In the wake of Lehman’s bankruptcy and the sell off at Wallstreet today Senator Barack Obama tried to link the situation to John McCain. Obama said that he did not directly fault Senator McCain for the economic problems facing the nation, but he did blame McCain’s economic philosophy.
Such a statement not only begs the question what the junior senator from Illinois meant, but it also shows his lack of understanding what is occurring and how it happened.
To be sure, from all indications John McCain is your run of the mill main stream capitalist. That means free markets dictate prices and in this case businesses are responsible for profit and loss. That does not include any sort of bowing to total laissez faire as indicated by McCain’s own words and proposals which include a steady diet of government regulations – almost to the point of irration of free-marketers.
That leaves, of course, the question what Senator Obama meant. Was he questioning the very corner stone of what this nation is built on in capitalism? Is implying that our economy should be based on socialist or even communist notions of collectivism?
No one can know for sure because the statment was vague and failed to outline precisely what Sentor Obama meant. However the attack does allow us to understand Obama’s mentality on the matter and his insight, or lack thereof.
Much of the crisis we are going through with these banks revolve around banks loaning money to individuals or businesses who normally would not and were deamed high risk. These risks defaulted – leaving the bank with property which was greatly devalued over the initial loan amount and thus no equity to do business with.
There are many causes for why those high risks loans defaulted. From what I gather many were people who took out ARMs or interest only mortgages only.
These individuals where hit hard between the Federal Reserve raising the interest rates repeatedly over several years, sky rocketing fuel, food prices in addition to out of control property tax rates force people to default on their home loans. Those all contributed to the reduction in disposible income and sky rocketing default rates.
Now I ask, what policy or economic philosophy of John McCain attributed to the situation we are in?
Now ask your self based on what both candidates who are running for President of the United States best addresses the problem?