Senator Obama - Quit Doling Out That Bad-Economy Line

[Red Wing]

I imagine that's what Charles Dickens would conclude about the current condition of the U.S. economy, based on the relentless drumbeat of pessimism in the media and on the campaign trail. In the past two months, this newspaper alone has written no fewer than nine times, in news stories, columns and op-eds, that key elements of the economy are the worst they've been "since the Great Depression." That diagnosis has been applied twice to the housing "slump" and once to the housing "crisis," to the "severe" decline in home prices, to the "spike" in mortgage foreclosures, to the "change" in the mortgage market and the "turmoil" in debt markets, and to the "crisis" or "meltdown" in financial markets. It's a virus -- and it's spreading. Do a Google News search for "since the Great Depression," and you come up with more than 4,500 examples of the phrase's use in just the past month.

But that doesn't make any of it true. Things today just aren't that bad. Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too. None of this, however, is cause for depression -- or exaggerated Depression comparisons.

Overall, the pessimists are up against an insurmountable reality: In the last reported quarter, the U.S. economy grew at an annual rate of 3.3 percent, adjusted for inflation. That's virtually the same as the 3.4 percent average growth rate since -- yes -- the Great Depression.

Why, then, does the public appear to agree with the media? A recent Zogby poll shows that 66 percent of likely voters believe that "the entire world is either now locked in a global economic recession or soon will be." Actually, that's a major clue to what started this thought-contagion about everything being the worst it has been "since the Great Depression": Politics.

Patient zero in this epidemic is the Democratic candidate for president. As it would be for any challenger, it's in his interest to portray the incumbent party's economic performance in the grimmest possible terms. Barack Obama has frequently used the Depression exaggeration, including during a campaign speech in June, when he said that the "percentage of homes in foreclosure and late mortgage payments is the highest since the Great Depression." At best, this statement is a good guess. To be really true, it would have to be heavily qualified with words such as "maybe" or "probably." According to economist David C. Wheelock of the Federal Reserve Bank of St. Louis, who has studied the history of mortgage markets for the Fed, "there are no consistent data on foreclosure or delinquency going all the way back to the Depression."

Read the rest of the story here.

[James Carder]

Candidates scramble to shift economic message

By TOM RAUM and GLEN JOHNSON, Associated Press Writers 9 minutes ago

GRAND RAPIDS, Mich. - With economic anxiety rising, Republican John McCain and Democrat Barack Obama scrambled Wednesday to adjust their messages to connect more directly with financially struggling voters.
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Obama talks directly into the camera in a new, two-minute television ad on how he'll fix an economy in which "paychecks are flat and home values are falling." McCain and running mate Sarah Palin softened opposition to government bailouts, accepting the U.S. takeover of the nation's largest insurer as unfortunate but necessary to protect ordinary Americans.

"The shot that has been called by the Feds — it's understandable but very, very disappointing that taxpayers are called upon for another one," Palin told reporters during a visit to delicatessen in Cleveland.

Both McCain and Obama advocated cracking down on freewheeling Wall Street practices and for tough new regulations on financial institutions.

Obama ridiculed McCain's calls for more regulation as an eleventh-hour conversion for one who has long championed deregulation.

Too many in Washington and on Wall Street "weren't minding the store. They sat on their hands until it was too late," Obama told a rally in Elko, Nev. He challenged McCain's vow to take on the "old boy's network...He hasn't taken them on for the last 26 years."

The increased emphasis on the faltering economy came on a day when stocks resumed their downward plunge following Tuesday night's government takeover of American International Group Inc. with an $85 billion two-year loan from the Federal Reserve in return for a majority stake in the company.

"The focus of any such action should be to protect the millions of Americans who hold insurance policies, retirement plans and other accounts with AIG," McCain said in a statement. "We must not bail out the management and speculators who created this mess."

The turnabout came a day after McCain strongly opposed additional government relief and praised the government's decision not to rescue Lehman Brothers after it had intervened to help investment bank Bear Stearns and mortgage giants Fannie Mae and Freddie Mac.

His Democratic rival addressed the AIG takeover in Elko, saying the government acted "to prevent an even larger crisis." Arguing that the U.S. housing market was "in a shambles," Obama said it was important now for the Federal Reserve to ensure that families with AIG insurance are protected. "It must not bail out the shareholders or the management of AIG that were making big profits when times were good."

Obama, in his own change of tactics, speaks directly to voters in a new commercial to air Wednesday on national cable and in some battleground states.

"In the past few weeks, Wall Street's been rocked as banks closed and markets tumbled. But for many of you — the people I've met in town halls, backyards and diners across America — our troubled economy isn't news," Obama says in the ad, taped Tuesday in a living room-like setting.

"Paychecks are flat and home values are falling. It's hard to pay for gas and groceries and if you put it on a credit card, they've probably raised your rates," he adds.

Obama also laments rising health insurance costs. He details major elements of his economic plan, including its proposal for a $1,000 tax cut for working couples, steps to reduce reliance on imported oil, bringing a "responsible end" to the war in Iraq and ending an "anything goes culture on Wall Street."

"Doing these things won't be easy. But we're Americans," Obama says.

Obama also discussed the AIG takeover

McCain campaigned in Michigan, one of the states hardest hit by eight straight months of rising unemployment.

At the General Motors Orion assembly plant, he told workers: "We are going to fight the special interests and corruption in Washington. We are going to fight the greed and irresponsibility on Wall Street."

"Doing these things won't be easy. But we're Americans," Obama says.

Obama also discussed the AIG takeover

McCain campaigned in Michigan, one of the states hardest hit by eight straight months of rising unemployment.

At the General Motors Orion assembly plant, he told workers: "We are going to fight the special interests and corruption in Washington. We are going to fight the greed and irresponsibility on Wall Street."

While both presidential candidates have called for tougher regulation of financial institutions and cracking down on Wall Street abuses, neither has come up with a detailed plan, nor gone so far as to endorse a proposal for the kind of massive federal intervention that took place in the savings and loan crisis of the late 1980s and the early 1990s.

Then, the Resolution Trust Corp. was established by Congress to acquire the real estate, mortgages and other assets of thousands of failed S&Ls.

Some lawmakers suggest such a strategy may be needed to stabilize financial markets, rather than the ad hoc interventions the government has been doing.

A day after extending a helping hand to AIG, the White House on Monday called the U.S. economy a mixed picture that would ultimately weather the current turmoil. Press secretary Dana Perino said help for other endangered companies would be considered on a "case-by-case basis."

Both candidates have been adjusting to keep pace with a fast-changing situation in which financial markets have been buffeted by one jolt after another.

The weak economy would normally be expected to benefit Democrats, since voters often punish the party in the White House for bad economic times, and McCain's Republican party has been in power for the past eight years.

But an Associated Press-Yahoo News poll conducted last week suggests McCain and Obama now are trusted equally on the economy, with 34 percent of voters saying each would do a better job. Previously, Obama had held a solid advantage on the issue.

Meanwhile, an advocacy group for older Americans questioned McCain's recent railing against Wall Street excesses at the same time he supports a plan to allow younger workers to divert some of the Social Security payroll tax they would pay into private investment accounts, much as President Bush would do.

McCain "continues to support plans to turn Social Security money over to the same Wall Street financiers he now criticizes," said Barbara B. Kennelly, president of the National Committee to Preserve Social Security and Medicare.

___

Tom Raum reported from Washington.
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Well, the cat-fight begins, and not between SP and HC.

Jim Carder

[Brad Marston]

How so NoBama? It was John McCain who stood on the floor of the Senate calling for greater oversight while your guy argued against it and took $120,000+ in campaign cash from Fannie Mae and Freddie Mac.