Cross Post: McCain’s judgment in economics is inherently flawed

As the markets spin out of control, with wild swings based on calamitous events such as Countrywide, MBIA, Ambac, Bear Stearnes, Fannie Mae, Freddie Mac, IndyMac, Lehman Brothers, Merrill Lynch and AIG, why do many insist that Bush’s administration, or his party’s nominee, John McCain, have gotten anything right at all?

John McCain’s former top economic advisor, ex-U.S. Senator Phil Gramm of Texas, had a primary hand in the Gramm-Leach-Bliley Act of 1999 that eliminated the firewall protections made by the Glass-Steagall Act of 1933 between investment, commercial banking, and insurance services during the Great Depression when so many banks failed. As a result of this deregulation, we are now seeing the enormous problems of integrated services spread like a plague throughout the market as many of these financial players mixed investments and savings and high-risk loans together and across various business entities.

McCain’s economic proclamations and company kept should be an albatross around his neck. You cannot expect change from a man that hires people that called Americans, “a nation of whiners,” during an economic crisis of their making. Meaning: Phil Gramm had his hand in your misery and now blames you for it.

Phil Gramm continues to be major cog in McCain’s campaign.

How is that change we can believe in?

Late Addition: (WaMu, another bank, is headed for sale....Yahoo Business)
A quote from the link:

But TPG agreed to waive the clause after concluding WaMu needs all the help
it can get.
"It became clear that it would be in the best interests of
Washington Mutual and our investors to waive the ... provisions," Fort
Worth, Texas-based TPG said in a statement. "Our goal is to maximize the
bank's flexibility in this difficult market environment."
The efforts to
find a buyer, though, were being complicated by uncertainty about the magnitude
of losses still lurking in Washington Mutual's home loan portfolio.
"No
one knows what's in their books," said a person briefed on the talks
between regulators and banks, speaking Wednesday on the condition of anonymity
because of the sensitivity of the matter.

Citing unidentified sources, the New York Post said the potential
buyers include JPMorgan Chase & Co. and HSBC Holdings PLC., as well as Wells
Fargo. The banks all declined to comment.

Nice to see the whole financial system is in scared rabbit mode. Hopping up and down the road, looking for a way out while a Mack truck bears down on their position.

It won't be long now people. Look out below minimum wage workers. Get prepared for calamity you lower-middle class (under $50,000) per year people. Cut back considerably you upper middle class wannabes. The Rich: you'll go to your pile of bricks, lock you doors and come out when the getting is good again.

Good Luck All!

The Bear is Yet to Come: The U.S. Economy will fall into a Depression

With today's announcement that Bear Stearns, the 5th largest investment bank needed an influx of cash to remain solvent to its outstanding investors/investments, it calls to question: what will happen next?

Bear Stearns, Merrill Lynch, Morgan Stanley, Lehman Brothers and Goldman Sachs are the benchmarks for high-yielding banks that produce money/provide liquidity in the Capital markets. If they start to falter, the next group is the commercial banks, which affects all Americans, Europeans and Asia markets.

The signs have been clear: Commodity Prices (Gold, Corn, Wheat, Silver, Oil) are at record highs, Mortgages are failing at huge rates, with ex-Fed Chair Greenspan asleep at the wheel in allowing the housing market to gallop ahead unrestrained, the United States Dollar is at record lows versus the Japanese Yen (99 Yen), Canadian Dollar (1.01), Swiss Franc (0.9987), The Euro (1.567) and to add to that, we are in a economic standstill right now, zero growth.

The United States Economy will trigger larger problems as it continues to pump liquidity into the market via lowering interest rates (expect .75% ease on Tuesday), thus causing the dollar to decrease in value and thus continuing to raise commodity prices, which introduces more inflation into an all ready, dicey situation.

Inflation has been a European concern of utmost importance which is why they have not lower their interest rates in lockstep with the United States. They are uniquely aware of the triggers of the Great Depression, which started in Europe, namely Germany, after WWI.

We are just at the beginning of a major economic shake up. And we have one Presidential candidate, John McCain, who said, "I don't understand the economy..."

Which leads one to wonder, do you want another ill-equipped President running a country in a economic meltdown? What did the Iraqi war gain us in economic terms? (The cost and money spent could have been used better...)

George W. Bush, with a Harvard MBA, has taken us back to the edge of the 1929 October financial meltdown.

He and his policy people pushed for easy/no regs on lending of money to people that should not have ever received a banking loan on a house. These people got over their heads. Then the banks got too tight - on lending, or passed their bad paper on to other banks, and other banks did the same,etc. - and the money has been devalued in the process. Meanwhile, the Fed and Government has done us in with bad policies.

Oil prices are being driven by devaluation of currency. Your money is buying less and less - and the problem is spreading to corporations that are cutting jobs - as Ford, Chrysler, GM and other big manufacturing are reducing their forecasts but cannot lower prices, while those that do overseas business are doing ok or better. So, not all is lost.

So, I am sounding the alarm on the 1MC: "start preparing for a long downturn in the U.S. Economy. Expect prices to rise 20, 30 and 50% above today's rate. And get your money out of risky investment vehicles. Hedge funds are the first to go. Stock up on staples. Get prepared for more bad news..."

Predicting another Great Depression is sometimes a self-fulfilling prophecy. But the government as currently constituted is not going to save you or me. "Let them eat cake," is their mantra.

I have made numerous posts on the American Economy prior to this, which means I have been paying attention longer than just today...so, though this is radical to say "Depression," in 12-18 months, it may "bear" itself out.