09/27/2008 02:30 am ET | Updated May 25, 2011

The economic attacks you didn't hear from Obama

Last night's debates have been judged a tie by some analysts, but given the economic free-fall due to Republican greed and deregulation favored by McCain, there was a lot more that Obama could have said about McCain's reckless, irresponsible response to the latest economic crisis.

Even though Obama won in most post-debate polling and focus groups, some pundits, especially at MSNBC, argued that Obama didn't vividly express the human impact of the collapsing economy and toughly attack McCain for it:

Interviewing ABC News reporter turned Obama operative Linda Douglass, Matthews pleaded: "Why did your candidate agree so much -- openly and relentlessly -- with his opponent tonight?" He followed up with an impassioned lecture about Obama's missed opportunities to pound McCain:

Why didn't he talk more about the terrible state of the economy, the jobless rate, unemployment, the degree of deficit we're in right now, the degree of national debt, all of those issues out there that effect the average person, the number of foreclosures? He let his opponent talk about taxes and earmarking, his specialties. He seemed to lose control of the economic topic.

Plus,Obama, while favoring a bailout with protections for homeowners and taxpayers, can still point out that there's apparently a hidden motive driving the push by Treasury Secretary Henry Paulson for quick passage of the bailout. That's saving hedge fund investors who may be seeking redemptions of billions in deposits by Oct. 1. That's what I was told on the radio show I co-host by James Davis, a financial scam and bankruptcy specialist with the Maryland Attorney General's Office (speaking as an individual).

This week made clear that if anyone doubted that John McCain will do anything to get elected -- including picking an inept fundamentalist to be his Veep because it could energize Republicans-- his sabotaging of the bailout talks by political grandstanding should settle the question. He inflamed the revolt of the hard-right House Republicans, and as Marc Ambinder points

During the White House meeting, it appears that Sen. John McCain had an agenda. He brought up alternative proposals, surprising and angering Democrats. He did not, according to someone briefed on the meeting, provide specifics.

One of the proposals -- favored by House Republicans -- would relax regulation and temporarily get rid of certain taxes in order to lure private industry into the market for these distressed assets.

That approach has been rejected by Senate Democrats, Senate Republicans and, to this point, the White House. During the meeting, according to someone briefed on it, Sec. Henry Paulson told those assembled that the approach was not workable.

Before the White House meeting, Democrats and Senate Republicans were on track to get legislation to the floor by tomorrow. Democrats say that, at best, they hope for half of Republicans in the House to go along. At worst, the vote in the House becomes partisan and then Senate Republicans get shaky and then...

What conservative Republicans want -- including many of the GOP voters McCain is hoping to energize -- includes easing taxes and regulation to encourage private investors to come to the rescue. That's the same philsophy that got us into this mess to begin with.

But before his grandstanding, fake "suspension" his campaign, McCain didn't even bother to read Paulson's three-page bailout plan, despite how McCain claimed his immediate presence in Washington was so essential.

Fortunately, there are two sharp analysts who help us better understand how we got here and how McCain's political allies and the GOP brought us to the brink of financial collapse. Bernie Horn, a senior fellow at the Campaign for America's Future and author of Framing the Future, heads the progressive group's "War Room" - and he explained last week on the radio show I co-host how greed and deregulation brought us chaos. And he offered suggestions on ways Obama could sharpen his message in ways that could appeal to independents.

On Thursday,, James Davis, a Maryland Assistant Attorney General (speaking as a private citizen) who worked on resolving the original S&L crisis, explained on the show how corporate scheming evolved both during the S&L crisis and today's mortgage-backed securities meltdown. (He followed a savvy 15-minute take by political analyst Ian Fried on how McCain's flailing on the economy is hurting in key swing states. ) Most importantly, Davis explained a likely hidden reason for the rush by Treasury Secretary Henry Paulson to pass the bailout : fending off a rush by rich investors to redeem their investments from shaky hedge funds, even though they're not going to be directly bailed out by the Paulson plan:


Initially, the Treasury proposed buying assets only from companies based in the United States, but Paulson laid out the case for a broader mandate to ensure credit was flowing.

"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," he said on the ABC program "This Week."

The Treasury chief confirmed that hedge funds -- investment vehicles for the wealthy -- would not be eligible.

Davis also pointed out that the real reason why there is such a clamor for a bill, and a rush to get it passed is that there may be billions of dollars pulled out of the hedge that is due on October 1. This may be the famed October surprise, but one that nobody figured was coming. If that money is due and the hedge funds can't pay, they will collapse.

As the blog Naked Capitalism points out:

One sign that the credit crisis is accelerating: [analyst ] Nouriel Roubini's forecasts are coming to fruition faster.

In the past, Roubini has too often played the role of seemingly mad prophet in the wilderness until he is proven correct. His calls that the housing bubble would collapse in a nasty way, that subprime was most certainly not contained, that Freddie and Fannie would get in trouble, that total credit crunch losses would reach $2 trillion, all sounded apocalyptic and were generally ignored, to the detriment of those who failed to take heed.

The time between Roubini making a dire forecast and it coming to pass has just collapsed. From yesrday's Financial Times:

The next stage will be a run on thousands of highly leveraged hedge funds. After a brief lock-up period, investors in such funds can redeem their investments on a quarterly basis; thus a bank-like run on hedge funds is highly possible. Hundreds of smaller, younger funds that have taken excessive risks with high leverage and are poorly managed may collapse. A massive shake-out of the bloated hedge fund industry is likely in the next two years.

In today's Independent (recall that London is an even bigger hedge fund center than New York/Fairfield County):

Hedge funds could have an unprecedented level of cash pulled out by investors this quarter, according to insiders, just as they faced millions of pounds of losses from last week's shock regulation of short selling. It has been a tough year for the industry with high-profile funds blowing up, clients increasing redemptions, as well as public fury over short selling and increased threats of regulation.

But Paulson's Wall Street pals are clamoring for help to clean up the mess that their irresponsible lending and greedy practices brought us, with McCain only pouring fuel on the fire he and his GOP deregulatory cronies helped start.

As Chris Hayes of The Nation pointed out on a recentKeith Olberman show, McCain has placed an "all-in bet on the stupidity of the American public." This Friday's debate should help us discover if he's going to win this desperate bet -- a theatrical, Hail Mary bailout plan for the McCain campaign. To paraphrase one of his slurs of Obama, John McCain has shown that he would rather lose an economy than lose an election.

How irresponsible is McCain? See The Nation's Chris Hayes gives his take:

The answer? Pretty damned irresponsible.

Let's hope that Obama makes that even clearer in the debates and campaign messaging in the weeks ahead. As his dishonorable, panicky campaign shows, John McCain simply isn't fit to be commander-in-chief, and he's the risky choice who could plunge this country into a new Great Depression -- or possibly launch us into a new world war with Iran, Russia or any other country that inflames his hair-trigger temper. And that's before the End Times-believing Sarah Palin would take the helm as President if McCain dies in office.

This is, without doubt, the scariest Republican ticket (Nixon included) we've seen in modern times, and why an Obama victory is so essential.