Required Reading: Obama and AIG
1:14 PM, Sep 17, 2008 • By DEAN BARNETT
Barack Obama - still voting present after all these years.
In dilating endlessly on the AIG bailout, Barack Obama declined to say whether or not he supported it. He did, however, condemn the bailout as sadly reflective on John McCain. But again, he didn't deign to say whether or not he thought the bailout was a good thing. How depressing! If ever we needed someone with magnificent judgment, it's now.
There's a staggering amount of Obamian economic ignorance on display here. Let's start with the "crony capitalism" charge. Who, pray tell, were AIG's cronies the past two years? I don't recall the Democratic congress rushing through a rash of oversight or regulatory measures. Of course, Obama is using the clichÃ© of "crony capitalism" in the same manner he often uses his rhetoric - as an impressive way of saying nothing while seeming to be uttering some remarkable profundity.
Here's some more bad news for Obama - in spite of his pathetic class warrior Schadenfreude over Main Street's difficulties trickling up to Wall Street, that's not what happened here at all. Wall Street made its own mess, creating the subprime crisis by issuing million of mortgages that defied economic sense. What will happen is that as Wall Street struggles with this mess, the pain will in fact trickle down to Main Street. Getting a mortgage will be much more difficult than it was. Homeownership will drift out of reach for many Americans. Unless Wall Street can pull itself together fast. To put it simply, Senator Obama seems to have no understanding of the symbiotic relationship between Wall Street and Main Street. He seems to believe that Wall Street is a nattily dressed predator that preys on ordinary folks like his humble next door neighbors the Rezkos. That's what Saul Alinsky probably thought.
Obama also seems to have no grasp of why the AIG bailout was necessary. It wasn't because a lot of consumers would have lost their homeowners' policies or life insurance. If AIG had gone under, those profitable parts of AG's business portfolio would have been scarfed up by eager third parties before sundown. To give you (not to mention Senator Obama) the Reader's Digest version of things, the parts of AIG that write consumer policies are essentially a separate company from the part that's in trouble. The reasons for this are too boring to get into, but it has a lot to do with state regulatory guidelines that cover consumer insurance policies.