Look around. American banks are failing because of a lack of capital. Our biggest financial institutions are selling pieces of their equity — and their souls — to sovereign wealth funds to raise cash. The debt pyramid constructed by Fannie Mae and Freddie Mac is tottering. All because of a lack of invested capital. After all, why should anyone invest in American stocks? The market is dropping, the dollar is weakening, and interest rates are the lowest in the world.
Now Obama pledges to double the capital gains tax. This misguided policy will drive capital off shore and turn a flow into a torrent. The financial problems of American banks will be amplified. McCain should pounce on this issue and correlate the current crisis with Obama’s position on capital gains. It would be a big winner.