Not only is he likely to die by the end of his first term in office (see the actuarial tables if you think I’m kidding), he’s clueless.
Yes, the wars in central Asia are a problem. But even bigger and more worrisome is our country’s fiscal well-being. To quote James Carville’s “war room” reminder from 1992, “It’s the economy, stupid.” Sixteen years later, it’s the economy again. And that’s stupid.
As if it wasn’t bad enough before, the past two weeks have seen our economy positively reeling from blows repeatedly delivered to it over the past several years.
First, September 7 it was announced that Fannie Mae and Freddie Mac were insolvent and had to be taken over by the government. These two publicly owned companies either own or guarantee fully half of the mortgages in America. That’s right: of the twelve trillion dollars – that’s 12 followed by a dozen zeroes, for those of you who don’t know – in money borrowed to finance the American Dream, $6 trillion of it was, in one form or another, the ultimate responsibility of these two companies.
Fannie and Freddie are, according to Fortune’s listing of the “Global 500,” the 161st and 162nd largest companies in the world respectively. The ranking is based on their annual revenue, which for each company is a little over $43 billion. Their profits, however, are in the negatives. Fannie Mae reports losses of $2.05 billion and Freddie Mac, even worse, reports losses of $3.094 billion. And together they were on the hook for six trillion dollars in debt, over one percent of which was delinquent. That’s a recipe for bankruptcy in anyone’s pocketbook.
Are these companies even the biggest losers on the scale of gargantuan companies posting gargantuan losses? No. General Motors (yes, another cornerstone of the American economy and a major employer worldwide) boasts that honor. With revenues of more than $182 billion, GM is posting a loss of $38.732 billion. Ford Motor Company isn’t quite as desperate. It comes in at #10 on the list of losers at a loss of $1.8 billion. A loss like that seems manageable in comparison to GM’s, doesn’t it?
Another US company, Sprint/Nextel, which is the third largest among the telecom giants, is posting losses exceeding $26 trillion this year. Staggering losses like these do more than cause a company to go bankrupt. Companies vaporize due to losses like these. Then there’s the domino effect of the fallout: lost jobs, unpaid debts to other companies, and a gap in the economy that no amount of politicking can fill.
Will the government rescue GM like it rescued the Chrysler Corporation in the 1970’s? Our automakers employ an awful lot of people. It will be very hard for the United States, competing with Indian and Chinese workers who charge pennies to the dollars charged by American workers for their time, to fill a manufacturing hole of that size.
It’s a big jump from these staggering losses to the next bracket of the biggest losers on Fortune’s list. A German bank, in the red because it helped bail out a German competitor that had tanked because it had invested heavily in American subprime mortgages, is next in line with losses of $8.4 billion, but then, when we look to the next giant losers, we’re back on American soil.
Merrill Lynch is the fourth biggest money loser worldwide right now. Merrill Lynch was in the news this weekend because Bank of America became its white knight, dashing in to rescue the failing investment giant, whose offices fill all 34 floors of the Four World Financial Center Building in Manhattan’s famous financial district. We might note here that the same subprime lending crisis has led to the failure of this icon of investing. We might also note that Merrill Lynch is one of the relative handful of investment companies that survived the Great Depression of the 1930’s. News of its failure is ominous, indeed.
Four of the top five money losers in the world are American, and the one that isn’t had losses caused entirely by the American subprime crisis. And get this: one of the top five losers is an agency of the American government! Did that sentence get your attention? It should have. Yes, the United States Postal Service is number five on the list of losers.
Now, I could wax lyrical about the mismanagement of the postal service here, but I’ll save my rant for another time. Maybe I’ll mention something in the comments to this blog about how much freaking money the USPS spends to advertise its monopoly. But for now I’ll pass. There’s a lot of complex analysis that goes into that discussion, and I’m talking about the economy in general, here. I’m talking about a certain presidential candidate’s understanding of the economy in particular.
You see, despite Fannie Mae and Freddie Mac, despite the subprime and credit crises, despite the failure of Merrill Lynch and AIG, which the Federal Reserve decided to help yesterday with an $85 billion bailout loan, despite the bankruptcy filing this weekend of Lehman Brothers, another huge investment firm, John McCain believes our economy is fundamentally sound.
Now, keep in mind that we have a federal budget deficit of $9 trillion that has grown by well over $400 billion a year since the current administration has been in control. We’re fighting two wars in central Asia at an annual cost of $200 billion, which we have borrowed from China – China! – to finance. The Federal Reserve just lent AIG $85 billion, and that money has to come from somewhere. Internationally, our currency is weak.
When the wars started, President Bush expanded the government in an unprecedented move by creating a Department of Homeland Security. (Excuse me, but wasn’t that what the already-existing National Security Agency for? Wasn’t Homeland Security redundant? I feel another rant coming on. I’ll stop here.)
The biggest financial losers globally are either American companies or driven to their staggering losses by American economic policies and practices, and John McCain thinks that the economy is fundamentally sound.
John McCain thinks that America’s big employers and investors can sustain staggering losses and the economy is still fundamentally sound.
Something in that jungle prison over there did more than make him unable to comprehend how to send an email. Something in that jungle prison over there robbed him of his ability to see what is obviously an unfolding financial disaster on a scale with the Great Depression.
The emperor is wearing no clothes, and his consort is a redneck rodeo queen.
Tens of thousands of jobs on Wall Street are at risk, as are hundreds of thousands of jobs in the automotive industry. Monday was the worst day for the stock market since the 9/11 terrorist attacks. The dollar is weak against foreign currencies. We’re fighting two wars. Oil, which we depend upon as much as we depend upon water, is three times as costly as it ought to be. Worker productivity has increased, but wages have not.
Our government isn’t financially sound. It has debt it can’t possibly repay and it has pushed a pro-credit, pro-housing agenda among the populace until consumers no longer can pay for what they buy. Unemployment is rising, and job creation is ridiculously low, a dangerous situation when we look at the potential for both white collar and blue collar job losses.
McCain thinks the government is fundamentally sound? You’ve got to be kidding me.
Last Updated on September 17, 2008 by Anne
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