[Marxism] McCain, Obama, and the financial crisis. by Barry Sheppard

[Fred Feldman]

Below is an article I wrote for Direct Action [Australia] at their request.

Obviously it is out of date, but I think it still is of interest because of
its emphasis on the outburst of rage by tens of millions at the proposal to
feed the financiers $700 billion while doing nothing for the working people
who are being hurt and will be hurt further as the recession deepens.


Obama, McCain and the financial crisis

By Barry Sheppard, in San Francisco

September 25 - Today there are spontaneous demonstrations occurring on Wall
Street and over 200 other places across the country denouncing the plan to
bail out the Wall Street financiers to the tune of US$700 billion. One
journalist sent out an email proposing such demonstrations and then support
for it exploded on the internet. People in each area decided by email where
to go. No single group organised these actions.

While thousands are demonstrating, they represent tens of millions who have
reacted with rage right from when they heard Treasury Secretary Henry
Paulson six days ago on national TV demand that Congress cough up the cash
immediately and without any strings attached. At first both Democratic and
Republican politicians rallied behind the proposal. But they were
immediately barraged with phone calls and emails from outraged citizens, and
they began to change their tune. 

Coming on the heals of the bailouts of Bear Stearns, Fannie Mae, Freddy Mac,
and AIG -- all of whom are now under criminal investigation by the FBI for
fraud - which will cost hundreds of billions, the Paulson "shock and awe"
demand for $700 billion fund to buy up Wall Street's "toxic" debt was just
too much for most working people. This is true whether they were leaning
toward voting for McCain or Obama. This explosion of outrage at giving such
an amazing amount to the very people who have caused the crisis in the
financial system came before the actual proposal was made public. Since then
the anger has deepened.

Paulson's proposal was contained in three pages! This reflects the lack of
details on just what will happen. He just said the fund would be used to buy
up the bad debts of banks and other financial institutions. But no-one knows
exactly how much bad debt there is, because it is has been bundled up with
other debts and then resold as complicated financial instruments. If the
government bought them at their actual market value, then the bailout
wouldn't be necessary since they could be sold at that level in the market.
So what will happen is that the government will pay for those toxic assets
at prices much higher than their market value, giving the banks and Wall
Street brokers an influx of cash in the hope that they will use that money
to make more loans and alleviate the credit crunch. And, by the way, pocket
millions for themselves.

It is not at all clear that this plan would even work, since the squeeze on
credit was not caused by a lack of money but by the larger financial crisis
that began with the collapse of the housing bubble. Many economists from
Harvard, Yale, MIT, the University of Chicago,  and other prestigious
institutions have written to members of Congress saying the Paulson plan
will not work.

Paulson's proposal was that he be given absolute power to decide what to buy
and from whom, at what price and with immunity from review "by any court of
law or any administrative agency." Furthermore, he would hire "contractors"
to help make those decisions, and they would be given the same immunity,
taking a page from US policy in Iraq. Who would those "contractors" be?
Experts, of course - that is, bankers!

It wasn't President Bush who made the proposal, but Paulson. And he did it
without consultation with Obama or McCain. Bush and the candidates were
brushed aside. The bombshell was dropped to play on the real fears of
working people about the economy to ram it through. Paulson, a former CEO of
the Goldman Sachs investment bank who reportedly "earned" $37 million in
2005, was on the cover of Newsweek with the caption "King Henry". Goldman
Sachs will be a major beneficiary of the bailout plan.

Paulson and Federal Reserve Board chief Ben Bernanke thought they could get
a repeat of the way fears after the 9/11 attacks were used to ram through
the Patriot Act and congressional backing for the invasion of Iraq. But it
backfired.

The whole context of the election campaign has changed. The Democrats are
tinkering with the proposal and many Republicans, including leading
conservatives, are opposed to the Paulson plan. There may be some kind of
compromise plan that still has as its heart "cash for trash". But any such
plan will not quell the public anger.

In the September 24 Washington Post there was a report of a new poll taken
after the Paulson announcement. "Turmoil in the financial industry and
growing pessimism about the economy have altered the shape of the
presidential race, giving Democratic nominee Barack Obama the first clear
lead of the general-election campaign over Republican John McCain, according
to the latest Washington Post- ABC News national poll", the Post reported.
The poll found Obama now leads McCain by 52% to 43%. It also found that more
voters trusted Obama to deal with the economy than his opponent. 

McCain panicked, announcing that he had unilaterally suspended election
campaigning and a call for postponing the September 26 nationally televised
debate with Obama, to concentrate on achieving bipartisan congressional
support for a financial bail-out plan.  He is being pressured to reverse
this stand. If Obama shows up and McCain doesn't, it would make him look
weak and unable to address the issue.

The McCain campaign received a boost at the Republican convention when he
chose Alaska Governor Sarah Palin as his vice-presidential running mate. She
is an extreme right-winger, and this choice energised the Republican base
among the white Christian right and others. But the bailout plan has
eclipsed the Palin effect, and crystallised the economy as the main issue in
the election.

On the front of foreign policy, the two candidates are becoming closer. Both
think that more US troops should be sent to Afghanistan. Obama's position,
stated months ago. that the US should militarily strike into Pakistan with
or without Islamabad's agreement is now official US policy. It turns out
that Bush authorised such attacks last July.

Obama's position on Iraq has become murkier. He had said that he would, if
elected president, immediately begin to draw down combat troops, and have
them all pulled out in 16 months, that is, by May 2010. Now he seems to be
going along with the Iraqi puppet president's proposal that the combat
troops would leave by December 2011. McCain still maintains that all the
troops should stay in Iraq until the US "wins". but he hasn't been pressing
this as much. The reality is that it will be hard to increase troops in
Afghanistan without drawing down troops in Iraq.

While Obama is pulling ahead in the polls, in past elections where a black
candidate was running, the number of votes they received was less than what
the polls predicted. Many whites will not vote for a black person, but are
ashamed to admit this to a pollster.

Republicans have been using code words to fan racist flames. One of these is
"uppity". In the US south before the 1960s civil rights movement, blacks
were often referred to as "uppity" if they stood up for their rights. A
Georgia Republican, Representative Lynn Westmoreland, recently referred to
Obama as "uppity". In Georgia the meaning of the word is clear: Obama
doesn't know his "place". Representative Geoff Davis, Republican from
Kentucky, earlier in the year used an old racist term for black men, calling
Obama a "boy".

The McCain campaign ran a TV ad accusing Obama of being "disrespectful" of
Sarah Palin. In the US south, it was common before the civil rights movement
for a black man accused of being "disrespectful" of a white woman to be
physically attacked, even lynched. Racism remains an underground theme in
this campaign.●