By Greg Sargent - Talking Points Memo
Counter-terrorism expert Richard Clarke dares to broach publicly the scenario that most will only discuss in private: The possibility of a terror attack, or the release of another Bin Laden tape, right on the eve of the election:
U.S. intelligence and security officials are worried. They admit that there is nothing concrete that suggests another attack, but they fear that al Qaeda may try something, maybe even in the United States...
At the very least, expect another Halloween video from the scary man in the cave...
Even more likely is the possibility that al Qaeda would hope the attack would benefit John McCain. Opinion polls, which, as noted above, al Qaeda reads closely, suggest that an attack would help McCain. Polls in Europe and the Middle East also suggest an overwhelming popular support there for Barack Obama. Al Qaeda would not like it if there were a popular American president again.
When dealing with this topic, it's always worth recalling that CIA analysts reportedly did conclude that Bin Laden had released the tape in order to help Bush stay in power, partly because his presidency made such a handy recruiting tool.
John Kerry has said that the Bin Laden tape released days before Election Day 2004 helped tip the election to Bush. But Kerry and his aides were caught off guard, and even alarmed, by the surfacing of the tape. One imagines -- indeed, one has no doubt -- that the Obama team is already thinking this through right now.
(Via Matthew Yglesias, whose new book on foreign policy and Democrats comes heartily recommended by this blog.)
Today's Feature Story:
David Corn - Mother Jones
On August 7, 1998, hundreds of people were killed when terrorists detonated car bombs at the U.S. embassies in Tanzania and Kenya. Almost immediately, the United States had evidence that a little-known group called al Qaeda was complicit in the attacks. Though al Qaeda and Osama bin Laden had been plotting against the United States for years, this act of mass-murder won the band of Islamic terrorists and its leaders worldwide infamy. Weeks after the attack, President Clinton fired scores of Tomahawk missiles at a suspected al Qaeda training camp in Afghanistan, and he also attacked a pharmaceutical factory in Sudan his administration claimed was a chemical weapons plant.
Ten years later, this past August 7, John McCain released a statement on the anniversary of the embassy bombings. It was a harsh indictment of the Clinton administration and others who in McCain's estimation had not regarded the threat of al Qaeda with sufficient seriousness back then:
Today marks the 10th anniversary of the al Qaeda terrorist attacks on U.S. embassies in Kenya and Tanzania that killed more than 225 people, including 12 Americans, and injured thousands others. The attacks made it painfully clear that al Qaeda's terrorist call to arms to attack Americans anywhere in the world was not an empty threat. The attacks proved the vulnerability of U.S. installations overseas, and demonstrated -- to any that needed further evidence -- that al Qaeda was a well-funded, organized and treacherous terrorist organization determined to kill Americans. Tragically, the U.S. response to the 1998 embassy bombings was wholly inadequate in addressing the threat posed by Al Qaeda despite the horrific toll of the embassy bombings in Kenya and Tanzania. Too many Clinton Administration officials refused to act effectively to counter the dangers posed by al Qaeda. Three years later, al Qaeda's commitment to kill was devastatingly brought to our soil.
But at the time--even after the embassy bombings--McCain, too, was slow to recognize the nature of the threat posed by al Qaeda and bin Laden. Weeks after these attacks, he even came across as dismissive of bin Laden as a danger and showed no enthusiasm for hunting down this terrorist and his al Qaeda allies. And he did so in a Mother Jones interview.
In mid-September 1998, journalist Jason Vest, on assignment for the magazine, conducted an hour-long interview with McCain. At the time, McCain's efforts to pass campaign finance reform and anti-tobacco legislation had made him, as Vest put it, "the darling of political reporters." Much of the interview covered issues of money and politics. But with the embassy bombings still in the news, Vest asked McCain about bin Laden and how to deal with terrorism. The following exchange ensued:
Vest: You not only have had combat experience in Vietnam, but you were also a prisoner of war. When you look at terrorism right now, with people like Osama bin Laden, do you have any reservations about watching strikes like that?
McCain: You could say, Look, is this guy, Laden, really the bad guy that's depicted? Most of us have never heard of him before. And where there is a parallel with Vietnam is: What's plan B? What do we do next? We sent our troops into Vietnam to protect the bases. Lyndon Johnson said, Only to protect the bases. Next thing you know....Well, we've declared to the terrorists that we're going to strike them wherever they live. That's fine. But what's next? That's where there might be some comparison.
McCain's answer makes it seem that he was not overly concerned about bin Laden or eager to go after him and that he was worried that military action against al Qaeda could draw the United States into another quagmire. That is, he was talking like those people whom McCain attacked in 2008 for not having realized in 1998 that "al Qaeda was a well-funded, organized and treacherous terrorist organization determined to kill Americans."
On August 20, 1998--the day that Clinton attacked the al Qaeda camp in Afghanistan and the factory in Sudan--McCain did issue a press release praising the military action as a "welcome response" He added that "American credibility and resolve have been enhanced by today's strikes." Two days later on CNN, he again hailed Clinton's response: "The president's decision to strike and his administration's promise to prevail in what may well be a long-term campaign were right." But a search of the Congressional Record at www.thomas.loc.gov indicates McCain made no statements on the Senate floor regarding bin Laden or al Qaeda any time that year. And a Nexis search of the six months following the embassy bombings produced no references to any McCain comments related to this terrorist outfit and its leader--other than his praise for Clinton's retaliatory strikes.
McCain's 1998 remarks to Mother Jones and the absence of public statements from him about bin Laden at the time suggest that McCain had been as much behind the curve on al Qaeda as the people he would decry ten years after the fact. At the time, he did not in public treat al Qaeda as a serious danger or advocate swift and extensive action. A decade later, he had no reason--other than politics--to be pointing fingers.
By Garrison Keillor, International Herald Tribune / Alternet
It wasn't their money Wall Street was playing with. It was ours.
Where were the cops?
It's just human nature that some calamities register in the brain and others don't. The train engineer texting at the throttle ("HOW R U? C U L8R") and missing the red light and 25 people die in the crash -- oh God, that is way too real -- everyone has had a moment of supreme stupidity that came close to killing somebody. Even atheists say a little prayer now and then: Dear God, I am an idiot, thank you for protecting my children.
On the other hand, the America's federal bailout of the financial market (yawn) is a calamity that people accept as if it were just one more hurricane. An air of crisis, the secretary of the Treasury striding down a hall at the Capitol with minions in his wake, solemn-faced congressmen at the microphones. Something must be done, harrumph harrumph.
The Current Occupant pops out of the cuckoo clock and reads a few lines off a piece of paper, pronouncing all the words correctly. And the newscaster looks into the camera and says, "Etaoin shrdlu qwertyuiop."
Where is the outrage?
Poor Senator Larry Craig got a truckload of moral condemnation for tapping his wingtips in the men's john, but his party proposes to spend 5 percent of the GDP to buy up bad loans made by men who walk away with their fortunes intact while retirees see their 401(k) go pffffffff like a defunct air mattress, and it's business as usual.
John McCain is a lifelong deregulator and believer in letting brokers and bankers do as they please -- remember Lincoln Savings and Loan and his intervention with federal regulators in behalf of his friend Charles Keating, who then went to prison? Remember Neil Bush, the brother of the C.O., who, as a director of Silverado S&L, bestowed enormous loans on his friends without telling fellow directors that the friends were friends and who, when the loans failed, paid a small fine and went skipping off to other things?
McCain now decries greed on Wall Street and suggests a commission be formed to look into the problem. This is like Casanova coming out for chastity.
Confident men took leave of common sense and bet on the idea of perpetual profit in the real estate market and crashed. But it wasn't their money. It was your money they were messing with. And that's why we need government regulators. Gimlet-eyed men with steel-rim glasses and crepe-soled shoes who check the numbers and have the power to say, "This is a scam and a hustle and either you cease and desist or you spend a few years in a minimum-security federal facility playing backgammon."
The Republican Party used to specialize in gimlet-eyed, steel-rim, crepe-soled common sense and then it was taken over by crooked preachers who demand Americans trust them because they're packing a Bible and God sent them on a mission to enact lower taxes, less government. Except when things crash, and then government has to pick up the pieces.
Some say the tab might come to a trillion dollars. Nobody knows. And McCain has not one moment of doubt or regret. He switches from First Deregulation Church to Our Lady of Strict Vigilance like you might go from decaf to latte. Where is the straight talk? Does the man have no conscience?
It wasn't their money they were playing with. It was yours. Where were the cops?
What we are seeing is the stuff of a novel, the public corruption of an American war hero. It is painful.
First, there was McCain's exploitation of a symbolic woman, an eager zealot who is so far out of her depth that it isn't funny anymore. Anyone with a heart has to hurt for how McCain has made a fool of her. Never mind the persistent cheesiness of his attack ads. And now this chasm of debt and loss and the gentleman pretends to be shocked. He was there. He turned out the lights. He sent the regulators home.
McCain seems willing to say anything, do anything, to get to the White House so he can go to war with Iran. If he needs to recline naked in a department store window, he would do that, or eat live chickens, or claim to be a reformer. Obviously you can fool a lot of people for a while and maybe he can stretch it out until mid-November. But the truth is marching on. A few true conservatives led the charge against the bailout. Good for them. But how about admitting that their cowboy economic philosophy was at fault here?
By Arthur Blaustein - TruthDig
Most Americans have one eye on the nation’s financial crises and the other on the presidential election. And they are asking themselves, “Is McCain or Obama, the Democrats or the Republicans, better for the economic health of the country, as well as for my own financial well-being?” That is the defining question of this election.
A businessman who voted for Bush twice and Clinton in 1996, told me, “Barack Obama sounds really impressive and I have to admit that the goals of his social programs—particularly health care, education and the environment—seem good. But I’m worried the Democrats can’t manage the economy as well and they’ll get into my wallet.”
Many voters agree, and a recent poll shows that an overwhelming majority cites the economy as their top concern. For years the pollsters have found that most voters believe the Republicans do better with the economy. I’ve heard the businessman’s basic point—that the Democrats have better social policies but the Republicans are better managers of the economy—more often than I’ve heard Judy Garland sing “Over the Rainbow.” But is it true? Don’t count on this question being examined and answered in a full, open and honest debate.
Twenty-eight years ago—with the election of Ronald Reagan—we entered an entirely new phase of presidential politics. The focus since then has been on who can raise the most money and package the best media image, rather than who demonstrates the most competence and capacity to govern. Our country’s political, economic and social life has been reduced to a battle of 15-second sound bites and 30-second commercials, with results reported like a football score. TV news has turned democracy into “duhmocracy.”
Fortunately, we don’t have to depend on campaign slogans or advertising bucks to frame the debate. We can look to the record. Here’s the Economic Sweepstakes Quiz. The rules are simple. Guess which president since World War II did best on these eight most generally accepted measures of good management of the nation’s economy. You can choose among six Republicans: Eisenhower, Nixon, Ford, Reagan, Bushes I and II; and five Democrats: Truman, Kennedy, Johnson, Carter and Clinton. (No peeking.)
Which president produced:
1. The highest growth in the gross domestic product?
2. The highest growth in jobs?
3. The biggest increase in personal disposable income after taxes?
4. The highest growth in industrial production?
5. The highest growth in hourly wages?
6. The lowest Misery Index (inflation plus unemployment)?
7. The lowest inflation?
8. The largest reduction in the deficit?
The answers: 1. Harry Truman, 2. Bill Clinton, 3. Lyndon Johnson, 4. John F. Kennedy, 5. Johnson, 6. Truman, 7. Truman, 8. Clinton. In the Economic Sweepstakes, Democratic presidents trounce Republicans eight times out of eight!
If this isn’t enough to destroy the myth that the economy has performed better under Republicans, the stock market has also done better under the Democrats. The Dow Jones Industrial Average during the 20th century has risen 7.3 percent on average per year under Republican presidents. Under Democrats, it rose 10.3 percent – which means investors gained a whopping 41 percent more. And the stock market declined further during George W’s two terms. Moreover, since World War II, Democratic presidents have increased the national debt by an average of 3.7 percent per year and Republican presidents have increased it an average of 10.1 percent. During the same time period, Democratic presidents produced, on average, an unemployment rate of 4.8 percent; Republicans, 6.3 percent. That’s the historical record.
What about economic policies over the past 15 years? The Clinton-Gore administration presided over the longest peacetime economic expansion in our history. The national debt was reduced dramatically, the industrial sector boomed, wages grew and more Americans found jobs.
How has the Bush-Cheney team fared? In the past seven years, we have experienced the weakest post-recession job creation cycle since the Great Depression, record deficits, record household debt, a record bankruptcy rate and a substantial increase in poverty. We have gone from being the nation with the biggest budget surplus in history to becoming the nation with the largest deficit in history.
What is downright frightening is that Bush and John McCain seem to still believe an unregulated free market will solve America’s economic problems. Barack Obama, on the other hand, maintains that government has the responsibility to keep our economy on the right track. Obama says he will work toward reducing the debt and deficit. He pledges to help the middle class and the working poor by maintaining benefit levels and eligibility for the Earned Income Tax Credit. He will hold the line on our tax progressivity and fairness by rolling back the Bush tax giveaways to taxpayers earning over $250,000 annually. And Obama wants to target health care, education, affordable housing, alternative energy and the environment with critical investments.
McCain wants to privatize Social Security and probably Medicare, although he gets dangerously vague about this at election time. To finance government spending in the wake of his tax cuts for the wealthy, Bush has borrowed heavily from the Social Security Trust Fund. At the same time, the United States owes huge amounts to foreign investors. McCain and George W. are mired in the failed economic policies of Republican predecessors. In 1980, Bush I called supply-side policies “voodoo economics.” But he embraced these “trickle-down” policies in order to become vice president and then president. Reagan and both Bushes’ royalist economic policies of the 1980s and the past seven years were failures—a fool’s paradise built on the sands of borrowed time and borrowed money. The consequences were staggering debt, industrial decline, shrinking wages, four painful recessions, increased poverty and structural unemployment. The reckless Reagan-Bush-Bush spending and borrowing has brought us to the brink of social catastrophe and economic depression.
Claims of being a maverick aside, McCain has emerged as nothing more than a supply-sider in the mold of George W. and Reagan. Since George W. took office, corporate profits have soared, while workers’ wages and benefits have been flat. That shows just who is the object of Bush’s conservative compassion. The Bush administration, supported by Republicans on Capitol Hill, pushed through a sweeping tax cut in 2001, under which the wealthiest one percent of Americans reaped 43 percent of the gain. In less than a year and a half, the federal government’s 10-year projected budget surplus of $1.6 trillion had vanished. In 2000, we had a surplus of $236 billion. In 2004, we had a deficit of $413 billion. This dramatic reversal is the direct consequence of Bush’s tax cuts. Since then, the Bush/McCain answer for the nation’s economic woes has been deregulation and more tax cuts for wealthy individuals and corporations, who by no coincidence contribute heavily to the McCain campaign. It’s “trickle-down” economics with a vengeance.
Since the conventions, McCain and his surrogates have been pounding away at the Democrats, labeling them as the “tax and spend” party. Yet recent research has shown that more than 70% of our national debt was created by just three Republican presidents. There’s an old expression in Las Vegas: “Figures don’t lie but liars figure.” Moreover, according to research from professor Larry Bartels of Princeton, real middle-class wage growth is double when a Democrat is president, contrasted to a Republican president.
So, while McCain and Sarah Palin compose hymns to patriotism, rugged individualism, “trickle-down” economics, “staying the course” on Bush’s tax cuts and family values, they are also embracing the very economic policies that undermine both the middle class and subvert the security of American family life.
American families need less pious rhetoric, and more policies geared toward a healthy economy, secure jobs, decent health care, affordable housing, quality public education, renewable energy and a sustainable environment. McCain seems unable, or unwilling, to grasp that the government has an important leadership role in this. In fact, providing tax giveaways for the rich and for corporate America is the only policy that seems to energize McCain and the Republicans in Congress, while Obama has pledged to repeal those very same giveaways. And, contrary to the GOP rhetoric, 90 percent of Americans—people making under $112,000 a year in individual income—would pay less taxes under Obama’s plan.
With four more years of McCain practicing Bushonomics, we could very well wake up one morning on the “economic endangered nations” list. Deficits and debt could strangle our economy for the next generation and all but the wealthy will have a tough time making ends meet.
Barack Obama has demonstrated a willingness to confront these painful realities. On overall economic policy, he offers qualities indispensable to genuine leadership for America—patience, fairness, candor and vision. We need an administration that understands and believes in coherent, comprehensive and equitable policies that promote sustainable economic growth— and, on that count, Democrats have a winning record.
By Jason Leopold - Consortium News
A Republican-dominated federal Appeals Court panel has blocked the enforcement of a congressional subpoena, effectively guaranteeing that George W. Bush will leave the White House without his senior aides having to explain the firings of nine prosecutors.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia granted the White House a stay on subpoenas that sought testimony from former White House counsel Harriet Miers and internal documents from White House Chief of Staff Josh Bolten.
The panel also refused to expedite consideration of a White House appeal challenging a District Court ruling that had ordered Miers and Bolten to comply. In other words, the stay either ends the case or forces the next Congress to renew the subpoenas in 2009 after Bush leaves.
Two of the Appeals Court judges were appointed by Republicans – Douglas Ginsberg by Ronald Reagan and Raymond Randolph by George H.W. Bush. The third judge, David Tatel, was appointed by Bill Clinton.
The two Republican judges said they were granting the stay to give the Bush administration more time to defend its broad claims of executive privilege, but they also refused to hear the appeal and noted that the subpoenas would expire at the end of the year when the 110th Congress dissolves.
“In view of the above considerations, we see no reason to set the appeal,” the ruling said. “If the case becomes moot, we would be wasting the time of the court and the parties."
Democratic-appointed Judge Tatel, while concurring on the stay, questioned the Republican judges’ logic.
“I am perplexed by the panel majority’s willingness to grant a stay while hypothesizing that the expiration of the 110th Congress might moot the case before it is heard on the merits,” Tatel wrote. “Never have we granted a stay that would have the effect of irrevocably depriving a party of its victory in the District Court” before Judge John Bates.
Tatel said he joined in the ruling because he believed the 111th Congress could revive the case when it convenes in 2009, although that means the Bush administration would have succeeded in delaying a resolution of the controversy until President Bush had left office.
Possible Appeal
House Judiciary Committee Chairman John Conyers indicated that his committee would appeal the decision, but he did not say whether he would wait until next year to do that.
"While the delay caused by this incorrect decision is unfortunate, at the end of the day, I believe Judge Bates's decision will be affirmed and that Harriet Miers and other key witness will appear before the House Judiciary Committee, and that we will get to the bottom of the Bush administration's disgraceful politicization of the Justice Department," Conyers said.
On July 31, Judge Bates ruled that the White House’s legal argument of blanket executive privilege lacked legal precedent and that Miers must comply with the congressional subpoena, invoking executive privilege only on a question-by-question basis.
Bates called the White House executive-privilege position “entirely unsupported by existing case law. … In fact, there is Supreme Court authority that is all but conclusive on this question and that powerfully suggests that such advisors do not enjoy absolute immunity.”
The White House then sought a stay of Bates’s ruling pending appeal.
Carl Nichols, the Justice Department’s deputy assistant attorney, told the Appeals Court panel that Miers would suffer professionally and personally if she were forced to testify before Congress about the U.S. Attorney firings. However, Nichols did not provide details on how that might occur.
Meanwhile, House counsel Irvin Nathan said Miers has crucial information to help the Judiciary Committee move its probe forward.
The dispute arose when President Bush forbade Miers and Bolten to comply with a congressional subpoena about the prosecutors’ firings in 2006. The House then voted to hold the two officials in contempt of Congress, the first time in 25 years a full chamber of Congress has voted on a contempt-of-Congress citation.
Last week, the Justice Department’s Inspector General and the Office of Professional Responsibility issued a 356-page report on the U.S. Attorney firings that “found significant evidence that political partisan considerations were an important factor in the removal of several of the U.S. Attorneys.”
Inspector General Glenn Fine and H. Marshall Jarrett, head of the Office of Professional Responsibility, found that Miers was involved in at least two of the dismissals and that Bolten played a role in at least one.
Neither Miers nor Bolten agreed to be interviewed by the Justice Department’s internal watchdogs.
‘Hindered’ Probe
Although Miers’ refusal to cooperate “hindered” the 18-month investigation, Fine and Miers were able to piece together enough evidence to conclude that Miers likely played a role in the firing of John McKay, U.S. Attorney for the Western District of Washington.
According to the report, McKay’s firing was due, in part, to the fact that he would not convene a federal grand jury and secure indictments of alleged voter fraud in the 2004 governor's race in the state in which Democrat Christine Gregoire defeated Republican Dino Rossi by a margin of 129 votes.
In an interview last year, McKay said some Republicans in his district with close ties to the White House demanded that he launch an investigation into the election and bring charges against individuals for voter fraud. But McKay concluded there was no evidence to support the suspicions.
McKay also said he believes he was not selected for a federal judgeship by local Republicans in Washington State last year because he did not file criminal charges against Democrats.
McKay said he requested a meeting with then-White House Counsel Miers to discuss the matter.
"I asked for a meeting with Harriet Miers, whom I had known since work I had been involved in with the American Bar Association, and she immediately agreed to see me in August of 2006," McKay told me.
McKay said that when he met with Miers and her deputy William Kelley at the White House, the first thing they asked him was, "Why would Republicans in the state of Washington be angry with you?"
That was "a clear reference to the 2004 governor's election," McKay said in characterizing Miers’s and her deputy's comments. "Some believed I should convene a federal grand jury and bring innocent people before the grand jury."
The meeting with Miers and Kelley did not have a positive impact on McKay's request to be appointed a judge at U.S. District Court. Instead, McKay said it appears that he landed on the list of U.S. Attorneys to be fired just a few weeks after his meeting with Miers and Kelley.
Moreover, according to the report, Miers was involved in pushing out Bud Cummins, the U.S. Attorney for the Eastern District of Arkansas.
Bolten was allegedly contacted by Steve Bell, chief of staff to Sen. Pete Domenici, R-New Mexico, who expressed dissatisfaction with the state’s U.S. Attorney David Iglesias, according to the report, because Iglesias would not prosecute alleged voter fraud cases.
Bell allegedly asked Bolten whether the White House could intervene and have Iglesias removed, according to the report.
Bolten and Miers still may find themselves subpoenaed by Nora Dannehy, a federal prosecutor from Connecticut who was appointed by Attorney General Michael Mukasey to continue the investigation.
Dannehy may have subpoena power, something that Fine and Jarrett lacked. She is charged with investigating whether any Justice Department or White House officials committed crimes as a result of the firings and in their efforts to cover it up after the fact.
Dannehy is expected to file preliminary report with the Justice Department in 60 days.
Five prominent economists share their thoughts on what's happening and how bad the situation really is.
The past week has seen the US economy rocked by some of the worst global financial turmoil in decades, with venerable firms collapsing, global banks and governments pouring huge sums of money into financial markets in a bid to ease turmoil and thousands facing unemployment or financial ruin.
As US officials announce planned measures to tackle the crisis, Al Jazeera asked five prominent economists: Does the crisis signal the end of US-style capitalism? And if so, what are the lessons learned?
James Galbraith, economist, professor at University of Texas, Austin
This does not mean the end of the United States' position in the world economy.
The US dollar has not moved, which does suggest that the position of the US government is still very much intact.
I think what it means is that in the future the big firms will have a smaller presence.
The years when the US government took the position that financial firms can run the country as they see fit and that regulation could be dismised is finished. There will be a major examination of how the financial markets are regulated.
Such financial events will have a lagged effect on everyone ... its most likely consequence is that the credit crisis will get more intense and the foreclosure crisis will get worse.
We will have to wait and see. But people do not learn from mistakes. How many times do we have to go through this?
'Enormous mess'
A well-functioning financial system has rules and it's when the rules are relaxed that shady practices and get rich quick schemes abound, which is what happened in the [sub-prime] mortgage system in 2005 and 2006.
The banks' behavior was conditioned by Bush. [He] sent a clear signal that they could get away with everything, [that there was] no more effective supervision so go ahead and make toxic loans, we won't stop you, then everyone made a bundle and left an enormous mess.
The evolution of good conduct is defined by effective rules. John McCain [the Republican presidential candidate] lectures on the morals of Wall Street but they are no more or less corrupt than other humans.
A full recovery will only begin with a new administration with a different philosophy seriously committed to ... bringing in new people, giving them adequate resources and the legal authority.
I would argue it is impossible for McCain to do it. Even if he is a genuine convert to prudent regulation which he has opposed thoughout his career, who would believe it?
He has been an enabler of the most speculative elements of banking system.
I think Barack Obama [Democratic presidential candidate] appreciates the severity of the issue and has the judicious temperament.
This is not a job for zealots or revolutionaries, it's for serious people to build institutions that can last for a long time.
Gerald Friedman, economics professor, University of Massachusetts
The end of US capitalism? I really doubt it.
This is a very serious financial crisis and if mishandled could become a serious recession even a depression, but it is unlikely to be as bad as the Great Depression of 1929-40 as the authorities have learned to co-operate in crises.
More importantly, a capitalist system - or any social system - can only be brought down by an opposing system supported by a rising economic class.
There is no such contender on the horizon right now to challenge capitalism. So, we'll continue to muddle along.
Still, it will be bad all around unless we change direction. An effective anti-depression strategy would help those with bad mortgages so that they will be able to make payments on their mortgages and keep their houses; such a policy would help the banks by allowing for a "trickle-up" effect.
Instead, the Federal Reserve is trying to hold back the tide of defaults and foreclosures by helping the top.
At best, this will transfer the costs to average Americans, who lose their homes, watch their neighbours lose their homes, and will in many cases lose jobs when construction and other businesses fail.
Foreigners will be hurt too because many banks and other financial institutions outside the US have invested heavily in US securities including mortgages and stocks and bonds in US investment banks.
Helping the people
We need a trickle-up strategy: Help the financial barons by helping the people.
The US should provide major help to people holding mortgages to renegotiate these and to make some payments so that people can stay in their homes and banks will be able to continue to carry these mortgages on their books.
There should also be a major increase in unemployment benefits so laid-off workers are protected and can continue to buy things and make payments on their debts. This, too, will help the banks.
We should also have a major public works programme to employ laid-off construction workers in overdue infrastructure building and have strict new transparency requirements on banks and other financial institutions.
The Fed, the Treasury, and foreign central banks (especially the European Central Bank and the Bank of Japan) should announce that they will stand behind every major bank and financial institution so that average investors will be absolutely protected.
This will end panic selling and allow the markets to stabilise.
At the same time, the Fed and others should take an equity stake in these institutions to to pry open the accounting records and to enforce new regulations that would clearly separate normal business operations from the speculative activities of the last decade.
Mark Weisbrot, co-director, Centre for Economic and Policy Research (CEPR)
No, the US Federal Reserve has the capacity to provide enough liquidity so this crisis can be smoothed over.
But it's not going to end the bankruptcies of institutions that are financially insolvent, including some major banks.
The problem is the real economy [ie. not the financial markets], which is on a downwards path because of the housing bubble, and it will continue even if banking crisis is resolved.
There have been a lot of crisis in the last 40 years and this happens to be the worst one since the US depression (in the 1930s) but I wouldn't exaggerate it.
It is not like the 1930s, we have learned from that period. This time the Fed and banks have pumped hundreds of millions of dollars of liquidity into the market and as long as they are willing to do that we should be able to minimise the impact of the credit crunch on real economy.
'Serious recession' fears
The economy will slow down because consumers are not borrowing against their homes as they did since 2001 when the last recession ended, that is what drove the last recovery - rising home equity. That process is now in reverse.
The solution is fiscal policy, the government can make up for slowing demand - it did some work with the stimulus package and if willing to do more the US can neutralise the effect of recession.
However, I don't think they'll be smart enough so there will be a serious recession.
The most affected are those who have lost jobs, people who have lost homes, millions losing equity or life savings - these are top the three negative impacts.
Should the US rethink its policies? No doubt. Even John MCain is acknowledging that, must be a change of policy?
The most important question not being asked is a simple one – why was this housing bubble allowed to grow to catastrophic portions? This shouldn't have happened.
I think we can blame media irresponsibility to an extent, as the [journalists] that report should have looked at the numbers, but I think they were following Alan Greenspan [former chairman of the Federal Reserve] and he had to know there was a bubble.
John Berlau, Competitive Enterprise Institute (CEI)
Is this the end of US capitalism? No, because we haven't had pure capitalism for a long time.
Our banking system is heavily regulated, but we have outdated rules for banks and we should be getting rid of these rules for banks so they can compete with hedge funds.
More competition is needed, everyone is bashing the short sellers but they are heroes - they were right and we should have been listening to them years ago.
Savings and mutual funds should be able to short bank funds as well. I think one way of lessening risk is letting common investment vehicles use those strategies, if more had been shorting we would not have a bull market now.
I think we need a modernisation of regulation and an updating of rules but that does not mean more.
'Moral hazard'
The Bush administration is hardly deregulatory – they put in rules after the Enron scandal which cost companies billions of dollars and also had accountants chasing after minutiae and not the big stuff.
We have had some regulation and it did not turn out to do much good. So examining what makes sense and doesn't could be good.
The US housing crisis has not impacted as much as some might think. It is only if people were involved in real estate or had to sell now. Oil prices increasing and inflation would have much more effect on lives of everyday Americans than the failure of a big banking firm.
It was right to let Lehmans to let them go bankrupt and not right to bail out AIG, how is that aiding ordinary Americans? It's a moral hazard if we bail out everyone out.
Failure is a part of capitalism but we also have to be responsible for the outcomes.
No 'scapegoats'
People who took risks and got big loans should learn their lesson. I have sympathy for those who were deceived and the government should punish fraud but the people who gambled should have live with the consequences and neither should a borrower be bailed out.
[We should look at] accounting rules and what makes regulatory sense, so if one bank sells a bad loan and others are spreading that contagion that should be looked at.
The government created Fannie Mae and Freddie Mac as implicitly government supported so they were not as careful as other firms, they inflated the bubble.
Polititians also pushed this idea that everyone should have a home, some of the laws they created encouraged banks to abandon underwriting standards and accusing them of discriminatign against the poor, it must be more transparent.
Everyone is looking for scapegoats but it is about the antiquated rules, not more or less regulation, and what makes sense for the 21st century.
James S Henry, economist, author of The Blood Bankers
This certainly changes the nature of US capitalism. It is not the the end of it, but it is the beginning for a new more carefully regulated financial and housing sector and I thnk with much more government oversight.
We have allowed basically a more or less hands off policy towards major financial institutions at the core of the economy. We've deregulated and now we must regulate.
The system as we know it exercises enormous political and economic power and we should have learned about the perils of this kind of "laissez-faire" approach.
Every time we act as if this has never happened before when actually lessons could have been learned much earlier.
Years of neglect
Is either political party ready to take a new approach? Many are ideologically beholden to the neo-liberal approach of financial capitalism.
But there is a whole new generation of younger ecomomists who will be more activists and less free market oriented.
Ironically, we've had all kinds of government intervention but it's been on the side of the institutions - what's the national interest there?
There are enormous ramifications for developing nationsas the US is a main trading economy. People from Mexico and the Philippines come here to send back billions in remittances but those flows are declining.
Trade will also suffer. We're a big market for industrial countries such as China, Japan and Canada. Middle tier countries such as Brazil and India may also notice some immediate impact.
And from the standpoint of Europe, there has been a major loss of net worth to lots ordinary investors and homeowners, so it will have real impact on the main street economy in the first world,.
The sources of credit people have lived off for year are drying up and will have big impact on consumption.
I don't think we need to worry about collapse, it's more like stagnation, many years of trying to work off loans and bad debts.
We are suffering from years of neglect, we'll learn that you need a market economy that is led and regulated intelligently, with strong government institutions with smart people not hostage to the institutions they are regulating.
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