Naomi Klein, did we watch the same election?

Ok, I need to unload on Naomi Klein’s column in the Guardian today.  Normally,  I really like Klein and appreciate her thorough and unique analysis.  But, the fundamentals of her latest argument on the Sarah Palin movement and what it means for American capitalism are anything but strong.

She asks :

…consider for a moment: what if [the bailout] actually works, what if the financial sector is saved and the economy returns to the course it was on before the crisis struck? Is that what we want? And what would that world look like? The answer is that it would look like Sarah Palin…

Think about it, Sarah Palin stepped on to the world stage as vice-presidential candidate on 29 August 2008 at a McCain campaign rally. Two weeks later, on 15 September, Lehman Brothers collapsed, triggering the global financial meltdown.

So in a way Palin was the last clear expression of capitalism-as-usual before everything went south…

The problem with this argument is timeline and perception.  Palin wasn’t the last healthy expression of capitalism-as-usual because the system had been in freefall for months before Palin ever stepped on the scene.  Look at the timeline from early 2008:

From Wikipedia:

January 2–21 2008 : January 2008 stock market downturn.

January 24 2008: The National Association of Realtors (NAR) announces that 2007 had the largest drop in existing home sales in 25 years, and “the first price decline in many, many years and possibly going back to the Great Depression.”

March 14 2008: Bear Stearns gets Fed funding as shares plummet.

March 16 2008: Bear Stearns is acquired for $2 a share by JPMorgan Chase in a fire sale avoiding bankruptcy. The deal is backed by the Federal Reserve, providing up to $30B to cover possible Bear Stearn losses.

June 19 2008: Ex-Bear Stearns fund managers arrested by the FBI for their allegedly fraudulent role in the subprime mortgage collapse. The managers purportedly misrepresented the fiscal health of their funds to investors publicly while privately withdrawing their own money.

September 7 2008 : Federal takeover of Fannie Mae and Freddie Mac, which at that point owned or guaranteed about half of the U.S.’s $12 trillion mortgage market, effectively nationalizing them. This causes panic because almost every home mortgage lender and Wall Street bank relied on them to facilitate the mortgage market and investors worldwide owned $5.2 trillion of debt securities backed by them.

September 14 2008: Merrill Lynch is sold to Bank of America amidst fears of a liquidity crisis and Lehman Brothers collapse.

September 15 2008: Lehman Brothers files for bankruptcy protection.

By Klein’s account, you would think Sarah’s system was a healthy one that failed in a freak accident just 2 weeks after her nomination. Rather, the health of our economic system was on life support, gasping for air, long before McCain and his sidekick were confidently declaring the fundamentals of our economy were strong.

Klein acknowledges that McCain and Palin’s optimistic view of the economy were lies:

“This is the most comforting and dangerous lie that there is: the lie that perpetual, unending growth is possible on our finite planet. And we have to remember that this message was incredibly popular in those first two weeks, before Lehman collapsed. Despite Bush’s record, Palin and McCain were pulling ahead. And if it weren’t for the financial crisis, and for the fact that Obama started connecting with working-class voters by putting deregulation and trickle-down economics on trial, they might have actually won.”

Um, did we not watch the same election?  This is the most off base, revisionist explanation of the last 2 months of the 2008 election I’ve seen yet.  And it’s another example of how some in the media cherry pick and shoehorn historical events to fit their line of argument.  Palin didn’t represent or inspire a movement of followers because they full-heartedly supported McCain’s platform.  If you look at the poll data, those who were asked if their vote was more a vote for McCain or a vote AGAINST Obama, said theirs was a vote against Obama.  I think Palin’s influence was inflated by the media because she reinvigorated a ticket desperate for some flair and excitement. She gave the media the horserace they had been routing for.

Also, never in the election could one reasonably argue that McCain was pulling ahead despite Bush’s record.  Just look at the list of the national polls going back to March 2008, showing the head to head match up between Obama and McCain.  Obama commands a clear lead in the majority of national polls from March to the end of the election.  McCain enjoyed a small and short bounce after the RNC and the Palin nomination.  That’s reflected in  AP and Ipsos polls in early September.  CNN had them tied. But that bounce faded by around September 12-16. And, it’s important to note that that bump started to fade just before McCain’s infamous “fundamentals of our economy are strong” line.  Also, if you look at the type of ads Obama’s campaign ran in the last two months, they painted McCain as a politician in lockstep with the policies of George W. Bush. McCain and Palin never “pulled ahead” despite Bush’s record.  It was because of him and Obama’s capitalization of that poor record that McCain and Palin failed.

To Klein’s main point that now is the opportunity to reform our financial system to one that does not necessitate bailouts in the future, I agree.  It’s the flawed evidence she uses to make this point that I had to address.