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John McCain Doesn’t Listen To Economists

John McCain has taken issue with economists. Primarily with ones who say that his gas tax holiday wouldn’t have a positive affect on the economy. At his most recent town-hall meeting hosted by Fox News, John McCain was quoted as saying of such economists “They’re the same ones, I guess, that didn’t tell us about the housing subprime lending crisis. They’re the ones that didn’t tell us about the dot-com meltdown. And they’re the ones that didn’t warn us about inflation that’s coming up.”

Actually, they did tell us about all those things. If John McCain listened to economists he would have heard a number of warnings.

The subprime lending crisis warnings have been sounding for a few years now.

“I’m one guy in a research department, but many people in our mortgage team have been
suggesting that there was froth within the market,” said Jack Malvey, the chief global
fixed-income strategist for Lehman Brothers. “This has really been progressing for
quite some time.”

Others on Wall Street echoed Malvey’s stance. “We’ve contended for a while that there
 was an issue in subprime debt,” said Neal Shear, global head of trading at Morgan
Stanley. “A year ago, we were aware that delinquencies were going to rise.”

It wasn’t that there were no predictions, it was that there were so many people who held
mortgage backed bonds that didn’t understand the risk and were blinded by earning high yields that it gave the market an appearance of doing OK. Many people (but not some economists) fell sway to the idea that if the market is doing well there is no problem.  

Regarding the Dot Com bust, there were plenty of warnings from some from the most influential men in American monetary policy. Warren Buffet and other economists including US central bank chairman Alan Greenspan warned of the dot com bubble as early as 1999 for Mr. Buffet and 1996 for Greenspan. It wasn’t that economists didn’t predict it. It has been argued that Mr. Greenspan didn’t take any action until late 2000 in an effort to provide the Democrats with political capital in the form of prosperous economic times.

And about the warning that inflation is going up, there were also numerous presages. In April of 2005 Policymakers at the Federal Reserve, as well as many other economists expressed some concerns about future inflation. It wasn’t that nobody predicted the rising inflation we’re experiencing. They DID predict the inflation we’re experiencing.  

Honestly, our country could benefit from a president who listens to economists.

While arguing his case for the gas tax holiday, John McCain called out Barack Obama on the gas tax holiday citing his votes in support of a gas tax holiday when gas was a dollar fifty a gallon. But had John McCain been listening to what Obama has been saying, he would have heard Barack Obama say that the gas tax holiday he supported was a failure and cost the people more than it benefited them. He would have heard Obama say that he has experience with this kind of thing and that what the economists are saying is right.

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June 13, 2008 - Posted by | Elections, John McCain | ,

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