Thursday, October 16, 2008

The End of Friedmanite Economics

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By Mike Whitney

1--On Monday, the stock market recorded its biggest one day gain in history on news that the G-7 had settled on a plan to recapitalize the banking system. The Federal Reserve, the European Central Bank (ECB) and the Bank of England (BOE) all agreed to make direct capital injections into "systemically important" banks so they could resume lending and reduce stress in the credit markets. They also decided to insure deposits and to guarantee interbank lending. Do you think that these unprecedented steps will be enough to avert a meltdown of the financial system?

Robert Pollin: Of course, by Tuesday, the Dow fell again by over 733 points. Meanwhile, the Niekkii in Japan fell by 10 percent on Wednesday. So, thus far, the answer to whether these steps are enough, on their own, to avert a meltdown is a resounding “no.” At the same time, to be fair, these measures have yet to have any real effect on banks’ balance sheets. Thus far, the stock markets are only responding to their own guesses as to what benefits, if any, these measures will have on stabilizing the balance sheets of financial institutions.

But there is another element that came into play especially over the past day. That is the reality within financial markets that the economic crisis has spread beyond Wall Street itself. It is now clearly becoming a crisis—a recession or depression, choose your own term--spreading into the realm of jobs, incomes, public sector budgets, and private non-financial profits as well. This means that averting a meltdown of the financial system will also require a massive stimulus of the non-financial side of the economy. We haven’t heard yet about any significant plans along these lines.

2-- How much of the present crisis can be blamed on ideology? Do you think that the ideas of Milton Friedman or the 30 year-long bias towards market fundamentalism contributed to the present troubles in the financial markets? Is this the end of the laissez-faire, free market "trickle down" era?

Robert Pollin: This is certainly a massive crisis of Friedmanite economics and neoliberalism more generally—which all along was the ideology that touted free markets and deregulation to privatize profits, but to come begging for government bailouts when the inevitable crises emerged. This is certainly not the first financial crisis under the neoliberal regime. There have been regular severe crises since the 1987 Wall Street crash. These crises were all quelled through Federal Reserve/Treasury bailout operations. Whether or not this crisis will mean the end of the neoliberal era will depend on political mobilization—specifically, how successful the left will be in building coalitions behind an agenda that combines egalitarianism with a stable financial system. I would say this: if the left is unable to defeat neoliberalism now, and build some version of social democracy or “leashed capitalism”, then we will never do it.

3--Secretary of the Treasury Henry Paulson's $700 billion bailout plan was opposed by over 200 economists. The vast majority of the economists supported the idea of capital injections into struggling banks rather than buying up their toxic mortgage-backed assets. (EU nations settled on the capital injections plan, too) On Monday, according to the New York Times, Paulson met with a group of CEOs from the country's largest banks and announced his plans for distributing the first $250 billion provided by Congress.

"Citigroup and JPMorgan Chase were told they would each get $25 billion; Bank of America and Wells Fargo, $20 billion each (plus an additional $5 billion for their recent acquisitions); Goldman Sachs and Morgan Stanley, $10 billion each, with Bank of New York Mellon and State Street each receiving $2 to 3 billion. Wells Fargo will get $5 billion for its acquisition of Wachovia, and Bank of America the same for amount for its purchase of Merrill Lynch." (Calculated Risk)

Half of the money allocated by Congress is being given to many of the same Wall Street giants that are directly responsible for the current implosion of the financial system. Doesn't this confirm our worst fears about Paulson, that he is merely a banking oligarch who serves the interests of the financial industry?

Robert Pollin: Paulson is a Wall Street man—and Goldman Sachs man, more specifically—through and through. There was never any doubt about that. He will always do his best to serve his Wall Street constituency. At the same time, this constituency has now been discredited to an extent unprecedented since the 1930s. So again, it will be a matter of how well the left mobilizes its forces to push for a different agenda with the Treasury and other major economic policy-making institutions. It will not be easy, and it won’t happen overnight. But now is most emphatically the time to make serious advances in building a serious alternative agenda.

4--Many pundits now point to the Lehman Brothers default as the main cause for last week's turbulence in the stock market. Can you explain how one bank can have such a dramatic effect on global stocks and credit markets?

Robert Pollin: Henry Paulson made the decision for one day—and one day only—to try free market capitalism during a financial crisis. That is, he and Federal Reserve Chair Ben Bernanke decided that if Lehman Brothers can’t make it on its own, then, according to the logic of free market capitalism, they should be allowed to fail. But once they made that decision, such deep panic ensued, on Wall Street and financial markets throughout the globe, that they backed off literally the next day, when the bailed out AIG Insurance.

Under neoliberalism, financial market players have become accustomed to do as they wish when the market is going up, but to get bailed out when the market is going down—privatization of profits and socialization of losses. The collapse of Lehman sent the signal that the old rules of neoliberalism may no longer apply—that market losers may really go down hard, as the true-blue free market model—as opposed to the neoliberal model—says they must. That’s why Lehman’s failure caused such a massive panic.

5-- Do you find it surprising that foreign investors and central banks have not sued the various US brokerage houses for selling them complex securities that were toxic? Why hasn't the ECB or the BOE demanded that the US buy-back this fraudulent mortgage-backed garbage or threaten to boycott US financial products?

Robert Pollin: We have to be clear on what we mean by “foreign” investors. They may well be physically living in other countries, and their institutions may have business charters outside the U.S. But they are heavily integrated into the U.S. economy. Neither the European Central Bank (ECB) nor the Bank of England (BOE) want to see either Wall Street or the dollar collapse. They themselves would also go down in the event of a global depression. So they are not about to call for boycotts of the U.S. economy. The Europeans may have some harsh words for the US players behind closed doors. On the other hand, nobody forced the Europeans to buy mortgage-backed securities. They also would hardly want to claim to be untutored innocents playing above their heads in financial markets. They—like the Americans—had every opportunity to think about whether mortgage-backed securities were good ways to make big-time profits. They all decided to go for it.

6---The Obama campaign has reportedly received $10 million from Wall Street contributors, whereas, the McCain campaign has taken in $7 million. Does this explain why no one in Congress from either party is demanding that Glass Steagall be restored, or that all derivatives contracts be put under government regulation, or that all financial institutions (that pose a danger to the overall system) maintain capital cushion of 12 percent? Has the big money which flows into the political system made it impossible for congress to do the work of the people?

Robert Pollin: The big money flowing into Obama, and to Democrats more generally, certainly will make it more difficult for our elected officials to do the work of the people. But here again, Wall Street has now been discredited to a degree unprecedented since the 1930s. That should give the left serious political leverage, even while fully recognizing the influence that big money will continue to play with both the Democrats and Republicans. And we don’t need to go back to Glass Steagall specifically—the financial regulatory system that came out of the wreckage of the 1930s Depression. We need to recreate its basic principles and then some—that is, to create a regulatory system focused on financial stability and channeling credit to socially productive activities, like affordable housing, job expansion, and building a clean energy economy. Does that mean that the financial system should be state owned? Certainly there is a case for at least partial ownership. That is hardly an outlandish crazy-left idea now, since George Bush and Henry Paulson have made this a cornerstone of the Republican-led bailout plan. But the real issue—whether it be through public or private ownership or some mix—is to move financial institutions and markets in the direction of egalitarianism. That won’t occur automatically by any means even with publicly owned financial institutions.

7---So far, foreign flows into US Treasuries (to cover our $700 billion current account deficit) have not been a big problem. But as the Federal Reserve and the Treasury expand their balance sheets to provide a backstop for the financial system--as well as emergency fiscal stimulus for maxed-out consumers--we could be facing a funding crisis as severe as anytime in history. In July, the purchases of US Treasuries hit a record low of roughly $6 billion leaving a shortfall of $50 billion. Now that we are headed into a global recession, do you think that foreign central banks will begin cutting back on their purchases of US debt? What effects will this have on the US economy (and the dollar)? Will interest rates rise sharply?

Robert Pollin: I think U.S. Treasuries are now, and will remain for some time, the single safest, and most desirable, financial instrument in the global financial system. I don’t think foreigners will shift dramatically away from Treasuries, though they may do so modestly. At the same time, U.S. investors will continue to clamor for Treasuries as opposed to buying stocks, bonds issued by private companies, and derivatives. This will push down the interest rates on Treasuries. However, other interest rates will continue to be very high. The growing disparity between the low Treasury rates and the high rates on private bonds, including those of AAA corporations, reflects the very high level of risk—the “risk premium—that investors are now attaching to any security that doesn’t have the full backing of the U.S. government.

8--In 1967 former Fed chair Alan Greenspan published an essay titled "Gold and Economic Freedom" which could have been written by a Libertarian like Ron Paul. The article proves that Greenspan has a good grasp of how low interest rates and credit expansion lead to disaster. In fact, he even blames the Great Depression on loose monetary policies. Here is a particularly revealing excerpt:

"When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates.

The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market -- triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed.... The world economies plunged into the Great Depression of the 1930's....The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit..." (Gold and Economic Freedom, Alan Greenspan)

What role did Greenspan play in the current financial crisis and why did Greenspan leave interest rates below the rate of inflation for 31 months when he knew it would lead to catastrophe?

Robert Pollin: I don’t agree that low interest rates and credit expansion lead to disaster. They only lead to disaster in an unregulated financial system, in which credit flows overwhelmingly support speculation as opposed to investments in productive activities that create useful things for people, like schools, housing and public infrastructure. Indeed, I strongly support an extensive system of government loan guarantees—i.e. credit risk insurance—to support private investments in retrofitting buildings and affordable housing. This will maintain low interest rates to finance these activities, and channel large amounts of cheap credit into these areas.

Greenspan himself is as responsible for this current financial disaster as anyone. His only competitors on this score are former Republican Senator and top McCain advisor Phil Gramm and former Clinton Treasury Secretary Robert Rubin. They all were relentless cheerleaders for financial deregulation—Democrats and Republicans alike. They were spouting nonsense about the virtues of unregulated financial markets for since the 1980s at least.

9---In "Imperialism is the Highest Stage of Capitalism", Vladimir Lenin says: "The development of capitalism has arrived at a stage when, although commodity production still "reigns" and continues to be regarded as the basis of economic life, it has in reality been undermined and the bulk of the profits go to the "geniuses" of financial manipulation. At the basis of these manipulations and swindles lies socialized production; but the immense progress of mankind, which achieved this socialization, goes to benefit... the speculators."

Despite the failures of the Soviet Union, is there anything in the analysis of Marx or Lenin that can help us to better understand this present phase of American-style capitalism?

Robert Pollin: This is very keen observation by Lenin—one among many, many others. As for Marx, he remains, in my view, the single most insightful thinker in history on the operations of a capitalist economy. This includes his voluminous writings on the nature of financial markets, which are full of tremendous insights. And remember, he was doing this writing 150 years ago, when he had very little to grab onto as he attempted to discern the nature of capitalism.

That doesn’t mean that I agree with everything Marx says. I also don’t see much point in assigning labels—Marxist or otherwise—to people. This is mostly a barrier to clear, straightforward thinking that might also someone be politically useful. And finally, in my opinion, there is a huge amount important thinking in Marx as to what is wrong with capitalism, but not very much about what to do about it. As such, in figuring out where we go from here, we are really on our own. There’s not much point in trying to figure out what Marx would propose to do in our present situation. We will never know that; and even if we did know, it would still be up to us to figure out whether Marx was making any sense. Remember that Marx himself once said, in exasperation at his dogmatic followers, that “I am not a Marxist.”

10---Liberals and progressives in the US seem much more focused on social issues than economic ones. Only recently, have they become more aware of the growing polarization between rich and poor and the inherent shortcomings of this crisis-prone, bubble-generating, wealth-shifting system. As the financial crisis spreads into the real economy triggering increasing unemployment, falling demand, tightening credit and soaring foreclosures; there will probably be many opportunities for change. Do you foresee a rise in "issue-oriented" populist movements or, maybe, a third political party? What are the immediate economic goals that progressives should pursue?

Robert Pollin: I do think we are in the midst of a major historic turning point, equivalent to the 1930s New Deal, or the emergence in 1979/80 of full-tilt neoliberalism under Thatcher in the UK and Reagan in the U.S. It seems clear that the economic agenda will rise to the top of the heap as a focus of concern for the left. This is not to denigrate other issues, such as the environment, anti-imperialism, racism, or sexism. But I think we will now be able to start seeing more clearly the connections between a critique of neoliberal capitalism and these other arenas of social and political struggle. For example, with the environment, it was only a year or so ago that the conventional wisdom held firmly that we could either have a clean environment, or a growing economy with an abundance of good jobs, but we couldn’t possibly have both. Trade-offs such as this were inevitable. You were simply a confused, mushy thinker if you didn’t understand this. It is now becoming clear that building a clean energy economy—and by this I mean a zero fossil fuel driven economy, with no “clean coal” and no nukes—can also be the engine to build a full employment economy as well as help construct a stable financial system.

Of course, to put such an agenda in place will mean treading through multiple political minefields. Should people work within their communities alone? In unions? Form a left caucus within the Democratic Party? For environmental justice groups? Keep trying to build third parties? I think all these approaches have merit, and that we on the left should try all of them. We should also have enough humility to acknowledge that none of us really knows what will work best under any given set of circumstances. Let’s try a lot of things, keep learning, and stay open-minded. And I would emphasize one other thing. During the 1968 uprising in France, one of the most bracing slogans to have emerged out that struggle was “Be Realistic, Demand the Impossible.” I am more inclined to embrace its mirror image as a guide for moving forward. That is, “Be Utopian, Demand the Realistic.”

Additional Thoughts on the Bailout

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By Paul Craig Roberts

"We hang the petty thieves and appoint the great ones to public office" - Aesop

Just as the Bush regime’s wars have been used to pour billions of dollars into the pockets of its military-security donor base, the Paulson bailout looks like a Bush regime scheme to incur $700 billion in new public debt in order to transfer the money into the coffers of its financial donor base. The US taxpayers will be left with the interest payments in perpetuity (or inflation if the Fed monetizes the debt), and the number of Wall Street billionaires will grow. As for the US and European governments’ purchases of bank shares, that is just a cover for funneling public money into private hands.

The explanations that have been given for the crisis and its bailout are opaque. The US Treasury estimates that as few as 7% of the mortgages are bad. Why then do the US, UK, Germany, and France need to pour more than $2.1 trillion of public money into private financial institutions?

If, as the government tells us, the crisis stems from subprime mortgage defaults reducing the interest payments to the holders of mortgage backed securities, thus driving down their values and threatening the solvency of the institutions that hold them, why isn’t the bailout money used to address the problem at its source? If the bailout money was used to refinance troubled mortgages and to pay off foreclosed mortgages, the mortgage backed securities would be made whole, and it would be unnecessary to pour huge sums of public money into banks. Instead, the bailout money is being used to inject capital into financial institutions and to purchase from them troubled financial instruments.

It is a strange solution that does not address the problem. As the US economy sinks deeper into recession, the mortgage defaults will rise. Thus, the problem will intensify, necessitating the purchase of yet more troubled instruments.

If credit card debt has also been securitized and sold as investments, as the economy worsens defaults on credit card debt will be a replay of the mortgage defaults. How much debt can the Treasury bail out before its own credit rating sinks?

The contribution of credit default swaps to the financial crisis has not been made clear. These swaps are bets that a designated financial instrument will fail. In exchange for “premium” payments, the seller of a swap protects the buyer of the swap from default by, for example, a company’s bond that the swap buyer might not even own. If these swaps are also securitized and sold as investments, more nebulous assets appear on balance sheets.

Normally, if you and I make a bet, and I welsh on the bet, it doesn’t threaten your solvency. If we place bets with a bookie and the odds go against the bookie, the bookie will fail, as apparently happened to AIG, necessitating an $85 billion bailout of the insurance company, and to Bear Stearns resulting in the demise of the investment bank.

Credit default swaps are a form of unregulated insurance. One danger of the swaps is that they allow speculators to purchase protection against a company defaulting on its bonds, without the speculators having to own the company’s bonds. Speculators can then short the company’s stock, driving down its price and raising questions about the viability of the company’s bonds. This raises the value of the speculators’ swaps which can be sold to holders of the company’s bonds. By ruining a company’s prospects, the speculators make money.

Another danger is that swaps encourage investors to purchase riskier, higher-yielding instruments in the belief that the instruments are insured, but the sellers of swaps have not reserved against them.

Double-counting of assets is also possible if a bank purchases a company’s bonds, for example, then purchases credit default swaps on the bonds, and lists both as assets on its balance sheet.

The $85 billion Treasury bailout of AIG is small compared to the $700 billion for the banks, and the emphasis has been on banks, not insurance companies. According to news reports, the sums associated with credit default swaps are far larger than the subprime mortgage derivatives. Have the swaps yet to become major players in the crisis?

The behavior of the stock market does not necessarily tell us anything about the bailout. The financial crisis disrupted lending and thus comprised a threat to non-financial firms. This threat would reflect in the stock market. However, the stock market is also predicting a recession and declining earnings. Thus, people sell stocks hoping to get out before share prices adjust to the new lower earnings.

The bailout package is a result of panic and threats, not of analysis and understanding. Neither Congress nor the public knows the full story. If the problem is the mortgages, why does the bailout leave the mortgages unaddressed and focus instead on pouring vast amount of public money into private financial institutions?

The purpose of regulation is to restrain greed and to prevent leveraged speculation from threatening the wider society. Congress needs to restore financial regulation, not reward those who caused the crisis.

'Joe the plumber' isn’t licensed

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Local man focus of presidential debate

"Joe the Plumber" isn’t a plumber — at least not a licensed one, or a registered one.

A check of state and local licensing agencies in Ohio and Michigan shows no plumbing licenses under Samuel Joseph Wurzelbacher’s name, or even misspellings of his name.

Last night, his name, "Joe the Plumber," came up about two dozen times in the debate between Mr. Obama and Republican nominee John McCain.

Since last night Mr. Wurzelbacher who lives alone with his 13-year-old son has been besieged with local and national news media, willingly granting interviews.

Mr. Wurzelbacher told reporters Thursday morning that he worked for Newell Plumbing & Heating Co., a small local firm whose business addresses flow back to several residential homes, including one on Talmadge Road in Ottawa Hills.

According to Lucas County Building Inspection records, A. W. Newell Corp. does maintain a state plumbing license, and one with the City of Toledo, but would not be allowed to work in Lucas County outside of Toledo without a county license.


Mr. Wurzelbacher said he works under Al Newell’s license, but according to Ohio building regulations, he must maintain his own license to do plumbing work.

He is also not registered to operate as a plumber in Ohio, which means he’s not a plumber.

Mr. Wurzelbacher said he was hired by Mr. Newell six years ago and that the possibility of him eventually buying the company was discussed during his job interview.

He said it’s his understanding he can work under Mr. Newell’s license as long as the licensed contractor works on the same site.

Mr. Wurzelbacher said he is working on taking the Ohio plumbing contractors’ license test.

Mr. Wurzelbacher’s notoriety has raised the ire of Tom Joseph, business manager for Local 50 of the United Association of Plumbers, Steamfitters, and Service Mechanics, who claimed that Mr. Wurzelbacher didn’t undergo any apprenticeship training.

"When you have guys going out there with no training whatsoever, it’s a little disreputable to start with," Mr. Joseph said. "We’re the real Joe the Plumber."

Mr. Joseph said Mr. Wurzelbacher could only legally work in the townships, but not in any municipality in Lucas County or elsewhere in the country.

"This individual has got no schooling, no licenses, he’s never been to a training program, union or non-union, in the United States of America," Mr. Joseph said.

The association has endorsed Barack Obama, according to Mr. Joseph.

Questions were raised Thursday morning whether Mr. Wurzelbacher is a registered voter.

Linda Howe, executive director of the Lucas County Board of Elections, said a Samuel Joseph Worzelbacher, whose address and age match Joe the Plumber’s, registered in Lucas County on Sept. 10, 1992. He voted in his first primary on March 4 of this year, registering as a Republican.

Ms. Howe said that the name may be misspelled in the database.

Mr. Wurzelbacher, 34, acknowledged during an interview at his home late Thursday morning that he knows he’s "a flash in the pan," after his fame spread for an impromptu debate he had in front of his Springfield Township home with Mr. Obama last Sunday.

Mr. Wurzelbacher said he objects to Mr. Obama’s plans to raise income taxes on incomes above $250,000. He said he makes no where near that much money but he would not say how much he makes or if he ever expects to make $250,000. Court records from a divorce show Mr. Wurzelbacher made $40,000 in 2006.

He said, "Is it right to take someone’s money because they work a little harder? It’s taking away from someone’s hard work."

Mr. Wurzelbacher said he disagrees with the idea of people being taxed at a higher rate because they earn more.

"They’re going to take more of your money because you’ve been more successful," he said.

In January, 2007, the Ohio Department of Taxation placed a lien against him because $1,183 in personal property taxes had not been paid, but there has been no action in the case since it was filed.

Mr. Wurzelbacher was playing football in his front yard with his son, Joey, on Sunday afternoon when Mr. Obama made an unscheduled stop to go door to door greeting voters and asking for their support.

In his conversation with Mr. Wurzelbacher, Mr. Obama tried to justify his plan tax breaks to 95 percent of Americans and raise taxes on incomes above $250,000.

Mr. Obama said his plan would improve the economy for other people trying to get a start in small business, and "spread the wealth."

The phrase was quickly picked up by conservative bloggers and commentators saying it reveals a desire to redistributed wealth on the part of Mr. Obama.

During that same conversation, Mr. Wurzelbacher advocated a flat tax to Mr. Obama under which everyone would pay the same rate of tax which was a feature of Mike Huckabee’s unsuccessful campaign for the Republican nomination this year.

Mr. Wurzelbacher said he was surprised by the spread the wealth phrase.

"That’s a pretty socialist comment. Two-fifty ($250,000) is his number now. When is it going to be one fifty ($150,000), when it’s going to be one hundred ($100,000)?"

He continued: "If you believe him, I would be receiving his tax cut," adding that he would not want the tax cut.

He won’t say who he will vote for on Nov. 4, but did say he likes Republican vice presidential candidate Sarah Palin.

He said he was born in the Toledo area, lived until he was 13 in the Florida Panhandle area, went to Springfield High School, and then entered the U.S. Air Force. He was stationed at an Air Force base in Alaska from 1992 until 1995. He said he was honorably discharged.

Mr. Wurzelbacher also said he lived in Arizona from 1997 until 2000.

’Joe the Plumber’ is focus of presidential debate’s first few minutes

From earlier editions of


The story of "Joe the Plumber" - Joe Wurzelbacher of Shrewsbury Street in Springfield Township - became a centerpiece of the early minutes of the presidential debate last night.

And Joe the Plumber became the subject of national and international interest.

Mr. Wurzelbacher, 34, was more interested in taking in the debate than in assessing his place in presidential politics.

"Honestly, I’m a small part of it," Mr. Wurzelbacher said. "They’re just using me as an example right now for the American public. I think they’re discussing more important is-sues."

He excused himself so he could finish watching Barack Obama and John McCain debate.

But after the debate, Mr. Wurzelbacher expressed some embarrassment that he was now known across America as Joe the Plumber.

"There’s a lot more important issues than me, and I’m starting to feel a little uncomfortable with it," he said. "Everyone’s more worried about what Joe the Plumber has to say than what Obama or McCain has to say."

While watching the debate at home with his father, he was interrupted several times by calls from the national media including CNN, Fox News, and Good Morning America. In addition, CNBC, ABC News, the Wall Street Journal, the Houston Chronicle, and the BBC called The Blade in their quest to reach Joe the Plumber.

Mr. Obama didn’t win Mr. Wurzelbacher’s support on Sunday, and he didn’t change his mind last night.

Mr. Wurzelbacher and Mr. Obama had something of a debate Sunday as the candidate walked house to house on Shrewsbury at the start of the candidate’s four-day visit in the Toledo area.

He told Mr. Obama that he was trying to buy a plumbing business.

"I’m being taxed more and more for fulfilling the American dream," Mr. Wurzelbacher said Sunday.

Mr. Obama said, in part, "It’s not that I want to punish your success. I just want to make sure that everybody that is behind you, that they have a chance for success, too.

"I think that when you spread the wealth around, it’s good for everybody."

The exchange was caught on videotape and was broadcast on a variety of news outlets and put on numerous Web sites, including YouTube.

It was the "spread the wealth around" comment that caught the attention of conservative commentators, including Rush Limbaugh, and in discussions on the Internet. Mr. Wurzelbacher was a guest of Fox News’ Neil Cavuto on Tuesday.

During the debate, Mr. McCain challenged Mr. Obama: "Joe wants to buy the business that he has been in for all of these years, worked 10, 12 hours a day. And he wanted to buy the business, but he looked at your tax plan and he saw that he was going to pay much higher taxes."

"You were going to put him in a higher tax bracket which was going to increase his taxes, which was going to cause him not to be able to employ people, which Joe was trying to realize the American dream," Mr. McCain said.

Mr. McCain then looked directly into the television camera and said: "Joe, I want to tell you, I’ll not only help you buy that business that you worked your whole life for and I’ll keep your taxes low and I’ll provide available and affordable health care for you and your employees. And I will not stand for a tax increase on small-business income."

Mr. Obama denied that was true.

"Not only do 98 percent of small businesses make less than $250,000, but I also want to give them additional tax breaks because they are the drivers of the economy," Mr. Obama said. "They produce the most jobs."

Mr. Wurzelbacher came up again when the debate turned to a discussion of health-care policies.

Mr. McCain charged that Mr. Obama’s plan would fine the company Mr. Wurzelbacher wanted to buy; Mr. Obama said small businesses were exempt.

"Hey Joe, you’re rich. Congratulations," Mr. McCain said mockingly.

Mr. Obama didn’t win Mr. Wurzelbacher’s support on Sunday, and he didn’t change his mind last night.

He did allow, "Obama, you can’t take away that he’s a damn good speaker."

Overall, though, Mr. Wurzelbacher was pleased with Mr. McCain’s performance.

"McCain was doing much better this time," he said. "McCain came across with some solid points. I like his tax cuts."

But he said Mr. Obama’s health-care plan scares him.

"It’s just one step closer to socialism," he said.

He said he hopes both candidates will talk about family and family values before the November election because he believes problems such as education and senior health care should come back to families taking care of each other. "Sense of family has to be brought back," Mr. Wurzelbacher said.

He added: "I believe there was too much emphasis put on me. The debate was more important."

Hunger eclipsed by financial crisis on World Food Day

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By Phil Stewart

world's leading crusaders against hunger voiced frustration on World Food Day on Thursday that the global financial crisis had overshadowed a food crisis tipping millions towards starvation.

The World Bank predicts that high food and fuel prices will increase the number of malnourished people in the world by 44 million this year to reach a total of 967 million.

Economists have also warned that the world's poor would be the most vulnerable to a global economic downturn.

"The media have highlighted the financial crisis at the expense of the food crisis," said Jacques Diouf, head of the U.N.'s Food and Agriculture Organisation in Rome. The World Food Programme's Executive Director Josette Sheeran acknowledged that even citizens of wealthy countries had been affected by high food prices and the financial crisis.

"But for those who live on less than a dollar a day, it's a matter of life and death," Sheeran said.

Proponents of more urgent measures questioned why the world's richest nations could not show the same urgency to save people from starvation as they did when rushing to rescue banks.

"My position is that the financial crisis is a serious one, and deserves urgent attention and focus, but so is the question of hunger, and millions (are) likely to die. Is that any less urgent?," asked former U.N. Secretary-General Kofi Annan.


Pope Benedict said the blame for hunger could be directed at "boundless speculation" in markets, partly blamed for high food and fuel prices. But he also pointed to "selfishness" by the world's rich and a poor distribution of resources.

A Senegal-based NGO said the fading attention to the food crisis showed a "problem of justice, of equity and solidarity."

"If they are able to raise funds for the banking system, they can also find ways to reduce poverty in the world," Vore Gana Seck, President of Dakar-based CONGAD (Council of NGOs Supporting Development) told Reuters in the Senegalese capital.

"I think it's a problem of priority."

Prices of wheat, rice, maize and other staples in the developing world have all risen dramatically this year, although they have fallen from their peaks in recent months.

In Somalia, wheat prices have risen by 300 percent in the 15 months to April. Maize prices in southern Africa have risen by anywhere between 40 and 65 percent, crippling the ability of the poor to feed themselves, said aid group Oxfam.

"It is shocking that the international community has failed to organise itself to respond adequately" to the food and energy crisis, said Barbara Stocking, the head of Oxfam.

"We need to see one coordinated international response, led by the United Nations, which channels funds urgently to those in need, and leads on implementation of the longer-term reforms."

Diouf said the world has the know-how to end hunger, even if the population climbs to a forecast 9 billion people by 2050.

But he complained that his U.N. agency lacked resources and said that it only received 10 percent of the $22 billion (12.8 billion pounds) pledged in June, following food riots in some of the affected countries.

"We have a serious shortfall in the financial resources needed to fulfill the expectations," Diouf said.

"In spite of the passionate speeches and financial commitments made by many countries, only a tiny proportion of what was promised in June has been delivered."

Development economist Jeffrey Sachs told reporters he was pessimistic about the future, given the lack of progress even when the food crisis had made headlines earlier this year.

"There are reasons to believe that on the current business-as-usual trajectory things will get worse.. because of rises in population, more climate shocks, more environmental degradation, and lack of ability of the very poor places to respond adequately," he said.

Why the Bailout Won't Do Anything for the Root of the Problem

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By John Miller

Hyman Minsky, the theorist of financial fragility whose work has enjoyed a revival as U.S. financial institutions crumble, always maintained that "there is nothing wrong with macroeconomics that another depression wouldn't cure."

Whatever salutary effects today's financial crisis, undoubtedly the worst since the Great Depression, might be having on macroeconomics, it has yet to improve economic policymaking. The Bush administration exploited a financial panic, vastly exaggerating its dangers for the broader economy, to extort $700 billion from a Congress only too willing to open taxpayer's wallets to bail out those who benefited from the speculative excesses of an $8 trillion housing bubble.

Whatever this massive public purchase of bad debt will do to patch up the credit system, the bailout will not counteract the downward spiral in housing prices that brought on the credit crisis and will undoubtedly continue. The bailout will do little to make bad mortgage debt more viable or to provide relief to homeowners behind in their mortgage payments or facing foreclosure. Nor does the bailout place effective limits on CEOs' pay or their golden parachutes, erect the regulatory safeguards that will curb future financial excesses, or counteract the worsening recession. Worse yet, the bailout swells the federal budget deficit and for that reason will likely sap whatever political will could have been mustered to make the massive public investments necessary to prevent the economy from falling into a prolonged depression.

For the policy maestros to do better than this disgraceful, already-failed, confidence trick of a bailout package that entirely ignores the elephant in the room (as economists Nouriel Roubini, Paul Krugman, Joseph Stiglitz, and Glen Hubbard have described it), the crisis will have to put an end to the illusion of self-regulating markets, much as Minsky envisioned a depression might.

But neoliberal prestidigitation continues. Even as the Wall Street Journal reports that the financial system has been "shaken to the core," its editors steadfastly maintain that the "sins of deregulation" are "a political fairy tale" in an attempt to absolve the market from blame for the crisis. The government-sponsored enterprises Fannie Mae and Freddie Mac, complain the editors, "turbo-charged the credit mania" by subsidizing rates of return for mortgage-backed securities and increasing the number of mortgages available to risky low-income borrowers. (For an accurate portrayal of Fannie's and Freddie's role in the crisis, see page Fred Moseley's article in the current issue.)

The Journal editors' latest free-market sleight of hand notwithstanding, unregulated and deregulated financial markets combined with new, harder-to-regulate financial instruments and ever-present greed to unleash today's pernicious economic instability. As the economy teeters, we must challenge the antidemocratic dictates of an inflation-phobic Wall Street to demand that government effectively regulate the entire range of financial institutions through strict capital requirements and a tax on speculative turnover intended to encourage long-term productive investment. We must build institutions of regulatory enforcement that will remain strong when the next bubble comes and its beneficiaries pour buckets of money into the political system to move their deregulatory agenda forward. Likewise, massive public spending is needed to put the nearly one million people who will have lost their jobs this year back to work and to jump-start the economy. Public policy must also be dedicated to spreading the benefits of renewed economic growth widely through progressive taxes and by putting the interests of people before the profits of those who have recklessly polluted the economy with toxic debt.

Without those measures, Wall Street will continue to be, as Woody Guthrie put it in the midst of the Great Depression, the street that keeps the rest of us off Easy Street.

The Lee Atwater Story: Meet the Man Responsible for Karl Rove and the GOP's Hate-Driven Politics

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By Isaac Fitzgerald

"Rovian." That’s the way many people are describing McCain’s current presidential campaign. Although Karl Rove officially holds no place among McCain’s staff, it is known that he is still in close contact with the campaign, especially his protégé and McCain adviser Steve Schmidt (whom the New York Times credits with some of the campaign’s most headline-grabbing moves, including the infamous Paris Hilton Britney Spears ad). But to describe the manipulation, prejudice, fearmongering and undertone of racism found in McCain’s current campaign as "Rovian" is to have a short memory. As director Stefan Forbes reminds us, the GOP playbook that we are all too familiar with today was written more than 20 years ago by an ambitious young man from the South named Lee Atwater.

Forbes’ "Boogie Man: The Lee Atwater Story" is a magnificent documentary that focuses on Atwater, a horrible but fascinating character. From Atwater’s quick rise in the College Republicans during the time of Nixon, through his years in the Reagan White House, to the height of his political career as George H.W. Bush’s ’88 campaign manager and head of the RNC, Forbes shows how negative campaigning, manipulating the media and flat-out lying seemed to come as easy to Lee Atwater as picking his beloved blues guitar.

But "Boogie Man" isn’t just about the bloodthirsty win-at-all-costs side of Atwater. Forbes does an incredible job of highlighting the undercurrents of Atwater’s life and times that helped shape him as a person as well as a political powerhouse, such as his upbringing in the South with its deep scars and racial tensions, the childhood loss of his brother, the excess and uber-ambitious attitudes of the ’80s, and, perhaps most importantly, his charm. Liberal journalist Eric Alterman, despite all of his distaste for Atwater’s negative style, describes Lee Atwater as "the most fun man I ever met," and with the amount of film that Forbes has of Atwater singing, playing guitar and generally having a good time, it shows.

But even with all his charisma, it’s hard not to watch "Boogie Man" without focusing on the fact that if there hadn’t been an Atwater, George H.W. Bush or even Ronald Reagan may never have been elected. Karl Rove would not be the power player he is today, and George W. Bush (who became friends with Atwater during his father’s presidential campaign) wouldn’t have learned the worst lesson in politics: winning at all costs. This is the lesson that is Atwater’s legacy, shown by many of the stories from those interviewed who were left much worse off for being on the wrong side of Atwater’s insidious politics (the most interesting of these being Mike Dukakis ... Willie Horton, anyone?).

Forbes tells Atwater’s whole story, ending with the sudden illness that led to Atwater’s death at the young age of 40, and the supposed remorse that he felt about the undignified way that he had affected politics. Remorseful or not, Atwater had an influence that can be seen in modern politics today, and it looks like many of his tactics are here to stay. Take the time to learn about the man who took dirty politics to a whole new level, and the next time you hear someone describe McCain’s current campaign as "Rovian," correct them. It is "Atwateresque."

"Boogie Man: The Lee Atwater Story" opens this Friday, October 17 at the Opera Plaza Cinema, 601 Van Ness Avenue, in San Francisco.

Stock markets fall as global recession takes hold

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By Patrick O’Connor

Stock markets in the US and Europe fell sharply yesterday amid mounting evidence that the US economy is entering into a severe recession.

On Wall Street yesterday, the Dow Jones Industrial Average declined by 7.8 percent, or 733 points, the index’s second largest one-day point drop. Of the 30 Dow industrials, only Coca-Cola finished marginally higher after it released better than expected profit figures.

The Standard & Poor’s 500 Index fell even more sharply, by 9 percent, while the technology-based Nasdaq declined 8.4 percent. Shares on these indexes were almost uniformly lower, with declining stocks outnumbering advancing ones by 8 to 1 on the Nasdaq.

Yesterday’s Dow Jones decline largely erased Monday’s one-day rise of 936 points, which followed the previous week’s unprecedented 18 percent fall. Monday’s rebound had been driven by the Bush administration’s announced extension of the $700 billion bailout of Wall Street, with up to $2.25 trillion in public money allocated to prop up the major banks and financial firms.

Yesterday’s downturn on the markets indicates a growing awareness that the bailout will not prevent the US from sliding into recession. Consumer spending is sharply down, job losses are mounting, business confidence remains low and critical US export markets in Europe and other regions are under threat as world growth stalls. None of the Bush administration’s measures addresses the underlying crisis of American capitalism.

“Everything the government has done is not going to prevent further deterioration in the economy,” Stuart Hoffman, chief economist at PNC Bank, told the New York Times.

“To some degree, we’ve moved on from the old crisis to the new crisis,” said Howard Silverblatt, a senior index analyst at Standard & Poor’s. “The credit crisis has been addressed to some extent, but now there’s the recession, unemployment, and rising manufacturing costs in the pike.”

The US Commerce Department’s report on September retail sales, released yesterday, found that sales had decreased by 1.2 percent. This was nearly twice the decline anticipated by economists and marked the third consecutive month in which consumer spending decreased.

Indicating the extent to which the financial crisis has hit working people, the fall in consumer sales especially affected auto retailers, with car sales down 3.8 percent, as well as department stores and shopping malls. In response, shares values yesterday declined for Wal-Mart (6.3 percent), Target (8 percent) and Staples (7.7 percent).

The Federal Reserve also released its “beige book,” a regular survey of businesses around the country, which found that spending has declined in all 12 metropolitan areas covered in the report. Retailing, auto sales and tourism declined in most districts, while housing and construction “weakened or remained low,” the report stated. Businesses said they “had become more pessimistic about the economic outlook.”

Other negative indicators included a measure of New York manufacturing, which recorded its lowest level since the index commenced in 2001.

In a separate announcement, New York’s chief financial officer, Comptroller William Thompson, estimated that the financial crisis could see 165,000 jobs lost in the city, including 35,000 in the financial sector alone. The forecast of 165,000 job cuts is more than double the amount Thompson anticipated in July. He said the revised estimate reflected “the spread of the economic troubles to other industry sectors as the nation slips into a general recession.”

Thompson’s statement was one of several which warned of an imminent rise in the level of unemployment. On Monday, Bill Gates of Microsoft said he expected a “fairly significant recession,” leading to a jobless rate of 9 percent. Gates issued this statement even before the value of his company’s shares declined by a total of 11 percent on Tuesday and Wednesday. Other tech stocks also fell sharply yesterday, including EBay (14 percent) and Dell (11 percent).

The specter of the Great Depression

Janet Yellen, president of the Federal Reserve of San Francisco, acknowledged in an address delivered to Silicon Valley executives that the US was officially in recession. She cited recent Fed data showing the economy was weaker than expected in the third quarter, “probably showing essentially no growth at all,” while for the fourth quarter “an outright contraction [is] quite likely.” She concluded, “Indeed, the US economy appears to be in a recession,” adding that she thought this was “not a controversial view.”

Notably, Yellen’s speech was not publicized on the Fed’s central web site. Federal Reserve Chairman Ben Bernanke struck a somewhat different note in a speech yesterday before the Economic Club of New York. Trying to reassure the markets, Bernanke again promoted the bailout, hinted that interest rates may be cut further later this month, and insisted that policy makers have learned from the Great Depression and have avoided the “critical errors” made by their counterparts in the 1930s.

These platitudes fell flat, however, with many on Wall Street unnerved by the fact that the Fed chief was now openly discussing the Great Depression.

Peter Cardillo, chief market analyst at Avalon Partners in New York, told the Wall Street Journal that he found Bernanke’s comparison of the current crisis with the 1930s “particularly worrisome.” “How can the market not react to that?” he declared. “Look at what he’s saying!”

While Bernanke insisted that he was confident the economy would emerge from the crisis with “renewed vigor,” his speech presented a dire prognosis. “Stabilization of the financial markets is a critical first step, but even if they stabilize, as we hope they will, broader economic recovery will not happen right away,” he said. “Economic activity has been decelerating even before the recent intensification of the crisis... Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning.”

It remains to be seen whether the Bush administration’s measures manage to revive the “normal” financial parasitism that has come to dominate the US economy.

“Blue chip” financial stocks were among those sharply down on Wall Street yesterday, with Citigroup and American Express each declining by about 13 percent. An influential bank analyst at Oppenheimer & Co contributed to the sell-off by warning that US banks were not “out of the woods” despite Bush’s bailout.

A significant factor in yesterday’s Wall Street sell-off was the activity of hedge funds, which were forced to sell stock to raise cash to meet margin calls from their brokers. Such forced selling by major investors further depresses share prices, in turn lowering the value of the collateral that backs the outstanding loans of financial firms, thereby precipitating more margin calls from their creditors. The result is an accelerating downward spiral on financial markets.

There is also the outstanding question as to how the bailout is to be paid for. On Tuesday, the Treasury reported that the federal government ran a budget deficit of $454.8 billion in the 2008 fiscal year, up from $161.5 billion in 2007. According to, Morgan Stanley chief economist David Greenlaw has predicted the shortfall may increase to about $2 trillion once the full extent of the bailout is realised. This would be the equivalent of approximately 15 percent of US gross domestic product—more than twice as large as the post-World War II record deficit of 6 percent of GDP recorded in 1983.

In his speech in New York, Fed Chairman Bernanke pointed to another serious danger to the US economy—slowing economic growth in major trading partners, which will almost certainly result in lower US exports.

Developments in Europe yesterday confirmed these fears. The major share markets suffered sharp declines, with the London FTSE 100 index down 7.2 percent, the French CAC-40 6.8 percent lower, and the German DAX down 6.4 percent.

The fall in British markets was triggered in part by the release of unemployment figures showing the official jobless rate for the three months from June to August at 5.7 percent, up from 5.2 percent in the previous quarter. An additional 164,000 people joined the ranks of the officially unemployed, the biggest quarterly increase in 17 years. According to the Financial Times, many forecasters expect the jobless rate in Britain to rise above 7 percent in the coming year.

Slowing world growth is reflected in falling demand for commodities, leading to lower prices. The Reuters-Jefferies CRB index, an index of world commodity prices, fell to a two-year low yesterday, down almost 40 percent from July’s record high. Over the past three months, the prices of crude oil, platinum, steel, copper and zinc have slid by 35-45 percent, while agricultural commodities including soy and corn have declined by more than 50 percent.

Rio Tinto has announced it is cutting production at some of its aluminum smelters in response to slowing Chinese growth. Rio Tinto chief executive Tom Albanese declared that the Chinese economy “is pausing for breath after spectacular GDP growth.” Shares in the mining giant plummeted by 16 percent in response to the announcement. Other energy and commodity firms’ stock also fell yesterday, including Alcoa (down 12.8 percent) and Exxon Mobil (14 percent).

The financial crisis has brought to a head the underlying contradictions which have been wracking the capitalist system over an entire period. Notwithstanding the desperate hopes of policy makers in Europe, Asia, and other regions, a severe and protracted recession in the US will inevitably trigger a major downturn in the world economy.

“Working Poor” report: Nearly 30 percent of US families subsist on poverty wages

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By Tom Eley

A report released Tuesday by the Working Poor Families Project reveals that more than 28 percent of American families with one or both parents employed are living in poverty.

The report, “Still Working Hard, Still Falling Short,” is based on data for the period from 2004 through 2006 gathered from the US Bureau of Labor Statistics, the US Census Bureau’s American Community Survey and the Census Bureau’s Current Population Survey.

The report finds that 9.6 million households can be described as low-income or “working poor”—defined as families that earn less than 200 percent of the official poverty level. There were 350,000 more such families in 2006 than in 2002. More than 21 million children now live in low-income working families—an increase of 800,000 in four years.

In 2006 there were more than 29 million jobs in the US that paid below the official poverty level—defined as $9.91 an hour for full-time labor—an increase of nearly 5 million poverty-wage jobs from 2002.

Family income inequality also increased rapidly between 2002 and 2006, the report says. In 2006, the top 20 percent of US households earned on average 9.2 times as much as the bottom quintile.

The report notes that working poor families “lack the earnings necessary to meet their basic needs—a struggle exacerbated by soaring prices for food, gas, health and education.” About 60 percent of low-income working families are forced to spend more than one-third of their income on housing, and nearly 40 percent lack health insurance for one or both parents.

These families struggle under poverty conditions despite parents working long hours. According to the report, “Adults in low-income working families worked on average 2,552 hours per year in 2006, the equivalent of almost one-and-a-quarter full-time workers.”

This total is about one third of all the hours that pass in a year. It is nearly twice the total yearly work hours of the average German worker, who works 1,362 hours per year, and 162 hours more per year than the average South Korean worker, according to statistics from the Organization for Economic Cooperation and Development.

The report documents the sharp decline in living standards for wide layers of the working class, the result of decades of corporate downsizing and wage-cutting presided over by Democratic and well as Republican administrations. It shows that poverty-level jobs are increasingly common and are held by broad sections of the population. Contrary to certain stereotypes promoted by the media, the majority of families living on poverty wages are neither immigrants, minorities or families with a single parent.

Some 72 percent of poor families, according to the report, hold jobs. More than half are headed by married couples, 69 percent have only American-born parents, 89 percent have a parent between the ages of 25 and 54, and 43 percent have white non-Hispanic parents. Only 25 percent receive food stamp assistance.

The study breaks its statistics down to the state level. In general, the conditions of working families are worst in the South and the non-Pacific West. Texas, for example, has the fourth highest number of working families defined as low-income, the second lowest percentage of low-income families who have a high school diploma or its equivalent, the second highest number with no post-secondary school experience, the fewest with health insurance, and the third highest family income inequality.

New York has the highest family income inequality in the nation, California the fourth highest.

The impoverishment of ever-larger sections of the working class population is the outcome of a number of processes: the dismantling of large sections of basic industry, the wave of union-busting and strike-breaking in the 1980s, the gutting of social welfare programs, the betrayal of the working class by the trade union organizations.

The other side of this process is the vast enrichment of the top 10 percent of the US population and the ever-greater concentration of wealth in the hands of the financial elite.

A survey carried out in March by Equilar and reported by the New York Times revealed that the CEOs of the 200 largest publicly traded companies earned an average of $11.7 million in 2007.

In 2005, the top 1 percent of US households accounted for 21.8 percent of all pre-tax income, twice the figure in 1970s. This represented the greatest concentration of income since the year before the onset of the Great Depression, 1928, when about 24 percent of national income went to the top percentile.

It should be noted that the “Still Working Hard, Still Falling Short” report reflects conditions that existed prior to the eruption of the financial crisis in August of 2007 and the subsequent slide into recession.

Trump: Bush impeachment would be 'wonderful thing'

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Property mogul and diehard Republican Donald Trump told CNN on Wednesday that President George W. Bush misled the US into the Iraq War and should have been impeached when the Democrats took control of Congress in 2006.

"I was surprised that she didn’t do more in terms of Bush and going after Bush," Trump said in an interview with CNN’s Wolf Blitzer, referring to Democrat House Speaker Nancy Pelosi.

"It ... just seemed like she was going to really look to impeach Bush and get him out of office, which personally I think would have been a wonderful thing."

Trump, 62, said Bush misled the United States into waging war on Iraq, a much worse offense than a dalliance with a White House intern his predecessor Bill Clinton was impeached for in 1999.

"He lied. He got us into the war with lies," Trump said about Bush. "And I mean -- look at the trouble Bill Clinton got into with something that was totally unimportant. And they tried to impeach him, which was nonsense.

"And yet Bush got us into this horrible war with lies, by lying, by saying they had weapons of mass destruction, by saying all sorts of things that turned out not to be true," he added.

On the race for the White House, Trump said he was rooting for John McCain to win the November 4 election, and felt sure he could overtake his Democrat rival Barack Obama, whom he trails in opinion polls, in the next three weeks.

"He’s a very smart guy, he’s a tough guy," he said. "I think he’d be a great president. But, he has to be John McCain and he could still probably pull it out.

"But, it’s going to be tough."

McCain and Obama face off in their third and final televised debate late Wednesday in New York state.

Trump inherited a real estate empire and added an airline, casino, resorts, hotels, skyscrapers in New York, around the world and named them after himself, turning his name into a sort of brand.

He also owns a television show, "The Apprentice," in which he appears, as well as the Miss Universe contest.

This video is from CNN’s Situation Room, broadcast October 15, 2008.

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