"It really is scary when the usually understated Alan Greenspan says the housing-finance crisis is the worst that he has seen in his long career.
Asked on ABC's 'This Week' about the need for a federal bailout of mortgage giants Freddie Mac and Fannie Mae, the ex-central banker said, '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.'"
And yet US Presidential Candidate and Arizona Senator John McCain still believes that the economy is fundamentally sound. This is the same position that he has taken since August of 2007 when the financial crisis became evident to all but the dim witted and those with their heads in the sand.
So instead of speaking out all of this time and demanding that something be done to head off this economic slide, John McCain states that after he is elected as President he is "GOING TO reform the way that Wall Street does business."
Keep in mind this is coming from the man who thought that Phil (America has become a nation of whiners) Gramm was a genius.
How sound is John McCain's economic judgment?
I also wonder he or any of the Presidential Candidates has any idea of how the destruction wrought by Hurricane Ike, not only in Texas and Louisiana but throughout the Midwest, is going to impact an already struggling economy.
As Alex Berenson reported yesterday for The NYTs:
A lot of smart people have tried to call the bottom on Wall Street this year.
So far, they have all been wrong.
Since the financial crisis first hit in August 2007, markets — and the financial industry — have gone through a series of swoons, each more dizzying than the last. Last week, the crisis reached a new pitch, as Lehman Brothers, the fourth-largest United States investment bank, struggled to avoid joining Bear Stearns on the trash heap, and Washington Mutual, the largest savings and loan, saw its shares briefly fall below $2.
Now even Wall Street’s professional optimists have given up predicting exactly when their industry might stabilize. One senior executive at a top investment bank, speaking anonymously so he could speak freely, recently observed that the crisis was entering its “19th inning,” with no ending in sight.
Until now, the cataclysm in the banking and securities industry has damaged but not derailed the rest of the economy and the Fed and the Treasury signalled last week that they were not ready to bail out Lehman Brothers with taxpayer money. Economists generally predict that the United States will grow slowly over the next few months but avoid a deep recession, especially if oil prices fall further, easing pressure on consumers, and exports remain strong.
But as the Wall Street crisis moves into its second year, the risks to the overall economy are increasing. While the economy grew during the first half of the year, businesses are cutting jobs and consumers reducing spending. In August, the unemployment rate reached 6.1 percent, compared with 4.7 percent less than a year ago.
Until the worst turmoil on Wall Street ends, the economy will struggle, said Sung Won Sohn, an economist at California State University, Channel Islands, who studies financial markets.
By the way, the US National Debt is nearing $9.7 trillion -- just in case anyone is still keeping track.
In Search of Answers to the Foreclosure Crisis
that won't make matters worse, May2008
Bad Luck, Incompetence, Lack of Regulation of Avarice, or
Simple Avarice, March, 2008
What Happens When You Don't Know What They Don't
Want to Tell You, November 2007
Watch for the Signs, October 2007