Can McCain show any more ignorance of economics than he has this week? And why is he playing political games - misleading people about the cause of the financial crisis so he can try to score points by (falsely) blaming Obama - during a serious crisis?
Let's start with McCain's comments from earlier today:
John McCain Is Not Qualified to Be President, by Brad DeLong: Since before 1844 central banks have been in the business of managing financial crises. That's what they do. Milton Friedman is spinning in his grave. The prevention of large-scale bank failures--"bailouts," in McCain's terms--is an essential part of responsibly managing the money supply.
John McCain does not know that. And nobody working for John McCain knows that:
John McCain: Finally, the Federal Reserve should get back to its core business of responsibly managing our money supply and inflation. It needs to get out of the business of bailouts. The Fed needs to return to protecting the purchasing power of the dollar. A strong dollar will reduce energy and food prices. It will stimulate sustainable economic growth and get this economy moving again...
pgl says "I was stunned." For good reason. And Brad didn't even note that McCain misunderstands the Fed's legal mandate. If he did, he wouldn't say that their job is to protect the dollar.
But that is not the most stunningly ignorant or misleading thing he said today. From his speech on the crisis:
The financial crisis we’re living through today started with ... the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.
I'm going to turn it over to Justin Fox:
Is McCain right about Fannie and Freddie?: John McCain, after feinting in the direction of SEC Chairman Chris Cox, has decided that Fannie Mae and Freddie Mac are to blame for all our nation's ills. This would be convenient because Fannie in particular had a long and lucrative symbiotic relationship with the Democratic Party. But is it true? ...
[W]hen the mortgage markets began to go absolutely crazy in late 2003, Fannie and Freddie were barely in the picture. Here's a chart I've already run a couple of times...
And here's the view of an actual industry expert, Tanta of Calculated Risk:
I think we can give Fannie and Freddie their due share of responsibility for the mess we're in, while acknowledging that they were nowhere near the biggest culprits in the recent credit bubble. They may finance most of the home loans in America, but most of the home loans in America aren't the problem; the problem is that very substantial slice of home loans that went outside the Fannie and Freddie box. ...
And finally, here's the verdict of a trio of real estate scholars who've been cited in this blog before... [They say] the Congressional crackdown on Fannie Mae and Freddie Mac (which came in the wake of accounting scandals...) may have been a proximate cause of the housing bubble. And John McCain says he supported the crackdown. This whole thing is his fault!
No, I don't really believe that last part. But it does play up the absurdity of McCain's charge that it's all Fannie's and Freddie's fault.
What McCain is doing is making up a story about why we are experiencing a housing crash so he can try to pin the problem on Obama. It's nothing but pure politics, and that's not needed in a crisis. He says:
We’ve heard a lot of words from Senator Obama over the course of this campaign. But maybe ... he could ... admit to his own poor judgment in contributing to these problems.
This is laughable:
Obama: McCain 'Panicked', Political Animal: .... In an odd turn, John McCain this morning blamed Barack Obama for the crisis on Wall Street, saying it was Obama's judgment that "contribut[ed] to these problems," and it was Obama who was "busy gaming the system," whatever the hell that's supposed to mean.
Soon after, Obama delivered a speech in Miami where I think he struck the right note: he accused McCain of feeling "a little panicked."
"This morning Senator McCain gave a speech in which his big solution to this worldwide economic crisis was to blame me for it," Obama said.
"This is a guy who's spent nearly three decades in Washington, and after spending the entire campaign saying I haven't been in Washington long enough, he apparently now is willing to assign me responsibility for all of Washington's failures.
"Now, I think it's a pretty clear that Senator McCain is a little panicked right now. At this point he seems to be willing to say anything or do anything or change any position or violate any principle to try and win this election, and I've got to say it's kind of sad to see. That's not the politics we need..."...
This is a serious crisis, and it demands serious leadership. George Bush has been off reading children's books or something, though he did make a brief appearance to blame short-sellers and demonstrate his own ignorance, and we don't need candidates for president playing politics with our future. John McCain likes to think he is a leader, but if this is evidence of what he means - first saying the fundamentals are strong earlier this week, which simply repeated the same old line he's been using on the campaign trail with no hint he understands the seriousness of the situation, then saying yesterday he'd fire the chair of the SEC when he doesn't have the power, as though that would solve the problem in any case, then flip-flopping today and blaming Fannie and Freddie, incorrectly, just so he could try to score a few political points.
This is not the time for scoring political points, this is a time to demonstrate leadership. John McCain is willing to lie repeatedly even after being called on it, play political games in time of crisis, and never mind the collateral damage it might cause. Country first? That's not what I'm seeing.
Let's end with this:
McCain's Campaign Manager Was for It Before He Was Against It: ...John McCain said ... today:
The financial crisis we're living through today started with the corruption and manipulation of our home mortgage system. At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.
It seems a little bizarre then that McCain's campaign manager Rick Davis was hired—after running McCain's failed 2000 presidential campaign—to head up a group called the Homeownership Alliance, a Fannie Mae and Freddie Mac advocacy group, which the Wall Street Journal reported ... had a website creed of being dedicated to: "exposing and defeating trends that would harm consumer access to the lowest-cost mortgage option." The group viewed as threats those who are "seeking to spread unfounded fears about risks to the housing system." ...
If I seem irritated, I am. It's hard enough to deal with a crisis like this, to get everyone on the same page working toward an effective solution, without political games getting in the way. People's livelihoods are at risk. To have someone standing in the way of that to suit their own ego, especially someone who touts themselves as the bridge between factions, is anything but effective leadership. If McCain has something constructive to contribute, then let's hear it, but if he doesn't understand the problem and has nothing but political games to offer, and it appears tha tis the case, then he should just be quiet and let those who do understand and have something to contribute take center stage.
McCain on banking and health, by Paul Krugman: OK, a correspondent directs me to John McCain’s article, Better Health Care at Lower Cost for Every American, in the Sept./Oct. issue of Contingencies, the magazine of the American Academy of Actuaries. You might want to be seated before reading this.
Here’s what McCain has to say about the wonders of market-based health reform:
Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.
So McCain, who now poses as the scourge of Wall Street, was praising financial deregulation like 10 seconds ago — and promising that if we marketize health care, it will perform as well as the financial industry!
See also: I’m Tired of Playing Lying or Stupid by Ryan Avent.