McCain's sky hasn't fallen just yet

Black Friday was a great headline. But with the Wall Street rally overnight it wasn't to be.

Australian economist John Quiggin has been posting about the current stock markets crisis:

No doubt, this too will pass. But it’s just about impossible to see things returning to the status quo ante. A severe recession now seems inevitable. And when it ends, we’ll be looking at a greatly contracted financial sector, with governments deeply enmeshed in both ownership and regulation. Among the likely consequences, a huge decline in the economic importance of New York City, as the firms that defined Wall Street disappear. What next?

My initial response: It's part of the decline of the American Empire. The inevitable shift to Asia, and back to Europe to some extent, is now in full swing. The Chinese should be able to buy up U.S. assets at bargain basement prices. They'll just be redeeming debt, private and public.

John agrees with It's the stupid economy that this could be the end of John McCain's comeback. Imagine Sarah Palin in charge of the economy as well as being Commander-in-Chief.

Politically, even allowing for the incredible triviality of US election campaigns, it’s hard to see McCain surviving once the implications of this sink in. From the Keating Five to deregulation in the 90s, he’s been in the pockets of the financial sector throughout his career.

It's instructive to look at the scrolling list of academics who endorse the Economic Plan on McCain's website. It's the usual suspects.

First is George Shultz, Ronald Reagan's Secretary of State and Labor and Treasury Secretary under Nixon. He was an adviser to George W. Bush for his 2000 presidential campaign. Currently he is on the Board of JP Morgan and is a member of Stanford University's Hoover Institution.

Another McCainite from Stanford is John Taylor. His profile is hardly that of a Washington outsider:

For four years from 2001 to 2005, Taylor served as Under Secretary of Treasury for International Affairs where he was responsible for U.S. policies in international finance, which includes currency markets, trade in financial services, foreign investment,international debt and development, and oversight of the international Monetary Fund and the World Bank. He was also responsible for coordinating financial policy with the G-7 countries, was chair of the working party on international macroeconomics at the OECD, and was a member of the Board of the Overseas Private Investment Corporation.

A third Hoover professor is John Cogan whose bio includes:

During the 2000 presidential campaign he served as a senior economic adviser to George W. Bush on issues relating to tax, budget, and social security policy. Following the 2000 presidential election, he directed President Bush's budget transition team.

Glenn Hubbard is Dean of the Columbia University Graduate School of Business. He was one of the designers of Bush's 2003 tax cuts. He also chaired the Council of Economic Advisors for President George W. Bush for two years.

There are also a number of Nobel Prize winners such as Gary Becker, who at 77 is just a touch older than the candidate. His professorship is at the University of Chicago, but he is also a Senior Fellow at the Hoover Institution.

John McCain tries to distance himself from George W. Bush and the so-called Washington establishment. He wants to be seen as the outsider despite spending 26 years in Congress. There must be some irony in his connection to the Hoover Institution given Herbert Hoover's presidency at the start of the Great Depression.

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