Sorry, This Was Just Dumb

McCain’s see Jeff G’s great post on this at Protein Wisdom – and I need to do a post on the likely [bad] consequences of this) and he should press on and try and make McCain’s campaign crumble right now.That’s more likely because of the logical perception that McCain’s offer was a ‘stunt’.

Practically, it was dumb because the place to work on the economy for both Obama and McCain is in the public eye, as a part of the campaign, not in the halls of the Senate where everything they do will inevitably be colored by association with their campaign.

It’s been a bad week for McCain and Palin (to top it off, the Enquirer is doubling down on their charges of an affair), but it’s not the final week and they can still get their feet under them. A strong performance at the debates – focusing closely on the economy – is a necessary first step.

127 thoughts on “Sorry, This Was Just Dumb”

  1. It is a decent move, as it exposes Obama as someone who wants the economy to do poorly, in order to a) blame the GOP for the mess, and b) to introduce sweeping socialism onto America.

    So Obama is exposed as both someone who wants a bad economy for political again, and also as someone who once again waits too long to address a problem.

    McCain will still show up to the debate, but Obama will be weakened there, as a result of this strategy.

  2. It’s dumb unless he succeeds in getting a compromise bill together and passed through the Congress. Then, he’s the guy who put aside personal advancement, reached out across the aisle, and did something to save America’s economy, while Obama ran around the country posing for pictures.

    The bill will be called the “McCain/Reid” (or whatever Democratic co-sponsor he finds) bill, so it’ll be directly obvious that it is his work.

    Can he do it? I don’t know — there’s a strong incentive for Republicans to go along with him (since it’s their only hope to save themselves this election cycle), and a strong incentive for at least some Democrats to do so (since the drying up of the credit markets would be a disaster exceeding partisan advantages). Yet there are also strong feelings against any sort of bailouts on the right, and strong partisan reasons on the left to want to see the economy tank through, say, 4 November.

    If McCain suspends his campaign and fails at this, then he’s done as a candidate. He probably figures that’s true anyway, however. As with the Palin pick, it’s a bold gamble — and, let’s be honest, one that plays to his strengths. He’s probably passed more difficult, bipartisan legislation than anyone else in recent memory. This is something he knows how to do.

    As they say: if it’s stupid and it works, it’s not stupid. We’ll have to see.

  3. McCain may be walking into a trap here, in part of his own making. Suppose (as is quite likely) that the bailout package that ultimately ends up before the Senate is laden with pork. McCain would be screwed no matter whether he votes for the bailout (in which case he’d quickly find himself accused of abandoning his anti-pork stance) or against it (in which case he’d just as quickly find himself accused of being willing to let the economy crash over some relatively trivial concern like pork). That, in a nutshell, is why campaigning against pork-barrel spending is such a dangerous proposition for any politician, let alone a presidential candidate.

  4. Yes, this is McCain at his worst. (Although if he manages to change the focus of the debate to the economic crisis instead of national security, I may have to re-think that gut reaction.)

  5. “The bill will be called the “McCain/Reid”.

    It will have to be ‘McCain/Clinton’.

    How is THAT for getting under Obama’s skin?

    tee hee…..

  6. bq. but it’s not the final week and they can still get their feet under them. A strong performance at the debates – focusing closely on the economy – is a necessary first step.

    Sounds like you’re rooting for him to pull closer.

    But didn’t you write a post recently slamming the Obama campaign for not having a larger lead over McCain, using polling data taken from right after the convention/Palin?

    (BTW, I told you that the numbers would recover for Obama after people got to know Palin better…).

    I’m just a little confused I guess about what exactly it is that you are advocating for here…or maybe I’m not the one that’s confused.

  7. I dunno. And I mean, I really dunno.

    My gut feel is that McCain is serious and sincere about this, and that it is not a campaign stunt, per se– I can see his advisors pretty much screaming at him not to do this. My gut feel is also that unless this breaks just right for McCain, it’s a self-inflicted chest wound, whether it’s a stunt or not.

    But, with the exception of an embattled and lame duck Bush, he is essentially the party leader, and my take on the bail-out was that the Republicans are deeply skeptical about it. If McCain can push them over the edge into full support, he can credibly think, in his mind, that he’s saved the country.

    That said, I don’t know that I disagree in spirit with your statement that the place to work on the economy is in the public eye… but in practice, the American people aren’t voting for a bail-out package. The American Congress is. Were this not a time critical activity, where days can matter, I’d agree with you whole-heartedly.

    Right now… I don’t know.

  8. BTW, I not only agree that this grandstanding is not only “dumb” but irresponsible, unserious and desperate.

    None of the qualities that a POTUS should demonstrate so prominently.

    His campaign is going south faster than a New Yorker in winter; Palin’s second effort at an interview with Couric is hitting the web and once again it ain’t pretty. Both he and her are in a media lockdown, refusing to take questions from reporters on important issues. They can’t…every time they open their mouths something damaging to their chances comes out. Their only hope at this point is to pull stunts. This being one.

  9. but irresponsible, unserious and desperate.

    But, but, yesterday Harry Reid called on McCain for help, “We need the Republican nominee for president to let us know where he stands and what we should do.” Seeing as how the majority leader is afraid to act on his own, McCain’s presence was probably a necessity.

  10. More evidence that it is all a stunt:

    (CNN) — McCain supporter Sen. Lindsey Graham tells CNN the McCain campaign is proposing to the Presidential Debate Commission and the Obama camp that if there’s no bailout deal by Friday, the first presidential debate should take the place of the VP debate, currently scheduled for next Thursday, October 2 in St. Louis.

    (What a coincidence.)

    In this scenario, the vice presidential debate between Joe Biden and Sarah Palin would be rescheduled for a date yet to be determined, and take place in Oxford, Mississippi, currently slated to be the site of the first presidential faceoff this Friday.

    Graham says the McCain camp is well aware of the position of the Obama campaign and the debate commission that the debate should go on as planned — but both he and another senior McCain adviser insist the Republican nominee will not go to the debate Friday if there’s no deal on the bailout.

  11. I know when Vista shows up with talking points that McCain has done something that has worried the Obama camp. Tonight’s talking point: “stunt.”

    Well, GK’s “McCain/Clinton Economic Recovery Act” could be called a _stunt_, but it’s a stunt that would set up President McCain to run against Sen. Clinton in 2012. Her oft-mentioned age issue won’t be a factor in that race, because he’ll still be older.

    Of course, we know the Clintons are above such considerations.

  12. That’s what McCain is saying, essentially, by pulling this stunt, which will have zero impact on the government’s ability to come to an agreement on how to deal with the developing (but not unforeseen) crisis but will prevent McCain or Palin from having to face voters to explain how they would deal with crises of this and other types as the chief executives.

  13. bq. I know when Vista shows up with talking points that McCain has done something that has worried the Obama camp.

    The ability of some people to see sinister connections between completely unrelated events is truly mind boggling, isn’t it?

  14. Here are some alternative suggestions for why the tide is running Obama’s way, instead of naively suggesting it’s the media.

    Regulatory oversight of Wall Street seems to have been inadequate. To the extent this is regulatory incompetence, McCain’s party is on the hook, and to the extent it is philosophical, up until last week McCain loved deregulation.

    I’d be glad to have Sarah Palin as my next-door neighbor, but there are probably hundreds of readers of this site better prepared to step in as President of the United States. McCain’s MO: bold, reckless, dangerous.

    McCain has alienated the press, who once loved him, by ending his once-famous access and by keeping Palin hidden away from any sort of questioning. His plan, as it were, to compensate for the press’s reaction to this is, guess what, to claim that it is the press that is unfair. (Palin to be questioned only by those suitably ‘deferential’.)

    McCain spent the first week of the bailout looking shocked, ill-informed (fundamentals are strong), self-contradictory, and confused, without any help from the press. He managed to lose George Will, who described him as a rookie playing a league too high while Obama looked collected and presidential.

    Except insofar as he’s the nominee, McCain isn’t a key player in the bailout negotiations, which were going along just fine without him. But the polls were starting to go south, so it was time for another wild gamble. (You do know he likes cas1no gambling, right?) Since this one looks like a non-starter, I can’t imagine what desperation move he has in mind for late October.

    I am, by the way, having a hard time understanding why the Administration’s $700B original bailout plan was not in some way socialistic. I guess the idea is that demanding an equity stake in the rescued businesses (Sweden did this, I read) is socialism, but just giving the money away for nothing is good old hard-edged capitalism. I’d have called it crony capitalism or even corporate fascism, but GK works from a different dictionary. Many of his posts seem to have suffered in translation from the Martian.

  15. bq. Since this one looks like a non-starter, I can’t imagine what desperation move he has in mind for late October.

    Yep…gotta really wonder what kind of crap they’re getting ready to pull out of their arses as the election grows closer and their chances dimmer and dimmer. Talk about putting America first…

    bq. I’d have called it crony capitalism or even corporate fascism, but GK works from a different dictionary. Many of his posts seem to have suffered in translation from the Martian.

    LMAO, except to say that his views are unfortunately typical of those behind the Republican/Rove firewall constructed to save the Union from Evil Liberals over the past decade or so. We’re really testing the integrity of this bulwark in this campaign, aren’t we? I can only imagine how people can still think Obama is more of a risk than McCain/Palin at this point after their concerted efforts to destroy their own credibility and standing as statesman/leaders.

  16. #19:

    _To the extent this is regulatory incompetence, McCain’s party is on the hook…_

    That seems to be the public perception, but it’s an odd one. As “Cassandra points out”:http://www.villainouscompany.com/vcblog/archives/2008/09/and_the_jackass.html the Bush administration has “implored Congress to regulate GSE no fewer than 18 times during 2008 alone (that’s roughly twice a month).”

    Which party controls Congress?

    Nevertheless, the public does seem to blame Bush. The buck, as they say, stops there — right or wrong, it just does.

  17. _It is a decent move, as it exposes Obama as someone who wants the economy to do poorly, in order to a) blame the GOP for the mess, and b) to introduce sweeping socialism onto America_
    -GK

    Astounding! The economy, such as it is, resides in the toilet and has for some time. As far as blame goes there’s certainly plenty to go around, after all Clinton/Rubin all gutted Glass/Stegall thus opening the floodgates, but no one owns this debacle more than the “free-market” fetishists of the GOP. It was Reagan’s bestiary of neo-cons who began the assault on the FDR era regulatory safeguards that would have made the current meltdown impossible.

    Did you use the “S” word? As some of the wealthiest people in all of recorded human history now beg before the congress-critters for _at least_ 700 billion taxpayer dollars in exchange for worthless “assets” that now threaten to swallow these cretins whole, you dare to speak of socialism while the most obscene display of socialism-for-the-rich unfolds before our very eyes?!

    For the past 30 years the free-market fundamentalists have demanded government non-intervention in the market because the market will self-correct excesses and reward innovation and efficiency. Well the market is correcting with a vengeance and the Bear wants to eat! Let him.

    If you leverage yourself at 60:1 on sub-prime debt should I pay the cost of your recklessness? Let’s try to be serious.

    There is nothing in Paulson’s “plan” that will in anyway prevent what is inevitable and for which there is *no taxpayer solution* . The housing bubble is deflating because house prices want to correct to the levels that the fundamentals suggest they should be. The bubble will not re-inflate and Wall Street knows this. Someone has to be left holding the bag. I’ll give you three guesses as to who that is.

    Much more on this subject later.

    PS. Intriguing teaser question: do we have a problem of liquidity?

  18. Grim, I am not going to comment on the 18 reforms until I can look up what they were specifically; they may have been changes (i.e., not reforms) that would make the situation even worse. Certainly the bankruptcy ‘reform’ had a negative impact on the mortgage crisis; making BK more difficult increased the economic sense of walking away from a difficult mortgage.

    I did, however, read far enough into your links to see that they assign mot of the blame for this mess on, variously, the GSEs and on such well-intentioned laws as the Community Reinvestment Act. This talking point has merit only for those who are looking for hacktackular anti-liberal talkingpoints, and those glibertarians for whom everything the government tries to do must have terrible consequences worse than any benefits.

    The CRA is implicated in something less (perhaps much less) than a quarter of distressed mortgages. No one twisted the arms of banks to make bad loans under the CRA or elsewhere, and I don’t see why if Fannie and Freddie were making loans that banks expected to be losers, they nevertheless felt obliged to copy them. (The CRA passed in the 1970s, so there’s also a temporal problem in this analysis.) In the real world, the banks loved the fees from constant refinancing and loan origination with increasingly weird alternative mortgages (which, you will recall, Alan Greenspan, not a liberal, endorsed in his attempt to keep the consumer sector afloat in the wake of the 2001-2 retrenchment in manufacturing and the inability of the Feds to respond because of deficits caused by foolish tax cuts).

    Even this, however, doesn’t strike at the single most important cause, which is the creation of bizarre Structured Investment Vehicles whose purpose, to borrow the verb from a Kos blogger, was to transubstantiate subprime crap into AAA collateral. These confections, which are now totally illiquid and impossible to appraise, should have simply been outlawed. Their purpose was to hide risk and enable obscenely large deals based on excessive leverage. The managements who overleveraged with alphabet soup junk as collateral and the stockholders who enjoyed the party while it lasted well-deserve to be zeroed out, which is why I like the various equity recapitalization suggestions that are floating about. The fact the clowns at places like Investors Business Daily (a rival that finds the WSJ too fact-based) support the $700B golden shower is almost enough by itself to say it’s a bad deal.

    The economy almost always does better under Democratic presidents than Republicans. Perhaps Dems are interested in broad measures of prosperity while the GOP concentrates on increased income disparity.

  19. Regulatory oversight of Wall Street seems to have been inadequate. To the extent this is regulatory incompetence, McCain’s party is on the hook, and to the extent it is philosophical, up until last week McCain loved deregulation.

    That this is the meme that will inevitably take hold galls me. The deregulation that everyone is blaming for this current round of woes is the Gramm-Leach-Bailey act, repealing the Glass-Steagall act in 1999. Yes, 1999. Which means Clinton signed it. Which doesn’t really matter, because the passage margins were 90% in the Senate, and 83% in the House. Not just veto-proof, but bullet-proof. Let’s remember that the reconciliation process that turned discrepant bills from either chamber into the unified bill that became law, gathered Democrat support by strenthening the CRA provisions, which effectively mandated lending practices for disadvantaged areas, i.e., “Forcing banks to lend to poor untrustworthy people,” as Republicans would put it.

    And let’s remember that while Dodd was asking, this week, where McCain was for the last few years if this was so all-fired important, McCain was actually trying to get more regulation on top of Fannie Mae and Freddie Mac, specifically the Federal Housing Enterprise Regulatory Reform Act of 2005. And the Bush administration tried to get regulatory authority in 2003, but that was derailed. Why? Never ask a politician to pass regulation that would slow down lending to disadvantaged neighborhoods– even in theory, if not in practice– and especially not while the subjects of that regulation are lobbying hard and spreading favors against it.

    So this may have been a failure of regulation, yes. And it very well might be that the public decides to blame the Republicans for this one. But it was a goddam complicated failure of regulation, and both sides had their eager hands in this right up to the elbows, and damn few people saw it coming– not like this. Serious, sober commentators on both sides admit that.

    Just once– just once in my life– I’d like to see the eternal cycle of political grab-ass take a goddam day off.

  20. “Many of his posts seem to have suffered in translation from the Martian.”

    Lazarus, that was not a Martian you jumped over, that was a sea-cucumber (look it up in your dictionary).

    “I can only imagine how people can still think Obama is more of a risk than McCain/Palin at this point after their concerted efforts to destroy their own credibility and standing as statesman/leaders.”

    You might not be among those with an income high enough to pay income taxes. But the middle class who does pay taxes will suffer under Obama’s taxation plan. “There is a reason that Democrats cannot attract the majority votes of any income bracket that earns more than $50,000 a year, and your single sentence reveals much about how economic success corelates strongly with an aversion to voting for Democrats. “:http://www.singularity2050.com/2006/06/a_take_on_the_l.html

    When even the $50K to $75K bracket votes solidly for the GOP, you know the Democrats are disastrous for productive people.

  21. Grim,

    That seems to be the public perception, but it’s an odd one.

    It’s an understandable one. High finance is as good as witchcraft to most folks, and I’m not much better myself. (I know a few things, but I haven’t studied it.) Regardless the actual facts, the average guy on the street knows (“knows”) that Republicans are out for Big Business and High Finance through Deregulation, and that Democrats are out for the Little Guy through Backing Unions and Regulation.

    It’s a simplification to such a degree that it’s practically a caricature, but simplifications still have an element of truth to them. Combine that with ignorance of the subject (and it’s a damn complicated subject) and a generally short attention space (much less for failed regulatory attempts) and the reason for the public perception should be obvious.

    Except this time, it happens to be false.

    Or at the very least, not straightforward.

  22. #23:

    I’m going to be a stand-up guy here, and admit that I don’t understand the economic and finance issues well enough to debate them. I listen to Cassandra on the subject because I respect her judgment and education, and I know that this is an area in which she is well-versed.

    I am, however, forced to bow to others in this area. As Scott Adams said in _The Dilbert Principle_, the world is becoming complex enough that we are all functionally morons in at least some areas; this is one of the ones where I am out of my depth. I understand how to take a third-world economy and start to make it functional for the people of a poorer nation, as that is something I’ve worked with professionally in Iraq and elsewhere: these are matters of agriculture and small businesses, which I understand fairly well. These complex financial instruments that dwell in the most advanced markets are a different matter, and one beyond my ken.

    As to whether Cassandra or you are right on the merits here, then, I cannot say with any authority. I will say that I trust her to speak the truth as she sees it, after long association: and therefore I don’t believe her to be ‘hacktacular.’ I’m quite sure she doesn’t have a libertarian bone in her body. But I am willing to learn, and if you want to engage her on the subject, I suspect that both you and I would learn something from the exchange.

  23. Andrew L –

    >No one twisted the arms of banks to make bad loans under the CRA or elsewhere,

    Actually they did. A bank couldn’t open a new branch without showing evidence of CRA compliance. It was a common tactic of Rev. Jackson to use this, for example.

    I personally think there is more then enough blame to go around on both sides of the aisle on this stuff. The GSEs for example were throwing money (all entirely legal contributions or grants to NGOs) around at anyone with a pulse in DC, — this isn’t an R or D issue. Add ordinary greed by borrowers, lenders, and brokers and we get where we are today.

    I understand this is serious stuff, but I do find it a bit galling to think of taxpayer bail-outs to firms that pay millions in bonuses however.

  24. Well, I’ll agree that the Democrats get a share of the blame. I don’t understand the purpose of quasi-private entities like Fannie Mae (or even the Postal Service) which Clinton-type New Democrats loved. What I don’t see is why their bad practices should have dragged down every investment bank in the country—stupidity is a long-term competitive disadvantage. Your neighborhood bank that sells mortgages just in your town is probably quite healthy right now, and one point of the bailout has to be protecting its smarter management. And I’m not sure whether the completely private sector was jealous of Fannie’s performance or the perceived opportunity for executive compensation.

    As for visiting Cassandra, I’ll have to check how much time I have. Running a worldwide Islamocommunist conspiracy worse than Goebbels is pretty time-consuming.

    My favorite liberal economist blog is Brad DeLong. Disclaimer: we’re acquainted. He has a great post today on what he intended to say at a debate with a Republican economist, although one of the two conservatives refused to appear.

  25. #29:

    Yes, I understand. My various conspiracies occupy a great deal of my time as well.

    That said, it would be nice to see some of the better minds brought together on the subject. Since you know Brad DeLong, perhaps he might want to engage Cassandra (or someone else she might name; it’s possible that she, likewise, has conspiracies on her hands that occupy her)? I am trying to learn more about the subject, as its importance has become clear, but it’s hard to find a place where the different views are being hashed out coherently. Trusting people whose intelligence and reasonable thinking is well established is a good first step, but once they are identified, it would be helpful if they could be convinced to talk to each other.

  26. PS – as to AL’s point. I don’t think it is a stunt at all. I am pleased that Obama joined in the recent joint statement. They both have day jobs and they aren’t doing them when they are running around campaigning. They don’t need to work this out in public, their day job is on Capital Hill.

  27. If I can expand on the point I was making in #30, consider “this analysis”:http://biglizards.net/blog/archives/2008/09/democrats_try_t_1.html which comes recommended by another blogger I respect on finance issues (Dad29). It’s got some nasty partisan rhetoric, but so does Brad DeLong’s blog (Nixon? LBJ?); but what I would like to do is get at the underlying issue, in order to understand it. This is how they describe it:

    bq. Let’s jump back 18 months. I spent several letters going over how subprime mortgages were sold and then securitized. Let’s quickly review. Huge Investment Bank (HIB) would encourage mortgage banks all over the country to make home loans, often providing the capital, and then HIB would purchase these loans and package them into large securities called Residential Mortgage Backed Securities or RMBS. They would take loans from different mortgage banks and different regions. They generally grouped the loans together as to their initial quality as in prime mortgages, ALT-A and the now infamous subprime mortgages. They also grouped together second lien loans, which were the loans generally made to get 100% financing or cash-out financing as home owners borrowed against the equity in their homes.

    bq. Typically, a RMBS would be sliced into anywhere from 5 to 15 different pieces called tranches. They would go to the ratings agencies, who would give them a series of ratings on the various tranches, and who actually had a hand in saying what the size of each tranche could be. The top or senior level tranche had the rights to get paid back first in the event there was a problem with some of the underlying loans. That tranche was typically rated AAA. Then the next tranche would be rated AA and so on down to junk level. The lowest level was called the equity level, and this lowest level would take the first losses. For that risk, they also got any residual funds if everyone paid. The lower levels paid very high yields for the risk they took.

    bq. Then, since it was hard to sell some of the lower levels of these securities, HIB would take a lot of the lower level tranches and put them into another security called a Collateralized Debt Obligation or CDO. And yes, they sliced them up into tranches and went to the rating agencies and got them rated. The highest tranche was typically again AAA. *Through the alchemy of finance, HIB took subprime mortgages and turned 96% (give or take a few points depending on the CDO) of them into AAA bonds.* At the time, I compared it with taking nuclear waste and turning it into gold. Clever trick when you can do it, and everyone, from mortgage broker to investment bankers was paid handsomely to dance at the party.

    Now — my question is, do we agree that this is the basic failure? Or was it the issue that “Ben Stein”:http://finance.yahoo.com/expert/article/yourlife/109609;_ylt=AihYXGa_2tf9PJDeCl.2G0S7YWsA pointed to?

    bq. The crisis occurred (to greatly oversimplify) because the financial system allowed entities to place bets on whether or not those mortgages would ever be paid. You didn’t have to own a mortgage to make the bets. These bets, called Credit Default Swaps, are complex. But in a nutshell, they allow someone to profit immensely – staggeringly – if large numbers of subprime mortgages are not paid off and go into default.

    bq. The profit can be wildly out of proportion to the real amount of defaults, because speculators can push down the price of instruments tied to the subprime mortgages far beyond what the real rates of loss have been. As I said, the profits here can be beyond imagining. (In fact, they can be so large that one might well wonder if the whole subprime fiasco was not set up just to allow speculators to profit wildly on its collapse…)

    bq. These Credit Default Swaps have been written (as insurance is written) as private contracts. There is nil government regulation of them. Who writes these policies? Banks. Investment banks. Insurance companies. They now owe the buyers of these Credit Default Swaps on junk mortgage debt trillions of dollars. It is this liability that is the bottomless pit of liability for the financial institutions of America.

    bq. Because these giant financial companies never dreamed that the subprime mortgage securities could fall as far as they did, they did not enter a potential liability for these CDS policies anywhere near their true liability – which again, is virtually bottomless. They do not have a countervailing asset to pay off the liability.

    Or is it a combination of the two? The CDS were bad thinking, proposition bets with money that didn’t really exist; but also, the odds of the proposition bets were badly evaluated because the bets were converted from subprime to AAA bonds?

    This is the kind of issue I’d like to have resolved with patient dialogue. I would, in fact, greatly appreciate some insight.

  28. I think so, but again, I’m spinning up on all this. I am a gambler, so when I say “a proposition bet,” I’m thinking of the term as it applies to table games at cas1nos. Frankly, this is starting to look like a situation where banks thought they were making proposition bets with good odds (AAA ratings!), but in fact were fooled by the tranches into betting on subprime mortgages without adequate security.

    So the proposition is: “You won’t get repaid.” And the bet is, “If you don’t get repaid, you pay me X; otherwise, I pay you Y.” X>Y.

    Now, you think you’ve got a AAA bond, so the odds of the proposition seem to favor you heavily. You take the bet.

    In fact, you have a bet based on subprime mortgages, and the odds actually favor you losing the proposition. You end up losing a large sum of money — not once, but on the vast majority (all?) of the 96% of subprime mortgages that got converted into AAA bonds.

    Now, what I want to know is, have I understood the situation correctly? If I have, there are some pretty clear policy prescriptions; but if not, I want to know where I’ve gone wrong.

  29. There was a good explanation of this stuff in the WSJ several months ago, but the URL is on my office computer. I’ll supply the link when I find it.

    The situation is even a little kookier than Grim’s source mentions in three respects.

    First, the ratings agencies are not so neutral as they might seem. If they don’t give a good rating, the banks may take their business elsewhere. So there was a lot of bargaining between the rating agencies and the banks on just how much crap to put in there. The idea that most of these instruments were high-risk didn’t seem to penetrate. (My guess is that in evaluating risk, they underestimated badly the likelihood of mortgages going bad all over the country in the same time frame, as opposed to localized housing price deflation.) But the rating agencies aren’t on the hook: their magic AAA, AAa, etc. are all a gimmick with other people’s money.

    Second, the instruments got even weirder than that story mentioned. For example, you could have a CDO-cubed, whose underlying securities were not mortgages that could be prices, more-or-less, but CDO-squares, which were tranches of agglomerated CDOs, etc. A new rule: any financial instrument that can be modeled with a Russian Doll is illegal.

    Third: Leverage. This AAA crap counted as assets enabling the banks to lend out much more. (We’ve had fractional reserve banking for 160 years, more or less.) This means that banks had to call in their loans when their own assets went bad… but those loans were used to be other crap, now you see the liquidity crisis where everybody tries to unwind their assets at once.

    We should have another thread on this, I would guess. I’ll try to keep further comments on the McCain gamble. Our presidential elections are not horseshoes, and it looks like McCain will try anything rather than lose quietly.

  30. I think there are several causes of the problems we’re now facing, a few of which I’ve seen in working with credit default swaps:

    1. regulatory and legislative push to make loans to debtors with poor credit;

    2. a failure of the Fed to raise interest rates sooner after the 9-11-01 attacks, contributing to overheating in the housing sector, fueling speculative borrowing and buying;

    (To this one could add other long-standing artificial stimuli for home-building, such as the mortgage interest deduction and Freddie and Fannie.)

    3. an unhealthy separation of loan origination business from the credit risks of loans originated, with the result that the originators, who securitized and sold the loans on the secondary market, had little incentive to police quality;

    4. failure of rating agencies to understand RMBS products;

    5. failure of rating agencies to understand systematic risk to financial guaranty companies of “wrapping” RMBS risk with credit default swaps;

    6. failure of investors (including credit default swap protection buyers) to conduct their own diligence of these products of securitization rather than simply relying on rating agency ratings of the products and financial guaranty insurers;

    7. failure of state financial guaranty insurance regulators to properly police financial guaranty companies and the continuing policy of such regulators to favor same-priority municipal bond policyholders over asset-backed securities policyholders;

    8. abusive shortselling;

    9. “too big to fail” moral hazard problems.

    Note that credit default swaps and rmbs, etc. aren’t regulated much because the players are supposed to be “sophisticated” and understand the risks. They cannot be sold to general investors in the US.

    All that said, the politicians asking for limits on executive pay and equity interests in participating banks don’t understand what the “bail-out” is supposed to do. It is not to save troubled lenders (though that might be a secondary effect). It’s purpose is to add liquidity to the credit markets, without which businesses that need financing (as almost all do) won’t be able to obtain it, and will fail, destroying value (and jobs) in all sectors of the economy (which will further depress housing prices and the ability of homeowners to pay their mortgages, further depressing the value of the RMBSs). To work, the banks (not all of which are near failure) have to want to participate, and cutting the decision-makers pay or demanding that shareholders allow their interests to be diluted is not the way to get participation.

    Don’t take that an an endorsement of the “bail-out.” I think it has a good chance of failing precisely because politics is getting involved and reducing it effect — a lot of this depends on credibility, which, like Middle Eastern foreign policy, tends to be eroded when partisan politics becomes a factor, and we’re only a few weeks before a major election. In addition, with the amounts involved, it’s simply too big a target for pork-barrelling. We’ll be fleeced.

    Even more fundamentally, I don’t trust the government to get the pricing right. How is it supposed to figure out what none of the market participants can figure out? In short, I fear we’ll end up putting in the money and not solve the problem.

    I don’t claim to have the answer, but I have to believe it starts with policies to strengthening the lenders that are least infected with the results of poor decision-making rather than those most infected — and the same goes for mortgagors.

    The bottom-line root cause of this problem is overdependence on credit at all levels. Having the federal goverment borrow even more money to throw at the problem seems a step in the wrong direction.

  31. OT for this thread but WTH, relevant to #35 and earlier.

    Throw another factor in, just for amusement: The unknown fraction of house appraisers who just parked their cars, took a few pictures, did a few Google searches, filled in the forms and billed their clients — without being diligent in looking at the properties being flipped and re-flipped. Nobody wants to hear bad news — make trouble and you’ll get fewer realtor clients — go go go!

    I am reliably informed that in fly-over country there were ‘way too many of those. I doubt that the coasts were blessed with any less of a fraction of questionable appraisals.

    This will be a grift that keeps on taking as houses lose real resale value compared to their old appraisals, when the music stops on those particular games of musical chairs.

  32. bq. The bottom-line root cause of this problem is overdependence on credit at all levels. Having the federal goverment borrow even more money to throw at the problem seems a step in the wrong direction.

    And the credit has effectively become part of the (perceived / depended upon) money supply, without ever having been printed by the USG. Argh! Remember (well, remember studying about) when banks used to print their own currency? Those were rocky times.

  33. I think you guys are overblowing this. Low interests rates are healthy. Quasi-governmental entities lending with no guidelines, knowing theyll be bailed out, are unhealthy. Pointing fingers at the market is as hypocritical as this sudden conservative reverance for the market in opposing a solution. The truth is we should be shocked at just how deeply our government was mired in this mess long before the crash.

    Regardless, one thing is certain. Capitalism starves without Capital. Thats what cause the Great Depression, and that is our greatest danger now. To date this ‘crisis’ has affected real estate, Washington, and a few gold medal companies not used to losing money. If the credit market dries up, _thats_ when we will see trouble that makes this look like a trivial hiccup.

    Example- my company services other companies. My suppliers borrow from a bank to buy the raw materials to supply my inventory. Essentially this is on faith that my company wont go bankrupt before they can collect on this short term investment, otherwise they are caught holding the bag. They likely have suppliers that are playing the same game.

    Now if money becomes more expensive to borrow, the price of business goes up and is passed down the line in the form of inflation. If money becomes _impossible_ to borrow, we see a chain reaction. I dont have product so i cant provide for my customers who cant provide for their customers and so on. Its a two way street- my customers dont pay me so i cant pay my vendors… which makes it impossible for them to borrow money… or very quickly stay in business.

    Bottom line- fuck the politics and the ideology. This has gone from a niche (if important) economic sector to a true threat to the stability of the Western economies. Capital is the fuel of capitalism, and credit (like it or not) is how business is done (dont think so? consider your best, longest standing customer asking you for an order. Now demand _cash,_ up front, for your goods or services. Ah, maybe credit isnt so bad, huh?). Whatever needs to be done to keep the flow of credit, needs to be done. That is the lesson of the Great Depression, and i’d hate to see us relearning it at this late date.

  34. Since it was mentioned in the original post, the Enquirer story alleging Palin had an affair with a Mr Hanson is backed up by a Mr Burdett:
    “Burdett is a former brother-in-law of Hanson’s estranged wife Carolyn’s brother….”
    Which is information you can take to the bank (given that the financial sector meltdown has forced a radical redefinition in how I use the phrase “take it to the bank”).

  35. There are two components to this: perception and reality. In reality, it’s a good thing to do. John McCain has a nearly unique record of being able to work across the aisles to get bipartisan bills crafted and passed. Since both McCain and Obama have come out in favor of some sort of bailout, and since Congressional resistance to a bailout is hardening, it makes sense for McCain to work on this directly. (In a way that it would not make sense for Obama to do so; he simply does not have the requisite skills and influence to make a deal. So yeah, it also makes sense for Obama to continue campaigning.)

    Then there is perception, and that depends on how this plays out. Immediate reactions are fairly negative, but that would change instantly if McCain is instrumental in brokering a deal. (For that reason, I think that Reid would scuttle a deal and blame it on the Republicans, rather than let McCain have any credit on this. Some things are more important to politicians than saving the economy, like winning elections. That is a problem for all politicians, regardless of party, and McCain is a rare exception to that rule, and even then only to a limited degree.) In any case, McCain has several opportunities to make this look good on him, even if he is a bit player in whatever settlement comes out. He can certainly spin it as him being serious and Obama not, but I don’t think that the media would be anything other than vicious to such an attempt. His better bet would be to either show up at the debate, and make the point that it is distracting him from something more important, but Obama is throwing a childish tantrum and refusing to accommodate the economy, so here he is. An even better thing would be to offer to let Palin go in his place to debate Obama.

    But I suspect that this is going to reflect badly on McCain unless he is intimately involved in crafting a deal, and that the Democrats will prevent any deal that intimately involves McCain.

    So on net, it was probably a bad move, not just in terms of perception, but in reality. Despite Reid’s call 2 days ago for McCain to engage, Reid’s statement yesterday was more cogent: the injection of presidential campaign politics into the debate is more likely to hinder than help passage of a bill, despite McCain’s undoubted skills at such things. I am of two minds as to whether that’s a good or a bad thing overall. It might be better to have no bill; I don’t know — I’m simply out of my debt on this issue, as are, unfortunately, most members of Congress.

  36. Getting back to the original post on McCain’s suspending his campaign and postponing the debate:

    This is the icing on the cake as far as John McCain’s drive to prove himself an utter fool. Who is advising this man? How is anyone to take him seriously. Does he really think that people will look on this as some grand heroic gesture, or that he will somehow be the guy in the white hat riding into Washington to clean up the mess?

    This team behind McCain is the most intellectually vapid I have ever seen.

  37. Next comment on the suspension outsourced to Steve Benen.

    [I]rresponsible risk-takers don’t much care about good judgment. They just want to go all in and let it ride. We saw this dangerous impulse problem last month when McCain made the ridiculous decision to add Sarah Palin to the Republican ticket, and we clearly saw it again yesterday. [snip] With extraordinary challenges at home and abroad, McCain has apparently decided that the very last thing the nation needs is a steady, unflappable leader with a cool head and reliable temperament. What we really need is someone who acts, then thinks. Or, in McCain’s case, acts, then blasts those who do think as some kind of elitists. I suppose there are worse qualities in a president. I’m just not sure what those qualities might be.

  38. Why is this instantly seen as a political move? Has anyone considered that McCain honestly went back to Washington to try to get a deal done before Congress adjourns for the year next week?

    Its bad enough that we are this jaded. Its worse that nobody even suggests that both McCain and Obama _should_ be back in Washington, and that Congress has no business shutting its doors until this and the oil drilling bills are signed.

    But, ok, we live in a hyper-political world. But setting that aside, shouldn’t both these guys (and ever other servant of the people) be busting their butts to figure this thing out? What kind of a evil-goatee world do we live in where its less cynical _not_ to go do your job and instead to keep hacking the campaign trail (and doubtless harping about the economy and sad state of our elected government’s response).

  39. Jeff, I agree with most of what your analysis, but not your conclusions. I think the perception of McCain will look good. I think the reality is that John McCain is not going to add anything of substance (other than maybe rallying the republican party towards bailout).

    It’s still in committee, on a committee that McCain has no stance in. Let the committee finish their work free from presidential politics, and then (if you’re behind the program) get back to Washington & sell it.

    However, the perception (for most Americans who don’t understand the political system) is that McCain is a leader who can go in and fix the system may pay off. Or, if the bailout looks bad a month from now (or if the economy keeps sliding, which is a safe bet) McCain may be attached to a 700 billion payout that didn’t stop the slide. It could play out very, very badly for McCain in the long run.

    Here’s the problem with the decision in my mind: McCain is trying to vie for control of a situation that is out of of control (even if the bill passes). That IS a dangerous perception gamble.

  40. #44 from Andrew J. Lazarus at 2:27 pm on Sep 25, 2008
    Next comment on the suspension outsourced to Steve Benen.

    _[I]rresponsible risk-takers don’t much care about good judgment. They just want to go all in and let it ride. We saw this dangerous impulse problem last month when McCain made the ridiculous decision to add Sarah Palin to the Republican ticket, and we clearly saw it again yesterday._

    I have just watched some videos on YouTube. Search *Palin Witchcraft* and tell me why would anyone in their right mind would defend McCain’s or any of his campaign staff’s judgement in choosing Sarah Palin.

    McCain is a loose cannon and Sarah Palin should be pitied.

  41. Mark (#45), McCain is in New York today at the Clinton Global Initiative, while the relevant parties are right now in washington hammering out a compromise deal.

    In addition, the McCain campaign has events scheduled for “today.”:http://3.bp.blogspot.com/_1xQeOPE9ePU/SNulCNGB3CI/AAAAAAAAClk/YMnDzflgMHM/s1600-h/livechatmccain.jpg

    Here’s Barney Frank on the issue:

    September 25, 2008 7:11 AM

    The chairman of the House Financial Services Committee, Rep. Barney Frank, D-Mass., chatted with reporters after the president’s speech last night.

    “I’m glad the president said what he said,” Frank said. “It’s not that making the speech was going to help, but failure to make a speech was probably hurting. In America, if you don’t hear from the president, it’s not a crisis.”

    Frank says that House and Senate Democrats have agreed upon what should be in the Wall Street bailout legislation. This morning Frank, his Senate counterpart — Senate Banking Committee Chairman Chris Dodd, D-Conn. — and top Republicans will meet to try to hammer out a final agreement. He was optimistic.

    “All of a sudden, now that we’re on the verge of making a deal, John McCain drops himself in to make a deal,” Frank said. “I really worry about this politicization of it.”

    “Frankly, we’re going to have to interrupt a negotiating session tomorrow between the Democrats and Republicans on a bill, where I think we’re getting pretty close, and troop down to the White House for their photo-op, and then come back and get on to it,” Frank said.

    “We’re trying to rescue the economy, not the McCain campaign,” he added.

    bq. Its bad enough that we are this jaded.

    Knowing all of this, perhaps now you can guess why people are “jaded” about this (or other) claims by McCain?

  42. I’d also like to know how all of you define “suspending the campaign” and whether any of the McCain campaign activities that are going on during this period would qualify as evidence of a lie?

    Does that mean no ads, no spokesman on TV, or just that McCain backs out of the debate and goes to Washington at some point after congress works out a plan for a photo-op?

    Hope you all caught David Letterman on this issue last night. Priceless and appropriate comic mockery.

  43. You know, G_Tarhune, I think you may be proceeding from a misapprehension. I have not heard a single person here claim that McCain is the greatest thing since sliced bread. Those of us who support McCain tend to feel that he is adequate, and the best person who got the nod, rather than that he is wonderful. Yet your attacks seem entirely designed to show us how not wonderful McCain is. Won’t work: we already know that. So why not focus on why Obama is better? Then at least there’d be something to discuss, and it would also make you look less petty and nasty.

  44. _All that said, the politicians asking for limits on executive pay and equity interests in participating banks don’t understand what the “bail-out” is supposed to do. It is not to save troubled lenders (though that might be a secondary effect). It’s purpose is to add liquidity to the credit markets_
    -ricg

    Fine, those institutions that are put off by the terms can go it alone. In the meantime the federal government can capitalize its own bank with the 700 billion to 1 trillion being suggested for the floundering banks that got themselves into quicksand. The banks that are strong enough to survive will survive, those that are not will have their assets purchased by the new federal entity for pennies on the dollar.

    There’s no liquidity crises. There are reckless banks that are functionally insolvent and they should fail. Furthermore, it can by argued that we suffered from a case of _too_ much liquidity, much of which was used for speculation rather than on the real economy of productive work. And do you really believe that encouraging already maxed-out consumers to assume even more debt is sound economic policy? This is precisely the kind of thinking that got us here in the first place.

    _To work, the banks (not all of which are near failure) have to want to participate, and cutting the decision-makers pay or demanding that shareholders allow their interests to be diluted is not the way to get participation_
    -ricg

    As should be obvious to all by now the decision makers were the problem, what makes them worthy participants in the solution now? In fact, this level of incompetence in the real world gets you fired. As to shareholder concern about the dilution of their stock, well… that’s just too bad isn’t it? That’s the price of insolvency. Investors who put up the money to rescue the bankrupt get an equity stake. Don’t like the deal? Then take a hike, kick some rocks, scram…

  45. If so, Jeff, then my apologies. The words “all of you” should not have been used in this context at #49.

    #48 was information to Mark that I think was appropriate to point out, however.

  46. _”In addition, the McCain campaign has events scheduled for today.”_

    And yet your link is to a McCain advisors speach.

    McCain is meeting the President, Obama, and congressional leaders in the White House today.

    And thanks for the words of the always non-partisan Barney Frank. I could quote you Harry Reid the other day specifically calling on McCain to reach a concensus, but why bother. That was yesterday, now amazingly the Dems feel the opposite.

  47. Well early reports suggest there now is a congressional bail out plan…. before McCain could get to the meeting. I don’t think this is a disaster for the McCain campaign, but it’s certainly an OOPSIE moment.

  48. … I guess house republicans haven’t agreed yet.

    Republicans aren’t going to officially agree to anything until McCain arrives. That much seems a given.

  49. #53…Is Palin part of the “McCain campaign” or not?

    Sep 25, 12:25 PM EDT

    Palin quiet on Sen. Ted Stevens’ political future
    By AMY WESTFELDT
    Associated Press Writer

    NEW YORK (AP) — Republican vice presidential nominee Sarah Palin, in a rare exchange with reporters, declined Thursday to endorse the candidacy of indicted Alaska Sen. Ted Stevens.
    Opening arguments began Thursday in Stevens’ corruption trial. The longest-serving Republican in the Senate faces seven counts of making false statements stemming from allegations that he concealed gifts on Senate financial documents. In spite of the charges, he is running for re-election to retain the seat he has held since 1968.
    When a reporter asked Palin, Alaska’s governor, if she supports the re-election of Stevens, she replied: “Ted Stevens’ trial started a couple of days ago. We’ll see where that goes.”

    Outside a firehouse near ground zero of the 2001 terrorist attacks, Palin took just a handful of questions from reporters

    And what about his regional campaign offices?

    bq. Across the country, McCain campaign offices are up and running, accepting volunteers, conducting phone banking, literature dropping and other GOTV activities. This held true on a local, state, and even regional level. The Huffington Post called up 15 McCain-Palin and McCain Victory Committee headquarters in various battleground states. Not one said that it was temporarily halting operations because of the supposed “suspension” in the campaign. Several, in fact, enthusiastically declared the continuation of their work. Others hadn’t even heard that the candidate for whom they were devoting their time had officially stopped campaigning.

    “Link.”:http://www.huffingtonpost.com/2008/09/25/mccain-campaign-still-act_n_129327.html

  50. _”Is Palin part of the “McCain campaign” or not?”_

    What the heck are your talking about? Is everyone involved in the campaign supposed to run to Washington? Are the old ladies putting up posters in Fargo supposed to jump on Amtrack?

    McCain went to DC. That’s all anyone ever said. So did Obama to his credit. Must you grasp at every rickety straw there is?

  51. I guess, Mark, I’m just wondering what he meant by “suspending my campaign”, as I asked above in #49.

    I certainly don’t think it is too much to ask that our potential presidents communicate clearly and honestly with the public.

    I’ll put you down for “McCain travels to Washington and backs out of a scheduled debate” category I guess.

  52. _”I guess, Mark, I’m just wondering what he meant by “suspending my campaign”, as I asked above in #49.”_

    Oh, i’m sorry McCain didnt parse his language exactly enough for those who actually thought he meant all the tens of thousands of supporters and campaign workers all over the country were going to stand down and start working on the mortgage crisis. Throw away your placards and pick up your calculators.

    For the slow, let me be more accurate, McCain suspended _campaigning._ Suspending the entire campaign being, you know, virtually impossible and ridiculous to boot. Sorry if you missed that difficult nuance.

  53. OK, so most of you guys think the campaign is precious. Well, just how important is this campaign? what new information of any consequence has been revealed by this bloated, public self-flagellation in the past two months? My guess is that the dispostion of the $700 billion is a lot more important.

    The “campaign” is a national embarrassment. Just who benefits from this exercise is a mystery. How did we get here?

  54. #61 from kieth Nissen at 10:59 pm on Sep 25, 2008

    What is important is not having a presidential candidate running around doing a Chicken Little impersonation. It is bad enough that the Secretary of the Treasury to be in the middle of one but we don’t want it spreading.

    My take is net this was bad move for McCain and only gives more credence to the perception that his campaign cannot be taken seriously. \if he worked for me I would tell him to get a grip.

  55. As of now, no deal because House Republicans balked at the handouts to ACORN and other goodies Barney Frank and Chris Dodd loaded onto the bill.

    Their constituents are calling overwhelmingly against.

    My guess, no deal. No debate, Obama doing a Townhall. Dems tank the deal to push the nation into Depression.

    Stupid move by McCain.

    He’s had no surrogates getting the word out on how Dems loaded this bailout bill with lots of stuff for HArd Left Marxist ACORN and so on. No words about Dems tanking the deal deliberately. No putting Obama on the spot to force a compromise by … exhibiting LEADERSHIP.

    McCain has run a bad campaign.

  56. Mark, Mark, Mark. You don’t seem to get it. McCain hasn’t “suspended his campaign” or “campaigning” or however else you or he want to put it. Not by a long shot. He just moved it to Washington so he can inject it directly into the economic bailout debate that was initiated without his involvement and can only suffer for it.

    I think the word “gullible” applies here.

  57. Whiskey, I’d like a link to the handouts to ACORN in Chris Dodd’s version of the bill. Color me skeptical. Meanwhile, the Republicans think the problem can be solved by more tax cuts. I guess the idea is that the Paulson bailout plan increases the national and tax cuts increase the national debt, so the two must be just as good at solving the banking liquidity crisis.

    Mark: AFAIK, McCain’s suspension of campaigning meant canceling an appearance on Letterman (he went on Couric instead) and threatening to no-show at the Friday debate that he hadn’t prepared for anyway. His ads are up. He continues to make public appearances. You don’t think showing up at a meeting that he helped arrange to monkey-wrench a bill he hadn’t helped negotiate is part of a campaign? Hunh?

  58. Again- what an amazingly cynical world we live in where a Senator is accused of hypocrisy for putting his higher aspirations on hold for a weekend to _do the job he’s already been elected to do._

  59. Mark, maybe a little cynicism is called for. McCain has been absent from the Senate since when, April? In his role as a Senator, this bailout plan wasn’t in his committee bailiwick and he wouldn’t have been involved in the negotiations between Congress and Bush/Paulson even if he were in town. GOP Senators like Bennett of Utah were sort-of on board until McCain ran into town—was any other Senator not on the pertinent committees demanding/arranging a White House meeting? No. So he wasn’t there as a Senator; he was there as a Presidential Candidate. And as you don’t even seem to dispute, he was doing all of the usual candidate things, hitting the talk shows, doing the photo ops, except for the few hours he was in the meeting he himself had set up. So let’s be clear. His campaign was “suspended” to the extent he backed out of one TV appearance (I, myself, am partial to the idea he did this to drive Sarah Palin’s dreadful interview with Katie Couric off the air). This is as ridiculous as Obama announcing he is suspending his campaign every time he plays some pickup basketball.

  60. Ah. This crisis is equivalent to a basketball photo op. Gotcha, run with that talking point.

    Just because Obama has only seen the inside of the Capitol building a couple dozen times doesnt excuse him. I’d just like to know when it became _admirable_ to be derelict in one elected office out of avarice for another- and yes, that applies to both candidates.

    Just so i’m straight with this- running around the country wrist wringing about the state of the economy is preferable to doing a little political arm twisting to actually get something done? i just want that on record.

  61. I don’t know what the American mainstream media is doing with this, but on Australian radio I’ve heard McCain’s move paraphrased as _”cancelling”_ his campaign, _”stopping”_ his campaign and _”ending”_ his campaign.

    _”Suspending”_ his campaign, a formula that suggests he reserves the right to restart it after giving up, is an undesired formulation.

    Rather, the tension between the fact that he has paused some activities but will go on (one assumes) to the finish is addressed with questions about how sincere this cancellation of his presidential bid is, or whether this is a stunt.

    No flat lies are told, but the words chosen tell a story – and the words I’ve heard journalists using are neither quotes nor accurate. They seem to be selected for effect, to promote a narrative that flows on regardless of the briefly acknowledged facts.

  62. It will be a dumb move on McCain’s part if he buys into the “emergency” and bails out the People’s Republic of Wall Street and the Democrat Party’s cronies.

    Clinton build and implemented this bomb and Bush went along for the ride till 2004 when it became apparent that the reckless move into subprime mortgages wasn’t just dull it was fradulent resulting in a $400 million fine from the FEC.

    Repeated attempts to reign in Barney Frank and the Congressional Black Caucus failed in 2004 aND 2005.

    sO WE NOW HAVE A TWO TRILLION DOLLAR DISASTER THAT bUSH AND HIS dEMOCRAT ALLIES WANT THE aMERICAN TAXPAYER TO FUND. This amounts to about 2,300 per individual (each and every one of us before taxes or about three weeks additional work). That is if you believe that $800 million will reign in this mess, I don’t.

    If McCain pushes this mess through we are finished as a nation because we have no means to trust our elected officials. So McCain playing along with Barney Frank’s kabuki dance will be a disaster. Apparently though Barney was told off. One can hope that any rememdy ends both Freddie Mac and Fanny Mae, while getting rid of the mountains of pork the Democrats seem bound and determined to pile on.

    If a bailout does go through the consequences will make the 70s seem like a golden era. For the Congress will have moneterized the debt, inflation will become rampant and the dollar will collapse. The PRC has announced it will no longer buy US debt, so who are we kidding.

    Its time to pay the piper folks. If you aren’t prepared you’ll have a rough time of it. But you get the government you deserve. The Dems promised change in 2006 and now its time to pay the bill for Clinton’s affirmative action housing plan.

  63. Mark: Wether his intentions were good or bad, this has to *look* bad right? A committee deal is announced, several republicans (in committee) say it’s good, McCain arrives a few hours later and tries to renegotiate, deal falls apart.

    Now, I’m all about negotiatiating out the crap, I think it’s a good idea. However, 24 hours ago McCain basically said that this situation is an emergency that must be passed immediately. It seems hypocritical (although we haven’t seen the bill, so it’s difficult to see what his objections were). This doesn’t mean it *is* hypocritical. But remember, to a public that isn’t paying attention, *seems* is more important than *is*.

    Again, this is the danger McCain engaged in: he involved himself in a situation he can’t control. Even his own party is skeptical of this bill, and many of them are trapped in their own election cycle, watching their butts first.

    This still has the opportunity to go right for McCain, but it’s a gamble, and it’s starting to look more and more risky.

  64. alchemist:

    Mark: Wether his intentions were good or bad, this has to look bad right? A committee deal is announced, several republicans (in committee) say it’s good, McCain arrives a few hours later and tries to renegotiate, deal falls apart.

    Yes, that looks bad, which is why the story is being concocted that way.

    In another version of the fairy tale, McCain is leading a revolt against President Bush. This is suddenly a bad thing, and Democrats stand frozen in horror, shocked by the divisiveness.

    House Democrats need to frame the story before the facts about their relationship with Fannie and Freddy sink in with the public. And leading the charge to the lifeboat is Barney Frank, who will soon be famous as the Herbert Hoover of Fannie Mae.

  65. McCain is an ill-advised, manipulated fool. He reminds me of the Dude in the Big Lebowski. He repeats the last thing he heard.

    The problem is not whether he is for or against the bail out. The problem is the problem is beyond his ability to grasp and beyond anything he can control. He as put himself in a lose/lose situation unless he can convince everyone else in Washington, Democrats and Republicans alike, that he is the cavalry come to save them. The chance of that happening is nil.

    Someone should have told him the story of the Sorcerer’s Apprentice.

  66. *Yes, that looks bad, which is why the story is being concocted that way.*

    Why be so conspiratorial about it? I don’t really think this is a good-evil fairy tale issue… or an issue where one side is being unfairly acted upon, it’s a bunch of politicians trying to fix a problems and hog all the credit at the same time.

    Let’s use the term ‘framed’ instead. Afterall, framing is what politicians do (especially as candidates)… the try to rephrase an issue to make themselves look better than their opponents. McCain made a brilliant short term manevour, and framed the issue as the only candidate that cares about this crisis. Unfortunately, for that framing to continue, he needed to swoop in and save the day.

    Unfortunately for him, he could not control what happened next, and that was the risk aspect here. Sure enough, other politicians framed this away from him. Again, McCain could still succeed, but he needs to rephrase what happened last night. And that can only happening by dominating this negotiation.

  67. Oh, and BTW, this is what many of us predicted would happen when you inject presidential election politics. (See AL’s intial post above).

  68. _”Mark: Wether his intentions were good or bad, this has to look bad right?”_

    I think so. Which is why i don’t think this is a political move (or not purely a political move). There’s really little upshot for McCain in this mess. I think McCain, right or wrong, legitimately thinks his place is in DC right now. I don’t think its helping his campaign and its certainly a huge risk to make himself the poster boy for this crisis (which may indeed be beyond anyones control).

    _”A committee deal is announced, several republicans (in committee) say it’s good, McCain arrives a few hours later and tries to renegotiate, deal falls apart.”_

    The way i’ve heard it explained is that the Democrats leaked that there was a deal before they had one _intentionally_ to embarrass McCain. I’m still not sold that the Republican minority is ready to go along with the bailout as it is. In my opinion its a bit late in the day (and bad timing) for the Reps to refind their conservative principles.

  69. Also, McCain has made plenty of enemies on both sides of the aisle. You just have to laugh that a couple of Republicans quite likely went to extra lengths to cut a ‘Gang of X’ type deal before McCain could get to DC. Thats payback, Washington style!

  70. bq. There’s really little upshot for McCain in this mess.

    Mark, that’s the rub. Even the small chance that this can end up working in his favor is what he is hoping at this point. It’s a desperate hail-Mary of a move that, in this context, seems reckless and destructive (not just to self either). That’s the part that is so bothersome and so typical of McCain’s self-centered personality…he seems all too willing to risk progress in the ongoing negotiations, to risk the completion of a bailout agreement which most parties acknowledge needs to get done soon, in order to potentially improve his political standing somehow.

    In this view of him, government resources and public interest are nothing more than mere tools that he can exploit as he sees fit on the way to his Throne.

  71. _You just have to laugh that a couple of Republicans quite likely went to extra lengths to cut a ‘Gang of X’ type deal before McCain could get to DC._

    Again. Oopsie.

  72. Occam’s razor. If this is senseless from a political point of view, but responsible from a… well responsible leaders point of view, why assume he is being senseless? The sensible answer is that he is letting politics suffer to get something important done (which has long term political benefits potentially).

    And lets not forget there were risks to his _not_ doing this. Harry Reid et al were scoring political points by begging McCain to come a hammer out a deal. No good deed goes unpunished.

    There is clearly a lot more daylight between what congressional reps are demanding and what the WH/dems have staked out. And lets not forget- Democrats have the numbers to pass this thing themselves _right now_ if they wish. But they arent going to do it without the cover of Republicans in case it doesnt work. The way i’m seeing it the Reps just arent on board, and McCain _does_ have a place making that work.

    If the Dems are so upset all they need to do is pass the legislation. Debate back on.

    Whats the hold up?

  73. bq. Just so i’m straight with this- running around the country wrist wringing about the state of the economy is preferable to doing a little political arm twisting to actually get something done? i just want that on record.

    Before answering this, Mark, why don’t you tell us what you envision Senator McCain’s contribution can be to this process?

    He is not on the Senate Banking Committee and there are no votes scheduled today in congress.

    Perhaps he just wants to make sure he can apply his solution to the Iraq domestic violence problem:

    bq. “One of the things I would do if I were President would be to sit the Shiites and the Sunnis down and say, ‘Stop the bullshit,’” said Mr. McCain.”

    To have such overarching self-confidence on one’s ability to influence world events by sheer power of personality and will is delusional.

  74. _”Top Republican Lawmaker: ‘No Agreement'”_

    _But Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, emerged from the White House meeting to tell reporters he was unhappy with the details._

    _”It’s flawed from the beginning,” Shelby said of the “agreement of principles.”_

    _Standing outside of the West Wing of the White House, Shelby added, “That agreement is obviously no agreement.”_

    “abc”:http://abcnews.go.com/Politics/Vote2008/Story?id=5884701&page=4

    That was _moments_ after the meeting. So much for a deal in principle. What role does McCain have? Are you serious? He’s already brought the House republicans concerns to the table… concerns that (its becoming increasingly clear) were not just ignored but attempted to steam roll and disappear.

    Obviously McCain and Obama are going to be critical in getting something done. The parties are at loggerheads already.

  75. Mark in #81

    Unfortunately I have to agree with you that this situation has become far more political than it should. Perhaps you are right in suggesting the Dems are sensitive about this. If so, I am not impressed, as I hold our leaders to a higher standard of service (public, not self). Their actions, however, do not forgive McCain or the Republicans’ from acting in this manner as well, if that is what you are suggesting.

    In my view Obama is the only one acting in the appropriate manner here in calling for a bipartisan agreement and urging that presidential politics be kept out of the process.

    A disturbing alternative interpretation of events is that McCain and some breakaway Republicans are actually willing to allow the deal to fall through so that the markets can collapse completely in service to a religious belief in free-markets. That most of them are fabulously wealthy and would suffer little under a second Great Depression certainly helps to assuage concerns over this.

    bq. “At the end of the day, there’s a lot of people thinking about how to rebuild this party,” said GOP strategist Ed Rollins on CNN, “and do we want to rebuild it with John McCain, who’s always kind of questionable on the basic facts of fiscal control, all the rest of it, immigration. And I think to a certain extent this 110, 115 members of this study group are saying, here’s the time to draw the line in the sand.”

    bq. “That’s pretty scary stuff that they’re thinking about party right now and not country, is that what you’re saying?” responded host Anderson Cooper.

    bq. “I think they’re, yes, they’re thinking about themselves,” said Rollins. “I think they don’t think that the threat is as great as a lot of other people do.”

    That would sure shake-up the race, now, wouldn’t it?

  76. _”Their actions, however, do not forgive McCain or the Republicans’ from acting in this manner as well, if that is what you are suggesting.”_

    I’m not, i agree with you. Congress created this mess. I wish i had something to back this up, but a journalist from the Chicago Tribune this morning was explaining how the government bought up a bunch of bad dept during the S&L crisis, just like they want to do now. And they sold it back to their buddies at a cut rate as years went by. Some of the companies that emerged from that we are hearing about today. It all goes around and around.

    Philosophically i am deeply concerned with giving the robbers the keys to the vault because they say they know best how to remodel it. But pragmatically, there are few possible worse things in the economic world than capital drying up. This Congress has put us on the horns of a dilemma. Who can we turn to to fix the crisis they’ve created? Its like the shady mechanic that breaks more than he fixes.

    Then again if we dont throw the bums out this year, i guess we never will.

    _”In my view Obama is the only one acting in the appropriate manner here in calling for a bipartisan agreement and urging that presidential politics be kept out of the process.”_

    I think time will tell, but i give Obama some leeway for the moment. On the other hand staying above the fray simply isnt viable long term. He will look aloof and scholarly. If something gets solved quickly, i think Obama acted well. If not, i have to start asking if he feels he doesnt have much of a horse in this race considering he benefits politically from a down economy.

  77. bq. Before answering this, Mark, why don’t you tell us what you envision Senator McCain’s contribution can be to this process?

    He’s 1/100th of the voting power in the Senate right now. Given his Presidential possibility (long shot though it may be), he may be able to swing a few more 1% voters.

    Put another way, one might wonder what _any_ Senator adds to _any_ legislation. If horse-trading, power base management, and coalition formation is not the job of a Senator (plus his 1% vote), then what do _any_ Senators contribute to the process? Certainly someone has to write up the agonizingly verbose drafts themselves, and inspect other people’s drafts to find things to complain about, but as I understand it that is handled by underlings, not the Senators or House members themselves.

    If we’re really in such a dire emergency that Congress needs to act immediately–a proposition I do *not* buy, incidentally, but it’s the underlying assumption in the should he/shouldn’t he question–then every additional Congresscritter you have present in Washington would, theoretically, be contributing to the process.

    Now I suppose there’s a remote chance some of them actually sit down, think deep thoughts, and come up with brilliant ideas out of their own heads. But I think we would all agree that would be a rare exception; I don’t think either McCain or Obama fall into this category. And I certainly do not think there are any Senators capable of doing so on complex questions of economics or monetary policy.

  78. Well, on balance, this looking to be…. pretty dumb, yeah.

    The situation may change, but here’s my take– and I knew this much before I knew how this would turn out:

    Fundamentally, this is a leadership challenge, and it’s decided by who blinks and does what the other guy says to do. So if the debates got delayed, McCain would “win” by virtue of forcing his opponent to bend to his will. If the debates went on, Obama would “win” by the same virtue. I’m putting “win” in scare quotes because I am tightly restricting it to interpretations of that single event; it is strictly about who got the other guy to bend, and it could be possible that even though McCain “won” by getting the debates delayed, Obama would be able to get more political points out of it in the long run, or vice-versa.

    Then there’s a sort of a degenerate case where neither one would blink– Obama would hypothetically show up in his suit and tie for the debate, and McCain would be elsewhere. In that case, I would think of it as a “draw” (again in that narrowly restricted sense) since neither one bent to the other. And then it would all be decided by public perception.

    But as of this writing, it looks like McCain is trying to gingerly crawl down off that ledge. If there’s a deal and a bill on Bush’s desk before the debate, then in my private little universe McCain will get the “win”, but that’s seeming unlikely. (And again, I stress the isolated, restricted meaning of “win.”)

  79. _Put another way, one might wonder what any Senator adds to any legislation._

    Well look, if you had a strong role on a committee, or enough specific experience & connections to craft a bill that desperately needs help, then a Senator could win alot of points from this type of scramble.

    This doesn’t appear to be happening, for a number of reasons.
    1) I’m not convinced that McCain is really experienced enough on this issue to control his party(though, he could change my mind if he succeeds)
    2)Core parts of the republican party are deeply suspicious of ANY bailout (which isn’t necessarily a bad thing)
    3)Bad emotions & tactics from presidential politics are now being injected into yahs, neahs, and who said what when. This only complicates an already ridiculously complicated procedure.

    As I see it, this is the fix McCain is in:

    McCain, by claiming his leadership was necessary, has put himself in the forefront of this bill’s success (or must later separate himself from the bill’s ineffectiveness). If the bill passes, it must not only be good, it must be a reflection on McCain leadership. If the bill fails, McCain must be able to claim that the bill (as constructed) would be more damaging than helpful, and thus he stepped forward to kill it (Difficult per Wednesday’s announcement).

  80. bq. If not, i have to start asking if he feels he doesnt have much of a horse in this race considering he benefits politically from a down economy.

    The economy will be “down” regardless of the outcome of this legislation.

  81. Whats interesting is that it appears McCain has found common cause with the ‘in the trenches’ republicans in the house, which is something new for him.

    I could see McCain championing a much different looking bill, and if it were to pass it would have pretty big implications.

    1.McCain further shores up his conservative base- they are suspicious of his big government tendencies. Fiscal hawkism plays well in places like Colorado and Nevada.

    2.Pelosi will be finished. She’s already got the most unpopular congress in history, and now she has the votes but cant get a bill passed. Its got to occur to somebody sooner or later that the Dem position at the moment is _”this bill is critical to the stability of the nation, we must pass it. But we wont do it without bipartisan cover, no matter the consequences.”_ That is a tremendous lack of leadership, and thats a place Obama may have to step in and twist some arms before people start realizing thats the Pelsosi/Reid stance. Panicked about the economy, but not so panicked that they will risk their political positions by taking ownership.

    3.Another argument Pelosi and Reid (boy is that a dopey pair, even by the high standards of their positions) are making without realizing the implications is that McCain and the House R’s are opposing President Bush. Oops. I thought McCain was King George III. That powerful argument that Obama was using well just vaporized. And McCain will have the sound bytes to prove it.

  82. If i were conspiracy minded, I might suppose this whole sequence of events was ginned up to allow McCain to take a sharp stand against Bush.

  83. Without having an opinion on the political wisdom of McCain’s stunt (and I don’t mean that pejoratively. It is a stunt, but possibly a good stunt), one thing this episode has done is called out the complete ineffectualness of the Democratic congressional majority. Could they be any more useless?

  84. Mark, I hate to break this to you, but McCain put his name out there; the coverage will go to McCain’s name first. And blaming the democratic party AND going to the debate before a bill when there appears to be no agreement looks even worse. I’ve been wrong about many things before, but this could be the week that McCain never recovers from.

    He really needs this debate. I think he’s got to crush Obama and get this whole debacle out of the headlines… and then he’s got make sure that bipartisan plan goes forward and leaves the headlines, and only then will McCain be on top again.

    And what happens if the situation gets worse (as expected)?

  85. I’m not sure about that. The point can’t be stressed enough (certainly if i’m a GOP operative) that the Democrats can have a bill on the Presidents desk within an hour if they so choose. That point would be powerful in the debate tonight. Particularly if paired with Obama’s apparent (if not actual) distance from the dealmaking.

    _IE- “Well, i and my colleagues have major reservations about this rescue and i have been trying to get our ideas addressed. However if Senator Obama and the Democratic Leaders are so sure this is the bill we need, i have to wonder why he hasnt pressed his Congressional majority to put the bill on the Presidents desk today. They have the numbers.”_

    Flipside- McCain would have looked a lot worse if the deal fell through like it did yesterday and he was out doing Letterman. At least this way its clear he is deeply concerned and involved, and that his party isnt undercutting him, they are shoulder to shoulder. That doesnt mean this still wont cost McCain, but I think he’d be in _big_ trouble right now if he hadnt made a move sooner. I suspect he made the move once he was told the House GOP was balking at the pay out.

    Final note- if McCain trounces Obama tonight somehow, it will quickly be chalked up to gamesmanship in this whole debate/no debate affair that through Obama off his game.

  86. _If i were conspiracy minded, I might suppose this whole sequence of events was ginned up to allow McCain to take a sharp stand against Bush._

    Possibly, Mark. However, don’t you think McCain would have a tough time making the transition from the position that the crisis is so urgent that he must suspend his campaign and cancel a debate in order to broker a bipartisan deal asap to the position of supporting a very partisan-based bill, the passage of which is going to take a great deal of time? It seems to me that anything McCain does at this point that does not forward the passage of a bipartisan emergency bill will make him appear unstable & desperate.

    Let’s not forget that the administration, both parties of the senate and one party of the house have agreed on one bill. The minority party of the house is holding it up. If McCain takes up their cause, he’s going to have trouble making his stand against politics as usual and washington gridlock.

  87. Let’s not forget that the administration, both parties of the senate and one party of the house have agreed on one bill. The minority party of the house is holding it up.

    Let’s not forget that the minority party of the house has no power to hold up a bill. The majority party of the house is refusing to take up the bill without political cover from the minority.

  88. mark, SG makes the key point. McCain can perfectly well claim he is taking a stand on principle against the bill. He’s not preventing its passage, after all, he’s preventing the Republican ‘stamp’ from being affixed to it. And i think thats fair- if the Reps (and McCain assumedly) really think this bill is wrong and they have a better way- you cant argue they are stonewalling the bill. They are simply refusing to be associated with it.

  89. SG, I think it’s pretty much understood and agreed upon that no bill of this magnitude is going to get passed without broad bipartisan support.

  90. Mark,
    Of course he can make the claim, but I doubt anyone will take that claim seriously given his earlier claims. McCain didn’t suspend his campaign to push for a particular plan (that emerged subsequent to his suspension); he suspended his campaign and urged bipartisan cooperation in an emergency. He issued a call for all hands on deck. All hands showed up and came to an agreement. McCain can’t now stand on principle for a point-of-view he didn’t previously hold while the ship goes down.

    Also, if McCain were to take the approach you are suggesting he would be saying in essence, you (the congress) should go ahead and pass the bill but I won’t vote for it. McCain has already made his position clear: this is an crisis and we must come together and pass a bipartisan bill. He cannot abandon ship at this point and remain credible.

  91. The majority party of the house is refusing to take up the bill without political cover from the minority.

    Works for me. The House Republicans “alternative” plan is a literal joke, featuring their all-purpose cure-all, tax cuts. I’m amazed they haven’t yet claimed tax cuts cure cancer. (Since the banks are suffering capital losses, capital gains tax cuts are actually counterproductive here!)

    I don’t see why the Democrats have to be grownups while the House GOP acts like little babies, not when they have their 2010 campaign mapped out around “Democrats raised your taxes for the bailout”.

    Notice Wachovia is down 30 percent today?

  92. But mark, surely he cant be expected to support _any_ bill just because it ends up bipartisan. By that logic the bill could be to nationalize the entire economy and McCain would be morally required to sign on just because he went to DC to broker a deal. Obviously that doesnt make sense, so there is a McCain argument that says, yes he went to DC, but not to roll over for a bill already in the pipeline (no need to show up for that, which was the point yesterday). But if he came to fight _for the right bill,_ and get it in a bipartisan manner, that still fits his stance right?

    In other words, if he came just to get his photo op on a done deal, than everything people said about it being a pointless stunt is true. Now if he came to stand up for the fiscal conservatives in the party AND to demand a deal get done, _with his principles taken into account,_ there would be a legitimate reason for him to be at the table. In other words he came back to keep Bush and the Dems from steamrolling a BAD bill through. Thats a good argument (plus it kills the McCain=Bush campaign).

  93. _”I don’t see why the Democrats have to be grownups while the House GOP acts like little babies, not when they have their 2010 campaign mapped out around “Democrats raised your taxes for the bailout”.”_

    “Vote Democrat 2008, just because they’re babies doesnt mean we have to be the grownups.”

    Has a ring to it.

  94. Mark, I think you are missing my point. Go back and see what McCain actually said two and three days ago. How the parties need to come together; how this a crisis ala 9/11; how time is of the essence; what you are suggesting McCain do may be wise in its own right, but from a political point-of-view it would be seen as a complete flip-flop. You can’t urge upon everyone the importance of coming together immediately (& dramatcially) to find consensus because there is no time to argue, and then being the guy who refuses to go along with the group’s decision and say, “no, let’s wait. let’s take more time. let’s do it MY way.”

    Perhaps finding consensus isn’t as important as finding the correct answer. Perhaps getting it done right is more important than getting it done right now. But that isn’t what McCain was saying two days ago. If McCain wants to prevent everyone from viewing his campaign suspension as an insincere stunt then he had better stick with the original stated terms. Remember McCain’s dire warnings of imminent disaster if we don’t immediately get money flowing into the system; how he was going to suspend the campaign until a bail-our agreement was reached. Well, he’s back campaigning now so he must feel an agreeement is within reach and thus he cannot turn around and not support that agreement without looking pretty foolish.

  95. This is what McCain is dealing with in the perceptions war; check out this “incredible toe-sucking job”:http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/26/a_frank_look_at_the_market_meltdown/ the Boston Globe is giving Barney Frank:

    Despite a lingering reputation as a warrior manning the partisan ramparts, at heart Frank is not an ultraideological combatant, but rather a liberal pragmatist. A graduate of Harvard and Harvard Law School, he’s as smart as anyone in public life. Add in a strong desire to get things done, a deep grasp of history, a Gatling gun speaking style, and a withering wit, and you have a congressman ready to work in bipartisan fashion when it’s possible – but unafraid to join the fray when it’s not.

    … But with unrestrained cowboy capitalism now in disrepute, Frank will have ample opportunity to push his vision forward.

    As this crisis has made clear, he has emerged as one of the most important voices in the Democratic Congress.

    Got that? This is all the fault of “cowboy capitalism”, and the guy who told the Democrats-in-chief at Fannie and Freddie to pour it on is now here to supply the restraint.

    Add to that the claim that “Barack Obama tried to stop John Bush McCain from wrecking the economy”:http://patterico.com/2008/09/26/rosa-erica-blair-brooks-war-is-peace-freedom-is-slavery-ignorance-is-strength-and-republicans-caused-the-mortgage-crisis/ and you’ve got the story that the Dems are sure will sustain them over the next 30 days. All that remains is to threaten to prosecute anyone who disagrees.

  96. I don’t see why the Democrats have to be grownups while the House GOP acts like little babies, not when they have their 2010 campaign mapped out around “Democrats raised your taxes for the bailout”.

    Because they have asked for and received the responsibility of governance. If they won’t make hard decisions, then they are proving to be incapable of governing. We might as well throw them out and just put Republicans in.

    Running for election is an implicit promise that you are a grownup; that you’ll make decisions. If you are unwilling to do that, get out of the office.

    Whether or not it works for McCain remains to be seen, but this is exactly the attitude that he’s set his campaign against. I’m not personally a big fan of bipartisan cooperation – typically it means both parties are screwing me – but McCain has repeatedly railed against politicians putting party over country and he’s got a USDA Prime example of that right here with the Democrats.

  97. I disagree. If McCain thinks the bill is bad, he’d be insane to support it just to be bipartisan (note that this is one of the reasons conservatives dislike McCain- bipartisan in Washington almost always means doing it the Democrats way and getting to have your name on the bill). Whatsmore- McCain can’t wave his wand and make the House Republicans come around. Its not McCains vote that killed this thing (its not any republican votes in fact). McCain can either fight to get some of the Reps ideas entertained (as he has done) or he can join the other team, and guess what, _we still dont have a bill._ So how is McCain better off doing that?

  98. And btw- here’s what went down yesterday:

    Dems and Prez sit down with a bill they like. Nobody really bothers to ask the Reps. Word comes that McCain is suspending his campaign. Word leaks out mysteriously that a deal is done. Reps get red in the face. McCain is reported to have ‘brought up all these crazy new ideas out of nowhere’… the ideas the republicans sitting at the table wanted addressed.

    Now it may be crazy but it seems to me everybody needs the House republicans cooperation, and they have some demands. McCain came in and brought that to the table. How is that not being constructive? Sounds to me like McCain was the only one who saw the assumed ladder in this deal and moved to do something about it.

  99. Mark B.,
    I don’t think he is better off. I think he unthinkingly painted himself into a corner by claiming he was going to suspend his campaign and cancel the debate until an agreement was reached. Now that he has “resumed activities” and agreed to debate because of his confidence that an agreement can be reached, he would look silly not supporting it. In your scenario McCain would have to claim that he meant he would suspend his campaign until an agreement was reached but that he might not support that agreement. I guess he’d have claim two separate levels of importance. I’m going to hold my breath till you guys reach a decision, because reaching any decision is that important–compromise is more important in an emergency than sticking to principle. However, keep in mind, that should you reach a decision, I reserve my right to be against it because I am a man of principle and not compromise.

    I agree that McCain can’t wave a wand and make the House Republicans come around. That’s why it was such a foolish move to suspend his campaign for the reasons he stated. Now he’s stuck. trapped. in a corner. I think he looks less foolish if he sticks with his original plan, which he now seems to be doing.

  100. _McCain came in and brought that to the table. How is that not being constructive?_

    When you enter a room with people smiling, you push said demands, and everyone leaves “yelling” at each other… that looks bad. Especially when you’re they’re to ‘help’ the process along.

    Again, McCain does not have to support this bill, but he does have to establish why he’s done a 180 in 2 days. And his reasoning better be clear, articulate and easy to grasp, as many voters are only barely paying attention.

    Maybe he’ll get a chance tonight…

  101. … I forgot to add that while everyone’s screaming at each other, you say “alright, process is moving again!” and leave, with nobody any closer to agreement.

  102. Again, McCain does not have to support this bill, but he does have to establish why he’s done a 180 in 2 days. And his reasoning better be clear, articulate and easy to grasp, as many voters are only barely paying attention.

    The fact that many voters are only barely paying attention mitigates against have to explain a 180. Only if you’re paying attention do you see the 180. If you’re not paying attention, Congress-as-usual was in session, where Dems and Reps stood on opposite sides of the field hurling tomatoes and nothing got accomplished until John McCain showed up and got them all in a room together.

    Now, I don’t think that’s an accurate portrayal of the events of the past week, but I do think you can spin it that way to someone who hasn’t been paying much attention (also known as a “swing voter”).

    I think it’s too early to conclude that McCain’s stunt has succeeded or failed. It can go either way. I do think if an agreement isn’t reached by early next week, it will be a failure.

  103. BTW, at this point I’m glad that the bailout hasn’t passed. So from my perspective McCain has accomplished something worthwhile, albeit completed by accident – or even incompetence.

  104. _”When you enter a room with people smiling, you push said demands, and everyone leaves “yelling” at each other… that looks bad”_

    By all accounts, thats _not_ what happened. Nobody consulted the House Republicans, their ideas were ignored and ridiculed, they were _never_ a party to the agreement. This conference was billed as a discussion, not a lecture. Then they hear the Dems claiming its a done deal. I can see why they would be pissed. And _the_ they are asked for their votes to provide nothing but political cover for a policy they abjectly oppose.

    What should be being asked is why in gods name anything thought this would work? Why were the Republicans taken for granted if their votes were needed to handhold the Democrat majority?

    The reports say McCain spoke last, and briefly. Obama spoke first and attacked alternatives. Now you tell me who torpedoed this ‘deal’ that never was.

  105. For what it is worth, McCain’s move is primarily a coup. He cannot be seen as being subservient to Bush and backing his plan. He has no chance of winning the election if he is seen anywhere in Bush’s ideological vicinity./

    This administration is more toxic than any of the debt.

    But what does that leave us with? A candidate that is running against his own party and more than willing to damage it more than he already has. I am against the bailout, but McCain would have been smart to stay clear of this issue completely, mixing in the “bypass the debate for the good of the country” nonsense was not only unnecessary, but a self defeating lose/lose proposition.

    In a couple of weeks, anything that he thought he might have gotten out of this would have faded anyway (and I think the net effect now was negative). So, he will be left with being perceived as impulsive, erratic and not very informed as he has been since the Paulson hearings.

    Not only that, the galvanizing of the vote against Bush only presents the Party as being in disarray, from top to bottom. No one in their right mind wants to deal with an insurgency withing the part less than 6 weeks before the election. It is never a winning proposition.

    Bad candidate, bad campaign, dreadful strategy on the part of Steve Schmitt. We may be seeing Rovianism self destruct in internecine warfare

  106. I love this philosophy that McCain is a crazy loose cannon, its such a joke. My god, he picked a woman for his running mate. _From Alaska?!_ He suspended his campaign to _work on legislation!!!!_
    How long would he be in office before DC is on fire and he’s jammin on a fiddle in the Rose Garden?! Do we really want Crazy Ol ‘Cancel the Debate’ with his finger on the button?!!! Can you sleep at night?!

  107. _The reports say McCain spoke last, and briefly. Obama spoke first and attacked alternatives._

    That partially conflicts with reports I’ve read…. do you mind citing where?

  108. bq. The reports say McCain spoke last, and briefly. Obama spoke first and attacked alternatives. Now you tell me who torpedoed this ‘deal’ that never was.

    Well, here’s what Republican negotiator Roy Blunt said:

    bq. REP. ROY BLUNT: Clearly, yesterday, his position on that discussion yesterday was one that stopped a deal from finalizing.

    “Link.”:http://www.youtube.com/watch?v=hqo-DRPF9B0

    You really should try to get your story straight here Mark.

    Either McCain stopped the bill because it deserved to be killed, as you suggest in #101, or he didn’t because Obama did, as you assert in #113.

  109. Mark B., I wouldn’t blame McCain for any of this. At the same time, I don’t see that he deserves credit for anything either.
    He made a dramatic (&, in my view, rather silly) announcement that for the sake of the country he was going to temporarily stop running for president and go to DC in order to bring everyone together (“all hands on deck”) to help avert disaster. However, he didn’t actually do anything except show up at a meeting in which 80% of the parties were already in agreement. It’s not McCain’s fault that the other 20% didn’t go along. All the same, he didn’t bring anyone together, he made no compromises and now, apparently, there is no agreement. Nonetheless, he has resumed running for president. I’m not sure how things are any different today than they were two days ago, except that we are two days closer to what he described as a catastrophe for the country. Perhaps he was exaggerating for effect.

    Basically, I don’t think any of this had anything to with him. It’s a mystery to me why he threw himself into it in such a way. He just looks silly.

  110. Whiskey couldn’t be troubled to source his accusation that the Democrats were going to send the bailout money to the left-wing group ACORN, but Salon comes through. This bizarre idea seems to come from Sen. Lindsey Graham, based on some provisions Sen. Dodd added that a certain percentage of money recovered go to government trust funds that develop affordable housing and marginal neiborhoods. These funds give grants, and it’s possible that ACORN might apply for and receive such a grant (although it hasn’t done so, and might be rejected if they did).

    What’s really going on is ACORN is a metonym for relief of low-income houseowners, instead of concentrating the bailout on CEOs.

  111. Vista, you get your story straight. That clip gives no context, or even shows if Blunt was in the room.

    _”McCain’s “Straight Talk Air” landed at National Airport just after noon, and McCain’s motorcade sped toward the Senate. But by then, senior Democrats and Republicans were already announcing that a deal in principle had been reached.”_

    _”That news appeared to be somewhat premature as House Republican leader John Boehner told his members that “no deal” had yet been reached. McCain arrived at 3:40 p.m. at the White House, where he and his rival, Sen. Barack Obama, were scheduled to meet with President Bush and congressional leaders at 4 p.m.”_

    _”Republican leadership aides reacted incredulously to Frank’s broadside, saying there was no way McCain’s chief economic adviser, Douglas Holtz-Eakin, could undermine a deal with House Republicans that has never had rank-and-file support._”

    _”Holtz-Eakin met this morning with Boehner, House Minority Whip Roy Blunt (R-Mo.) and House Republican Conference Chairman Adam Putnam (R-Fla.), but the GOP leaders did virtually all of the talking, and what they told him was how little support the $700 billion package had with their rank-and-file. When McCain emerged from the back door of Boehner’s office in the Capitol, both Holtz-Eakin and Sen. Lindsey O. Graham (R-S.C.), a key McCain ally, said they knew very little about the deal.”_

    _”Republican Rep. Spencer Bachus (Ala.) said he had spoken to McCain yesterday, had breakfast with two McCain advisers this morning and spoke to McCain again immediately after today’s meeting. But, Bachus said, “John’s not trying to call the shots for the House caucus, I can tell you that. He’s just opposed to the plan in its present form.””_

    “Washington Post”:http://voices.washingtonpost.com/the-trail/2008/09/25/mccain_stops_at_senate_en_rout.html?nav=rss_email/components

    There never WAS a deal, and the more people disparage the Republican House members by suggesting they are rolling over for either the Dems of McCain, the less likely there WILL be a deal.

  112. Alchemist-

    _”Both presidential candidates sat at opposite ends of a long conference table, with Mr Bush and Congressional leaders in between. Mr Obama was more vocal in his questioning of Mr Paulson that Mr McCain, who said little, according to US media reports.”_
    “Times Onlines”:http://www.timesonline.co.uk/tol/news/world/us_and_americas/article4829757.ece

    _”McCain’s campaign has countered that it was Obama whose presence disrupted the meeting._

    _“The Democrats allowed Senator Obama to run their side of the meeting,” McCain spokesman Brian Rogers said in a written statement released Thursday night. “That did not work, as the meeting quickly devolved into a contentious shouting match that did not seek to craft a bipartisan solution.”_

    “fox”:http://elections.foxnews.com/2008/09/26/dems-blast-mccain-after-bailout-negotiations-go-sour/

    This is unsourced, so take it for what its worth:

    _”When Sen. Barack Obama was given the floor to speak during White House negotiations, according to White House aides, he did so raising concerns about a House Republican alternative to the Paulson/Bernanke $700 billion bailout. But those concerns weren’t necessarily his, as he was not aware of the GOP plan before reviewing notes provided him by Paulson loyalists in Treasury prior to entering the meeting.”_
    “American Spectator”:http://www.spectator.org/blogger.asp?BlogID=14879

    However you take it, this plan was already rejected by Boehner and co before McCain arrived in DC, and McCain said little in the meeting at all. Apparently it was largely an argument between Boehner and the Republican Housers and the Democrats.

  113. Glen W,

    To find out what really happened, you have to wait six years and then buy a goddamn Bob Woodward book.

    Thanks, Glen. In the middle of an otherwise busy, hectic day overshadowed by worries about this, that got a chuckle from me.

  114. #115 from Mark Buehner at 10:11 pm on Sep 26, 2008

    The woman is now an object of pity. Even Parker From National Review can’t keep from cringing.

    As far as the suspending the campaign to work on the legislation is concerned, well, I think that one is a little tough to swallow. But, believe what you wish.

  115. Looks like the score on Rick Davis is Mainstream Media 1, Protein Wisdom 0. Gosharoonie, the McCain campaign was somewhere between disingenuous and mendacious in discussing Rick Davis’s ongoing lobbying ties.

    This is the sort of Armed Liberal observation I can’t quite grok, how he was immediately ready to assume the worst of the MSM and the best of a blogger parroting the McCain line.

    Speaking of disingenuous, I need to research this a little further, but there has apparently been some VRWC distortion of the donations received by Democrats from Fannie and Freddie: they’re including donations made by individual employees (the custodians?), not PAC money.

  116. Just in case anyone was still clinging to the notion that McCain’s stunt wasn’t just that, here’s the latest:

    bq. After declaring he’d return to Washington to help with the bailout negotiations immediately after last night’s debate, Sen. John McCain (R-AZ) never went to Capitol Hill today. In fact, McCain stayed largely holed up in his Arlington apartment, leaving only to go to his campaign headquarters just around the block, the New York Times reports:

    bq. Asked why Mr. McCain did not go to Capitol Hill after coming back to Washington to help with negotiations, [McCain adviser] Mr. Salter replied that “he can effectively do what he needs to do by phone.’’

    “And here’s the link.”:http://thinkprogress.org/2008/09/27/mccain-in-arlington/

  117. Well, After today’s vote, McCain’s lose/lose gambit has come to its logical end. Does he suspend his campaign again and head back to Washington and stay there until there is a solution?

    He is simply painting an excellent portrait of himself that the Democrats have been trying to paint of him since the beginning of the campain. Impulsive, chimerical, and more than a bit like the Dude in the Big Lebowski – Acting on the last thing someone told him.

    We now have a full scale rebellion in the party with the “back benchers” in open revolt against the Republicans in the Senate, a Republican President and His Viceroy, Secretary Paulson. with the election less than six weeks away and his falling in the polls.

    Look for the splinter parties on the right to draw votes away from McCain in ever greater numbers as the election draws closer and it becomes more and more apparent that McCain has no chance to win.

    This election is lost. The only thing now to measure is how bad the damage is. The public will, for the most part see this as Republican against Republican. It is a plan set forth by a Republican President that two thirds of the House caucus voted against.

    Nobody is going to swallow the Nancy Pelosi speech killed the deal coming out of the Republican camp. No party discipline, party in disarray. What a mess.

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