To hear him say the things he is saying today sounds like an echo chamber of what I and many others have been saying for a long time. We pointed out forcefully that Bush was gutting the regulatory agencies by putting the fox in charge of the hen house. Enron taught us that lesson. 3 years ago we had all the proof we needed when we saw the result of putting Brown in charge of FEMA. But nothing changed. Senate Republican, including McCain, filibustered all efforts to head off this predicted disaster.

McCain just finished up his speech with his boilerplate of borrow and spend, showing that he doesn't understand what he just said. Hollow words don't cut it.

It was good, Both Palin and McCain were very calm, very measured and they very spefically explained what needs to be done and they both laid out the rudiments and cause of the problem, where we are now and what we need , no must do,to fix it.

These are times that call for such precise and calm explanations in order to help Americans understand what we face and what happened and what we must now do.

I prefer that to the fake hoopla and false bluster

and bullshit your guy sells.

We can celebrate later when McCain gets elected and America starts drilling ans we take back the reins of our economy and revalue our own dollar by doing so.

Both he and Obama are sounding like clueless Fraysters. I'm comforted only by the thought that by seemingly "not understanding what he just said," he understands it all too well, realizes it's total crap and a recipe for doubling down on disaster, and has no intention of following through.

Because otherwise, we're screwed in this area no matter who gets elected.

It’s not really like that Laurie.

The issue is derivatives. Nobody knows what these complex instruments are valued at. The firms gambled with orders of magnitude more than they were worth and when housing went down they couldn’t untangle the investment instruments to see which ones paid and which ones don’t. The result is nobody wants to buy or extend credit.

The RT type solution (like savings and loans) will cordon off all of the bad investments—under government (read our) ownership so the firms can start to do business again. It’s probably the best of a bad set of solutions.

More regulation works for a while—as it did with the derivatives crisis of the early 90s until the next exotic trading instrument is developed that circumvents regulations. It’s necessary now.

What this really means is that the high paying jobs on Wall Street are gone. And they’re unlikely to come back for a long time.

This plan will be successful provided that a) the positions are illiquid rather than insolvent and the bond issues come back (likely) b) all of the radioactive issues can be cordoned off tightly and c) they provide a way to refinance many of the exotic mortgages and overvalued mortgages at lower principles for home owners in trouble (a hit the banks don’t want to take but congress is likely to enforce as part of the deal if the Democrats have their way).

With those three elements it could work—and it punishes the bank a bit for bundling in a way that deliberately obfuscated value and it made it impossible to unwind. It’s like trying to look into a black box to see which ones are good and bad—you just can’t see from the outside which individual ones are healthy.

The bottom line—Obama has Rubin, Sumers and Volcker to provide a plan to fix this. McCain has Feldstein and Carly Fiorina. That (and his savings and loan exposure) doesn’t give me confidence. Obama rates better on the economy because Democrats do manage it better (in fact and statistically). McCain’s involvement with the S&L debacle is a point against him as this issue roars to the front.

We’ll see—but this dominant issues is a challenge for him—and I (for one) would really, really like to see Rubin and Volcker have outsized influence here and an administration with a strong focus on the deficit and adjusting mortgage principles lower to provide fixed 30 year terms under the jumbo limits without PMI. Those two things would do more to fix the economy than all the posturing under the sun. And it would be possible given the government ownership of those loans.

Drilling is nothing now. Oil is headed for $80 a barrel without a single drop of newly drilled oil hitting the supply. Demand drops, equities look safer, the dollar strengthens a bit, speculators flee oil, and poof. Back to $80. It'll be an issue again--but not by November.

In much of this can be laid at the feet of Phil Gramm, John McCain's chief economic advisor. Gramm pushed through legislation to end Glass-Segal (sp) protections. This along with Alan Greenspan's loose money policy and 1% interest rates created a bubble that was sure to burst. As they say, the rest is history.

McCain gave a good speech this morning, at least the first part dealing with policy. The problem is that this represents a 180 degree turn for McCain the deregulator. Nobody trusts that he means what he is saying. John McCain is no Democrat and this morning he gave a stump Democratic speech. Just 3 days ago McCain said that the fundamentals of the economy are strong. That was even after the Freddie/Fannie bailout.

He will apparently say anything to get elected. It is that simple. The straight talker has a forked tongue.

Who has had a hold on the reins of our economy for the last 8 years? Yes, we now know that the predictable happened with the removal of Glass-Segal (sp) protections and the up-tick rule on short selling but these are the lesser part of the problem. Creating a new agency will do little to fix anything. The Department of Homeland Security is one example of that, witness the slow recovery from Ike.

The more serious problem was putting the fox in charge of the hen house. The old regulators were fired and replaced by unqualified cronies with Michael Brown at FEMA being the poster boy of this type of appointment. Yes, I agree with McCain that Cox should go at SEC. But then I said that Cox was the wrong man at the time Bush nominated him so it comes as no surprise that he has been a failure. In fact, it was predicted. We saw it coming but nobody paid attention.

To put John McCain in charge of cleaning up the mess would be just another example of putting the fox in charge of the hen house. Been there, done that.

Here is more. <link>