"Our Economy is Fundamentally Strong"--John McCain

September 15, 2008 is already being dubbed “Nightmare on Wall Street.” On this day, the 158 year old Lehman Brothers went bankrupt—the biggest bankruptcy in our nation’s history. Bank of America bailed out 94 year old stalwart, Merrill Lynch by purchasing it.

AIG, the nation’s largest insurance company lost over half its stock value in just one day. And to top it off, Washington Mutual, the nation’s largest Savings-and-Loan, witnessed its stock drop 27%, and its credit rating down-grade to “junk” status.

In spite of such troubling news, Republican presidential nominee John McCain—on the very morning of September 15, 2008—reiterated a statement he’s been saying throughout the campaign, and that is, the “fundamentals of our economy are strong.” This time, however, he admitted that we are in difficult times, and he attempted to clarify what he meant by “fundamentals.”

McCain defined “fundamentals” as the “American worker and their innovation, their entrepreneurship, [and] small business.” But then he went on to say, "the fundamentals of our economy are at risk.” Well, he may have upped the antee in his language from “strong” to “at risk,” but most of us did that a long, long time ago.

News flash! We’re not just “at-risk” anymore, McCain. And that’s not doom and gloom talking. I’m one hopelessly optimistic woman (who’s also studied economics). We’re teetering on the brink of economic collapse.

Don’t believe we’re that close to the edge? Let’s review a few fundamental factors:

• The United States is 10 trillion dollars in debt—the largest in U.S. history.
• The U.S. is experiencing the biggest foreclosure crisis in 30 years—maybe even since the Great Depression.
• Household (consumer) debt is at a record high.
• The U.S. has record high trade deficits.
• Just one week ago on September 8, 2008, the U.S. government bailed out the nation’s largest mortgage lenders—Fannie Mae and Freddie Mac.
• In spite of soaring oil prices, members of OPEC say they won’t cut oil prices because they lack confidence in America’s ability to deal with it’s current economic crisis.
• The plummeting U.S. dollar has decreased the value of U.S. assets.
• American companies and foreign governments lack confidence in American markets. Thus, companies lay off, lenders loan less, and foreign governments buy up our Assets.

Trouble on the Horizon
Former Federal Reserve chief Alan Greenspan stated in an interview on Sunday that the current crisis is the worst of his career. He stated that "There's no question that this is in the process of outstripping anything I've seen, and it still is not resolved and it still has a way to go."
If we still have “a way to go,” do we really want to expand the George Bush tax cuts?

Even Alan Greenspan—a friend of John McCain—doesn’t think that expanding the tax cuts are such a good idea. In an interview with Bloomberg television, Greenspan stated that the United States cannot afford the 3.3 trillion dollars in tax cuts that McCain is proposing, unless the tax cuts are matched by cuts in government spending. And we ALL know our biggest spending culprit is the Iraq war…

Now, just because we’re teetering on the brink of collapse doesn’t mean we will. And if we do, we’ll certainly rebound—in some form or another—but I think it’s imperative that we recognize our current situation for what it truly is.

It may be that all this talk about economics is just getting to be a bit much for John McCain—the self proclaimed novice on such matters. Personally, I think John McCain is conflicted on the issue of the economy. But he cannot have his cake and eat it too.

McCain’s record shows that he’s anti-regulation and would prefer for the market to correct itself. John McCain himself has stated that, “fundamentally, I’m a deregulator.” And while McCain has begun to address the economy more often in his campaign speeches, it really just sounds as though he’s reciting the talking points of his speech writers. Somehow I’m just not sure if he really gets it.

John McCain must resolve—once and for all—whether he believes our economy is fundamentally strong or fundamentally “at risk.” Right now, he just comes across as fundamentally clueless.