Liars

The Republicans have been blaming the bailout failure on Pelosi's speech, which was given about 1:20 pm yesterday, after the lunch break. But, the Washington Post tells us the Republican leadership knew the bill would lose before the lunch break:

Just before lunchtime yesterday, House Minority Leader John A. Boehner (R-Ohio) and his lieutenants went through the final vote count and realized they had a problem: A rank-and-file uprising was on the verge of torpedoing a bill that had been heralded by President Bush, his top advisers and congressional leaders from both parties as the remedy for Wall Street and Main Street.

Boehner and House Minority Whip Roy Blunt (R-Mo.), recognizing the danger of the situation, discussed whether to urge Democrats to pull the bill from the floor rather than have it go down in defeat. Instead, less than three hours later, the gavel fell on a stunning rebuke to Capitol Hill leaders on both sides of the aisle.

"We did everything possible to maximize our votes. Begged, pleaded. We didn't threaten anyone. And we had a pretty good idea of where we were," Boehner said in an interview in his office after the vote.

Kevin Drum gets shrill

Much like Barack Obama, it's a rare day that Kevin Drum gets fire in his belly, but that he did in the aftermath of the debacle yesterday. I'm reproducing the whole post here because it so nearly mirrors my own response:

NOTES ON THE BAILOUT....Sorry for the radio silence this afternoon. I spent most of the day feeling about the same way I did on 9/11, consumed with a debilitating combination of fury and despair. I don't feel much better tonight, but here are a few thoughts on the failure of the bailout bill anyway:

• The Republican Party is now officially hostage to a band of primitive conservative ideologues whose knowledge of economics was already outdated when Christians were being fed to lions. They are simply beyond belief.

• I'm not much happier with the Jello-like support the bailout bill got from many of our leading liberals. Unfortunately, I include Brad DeLong in this group, but he's certainly right when he says, "This Republican Party needs to be burned, razed to the ground, and the furrows sown with salt..."

• John McCain deserves to be tarred and feathered. His behavior over the past week has been almost unbearably craven.

• Barack Obama's behavior has been a little better. But only a little. He hasn't exactly displayed a backbone of steel on this issue.

• An awful lot of people really, really still don't get it. I swear, if I hear one more blogger or pundit suggesting that maybe it's actually a good thing the bailout bill failed because now we have a chance to pass an even better bill, I'm going to scream.

• After the failure of the bill, the GOP leadership invented a fairy tale about Nancy Pelosi being at fault for the vote debacle because she gave a partisan speech on the floor of the House. The press is almost unanimously reporting this seriously. If Republicans had blamed it on Santa Claus, I guess they would have reported that seriously too.

• Do you know the old saying about credit? "It's like oxygen. You don't know how much you need it until it's gone." We're about to go into financial hypoxia, and it's not the millionaires who are going to suffer most from this.

• There are many of you who probably think I'm overreacting. I hope you're right.
  

And if you think this post is too caustic and bleak — well, you should have seen the first draft that Windows ate. This is the toned down version.

McCain Post Debate 1 Response

John McCain would've been better off sticking to his original plan of just not showing up. Standing next to Barack Obama, McCain looked like yesterday's man, stuck in the past uttering his half truths, mistruths and endless spin. The McCain-Palin method of stubbornly repeating lies and then crying foul whenever they're called on it is being imitated in GOP campaigns all across the country.

Slate predicts McCain's next 10 Hail Mary stunts

Posted Thursday, Sept. 25, 2008, at 1:39 PM ET

1. Returns to Vietnam and jails himself.
2. Offers the post of "vice vice president" to Warren Buffett.
3. Challenges Obama to suspend campaign so they both can go and personally drill for oil offshore.
4. Learns to use computer.
5. Does bombing run over Taliban-controlled tribal areas of Pakistan.
6. Offers to forgo salary, sell one house.
7. Sex-change operation.
8. Suspends campaign until Nov. 4, offers to start being president right now.
9. Sells Alaska to Russia for $700 billion.
10. Pledges to serve only one term. OK, half a term.

McCain's Forked Tonge

Pre-Shock: McCain: My Campaign Manager Had Nothing To Do With Freddie Mac Since 2005... "And I'll Be Glad To Have His Record Examined By Anybody Who Wants To Look At It"

SHOCK: FREDDIE MAC PAID MCCAIN CAMPAIGN MANAGER'S FIRM THROUGH LAST MONTH

Obama on his first debate with McCain

I just finished my first debate with John McCain.

Millions of Americans finally got a chance to see us take on the fundamental choice in this election -- the change we need or more of the same.

I will provide tax cuts for the middle class, affordable health care, and a new energy economy that creates millions of jobs. John McCain wants to keep giving huge tax cuts to corporations, and he offered no solutions for the challenges Americans are facing in their daily lives.

I will end the war in Iraq responsibly, focus on defeating al Qaeda and the Taliban, and restore America's standing in the world after eight years of disastrous policies. John McCain wants an unending commitment in Iraq and fails to recognize the resurgent threat in Afghanistan.

Let's be clear: John McCain is offering nothing but more of the same failed Bush policies at home and abroad that he has supported more than 90% of the time in the Senate.

Excellent News for McCain!

From the Politico ...

Sen. John McCain (R-Ariz.) and his top aides took credit for building a winning bailout coalition - hours before the vote failed and stocks tanked.
The rush to claim he had engineered a victory now looks like a strategic blunder that will prolong the McCain's campaign's difficulty in finding a winning message on the economy.

Shortly before the vote, McCain had bragged about his involvement and mocked Sen. Barack Obama for staying on the sidelines.

"I've never been afraid of stepping in to solve problems for the American people, and I'm not going to stop now," McCain told a rally in Columbus, Ohio. "Senator Obama took a very different approach to the crisis our country faced. At first he didn't want to get involved. Then he was monitoring the situation."

McCain, grinning, flashed a sarcastic thumbs-up.

--Josh Marshall

The Questions for Perot about McCain and Gambling

Gerald Posner
Posted September 29, 2008 | 02:00 PM (EST)

Yesterday's New York Times front-page investigative story about John McCain's long time ties to the nation's gambling industry ("For McCain and Team, a Host of Ties to Gambling"), jogged my memory about an unsettling bit of information I was given by Ross Perot in 1995.

In November 1995, my wife and fellow author, Trisha, and I, interviewed Perot for several days for an unauthorized biography (Citizen Perot: His Life & Times, Random House, 1996). During one of our conversations, outside of the 'on the record' taped interviews, Perot discussed with us how he had utilized private investigators to uncover information about other people. Perot never used, from what I could determine, any of the personal details he assembled about others. Rather, he was merely a collector of information, never knowing when it might come in useful.

I discussed this with my editor, Bob Loomis. Without independent reporting, much of it was no more than informed gossip. Perot had passed along personal details about Barbara Walters family, Clinton chief of staff Leon Penneta, and business tycoon Peter Ueberroth, someone Perot had seriously considered as a vice-presidential candidate in his own 1992 presidential run.

From our interviews with Perot about the Vietnam POW/MIA issue, it was clear there was no love lost between Perot and a number of public officials who opposed his efforts to keep looking for soldiers he believed had been left behind and were alive. On Perot's most disliked list was George Herbert Bush, who as Reagan's vice-president had shut the door to any further government probe on the matter. Richard Armitage, George W. Bush's ex-deputy Secretary of State, had earned Perot's eternal animosity because of his conclusion that there were no MIAs left in Southeast Asia. And the final person to earn Perot's enmity was John McCain, who as a decorated war hero, and then Senator, had also closed the door to any further MIA investigations.

Bob Loomis and I decided that I should not report Perot's personal details about these men and women, with two exceptions. Regarding Ueberroth, I wrote in Citizen Perot that one Perot campaign insider had concluded that "Ueberroth was the perfect match," but that "Perot and Mort Meyerson (Perot's top business executive at EDS) personally made inquiries about him and eventually opted for a stand-in candidate."

And as for Armitage, Perot's information was so detailed, including even surveillance photos of Armitage in supposedly compromising situations, I did report it. And Armitage was generous in giving me extensive interviews that helped explain the background and put into context Perot's one man war on him.

I am only reporting now Perot's rumor/information about McCain because of today's New York Times story. Perot told me that McCain had a gambling problem and he had uncovered details that McCain was bailed out in the late 1980s from a big gambling debt by his wife, Cindy.

If true, it raises a question as to whether McCain's gambling might ever have put him in a situation where he was pressed to repay his debt through Senatorial favors.

An enterprising reporter has to ask Ross Perot if he will acknowledge what he shared with me 14 years ago, and if so, if he will now provide the evidence to back up the assertion. Perot hasn't talked to me since I published my unauthorized biography, so unfortunately, I am not the person to ask. And some reporter should ask McCain, directly, if he has ever had a gambling debt that his wife had to pay off. American voters have a right to know.

Next Shameless Grandstanding from McCain-Palin

From the Times of London ...

In an election campaign notable for its surprises, Sarah Palin, the Republican vice- presidential candidate, may be about to spring a new one -- the wedding of her pregnant teenage daughter to her ice-hockey-playing fiancé before the November 4 election.

Inside John McCain's campaign the expectation is growing that there will be a popularity boosting pre-election wedding in Alaska between Bristol Palin, 17, and Levi Johnston, 18, her schoolmate and father of her baby. "It would be fantastic," said a McCain insider. "You would have every TV camera there. The entire country would be watching. It would shut down the race for a week."

--Josh Marshall

Poll Shows Obama with Best Response to Economy

Who's offered the best response to the economic crisis?
Barack Obama 38%
John McCain 26%
They're about the same 25%
President Bush 11%

Total Votes: 285,216

AOL Poll Shows Skepticism on Bailout

Poll Results
Do you believe the bailout, if passed at all, will succeed?
No 59% sample size: 36,202
Yes 41%

Sarah Palin and the Assault on Merit

http://www.tcrecord.org/Content.asp?ContentID=15383

by Jonathan Zimmerman — September 22, 2008

This commentary argues that the nomination of Sarah Palin represents a direct attack on long-standing ideals of merit in American history.
In the 1990s, the Chicago Bulls won six NBA championships. Their formula was simple: Michael Jordan plus a decent supporting cast equals victory. At the end of every game, the ball was in Jordan's hands. And the Bulls almost always came out on top.

Were the Bulls being "elitist" by channeling their entire offense through Michael Jordan? Of course they were. Jordan was the best basketball player on earth, plain and simple. He had won the right to carry the Bulls, and--even more--the Bulls needed him to do it. Anything less would have weakened their chances.

So there's nothing wrong with "elitism," per se, so long as it's based on merit. The problem arises when people become elites without earning it, by the luck of birth and wealth. Your station in life should reflect your skill and effort, not your inherited status.

Unless, of course, you want to be our vice president.

The nomination of Sarah Palin represents a direct and unprecedented assault on the American ideal of merit. Of course, Palin's handlers insist that she has the experience, talent, and ability to serve as the nation's second-in-command. Clearly, though, Palin was nominated because of who she is---a hockey mom, a hunter, and so on---rather than what she has done.

Would you select an accountant because his son plays hockey? Would you choose a doctor because she can kill a moose? I doubt it. But plenty of voters seem ready to make Sarah Palin their vice-president, simply because she seems to be like them.

To be sure, Americans have always wanted their leaders to possess a common touch. Abraham Lincoln split rails, after all, and Theodore Roosevelt went all the way to Africa to shoot lions. Heck, even President Bush wears cowboy boots and clears brush.

Most of this was political theater, of course, as Ivy-educated patricians like Roosevelt and Bush tried to affect a regular-guy demeanor. Americans have always suspected inherited wealth, and rightly so: it runs counter to the self-made ideal, whereby each of us rises or falls depending on individual ability, dedication, and persistence.

That's why Thomas Jefferson hoped that America would develop a "natural aristocracy," a new generation of talent to lead the new nation. Otherwise, he warned, we would be governed by "an artificial aristocracy founded on wealth and birth." Better to be ruled by the gifted few, Jefferson wrote, than by the fortunate rich.

Since then, Americans have been arguing about which is which. How can you pick out the natural aristocrats among us? How many of them simply appear talented, because of their social advantages? And how many poorer folk have the ability to rise to the top, if only they get a little break?

Writing in the midst of the Great Depression, Harvard president James B. Conant thought he found the answer: standardized testing. As Conant well realized, many Harvard students got into the college solely because of their wealth or last name. The trick was to devise examinations that would separate people with true merit from those who simply had privilege. And so the Standardized Achievement Test was born.

We've had plenty of debate about that, too. What does this test really measure? How should it be weighed next to grades and other accomplishments? Does it discriminate against minorities?

The last question raises the specter of affirmative action, which has polarized our country for the past forty years. If a given group has suffered prejudice, some Americans argued, it should receive a special advantage in college admissions, job hires, and so on. Nonsense, said the other side: no matter what happened in the past, your future in life should never rest on the color of your skin.

But here's the larger point: in all of these debates, both sides embraced the idea of merit itself. The dispute lay in the measurement of ability, not in its significance. Nobody questioned whether skill matters, or whether society should recognize and reward it.

Nobody, that is, until this election cycle. In the smiling face of Sarah Palin, we see something fresh and truly remarkable in American history: the anti-merit candidate.

Some people have gamely tried to depict Palin as a kind of Jeffersonian natural aristocrat, a sharp diamond plucked out of the Alaskan rough. More commonly, though, they have embraced her for her lack of special talent, ability, or knowledge. There's nothing special about Sarah Palin, and that's precisely what is so new--and so special--about her.

And that brings us back to "elitism," which Palin's defenders inevitably invoke whenever anyone questions her qualifications. The very charge shows how far we have strayed from the meritocratic ideal. It ignores the difference between deserved and undeserved elitism, suggesting that any claim to high status is somehow suspect. And it makes a mockery of our entire government, implying that anyone among us is good enough to lead it.

In one of his best-known quips, the conservative icon William F. Buckley said he would rather be governed by the first 300 names in the Boston phonebook than by the faculty of Harvard University. In the end, though, Buckley didn't want either group in charge. He rejected the faculty's left-liberal politics, of course, but he also recoiled at the notion of any average Joe at the helm.

He was, in short, an elitist. And so am I. In a time of economic turmoil at home and enormous peril overseas, we need extraordinary—not ordinary--leaders. Woe to America if we fall victim to the seduction of Sarah Palin, who tricks us into thinking that Everyman---or Everywoman---is good enough for us all.


Cite This Article as: Teachers College Record, Date Published: September 22, 2008
http://www.tcrecord.org ID Number: 15383, Date Accessed: 9/26/2008 8:39:40 PM


Jonathan Zimmerman
New York University
E-mail Author
JONATHAN ZIMMERMAN teaches history and education at New York University. He is the author of "Innocents Abroad: American Teachers in the American Century" (Harvard University Press).

The Cheney solution

I'm wondering if we're going to end up with the "Cheney solution" to the financial crisis. I suspect it might include the following:

1) Suspend Congress
2) Declare martial law
3) Bailout the banks etc without Congressional authority
4) Cancel the election
5) Appoint Cheney king

Ludicrosity

Ludicrous as it may seem, the McCain team is out there trying to claim that Obama and the Democrats are responsible for the failure of the bailout bill purely for political reasons, despite the fact that it was the Republicans who voted it down. I doubt people will buy that. They'd probably have done better to claim McCain was the one who torpedoed the bill (which he came close to doing earlier) since such a large segment of the (ignorant) public seems to be against it.

Something new and different

The Attorney General has actually accepted his IG's recommendation and appointed a special prosecutor to investigate the attorney firing scandal. Among the reasons a special prosecutor was needed is the fact that Bush Administration people like Karl Rove, Harriet Miers, et al refused to cooperate with the Justice Department's IG.

Don't know much about the woman Mukasey appointed, but maybe this is a start.

This is something really new and different (maybe) for the Bushies.

To bail or not to bail

Notwithstanding years of training and experience in the financial markets, I have no real idea whether this bill will work, but I guess I come down about where Paul Krugman does. It's a bad bill, but it's the best bill we can get, and we desperately need something to try to stop the meltdown.

In a little over an hour, we'll know whether it makes it through the House. I suspect the Republicans will torpedo it, but who knows? If they do, and the banks come tumbling down, it will be a little late to assign the blame. We'll all be in deep do do.

When the boat is filling with water, it's time to bail.

Elizabeth Dole, Senator from where?

In 2006, Elizabeth Dole spent a total of 13 days in the state she represents as Senator, North Carolina. The DSCC has put out a pretty good ad highlighting this kind of neglect. Go watch, particularly if you live in NC.

Tracking polls

It looks like Obama is beginning to run away with the race in the tracking polls, particularly now that one post-debate day is in the mix.

I've got my fingers crossed that this will hold or improve even more, but there are still 37 days to go and Sarah Palin's daughter's wedding to screw up the mix.

Palin the Post Turtle

I can't resist reproducing this from Talking Points Memo:

Turtle Soup?

While suturing a cut on the hand of a 75 year old rancher who's hand was caught in the gate while working cattle, the doctor struck up a conversation with the old man. Eventually the topic got around to Palin and her bid.

The old rancher said, "Well, ya know, Palin is a 'Post Turtle'".

Not being familiar with the term, the doctor asked him what a 'post turtle' was.

The old rancher said, "When you're driving down a country road you come across a fence post with a turtle balanced on top - that's a 'post turtle".

The old rancher saw the puzzled look on the doctor's face so he continued to explain. "You know she didn't get up there by herself, she doesn't belong up there, and she doesn't know what to do while she's up there, and you just wonder what kind of dummy put her up there to begin with".

CNN Walks back its own poll

Just a few minutes ago, Wolf Blitzer walked back the CNN post-debate poll results (which showed Obama winning by a fairly large margin) by saying that the poll was a poll of those who watched the debate and that the debate was actually watched predominantly by Democrats, so it isn't surprising that Democrats would think Obama won.

It does, however, seem that other polls show similar results, particularly among the undecideds, so I still suspect Obama was the net gainer notwithstanding Maureen Dowd's rant against Obama in today's Times (which I'm not going to favor with a link -- go Google it yourself if you really want to read it).

Trade missions? What trade missions?

Via Raw Story:

In a Thursday interview with Katie Couric, Republican vice presidential nominee Sarah Palin cited "trade missions" with Russia as her one tangible piece of foreign policy experience.

What trade missions?

Research doesn't show a single Alaska-Russia trade mission since former Democratic governor Tony Knowles visited Siberia in 1997, when Palin was running Wasilla, according to Salon.com.

Beetle eradication czar

I can't resist posting this excerpt from NY Times' columnist, Gail Collins today:

One thing we now know for sure. Electing John McCain would be God’s gift to the profession of journalism. A story a minute.

Imagine what would happen if a new beetle infested the Iowa corn crop during the first year of a McCain administration. On Monday, we spray. On Tuesday, we firebomb. On Wednesday, the president marches barefoot through the prairie in a show of support for Iowa farmers. On Thursday, the White House reveals that Wiley Flum, a postal worker from Willimantic, Conn., has been named the new beetle eradication czar. McCain says that Flum had shown “the instincts of a maverick reformer” in personally buying a box of roach motels and scattering them around the post office locker room. “I can’t wait to introduce Wiley to those beetles in Iowa,” the president adds.

On Friday, McCain announces he’s canceling the weekend until Congress makes the beetles go away.

Barack Obama would just round up a whole roomful of experts and come up with a plan. Yawn.

The debate

I never trust my own judgment about who won a presidential debate. After all, I thought Nixon won the Kennedy debate hands down.

Last night, right after the debate, even though I had thought Obama won on substance and McCain on feistiness, I sort of concluded that the public would probably see this debate as a draw. Then came the pudits on MSNBC who universally seemed to think that McCain won hands down. One even said McCain was already running the "you're right, John" ads. So, I went to bed in a very grumpy mood. Now I see that the early polling of voters suggests they think Obama won hands down. Despite that, many of the pundits are still sticking to their "McCain won" view, but seem to have backed off the "hands down" qualification.

Early polling often reverses itself, but I'm beginning to think that the conventional wisdom on this is going to come out about where the NY Times put it today, i.e., the debate was more or less a draw but McCain needed a knock out in the one debate on foreign policy, so Obama effectively won.

Only time will tell.

President Palin, Welcome!

It's five minutes after the debate, and the pundits have all concluded that McCain is our next president, so welcome Sarah Palin.

Meanwhile, I'm planning my move to Austria.

Probability of death

You may have seen an ad running on MSNBC yesterday that questioned McCain's health and age. Bill O'Liely called MSNBC to complain, and they cancelled the ad.

Just for the record, I looked up the standard mortality tables. McCain is 72 years old. Out of every 100,000 males alive at birth, the tables show that 67,016 will be alive at 72. Of those, only 57,395 will be alive four years later. In other words, there's a 15.85 percent chance McCain will die before he finishes his first term.

That figure doesn't even take account of the fact that McCain has had repeated cancers. The other day I read a note from some dermatologists saying that given a five year survival from the type of cancer McCain had (and, it's been about five I think), there is still about a 15% chance of his dying from that cancer in the next few years. That's more or less on top of the 15.85 percent chance he'd die even if he hadn't had cancer. Combine it, and you get a probability of roughly 30% that he'll die before the end of his first term -- that's almost a one in three chance!

It seems to me that's worth worrying about, no matter how morbid it may seem, particularly when it's Sarah Palin, the bimbette, who's waiting in the wings.

Man sues doctors after penis amputated

I can tell you that if this had happened to me, I would do more than sue the docs. I'd be going after them with a scalpal:

LOUISVILLE, Ky. -- A Shelby County man and his wife said two doctors amputated the man's penis without his consent, and have filed a lawsuit.Watch The StoryAccording to the lawsuit, Philip Seaton, 61, went to have a circumcision last Octoberas part of treatment for a medical condition. Seaton said when he woke up from the procedure, he realized his penis had been amputated.

Ouch!!!!!

AOL Poll on McCain's Shenanigans

Is John McCain playing politics with the economic crisis?

Yes, a lot 57%
No 31%
Yes, a little 12%

Total Votes: 137,743

Obama's lies

Above the fold on the front page today the NY Times has a story with the following headline:

Dubious Claims in Obama’s Ads Against McCain, Despite Vow of Truth

Unfortunately, when you read the article, you find out that some of Obama's ads are almost as egregiously dishonest as those McCain ads we've been complaining about. "McCain has always stood against stem cell research." Not true. "McCain and Rush Limbaugh stand together to block immigration reform." Not true, even if maybe at times they come out to the highway from the same side street. etc., etc.

What I don't understand is why, with such a wealth of real stuff to go after McCain for, the Obama camp feels it has to tell lies instead. Jeese, why can't we have better politicians?

Democrats sucker punched one more time

Like Charlie Brown watching Lucy pull the ball out from under him for the umpteenth time, the Democrats fell for the Thuglicans' sucker punch one more time yesterday. They managed to turn a Bush/Paulson/Bernanke plan that was hated by Main Street Americans into a Democratic Plan, and when they went to kick the field goal, the Republicans pulled it out from under them, accusing them of being (whdayaknow?) "tax and spend" Democrats.

Meanwhile, WaMu goes down and the economy sinks deeper and deeper into the quagmire.

And, John McCain's white horse seems to be lost somewhere in the swamp.

Changing the subject

In my earlier post on all the goals McCain has achieved by "suspending" his campaign and refusing to debate, I missed a biggee. It's that he's managed to totally suspend Obama's campaign in the press. All the coverage is now devoted to whether or not McCain is going to debate rather than what the candidates stand for. Once again, he's managed to change the subject.

Man charged with battery for farting near cop

Read and weep.

McCain's leading supporter

More from McCain's best friend and leading supporter:

ABC News' Nitya Venkataraman Reports: Former President Bill Clinton defended Sen. John McCain's request to delay the first presidential debate, saying McCain did it in "good faith" and pushed organizers to reserve time for economy talk during the debate if the Friday plans move forward.

McCain's ploy

It's beginning to appear that McCain's campaign "suspension" ploy has accomplished at least a few of its goals.

1) It has completely diverted attention from Sarah Palin's disastrous interview with Katie Couric yesterday.

2) It has completely diverted attention from Rick Davis' relationship with Fannie Mae.

3) The press is referring to the bipartisan "cooperation" with Obama as, "McCain's initiative."

4) McCain will get to have a photo op with the President taking credit for the bailout deal that he had nothing to do with.

5) Notwithstanding his campaign "suspension," his ads are still running in the swing states, and his surrogates are still attacking Obama on the airwaves.

6) He got to give a stump speech, broadcast to the entire country, thanks to his great pal and supporter, Bill Clinton.

And, of course, he still may get his wish to cancel Sarah Palin's debate and postpone his until then.

What's still to be determined is whether this will sell to the 'mercan public. I'm guessing it will, but then again, I don't have much faith in the 'mercan public. Look what they did in 2000 and 2004.

What's next?

Hmmm.

BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

If they stop all lending to the US, we won't be able to borrow the $700 billion for the bailout. Oh well...

Mean Woman

Sarah Palin has a way of using "old boys" -- then dumping them when they become inconvenient.

By David Talbot, Reuters

Sept. 23, 2008 | WASILLA, Alaska -- Before Sarah Palin decided to run for the Wasilla mayor's office in 1996 against incumbent John Stein, the Palins and Steins were friends. John Stein had helped launch Palin's political career, mentoring the hockey mom during her 1994 run for City Council, along with veteran council member Nick Carney. Stein's wife, Karen Marie, went to aerobics classes with Palin.
But when she announced her candidacy for Stein's seat, vowing to overturn the city's "old boy" establishment, a different Sarah Palin emerged. "Things got very ugly," recalled Naomi Tigner, a friend of the Steins. "Sarah became very mean-spirited."

The Wasilla mayor's seat is nonpartisan, and Mayor Stein, a former city planner who had held the post for nine years, ran a businesslike campaign that stressed his experience and competency. But Palin ignited the traditionally low-key race with scorching social issues, injecting "God, guns and abortion into the race -- things that had nothing to do with being mayor of a small town," according to Tigner.

Palin's mayoral campaign rode the wave of conservative, evangelical fervor that was sweeping Alaska in the '90s. Suddenly candidates' social values, not their ability to manage the roads and sewer systems, were dominating the debate. "Sarah and I were both Republicans, but this was an entirely new slant to local politics -- much more aggressive than anything I'd ever seen," said Stein, looking back at the election that put Palin on the political map.

There was a knife-sharp, personal edge to Palin's campaign that many locals found disturbing, particularly because of the warm relationship between Palin and Stein before the race.

"I called Sarah's campaign for mayor the end of the age of innocence in Wasilla," said Carney. Even though Palin knew that Stein is a Protestant Christian, from a Pennsylvania Dutch background, her campaign began circulating the word that she would be "Wasilla's first Christian mayor." Some of Stein's supporters interpreted this as an attempt to portray Stein as Jewish in the heavily evangelical community. Stein himself, an eminently reasonable and reflective man, thinks "they were redefining Christianity to mean born-agains."

The Palin campaign also started another vicious whisper campaign, spreading the word that Stein and his wife -- who had chosen to keep her own last name when they were married -- were not legally wed. Again, Palin knew the truth, Stein said, but chose to muddy the waters. "We actually had to produce our marriage certificate," recalled Stein, whose wife died of breast cancer in 2005 without ever reconciling with Palin.

"I had a hand in creating Sarah, but in the end she blew me out of the water," Stein said, sounding more wearily ironic than bitter. "Sarah's on a mission, she's an opportunist."

McCain Attacks Washington, Republicans, Old White Men with White Hair

Andy Borowitz
Posted September 16, 2008 | 02:28 PM (EST)

In what some political observers are calling his most ironic speech of the 2008 campaign, GOP presidential nominee John McCain today lashed out at Washington, the Republican Party and a group of insiders he called "old white men with white hair."

"It's time to take our country back," Sen. McCain told his audience in Dayton, Ohio. "It's time to send a message to those in power -- those Republicans in Washington, those old white men with their combed-over white hair."

Sen. McCain went on to attack the power elite on Wall Street, calling them "wealthy plutocrats with private jets and too many houses to keep track of."

"The time has come to say enough is enough to those rich old white men," he said. "And the same goes to their zombie-like trophy wives who plaster their makeup on like trollops."

Responding to the nation's economic turmoil, Sen. McCain said that as president he would create millions of jobs "by putting Americans to work making negative ads."

"We no longer lead the world in manufacturing cars, steel, or computers," Sen. McCain said. "But our negative ad industry is second to none."

In other economic news, President Bush announced another massive bailout today, saying that he had completed a deal for China to buy the United States in its entirety.

"This was a difficult deal to pull off," Mr. Bush acknowledged. "The hard part was identifying the parts of the U.S. that China didn't already own."

Conditions for Financial Sector Restructuring

Wall Street firms benefiting from a bailout should not be given anying. First, their managers' bonuses should be put in escrow and distributed only if the firms recover accepably. Second, any funds received should be loans with interest to be repaid. Third, taxpayers should get equity interest in the firms in proportion to their contribution. For good measure, fund mangers including hedge fund managers should be taxed on their income, not based on capital gains. They are wage earning employees, not investors.

What do you want, someone who will help you or someone who will hurt you?

Brad DeLong, maybe the best of the economics bloggers and prof at UC Berkeley, presents a pie chart showing just how tiny a sliver of the budget deficit is taken up by the cornerstone of McCain’s budget balancing promises, “earmarks.” Those are the fire stations and bridges locals want that Congress people scratch each others' backs to fund – sometimes good, like the really needed fire station, and sometimes not so good, like the infamous “bridge to nowhere,” but almost always popular locally. And I do mean the earmarks sliver is teeny, tiny. Real viewer effort is actually required even to see it. Maybe an enterprising reporter will ask McCain how his plan will work when earmarks are only a tiny percentage of the Federal deficit.

In the meantime, DeLong, who says he was mostly an independent before George Bush I, puts the economic issue in a nutshell (emphasis added):

What reason could there be not to vote against a candidate who says he doesn't know very much about economics? Not to vote against a candidate whose two chief economic advisors are Phil "What Problems with Deregulation, You Whiners?" Gramm and Carly "H-P Paid Me $21 Million to Go Away" Fiorina. All signs are that McCain economic policy is set to be much worse than even the George W. Bush policy . . . .

It is not just that economic policy under John McCain is likely to be very bad, it is that economic policy under Barack Obama is likely to be quite good. Barack Obama shows every sign of continuing the moderate Democrat tradition of economic policy--working to reduce income disparities, enhance opportunity, restore fiscal balance, speed up productivity growth, try to fix our health care system, invest in America's future, and engage with the global economy. He is a very smart man with, I think, a very good team of advisors.

On the one had, we have a candidate unengaged with the economy as opposed to a candidate who is. A candidate who gets on the phone with Phil Gramm and Carly Fiorina--and who doesn't appear to know that Ms. Fiorina received one of those golden parachutes he is denouncing--as opposed to a candidate who listens to Austan Goolsbee, Bob Rubin, Larry Summers, Gene Sperling, and Laura Tyson. The choice seems obvious to me. I'm interested in why it doesn't seem obvious to [everyone else].

McCain's immigration dilemma

by Kos
Fri Sep 19, 2008 at 09:10:13 AM PDT

Up until now, McCain has been totally unwilling to define his current position on immigration. Having run as rapidly as possible from his previous record on reform during the primaries, he has lately managed play both sides of the field according to who he's pandering to at the moment without firmly taking a stance.

He talks about enforcement first and governors certifying the borders as hermetically sealed before there can be any talk of reform to his base (knowing, as they do, that that will never happen), while telling Latinos not to worry, Tio Johnny will take care of everything (wink, wink).

It's reached the point that earlier this week during the conference call sponsored by the leading Latino and immigrant–rights advocates, NCLR, MALDEF, and Americas Voice to discuss McCain's bogus ad, the majority of time was spent not on the ad, but rather trying to figure out just where McCain stands at the present time. ...and in the end, no one could definitively answer the question.

It appears that Obama has done us all a favor.

He has forced McCain into a corner where he must make a choice between two very unpleasant options.

He must either defend his previous record, reminding those who nearly denied him the nomination why they hated him in the first place, negating all the Palin picking, ass-kissing, and soul-selling he's done over the last year to win over the base ...or .... Leave the ad unanswered and give up any hope whatsoever of getting the 40% Latino vote he has to have to even stand a chance at getting elected. ...Tough times for Tio Johnny Huh?

Poll Tracker

*
NH-Pres
Sep 22 Univ. of NH
McCain (R) 47%, Obama (D) 45%
*
FL-Pres
Sep 22 Rasmussen
McCain (R) 51%, Obama (D) 46%
*
MI-Pres
Sep 22 Rasmussen
Obama (D) 51%, McCain (R) 44%
*
OH-Pres
Sep 22 Rasmussen
McCain (R) 50%, Obama (D) 46%
*
PA-Pres
Sep 22 Rasmussen
Obama (D) 48%, McCain (R) 45%
*
VA-Pres
Sep 22 Rasmussen
McCain (R) 50%, Obama (D) 48%

Confirmed: Despite Claim, Palin's Pay As Mayor Of Wasilla Went Up

By Greg Sargent - September 19, 2008, 3:06PM

I've just obtained some records from the city of Wasilla that confirm that Sarah Palin's pay as mayor went up, despite her claim that she took a pay cut.

One thing Palin has frequently claimed as proof of her reform credentials is that she "took a pay cut" as Wasilla mayor. As I reported here yesterday, however, local Alaska press clippings seemed to show that this is only true in a very narrow sense.

The clippings indicate that while she did pass a pay-cut ordinance upon taking office, her pay actually went up during her overall tenure.

Now we have records from the city of Wasilla that confirm this. Here is the trajectory of her pay, according to the records:

Upon taking office on 10/14/1996: $64.200

01/01/1997: Pay was cut from $64,200 to $61,200

06/01/1998: Pay rose from $61,200 to $68,000

07/01/1999: Pay cut again from $68,000 to $66,000

10/01/1999: Pay rose from $66,000 to $68,000

From late 1999 until the end of her mayoralty in 2002, records show, her pay stayed at $68,000 -- higher than the $64,200 it was when she started out, and significantly higher than the $61,200 she initially cut it to.

The records don't explain the mechanisms by which the pay shifts happened. As best as we can determine, the cuts were engineered by Palin herself through some sort of executive mechanism, and the raises were City Council-mandated hikes.

What's the upshot? Well, Palin's claim that she "took a pay cut" as mayor is true in a narrow sense. She came in and took a pay cut that she engineered herself.

But in a broader sense, the claim is an oversimplification that borders on misleading. The bottom line is that whatever her intentions, over the course of her mayoralty Palin's pay went up thousands of dollars and stayed higher for years, money which she presumably kept. (If any proof emerges that she donated it to charity or channeled it back into city coffers in some other way, we'll happily update.)

This isn't another Bridge to Nowhere. But it does fit a pattern here, where Palin burnishes her reform credentials by describing intentions as realities or otherwise boiling down the record into easily-digestible sound-bites that at best are half-truths, as this latest one has now proven to be.

The McCain campaign has declined to comment on the pay hikes.

We'll bring you the records themselves soon.

Late Update: The documentation is here. It's what the city of Wasilla's Human Resources Generalist will send to anyone who asks for documentation of Palin's pay.

McCain on banking and health

Walldon directs me to John McCain's article, Better Health Care at Lower Cost for Every American, in the Sept./Oct. issue of Contingencies, the magazine of the American Academy of Actuaries. You might want to be seated before reading this.

Here's what McCain has to say about the wonders of market-based health reform:

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

So McCain, who now poses as the scourge of Wall Street, was praising financial deregulation like 10 seconds ago — and promising that if we marketize health care, it will perform as well as the financial industry!

Governor Palin's Reading List

Fascist writer Westbrook Pegler, an avowed racist who Sarah Palin approvingly quoted in her acceptance speech for the moral superiority of small town values, expressed his fervent hope about my father, Robert F. Kennedy, as he contemplated his own run for the presidency in 1965, that "some white patriot of the Southern tier will spatter his spoonful of brains in public premises before the snow flies."

It might be worth asking Governor Palin for a tally of the other favorites from her reading list.

Robert F. Kennedy Jr.

McCain Cares Not for the American People

John McCain has voted with George Bush more than 90 percent of the time -- including to continue Bush's failed Iraq policies, not investigating the government response to Katrina, not supporting children's health care, not supporting college benefits for returning veterans, and passing tax cuts for the rich at the expense of the middle class.

Loan Titans Paid McCain Adviser Nearly $2 Million

By DAVID D. KIRKPATRICK and CHARLES DUHIGG

Senator John McCain's campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.

Mr. McCain, the Republican candidate for president, has recently begun campaigning as a critic of the two companies and the lobbying army that helped them evade greater regulation as they began buying riskier mortgages with implicit federal backing. He and his Democratic rival, Senator Barack Obama, have donors and advisers who are tied to the companies.

But last week the McCain campaign stepped up a running battle of guilt by association when it began broadcasting commercials trying to link Mr. Obama directly to the government bailout of the mortgage giants this month by charging that he takes advice from Fannie Mae's former chief executive, Franklin Raines, an assertion both Mr. Raines and the Obama campaign dispute.

Incensed by the advertisements, several current and former executives of the companies came forward to discuss the role that Rick Davis, Mr. McCain's campaign manager and longtime adviser, played in helping Fannie Mae and Freddie Mac beat back regulatory challenges when he served as president of their advocacy group, the Homeownership Alliance, formed in the summer of 2000. Some who came forward were Democrats, but Republicans, speaking on the condition of anonymity, confirmed their descriptions.

"The value that he brought to the relationship was the closeness to Senator McCain and the possibility that Senator McCain was going to run for president again," said Robert McCarson, a former spokesman for Fannie Mae, who said that while he worked there from 2000 to 2002, Fannie Mae and Freddie Mac together paid Mr. Davis's firm $35,000 a month. Mr. Davis "didn't really do anything," Mr. McCarson, a Democrat, said.

Mr. Davis's role with the group has bubbled up as an issue in the campaign, but the extent of his compensation and the details of his role have not been reported previously.

Mr. McCain was never a leading critic or defender of the mortgage giants, although several former executives of the companies said Mr. Davis did draw Mr. McCain to a 2004 awards banquet that the companies' Homeownership Alliance held in a Senate office building. The organization printed a photograph of Mr. McCain at the event in its 2004 annual report, bolstering its clout and credibility. The event honored several other elected officials, including at least two Democrats, Gov. Edward G. Rendell of Pennsylvania and Representative Artur Davis of Alabama.

In an interview Sunday night with CNBC and The New York Times, Mr. McCain noted that Mr. Davis was no longer working on behalf of the mortgage giants. He said Mr. Davis "has had nothing to do with it since, and I'll be glad to have his record examined by anybody who wants to look at it."

Asked about the reports of Mr. Davis's role, a spokesman for Mr. McCain said that during the time when Mr. Davis ran the Homeownership Alliance, the senator had backed legislation to increase oversight of the mortgage companies' accounting and executive compensation.

Watching History Unfold

Jared Bernstein
Posted September 21, 2008 | 07:59 PM (EST)

You hear that implosion reverberating through financial markets? It's the sound of decades of conservative ideology collapsing.

This raises many pressing questions, both short- and long-term. What's the deal with the Paulson deal? There's a lot of well-aimed skepticism about this plan, and myself and my EPI colleagues will be commenting on it all week (I'm not liking what I'm seeing--not enough safeguards to protect taxpayers from banks perfectly happy to dump toxic debt on the government; not enough quid pro quos for Main Street). But for now, I'd like to focus on an even more important question: what next?

The week that just ended revealed the myth of market fundamentalism: the notion associated with mainstream, Milton Freidman'esque economics, and amplified by anti-government conservatives that unfettered markets will provide society with the best outcomes. Such simplicity, such elegance...such nonsense.

For many of us, it didn't take a market failure of the magnitude we've witnessed in recent weeks to belie this myth. We've been documenting the slow bleed of much subtler market failures for decades. Most recently, we've stressed that despite years of growth before the recent downturn, the real income of middle-class working-age families fell $2,000. Poverty rose. The share of the population without health coverage went up. For the first time in years, the rate of homeownership declined.

If that's Bush's ownership society, please don't sign me up (in truth, it's too late to refuse membership: as taxpayers, we're now proud owners of a growing pile of toxic debt--thanks, George).

But slow bleed or sudden shock, the idea that I've described as YOYO (you're on your own) economics is seriously on the ropes. I still encounter some old school ideologues on the CNBC airwaves, but they're fewer and more contrite, and, interestingly, they generally support the bailouts. Apparently, their mantra is actually "you're on your own; we're lookin' for a bailout." It's privatize the profits, socialize the losses; patriotism for the masses, socialism for the rich.

Such chatter will always be heard, but progressives have a rare opportunity to change the economic debate in this country by injecting some glaringly obvious truths into the fray, such as:

--Deregulated markets cannot police themselves; they tend toward speculation, vastly underpriced risk, and deeply damaging bubbles;

--An economy that generates growth while leaving most families behind is a broken economy;

--We can neither achieve broad prosperity nor compete globally without robust growth in key sectors which we have ignored or underfunded, including manufacturing, green production, and cradle-to-retirement public education; crafting evermore clever financial instruments will not pave the way to dependable, broadly shared growth;

--No private sector firm should be too big to fail; any firm of that magnitude must be nationalized;

--Capital markets are dysfunctional; borrowing and lending standards are ignored; lax capital requirements lead to constant over-leveraging; shadow accounts thwart transparency;

--We apparently can quickly find (or borrow) the money to do the stuff the authorities deem necessary, be it war or bailout; thus, we can also find the money we need for investment in people, from health care to education to infrastructure, etc.

--Supply-side, trickle-down economics does not work; it exacerbates already excessive levels of market-driven inequalities and defunds government, which leads to:

--Clearly, we need government to be amply funded; as is the case today, we will always turn to federal government to meet the toughest challenges, and if the money isn't there, we'll borrow from the future. This means taxes cannot only be lowered; they must sometimes be raised.

--For decades, under the spell of mainstream theories like "rational expectations" (bubbles can't form because prices can't diverge from reality for long), economists and policy makers have missed almost every big market failure, including the last two bubbles (in IT and housing). Government intervention is only "distortionary" in these models, adding the anti-gov't bias since Reagan. We desperately need policy makers and their economists to be much better analysts of markets and how they fail. It is not an exaggeration to state that much of what's gone wrong in the current case could have been avoided by better oversight, common-sense regulation, and clear-eyed analysis of economic indicators that should not have been missed.

If I were Martin Luther, I'd hammer such a list--and this is just a rough draft--feel free to edit and comment--to the doors of the Federal Reserve, but I'd probably get arrested or worse the minute I took out my hammer.

The point is that these are potentially transformational times.

Transformations evolve out of crises. As the great Robert Kuttner stresses in his new book, the big social movements that have transformed our politics have often resulted from the collision of brave, visionary leaders and major upheavals: Lincoln and the Civil War, FDR and the Depression, Johnson and the Civil Rights movement. Kuttner believes the stage is set for the next transformation, this time from a broken economy that threatens American prosperity to one that works for everyone.

After reading Bob's book, I sent him a note pointing out that it might well be a lot harder to motivate major change given the slow bleed we've experienced versus civil war, economic depression, or mass protests and burning cities.

But that was before the bust of the last few weeks, before the onset of a crisis of capitalism that is widely described as the worst market meltdown since the Depression, before the most aggressive government intervention into the economy I've seen in my lifetime. Maybe these recent events fail to rank with those motivating Kuttner's insights, but they're getting awfully close.

What has to happen to realize the transformational potential of the moment? It's quite amazing that this is occurring during the very moment in a pivotal election when a) the electorate is starting to pay attention, and b) the economy is the dominant issue.

The candidates are already grappling with these issues, both stressing some versions of the lessons I noted above, which is a nice way of saying McCain is adopting the mantel of reformer and regulator in order to convince pissed-off voters of his midnight conversion from a legislator who accommodated a lot of this damage to one who will fix it. But he's so changeable these days, even uninformed voters are seeing there not much there to his populist railing. It's all starting to sound like a pretty unhinged "I'll say anything to get your vote!"

Obama's got a head start. He's much less ideological about all this stuff, with a strong pragmatic bent and a willingness to listen to diverse views. He's also been talking for a while about the need to regulate financial markets, and his ideas are sound. Had they been in place, a lot of this mess would not have occurred.

But, as Kuttner stresses, that doesn't mean he will be transformational, or recognize the importance of injecting views like those above into the heart of the national debate. He certainly has that capacity--the vision, the intellect, and the ability to present the big picture.

White Priviledge

White privilege is being able to attend churches over the years whose pastors say that people who voted for John Kerry or merely criticize George W. Bush are going to hell, and that the U.S. is an explicitly Christian nation and the job of Christians is to bring Christian theological principles into government, and who bring in speakers who say the conflict in the Middle East is God's punishment on Jews for rejecting Jesus, and everyone can still think you're just a good church-going Christian, but if you're black and friends with a black pastor who has noted (as have Colin Powell and the U.S. Department of Defense) that terrorist attacks are often the result of U.S. foreign policy and who talks about the history of racism and its effect on black people, you're an extremist who probably hates America.

* White privilege is not knowing what th e Bush Doctrine is when asked by a reporter, and then people get angry at the reporter for asking you such a "trick question," while being black and merely refusing to give one-word answers to the queries of Bill O'Reilly means you're dodging the question, or trying to seem overly intellectual and nuanced.

* White privilege is being able to claim your experience as a POW has anything at all to do with your fitness for president, while being black and experiencing racism is, as Sarah Palin has referred to it a "light" burden.

* And finally, white privilege is the only thing that could possibly allow someone to become president when he has voted with George W. Bush 90 percent of the time, even as unemployment is skyrocketing, people are losing their homes, inflation is rising, and the U.S. is increasingly isolated from world opinion, just because white voters aren't sure about that whole "change" thing. Ya know, it's just too vague and ill-defined, unlike, say, four more years of the same, which is very concrete and certain.

Yes, McCain is going to clear up all that corruption in Washington!

09.22.08 -- 9:54AM
The Rot

Last week I got a mountain of emails asking me to call the McCain campaign out for 'lying' about former Fannie Mae CEO Franklin Raines' relationship with the Obama campaign. It was pretty clear, as Karen Tumulty noted in Time, that the McCain camp was happy to play up Raines' race. And all the McCain camp could find to justify calling Raines an Obama 'advisor' was a stray reference in an article in the Washington Post which reported that Raines had taken a couple phone calls with people tied to the Obama campaign.

Still, in the rough world of politics, this amounted to basically a lie and not the usual McCain standard of 100% lie. But now we learn from the NY Times that McCain's campaign manager and right hand man Rick Davis bagged more than $2 million running a front group set up by Fannie Mae and Freddie Mac to defend them against stepped up federal regulation.

--Josh Marshall


09.21.08 -- 8:48PM
The Big Question: 2+2=4?

The New York Times reports this evening that "foreign banks, which were initially excluded from the [Wall Street bailout] plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks."

The Times further reports that two of the biggest foreign banks in need of such relief are Barclays and UBS. In fact, my understanding is that UBS is more on the line here than any other foreign bank.

Let's add this up.

John McCain's top economics advisor, who is widely believed to be his choice for Treasury Secretary, should he win in November, is former Sen. Phil Gramm. (Indeed, just last night his spokesman refused to say Gramm wouldn't be McCain's choice for Treasury Secretary.)

Gramm is both vice chairman of UBS's US division and a lobbyist for UBS.

If UBS successfully lobbied over the weekend to get in on the bailout, what was Gramm's role in the lobbying?

--Josh Marshall

Patriot Act all over again

It's beginning to look like the Democrats are going to swallow this bailout package hook, line and sinker and give the Bush administration about a trillion dollars to feather the pockets of its friends, while soaking the taxpayer and doing nothing to solve the underlying problem, which, as many have pointed out, is a solvency, not a liquidity problem.

Meanwhile, kiss the USA as we've known it goodbye.

Assets v. Liabilities

I'm getting a bit tired of reporters' use of language in this financial crisis, particularly the line that the government is going to buy up the banks' bad debts. What they are actually talking about buying is not the bank's "debts," which include the deposits and other liabilities of the banks, but their "assets." The "assets" may not be worth much, and they're certainly not worth what they cost the banks to buy, but they are nevertheless the banks' assets, not their debts. They are, also, of course, the debts of the various struggling homeowners, whose houses aren't worth much anymore.

It's so tragic

Via Kevin Drum:

"A lot of those people will have to sell their homes, they're going to cut back on the private jets and the vacations. They may even have to take their kids out of private school," said [Robert] Frank. "It's a total reworking of their lifestyle."

...."It's going to be very hard psychologically for these people," Frank said. "I talked to one guy who had to give up his private jet recently. And he said of all the trials in his life, giving that up was the hardest thing he's ever done."

Don't you just feel his pain?

The Bums Try an End Run

September 9, 2008

So the Republicans have decided to run against themselves. The bums have tiptoed out the back door and circled around to the front and started yelling, "Throw the bums out!" They've been running Washington like a well-oiled machine to the point of inviting lobbyists into the back rooms to write the legislation, and now they are anti-establishment reformers dedicated to delivering us from themselves. And Mayor Giuliani is an advocate for small-town America. Bravo.

They are coming out for Small Efficient Government the very week that the feds are taking over Fannie and Freddie, those old cash cows, and in the course of a weekend twenty or fifty or (pick a number) billion go floating out the Treasury door. Hello? Do you see us out here? We are not fruit flies, we are voters, we can read and write, we didn't just fall off the coal truck.

It is a bold move on the Republicans' part "forget about the past, it's only history, so write a new narrative and be who you want to be” and if they succeed, I think I might declare myself a 24-year-old virgin named Lance and see what that might lead to. Paste a new face on my Facebook page, maybe become the Dauphin Louie the Thirty-Second, the rightful heir to the Throne of France, put on silk tights and pantaloons and a plumed hat and go on the sawdust circuit and sell souvenir hankies imprinted with the royal fleur-de-lis. They will cure neuralgia and gout and restore marital vigor.

Mr. McCain has decided to run as a former POW and a maverick, a maverick's maverick, rather than Mr. Bush's best friend, and that's understandable, but how can he not address the $3 trillion that got burned up in Iraq so far? It's real money, it could've paid for a lot of windmills, a high-speed rail line in Ohio, some serious R&D. The Chinese, who have avoided foreign wars for fifty years, are taking enormous leaps forward, investing in their economy, and we are falling behind. We're wasting our chances. The Republican culture of corruption in Washington hasn't helped.

And a former mayor of a town of 7,000 who hired a lobbyist to get $26 million in federal earmarks is now running against the old-boy network in Washington who gave her that money to build the teen rec center and other good things so she could keep taxes low in Wasilla. Stunning. And if you question her qualifications to be the leader of the free world, you are an elitist. This is a beautiful maneuver. I wish I had thought of it back in school when I was forced to subject myself to a final exam in higher algebra. I could have told Miss Mortenson, "I am a Christian and when you gave me a D, you only showed your contempt for the Lord and for the godly hard-working people from whom I have sprung, you elitist battleaxe you."

In school, you couldn't get away with that garbage because the taxpayers know that if we don't uphold scholastic standards, we will wind up driving on badly designed bridges and go in for a tonsillectomy and come out missing our left lung, so we flunk the losers lest they gain power and hurt us, but in politics we bring forth phonies and love them to death.

I must say, it was fun having the Republicans in St. Paul and to see it all up close and firsthand. Security was, as one might expect, thin-lipped and gimlet-eyed, but once you got through it, you found the folks you went to high school with "farm kids, jocks, the townies who ran the student council, the cheerleaders, some of the bullies” and they are as cohesive now as they were back then, dedicated to school spirit, intolerant of outsiders, able to jump up and down and holler for something they don't actually believe. But oh Lord, what they brought forth this year. When you check the actuarial tables on a 72-year-old guy who's had three bouts with cancer, you guess you may be looking at the first woman president, a hustling evangelical with ethics issues and a chip on her shoulder who, not counting Canada, has set foot outside the country once, a trip to Germany, Iraq and Kuwait in 2007 to visit Alaskans in the armed service. And who listed a refueling stop in Ireland as a fourth country visited. She's like the Current Occupant but with big hair. If you want inexperience, there were better choices.

© 2008 by Garrison Keillor. All rights reserved. Distributed by Tribune Media Services, INC

The elephant in the room

I know nobody wants to talk about the elephant in the room, but it's standing there blocking the door whether we talk about it or not.

WASHINGTON (AP) — Deep-seated racial misgivings could cost Barack Obama the White House if the election is close, according to an AP-Yahoo News poll that found one-third of white Democrats harbor negative views toward blacks — many calling them "lazy," "violent," responsible for their own troubles.

The poll, conducted with Stanford University, suggests that the percentage of voters who may turn away from Obama because of his race could easily be larger than the final difference between the candidates in 2004 — about two and one-half percentage points.

Gotcha

I know everyone else has commented on this too, but it's just too good for me to let it go by unmentioned here. Last night, Paul Krugman posted his latest find in the current issue of an actuarial magazine. It's an article by John McCain in which McCain is quoted as follows:

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

It ought to be pretty hard to worm out of that one, but I'm sure McCain will try to find a way. Perhaps he'll claim that this was a different John McCain ... uh, maybe that doesn't work too well given how many different John McCains we have seen already.

Given that this was published in the September/October issue of the journal, it would be a little difficult to say this was what he used to believe long ago but has now changed his mind. After all, it isn't even October yet.


Ah, perhaps he'll claim they mis-quoted him. That should certainly work.

McCain Showing More Symptoms of Foot in Mouth Diease

Late Wednesday night, news made its way from the other side of the Atlantic that John McCain, in an interview with a Spanish outlet, had made a series of bizarre responses to a question regarding that country's prime minister.

"Would you be willing to meet with the head of our government, Mr. Zapatero?" the questioner asked, in an exchange now being reported by several Spanish outlets.

McCain proceeded to launch into what appeared to be a boilerplate declaration about Mexico and Latin America -- but not Spain -- pressing the need to stand up to world leaders who want to harm America.

"I will meet with those leaders who are our friends and who want to work with us cooperatively," according to one translation. The reporter repeated the question two more times, apparently trying to clarify, but McCain referred again to Latin America.

Finally, the questioner said, "Okay, but I'm talking about Europe - the president of Spain, would you meet with him?" The Senator offered only a slight variance to his initial comment. "I will reunite with any leader that has the same principles and philosophy that we do: human rights, democracy, and liberty. And I will confront those that don't [have them]."

The implication seemed fairly clear: McCain was refusing to commit to meet with Zapatero, the "socialist" party leader, whose country is a member of NATO and intricately involved in many of America's global financial and national security objectives.

Already, several explanations are being offered to explain McCain's statements. As Josh Marshall at Talking Points Memo opined: "The great majority [of those who have weighed in] appear to think the McCain was simply confused and didn't know who Zapatero was -- something you might bone up on if you were about to do an interview with the Spanish press. The assumption seems to be that since he'd already been asked about Castro and Chavez that McCain assumed Zapatero must be some other Latin American bad guy. A small minority though think that McCain is simply committed to an anti-Spanish foreign policy since he's still angry about Spain pulling it's troops out of Iraq."

If, in fact, that latter group is correct and McCain was just putting voice to an adversarial stance, it could be as quizzical as if he didn't know Zapatero's name in the first place. Indeed, such a take on U.S.-Spain relations puts McCain in a far more hard-lined position than even the Bush administration, which has warmed to the Spanish leader after a rocky initial period. Indeed, the State Department's website touts the Zapatero government, which came to power in April 2004, for supporting "coalition efforts in Afghanistan" as well as "reconstruction efforts in Haiti" and counterterrorism tasks across the globe.

I Have Seen the Enemy, and He is CDS

by Mike Larson

It's been quite the eventful week on the bailout front. The Treasury and Federal Reserve drew the line at Lehman Brothers, allowing the fourth-largest broker in the U.S. to file for bankruptcy.

Then a couple days later, the Fed backtracked and arranged an $85 billion bailout of American International Group. The deal gives AIG a two-year loan at a punitive interest rate of 11.5%, and grants the Fed a 79.9% stake in the insurance firm. The idea is to keep AIG afloat while it sells assets to raise money.
Personally, this is just more evidence that no one seems to know how deep this rabbit hole of losses goes. Every time one troubled financial institution gets saved or fails, another troubled one pops up somewhere else.
As I've been discussing for a long time, crummy residential mortgages ... troubled commercial mortgages ... and all kinds of other souring loans are causing a huge chunk of the problems in the banking and brokerage industry. But in the case of AIG, something else is at work. It's an obscure kind of contract that, behind the scenes, is wreaking havoc throughout the financial industry.
And I want to talk about these "CDS" — or Credit Default Swaps — today.
How Credit Insurance Works

I'm sure you know how traditional insurance works. After all, you have some combination of homeowners insurance, life insurance, auto insurance, and maybe even a policy on an RV, a boat, or a motorcycle.
You pay a monthly, semi-annual, or annual premium to an insurance company. And the company invests that money to generate returns. If a catastrophe strikes — you get in a car crash, your house burns down, or you die — the insurance company pays you or your heirs a lump sum of money.
It's a pretty straightforward business.

But in the past few years, many Wall Street firms, hedge funds, and companies like AIG plunged headlong into the Wild West World of CDS.CDS operate like insurance on a bond or other security. Let's say you're a portfolio manager who owns $100 million in XYZ Corp. bonds. You read the paper, and you see that the industry XYZ is in is faltering, with sales declining and profits falling. As a result, you might be concerned about the possibility that XYZ will default on the bonds you're holding. But for one reason or another, you don't want to sell your bonds and move on. So instead, you go into the market and buy CDS to protect you against the possibility of default.

You — the credit protection buyer — would pay periodic premiums (just like you and I do on life or car insurance) to a credit protection seller. If XYZ does NOT default, then the seller just collects his premiums and makes a decent return. If XYZ does default, then the seller either takes the bonds off your hands, paying you face value (regardless of where they're trading), or he pays you a cash settlement that makes you whole.

Either way, you as the buyer are protected from catastrophic loss — just like a homeowner is protected from catastrophe by his policy when his home burns down.

The Flaws in the System

Sounds good, right? But here are the problems ...
First, CDS aren't highly regulated like the traditional insurance market is at the state level. In fact, the CDS market isn't really regulated at all. As we alerted our Safe Money Report readers way back in a November 2006 gala issue on derivatives ...

"Complacency is now unprecedented and regulators are asleep at the switch. The Securities and Exchange Commission says it has no direct supervision of trading in credit derivatives. The Commodity Futures Trading Commission also says it isn't responsible. The International Swaps and Derivatives Association (ISDA) says the industry can policy itself. We're not so sure."

Second, the CDS market exploded in size over the past several years. According to the British Bankers Association, the CDS market expanded from just $180 billion in 1996 to a stunning $20 trillion a decade later. That's a 111-fold expansion in this esoteric, opaque market. And by all accounts, it continued to grow LAST year as well — to a whopping $57.9 TRILLION, according to the Bank for International Settlements.

Third, the CDS market morphed into a vehicle for massive speculation on corporate credit rather than a way to hedge downside risk. Investors started buying CDS on companies with worsening credit — expecting those contracts to rise in value — and selling CDS on companies with improving credit — expecting to record a gain as those contracts declined in value.
Fourth, the quality of counterparties in the CDS market deteriorated substantially. What do I mean? When you bought your last homeowners or life insurance policy, you probably checked the credit rating of the company selling that policy. After all, what good is insurance if the company standing behind it can't make good on claims?
The problem is that more and more CDS were being bought and sold by hedge funds and other thinly capitalized companies during the boom days. This excerpt from a recent Minyanville column pretty much sums up the problem:
"A hedge fund trader once told me that they insured/sold 50 times their capital in CDS with the counterparty being a very large, well-known investment bank.
"When I asked him if he was worried about that kind of leverage, he responded by saying that is the bank's problem because if he is wrong about writing all these insurance policies (in the form of CDS), they can only lose their investment capital in the fund."
Comforting, eh?

The Fallout is Spreading

So how does AIG fit into all this? Well, it sold protection on a mind-boggling $441 billion of fixed income securities. $441 billion! According to Bloomberg, almost $58 billion of those contracts referenced securities tied to subprime mortgages. That's what really brought AIG to its knees — the exposure to the CDS market.
Who else has massive exposure to credit derivatives?

According to a Fitch Ratings report from last year, the top five counterparties on CDS contracts (as of 2006) were:
• Morgan Stanley,
• Goldman Sachs,
• JPMorgan Chase,
• Deutsche Bank, and
• ABN Amro.
It's impossible to know exactly how these institutions are positioned, how those rankings have changed since then, and so on. What we do know is that this garbage paper is spread throughout the system, that the underlying securities that CDS insure are plunging in value, and that the financial tally from this whole mess is rising month in and month out. If you needed yet ANOTHER reason to remain skeptical of the financial industry's fortunes, the CDS market is it.

Locking in the next president

From The Hill:

Congressional budget writers are already starting to worry that the massive federal government bailout of Wall Street could have drastic repercussions on how the government spends money next year and beyond, regardless of the make-up of either end of Pennsylvania Avenue.

Rep. Jim Cooper (Tenn.), a senior Democrat on the House Budget Committee, as well as a former investment banker, stressed that the moves by the federal government to prop up the financial markets are positive and necessary. Still, the investments — just because of the sheer dollar amounts involved — could freeze Congress’s ability to spend money on a host of things well into next year and beyond, he added.

“This cripples the domestic policy priorities of the next president, whoever it is, because it soaks up so much cash,” said Cooper, a senior Democrat on the House Budget Committee and a former investment banker. “In the long term, it is good news because it will encourage better behavior from everyone.”

So, don't count on any health care reforms or anything else under Obama. Of course, we already knew we wouldn't get any under McCain.

Frankly, I think that's only the tip of the iceberg that will freeze our economy for years to come.

Voter registration drives

Hmmm.

BIRMINGHAM, Ala. (AP) — Alabama Prisons Commissioner Richard Allen stopped a voter registration drive for inmates Thursday under pressure from the Alabama Republican Party.

In a letter to state Republican Party Chairman Mike Hubbard, Allen said individuals conducting the program "were not doing anything for the inmates that they could not do themselves by simply contacting the Secretary of State's Office for the voter registration postcard."

And, couldn't that be said about any voter registration drive anywhere? I guess we should stop them all since they're, "not doing anything for people that the people couldn't do for themselves."

Credit where credit is due

I've been quick to criticize Obama when I thought he was campaigning poorly, failing to stay on message, and hiding from the withering criticism of his opponents instead of fighting back. In the last two weeks or so, however, it seems to me he has turned the corner and addressed many of these criticisms. In my view he's still not forceful enough, but he's a lot better than he was earlier in the campaign, and it certainly seems to be paying off in the polls.


I'm still worried, however. He's seems now to have a five or six point lead nationally and within the MOE leads in many of the battleground states, and I'm afraid that's not going to be enough to offset the "Bradley effect." My guess is that there are at least 5 to 6 points against Obama missing from the polls either because respondents lie to avoid admitting they won't vote for an African American or because they simply won't answer the pollster's questions to avoid an admission.

So, let's hope the momentum continues in Obama's favor.

Above my pay grade

Answering this question is above my pay grade, but I nevertheless wonder what happens to a country which is already deep in debt when it is forced to pony up trillions, perhaps even tens of trillions of dollars, to keep its financial system from outright collapse?

While the effects of an outright collapse of the financial system would certainly be devastating, are the long run effects of this bailout going to be much better? I'm not at all sure.

Hyperinflation is one of those words that comes into my mind.

So, Where's George Bush?

Here we've just had the worst financial crisis since the Great Depression, and our president appears to be in hiding. I can't ever remember anything like this. The midst of a crisis, and the president is in hiding. Oh yes -- I seem to recall the same thing happened on September 11, 2001.

McCain and YOUR Social Security

Ask and you shall receive. See marketingace post below.

Actually, the Obama ad campaign is hitting some good notes quickly right now.

Don’t you wish Lehman Brothers or Bear Stearns had been carefully guarding your Social Security funds all this time?

Are You as Confused As I?

* I'm a little confused. Let me see if I have this straight.....*

Once again, just providing info.
** If you grow up in Hawaii , raised by your grandparents, you're "exotic, different."*
* *** Grow up in Alaska eating moose burgers, a quintessential American story. *

* * If your name is Barack you're a radical, unpatriotic Muslim.*
* * Name your kids Willow, Trig and Track, you're a maverick. *

* * Graduate from Harvard law School and you are unstable.*
* * Attend 5 different small colleges before graduating, you're well grounded.*

* * If you spend 3 years as a brilliant community organizer, become the first black President of the Harvard Law Review, create a voter registration drive that registers 150,000 new voters, spend 12 years as a Constitutional Law professor, spend 8 years as a State Senator representing a district with over 750,000 people, become chairman of the state Senate's Health and Human Services committee, spend 4 years in the United States Senate representing a state of 13 million people while sponsoring 131 bills and serving on the Foreign Affairs, Environment and Public Works and Veteran's Affairs committees, you don't have any real leadership experience. *

* * If your total resume is: local weather girl, 4 years on the city council and 6 years as the mayor of a town (the crystal meth capital of Alaska) with less than 7,000 people, 20 months as the governor of a state with only 650,000 people, then you're qualified to become the country's second highest ranking executive. *

** If you have been married to the same woman for 19 years while raising 2 beautiful daughters, all within Protestant churches, you're not a real Christian.*

* *** If you cheated on your first wife with a rich heiress, and left your disfigured wife and married the heiress the next month, you're a Christian.*

* ** * If you teach responsible, age appropriate sex education, including the proper use of birth control, you are eroding the fiber of society. *

** I, while governor, you staunchly advocate abstinence only, with no other option in sex education in your state's school system while your unwed teen daughter ends up pregnant, you're very responsible. *

* * If your wife is a Harvard graduate lawyer who gave up a position in a prestigious law firm to work for the betterment of her inner city community, then gave that up to raise a family, your family's values don't represent America 's.*

** If you're husband is nicknamed "First Dude", with at least one DWI conviction and no college education, who didn't register to vote until age 25 and once was a member of a group that advocated the secession of Alaska from the USA, your family is extremely admirable.*

*OK, much clearer now?*




--------------------------------------------------------------------------------

Hello? If McCain Had His Way, That'd Be Our Social Security Money Wall Street is Losing

By John Neffinger
Posted September 16, 2008 | 08:31 PM (EST)

What do we democrats have to say about the mess on Wall Street?

Today Obama said it proves that the Republican economic philosophy has failed, and I heard him mock McCain for calling for a commission because "we know how we got into this mess." Now some people think about things like "economic philosophy" a lot, and many have at least a general notion of how we got into this mess. But even though everybody cares about how much money ends up in their pockets, most people are understandably a little fuzzy about all the policies and philosophies and market forces behind our very complex economy. And to further confuse the issue, McCain is also saying something about reform, and taking on "fat cats," and accusing Obama of being just as cozy with these Wall Streeters as anyone else. The upshot so far is that slightly more voters trust John McCain to handle the economy than trust Barack Obama.

As it happens, though, not that long ago we had a rare political moment in this country, a moment where the public sat up and took notice of economic policy -- and spoke out and made its voice heard too. When George W. Bush made it to term #2, he decided to try to privatize social security to reward his supporters on Wall Street with a new source of capital, customers, and fees. (Those would be the same people whose firms are now cratering under the weight of the bad debt they recklessly took on while Republican regulators looked the other way). But as it turned out, we Americans were not about to let our elected representatives turn over our social security taxes to Wall Street financiers to gamble with if it meant losing the guaranteed income that has allowed millions upon millions of American seniors to live out their sunset years with at least a basic measure of dignity.

But while ordinary Americans spoke out, John McCain stood with Bush (hugged him awkwardly in public, even), against the American people. In fact, just six months ago, McCain again let slip his fondness for privatization.

I have been scratching my head why this has not been talked about more, especially since Obama has been having trouble winning votes among seniors. There may well be some good reason I'm missing why it hasn't been a top argument thus far.

But now that you can't look at a newspaper or TV screen without seeing the mayhem on Wall Street, it's time to remind Americans what the world would look like if John McCain was in charge of our economic policy. Plenty of people are losing plenty of their retirement savings as it is. But if we had let Bush and McCain privatize social security, some of those people would be losing a lot more. And a lot of other people with less retirement savings would be hurting even more, because they depend on social security to cover basic needs.

This is something Americans understand: social security is secure, and the stock market is anything but. There are few more personal or dramatic ways to illustrate McCain's terrible judgment than to imagine the nightmare scenario so many Americans would face if McCain and Bush had gotten their way on this -- or if McCain were to get his way as President.

When Wall Street's woes are the top story, this should be our top talking point.

Sarah Palin Nightmares: Wake Up to Reality Before 11/2/08

Written by Eve Ensler, author of the Vagina Monologues

I am having Sarah Palin nightmares.

I dreamt last night that she was a member of a club where they rode snowmobiles and wore the claws of drowned and starved polar bears around their necks. I have a particular thing for Polar Bears.

Maybe it's their snowy whiteness or their bigness or the fact that they live in the arctic or that I have never seen one in person or touched one.

Maybe it is the fact that they live so comfortably on ice.

Whatever it is, I need the polar bears.

I don't like raging at women.

I am a Feminist and have spent my life trying to build community, help empower women and stop violence against them.

It is hard to write about Sarah Palin.

This is why the Sarah Palin choice was all the more insidious and cynical.

The people who made this choice count on the goodness and solidarity of Feminists.

But everything Sarah Palin believes in and practices is antithetical to Feminism which for me is part of one story -- connected to saving the earth, ending racism, empowering women, giving young girls options, opening our minds, deepening tolerance, and ending violence and war.

I believe that the McCain/Palin ticket is one of the most dangerous choices of my lifetime, and should this country chose those candidates the fall-out may be so great, the destruction so vast in so many areas that America may never recover.

But what is equally disturbing is the impact that duo would have on the rest of the world.

Unfortunately, this is not a joke.

In my lifetime I have seen the clownish, the inept, the bizarre be elected to the
presidency with regularity.

Sarah Palin does not believe in evolution.

I take this as a metaphor.

In her world and the world of Fundamentalists nothing changes or gets better or evolves.

She does not believe in global warming.

The melting of the arctic, the storms that are destroying our cities, the pollution and rise of cancers, are all part of God's plan.

She is fighting to take the polar bears off the endangered species list.

The earth, in Palin's view, is here to be taken and plundered.

The wolves and the bears are here to be shot and plundered. The oil is here to be taken and plundered.

Iraq is here to be taken and plundered.

As she said herself of the Iraqi war, "It was a task from God."

Sarah Palin does not believe in abortion.

She does not believe women who are raped and incested and ripped open
against their will should have a right to determine whether they have their rapist's baby or not.

She obviously does not believe in sex education or birth control.

I imagine her daughter was practicing abstinence and we know how many babies that makes.

Sarah Palin does not much believe in thinking.

From what I gather she has tried to ban books from the library, has a tendency to dispense with people who think independently.

She cannot tolerate an environment of ambiguity and difference.

This is a woman who could and might very well be the next president of the United States.

She would govern one of the most diverse populations on the earth.

Sarah believes in guns.

She has her own custom Austrian hunting rifle.

She has been known to kill 40 caribou at a clip. She has shot hundreds of wolves from the air.

Sarah believes in God.

That is of course her right, her private right.

But when God and Guns come together in the public sector, when war is declared in God's name, when the rights of women are denied in his name, that is the end of separation of church and state and the undoing of everything America has ever tried to be.

I write to my sisters.

I write because I believe we hold this election in our hands.

This vote is a vote that will determine the future not just of the U.S., but of the
planet.

It will determine whether we create policies to save the earth or make it forever uninhabitable for humans.

It will determine whether we move towards dialogue and diplomacy in the world or whether we escalate violence through invasion, undermining and attack.

It will determine whether we go for oil, strip mining, coal burning or invest
our money in alternatives that will free us from dependency and destruction.

It will determine if money gets spent on education and healthcare or whether we build more and more methods of killing.

It will determine whether America is a free open tolerant society or a closed place of fear, fundamentalism and aggression.

If the Polar Bears don't move you to go and do everything in your power to get Obama elected then consider the chant that filled the hall after Palin spoke at the RNC, "Drill Drill Drill." I think of teeth when I think of drills.

I think of rape. I think of destruction. I think of domination.

I think of military exercises that force mindless repetition, emptying the brain of analysis, doubt, ambiguity or dissent.

I think of pain.

Do we want a future of drilling? More holes in the ozone, in the floor of the sea, more holes in our thinking, in the trust between nations and peoples, more holes in the fabric of this precious thing we call life.

Obama's poor delivery, not panic

This contributor does not agree entirely with this piece's position that rebuttal by Obama to McCain lies are damaging to Obama's image rather that the rebuttals have not constituted good marketing which calls for side by side comparisons to be cited by Obama under which scruitiny Obama's superiority would speak for itself.
The characterization of Obama's accepance speech is misconstrued to the point of bordering on a Faux News commentary.

Obama's Panic By Michael Gerson
Wednesday, September 17, 2008; Page A19

Seldom has there been a larger contrast between the style of a candidate and the strategy of a campaign organization. Barack Obama is cool, firm and permanently unruffled. It is precisely this quality of steadiness that has made him seem a credible prospective president with the thinnest of résumés.

But Obama's campaign is rootless, reactive and panicky. At every stage since securing the nomination, it has seemed fearful of missteps and unsure of its own organizing principle. So it has invariably adopted the Democratic conventional wisdom of the moment.

Obama's first major decision was his running mate. He could have reinforced a message of change and moderation with a Democratic governor who wins in a Republican state, or reached for history by selecting Hillary Clinton. But his choice came soon after Russia invaded Georgia, and the conventional wisdom demanded an old hand who knew his way around Tbilisi. When the Georgia crisis faded, Obama was left with a partisan, undisciplined, congressional liberal at his side. This has served to undermine Obama's message of change -- and has allowed Sarah Palin to pilfer a portion of that appeal.

Obama's second decision concerned the tone and content of his convention. Here the Democratic conventional wisdom was nearly unanimous. Obama should shelve his highfalutin rhetoric and talk like a real Democrat. Go after McCain. Talk about "bread and butter" issues -- code words for class-warfare attacks on consumers of blinis and caviar.

Obama took this advice to the letter -- at the cost of his political identity. In his Denver speech, it seemed that every American home was on the auction block, every car stalled for lack of gasoline, every credit card bill past due, every worker treated like a Russian serf. And John McCain? He was out of touch, with flawed "judgment." His life devoted to serving oil companies and big corporations. And, by the way, he didn't have the courage to follow Osama bin Laden "to the cave where he lives." In obedience to the best Democratic advice, Obama managed to be conventional, bitter and graceless.

Now Obama has made his third major campaign decision -- to finally get really tough on McCain. In response to attacks and dropping polls, the Democratic wisdom is once again nearly uniform: Democrats lose because they are not vicious enough. And once again, the Obama campaign has taken this advice without hesitation. "We will respond with speed and ferocity to John McCain's attacks, and we will take the fight to him," says Obama's campaign manager.

Obama feels provoked -- and he has been. There is no evidence that Obama supported explicit sex education for kindergarteners, as a McCain ad implied. Having already accused McCain of being a cowardly corporate tool who is disconnected from reality, escalation is not an easy task for Obama. But he has managed. In one recent commercial, McCain is clearly mocked for his age -- compared to a disco ball and a 10-pound cellphone. Another ad uses the word "dishonorable" next to a photo of McCain -- an attack from a candidate who has little practical familiarity with the cost of honor.

Who is hurt most by this race to the bottom? McCain, by the evidence of his own convention, wants to be a viewed as a fighter -- which a fight does little to undermine. Obama was introduced to America as a different and better kind of politician -- an image now in tatters.

Even worse for Obama, all these shifts to catch the prevailing winds confirm the most serious concerns about his political character. As a senator, he has almost never opposed the ideological consensus of his party. (The ethics reform he often cites as his profile in courage eventually passed the Senate 96 to 2.) And now as a presidential candidate, Obama has run his campaign with all the constancy of a skittish sailboat on an erratic ocean.

Here is a different strategy. Obama could attempt to "beat back the politics of fear, and doubt, and cynicism." He could try to build a coalition that "stretches through red states and blue states." He could reject "the politics where we tear each other down instead of lifting this country up."

The candidate who said those words the night he won the Iowa caucuses did pretty well. But whatever the outcome of this presidential election, that candidate is no longer in the race.