Amazed...

After this last week, I'm not sure that I can support Senator McCain for President any longer. His behavior in siding with the partisan House Republicans has made me question his judgement.

Of course Senator McCain doesn't really understand the economy. For that matter, neither does Senator Obama, Senator Biden, Governor Palin, President Bush, or about 99% of our elected government. Presidents Reagan and Clinton really never had more than a very high level understanding.

Its not that I'm saying any of these people are stupid (of course I'm not saying that some of them aren't), in fact President Clinton was in incredibly intelligent man. Its just that economics is an incredibly complex subject with millions of uncontrollable variables. There are people who devote their entire professional career to studying the economy and why it behaves as it does. These are very smart people, and do you know what? They disagree with each other. Don't get me wrong, there are certainly areas of agreement, but economics is not like physics. Ask ten physicists what happens when you drop a baseball from twenty feet high at sea level, and they will give you the same answer as to how fast the ball was traveling when it hits the ground. Ask ten economist what a half percent increase in the income tax rate will do to the overall size of the economy and you might get fifty different answers.

This is part of the reason that I find it highly amusing that political candidates pitch their economic plans to the masses at election time. Its great to educate oneself about the the economy and the candidate's position, but as far as making an informed choice, you might as well flip a coin.

So while I don't expect the candidates or the voters to really understand economics, I do expect them to surround themselves with knowledgeable people, and respect the advice of those experts. Even President's Bush's many critics acknowledge that Secretary Paulson is an extremely sober and competent individual. He and Fed Reserve Chief Bernanke crafted a plan that while expensive, will address the problem of getting bad loans out of the system. Yes, it will cost the tax payers, but it will also preserve the integrity of the economy.

Senator McCain has said that he supports the principles that the House Republicans are fighting for. They proposed an alternative insurance for bad loans and further deregulation. The insurance would have to be retroactive, or it wouldn't accomplish much of anything. Perhaps that is part of the plan. In the long run, I'm not sure that the insurance plan will be any more effective or less costly than Paulson's plan.

What stuns me is that they are asking for more deregulation. In a time where the lack of oversight seems to have contributed to the problem, we want more deregulation? Politically it is an incredibly stupid idea. Its only slightly wiser than just saying "screw all the deadbeats and banks", they deserve what they get. Ironically, a few large financial institutions recently opted to undertake further regulations by changing their classification to banks.

Financial markets definitely need more strict regulation because they depend on the confidence of the investor. People are more confident to invest in something if they know that an objective third party is making sure that things are on the up and up. Can there be too much regulation of financial markets? Perhaps, but I don't think that's a problem that we have right now.

I think that Senator McCain is showing extrodinarily bad judgement. Right now I'm just as likely to sit this race out as vote in it.