March 26 (Bloomberg) -- Democratic presidential candidate Barack Obama said the economy is ``grinding to a halt,'' millions of people are at risk of losing their homes and Arizona Senator John McCain's solution is to ``just sit back and watch it happen.''

Obama chided the presumptive Republican presidential nominee, who yesterday said in a speech in California that a government rescue of banks should be based ``solely on preventing systemic risk'' and not on helping financial and property speculators.

``John McCain has admitted that he doesn't understand the economy as well as he should and yesterday he proved it,'' Obama, an Illinois senator, said in Greensboro, North Carolina, where he is campaigning ahead of the state's May 6 primary.

``He said that the best way for us to address the fact that millions of Americans are losing their homes is to just sit back and watch it happen,'' Obama, 46, said. ``In his entire speech, he offered not one policy, not one idea, not one bit of relief to the nearly 35,000 North Carolinians who were forced to foreclose on their dream over the last few months -- not one.''

McCain told a group of Hispanic small-business leaders in Santa Ana yesterday that he wouldn't ``play election-year politics with the housing crisis.''

``I will evaluate everything in terms of whether it might be harmful or helpful to our effort to deal with the crisis we face now,'' said McCain, 71.

Housing Glut

Surging mortgage defaults and a glut of unsold houses are depressing property prices, and mortgage-backed securities have spread losses across the global financial system. The world's biggest financial companies have posted at least $195 billion in writedowns and credit losses tied to subprime mortgages and collateralized debt obligations, according to data compiled by Bloomberg.

McCain defended his housing plan today, calling it a ``good prescription'' for keeping people in their homes.

``What we want to do here is help legitimate homeowners without rewarding people who misbehaved,'' he told reporters en route to Monterey from Los Angeles.

``We may have to do more, but to raise taxes as Senator Obama wants to do or some kind of massive bailout, that is a needless expenditure'' of taxpayer dollars, McCain said.

Obama today reiterated his call for reworking existing subprime loans into affordable, long-term fixed loans and creating a foreclosure prevention fund to help keep Americans in their homes. He has pledged that as president, he would seek a mortgage-tax credit for homeowners and crack down on mortgage fraud and predatory lenders.

Obama said that a McCain administration would continue President George W. Bush's economic policies.

``We can't afford another four years of Bush economics,'' Obama said. ``If there's one thing this crisis has taught us, it's that we can't have a thriving Wall Street and a crumbling Main Street, because we're all connected.''

To contact the reporter on this story: Julianna Goldman in Greensboro, North Carolina at jgoldman6@bloomberg.net

Last Updated: March 26, 2008 15:35 EDT