Reflections On The Wall Street Mess

As the details emerge about the massive bailouts which are to be voted on this week, there is reason for cautious optimism. It seems that at least as far as the public is being told, the bailout is well-structured. Final comment of course must be reserved until after the final legislation and absurd "signing statements" favored by President Bush, have been reviewed.

The meat of the plan is simple, the government will buy up CDO's and MBS's for very small percentages of their believed worth, and sell them after the market has stabilized, hopefully for a profit. Each of the parties has put forth a sensible suggestion, the Democrats that executive pay be limited, and the Republicans that all profit be earmarked for the national debt. Other, sillier proposals have also been made, but hopefully they will be ignored.

Somewhat ironically, Democrats also want more "protections" for homeowners, ignoring the fact that unsuitable homeowners are arguably at the root of the problem, and the easiest way to deal with the problem, though not least painful, is to let these people, most of whom don't want or can't afford their houses, lose them. The historical root of the entire crisis lie in the government's creation of Freddie and Fannie as a way to make home ownership easier for the poor. That's where the problem stems from, and this seems to be overlooked. The Democrats also blame "deregulation" and want a bunch of new bureaucracy and red tape for the markets. While there still needs to be some investigation of how this spun out of hand so badly so quickly, the real regulations needed are a couple pages long at the most, and simply address the grading of CDO's and other derivitives, not entire new agencies or piles of red tape.

There is plenty of blame to go around, from Alan Greenspan, to the unchecked deceit and greed by Wall Street along with the blind eye turned by both parties, but especially the Democratic party, which blocked reform proposed years ago. Mr. Obama was particularly deceitful about this, blaming Mr. McCain for the problem when in fact, Mr. McCain tried to address the issue in part years ago. Mr. Obama continues to completely lie about the issue, ignoring the fact that his party was to blame for the majority of the problem under the guise of "helping poor people get mortgages". When people who shouldn't get loans get them, bad things happen.

Mr. Obama ignored the history of the issue and instead waited to see what would be popular and spout that as his rhetoric. Mr. McCain responded with a devastating and accurate assessment, which of course was all but ignored by the left wing "mainstream media":

"Whether it's a reversal in war, or an economic emergency, he reacts as a politician and not as a leader, seeking an advantage for himself instead of a solution for his country,"

Mr. McCain is often wrong, in policy and tactics. However, he has distinguished himself as a leader rather than a political opportunist. Mr. Obama should strive to meet that standard consistently.