If a week is a long time in politics, it's an even longer time on Wall Street. And last week Wall Street, Washington and Wasilla, Alaska, collided in ways that few could have imagined. Wall Street's worst week since 1929 saw Merrill Lynch married off to Bank of America with all the haste and embarrassment of a shotgun wedding. Meanwhile, Lehman Brothers filed for bankruptcy, Morgan Stanley scrambled to stay afloat and an $85bn government rescue of insurance giant AIG ended with an unprecedented plan for a massive federal bail-out that could cost taxpayers a trillion dollars.
Treasury secretary Henry Paulson's announcement that he was working with congress on a plan to buy mortgage-backed securities from big banks and investment houses triggered an enormous surge on Friday and catapulted the Dow Jones back to where it started on Monday. But while the Dow remains the same, the landscape on Wall Street has been permanently altered.
Just as the Russian invasion of Georgia provided a stage for McCain's and Obama's auditions as international statesmen, their responses to the prospect of fiscal armageddon offered an insight into their leadership in a domestic crisis. Both men were consistent. Once again, evasions, half-truths and scattergun accusations prevailed.
McCain channels Karl Marx
Ever the knee-jerk candidate, John McCain, a lifelong champion of deregulation, suddenly sounded more like a disciple of Karl Marx than Adam Smith. Railing against Washington corruption and Wall Street greed, he declared war on both fiefdoms.
"If Governor Palin and I are elected, we are not going to waste a moment in changing the way Washington does business," he told a rally on Friday. "We're going to start where the need for reform is greatest. In short order, we are going to put an end to the reckless conduct, corruption, and unbridled greed that have caused a crisis on Wall Street."
It was the latest in a series of contradictory statements that have claimed the fundamentals of the US economy were sound, called for the firing of the SEC chairman Christopher Cox, opposed and supported the bail-out of AIG, and called for a commission to find out what went wrong on Wall Street and a new regulator to correct what McCain has already identified as the problem. According to McCain, the list of culprits range from the Bush administration to Barack Obama, who he said "profited from this system of abuse and scandal". To hear McCain tell it, everyone in Washington is responsible for every crisis, except John McCain.
It is a calculated part of McCain's strategy that he talks about Washington as though he had never been there. Every stump speech is peppered with pledges to "change the way Washington does business". At every campaign stop, he excoriates the "do-nothing congress" and its "lobbyists and influence- peddlers". Like someone who has woken from a decades-long coma, McCain seems blissfully unaware that he has spent more than a quarter of a century in Washington's "do-nothing congress", nestled close to the bosom of its "lobbyists and influence peddlers".
His most senior advisers – campaign manager Rick Davis and political adviser Charles Black – are the heads of two of Washington's most powerful lobbying firms and count several Wall Street institutions, including Fannie Mae and Freddie Mac, as their clients. Seven of Washington's top lobbyists are at the top of the McCain totem pole, including Tom Loeffler and Wayne Berman, his chief fundraisers.
Unsurprisingly, McCain's response to the crisis – part hot-headed rhetoric, part hang 'em high jingoism – was greeted with chilly disdain in the financial world. In an editorial on Friday, the Wall Street Journal sharply criticised his assault on the SEC chairman as "false, deeply unfair… and also unpresidential".
Obama's response was equally consistent – eloquent but unfathomable. He told reporters he supported government efforts to shore up the financial markets but offered no clue as to how he would tackle the meltdown. His plan couldn't be formulated in a day, he said, but would have to be done in an "intelligent, systematic, thoughtful fashion. I'm much less interested in scoring political points than I am in making sure that we have a structure in place that is sound and is actually going to work". His call for calm rang a little hollow in the absence of any concrete proposals. He may have sounded more presidential than McCain, but he was several stops short of showing substantive leadership skills.
'Other people's money'
And in her second interview since she became a political sensation, McCain's running mate Sarah Palin blamed the catastrophe on "these CEOs and top management people being addicted to, we call it, OPM, O-P-M, 'other people's money'". Obama's running mate, Joe Biden, used the crisis to bludgeon McCain who, he proclaimed, "hasn't a clue".
In a contest between McCain's volatility and Obama's vacuousness, Obama regained the upper hand, with polls suggesting that a week of economic trauma has whittled away McCain's lead. The economy has never been the Republican candidate's strong suit. His best-known economic adviser is Phil Gramm, the former senator who led the 1990s deregulation of banking and who recently called Americans "a nation of whiners" because of their anxiety about the economy.
Obama has assembled a formidable team of economic advisers, including Warren Buffet, the investor formerly known as the richest man in the world, former Federal Reserve chairman Paul Voeckler, and several former Republican and Democratic treasury chiefs, which seems to have reassured the US public that he is at least taking the problem seriously. And independent
studies of the tax policies of both candidates suggest Obama's would benefit 90% of Americans, while McCain's would favour the top 1%.
But it's an ill wind that blows no good. The Wall Street tsunami diverted attention from the storm clouds gathering in the north-west, where the Troopergate scandal took a fresh twist. On Friday, hearings were abandoned when Sarah Palin's husband and six of her staffers ignored subpoenas to appear before the Alaska state judiciary committee which is investigating allegations that Palin abused her powers in firing Alaska's 'top cop', public safety commissioner Walt Monegan. Another six witnesses, whose appearance was guaranteed by Alaska's attorney general, a friend of Palin's, also failed to show.
Palin fired Monegan in July this year. She claims he was dismissed because of a budgetary clash. Monegan claims it was because he refused to succumb to pressure from Palin to fire state trooper Mike Wooten, who was involved in an ugly divorce with Palin's sister.
Before she became McCain's running mate, Palin said she welcomed the investigation and promised her full co-operation. When it emerged there were tapes of Troopergate conversations, she acknowledged that her staff and her husband contacted Monegan more than two dozen times to seek Wooten's dismissal. The committee had promised to publish its findings on 10 October, but in the interim, the McCain camp has adopted the classic Bush 'stall and stonewall' tactic, dispatching a team of lawyers to Alaska, headed by former New York federal prosecutor Ed O'Callaghan, to ensure the investigation's conclusions are delayed until after the 4 November election.
With signs that America's infatuation with Palin may be waning, some McCain advisers think the move may backfire. The old Washington truism that it's the cover-up, not the crime, that does the real damage, looks like it may travel well in Wasilla. But for now Palin is out of state and immersed in what Democratic wags have dubbed 'Veep Boot Camp'. As part of her preparation for her 2 October debate against Joe Biden, Palin is to attend the UN general assembly this week, where she will get a crash course in global affairs with some of 191 world leaders who are expected to be present.
The general assembly is to open on Tuesday with a speech by President Bush, but calls to the White House and the department of state suggest neither is aware of plans by McCain or Palin to attend. She may, however, attend events organised by the US government, including a Monday-night dinner for Bush and other foreign dignitaries at the Waldorf Astoria, where she could press the flesh with bold-face international names such as Nicholas Sarkozy, Angela Merkel and Gordon Brown.
Palin's immersion in international affairs got off to a shaky start when she was disinvited from her debut event, a rally to protest Iranian president Mahmoud Ahmadinejad's visit to the UN. The Conference of Presidents of Major Jewish Organisations, which is sponsoring the rally, invited Hillary Clinton as its main speaker several weeks back. Last week, the group, mindful of the blizzard of publicity that would follow if Clinton and Palin were to share a stage, invited Palin to co-headline. Palin, wanting to put a shine on her foreign policy credentials, accepted with alacrity.
It would have been a surreal event, an art imitating farce twist on last weekend's Saturday Night Live Palin/Clinton sketch. But the encounter was not to be. Like an aging Hollywood icon, Clinton was not about to be upstaged by the brash, young(er) starlet, and haughtily announced she would not be attending. Palin adopted a wounded 'Miss Congeniality' tone in her "I don't know why she doesn't like me" statement. The organisers fumed, pilloried Clinton, then disinvited Palin.
It's unclear whether the Irish delegation is on her dance card, but it seems even the Northern Ireland peace process, hitherto regarded as something even the most bitterly partisan members of congress could acknowledge as a foreign policy success, is no longer off-limits in the foreign policy slugfest.
A spokesman for the Obama campaign confirmed that, tomorrow, congressmen Joe Crowley and Richard Neal and Maryland governor Martin O'Malley, three of the Democrats' staunchest advocates of Irish causes, will hold a conference call with reporters to discuss McCain's "failed record on issues important to Irish-Americans such as immigration reform, the economy, and securing lasting peace in Northern Ireland".
Although Ireland has never been at the top of his foreign-policy agenda, McCain has supported the peace process. He was a voluble supporter of immigration reform, and spoke at events organised by the Irish Lobby For Immigration Reform, pledging his support for laws that would put illegal workers on the path to legalisation. But an immigration reform bill authored by McCain and Ted Kennedy met with a sudden death in congress, and since then, McCain has been noticeably silent, other than to promise tougher border controls.
With less than four years in the senate, Obama's Irish resumé, aside from his much-vaunted Offaly ancestry, is thin. He may have missed the peace process boat but, should he be the next occupant of the Oval Office, he has pledged to appoint a special envoy to Ireland. His chief foreign policy adviser is Tony Lake, Bill Clinton's former national security adviser, who is credited with persuading Clinton to grant a US visa to Gerry Adams.
Forget Wall Street. When they start squabbling over Stormont, you know the gloves are well and truly off.
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