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Politcal Post of the Week – How Are We Going To Pay For It?

The government took bold steps to turn the market around this week but have been very quiet about where all this money is going to come from.

Did the government really do enough to save us or is this just like throwing a few more sandbags in front of the levee during Katrina?  There are two very different schools of thought and both have their points but most people focus too much on the US economy which, although about 23% of the global economy, will not be able to rise on it's own.  We still have the power to take the world down with us if we slip into the abyss but we're not likely to turn things around if the other 77% of the world is already sliding down anyway.

On the other hand, the new rules imposed on the markets and the $500Bn injected by the Fed and Treasury last week would be a 100% boost to the entire GDP of all but 17 of the World's nations so if you've even glanced at the markets in Pakistan ($144Bn GDP) or Vietnam ($70Bn) or the UAE ($192Bn), Hong Kong ($206Bn), Saudi Arabia ($376Bn) or worried about Nigeria ($166Bn) then you can understand how MASSIVE this action is. 

Last year, the GDP of the United States was just under $14,000Bn.  The government already collects $2.5Tn of that (18%) but spends about $2.8Tn that they admit to and another $500Bn they don't on wars and bailouts.  Clearly some belt tightening will be in order but it stands to reason that if the government were to control spending and RAISE taxes to collect say $4Tn a year (28%) then we would have an extra $1,000,000,000,000 to pay off those debts (which are costing us $250Bn a year in interest) and probably enough left over to bail out the GSEs and everyone else with room to spare. 

The problem seems massive – it is massive, but so is our economy and, if given time, it can get back on its feet but it's time that is the question.  BSC, LEH, AIG, FRE, FNM, MER ran out of time – hopefully this very late action is going to buy enough for everyone else but we need to follow it up with responsible action from our leaders and that means telling people they are going to have to take their medicine and those people cannot be the bottom 80% of the earners, who make less than 20% of the money – it's not possible, nor is it right to try to fix things that way

Even Ronald Reagan, when faced with a similar deficit crisis, in 1982 passed the Tax Equity and Fiscal Responsibility Act (TEFRA) along with the Highway Revenue Act, which raised fuel taxes.  Overall, this the two taxes accounted for 1% of the GDP ($140Bn a year in today's numbers).  In 1983 Reagan raised Social Security taxes and in 1984 he signed the Deficit Reduction Act followed by the Consolidated Omnibus Budget Reconciliation Act of 1985, the Tax Reform Act of 1986 (which was a nice way of saying increase), and the Omnibus Budget Reconciliation Act of 1987.  Overall, the largest tax increases in US history came under the Reagan Presidency.

While Reagan was anti-taxes and anti-big government, he wasn't so unrealistic that he didn't think we needed to balance our budget at some point.  To me, the scariest thing about what the government is doing is that they have made no mention of how it's going to be paid for.  I don't see that we can afford to sweep this under the rug.  If we lose the faith of the other 77% of the global economy they may be forced to take the very painful step of cutting us off, the same way Paulson decided to let LEH die. 

The price tag on the next phase of the government bailout has been set at $700Bn today in a proposal sent to Congress this morning.  Included in the proposal is legislation that will raise our nation's debt limt from $10.6Bn to $11.3Bn.  The Treasury plans to hire asset managers to purchase the assets through so-called reverse auctions, seeking the lowest prices, a person briefed on the proposal said yesterday. The proposal specifies that only assets from U.S.-based financial institutions issued or originated on or before Sept. 17 can be purchased but some see this as nothing more than economic extortion on the part of Paulson and Co., timed to jam this "rescue" down Congresses' throat just ahead of the recess or else they will be branded as the villains as they head home to campaign for re-election.

Bush today said he's unconcerned that the price tag on the package may seem high. “I'm sure there are some of my friends out there that are saying, I thought this guy was a market guy, what happened to him,'' the President said. “My first instinct was to let the market work, until I realized, while being briefed by the experts, how significant this problem became.''

Thanks Mr. President.  The headline in the LA Times is "Europeans on Left and Right Ridicule US Money Meltdown" and some of the quotes are just too depressing to even post so I warn you before reading it.  The NYTimes accurately calls the whole package a "Hail Mary Pass" by the government and there will, in fact, be no time left in the game if this one doesn't connect for a touchdown.

Mish points out the the actual text of the bailout plan says: "The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time."  Indicating that this is not a one-time $700Bn but more of a revolving debt that allows the government to be a dumping ground for $700Bn in assets and then another $700Bn as soon as they unload the first batch.  "At taxpayer expense," Mish says, "Bernanke and Paulson are willing to bail out their banking buddies at enormous expense to the average taxpayer of this country. Bernanke and Paulson should both should be fired. Instead Congressional sheep will baa yes to this bailout and Bush will baa yes when he signs it. It is a sickeningly sad that day for America that Congress will go along with this proposal that makes the US Taxpayer A Giant Dumpster For Illiquid Assets."

Time magazine has an alarming article called "Why China Won't Come to the Rescue" noting that China's sovereign wealth fund already did come to the rescue when they took a 9.9% stake in MS ($5Bn) and a $3Bn stake in BX on their IPO (now down almost 50% from the open at $34).  According to Time, the SWF has "been the subject of withering public scorn in China and has drawn pointed private criticism from the highest levels of the Communist Party."

In order to entice Sovereign Wealth funds, foreign governments and foreign capital of all stripes to back this plan, we are going to have to have a real fire sale, structuring deals like the one MER made with Temasek (Singapore SWF) last December, which had onerous terms that allowed Temasek to dump shares at 1/2 price and still end up about even. 

It will be very important to look at the terms of the deals being signed, not just the dollars involved as there is going to be little point in being a future investor if 90% of the value of the company is already held by preferred investors who can dump shares with impunity.  As Paulson and Co rush to raise the auction hammer on the United States, Forbes asks 10 pertinent questions:

  1. Who gets to participate?
  2. How much will individual companies be allowed to dump?
  3. How will the assets be priced?
  4. How open will the books be?
  5. Who will run it?
  6. How long will this thing be around?
  7. How much will the new agency cost taxpayers?
  8. Doesn't this make it harder to say no to other bailouts?
  9. What happens next week in Congress (they are supposed to adjourn).
  10. Will this end the credit crisis?

How did this happen to us?  Well Time has a very good, very long article on that as well but be warned – not on a full stomach!  Great opening line: "Every day brings another financial horror show, as if Stephen King were channeling Alan Greenspan to produce scary stories full of negative numbers."


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  1. What bad things would have happened if this bailout was not implemented? Same question for the Fanni/Freddie bond holders/PIMCO bailout.
    There’s another side to the question. What are the risks involved? What harm may be caused? For example, dollar devaluation kills people on fixed incomes or trying to save for retirement.
    Here’s what a particularly bright guy has to say.
    TESS VIGELAND: Speculation says the final product of this bailout will look something like the Resolution Trust Corporation, or RTC, which bailed us out of the savings and loan crisis. No matter the final version, as Jeremy noted, we’re all now holding that bad debt.
    For more on what that means we turn to a familiar voice. Robert Reich, thanks for being with us.

    ROBERT REICH: Hello. I’m delighted, Tess.

    Let’s talk, first of all, about who is at risk as we look at the possibility of an RTC-like agency.

    Taxpayers. And we don’t know at the risk of how much money. Because the RTC, remember, took over the bad debts of hundreds of savings and loan institutions — something on the order of $400 billion — and then resold those assets off so that the American public, taxpayers, were not stuck with that huge bill, something far less. This time around, though, nobody knows what the bottom is. It could be many multiples of that.

    Yeah, I think Sen. Richard Shelby went on TV today and actually threw out the T word — trillions.

    It’s a scary number and nobody should be alarmed. But at the same time nobody should underestimate the potential liability on taxpayers.

    So what exactly does that mean for us?

    Well, it means that if the worst happens and the economy does not recover, or these pieces of paper have very little value because the underlying loans are not going to be repaid, well that means that taxpayers get left holding the bag. Which, in turn, means that the debt — the federal deficit and the federal debt — go much, much higher. And, if that happens, then first we can’t do a lot of things we would like to do as a nation. And foreigners may get a little bit nervous about the faith and credit of the United States. And they may slow down even more than they are already slowing down their willingness to lend us money. And that results, potentially, in a further drop of the dollar. Which means everything we buy from abroad costs more.

    I thought this idea that came out today was supposed to make us all feel better.

    Well, it certainly made a lot of investors feel better. And maybe it’ll work. But, you see, Tess, this is the problem. The crisis on Wall Street right now is less about solvency and about capital than it is about trust. And the real question is, How do you restore trust to a system in which, basically, nobody trusts the numbers that a re supplied by big banks on securities?

    Well, let me ask you to answer your own question there. Or try. How do you generate that trust? What is the alternative?

    Well, the answer is regulation. There’s just all sorts of areas that beg for more transparency. And until you get that much transparency, people are just not going to trust what Wall Street is telling them.

    Why didn’t the government take this sort of radical action earlier?

    Well, the kernel of the idea — that is, have a separate agency take the bad debt off the books of some of these banks and then resell them just like the old Resolution Trust Fund — that may make some sense in the short-term. But there’s no reason the taxpayers have to be involved. You could do this by a kind of reorganization under bankruptcy, a kind of big Chapter 11 process. You don’t have to call it bankruptcy. You could call it a kind of emergency reorganization of financial institutions. Or you could call it liverwurst. It doesn’t matter. You just basically eliminate all of the investment value in these banks and all of the focus would be on making creditors as whole as possible.

    Alright folks, you heard it here first. Liverwurst is the answer. . . . Thank you so much, Bob.
    REICH: Thank you, Tess

  2. Obama objects to the so-called guilt by association w/ folks like Bill Ayers and his pastor friend and mentor Rev Wright.
    And then there are folks like FNM Jim Johnson and Franklin Raines (both should be considered economic criminals who ought to be in jail).

    Then he goes out to try to slime McCain w/ guilt by association w/ Phil Gramm and even Pres. Bush.

    So … is guilt by association fair game or not  ?  Watch the video …

  3. Robert Reich .. a real capitalist !  Save the creditors; wipe out the shareholders.
    Way to go Bob.

  4. Once again a designer crisis (this time based on naked short selling) is used to force carefully crafted legislation through in a big rush, without careful consideration or due process.  A hallmark of the present regime.  

    When I look at it from an investors point of view I have to ask?  WHO WINS?

    As laid out in the press this $700,000,000,000.00 will go to the banking system.  Bush will veto anything that could financially help any American who is underwater in his home equity.  The banks will be made whole on the problem loans.  Homeowners will continue to owe on loans that the bank has been made whole on, (Debt Slaves).  The crisis in the real estate market will continue unabated.  THE BANKS WIN!!!

    As with any government bailout where the money goes to the top of the economic ladder, the money goes into stasis. Sure there will be more 25,000 sq ft homes built in Aspen, Beaver Creek, and Deer Valley.  More estates in the Hamptons will be renovated, and the mega yacht builders will celebrate.  The providers to the elite will benefit, however; precious little of this money will make it into the hands of the citizens that these people were supposed to represent.

  5. Phil/Jeffrie1/anyone:
    The post from Jeffrie1 yesterday at 1:32 speaks of:
    "There are only 32 bids at 2.12 and then the next bid drops down to 1.80.  I kept an eye on it, and once the bids were hit, I put in an order at 1.90 and got filled."
    Can anyone tell me how to monitor these bid/ask queues.  I use TOS and can’t seem to find that information anywhere.  Anyone know where I can see and monitor this information without having to pay and subscribe to yet another service.  Thanks.

  6. Phil…  In light of the short sale ban stupidity..  Why has nobody suggested reporting short sale numbers on a daily basis vs the current monthly reports?  They have the data, and if it was released on a daily basis, we’d have the transparency without screwing the liquidity..  

    Then we’d pretty easily be able to see that Fanny was being beat down by shorts and (potentially) not by everyone long selling..  

    It falls into the same bucket (in my head) as reporting open interest on options..  The data is there, so why not make it available and let the free market do what it does best..  ?  -Peter

  7. Ros – I don’t know TOS but see if they have Level II data steams. 

    Foto – I think they did say weekly reports, not sure about daily.  Daily would be nice and there’s an interesting movement among some fund managers to notify their brokers that their shares are not to be lent out.  That will be fun if it works…

  8. Thanks.

  9. David, my friend who teaches at Dartmouth, bought 80k worth of Lehman for a nickel on thursday and sold it for a quarter on Fri at the high.  unfreaking believable.  Some people are making a killing in this market.
    I own some shares of mkl, they finally woke up.

  10. jomama – did he tell you about the other 80k worth that he had bought at 20? :)

  11. jomama – That is one lucky (and gutsy) trader!  I have a spine surgeon friend who used to teach at Dartmouth Medical School.  He gave up on academics and moved to Florida about four years ago.  I had the job of refreshing him on new orthopedic trauma techniques when he returned to a multi discipline practice and he had to take call.  It was amazing to direct him through cases and have him get it first time.  Talented man.  Socially he is a mess though…  damn academics!  I’d be willing to bet that they know/knew each other.  His name is Dr. Ron Wiznes.. I will not mention the rest for his privacy.   

    I looked at the Glide Scope products and they look good.  As you mentioned they are privately held so there is no play to be had there.  Heck of a nice tool to be able to visualize the airway while intubating the patient.  Helps avoid complications and speeds things up with difficult airways.

  12. Ros / ToS Level 2 -
    It’s only available on the desktop application, not the web-based system. Go to the Trade tab and open the Trade Grid section. If you’re seeing something other than L2 underneath (like small charts), open the small "grid box" dropdown at the right end and select Level 2.
    If you’re still stuck, use their online chat for help. I’ve always been connected with a rep very quickly.

  13. David, the glide scope is quickly becoming a standard "back-up/emergency" tool for airways.   It also has a disposable sleeve so ka-ching for the company. 
    Nav – good point.  you only hear about the  home runs not the major strike outs.
    David, i’ve still been selling calls and puts on the financials.  Got pretty lucky this week.  The 17.5 Citigroup puts were assigned to me and became a tidy profit on friday thanks to Paulson.  In addition, i had som XLF’s in my retirement account that i sold into the excitement.  I keep on buying them when they get around 19.  I so sold some BAC calls at the open against some leaps.   But my tech leaps totally suck ass:  txn, intc, ibm.

  14. I read this morning that Democratic leaders want to add another bailout to the trillion dollar plan. This addition would bail out homeowners unable to pay their mortgages and supposedly prop up the price of homes. I’m a Democrat and definately sit on the left hand side of the aisle but I don’t see the need for this purpose of this other  than to ultimately bail out undeserving banks even more.
    First of all, no one is facing homelessness. Talk of keeping people in their homes is really talk of keeping people in their current homes which they can’t afford. If these homeowners walk away from their homes and mortgage obligations, they can rent comperable homes for as little as half of what they’re paying for their mortgages. The only hardship is moving, something most of us have done several times. Reducing one’s housing costs substantially is not a hardship but a benefit. The "hardship" falls on the banks who bought mortgages without regard to risk and bought beyond their means by leveraging.
    Unless it’s really different this time, home prices will do what they have always done in their cycles and revert to the affordable mean of 2.5 times family income after a sizeable down payment. Affordable housing is not bad in the long term for the economy. The housing market will not recover until housing becomes affordable once again. Most people can’t afford housing at today’s prices. How will keeping people in homes beyond their means keep housing prices from reverting to their affordable mean? And, what happens to the upside down homeownerafter the bail out when housing prices continue to fall? They’re upside down all over again. And under some plans I’ve seen, the US taxpayer ends up as the mortgage guarantor making the banks whole as housing reverts to mean.
    Finally where does all this bailout money end up? In the hands of the banks who are the only entities certain to benefit from all this.

  15. Under the "Portfolio" Tab, I’ve started a new column for Trade Ideas, begininning with long-term plays. Let me know what you think of the format it as it’s a work in progress at the moment.

  16. Phil – Good idea on the Trade Ideas column, it probably deserves it own tab.  Perhaps taking the SC space on the main set of tabs.

    Given the immensely inflationary forces in these bailout packages and the erosion of confidence in the U.S. dollar.  I would appreciate it if you could review the best of the gold stocks, indexes or etf’s and how to build a profitable option trading strategy on them.

  17. David, i think you’re right on the gold idea.  With helicopter Ben + indian wedding season, i think that gold will probably go back to mid 900′s soon.

  18. GLD is a good speculative cover and I wrote up ABX under the Portfolio tab as a long-term play.  With GLD, I think at this stage we will be hard pressed to get back below $750 (what’s going to make us think that the financials are long-term sound and the dollar is stable?).   It’s not as attractive now as when we looked at it earlier in the week but, since we’re looking at the possiblity of a massive confidence crisis, Nov $90s at $4.45 can be great gainers if gold breaks $1,000 and should hold about $2.50, even if we test $780 again.  The 50 dma is $863 so as long as we are above that, the value should hold up well through Oct expiration. 

    One way to play Oct GLD up and reduce premium is to sell, say 1 $86 call for $4.25 against 2 $82 calls for $6.55.  It’s still a bullish bet but the $82s are $4 in the money so the play takes care of $4.25 out of $5.10 in premiums paid.  In almost every case, you make more than you would with just 1 $82 call but you drop your break-even from $88.50 to $87, not great but better than not at all.

  19. Cap this one is for your repository of Obama ‘bashin’ :-)
    Obama taught at the University of Chicago Law School for a decade before he left in 2003 to run for the United States Senate. He emerged as one of the Senate’s most liberal members, and his voting record is often invoked in the current campaign, especially by his opponents. But the men and women who studied with him at Chicago echo Escuder’s observation that Obama was much more pragmatic than ideological.

  20. I don’t need to bash, ramana.  Obama’s resume is paper thin.

    First of all, he was a "lecturer" at UC Law, not a professor.  Big difference.
    Here is what Hillary Clinton’s campaign had to say on the matter:

    Sen. Obama consistently and falsely claims that he was a law professor. The Sun-Times reported that, “Several direct-mail pieces issued for Obama’s primary [Senate] campaign said he was a law professor at the University of Chicago. He is not. He is a senior lecturer (now on leave) at the school. In academia, there is a vast difference between the two titles. Details matter.” In academia, there’s a significant difference: professors have tenure while lecturers do not. [Hotline Blog, 4/9/07; Chicago Sun-Times, 8/8/04]

    Here’s another interesting piece:

    Basically, Obama’s footprints as a lecturer, much as his other experience, leaves much to be desired or even inspected.  No accomplishments.  No scholarship.  Nothing.

    Better questions:  How did he get the job ?  Why ?  Patronage ?  Affirmative Action ?  What ?  Certainly not based on any scholarship or other accomplishments.

    So some folks found him to be "pragmatic" whatever that means.  So what.

  21. Hillary to rebut Obama : Smell of Republican desperation. The irony is not lost, Cap. :-) One other thing, McCain wants the most conservative SEC Chairman Cox fired and that is good ?

  22. The Federal Reserve said it had approved the transformation of both Morgan Stanley and Goldman Sachs from investment banks to traditional bank holding companies, a step that would place the last two Wall Street titans under the close supervision of national bank regulators, subjecting them to new capital requirements and additional oversight.

  23. Alf – Ref GS & MS. I guess that as being traditional banks they will be able to unload toxic waste. Not that this is an important …

  24. "Basically, Obama’s footprints as a lecturer, much as his other experience, leaves much to be desired or even inspected.  No accomplishments.  No scholarship.  Nothing." Cap
    Obama graduated (according to my Google search) in the top 5% of his class at Harvard Law School. Law school grades are given without the identity of the student being known by the grader. I don’t know about Harvard specifically but that’s the norm. Harvard along with Yale and Stanford are the nation’s top three law schools. Obama was president of Harvard Law School Law review. Graduating from a top law school in the top 5% of one’s class while heading up the law review are all scholarly accomplishments. But why let facts get in your way?
    McCain graduated in the bottom 5% of his college class, 5th from the bottom. That’s another fact.

  25. Obama still looking good on the electoral map, despite Cap’s best efforts!

  26. Regarding the who lecturer vs tenured professor thing:
    Its not a big deal. People seem to blow this out of proportion. I have an adjunct faculty appointment at the University I work at. I am not tenured. However, if you look at what i do, i do just as much if not more than any tenured professor here at the university. Titles can be misleading.
    Also, other people that have similar appointments as me are usually people who work in the industry, but come back to teach or do something similar because they love teaching. They are not interested in hard-core scholarship (publish). So what? A lot of good work gets done that is not publishable…

  27. How are the Republicans going to escape blame for this mess?

  28. Cap, from George Will, with love :-)
    The world is a sweeter place because Sarah Palin has increased the quantity of love, but this is not a reliable foundation for John McCain’s campaign.

    The tech bubble was followed by the housing bubble, which has been topped by the Palin bubble. Bubbles will always be with us, because irrational exuberance always will be. Its symptom is the assumption that old limits have yielded to undreamed-of possibilities: The Dow will always rise, as will housing prices, and rapture about a running mate can be decisive in a presidential election.

    But the country’s romance with her will, as romances do, cool somewhat, and even before November some new fad might distract a nation that loves "American Idol" for the metronomic regularity with which it discovers genius in persons hitherto unsuspected of it.

    By picking Palin, McCain got the country’s attention. That is a perishable thing, and before it dissipates, he should show the country his veto pen. span.jajahWrapper { font-size:1em; color:#B11196; text-decoration:underline; } a.jajahLink { color:#000000; text-decoration:none; } span.jajahInLink:hover { background-color:#B11196; }

  29. From the Bloomberg article:
    The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.
    Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street’s efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.
    In the times that Fannie and Freddie couldn’t make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.
    The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.
    Turning Point
    Take away Fannie and Freddie, or regulate them more wisely, and it’s hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.
    It is easy to identify the historical turning point that marked the beginning of the end.
    Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission’s chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie’s position on the relevant accounting issue was not even “on the page” of allowable interpretations.
    Then legislative momentum emerged for an attempt to create a “world-class regulator” that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.
    Greenspan’s Warning
    The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn’t be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”
    What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.
    Different World
    If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.
    But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn’t even get the Senate to vote on the matter.
    That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: “It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.”
    Mounds of Materials
    Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.
    But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.
    Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.
    Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.
    There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.
    Oh, and there is one little footnote to the story that’s worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.

  30. Sorry about the trailing junk in my last post. I will be careful in future.

  31. Cap another gem from George Will : McCain Loses His Head  (that is the title !)
    Channeling his inner Queen of Hearts, John McCain furiously, and apparently without even looking around at facts, said Chris Cox, chairman of the Securities and Exchange Commission, should be decapitated. This childish reflex provoked the Wall Street Journal to editorialize that "McCain untethered" — disconnected from knowledge and principle — had made a "false and deeply unfair" attack on Cox that was "unpresidential" and demonstrated that McCain "doesn’t understand what’s happening on Wall Street any better than Barack Obama does."
    In any case, McCain’s smear — that Cox "betrayed the public’s trust" — is a harbinger of a McCain presidency. For McCain, politics is always operatic, pitting people who agree with him against those who are "corrupt" or "betray the public’s trust," two categories that seem to be exhaustive — there are no other people. McCain’s Manichaean worldview drove him to his signature legislative achievement, the McCain-Feingold law’s restrictions on campaigning.
    By a Gresham’s Law of political discourse, McCain’s Queen of Hearts intervention in the opaque financial crisis overshadowed a solid conservative complaint from the Republican Study Committee, chaired by Rep. Jeb Hensarling of Texas. In a letter to Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, the RSC decried the improvised torrent of bailouts as a "dangerous and unmistakable precedent for the federal government both to be looked to and indeed relied upon to save private sector companies from the consequences of their poor economic decisions." This letter, listing just $650 billion of the perhaps more than $1 trillion in new federal exposures to risk, was sent while McCain’s campaign, characteristically substituting vehemence for coherence, was airing an ad warning that Obama favors "massive government, billions in spending increases."
    It is arguable that, because of his inexperience, Obama is not ready for the presidency. It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?

  32. I could not help but think of David when reading this:

    Naomi Wolf Bravely Speaks Truth to the Palin Police State
    MoonbatsTue, Sep 23, 2008 at 8:55:26 am PDT
    Our unhinged rant of the day: a new article by feminist nutbar Naomi Wolf (last seen at LGF praising the religion of Islam for keeping women submissive) at the ever-loony Huffington Post: Naomi Wolf: The Battle Plan II: Sarah ‘Evita’ Palin, the Muse of the Coming Police State.

    Please understand what you are looking at when you look at Sarah “Evita” Palin. You are looking at the designated muse of the coming American police state.
    You have to understand how things work in a closing society in order to understand “Palin Power.” A gang or cabal seizes power, usually with an affable, weak figurehead at the fore. Then they will hold elections — but they will make sure that the election will be corrupted and that the next affable, weak figurehead is entirely in their control. Remember, Russia has Presidents; Russia holds elections. Dictators and gangs of thugs all over the world hold elections. It means nothing. When a cabal has seized power you can have elections and even presidents, but you have freedom. [sic]

    Do people like Wolf really believe this kind of stuff, or are they just working the left wing rubes who eat it up with sporks? A typical comment:

    One trillion dollars to bail out the financial institutions? I don’t think so. I think they will use this money to set up their fascist police state, suspend the constitution and declare martial law.

    Good grief. Hundreds of comments like that one.

  33. Just as I was thinking, where is Joe Biden anyway ?, I come across this little gem:

    Ah, Biden   [Yuval Levin]
    Jennifer Rubin notes a classic Biden moment in his interview with Katie Couric today, talking about the tone of the campaign:

    Couric: And you guys haven’t been completely guilt-free, making fun of John McCain’s inability to use a computer.
    Biden: I thought that was terrible, by the way.
    Couric: Why’d you do it then?
    Biden: I didn’t know we did it, if I’d have known we did we’d have never done it, I don’t think Barack, you know, I just think that was, ah
    Couric: Did Barack Obama approve that ad? He said he did, right?
    Biden: Yeah, the answer is, I don’t, I don’t think anything was intentional about that, they were trying to make another point.

    He seems to be suggesting the Obama campaign needs adult supervision, and if only he had known what Obama was up to it never would have happened. Not quite the message the campaign is looking to push these days.

  34. "A Sharp Nail" and "I Need Job"  
    Suitable anagrams for "Sarah Palin" and "Joe Biden"

  35. Obama and Ayers   [Ed Whelan]
    Barack Obama wasn’t telling the truth when he dismissed his relationship with unrepentant Weather Underground terrorist Bill Ayers by describing Ayers as just “a guy who lives in my neighborhood.”  That was clear enough from the fact that Ayers and his wife (and fellow terrorist) Bernardine Dohrn hosted the party that launched Obama’s political career.  But it’s even more clear from the pair of articles that NRO and Corner contributor (and my Ethics and Public Policy Center colleague) Stanley Kurtz has published today, in the Wall Street Journal and on National Review Online, on the Obama-Ayers partnership to radicalize Chicago’s public schools.

    Will the mainstream media show any interest in exploring why Obama blatantly misrepresented his relationship with Ayers and what that relationship really was and is?  And Obama’s other associations with radical figures and organizations?

    09/23 09:57 AM

    Obama’s Statement on Ayers   [Stanley Kurtz]
    Today, I begin to publish a series of pieces on my research into Barack Obama, Bill Ayers, and the Chicago Annenberg Challenge. The two pieces out today are, first, "Obama and Ayers Pushed Radicalism on Schools," and second, "Obama’s Challenge." This second piece contains the full text of a public statement from the Obama campaign in response to my findings about Obama, Ayers, and Annenberg. It also includes my detailed response to that statement. I’ll have more on Obama, Ayers, and Annenberg soon. Stay tuned.

  36. Ayers and Obama   [Peter Kirsanow]
    Stanley Kurtz’s articles today on NRO and in the Wall Street Journal are must reads. Three takeaways:

    *       Obama had a long-term working relationship with William Ayers.
    *       The Chicago Annenberg Challenge ("CAC"), the only executive experience on Obama’s resume, was an objective failure despite the expenditure of millions of dollars.
    *       Through the CAC, Ayers and Obama financed radical organizations, including one with a history of engaging in voter fraud.            

    Stanley’s work is a challenge to mainstream journalists. A candidate for the presidency has a demonstrated working relationship with — indeed funded — an unrepentant terrorist, yet the media have spent more time reporting about Sarah Palin’s hair styles.

  37. Wow, what a nut !

    "Do Not Let Her!" — Life in the Palin-Rove-Cheney Police State   [Victor Davis Hanson]
    When this election is all over, it will be hard to remember which Obama partisan proved the most unhinged (Rev. Wright doesn’t count):

    The "comedian" who called for the rape of Sarah Palin; the discredited Atlantic Magazine blogger who snowballed rumors that the Palin Down syndrome child was not her own; the Atlantic Monthly hired photographer who disseminated photo-shopped outtakes of McCain; the son of the Democratic legislator who hacked into the Palin email account; or one of the many in Hollywood/New York who gave us a moronic rant in the style of Woody Allen, Matt Damon, Sean Penn, Chevy Chase et al

    My vote, however, would go to Naomi Wolf (most infamous for charging Al Gore several thousands a month for advice on matters involving Alpha males, and Harold Bloom with sexual harassment years later). Now she warns about the "horror" that she was "seeing in Governor Palin: the continuation of the Rove-Cheney cabal." And indeed the reach of Sarah Palin’s police state is already proving to be long indeed:

    Almost everyone I work with on projects related to this campaign for liberty has been experiencing computer harassment: emails are stripped, messages disappear. That’s not all: people’s bank accounts are being tampered with: wire transfers to banks vanish in midair. I personally keep opening bank accounts that are quickly corrupted by fraud. Money vanishes. Coworkers of mine have to keep opening new email accounts as old ones become infected. And most disturbingly to me personally is the mail tampering I have both heard of and experienced firsthand. My tax returns vanished from my mailbox. All my larger envelopes arrive ripped straight open apparently by hand. When I show the postman, he says "That’s impossible." Horrifyingly to me is the impact on my family. My childrens’ report cards are returned again and again though perfectly addressed; their invitations are turned back; and my daughters many letters from camp? Vanished. All of them. Not one arrived. Try explaining that to a smart thirteen year old. Try explaining it in a way that still makes her feel secure and comfortable.

    I am not telling you this because it’s about my life. I am telling you this because it is about your life — whoever you are, Conservative or Liberal, independent or evangelical. Your politics will not protect you in a police state. History shows that nothing portects (sic) you in a police state.

    …Make no mistake: Sarah "Evita" Palin is Rove and Cheney’s cosmetic rebranding of their fascist push: she will help to establish a true and irreversible "fear society" in this once free once proud nation. For God’s sake, do not let her; do not let them.

  38. This is your VP guys ?   ROTFLMAO !!!!

    Biden — The Election Wouldn’t Be the Same without Him   [Kathryn Jean Lopez]
    This one, just for a chuckle, from Ben Smith:

    Joe Biden’s denunciation of his own campaign’s ad to Katie Couric got so much attention last night that another odd note in the interview slipped by.

    He was speaking about the role of the White House in a financial crisis.

    "When the stock market crashed, Franklin Roosevelt got on the television and didn’t just talk about the princes of greed," Biden told Couric. "He said, ‘Look, here’s what happened.’"

    As Reason’s Jesse Walker footnotes it: "And if you owned an experimental TV set in 1929, you would have seen him. And you would have said to yourself, ‘Who is that guy? What happened to President Hoover?’"

  39. VDH makes good points and asks the right questions:

    And the Media Worries about Palin’s Experience and McCain’s Age?   [Victor Davis Hanson]
    I think in the space of about the last 24 hours, Joe Biden claimed that the AIG bailout was bad, but then said it wasn’t bad;

    that we did not need to burn coal;

    that his apology about the dirty McCain ad was, as they say, inoperative;

    that FDR once went on television to address the nation after the stock market crash of ’29 (that’s a twofer that trumps Obama’s Americans liberating Auschwitz);

    and all but said that McCain took a $50,000 bribe.

    Not a bad day’s work — encompassing terrible energy policy, flip-flopping, historical ignorance, and slander. And this comes on top of Palin the "good looking" "Lt. Governor" of Alaska, Hillary as the better VP pick than himself, the patriotism of paying higher taxes, and so on.

    And those in turn come on top of the primary remarks about Indians in donut shops, and "bright and clean" blacks. And those in turn come on top of . . . (Well, go back to the pilfered speeches and made-up bios.)

    Something is very wrong here. While most forgive the silly slip like "Barack America" or asking the wheel-chair bound to stand up, I think the Obama staff  must have gone from amusement to embarrassment and now to serious concern whether Biden is up to the job.

    Had this been Palin, the election would now be over.

  40. Cap, you ignored, brilliant articles from The Conservative George Will. One dissing Palin and the other questioning whether McCain is qualified to be President. Pray, why ? :-)

  41. Not a big George Will fan; never have been.  He’s entitled to his opinion.  Has some good columns and not so good columns.  Not sure what your point is ramana ….

  42. My point is, McCain despite all the pretense NOT a candidate for the thinking citizen. George Will eloquently makes the case. :-)

  43. McCain Seeks to Delay First Debate Amid Financial Crisis
    Senator John McCain said Wednesday that he would suspend campaigning on Thursday, and seek a delay in this week’s planned presidential debate, so that he could return to Washington to try to forge a consensus on a financial bailout package.
    A short time later the Obama campaign issued a statement saying that the two presidential candidates had spoken on the telephone Wednesday morning about issuing a statement on the financial difficulties facing the nation, but did not address cancelling the debate.

  44. McCain’s pettiness shows : He suggests joint statement, then runs off and gives press statement unilaterally. How can you trust this guy? Unbelievable. :-)

  45. Barack Obama is right : it was bad to inject presidential politics into delicate negotiations. Desperate McCain is treading the path of gross irresponsibility. I lost all respect for this guy.
    He is willing to dump the interests of the nation for prospective political gains. But sadly, those gains are pyrrich at best. What is on display is recklessness masquerading as leadership.

  46. here is a video you may find interesting.
    What Caused Our Economic Crisis? « Giovanni’s World

  47. McCain looks like slowly accepted the inevitable that he is no consesus builder. He conceded failure, after the blow up by his forceful intrusion into the delicate negotiations, by agreeing to participate in a debate.
    In the first place, why did he want to postpone the debate ? Fear, me thinks he would be overwhelmed by an eloquent Barack. :-)

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  49. 2nd test
    span.jajahWrapper { font-size:1em; color:#B11196; text-decoration:underline; } a.jajahLink { color:#000000; text-decoration:none; } span.jajahInLink:hover { background-color:#B11196; }

  50. SHAME, SHAME ON McCAIN………he lies to Letterman; says he didn’t read Paulson’s three page bailout plan after announcing  the suspension of his campaign to rush to Washington to join the talks re the Bush plan to "rescue" the economy; also, declines to debate UNTIL consensus is reached; it wasn’t as of 5;00 PM today BUT he reversed once again and flew to the debate site.  Oh yeah with his participation in the KEATING FIVE SCANDAL he probably could offer lots of political cover to his cronies both in and out of Congress.  GABBY, 85 yr. young combat-disabled WWII Navy vet who’s proud to be a Boston moderate/liberal voter who wants a better country for his children and grandkids and all who need and want an opportunity to achieve the AMERICAN DREAM !!!!

  51. Gotta say this first part of the debate shows 2 people that have not even the basic comprehension of economics and finance. Carli Fiorina was right. none of them could run a country. Seriously , if you had a choice would you invest your money in either?

  52. That was supposed to be run a business

  53. Neither one of these guys should run a 7/11. I am so dicouraged…

  54. And Carly is an expert after what she did to HP? Ouch

  55. Crisco – Good video but attempts to place blame for good-hearted housing program begun by Dems that was loopholed and co-opted by the IBanks under Republican deregulation.  Surley you must be able to draw the connection between the last savings crisis under Bush 1 and this one.  It’s what they do!   McCain is a Keating fiver – it’s a big friggin’ joke on America. 

    As to the BS that McCain tried to pass housing reform.  He was only trying to put the GSEs under special regulation and according to a comment I read elsewhere: The Federal Housing Enterprise Regulatory Reform Act of 2005 was introduced on Jan 26, 2005. Where it died in a Republican-controlled committee of the Republican-controlled Senate.  This page tracks various initiatives from 2003, and demonstrates how no progress occurred on any reform bill while the Republicans controlled Congress. 

    On 31 July 2007, after the Democrats obtained control of the Congress in the November 2006 election, House Speaker Nancy Pelosi introduced HR 3221, a "bill to provide needed housing reform and for other purposes." Among other things, the bill granted the newly formed Federal Housing Finance Agency "supervisory and regulatory authority over Fannie Mae, Freddie Mac, and the federal home loan banks (enterprises)" (per CRS analysis).  Pelosi’s bill became Public Law 110-140 on 19 December 2007.

    If I were Obama, I would take what McCain says and turn it around and say "So you knew it was a problem, you claim to be a leader of the Senate yet you were unable, for all these years to accomplish anything – and now you are asking to be President.  We need a President who gets things done, not someone who co-sponsors bills that die in committee.

    I was, on the whole, nonplussed by Obama’s performance.  Had McCain not acted subordinate to him the entire debate by refusing to look him in the eye or address him directly (despite the fact that that was what the format was supposed to be and the moderater simply got tired of telling him) then he may have won the debate but the image (and Nixon will tell you that image is everyting in a debate) is one of McCain being dominated by Obama.  Both candidates scored points but Obama was way too stiff as well as way to defferntial to McCain.  Debates are not the time to play nice and shame on him for not having a few memorable lines to spin off in such an open forum.

    How about a simple statement on earmarks like "John, you need to stop fixating on the $18Bn in earmarks and stop bringing out wild examples to stereotype them all as evil.  Some earmarks are for vital community projects like X and Y but the biggest earmark of them all is a one thousand Billion dollar war that’s being jammed down our throats and now you are talking about taking hard lines with Russia and Iran – when is that spending ever going to end?"

  56. Phl,

    He was exonerated for Keating 5.  It has been shown time and again that the ONLY reason he was even involved was because the Dems needed a Rep so they wouldn’t look so guilty. Even Bob Bennett , the Democrat special prosecutor, wrote in his book that McCain was wrongley involved.   ramanane, she was fired over the Compaq purchase/merger. I would say that has worked out pretty well for HP. My point is they both are not qualified …

  57. Phil,

    There is lots of blame to go around in this mess. I am concerned that Barney frank and Chris Dodd are leading this fix.

  58. Keating – here’s a fair assessment of what happened in Slate. McCain may be able to say he was an innocent dupe back in 1987 but you would think being investigated by the Senate Ethics Committee and having to give back the $112,000 you accepted from Keating would have had McCain a little more on his toes as this scandal was dropping like cluster bombs for the past 18 months yet his 9/15 statement  "Our economy, I think, still, the fundamentals of our economy are still strong." shows he can be fooled again.  Yes, he’s talking about the need for regulation but if he was in any way on top of things, he might have realized we don’t have until Jan 20th for him to roll out a plan.

    Anyway, I’m not into McCain bashing, he’s a nice guy and he’s trying hard – I just don’t think he’s the right guy for the job.  We do need change in a big way, not a "maverick" Republican who has all the same baggage and "only" backs Bush 90% of the time.  Here’s an excellent review of McCain’s voting record, by the way.  There’s also one for Obama but it’s shorter!

    Good commentary on McCain’s debate economics.

    This NYTimes thing is really well done, they have a video of the debate and a "chekpoint" tab that checks facts along the way (yes from the "liberal" NYTimes). is also a good place to go to find out what’s real and what isn’t.  I think Obama made a big mistake though saying to people "you can look it up" as most people do not know where to look and are not inclined to do so.  You can’t rebut a debating point by saying "you can go check it out if you want to."  Again, I think Obama was not enough on the attack.  We have the VP debates on Thursday, that will be fun and then the candidates are back at it on 10/7.

  59. Frank and Dodd – Is that how you really see it Crisco?   Frank and Dodd are sucking it up and doing their best to support what Paulson and Bernanke and Bush (ie. the Republican Admistration) proposed with little modification despite serious reservations and they have gathered the support of the majority party for a plan put forth by people they loathe in the interests of doing what’s best for this county.  During this time the Democrats kept the internal sqabbling very quiet, again, in the interest of keeping the markets calm and, especially for the house, who all have challenged seats, agreed to give up a week (longer now) of campaigning ahead of the election, giving free reign to their Republican opponents in their home districts. 

    It would have been much easier to tell the administration to shove it, let the country burn and go home and point their fingers at 8 years of total incompetence by the current administration while people are standing in lines at banks trying to get their money out.  But, they did not do that because they do put America first – they even were saying nice things about the Republicans until the thing blew up, now they are understandably frustrated…

  60. Phil, 
    You argue here daily that we are the "least sucky" place to put your money. I am assuming that  you think the fundamentals of our economy are sound. McCain admitted he used poor judgement in Keating 5, but did nothing bad enough for it to be relevent now. Having met Barney Frank ( since he was my rep for 10 yrs at one point) I can honestly say his is an ASS. self serving ,egotistical ASS. By the way , if you don’t know a prostitutio ring is being run fro your townhouse, I have every right to question your judgement. How is sending money to ACORN sucking it up?
    Frank and Dodd are in CYA mode and nothing good comes from that. Honestly (and this is hard to say) I think Paulson has the least to gain form this mess and is the best equiped to handle it. Yes, he made a fortune at GS, but what is wrong with excelling at something. I want that guy in charge of my money. I respect his accomplishments. This country has been run by know nothing politicians for way too long. They have no skill other than getting elected. I was for Romney. Politics aside he is a brilliant business man. The only chance we have at change is to elect an outsider. Obama has been running for this since he left High School.

  61. I just put up a post on Friday’s stock page, and I also pointed out Frank and Dodd as being major major culprits.  Crisco is right.  Since I am not inclined to re-write it, go read it there if you can.  In short, these guys were FNM and FRE’s enablers and blocked any efforts to reform or reign them in.    And McCain and even Greenspan were sounding the alarm for years.

  62. Crisco, I also mentioned the ACORN nonsense.  Amazing what the press won’t cover, while Pelosi and Reid try to load up the bailout w/ goodies for unions and left wing scam artists like ACORN.

  63. Polls, schmolls, Phil.  Watch your eyes and listen w/ your ears. 
    Decent debate.  McCain clearly won, although he could have done better at smacking Obama down on many many issues.  Obama did fine also, but as usual was woefully short of any specifics, ran from his record, scowled a lot at the hits he took, and flip flopped like mad.  He certainly was no Messiah last night.

    Let’s talk about Kissinger, just as one example.
    Kissinger on Kissinger  
    He says tonight:

    Senator McCain is right. I would not recommend the next President of the United States engage in talks with Iran at the Presidential level. My views on this issue are entirely compatible with the views of my friend Senator John McCain. We do not agree on everything, but we do agree that any negotiations with Iran must be geared to reality.

    How about missile defense ?

    McCain could do much better on smacking down Obama on Iran, terrorism and Al Qaeda.  Obama seems to think Al Qaeda only exists on the border between Pakistan and Afghanistan, which is incredibly naive and foolish.  Plus, Al Qaeda got run out of Iraq, which if Obama had his way, Al Qaeda and Iran would be ascendant in Iraq. 

  64. Update from someone:
    "My congressional staff source tells me that the nasty, Big Labor-backed "proxy access" provisions are likely to get knocked out of the financial stabilization deal. So that’s two lefty add-ons gone (the other being the ACORN slush fund), and one more to go (the government equity stake in banks)"

    So CNN can keep blaming House Republicans all they want; but Pelosi and Co. tried to roll Paulson (perfectly willing to be rolled).  Let them try to pass their goodies w/ out bi-partisan cover.  Bunch a crooks.

  65. Kissinger didn’t say the last part about missile defense; the cut and paste didn’t work right for some reason.

  66. ramana; man you are one partisan dude ….

  67. Crisco, you are right by the way, people keep forgetting that I am not overly enamored w/ McCain ( I liked Rudy and Romney); but he is still a better choice than O’Jesus.

  68. Crisco, you have to forgive Phil sometimes b/c of his over reliance on left wing slanted sources for his info ….

  69. Phil, how can YOU criticize McCain stating that the fundies of the economy are strong.

    This is EXACTLY what you preach here on this site, all year long, talking about hyenas and shakeouts and so on.

    I have suggested to you many times to rethink your rosy outlook on the overall economy, particularly as it related to financial companies like C, AIG and others.

    My point being, it seems to me to be unfair and hypocritical of you to criticize McCain over such a statement, which you are taking out of context in any event.

  70. Frank and Dodd "sucking it up" ?  Hilarious.

    Dodd, friend of Angelo, didn’t even know he was getting a special deal on his mortgage ?  Guffaw !

    Let’s let him fix the problem !!  And Rangel too !!

  71. Crisco; I get a kick out of reading your posts.  Its scary how we see much of this in exactly the same context.  You are dead on, my friend.

  72. What I most enjoyed about the debate was how Obama not only failed to link McCain to Bush (foolish to try, nobody buys it), but McCain turned the tables on him by comparing Obama’s stubborness to admit he was wrong about Petraeus, the surge and our recent successes in Iraq, to Bush’s infamous stubborness to admit mistakes.  Nailed him.

    Also, what was up w/ Obama’s weak closing comments and some nonsense about how his father from Kenya wanted to come to America or whatever. ?

  73. Sorry in advance for this long cut and paste job .. no link available .. but I thought it hits much about what is wrong with Obama:

    For the next debate   [Mona Charen]
    McCain certainly vitiated the age issue last night. His energy, command of specifics, and memory for names made him look quite vigorous. I agree with John Pitney  that there were missed opportunities, but McCain was masterful in distancing himself from an unpopular administration without running away from a conservative approach to foreign policy.
    Still, the McCain campaign has not yet done is most important job: showing the world what a true leftist Obama really is. This month’s Commentary has a good piece by Josh Muravchik providing chapter and verse. Here is an excerpt:

    Entering the national political scene eight years later, Obama did not, to be sure, appear as a radical, but he still bore the earmarks of the world in which he had been immersed for twenty years. He called himself “progressive,” a term of art favored by veterans of the hard New Left, like Tom Hayden, as well as by old-time Communists. Early this year his wife Michelle, lacking his tact, would kindle controversy by saying that his success in the presidential primaries made her feel proud of her country for the first time. The comment, a faux pas that she was soon at pains to explain away, flowed logically from her view, expressed in her standard stump speech, that our country is a “downright mean” place, “guided by fear,” where the “life . . . that most people are living has gotten progressively worse.”
    This year, Obama appeared before Rev. Al Sharpton’s National Action Network (whose official slogan is “no justice, no peace”) to seek its support. The candidate praised Sharpton as “a voice for the voiceless and . . . dispossessed. What National Action Network has done is so important to change America, and it must be changed from the bottom up.” Given Sharpton’s long career of reckless racial demagogy, it might seem shocking that a mainstream candidate should be seeking his blessing, but in this, at least, Obama was not unique: all of the 2008 Democratic aspirants did so. He did, though, strive to separate himself from the pack:

    If there is somebody who has been more on the forefront on behalf of the issues that you care about and has more concrete accomplishment on behalf of the things you’re concerned about, then I am happy to see you endorse them. I am happy to see you support them. . . . But I am absolutely confident that you will not find that, because there is nobody who has stood fast on these issues more consistently each and every day, than I have. That is something that I know.

    And this:
    Even after declaring his candidacy, and despite a certain inevitable sidling rightward, Obama still reflected the presuppositions of a radical worldview. In one notable remark, he said of voters in economic distress that in their desperation they “cling to guns or religion or antipathy to people who aren’t like them.” Chastised for his condescension, he responded: “I said something that everybody knows is true.” This was elitism of a very specific kind—the mentality of the community organizer, according to which people in the grip of “false consciousness” need to be enlightened as to the true nature of their class interests, and to the nature of their true class enemies.
    The same suppositions are again evident in Obama’s stances on international issues. Iraq, as he sees it, is only a symptom. “I don’t want to just end the war . . . I want to end the mindset that got us into war in the first place.” And what would that mindset be? In a 2002 speech that he frequently cites, he said the war resulted from

    the cynical attempt by Richard Perle and Paul Wolfowitz and other armchair, weekend warriors . . . to shove their own ideological agendas down our throats, irrespective of the costs in lives lost and in hardships borne . . . the attempt by political hacks like Karl Rove to distract us from a rise in the uninsured, a rise in the poverty rate, a drop in the median income . . . the arms merchants in our own country . . . feeding the countless wars that rage across the globe.

    In this litany of global perfidy, the issues of Saddam Hussein’s murderous dictatorship, of American security, of the future of freedom, shrink to inconsequentiality next to the struggle of the oppressed against their American capitalist overlords.
    When it comes to Iran, Obama has acknowledged that the regime presents a problem. But his actions—he opposed the Kyl-Lieberman amendment designating the Iranian Revolutionary Guard Corps a terrorist organization—as well as his rhetoric imply that the greater danger emanates from George W. Bush (who is allegedly seeking “any justification to extend the Iraq war or to attack Iran”). Likewise on defeating terrorism, where he rejects the America-centric focus that Bush has given to the issue; instead, in the words of his aides, Obama’s main goal is to “restore . . . our moral standing”—that is, to put an end to our aggressive ways.
    Even the events of 9/11 could not shake Obama from the mindset that the enemy is always ourselves. The bombings, he wrote, reflected

    the underlying struggle—between worlds of plenty and worlds of want; between the modern and the ancient; between those who embrace our teeming, colliding, irksome diversity, while still insisting on a set of values that binds us together; and those who would seek, under whatever flag or slogan or sacred text, a certainty and simplification that justifies cruelty toward those not like us.

    In this reading, the lessons to be learned from the actions of Osama bin Laden and Mohammed Atta are that we must accept multiculturalism at home and share our wealth abroad.

    I would make an ad that combines some of what’s in this article with Obama’s closing statement last night about children around the world no longer looking up to America. Coming from the far left milieu he does, Obama really believes that America is reviled around the world — because she is reviled by the people with whom he allied himself from the beginning.

  74. "Senator McCain Is Absolutely Right…"   [Byron York]
    Greetings from Oxford, Mississippi.  A few minutes after the debate was over last night, I asked Charlie Black, a top McCain adviser, whether Barack Obama had performed as the McCain debate team anticipated.  From my story:

    "No, no," Black said emphatically.  "I never expected Sen. Obama to spend the entire debate on the defensive, and he did.  He did."

    Maybe there was a tad of exaggeration in Black’s verdict, but there was some truth in it, too.  Obama was smooth, unflappable, and just a little off balance for much of the evening.  Worse for him, he seemed inexplicably eager to concede that McCain was right on issue after issue.  A candidate determined to appear congenial might do that once, or even twice, but Obama did it eight times:

    * "I think Senator McCain’s absolutely right that we need more responsibility…"

    * "Senator McCain is absolutely right that the earmarks process has been abused…"

    * "He’s also right that oftentimes lobbyists and special interests are the ones that are introducing these…requests…"

    * "John mentioned the fact that business taxes on paper are high in this country, and he’s absolutely right…"

    * "John is right we have to make cuts…"

    * "Senator McCain is absolutely right that the violence has been reduced as a consequence of the extraordinary sacrifice of our troops and our military families…"

    * "John — you’re absolutely right that presidents have to be prudent in what they say…"

    * "Senator McCain is absolutely right, we cannot tolerate a nuclear Iran…"
    Add it all up, and Obama was undeniably, and surprisingly, deferential to a man who in the past Obama has said "doesn’t get it." Moments after the debate ended, I asked David Axelrod, Obama’s chief strategist, whether Obama had simply been too nice (not a question one often gets to ask in these situations). "The bottom line is, I don’t think the American people want us to disagree just for the sake of being disagreeable," Axelrod told me.  "I think he made a very strong case, absolutely."

    Well, you wouldn’t expect Axelrod to admit that his guy messed up.  But here’s a prediction: The next time McCain and Obama meet in debate, on October 7 in Nashville, start a drinking game in which you take a big swig every time Obama says, "John is absolutely right."  I’ll bet you get to the end of the debate without ever lifting a glass.

  75. I had this thought at one point during the debate that Obama thinks he’s running for President of the World, not of the USA. 
    So does this guy:

    Obama and the Debate: Proud of His Country?   [Peter Kirsanow]

    Two quick points on the debate:
    Obama inexplicably chose to feed the narrative that he’s smug, arrogant and condescending by repeatedly referring to McCain as "John" and by his behavior while McCain was speaking; on the split screen Obama’s expression was one of disdain and he had a tendency to interrupt and talk over McCain as McCain was trying to wrap up a point. Not necessarily in the same league with Gore’s repeated sighing, but off-putting enough.
    Second, at the very end Obama seemed to be going for a big finish. He talked about his father from Kenya "writing letter after letter" trying to come to college in the U.S., because in no other country on Earth  could one make it like here—"our ideals and values inspired the world." Powerful stuff.
    But then Obama concludes by saying " I don’t think any of us can say that our standing in the world now, the way children around the world look at the United States, is the same. " CLANG. He then states, reminiscent of Kerry’s "Global Test", that we need to "show the world that we will invest in education" and "things that will allow people to live their dreams". 
    The Obama campaign spent months countering Michelle Obama’s " for the first time in my life I’m proud of my country " statement and then Obama himself suggests our ideals and values don’t inspire the world,  and that  we ourselves realize our values and ideals are suspect. 
    Criticizing George Bush or any of our other political leaders is one thing. Contending America’s ideals and values are somehow suspect is a breathtaking statement for a prospective commander in chief to make, especially when thousands of Americans have given life and limb, sons and daughters, in brave demonstration of our ideals and values.
    In case Mr. Obama missed it, millions remain sufficiently inspired to try to come to America; our values and ideals still cause the rest of the world to look to us first whenever there’s a crisis. And we always respond.
    Like Obama and millions of  other Americans, my father also came to America from another country. Not after writing letters trying to come to a prestigious college here, but after escaping from the death squads of the Soviet empire. Once here, he saluted the American flag every single day. And although he has since passed, I’m certain he’d marvel at our ideals and values today. He’d hold Obama’s statement in contempt.
    Insulting the values and ideals of  America may be fashionable in the salons occupied by William Ayers and Rev. Wright. It may be a matter of course at swanky fundraisers in San Francisco attended by pampered glitterati. But it’s not something likely to fly with those who expect their president to have unwavering pride in America and the sacrifices of its best and bravest.

  76. Who is doing the politicizing here ?

    "Unpatriotic"   [Rich Lowry]
    Pelosi unloads on House Republicans. Why is it always OK for Democrats to call Republicans "unpatriotic"?
    09/27 07:14 PM

  77. As to the economy being strong.  Outside of this fiancial meltdown and the ridiculous price of commodities (all tied together) the economy is strong, corpotate earnings were strong, the GDP was very good, albeit stimulated by a point or so but the context of McCain’s topic was specifically about the financial crisise and that was the same week I had called for SKF covers and FXP puts because clearly, things were not going well in the financial sector. 

    I will be glad when this damn election is over, it’s getting sickening already.  Politics is about muck, there are no issues – just who can get a zinger in at the right moment so they can loop it on the newscasts and the really sickening thing is that it works because that’s how our populace votes.  Look at Cap’s post at 8:41 – Obama is some kind of fool because he agrees with McCain.  It doesn’t matter what his actual views are but it means he’s weak if he doesn’t say ever idea McCain has is crap – this is a sickness in politics that leads to the kind of lunacy we saw played out at the White House on Thursday – very sad…

  78. What’s sick about it is that Obama’s "Sen McCain is right" comments were a deliberate strategy of the Obama campaign that they felt would paint Obama in a positive light by not being disagreeable (except when he was being disagreeable).

  79. Yea Politics.
    Paulson Update   [Rich Lowry]
    Just talked to a friend who is plugged-in to all this who wants a deal and has tended to think all along that there will be a deal. Now he’s not so sure. He thinks the wheels are coming off. House Republicans want their insurance as a mandatory thing rather than an option, while the House Democratic caucus is imploding and pulling the deal far to the left. It’s getting ugly.
    Breaking News From   [Rich Lowry]
    Here: "House Democrats introduced into the marathon financial bailout negotiations on Saturday a new proposal to protect taxpayers that would force the financial services industry to pay for any losses." 
    From Roll Call:

    House and Senate GOP aides warned Saturday that Democrats threatened to blow up talks on a financial market rescue plan by sending in too many negotiators, particularly those with a political bent.

    Although Treasury Secretary Henry Paulson asked each leader of the House and Senate to send only one envoy to the negotiating table, both House and Senate Democrats appear to be disregarding that.

    At the beginning of what was billed as a crucial negotiating session Saturday afternoon, Democrats sent in five Senators and three House Members, compared with one representative each from the House and Senate Republicans. Paulson and a few other Treasury officials were also present.

    Poll Results
    Who won the debate?

    John McCain



    Barack Obama



    It was a tie



    I didn’t watch



    Note on Poll Results

    Total Votes: 520,059

  81. 26k people said I didn’t watch? First laugh in a week/

  82. Obama & his "me too" dead soldier’s bracelet.

    Apart from the fact that Obama couldn’t remember the soldier’s name, it turns out the family does not even want him wearing the bracelet.

    Just another slick politician ….

  83. It is amazing how much Dodd and Frank forget about the 90′s when they and the democrats refuted any attempts to reform freddie and Fannie.   And they have lined their pockets with money from them. Even Obama has gotten into the act.    And how they all point to the republicans for this problem.  When they refused to reform Freddie and fFannie because they were getting too much money from them.   Even Bill Clinton was quoted as saying the problem was the Democrats.

    This makes me want to give up on the US and go to the Philippines where you know you have real corruptuion but that is what you are expecting.  Here in the USA the type of corruption is just unfathomable and the problem is it occurs years before anything happens and then the other party gets the blame.

  84. A Freddie Mac Money Trail Catches Up With McCain
    Few advisers in John McCain‘s inner circle inspire more loyalty from him than campaign manager Rick Davis. McCain and his wife, Cindy, credit the shrewd, and sometimes volatile, Republican insider with rescuing the campaign last year when it was out of money and on the verge of collapse. As a result, McCain has always defended him—even when faced with tough questions about the foreign lobbying clients of Davis’s high-powered consulting firm. "Rick is a friend, and I trust him," McCain told NEWSWEEK last year.
    Last week, though, McCain’s trust in Davis was tested again amid disclosures that Freddie Mac, the troubled mortgage giant that was recently placed under federal conservatorship, paid his campaign manager’s firm $15,000 a month between 2006 and August 2008. As the mortgage crisis has escalated, almost any association with Freddie Mac or Fannie Mae has become politically toxic. But the payments to Davis’s firm, Davis Manafort, are especially problematic because he requested the consulting retainer in 2006—and then did barely any work for the fees, according to two sources familiar with the arrangement who asked not to be identified discussing Freddie Mac business. Aside from attending a few breakfasts and a political-action-committee meeting with Democratic strategist Paul Begala (another Freddie consultant), Davis did "zero" for the housing firm, one of the sources said. Freddie Mac also had no dealings with the lobbying firm beyond paying monthly invoices—but it agreed to the arrangement because of Davis’s close relationship with McCain, the source said, which led top executives to conclude "you couldn’t say no."
    One senior McCain adviser said the entire flap could have been avoided if the campaign had resisted attacking Barack Obama for his ties to two former Fannie Mae executives, which prompted the media to take a second look at Davis. "It was stupid," the adviser said. "A serious miscalculation and an amateurish move." Still, this adviser said, McCain’s faith in his campaign manager remains unswerving.