It is deregulation and the explicit refusal to regulate complex derivates that has led to the current state of the financial markets across the world.
More irony with the Bush administration and Sen. John McCain: John McCain has been quoted many times declaring himself to be a "deregulator". President Bush signed into law and pressured state law makers into deregulating the energy industry leading to the commoditizing of electricity, heating, and other sources of energy. Yes, electricity is technically not a commodity in the conventional sense but we are talking about Republicans here. Ultimately, energy deregulation led to rolling blackouts in California, spiking energy costs across the country, price gauging by energy traders and speculators, and of course the collapse of Enron.
It's déjà vu all over again. We again find ourselves in almost the same predicament as we were in the early part of the Bush Administration. It is deregulation and the explicit refusal to regulate complex derivates such as Credit Default Swaps, Collateralized Debt Obligations, and Mortgage Backed Securities that has led to the current state of the financial markets across the world. The global capital markets are literally collapsing all around us. More importantly, it appears as though we still are only peeking at the tip of the ice-berg.
Consider this: just a week ago Wall Street had four bulge bracket investment banks, Goldman Sachs, Morgan Stanly, Merrill Lynch, and Lehman Brothers. Today, only Goldman Sachs and Morgan Stanly still stand, although according to NBC News the latter is in "advanced negotiations" to be acquired by Wachovia Bank. Moreover, according to most analysts including economist Nourial Roubini of the Stern School of Business at NYU, Goldman Sachs like its brethren will likely disappear before the end of the month. Collectively these four venerable banks are hundreds of years old. They are not simply icons of Wall Street or the financial markets. They have served as engines of the American economy for centuries, and by week's end, they all will likely disappear. How very sad.
This is unprecedented. These banks survived the crash of 1929, the great depression, the junk bond era of the 1980s, and 9/11. However, they could not survive the Bush-McCain doctrine of deregulation as a tool for economic growth. Even Alan Green said, "This is a once in a century type event". And while the "event" according to Mr. Greenspan is the collapse of Wall Street, he really means Bush-McCain or more accurately Bush-McCain-Greenspan.
All three men eroded long standing regulations and laws such as the Glass-Steagall Act of 1933, which among many things prohibited investment banks from operating as commercial banks and commercial banks from operating as investment banks. It was McCain who pushed for these deregulations during his time as the Chair of the Commerce Committee in the Senate - don't forget he is "The Deregulator... destroying economies everywhere!"
Bush-McCain also refused to regulate commodities market, allowing speculators to run wild and make insane amounts of money on the backs of hard working Americans and people around the world. Energy prices skyrocketed to unholy levels. The price of corn began mimicking the price of Gold. As a result, food prices went up, cost of heating and cooling homes went up, cost of putting gas in your car went up, and all as real middle class wages went down by $2,000 per year. This is not to mention the food riots in places like Haiti and other third world countries.
In no time in American history including the market crash of 1929 and the great depression has American wealth been so out of whack. Here's where the irony comes in: in the mind of Bush, we are simply going through a market "adjustment" right now, and according to McCain "The economy is fundamentally strong", a mantra he has repeated a perplexing number of times.
These are two men living in a cocoon build by their fathers and protected by the average American taxpayer who has no idea what regulating the commodities and financial markets mean. They prey on ignorance. Then again they themselves may be ignorant. You too would believe that the economy is fundamentally strong if you own 13 houses and believe you have to earn $5 million a year in order to be considered middle class; not $5 million in total wealth but $5 million a year in income. You too would believe that we are simply going through an "adjustment" if you have spent more time on trips around the worlds and in your luxury ranch in Texas than in the Oval office focusing on the business of America. In all of American history, there has been no other U.S. President who has spent less time in the White House than President Bush.
After deregulating us into the collapse of Enron, Worldcom, the energy markets, the commodities market, and the financial markets, Bush-McCain are saying "we can fix this." How do you plan on fixing this Mr. McCain when you are the cause of it? It's like a boyfriend who infects you with HIV and then tells you, "Don't worry, I can cure you if you just have sex with me one more time." We are not that dumb.