Greenspan, nobody did as much as Mr. Gramm to make this crisis possible,” Krugman writes.
3 Responses to “While Bush Administration Begins To Grasp Failures Of Deregulation, McCain Wants More Of The Same”
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The current housing and financial market problems are a great example of the kinds of problems that deregulation can bring. Rather than the markets operating with honesty, transparency, and legitimacy, they fall prey to big ticket con men like Kenneth Lay and Alan Schwartz.
The financial markets exist because of regulation. Deregulating the markets is the same as dismantling them. Markets which have built up the trust of generations of Americans are crumbling before our eyes.
The United States needed to bail out Bear Stearns. If they had not then none of us would feel safe, wondering if our investments would be the next to disappear like so many pieces of paper in a filing cabinet.
I’m not sure how many more investment banks, hedge funds, and major corporations can disappear before we seriously lose faith in the crumbling markets and decide we’d be better off with money under our mattress, rapidly devaluing against all other world currencies.
March 26th, 2008 at 11:53 pmNo, we did not need to bail out Bear Stearns. We needed to nationalize Bear Stearns and quite publicly discharge the senior management that had been responsible for this mess. Only after this step, with new and capable management installed, should the business have been placed on the market for sale.
We have seen a series of bailouts for large Wall Street firms. The common investor, the mortgage holder and taxpayer are all held hostage by an increasingly stacked economic and legal system which holds the ordinary person to exceedingly exact requirements with draconian punishments for any deviance. Those who sit atop the corpocracy whether in business or government) find the law to be but an inconvenient requirement which may be easily dismissed or ignored.
The moral hazard created by such bailouts whether they be for failed economic strategies (S&L, subprime mortgages) or unitary executives (illegal wiretapping, politicization of DoJ) will simply destroy the fabric of our society. The ordinary person is now held hostage to a small and wealthy elite that controls the markets, the labor pool and the government. It must change.
March 27th, 2008 at 10:23 amWhat McCain espouses is blind devotion to Reagan’s policies, but he’s looking at the what’s, not the why’s. Reagan promoted tax cuts and deregulation to make investment more lucrative, to boost confidence in the markets and draw investment capital out of commodities. Paulson’s goal is the same, and he realizes that a different course of action is required, but McCain is too dim to see that. He’s a “stay the course” man, just like Bush.
March 27th, 2008 at 11:23 am