Wall Street crisis: this should be Barack Obama's moment

Millions will ask a series of questions. How did this happen? Could it have been prevented? How can its worst effects be mitigated? And can we do anything which ensures it doesn’t happen again?

As a proponent of free markets, I think this is evidence of capitalism working. After a sustained period of wealth creation, which could never have been masterminded by any state, no matter how benevolent, risk-taking has spilled over into irresponsible behaviour which is now being punished. But I can appreciate that many reasonable people will frown and say: "I’m afraid that’s not good enough. What about all the others who are going to suffer as a result of these plutocrats’ lust for wealth?"

Well, yes, up to a point. But no indebted citizen had a gun put to his head by bankers or was ordered to max out on credit cards and choose a 110% mortgage at five times salary. Individuals did these things of their own free will, and could have chosen to delay gratification or live in a slightly smaller house. Still, that will not stop many feeling a righteous anger at the vulgar antics of the super-rich bankers who gambled with the money and livelihoods of others.

And so, there is a great prize for the American politician who can capture, define and exploit this moment. Freewheeling capitalism is in the American DNA, but it is balanced by a scepticism about the worst Wall Street excess which is almost as strong as the deep distrust of Washington. These are the millions who recognise the need for enterprise but are defined by a belief in an honest day’s pay for an honest day’s work.

This cannot, surely, be a moment for John McCain. He really doesn’t understand the economy and thinks it "boring" in comparison with foreign policy. Wall Street is perceived as a largely Republican establishment animal and in time this will come to be seen as another crash – if this is what it is – which happened on the Republican’s watch. McCain will be deeply confused by current developments and I can’t wait to see how he tries to distance himself from the credit and spending boom over which his party presided.  

So, naturally, this should be Obama’s moment. He has struggled, for months, to connect with his fellow countrymen and has seemed merely verbose and disengaged from everyday concerns. He is now getting advice from Bill Clinton and should shamelessly steal the playbook that Clinton and James Carville devised in the 1992 campaign: "It’s the economy stupid." The pair worked out that it was possible to sound pro-enterprise and pro-business while sticking up for blue-collar and middle class Americans. The formula was stolen for use in Britain to great electoral effect by Tony Blair and Gordon Brown after they visited Washington (it’s a shame they didn’t listen to the bit about the need for balanced budgets, but there you go).

So, Obama needs some good, simple, phrases and an attack which goes something like this: "Those in the Republican establishment aren’t like you or me, look at the mess their rich friends have just made on Wall Street. Like you I believe in the American dream, but these folks betrayed that dream. Now, what about a little fairness and consideration for others?"

Moments like these are cultural events, as much as they are purely economic or political, and from their fire great leaders are forged (FDR out of economic collapse, and Churchill from moral and military defeat).

Here comes the real test of Obama’s supposed abilities to transcend a rather squalid contest with McCain. Trust in institutions and faith in leaders is running at such a low ebb that a leader who offered some common sense and optimism about the West’s ability to regenerate itself could win big.

We’ll know, probably by the end of this week, whether Obama has that special quality his advocates have claimed. If he does frame this moment correctly he’ll win in November and become the most important figure of his generation. If he cannot, he really was just all hot air.