The economy is in a meltdown, and John McCain can't figure it out. On the day the Dow tanked and Merrill Lynch and Lehman Brothers fell, he declared that the fundamentals of the economy are sound. Then he had to try to explain his comment away--by "fundamentals" he meant "American workers." Now he is calling for putting "an end to the abuses on Wall Street."

How is that, exactly? On the campaign trail, McCain has repeatedly declared that too much government regulation is the problem. A decade ago, an article in the Washington Post points out, he and Senator Phil "a nation of whiners" Gramm teamed up deregulate the financial industry helping to set up the current collapse.

McCain's economic advisers haven't done him a lot of good lately. First Gramm had to quit after his "whiners" comment about the country facing a "mental recession." Then, this week, former Hewlett-Packard CEO Carly Fiorina had to cancel interviews after admitting that she didn't think Palin or McCain could run a large company.

Oops.

Bad economic news makes the idea of electing someone who has admitted to knowing little about the economy, and a running mate who knows even less, considerably less attractive.

McCain has clung to the old Republican cut-taxes-and-government-regulation mantra far too long, even as the economic ground has shifted under his feet. His sudden burst of populism on the campaign trail--complaining about "greed" on Wall Street, doesn't change the fact that his tax plan is startlingly regressive--giving only $19 a year in tax cuts to the bottom fifth of taxpayers, and $140,000 to the top 1 in 1000. For the middle class, he offers considerably less than Barack Obama--$319 to Obama's $2,136.

Stirring up the base with a "culture wars" message has worked for the Republicans in the past as a distraction from dull policy debates. But with pension funds losing money, a "psychology of fear gripping investors," as The New York Times put it today, credit drying up, interest going up on mortgages and student loans, and job cuts looming, voters are not feeling quite so distractable.

A New York Times/CBS poll today shows that "the Palin effect" has peaked. White women are no more likely to support McCain than they were before the conventions (though he continues to have an edge of 44 to 37 percent in that group).

"The poll was taken during a period of extraordinary turmoil on Wall Street," the New York Times reports. "By overwhelming numbers, Americans said the economy was the top issue affecting their vote decision, and they continued to express deep pessimism about the nation's economic future. They continued to express greater confidence in Mr. Obama's ability to manage the economy." The poll also found that 57 percent of voters continue to view McCain as a "typical Republican" and to tie him to Bush, with only 37 percent believing that McCain represents "change" in Washington, compared with 65 percent believing that Obama would bring change.

Obama had a good week, hitting McCain for his claim to want to change the "old boys club" in Washington by pointing out that he has been part of that club for more than two decades, and has a staff loaded with the very Washington lobbyists he likes to attack on the stump.

On the other hand, Obama is the bigger recipient of campaign contributions from Wall Street. His calls for regulation of the financial markets--and his prediction of the housing market collapse back in the spring of 2007--make him look progressive only because Republican irresponsibility has become so extreme.

The good news for Obama is that serious times tend to diminish the importance of fuzzy charges like "elitism" or the Palin sideshow. The bad news for Americans is that even if the dreadful policies that got us to this point do change, it will be after considerable damage is already done.