In our ever more interconnected world, something always has to give when some fundamental is fundamentally out of whack. And sometimes, that something is everything, all at once. Which takes us to yesterday, when the Dow Industrial Average fell nearly 400 points amidst a simultaneous spike in oil prices (of over $11 to nearly $139/bbl) and unemployment (of around half a percent to 5.5%).
All of which is to say, if, say, Alan Greenspan were publicly flayed and then burned at the stake, would it solve any of this? No, of course not... but it might be helpful nonetheless, as an appropriate reminder to Ayn-Rand-worshiping-egomaniacal- Fed-chairmen-of-the-future who might start to believe rumors of their own divinity, who go on to pump up price bubbles "because they feel good." And lest we forget, it was ultimately Greenspan's imprimatur that let a feckless Democratic "opposition" get out of the way and allow the insanely destructive "Bush tax cuts" (which, along with the Iraq war, have become the Scylla and Charybdis of the economy-- the world economy, btw, not just ours) to begin their deficit causing wonder.
WTF, TD? Ah, the politics of insane government deficits are such that a big part of the economy follows from them: the deficits must be paid for with borrowed money, on which an interest rate must be paid. Ordinarily, as competing needs for the funds arise (i.e. when private uses for the money go unfunded in a process we call "crowding out") interest rates rise. Ah, but politically, interest rates rising at current deficit levels would increase those deficits even higher, and then the call for tax increases from our creditors (the ones in Beijing and Tokyo) would become inexorable, and hence, the Fed has to-- HAS to-- keep interest rates here artificially low, because tax cuts for the rich are not negotiable.
While seemingly good for our economy (think home mortgages, car loans, business loans, credit cards, etc.), see above re:"something has to give". That would be our currency the once-mighty-yankee-dollar, which declines in value, as the rest of the world realizes that our insanely low interest rates mean that they will not get a good return in their own currency terms on the dollar... unless the dollars falls... some more... which, of course, it must. Which means, of course, that real purchasing power for real things-- the most important of those real things being oil and food-- collapses all around us.
Meanwhile, oil itself is not standing still: the world supply remains in a perilous state, as one of the biggest reserves (in Iraq) remains under-exploited as the war there goes on, while supplies in Iran are seemingly vulnerable by pronouncements by Israel of imminent attacks should Iran proceed with its nuclear program, God knows what is happening in Nigeria, and even though the market ($4/gallon gasoline) stateside is reducing demand here, China is stockpiling diesel in the aftermath of the Szichuan earthquake and ahead of the Beijing Olympic games... none of which, absent the fundamentals described earlier, would, by themselves, but together would, take oil further to the stratosphere. Higher oil prices, of course, effect everything, as goods and services have to move, oil is used in fertilizers and industrial inputs of virtually all kinds, food is diverted to bio-fuels programs, and well, you get the rest in a big "etc.".
And that, boys and girls, is, albeit a bit abbreviated and simplified, where we are today, in an economic sense. And it ain't pretty. And even though John McCain himself is likely too decent a man to run the kind of outright race-baiting campaign that we would expect against Barack Obama, he will nonetheless continue to run on the kind of failed economic policies (and that includes the Iraq war, btw) engendered by Republican ideology that have brought us to where we are now (that's the brink of economic meltdown for those not paying attention)... and despite the clear and obvious failure of those policies and Obama's commitment to change them, McCain may win anyway, solely because of good old American racism.
Will reality win out at the end of the day? Maybe... maybe not. This has been... the Free (falling) Market.