Wednesday, September 17, 2008

Here's a rich one

Rich in so many ways. Cindy Lou McCain speaking at the RNC:
Despite our challenges our hearts are still alive with hope and belief in our individual ability to make things right if only the Federal government would get itself under control and out of our way.
Ideologues cheered and cheered. Like it was 1980 and gubment was in the way of reasonable bidness activities. All those pesky regulations.

So Johnny Lou McCain said on Tuesday:
"I do not believe that the American taxpayer should be on the hook for AIG," McCain said Tuesday morning on NBC's "Today" show. "We cannot have the taxpayers bail out AIG or anybody else."
He said that because just about the only information he can muster on economic issues derives from the same ideology that worked to dismantle the regulation of bidness dealings beginning with his Reagan footsoldier days.

But guess what? It's 2008! The footsoldier finds himself on a battleground for which he is woefully unprepared. Nowadays bidness, not gubment, is in the way of bidness because bidness has invented a shitload of new kinds of bidness toxicity, and there ain't no regulations in sight.

Turns out gubment had to get in the way this time around. And $85 billion later, after the Fed bought us all a failed insurance company, Johnny Lou McCain said:
"On the bailout itself, I didn't want to do that," he said on ABC's "Good Morning America." "But there were literally millions of people whose retirement, whose investments, whose insurance were at risk here, and they were going to have their lives destroyed."
According to the senator from Arizona, the presidential candidate for the party of bidness, the bailout of AIG happened because people's investments were at risk. Some kinda compassionate conservative thing, maybe.

Ummm. No.

Mutual funds like those sponsored by AIG Sun Ameria hold a range of securities in assorted sectors of the economy. Those holdings are the property of the funds' shareholders and are not counted as assets of the sponsoring company. The failure of AIG would have made a mess of things, but it would not have resulted in losses for people holding shares of mutual funds sponsored by AIG in retirement accounts or other investment accounts for which AIG was basically a service provider.

What McCain said was wrong.

The hideously huge public cash infusion that happened in the case of AIG was motivated not by compassion for individuals who might be directly injured by the company's failure. It was inspired by fear -- fear of the consequences in America and abroad of a rolling blackout across all financial institutions everywhere. The company is so big and its dealings are distributed so wide and deep in finances around the world that even imagining its collapse was unbearable for Bernanke and Paulson. Too big to fail? Yep. Too farking big to fail, in fact.

And now we are left to wonder at it all. And especially we are left to wonder whether the presidential candidate from the party of bidness has even a tiny clue about the economy beyond Reaganite cliches and muddled musings.

My guess is no.

1 comment:

Morse said...

Johnny Mac's knowledge of economics only goes as far as Charles Keating.