IT TOOK a Wall Street panic to push the Palin preoccupation off the front page. It wasn t quite the Panic of 1907, but Monday s meltdown in the country s financial system was scary enough. Finally, reality bit through the nonsense that has passed for presidential campaigning lately.
The strategic GOP distraction that is John McCain s running mate was the farthest thing from inquiring minds recently. Tough break, Karl Rove, but not even Britney Spears could compete with the news that shook the stock market and country.
Suddenly, renowned giants in the banking, brokerage, and insurance world, weighed down by billions of dollars in lousy mortgage loans, were teetering on the edge of financial ruin. Just goes to show you can run but can t hide from some issues.
No amount of spin could minimize what happened on Wall Street to big-name players who went for broke literally on a wild shell game that assumed housing prices would only go up. Lehman Brothers, Merrill Lynch, and AIG made and lost a fortune on the multibillion-dollar subprime pyramid scheme.
They played fast and loose with the rules until the housing boom went bust. Like a house of cards, bank after major culpable bank has fallen, but the collapse of Lehman Brothers, a legendary investment bank that predates the Civil War, was particularly stunning.
When one of Wall Street s most venerable institutions can weather financial storms for well over a century, including the Great Depression, but can t survive the great housing catastrophe of our times, be afraid. When Lehman was filing the largest bankruptcy in American history while Merrill Lynch, another storied investment house, was being sold off in a shotgun sale to Bank of America to avoid Lehman s fate, be shocked.
And when the world s largest insurer, AIG, also severely undermined by the housing crisis, had to secure an emergency government loan to stay afloat, be angry that your tax dollars are on the line again. But do not be duped by those promising to fix what s broken and end the corruption and excesses of Wall Street, while still insisting the fundamentals of our economy are strong.
I guess eventually John McCain had to say something besides Isn t Sarah great?
He expressed righteous indignation over the upheaval of falling stock prices, mega mergers, and bankruptcies, but friends, it happened on his party s watch.
The Republican presidential nominee can also claim he s the only one capable of helping America out of its prolonged financial market slump, but his close personal friend and economic guru is a big reason we re in it. Try to think good thoughts about former U.S. Sen. Phil Gramm next time you peruse your 401(k) account. Bet you can t.
When the mighty on Wall Street crashed and burned on Monday, so did the stock market. It plunged by a margin not seen since the Sept. 11, 2001 terrorist attacks.
Here s where your hammered 401(k) comes in. The 500-plus point loss washed about $700 billion away from retirement plans, government pension funds, and other investment portfolios.
Now recall Mr. Gramm s reputation in the Senate as true blue ally of Big Finance and noted champion of the banking deregulation. His tireless efforts to ensure that financial institutions remain utterly unregulated opened the door to tens of trillions of dollars in transactions done in the dark on the riskiest subprime mortgages.
Today, to no one s surprise, the reckless deregulator is a lobbyist for Switzerland s largest bank and economic adviser to the McCain campaign.
Actually Mr. Gramm was campaign co-chair until an insensitive little crack about Americans being whiners over small stuff like losing jobs, homes, and medical coverage, forced him lower his profile.
Yet the Republican economic expert is still indispensable to his former Senate colleague who would be president. Mr. McCain, who has acknowledged that the economy is not his strong suit, relies heavily on Mr. Gramm for policy advice, especially in housing matters, according to the campaign.
And there is strong speculation that Mr. Gramm would be a shoo-in for Treasury secretary in a McCain administration should that become a reality. But it can t, not with financial Armageddon looming large.
Not with Wall Street tremors so strong Main Street is reeling and worried the mounting losses in the financial sector could trigger even tighter credit, making it harder for everyone to borrow money. And making it tougher to arrange financing for either businesses or consumers could discourage spending by both, weakening an already shaky economy.
Not exactly the confidence booster we desperately need to turn things around. Then again, neither is another call for a commission to study the problem, or the continuing obsession with Sarah Who.