September 16, 2008 [LINK / comment]
Wall Street Lays An Egg
That was the famous headline in Variety magazine after Black Tuesday in 1929, when the stock market crashed. Yesterday's 500-point drop in the Dow Jones Industrial Average wasn't as bad on a percentage basis ("only" 4.4%), but the alarm bells should rouse our attention nevertheless. The Lehman Brothers investment firm went bankrupt yesterday after no buyers stepped forward, while Merrill-Lynch* was bought out by Bank of America. The collapse in investor confidence is raising pressure on the Federal government to step in, and decisions made by the Treasury Department and the Federal Reserve in the next few days could have profound ramifications for our country's future. See Washington Post.
* "Bullish on America," remember?
World markets have been plunging in reaction to the U.S. financial distress; see CNN.com. On the plus side, oil prices are sinking while the Dow Jones has rebounded today in part because of reports that the Federal government may bail out the AIG insurance-investment conglomerate, also on the verge of bankruptcy. "It's too big to fail," they say. Well, that kind of thinking is what brought us to this point in the first place. A case could be made for bailing out Fannie Mae and Freddy Mac since they had an explicit public charter (see Sept. 8), but AIG is a private firm and should bear the full responsibility for its own bad decisions.
I'll have more to say on the state of the U.S. economy later, but for now suffice it to say that there are indeed severe distortions that need to be reformed. Public policy in recent years has undermined the working of the free market, while regulatory agencies have neglected their proper role. The status quo of crony capitalism -- which the Bush administration failed to remedy, unfortunately -- is no longer viable, and puts us all at risk of a misguided push toward something resembling state socialism. During a presidential campaign, there will be a huge temptation by both candidates to indulge in populist rhetoric that would confuse voters about the real nature of the problem. That would further discourage investors, compounding our economic problems.
Second thoughts about Palin
Now that the euphoria about John McCain's savvy choice of running mate has passed, it's time to think more seriously about the ramifications of electing Sarah Palin to be our vice president. Ordinarily, the office isn't worth "a warm bucket of spit," in the words of FDR's first vice president, John Nance Garner (or rather "piss," according to wikipedia). But because Gov. Palin has dramatically altered the political landscape, all of a sudden the question of who will hold the office of vice president is the most important issue in the fall campaign.
The Sarah Palin phenomenon has clearly thrown Barack Obama off balance, so I can understand that Democrats would be deeply annoyed. I would grant that there is some merit to the criticisms about her relative lack of experience, but much of what I hear rings hollow. After thinking about it, I came up with this generalization: Outrage over Sarah Palin is inversely proportional to the likelihood of the person voting for John McCain in the first place. In other words, those complaints won't affect many people's votes.
I have seen reports that Sarah Palin's rise to mayor of Wasilla and then to the governor's mansion was accompanied by hard feelings. That's normal in politics, to an extent, but the reasons for the "Bad Blood" (see Washington Post) remind me of recent political maneuverings here in Virginia.
Another cause of worry is that Todd Palin, known as the "First Dude," has been deeply involved in Alaska's state government, even lobbying state legislators. He is also being scrutinized in connection with the state trooper who was fired. See New York Times; hat tip to Connie. To me, it sounds just like Hillary Clinton!
Indeed, Sarah Palin has brought about an amazing role reversal, as social conservatives hail the career-juggling Supermom from Alaska, while liberal feminists fret about what effect her vice presidential duties will have on the five Palin children. Who is the real "sexist"? Along those lines, I recently saw an amusing yard sign that reads "I Am Voting For The Chick," and Steve Kijak follows up on that.
Daniel Drezner is among those who are dismayed by McCain's pick. He feels like the GOP doesn't care about folks like him (and me?) any more: "Question to other GOP policy wonks: is it possible to support a candidate that campaigns on the notion that expertise is simply irrelevant?" (Some of the commenters questioned whether Drezner's professed affiliation with the Party of Lincoln means anything, since he voted for John Kerry in 2004.) I enjoyed several of the comments, a few of which are worth repeating:
How much foreign policy experience did that grocer's daughter in the UK have? And Truman?"
I am stunned by all the people who think it is such a horrible, terrible, beyond the pale thing that McCain might have picked his vice president solely for the sake of getting himself elected. That's what politicians DO.
Dan, you're an intelligent, serious, thoughtful guy who tries to think through issues and come to a reasonable conclusion based on evidence, experience, and a coherent philosophy of government. The Republicans haven't wanted you for years.
That last one hits too close to home. Ouch!
Is Obama smarter?
Just in case you think that Obama is in a league of his own in terms of intellect or eloquence, take a look at some of the factual gaffes he has made in his speeches at Sun Versus Wind (now dubbed "The Mud Pile"). Well, Obama is only human, after all.