Monday, September 22, 2008

It's the Economy, and we are ALL stupid.

On the one hand, it is mistaken to suggest that the pending economic disasters are the fault of people or parties more than the collective fault of our hopelessly inefficient and politicized, lobbied, and manipulated regulatory systems combined with serious flaws in our capitalist infrastructure.

That said, it's very hard to escape the fact that the Bush administration will be seen - probably with justification - as the party most asleep at the wheel as the American economy was teetering on the brink of collapse. This is likely to play far better for Obama the McCain, and unless the McCain party line can find a way to distance itself from the huge failures of current US economic policy Obama's lead is likely to become insurmountable. McCain will have to find a way to acknowledge that the current economic situation is totally unsustainable but not the fault of the Bush administration. This will be a tough row to hoe.

I'm by no means suggesting that Obama and fellow Democrats should not shoulder some of the blame for the current crisis. Although they have been ranting against the current economic approaches of the Bush administration it appears pretty clear that the Democrats - like the Republicans - failed to see looming catastrophe until it was too late. More importantly Democrats failed to intervene years ago when the seeds of the current catastrophe were planted. In fact a key Obama advisor was the CEO of Fannie Mae until 2004. If Obama keeps him on board (or lets him go as he shoud) I'd say both of them have some explainin' to do.

I'm very unclear about why this crisis was not at least the subject of a lot more speculation, because it has been obvious for at least two years that the real estate bubble would burst, dropping trillions in equity from balance sheets.

The polls are starting to show a shift to Obama based on the dire economic news, and it seems likely this shift will continue. The importance of the debates on Friday is likely looming large for many undecided voters desparate to know who can return prosperity to a flagging US economy.