October 09, 2008 - Senator McCain's unofficial chief economic advisor, former Senator Phil Gramm of Texas, diagnosed the 2008 financial crisis as a "mental recession". The United States, he said, had become a nation of whiners. Before he became a Senator Gramm had taught economics at Texas A & M. When he left the Senate he became an international banker, one of those fortunate few who garnered performance bonuses even as their bank's portfolios slumped and their shareholders watched as red ink splashed across the ledger pages. America's economy was fundamentally sound, he taught his new eager student, John S. McCain, the Republican Nominee for the Presidency.

There was nothing wrong that a good dose of deregulation couldn't fix. That being so the springtime economic contraction of 2008 could not be real. It was purely a new psychological manifestation of unease. McCain, who had confessed that economics was not his strong suit, bought into the idea and even as the economic horizon spun crazily out the windscreen repeatedly proclaimed to scripted town meeting after town meeting, "The economy is fundamentally strong" as if by repeating that mantra the financial spin would level off leaving the jet pilot in control of the economic aircraft yet again.

It did not work that way. Wishful thinking is no substitute for sound policy. One minute the financial sector was soaring to new heights. It was as if the FAA had been disbanded, the skies deregulated and all of the air traffic controllers had been laid off with thousands of flights still in the air. We found to our horror that there was nobody at the controls. Our grandfathers had learned in 1929 what happened when the brokers, bankers, and insurance agents were all in the same office. In that global crisis strict regulation saved investment capitalism. Still it took nearly a generation and the investment it two wars for the economy to regain the altitude from which it had plunged.

We liked to say that we would never see the like of the Great Depression again. There were, we told ourselves, too many safeguards in place regulating Wall Street. The bursting of the Roaring Twenties Bubble of unrestrained greed and speculation had taught a hard lesson - or so we thought. But even hard lessons are too often forgotten. It won't happen again, we told ourselves and proceeded to dismantle the framework of economic protections we had erected.

Well, it did happen again and the ersatz fighter pilot is fumbling at the controls. Our economic aircraft has stalled and is locked in a spin. John McCain is trying to get into the cockpit by blaming the relaxed de-regulators of the Bush Administration for the Crash of 2008. The fact is that the banking crisis is just a symptom. Our economic wings have lost their lift and the resulting turbulence has cast us into a death spiral.
Reagan was wrong. Government is not the problem. Lack of government is the problem and we need a real leader who understands that only a firm hand can steer us out of the spin.