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A presidential campaign is often described as a horse race; a demolition derby is more like it. The candidates are always backing up – and smashing into their own scams. The dewy Democrat rolled along smartly in his new “change-mobile”. Then, under pressure from the knuckleheads in his own party, he reversed to pick up that babbling hack, Joe Biden, as his running mate – and ran right into his own fraud. Biden is to Obama what Monica Lewinsky’s blue dress was to Bill Clinton – the dumb thing that reveals the spoken lie.
Biden demolished his own presidential campaign in 1987 by pretending to be British Labour politician Neil Kinnock. Not only did he recite Kinnock’s lines about being the first in his family to go to university, he also stole his identity, claiming that his father had worked in the coal mines. His own father was actually a polo-playing car salesman from Baltimore. But if the media hadn’t stopped him, he probably would have soon claimed Kinnock’s pension, too. Apparently, the better you know Biden, the less you like him. In his home state, 97% of voters refused to back him in the presidential primary. But that was Biden in the 1980s. In the 2000s, Biden is, supposedly, on the ticket because he knows who Saakashvili is. In truth, he’s there because the old nags in the Democratic party wanted someone they could trust on the ticket – a real go-along, get-along backslapper. They turned to Biden, in other words, not for change, but to avoid it. And now, Obama is trailing in the polls. Americans don’t mind a liar in high office; but they’re suspicious of one who can’t keep his lies straight.
Meanwhile, over in the Republican camp, that tough old salt, McCain, has come about smartly, outmanoeuvreing the Dems by choosing a baroque woman from Alaska as his number two. If military experience were so important to the nation’s top office, you’d think he – at 72 years old – would want a serious chief mate to take command if he were struck down. Palin’s military experience is limited to 22 months as captain of the Alaska National Guard. Then again, she might be an improvement over McCain anyway.
McCain’s right to rule, he says, comes from his superior command of the military situation. But the claim looks counterfeit. During his tour of duty, McCain lost five US Navy aircraft, four in accidents, one in combat. The first one went down in Corpus Christi Bay when he was practising landings. The second crash occurred over Spain, when he was flying too low. He took out some power lines and bailed out. Number three was wrecked when he was flying into Philadelphia for an Army-Navy football game. The fourth one, at least, was not his fault. An accidentally-fired rocket hit his plane when he was waiting to take off. The resulting explosion killed 134 sailors, destroyed 20 aircraft and nearly sank the ship. Finally, in 1967, he got shot down, roughed up... and then, by his own admission, collaborated with the enemy in order to save his skin. Maybe getting shot down was just bad luck too, but sailors are a superstitious lot. They’d probably give the heave-ho to this right Jonah rather than set sail with him as captain.
Of course, the financial world too is full of mountebanks, cads, and imposters. Who can forget Alan Greenspan’s famous remark that a nationwide decline in housing prices was “most unlikely”? Or Ben Bernanke’s suggestion a year ago that subprime losses wouldn’t exceed $100bn (they’re now about $500bn, and still growing)? Or bond appraisers’ Triple A ratings for what turned out to be junk? “I have enormous confidence in BSAM [Bear Stearns Asset Management] and the ability of our talented professionals... You can count on us to deliver,” wrote James E. Cayne, CEO of Bear Stearns to his customers a year ago. And the talented professionals on Wall Street and in the City did make good work of it, taking the bumpers off portfolios all over the world.
But it is at the intersection of politics and finance that the biggest wrecks occur. Last Sunday, we heard the rubber squeal: the US government took control of Fannie Mae and Freddie Mac – America’s government-sponsored mortgage backers. The Financial Times dutifully reported that this nationalisation – the biggest in history – will cost the government $200bn. USA Today reported only that it put the taxpayers on the hook for “trillions”. Asked the question by a reporter, Mr. Paulson, Secretary of the Treasury and the man who should know, replied: “We didn’t sit there and figure this out with a calculator.”
Thus did he drive the nation into the most dangerous intersection in economics – blindfolded. But did bond investors cover their eyes – aghast at the accident that is about to happen? No, they bought the government’s paper. Yields fell. Did the taxpayers cringe and howl, in pain and outrage, at the huge new burden placed upon them on Sunday night? No again. Of course, a nation that robs Peter to pay Paul won’t get a whine out of Paul. But what did they think? That they were all Peters? That they would never have to pony up a cent? But there is the biggest scam right there – that the credit of the US government and its money are infinitely stretchable and ultimately crash-proof... and that no one will have to pay for its bailouts, its bamboozles, and its busted-up humbugs.
Check your airbags.
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Economics
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by
Bill Bonner
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