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Main Entry: 1lib·er·al
1. Liberal -- Not limited to or by established, traditional, orthodox, or authoritarian attitudes, views, or dogmas; free from bigotry.
2. Favoring proposals for reform, open to new ideas for progress, and tolerant of the ideas and behavior of others; broad-minded.
Friday, September 26, 2008
So What's John McCain's Plan? Oh, He Doesn't Have One. He Just Wants To Take Credit For Whatever Does Pass.
MORE OF JOHN MCCAIN'S KABUKI THEATER ______________________________________________ John McCain 'undermining' bail-out to lift campaign
John McCain announces he is suspending his campaign to work on the economic bailout package on Wednesday. Photograph: Gerald Herbert/AP
John McCain last night was accused of sabotaging the Wall Street bail-out with theatrics that reduced America's credit crisis to a showcase for his presidential leadership capabilities.
The furious words for the Republican candidate came from Democrats came after a contentious meeting at the White House between George Bush and congressional leaders meant to seal a deal on a $700bn rescue package. Both McCain and Barack Obama also attended the meeting.
The extraordinary session had been called after McCain's stunning announcement on Wednesday that he would suspend his campaign and would seek a delay in tonight's presidential debate to try to personally help steer through a deal on the bail-out. By midday yesterday, congressional leaders said they had reached the outlines of a deal.
But that optimism appeared to have dissipated after the White House meeting.
Democrats and Republicans said that prospects for a deal vanished after McCain had tried to prod his fellow Republicans in another direction. The breakdown cast new uncertainty over Friday night's presidential debate in Mississippi, as well as the future of the bail-out itself.
McCain said he would not attend the debate until a deal is reached. Obama said he would go to the debate, and the University of Mississippi, which is hosting the event, said that it planned to go ahead.
Last night, Democrats were scathing of the Republican's posturing, saying he had jeopardised efforts to unite Congress around the plan put forward by the treasury secretary, Hank Paulson.
"This is the presidential campaign of John McCain undermining what Hank Paulson tells us is essential for the country," said Barney Frank, the Massachusetts congressman who had been leading negotiations for the Democrats. "This is McCain at the last minute getting House Republicans to undermine the Paulson approach."
Obama also chided McCain. "When you start injecting presidential politics into delicate negotiations you actually start creating more problems," he said.
The anger and uncertainty about the bail-out last night threatened to rebound against McCain's efforts to cast himself as above the political fray when it came to America's credit crisis. McCain had depicted the bail-out negotiations as a crisis requiring his personal attention.
"I'm an old navy pilot, and I know when a crisis calls for all hands on deck," he said in a speech to the Clinton Global Initiative in New York, before travelling to Washington. "As of this morning, I suspended my campaign. With so much on the line, for America and the world, the debate that matters most right now is taking place in the United States Capitol - and I intend to join it."
Obama continued to reject McCain's argument that the gravity of America's financial crisis should put the campaign on hold. "Our election is in 40 days," he said in his speech to the Clinton initiative, delivered from Florida where he was preparing for the debate. "The American people deserve to hear directly from myself and Senator McCain about how we intend to lead our country. The times are too serious to put our campaign on hold, or to ignore the full range of issues that the next president will face."
However, it was widely noted that McCain did not even arrive in Washington until after Democratic and Republic leaders announced they had the outlines of a rescue package. He admitted as recently as Tuesday he had not taken the time to even read the plan, according to an NBC transcript distributed by the Obama camp.
But that did not stop the Republican from seizing the headlines for two days in a row. McCain first wrong-footed Obama on Wednesday with his stunning announcement he would suspend his campaign and would not attend the debate.
Yesterday, he struck again, appropriating Obama's conditions for the rescue deal - barely 24 hours after rejecting them. The Democrat proposed the conditions in discussions with McCain on Wednesday about a joint statement on the crisis.
The Obama camp had called for an independent oversight board, a mechanism to protect taxpayers, a curb on outsized payments to Wall Street executives, and relief for homeowners faced with losing homes. The proposed joint statement also rejected attaching other measures, or earmarks, to the bill. In his speech yesterday McCain adopted near identical language - as well as the essence of four of the measures: an oversight board, protection for taxpayers, controls on Wall Street executives and a ban on earmarks; he made no mention of relief for homeowners.
McCain's urgency for reaching a deal comes after polls suggested the economic crisis was eroding Republican support.
# posted by The Punisher @ Friday, September 26, 2008 0 comments
Why Did John Boehner (R-Ohio) Torpedo the Bailout Deal Yesterday?
(Editor's Note) - Republican John Boehnert's top aide, Kevin Smith, said Republicans revolted, in part, because they were chafing at what they saw as an attempt by Democrats to jam through an agreement on the bailout early Thursday and deny Mr. McCain an opportunity to participate in the agreement.
So the deal was agreed to in principle by all Parties. But because it didn't allow enough time for John McCain's "Campaign Suspension" Stunt to APPEAR to have worked, the House Republicans torpedoed the deal.
Read it for yourself.
September 26, 2008 New York Times
Talks Implode During a Day of Chaos; Fate of Bailout Plan Remains Unresolved
By DAVID M. HERSZENHORN, CARL HULSE and SHERYL GAY STOLBERG
This article was reported byDavid M. Herszenhorn, Carl Hulse and Sheryl Gay Stolberg and written by Ms. Stolberg.
WASHINGTON — The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support.
“If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.
It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington.
By 10:30 p.m., after another round of talks, Congressional negotiators gave up for the night and said they would try again on Friday. Left uncertain was the fate of the bailout, which the White House says is urgently needed to fix broken financial and credit markets, as well as whether the first presidential debate would go forward as planned Friday night in Mississippi.
When Congressional leaders and Senators John McCain and Barack Obama, the two major party presidential candidates, trooped to the White House on Thursday afternoon, most signs pointed toward a bipartisan agreement on a grand compromise that could be accepted by all sides and signed into law by the weekend. It was intended to pump billions of dollars into the financial system, restoring liquidity and keeping credit flowing to businesses and consumers.
“We’re in a serious economic crisis,” Mr. Bush told reporters as the meeting began shortly before 4 p.m. in the Cabinet Room, adding, “My hope is we can reach an agreement very shortly.”
But once the doors closed, the smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.
Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand.
The talks broke up in angry recriminations, according to accounts provided by a participant and others who were briefed on the session, and were followed by dueling news conferences and interviews rife with partisan finger-pointing.
Friday morning, on CBS’s “The Early Show,” Representative Barney Frank of Massachusetts, the lead Democratic negotiator, said the bailout had been derailed by internal Republican politics.
“I didn’t know I was going to be the referee for an internal G.O.P. ideological civil war,” Mr. Frank said, according to The A.P.Thursday, in the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal.
“I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.”
Mr. Paulson sighed. “I know. I know.”
It was the very outcome the White House had said it intended to avoid, with partisan presidential politics appearing to trample what had been exceedingly delicate Congressional negotiations.
Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Senate banking committee, denounced the session as “a rescue plan for John McCain,” and proclaimed it a waste of precious hours that could have been spent negotiating.
But a top aide to Mr. Boehner said it was Democrats who had done the political posturing. The aide, Kevin Smith, said Republicans revolted, in part, because they were chafing at what they saw as an attempt by Democrats to jam through an agreement on the bailout early Thursday and deny Mr. McCain an opportunity to participate in the agreement.
The day seemed to hold promise as it began. On Wednesday night, Mr. Bush had delivered a prime-time televised address to the nation, warning that ”our country could experience a long and painful recession” if lawmakers did not act quickly to pass a huge Wall Street bailout plan.
After spending Thursday morning behind closed doors, senior lawmakers from both parties emerged shortly before 1 p.m. in the ornate painted corridors on the first floor of the Capitol to herald their agreement on the broad outlines of a deal.
They said the legislation, which would authorize unprecedented government intervention to buy distressed debt from private firms, would include limits on pay packages for executives of some firms that seek assistance and a mechanism for the government to take an equity stake in some of the firms, so taxpayers have a chance to profit if the bailout plan works.
“I now expect we will indeed have a plan that can pass the House, pass the Senate, be signed by the president, and bring a sense of certainty to this crisis that is still roiling in the markets,” said Robert F. Bennett, Republican of Utah, a member of the banking committee.
He made a point of describing that meeting as free of political maneuvering. “It was one of the most productive sessions in that regard that I have participated in since I have been in the Senate,” Mr. Bennett said.
But a few blocks away, a senior House Republican lawmaker was at a luncheon with reporters, saying his caucus would never go along with the deal. This Republican said Representative Eric Cantor of Virginia, the chief deputy whip, was circulating an alternative course that would rely on government-backed insurance, not taxpayer-financed purchase of mortgage assets.
He said the recalcitrant Republicans were calculating that Ms. Pelosi, Democrat of California, would not want to leave her caucus politically exposed in an election season by passing a bailout bill without rank-and-file Republican support.
“You can have all the meetings you want,” this Republican said, referring to the White House session with Mr. Bush, the presidential candidates and Congressional leaders, still hours away. “It comes to the floor and the votes aren’t there. It won’t pass.”
House Republicans have spent days expressing their unease about a huge government intervention, which they regard as a step down the path to socialism.
Mr. Smith, the aide to Mr. Boehner, said the leader had directed a group of Republicans a few days ago to see whether they could come up with alternatives that relied less on tax funds in providing the rescue package; that led to Mr. Cantor’s mortgage-insurance approach. He said Mr. Boehner thought Mr. Cantor’s idea should be taken into consideration in the talks.
At 4 p.m., Mr. Bush convened his meeting at the White House; Mr. McCain had already met with House Republicans to hear their concerns. He later said on ABC that he had known going into the White House that “there never was a deal,” but he kept that sentiment to himself.
The meeting opened with Mr. Paulson, the chief architect of the bailout plan, “giving a status report on the condition of the market,” Tony Fratto, Mr. Bush’s deputy press secretary, said. Mr. Fratto said Mr. Paulson warned in particular of the tightening of credit markets overnight, adding, “that is something very much on his mind.”
Mr. McCain was at one end of the long conference table, Mr. Obama at the other, with the president and senior Congressional leaders between them. Participants said Mr. Obama peppered Mr. Paulson with questions, while Mr. McCain said little. Outside the West Wing, a huge crowd of reporters gathered in the driveway, anxiously awaiting an appearance by either presidential candidate, with expectations running high.
Instead, the first politician to emerge was Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, waving a sheet of paper that he said detailed his own concerns. “The agreement,” Mr. Shelby declared, ”is obviously no agreement.”
Friday morning, on the CBS morning program, Mr. Shelby said, “Basically, I believe the Paulson proposal is badly structured.”
“It does nothing basically for the stressed mortgage payer,” he said, according to The A.P.
The House Republicans’ revolt shocked Democrats; the Senate majority leader, Harry Reid of Nevada, said later that he was under the impression that Mr. Boehner had been a strong advocate for moving forward with the Paulson plan.
Mr. Frank, who attended the White House meeting, was shocked as well. “We were ready to make a deal,” Mr. Frank said later.
At 8 p.m., an exasperated Mr. Frank walked back to the Rules Committee room on the second floor of the Senate side of the Capitol, with a pack of reporters on his heels. He was headed for another late-night meeting with Mr. Paulson and many other lawmakers to see whether they could restart the negotiations — and ward off a Friday morning bloodbath in the markets.
Ms. Pelosi told reporters that she was open to considering ideas proposed by the House Republicans. And Mr. McCain and Mr. Obama both said they held out hope that a deal could be reached soon.
At the White House, Mr. Bush was holding fast to the approach that Mr. Paulson has championed.
“In case there’s any confusion,” Mr. Fratto, the deputy press secretary, wrote in an e-mail message. “The president supports the core of Secretary Paulson’s plan.”
Elisabeth Bumiller contributed reporting.
# posted by The Punisher @ Friday, September 26, 2008 1 comments
Thursday, September 25, 2008
Letterman Blisters McCain
# posted by The Punisher @ Thursday, September 25, 2008 0 comments
This is just flat out funny.
# posted by The Punisher @ Thursday, September 25, 2008 0 comments
Sarah Palin On Afghanistan. Seriously, I didn't edit this quote.
"The logistics that we are already suggesting here, not having enough troops in the area right now. The... things like the terrain even in Afghanistan and that border between Pakistan and Afghanistan, where, you know, we believe that-- Bin Laden is-- is hiding out right now and... and is still such a leader of this terrorist movement. There... there are many more challenges there. So, again, I believe that... a surge in Afghanistan also will lead us to victory there as it has proven to have done in Iraq. And as I say, Katie, that we cannot afford to retreat, to withdraw in Iraq. That's not gonna get us any better off in Afghanistan either. And as our leaders are telling us in our military, we do need to ramp it up in Afghanistan, counting on our friends and allies to assist with us there because these terrorists who hate America, they hate what we stand for with the... the freedoms, the democracy, the... the women's rights, the tolerance, they hate what it is that we represent and our allies, too, and our friends, what they represent. If we were... were to allow a stronghold to be captured by these terrorists then the world is in even greater peril than it is today. We cannot afford to lose in Afghanistan." - Sarah Palin
For Video of Sarah Palin answering the question see:
# posted by The Punisher @ Thursday, September 25, 2008 0 comments
Admiral Akbar speaks out on John McCain's "Suspension" of his Campaign.
# posted by The Punisher @ Thursday, September 25, 2008 0 comments
John McCain's Kabuki Theater
When John McCain held an unexpected news conference mid-Wednesday afternoon he addressed the current economic crisis with direness previously unseen. His campaign would be suspended, he told reporters, in order to work on the bailout legislation in Congress. The debate scheduled with Barack Obama on Friday night, he added, could be postponed.
Observers, critics, even fellow Republicans, were left wondering: where did this sense of urgency come from? After all, it was this past Sunday that McCain hinted on 60 Minutes that he would support the bailout -- "we have to stop the bleeding" -- only to express deep criticisms on Monday and then admit he hadn't even read the three-page proposal on Tuesday.
"I have not had a chance to see it in writing," said the Senator. "I have to examine it."
The move permeated with political opportunism: an attempt by McCain to grab the leadership mantle he did not own and divert attention from poll numbers that were plummeting. Indeed, on Wednesday morning a Washington Post-ABC poll had McCain trailing Obama 52 percent to 43 percent among likely voters. The internals were even worse: 54 percent of white voters with economic anxiety favored Obama.
So McCain changed the script, announcing his imminent departure from the campaign trail. And Democrats in Congress were left (somewhat angrily) scratching their heads.
"I'm delighted that John is expressing himself on this issue," said Chris Dodd, chairman of the Senate Banking Committee. "I have heard form Obama numerous occasions these last couple days. I have never heard from John McCain on the issue... I'm just worried a little bit that sort of politicizing this problem, sort of flying in here, I'm beginning to think this is more of a rescue plan for John McCain and not a rescue plan for the economy."
McCain's mixed messaging on the bailout proposal was not just bizarre. It was emblematic of his actions the entire week. Indeed, the Senator has been all over the map when it comes to addressing the current situation. When the market crisis originally surfaced, McCain - now infamously - was the one to declare that the fundamentals of the economy were strong. Later he would call the situation the worst since World War II.
Watch a compilation of McCain clips on the financial crisis:
Even his actions on Wednesday seemed either oddly calculated or at conflict with the image he was trying to present. It was, in fact, Obama who first proposed to form a unity front in addressing the issue, calling McCain at 8:30 in the morning to discuss the issuance of a joint statement. The call went unreturned for six hours. McCain's campaign would later claim he was huddling with economic advisers. But during that time he made a scheduled stop with Lady Lynn de Rothschild, a high society New York Democrat who recently endorsed his campaign. Rothschild did not return repeated request for comment.
At 2:30 the two candidates finally connected and agreed on the idea of a co-authored declaration of principles. But by the time Obama got back to his hotel room, McCain had already declared his campaign's suspension. If the idea seemed impromptu, it surely wasn't. The website PolitickerCO posted talking points that aides to the Arizona Republican had sent to one another to help manage the candidate's newly stated position.
And then, after McCain told late night host David Letterman that he could not make his scheduled appearance on his show because of urgency of the situation, he still managed to swing by CBS Evening News with Katie Couric, much to Letterman's dismay. That interview, a spokesperson for the station told the Huffington Post, had been arranged shortly after McCain had temporary halted his campaign - a curious move for a candidate who was asking his opposition to drop everything and get back to Washington with him.
"Clearly there was news today," said a spokesperson for the station. "We asked for an interview and he said yes."
In fact, the Senator is still scheduled to appear at Bill Clinton's Global Initiative event in New York on Thursday, before heading to D.C.
In essence, at the same time McCain was warning of the danger of inaction, he himself was not moving with haste. And there is some question - bordering on concern - about the role he would actually play once back in Congress. As one Senate staffer told the Huffington Post: "McCain's little gambit really runs the risk of mucking up the works, maybe even delaying a deal. This is complex stuff, he's had zero involvement so far."
And yet, by the time McCain arrives on Capitol Hill the contours of a bailout proposal may already be in place. On Wednesday evening, President Bush hinted that he was ready to acquiesce on several principles of the proposed legislation - to the enthusiasm of Obama. In the House of Representatives, meanwhile, Rep. Barney Frank declared that Democrats had reached an agreement on a plan and had the votes to pass it.
McCain, for all the dramatics, could prove irrelevant.
"We are pleased to report we are making bipartisan progress on a rescue proposal for our financial markets," said Chris Dodd and Sen. Chuck Schumer in a joint statement. "During these discussions, we have received significant cooperation and constructive feedback from the other side of the aisle -- with one notable exception. Apart from his unproductive criticisms made from afar, we have heard nothing from Senator McCain on these critical issues. Now is certainly not the time for him to inject presidential politics into these delicate discussions."
# posted by The Punisher @ Thursday, September 25, 2008 0 comments
Wednesday, September 24, 2008
Think the McCain Campaign has been ridiculous? Just wait until you see how a McCain Presidency Goes. He'll make Bush look Competant.
It took John McCain 10 days to go from saying our economy is strong to claiming that we're facing the greatest economic collapse since the Great Depression.
It's now so urgent that we must not have a debate on Friday between the two men who will be most responsible for cleaning up this mess come January.
If John McCain wasn't so close to winning this thing, his campaign might make a really funny "buddy" picture. It's that much of a joke.
But the bottom line is that this guy could still win. That's a seriously fucking sobering thought.
Hugs and Kisses,
# posted by The Punisher @ Wednesday, September 24, 2008 0 comments
John McCain's Economic Plan: Blurt Out Random Crap
by Bob Cesca
There are several reasons why Senator Obama is enjoying a double-digit lead in "honesty and trustworthiness" (47 percent to 36 percent according the new ABC News/Washington Post poll). First, Senator Obama doesn't, you know, lie to the American people every damn day. Second, Senator Obama didn't vote with the dishonest, corrupt Bush administration 90 percent of the time.
But one of the main reasons why the nation appears to be lining up against Senator McCain's insanely obvious lack of integrity could be because his very serious and mavericky campaign strategy can be described in four simple words:
Blurt Out Random Crap.
"Crap," in this context, is defined as everything from lies to weasel-words to inexplicably weird nonsense. And it seems like Senator McCain does this a lot. So much so that we can only conclude that it's intentional.
The goal: Get McCain on record saying something no matter how ridiculous. This way, he can hit the stump later and boast that he said something with regards to scary stuff in the news. I said something [that didn't make any sense and was probably a lie] and Senator Obama didn't say anything [also a lie]! And whenever he's accused of routinely blurting out random crap, Senator McCain trucks out the old punishment theorem: If Senator Obama had only agreed to the town halls, I wouldn't be selling-out the last shreds of my honor or integrity just to get elected. Can't you see? Senator Obama turned me into a hack, dammit!
First thing that pops into his head. Is it truthful? Doesn't matter. Sex education for kindergarteners, for instance. "Palin sold her jet on eBay," for instance. Does it even make sense or is it just a bunch of words strung together to form a sentence? Who cares. "President Putin of Germany," for instance. "Delivering bottled hot water to dehydrated babies," for instance.
I'll admit that the latter category is more fun to document. However, the lying is especially infuriating -- and maybe that's the idea -- piss off the liberals. But it can't be helping with independents and undecideds who are discovering quite rapidly that the mythology of "John McCain" doesn't match the real-life John McCain. The Real McCain is rapidly coming into focus for those in the middle. McRage. McLiar. McPanderer. McIncompetent. McBush. And the Obama campaign only needs to tweak these frames. After all, the McCain campaign is doing all of the heavy lifting by itself.
And as we witnessed with the Zapatero episode, as soon as Senator McCain blurts out random crap, his staff scrambles onto the stage with pronouncements and excuses so as to make it seem as if McCain meant to say what he said -- a routine which only serves to compound the farcical nature of it all.
So it comes as no surprise that the McCain-Palin strategy on the economic crisis is to -- that's right! -- blurt out random crap.
All along and without regard to the actual status of the economy, Senator McCain has blurted out the well-known talking point "the fundamentals of the economy are strong." Why? Because that's the Bush Republican position. Those exact words. And shortly after President Paulson announced his bailout plan when it appeared as if we were on the verge of a complete meltdown, Senator McCain, in the most Pavlovian sense, couldn't help himself and -- WHOOPS! -- he said it again. Why? Because that's what he always says about the economy.
When he was immediately and appropriately called out for being a doof, he blurted out that everyone in the world misunderstood him. The "fundamentals," he claimed, meant "the workers." In other words, American workers are strong. What the hell does that have to do with the status of the economy? Does it mean the workforce can lift heavy things -- like factory equipment that's being shipped to China? How does one quantify worker "strength" as an economic indicator? Even if a crazy economist somewhere includes the morale of the workforce as a fundamental of the economy, the McCain campaign clearly overlooked the reality that we've lost 1.75 million jobs this year and unemployment spiked to 6.1 percent two days after Sarah Palin's overrated acceptance speech. Not strong, McCain. Bad! But, then again, he really didn't mean "the workers" in the first place anyway.
When this failed, he blurted out something about averting the impending economic meltdown by convening a government commission, ostensibly to study the urgent crisis and perhaps issue a recommendation sometime in the future. Decisive!
When that didn't work, he called for the firing of the head of the SEC, Chris Cox, even though Phil Gramm, the author of McCain's economic plan (pre-crisis), is also responsible for the Gramm-Leach-Bliley Act of 1999 -- a piece of legislation which, along with Reaganomics and Alan Greenspan's love of all things bubble-shaped, is directly responsible for this present mess. Phil Gramm. A man who said that the economic crisis is mostly a figment of our whiny imagination. A man who could be our next Treasury Secretary and steward of the economy. Hire him, but fire the other guy. Because that'll somehow help. Oh, Magoo.
It's worth noting that while that idea was failing, Senator McCain inexplicably called for the firing of the head of the Federal Elections Commission, Donald F. McGahn II. Poor McGahn II. Minding his own business, and suddenly McCain's on television calling him out for screwing the economic pooch.
When that failed, Senator McCain rolled out one of his most egregious lies to date, claiming that Senator Obama, of all people, has been directly responsibility for the crisis. Why? Because the former CEO of Fannie Mae, Franklin Raines, once talked on the phone with someone associated with the Obama campaign. Like 16 months ago. And that somehow makes Raines a close economic advisor. Never mind that Rick Davis, McCain's campaign manager, was on the Freddie Mac payroll as recently as a couple of weeks ago.
Which leads us to Senator McCain blurting out that no-one on his staff is associated in any way with Freddie Mac and Fannie Mae.
What's next, McCain campaign? A Mogwai ate a sandwich after midnight; morphed into a Gremlin; then caused the economic crisis? Or will it be Marty McFly's sports almanac screwing up the space-time continuum? Or will it be Reverend Wright putting a curse on the banks? Whatever is next is bound to be crazier than what's already been said.
So what will a McCain administration economic policy look like? From the lack of foresight and leadership we've witnessed so far, we can assume that McCain might choose a new economic policy totally at random, depending on how saucy he feels from minute to minute. "I'll have a muffin with my Egg Beaters, and replace Bernanke with that hooplehead who weedwacks the knoll." Two minutes later... "Hey Phil, we don't need the Nasdaq anymore. Kill it." Two minutes later... "My God! What have I done! Quickly -- nationalize the paintball industry! Go!"
One thing is for sure. Expecting a workable solution to this economic meltdown from a man as knee-jerk, dishonest and incomprehensible as John McCain would be an exercise in national self-destruction. He doesn't have anything real to say, and what he does say, he can't sell. He simply can't do the gig. A vote for McCain-Palin is absolutely a vote for the end of America as we know it.
# posted by The Punisher @ Wednesday, September 24, 2008 0 comments
Dick Move: John McCain Agrees to Obama's proposal to issue joint statement on Wall Street Bailout.. Then Issues Solo Statement.
Jesus, McCain is a fucking piece of work. Obama calls him to suggest they issue a joint statement on the crisis. Six hours later McCain agrees. Then immediately sends out a statement saying he's suspending his campaign to resolve the crisis. That is a dick move.
NEW YORK — Republican John McCain said Wednesday he wants to delay Friday's debate with Democratic rival Barack Obama and temporarily put aside their partisan campaign to resolve the nation's financial crisis.
McCain's announcement came after the two candidates held private talks about joining forces to address the Wall Street meltdown. The Obama campaign said the Democrat initiated the talks, but McCain beat Obama to the punch with the first public statement calling for the two to rise above politics in a time of crisis.
McCain said the Bush administration's plan seemed headed for defeat and a bipartisan solution was urgently needed.
McCain said he would put politics aside and return to Washington Thursday to focus on the nation's financial problems after addressing former President Clinton's Global Initiative session in New York. McCain said he had spoken to President Bush and asked him to convene a leadership meeting in Washington that would include him and Obama.
"It has become clear that no consensus has developed to support the administration's proposal," McCain said. "I do not believe that the plan on the table will pass as it currently stands, and we are running out of time."
McCain said he has spoken to Obama about his plans and asked the Democratic presidential nominee to join him.
Obama's campaign did not immediate say whether he supported a delay of the debate or would also stop campaigning.
The Obama campaign said in a statement that Obama had called McCain around 8:30 a.m. Wednesday to propose that they issue a joint statement in support of a package to help fix the economy as soon as possible. McCain called back six hours later and agreed to the idea of the statement, the Obama campaign said. McCain's statement was issued to the media a few minutes later.
"We must meet as Americans, not as Democrats or Republicans, and we must meet until this crisis is resolved," McCain said. "I am confident that before the markets open on Monday we can achieve consensus on legislation that will stabilize our financial markets, protect taxpayers and homeowners, and earn the confidence of the American people. All we must do to achieve this is temporarily set politics aside, and I am committed to doing so."
McCain's statement was an effort to show leadership on an issue that has spread economic fears across the country and overshadowed the presidential campaign just six weeks from Election Day. The economy has not been McCain's strongest suit, and his move was an attempt to turn it into an opportunity to show he's the candidate of bipartisanship and action. Recent polls showed Obama with an advantage with voters in handling the economy.
The move put Obama in a bind. Rejecting the idea would allow McCain alone to appear above politics, but agreeing to suspend campaigning and the debate could make Obama look like he's following McCain's lead.
McCain said if Congress does not pass legislation to address the crisis, credit will dry up, people will no longer be able to buy homes, life savings will be at stake and businesses will not have enough money
"If we do not act, ever corner of our country will be impacted," McCain said. "We cannot allow this to happen."
McCain also canceled his planned appearance Wednesday on CBS' "Late Show With David Letterman" program.
A senior McCain adviser, Mark Salter, said the campaign would suspend all advertising and campaign events until a workable deal is reached on the bailout proposal _ but only if the Obama campaign agrees to do the same.
# posted by The Punisher @ Wednesday, September 24, 2008 0 comments
Mitch McConnell Singled Out for Stupidity on the Colbert Report. And John Stewart Explains the Wall Street Crisis.
# posted by The Punisher @ Wednesday, September 24, 2008 0 comments
Tuesday, September 23, 2008
$700 Billion to Bail Out Wall Street? It's the 80's S&L Crisis all over again. Can you say Keating Five? Can you say Phil Gramm?
"Once is happenstance. Twice is coincidence. Three times is Enemy Action." -- Auric Goldfinger
James Bond's wealthy nemesis may have had an obsession with gold, but he judged, quite correctly, that if people keep putting your plans awry, that was likely their intent.
In 1982, the same year John McCain entered the Senate, a bill was put forward that would substantially deregulate the Savings and Loan industry. The Garn-St. Germain Depository Institutions Act was an initiative of the Reagan administration, and was largely authored by lobbyists for the S&L industry -- including John McCain's warm-up speaker at the convention, Fred Thompson. The official description of the bill was "An act to revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans." Considering where things stand in 2008, that may sound dubious. It should.
Seven years later, the S&L industry was collapsing. What was the cause? Garn-St. Germain handed the S&Ls a greatly expanded range of capabilities, allowing them to go head to head with full service banks, but it didn't give them the bank's regulations. Left to operate in an anarchistic gray area, S&Ls chased profits, indulged in amazing extravagances, and cranked out enough cheap mortgages to fuel a real estate boom. They also experimented with lots of complex, creative -- and risky -- investments, even though they didn't have the economic models to really determine the worth of the things they were buying. The result was a mountain of bad debts and worthless "assets." Does any of that sound eerily (or nauseatingly) familiar?
It wasn't a foregone conclusion. In 1985, three years after the deregulation of the S&Ls, the chairman of the Federal Home Loan Bank Board saw that the situation was already looking shaky, with the potential to become much worse. He instituted a rule to limit the amounts and types of investments S&Ls could carry on their books in an effort to head off disaster. However, many savings and loans -- among them Lincoln Savings & Loan Association of Irvine, CA, which was headed by a fellow named Charles Keating -- promptly ignored these rules.
Now enters a familiar cast of characters. First to pop up was the universally beloved Fed-chief-to-be, Alan Greenspan. Greenspan argued against the loan board's new rules, and persuaded Reagan to appoint one of Keating's pals to the board to blunt the requirements. A quintet of senators, among them John McCain, began having meetings with both the management at Lincoln and the regulators at the loan board. ] Alan Greenspan also helped out with a letter to the regulators, asking that Lincoln be exempt from the new rules. With their help of Greenspan and their pet senators, Lincoln was able to stay in business an additional two years, at the end of which they failed -- taking the life savings of 21,000, mostly elderly, investors with them.
How involved was John McCain? McCain and Keating had known each other since 1981 and had become fast friends. Of all the "Keating Five," it was McCain who moved into the life of the Lincoln S&L chief. The two men vacationed together multiple times, with the whole McCain clan (babysitter included) heading out for Keating's private Caribbean property on Keating's private jet. McCain didn't think to actually report these trips, or pay for them, until the investigators were breathing down his neck. And McCain took his payment in the form of more than just vacations. Keating and other members of Lincoln's parent company padded McCain's pockets with $112,000 in campaign contributions.
In John McCain's biography, he called his meetings with Keating and regulators "the worst mistake of my life," though from the text you'd think this was a spur of the moment decision, not something that McCain did repeatedly over a space of years. Still, you might think that a "worst mistake" would stay fresh in his memory.
It certainly didn't fade quickly for the country. Following the S&L crisis, the Resolution Trust Company was formed to swallow up the debt of Lincoln and 746 other S&Ls gone wild, and taxpayers were left with the $125 billion bill. The resulting budget deficit forced cutbacks in other programs. The artificial real estate boom collapsed and housing starts fell to their lowest levels in decades. Finally, the whole nation settled in for a period nasty enough that three years later someone could still campaign around the idea "It's the economy, stupid."
Even so, by 1999 Phil Gramm -- who had entered the Senate two years after McCain and quickly become the economic guru of the Keating Five maverick -- put forward the Gramm-Leach-Bliley Act. This Act passed out of the Senate on a party line vote with 100% Republican support, including that of John McCain. (To be fair, the bill eventually passed again with a wide margin following revisions in the House.)
This act repealed part of the Glass-Steagall Act. This may sound like a bunch of Congressperson soup, but the gist of it is that Glass-Steagall was put in place in 1933 to control the rampant speculation that had helped cause the collapse of banking at the outset of the depression, and to prevent such consolidation of the banks that the nation had all its eggs in one fiscal basket.
Gramm-Leach-Bliley reversed those rules, allowing not only more bank mergers, but for banks to become directly involved in the stock market, bonds, and insurance. Remember the bit about how S&Ls failed because they didn't have the regulations that protected banks? After Gramm-Leach-Bliley, banks didn't have that protection either.
Gramm wasn't done. The next year he was back with the Commodity Futures Modernization Act, which was slipped into a "must pass" spending bill on the last day of the 106th Congress. This Act greatly expanded the scope of futures trading, created new vehicles for speculation, and sheltered several investments from regulation.
As with both Gramm-Leach-Bliley and Garn-St. Germain, large parts of this bill were written by industry lobbyists. This famously included the "Enron Loophole" that exempted energy trading from regulation and was written by (big suprise) Enron Lobbyists working with Gramm. Not coincidentally, Senator Gramm, the second largest recipient of campaign contributions from Enron, was also key to legislating the deregulation of California's energy commodity trading.
Thanks to this fortunate trifecta of Gramm-crafted legislation, Enron was able to create "EnronOnline" and trade electricity in California with absolutely no oversight or transparency. They quickly worked out how to game the system. Previously, there had been only one Stage 3 rolling blackout in the history of California. Within months, the system had been manipulated by traders to generate 38 such blackouts and wholesale electrical prices had gone up more than 3000%. Despite production capacity equal to four times the demand during winter, energy traders even engineered a blackout in mid-January.
During the confusion of these deliberate "shortages" and "price spikes," the California administration of Gray Davis -- blind to speculator manipulations because of the walls erected by Gramm's legislation -- was forced to sign energy contracts at enormous rates. There was little choice, because most of California's public utilities were on the brink of bankruptcy from the rising wholesale prices.
In a single year, Gramm's legislation allowed speculators to bring the state to its knees. Enron alone looted California of $11 billion. The manipulations of the energy market were also a major factor in Davis getting the hook, helped usher the governator into power, and they still have repercussions in California's budget battles today. By the end of that year, the depth of Enron's deception could no longer be hidden, and the whole company came crashing down in the largest bankruptcy in history -- at the time. This brought more billions lost in mutual funds and pension funds across the country, and played a major role in the economic downturn of 2001.
But that was only the second act. The combination of Gramm-Leach-Bliley and the Commodity Futures Modernization Act was a toxic cocktail whose total damage was greater than the sum of its parts.
The first Act promoted bank buyouts and mergers that reached such an insane pitch that the average consumer could only keep up by tracking the changing names on their checks and credit cards. Mercantile buys Ameribanc and Mark Twain. Firstar buys Federated and First Colonial. US Bancorp buys Mercantile and Firstar. And, because it allowed brokerages and insurance companies to mingle with banks, the Act cemented a trend that was already (and illegally) underway in which all those terms had become rather quaint. Is Wachovia a savings bank, an investment bank, a brokerage, or an insurance provider? The answer is "yes."
In allowing financial institutions to grow to Godzilla-sized proportions, Gramm-Leach-Bliley helped ensure that we would have financial entities that were "too big to fail." Rather than choosing to enforce rules that kept these institutions apart, the deregulators chose to create monster bankeragasurances whose downfall (and existence) was enough to threaten the whole system.
But if Gramm-Leach-Bliley removed the limits on size and scope, these new institutions still needed fuel. With many financial transactions operating on razor thin margins, and increasing automation sapping the profits from trading of all sorts, they needed a new way to generate the funds required to swallow their brethren in the merged fiscal corporation pond. For that, the Commodity Futures Modernization Act was a godsend.
Among those instruments which the CFMA sheltered from regulatory scrutiny was something called the "credit default swap." A kind of insurance one bank could exchange with another, credit default swaps supposedly made it safe for banks to take on ever riskier forms of debt. The Act didn't invent these swaps, though they were relatively new. Instead, by placing them in a state where they were not only unregulated but almost perfectly opaque, credit default swaps were turned into the perfect vehicle to fuel a Wall Street revolution. No one had any idea what these things were actually worth, they were traded "over the counter" without being administered by any exchange, and even the SEC could monitor their existence only indirectly.
Who would cheer for a new kind of financial instrument that was difficult to understand, invisible to regulators, and impossible for even the whizziest of Wall Street whiz kids to value? Guess.
More recently, instruments that are more complex and less transparent--such as credit default swaps, collateralized debt obligations, and credit-linked notes--have been developed and their use has grown very rapidly in recent years. The result? Improved credit-risk management together with more and better risk-management tools appear to have significantly reduced loan concentrations in telecommunications and, indeed, other areas and the associated stress on banks and other financial institutions. --Alan Greenspan, 2002
Get that? Greenspan loved credit default swaps. He opined again and again that such instruments would be the salvation of the industry by spreading around risks. To the mighty Greenspan, both their complexity and their lack of transparency were good things, since swaps would only be handled by the big boys who knew how to play with fire.
When questioned about his support of Gramm's legislation, John McCain called his friend (and by then, campaign co-chair) Gramm "one of the smartest people in the world on the economy" and pointed out that Greenspan also favored the acts Gramm and his coalition of lobbyists had authored. If both Gramm and Greenspan were on his side, McCain couldn't possibly be in the wrong.
Except, of course, that he could.
From the beginning, there were plenty of people in the financial community whose opinion of these unregulated credit swaps was not as rosy as that of Gramm, Greenspan, and McCain. Chief among those speaking in opposition was SEC Chairman, Arthur Levitt. Levitt argued that what the industry needed was more transparency, especially when it came to complex instruments like default swaps, and he testified to this before Gramm's Senate Banking Committee,.
"In my judgment, the risk of this regulatory approach is simply unacceptable for America's investors." --Arthur Levitt, 1999
Gramm paid no attention.
Credit default swaps did allow the banks to share risks. So much so, that banks raced each other in an effort to find more risks. They made it possible for the down payment on homes to become 3%, 1%, 0%. Skip the credit check, avoid the employment requirements, damn the torpedoes, full speed ahead! We've got a credit default swap, we can do anything!
The encouragement and "safety" that credit default swaps provided made the sub-prime mortgage market possible. Just as with the deregulation of S&Ls in the 1980s, the market was suddenly flooded with easy credit. The result was a real estate boom, soaring home prices, and a plague of "Flip that House!" shows on cable.
As the banks piled up crappy mortgages, they heaped on ever more of the credit default swaps -- and they still had no idea how to value the things. Worse, they began to trade the swaps themselves as if they were an investment, treating them like something worth holding instead of a big bundle of cartoon bombs whose fuses were already lit. Since very few loans were falling into default at the time, owning a default swap seemed like a way to collect fees without ever paying out. Banks wanted more, and more, and more.
A secondary market for trading swaps exploded into existence, and swaps were traded with absolutely no consideration for the nature or quality of the underlying investment. Swaps changed hands a dozen or more times, growing in "value" as they went. Worse still, no one regulated who could buy a swap, so it was (and is) perfectly possible for a company to acquire swaps that theoretically cover billions of dollars in loans, even if that company doesn't have a red cent on hand to cover those swaps should the loans default.
How big did this market become? Here's business correspondent Bob Moon and host Kai Ryssdal on American Public Media's Marketplace from back in the spring.
BOB MOON: OK, I'm about to unload some numbers on you here, so I'll speak slowly so you can follow this.
The value of the entire U.S. Treasuries market: $4.5 trillion.
The value of the entire mortgage market: $7 trillion.
The size of the U.S. stock market: $22 trillion.
OK, you ready?
The size of the credit default swap market last year: $45 trillion.
KAI RYSSDAL: That's a lot of money, Bob.
As in three times the whole US gross domestic product, Bob. And the truth is that Moon probably underestimated. The unregulated and poorly reported credit default swaps may have actually passed $70 trillion last year, or about $5 trillion more than the GDP of the entire world.
So, are you starting to get an idea of just how big a genie Phil Gramm and his pals unleashed?
With some regularity over the last eight years, fiscal whistle blowers have tried to raise their hands and register a protest. Um, sirs? Is it altogether a good idea to run up debts exceeding all the assets it's even possible to hold? But so long as no one actually had to pay off on the swaps, the party went on. Even usually conservative (in the fiscal sense) companies like AIG started to worry that they were being left behind and leapt headlong into the swap pool.
Shortly after Greenspan's departure in 2006, the Federal Reserve took the unusual step of issued a joint statement along with the SEC to warn about the risks associated with credit default swaps. But by that point, the damage was already severe. If swaps lost their value, most of those who had played the game would find their giant firms abruptly valued in pocket change. The only solution was to cover the problem with still more swaps and keep moving.
Then a funny thing happened. After years in which banks had handed out loans willy-nilly, guarded by the indestructible swap, people and companies started to really default on those loans. Credit slowed, home prices fell, and the whole snake started to eat itself tail first. Suddenly, credit default swaps were not sources of limitless cash. It turns out that an insurance policy -- even a secret, unregulated policy -- is occasionally expected to pay. Speculators started to look at the paper they were holding and for the first time realized it could all be worthless. Worse, it could (and did) represent a massive debt; one that no one had the funds to cover.
When Bear Stearns fell apart last March, it was only suspected that a big part of the effort in saving the giant investment bank was keeping their holdings in credit default swaps from unraveling and spreading to other institutions. Naturally, part of solving this problem involved creating a new credit default swap to cover Bear Stearn's potential debt. But the all-purpose swap was starting to lose its power. Shortly after Bear Stearns went belly up, AIG reported the largest quarterly loss in the company's history, taking a $11 billion hit on revaluing its holdings of swaps. The party was definitely coming to a close.
When AIG finally collapsed this week, there was no doubt about the primary cause of its failure. The previously well grounded company had "gotten itself involved with something called credit default swaps." Point of irony alert: Arthur Levitt now serves on the AIG board... or at least he did until the government had to take over most of AIG to salvage the company from the very idiocy Levitt had warned of in 1999.
This week, the Bush administration announced the beginnings of a plan to salvage what remains of the financial markets. At first glance, it appears that the plan will consist mainly of creating a kind of "garbage pit," a fund or group of funds -- cousins of the Resolution Trust that was created during the S&L crisis -- into which those people who have dabbled in bad debts can toss their problems. Only this time the cost to the taxpayers is at least $700 billion... and a big bite out of representative democracy.
The expansion of unregulated Savings and Loans in the 1980s brought on the collapse of that industry, a crippling of the economy, and left taxpayers holding the bag. Maybe that was only happenstance. Those pushing for the Garn-St. Germain Depository Institutions Act may not have known what they were doing.
The deregulation of the California electricity market, along with the protections provided to Enron through Phil Gramm's lobbyist-written legislation brought blackouts, fiscal and political chaos, and left taxpayers holding the bag. But the people who engineered that event -- people like Gramm and Greenspan -- had already seen what happened with the S&Ls. They should have known better. Still, perhaps that was only coincidence.
The sub-prime mortgage crisis that has not only come so close to utterly destroying the markets, but has ruined the value of many people's homes and left millions with mortgages they can't pay, was also the outcome of the deregulation created by these men. The very outcome. When taxpayers are left holding the bag for $1 trillion this time around, it's hard to believe it's any sort of accident.
This is enemy action. This is a bullet deliberately fired into the economy by men willing to exercise their ideology regardless of the cost to taxpayers. Men who have every expectation that they can plunder the system again and again, while the public picks up the tab. John McCain may not have had his finger directly on the trigger, but he was there. He assisted. These were his personal friends and philosophical comrades. He may not be the high priest, but he has been a loyal acolyte in the cult of deregulation.
It may come as a surprise to the champions of deregulation, but nobody likes regulation. The restrictions that were placed on banks, S&Ls, and other institutions in the 1930s weren't put there because someone thought it would be fun. They were put in place because they addressed problems that had just been clearly and painfully revealed. They were put in place because they were necessary.
It's bad enough if John McCain didn't know that. It's far worse if he did.
# posted by The Punisher @ Tuesday, September 23, 2008 0 comments
Paulson's Wall Street Bailout - Ignore the Cause, Feed the Symptoms Tax Cash. A Wall Street Executive Masquerading as the Secretary of the Treasury.
Paulson's Conflicts of Interest Spark Concern:
As the financial markets took a turn for the worse over the past few weeks, conventional wisdom on Wall Street and Washington was that Hank Paulson, the Treasury Secretary, was the right man for the difficult job. A seasoned hand on financial matters, the former Goldman Sachs head had an acute understanding about how markets work, and had earned accolades from both political parties for his willingness to take a level-headed approach on these matters.
Now, however, confidence in Paulson is eroding, with critics questioning whether the Treasury Secretary's Wall Street connections have impacted his approach to the current crisis. Both progressive and conservatives and sounding the alarm.
"Some are saying that we should simply trust Mr. Paulson, because he's a smart guy who knows what he's doing," wrote Paul Krugman of the New York Times. "But that's only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half -- a period during which Mr. Paulson repeatedly declared the financial crisis 'contained,' and then offered a series of unsuccessful fixes -- justifies the belief that he knows what he's doing? He's making it up as he goes along, just like the rest of us."
Then there was conservative pundit Michelle Malkin, hardly of the same ideological ilk of Krugman, who declared on Fox News: "I think that Hank Paulson's corporate...record is very important. While he was a Goldman Sachs, the company was buying up a lot of Chinese banks in particular, and at the time of his nomination, there were very serious questions raised about the conflicts of interest involved, and where his priorities are, and who he really is looking after."
Malkin was referencing the stipulation, in Paulson's bailout plan, for the U.S. Treasury to help prop up some foreign banks. But the main thrust of her point -- that Paulson's past mattered -- was echoed among economists, analysts, and lawmakers throughout Monday. Some of Paulson's former associates and colleagues are the very people he now is in position to help aide with taxpayer dollars. As McClatchy News reported, "Paulson's former assistant secretary, Robert Steel, left in July to become head of Wachovia, the bank based in Charlotte, N.C., that has hundreds of millions of troubled mortgage loans on its books."
Moreover, as Bloomberg News reported: "Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid..."
On Monday, Oregon Democratic Rep. Peter DeFazio put a voice to this concern, warning House colleagues against being "rolled by a Wall Street executive who is masquerading as the secretary of the Treasury."
There is a certain irony to a former head of a major investment firm now being tasked with reforming the very system that made him so wealthy. Goldman, while never a huge player in the mortgage bond industry, nevertheless reported pre-tax earning of more than $6.2 billion in its trading division - which included such bonds - in 2005. Similarly, under lax federal oversight, Goldman's investment banking division had pre-tax earnings of $413 million during that same year, according to an annual report.
Having been steeped in this environment, observers argue, Paulson is seeking to tackle the current crisis from too narrow an angle; in essence, ignoring the cause (the failing housing market) in favor of the symptom (the crisis among investment banks).
"He does have potential personal conflicts of interest - not only regarding his associates, and his next finance position, but also the fact that part of his wealth almost certainly is in a blind trust that includes large holdings in Goldman Sachs and other funds," said Robert Shapiro, president of Sonecon and the undersecretary of commerce in the Clinton White House. "But even if Paulson is unaffected by such issues - and he may be, I just don't know - the more important issue is whether his former and future positions create a distorting prism for the bailout design. This crisis is ultimately driven by the falling housing market, and we will not finally get past it until the housing market stabilizes, which is why almost all economists say we're probably only halfway through this crisis. Yet, instead of trying to stop mortgage foreclosures and stabilize the housing market with loans to homeowners facing foreclosure, a Treasury headed by one of this period's leading investment bankers focuses only on loans and other bailouts for institutions that borrowed huge amounts to invest recklessly in the securities and derivatives based on those mortgages."
Economists have additional concerns with Paulson's approach, also related to the secretary's background. In his last report at Goldman Sachs, Paulson received a compensation package of $38 million. And while he was reportedly instrumental in decreasing the size of the former New York Stock Exchange head Richard Grasso's golden parachute in 2001, others see him now as too willing to protect the earnings of the big-time CEOs in the current bailout proposal.
Then there is the issue of transparency and judgment. "I would borrow directly from Ronald Reagan, trust but verify," said James Galbraith, a professor of economics at the University of Texas, when asked about Paulson. "The guy is clearly competent. He has worked with Democratic leadership in the Congress very well. If this was John Snow still in the Treasury, there would be no question you couldn't do business. On the other hand, I wouldn't want to turn my back on him... This is a guy who thought he could weaken the SEC and even a couple of weeks ago, when he wanted advice on the risks with Fannie and Freddie, he went to Morgan Stanley."
To some extent, the political world is still grappling with how much responsibility Paulson deserves for the current crisis he has now been tasked with remedying. As it stands now, the Treasury Secretary still enjoys tremendous deference within the halls of power, with everyone from the Obama campaign to Michael Bloomberg and Mitt Romney expressing, at a minimum, basic confidence in his competency for the task. His past statements, specifically, his declaration six months ago that "our institutions, our banks and investment banks, are strong," is chalked up as a forgivable attempt to soothe public concern. And while backlash to his initially proposal for handling the financial crisis is growing on Capitol Hill, the consensus seems to be that - with the end of the Bush administration in site - criticism and vetting of Paulson won't be overtly intense.
"If this were to the end of Bush's first term and is going to be reelected, this stuff would matter more," said Steve Hayward of the conservative American Enterprise Institute. "But he is going to be gone in three months. It is the next Treasury Secretary who will be doing the deeds and overseeing the money."
# posted by The Punisher @ Tuesday, September 23, 2008 1 comments
Monday, September 22, 2008
Bernie Sanders on Wall Street Bailout
Bernie Sanders Op-Ed: The Middle Class Must Not Be Forced to Bail Out Wall Street Greed -- 09/21/2008
For years, as a member of the House Banking Committee and now as a member of the Senate Budget Committee, I have heard the Bush Administration tell us how “robust” our economy was and how strong the “fundamentals” were. That was until a few days ago. Now, we are being told that if Congress does not act immediately and approve the $700 billion Wall Street bailout proposal these “free marketers” have just written up, there will be an unprecedented economic meltdown in the United States and an unraveling of the global economy.
This proposal as presented is an unacceptable attempt to force middle income families (and our children) to pick up the cost of fixing the horrendous economic mess that is the product of the Bush Administration's deregulatory fever and Wall Street's insatiable greed. If the potential danger to our economy was not so dire, this blatant effort to essentially transfer $700 billion up the income ladder to those at the top would be laughable.
Let us be clear. If the economy is on the edge of collapse we need to act. But rescuing the economy does not mean we have to just give away $700 billion of taxpayer money to the banks. (In truth, it could be much more than $700 billion. The bill only says the government is limited to having $700 billion outstanding at any time. By selling the mortgage backed assets it acquires -- even at staggering losses -- the government will be able to buy even more resulting is a virtually limitless financial exposure on the part of taxpayers.) Any proposal must protect middle income and working families from bearing the burden of this bailout.
I have proposed a four part plan to accomplish that goal which includes a five-year, 10% surtax on the income of individuals above $500,000 a year, and $1 million a year for couples; a requirement that the price the government pays for any mortgage assets are discounted appropriately so that government can recover the amount it paid for them; and, finally, the government should receive equity in the companies it bails out so that when the stock of these companies rises after the bailout, taxpayers also have the opportunity to share in the resulting windfall. Taken together, these measures would provide the best guarantee that at the end of five years, the government will have gotten back the money it put out.
Second, in addition to protecting the average American from being saddled with the cost, any serious proposal has to include reforms so that we end the type of behavior that led to this crisis in the first place. Much of this activity can be traced to specific legislation that broke down regulatory safety walls in the financial sector and allowed banks and others to engage in new types of risky transactions that are at the heart of this crisis. That deregulation needs to be repealed. Wall Street has shown it cannot be trusted to police itself. We need to reinstate a strong regulatory system that protects our economy.
Third, we need to address the needs of working families in this country who are today facing very difficult times. If we can bail out Wall Street, we need to respond with equal vigor to their plight. That means, for example, creating millions of jobs through major investments in rebuilding our crumbling infrastructure and creating a new renewable energy system. We must also make certain that the most vulnerable Americans don’t freeze in the winter or die because they lack access to primary health care.
Finally, we need to protect ourselves from being at the mercy of giant companies that are "too big to fail," that is, companies who are so large that their failure would cause systemic harm to the economy. We need to assess which companies fall into this category and insist they are broken up. Otherwise, the American taxpayer will continue to be on the financial hook for the risky behavior, the mismanagement, and even the illegal conduct of these companies' executives.
These are the last days of the Bush Administration, the most dishonest and incompetent in modern American history. It is imperative that, at this important moment, Congress stand up for the middle class and for fiscal integrity. The future of our country is at stake.
# posted by The Punisher @ Monday, September 22, 2008 0 comments
Greatest Ever Bank Robbery: Congress Preparing to Give $700 Billion to One Man with Zero Oversight. Are they Fucking High?
Dirty Secret of the Bailout, 32 Words that None Dare Utter
A critical - and radical - component of the bailout package proposed by the Bush administration has thus far failed to garner the serious attention of anyone in the press. Section 8 (which ironically reminds one of the popular name of the portion of the 1937 Housing Act that paved the way for subsidized affordable housing ) of this legislation is just a single sentence of thirty-two words, but it represents a significant consolidation of power and an abdication of oversight authority that's so flat-out astounding that it ought to set one's hair on fire. It reads, in its entirety:
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch - who, we remind you, will have the incentive to act upon this privilege as quickly as possible, before they leave office. The measure will run up the budget deficit by a significant amount, with no guarantee of recouping the outlay, and no fundamental means of holding those who fail to do so accountable.
The deal proposed by Paulson is nothing short of outrageous. It includes no oversight of his own closed-door operations. It merely gives congressional blessing and funding to what he has already been doing, ad hoc. He plans to retain Wall Street firms as advisors to decide just how to cut deals to value and mop up Wall Street's dubious paper. There are to be no limits on executive compensation for the firms that get relief, and no equity share for the government in exchange for this massive infusion of capital. Both Obama and McCain have opposed the provision denying any judicial review of decisions made by Paulson -- a provision that evokes the Bush administration's suspension of normal constitutional safeguards in its conduct of foreign policy and national security. [...]
The differences between this proposed bailout and the three closest historical equivalents are immense. When the Reconstruction Finance Corporation of the 1930s pumped a total of $35 billion into U.S. corporations and financial institutions, there was close government supervision and quid pro quos at every step of the way. Much of the time, the RFC became a preferred shareholder, and often appointed board members. The Home Owners Loan Corporation, which eventually refinanced one in five mortgage loans, did not operate to bail out banks but to save homeowners. And the Resolution Trust Corporation of the 1980s, created to mop up the damage of the first speculative mortgage meltdown, the S&L collapse, did not pump in money to rescue bad investments; it sorted out good assets from bad after the fact, and made sure to purge bad executives as well as bad loans. And all three of these historic cases of public recapitalization were done without suspending judicial review.
Kuttner's opposition here is perhaps the strongest language I've seen used, pushing back on this piece of legislation, in any publication of repute, and even here, Section 8 is not cited by name or by content. McClatchy Newspapers also alludes to Section 8 with concern, citing the "unfettered authority" that Paulson would be granted, and noting that the "law also would preclude court review of steps Paulson might take, something Joshua Rosner, managing director of economic researcher Graham Fisher & Co. in New York, said could be used to mask previous illegal activity." Jack Balkin also gives the matter the sort of attention it deserves on his blog, Balkinization.
But elsewhere, the conversation is muted. The debate over whether Congress is going to pass the Paulson bailout package, or pass the Paulson bailout package really hard seems to have boiled down to a discussion of time and concessions. The White House has made it clear that they want this package passed yesterday. Congressional Democrats seem to be of different minds on the matter, with some pushing back hard, and others content to demand a small dollop of turd polish to make the package seem more aesthetically pleasing, at which point, they'll likely roll over and pass the bill. Neither candidate, John McCain or Barack Obama, seem all that amenable toward the bailout, but neither have either demonstrated that they are willing to risk their candidacies to do much more than exploit the issue for electoral purposes.
Sunday morning came and went, with Paulson traipsing dutifully from studio to studio, facing nary a question on Section 8. Front page articles in the New York Times, Washington Post, and the Wall Street Journal detail the wranglings, but make no mention of this section of the legislation. On TV, cable news networks are stuck in the fog of the ongoing presidential campaign.
Throughout the coverage, one catches a whiff of what seems like substantive pushback on this power grab, but it largely amounts to a facsimile of journalistic diligence. Most note, in general terms, that the bailout represents a set of "broad powers" that will be granted to the Department of the Treasury. Yet the coverage offsets these concerns through the constant hyping of the White House's overall message of "urgency."
But one cannot overstate this: Section 8 is a singularly transformative sentence of economic policy. It transfers a significant amount of power to the Executive Branch, while walling off any avenue for oversight, and offering no guarantees in return. And if the Democrats end up content with winning a few slight concessions, they risk not putting a stop-payment on the real "blank check" - the one in which they allow the erosion of their own powers.
Nevertheless, the fact that Section 8 of the Paulson plan seems to strike few as a de facto dealbreaker can and should astound. The failure of Congress to hold the line on this point would be truly embarrassing. But if we make it through this week with nobody in the press specifically informing the public about the implications of this single sentence - in the middle of a complicated bill, in the middle of a complicated time - then right there, you have the single largest media failure of this year.
# posted by The Punisher @ Monday, September 22, 2008 0 comments
Crisis Thinking: Obama makes McCain Look Reckless
Obama, Not McCain, Shows Steady Hand in Crisis: Albert R. Hunt
Commentary by Albert R. Hunt
Sept. 22 (Bloomberg) -- For the first time since 1932 a presidential election is taking place in the midst of a genuine financial crisis. The reaction of the candidates was revealing.
John McCain, railing against the ``greed and corruption'' of Wall Street, won the first round of the sound-bite war. He came out with a television commercial on the ``crisis'' early on Monday of last week, and over the next three days gave more than a dozen broadcast interviews. He and running mate Sarah Palin would reform Wall Street and regulate the nefarious fat cats that caused this fiasco.
It was a great start. It then went downhill as he stumbled over his record of championing deregulation, claimed the economy was fundamentally strong, and flip-flopped over the government takeover of American International Group Inc.
For his part, Barack Obama didn't come across as passionately outraged and wasn't as omnipresent or as specific.
More revealing, though, was to whom both candidates turned on that panic-ridden morning of Sept. 15, and how the messages evolved before and after that day.
Feldstein, for all his intellect, was ineffective in the Reagan administration; then-White House deputy chief of staffDick Darman cut him out of important action. Volcker, first at the Treasury and then as chairman of the Federal Reserve, was a towering figure in every way.
Taylor is a well-regarded academic. In four years as undersecretary of the Treasury, he left few footprints. Summers, as both deputy secretary and secretary, left a lot.
Fiorina is smart and quick; to put it charitably, Rubin will forget more about financial markets than she'll ever know.
When it comes to governance, and either Democrat Obama or Republican McCain will inherit this miserable financial mess, the best guide is who they talked to, what they said, where they've been, and how knowledgeable they are.
Obama's record and earlier speeches belie some of his more populist rhetoric. Yet they also suggest, as do his advisers, a much more activist government role than is likely under a McCain-Palin administration.
Comfortable With Subject
Obama called for the overhaul of the financial-regulatory system and tougher enforcement well before this past week's traumas.
Detached observers who watched him last week, especially in a Bloomberg Television interview, were taken by how conversant and comfortable he was on the subject, despite his thin record. Few detached observers came away with that impression watching the Arizona senator.
Much of the re-regulatory fever focuses on the Federal Reserve and any new agencies created to clean up the fiasco. Central, however, will be a more vigorous Securities and Exchange Commission, or whatever holds that investor-protection function.
McCain displayed a sudden interest in the SEC last week when he demanded that Chairman Chris Cox be fired. When his campaign was asked if the senator had ever criticized the current commission's performance before, they failed to respond.
All For Obama
Tellingly, three former SEC chairmen, a Democrat, Arthur Levitt, and two Republicans, David Ruder and Bill Donaldson, have endorsed Obama. Levitt is a board member of Bloomberg LP, the parent company of Bloomberg News.
Donaldson, who was tapped by Bush to head the SEC, says Obama called him last year about the financial-regulatory problems. He has never heard from McCain.
``Obama has been talking about the need for better financial regulation well before this crisis hit and has done some real thinking about it,'' says Donaldson, a lifelong Republican. ``McCain comes across as someone who suddenly realized changes have to be made.''
There is a case for McCain: it's if you believe in less regulation, that the government should get out of the way and let the markets work their will.
No `Real Understanding'
``I don't think anyone who wants to increase the burden of government regulation and high taxes has any real understanding of economics,'' McCain said this spring at an Inez, Kentucky, town hall meeting, where he also declared ``the fundamentals of our economy are good.''
Until recently, he repeatedly invoked Ronald Reagan's calls for less regulation. He voted for the 2002 Sarbanes-Oxley corporate-governance regulations -- then last year said he regretted that vote.
McCain isn't averse to some regulations. He has strongly championed a greater federal role in campaign finance, tobacco and boxing. In each case, he saw a clear villain -- special- interest money, a tobacco product that puts profits ahead of lives, and unscrupulous boxing promoters.
There has been little evidence that prior to last week he ever put financial firms in this category. Although he assailed excessive corporate compensation last week, McCain has opposed a tepid House-passed bill that would give corporate shareholders the right to cast a non-binding vote on compensation of top executives.
Turning to Gramm
The person he has turned to most for counsel on such matters is his ex-Senate colleague Phil Gramm. Gramm is a political Gordon Gekko, a brainy economist with a Darwinian view of markets and public policy.
It's not easy to remember what the financial world looked like 10 days ago much less 10 months ago. Decisions that will be reached after this election will be the most important since the 1930s.
Obama, as more than a few Democrats are complaining, hasn't been as quick, sharp -- or demagogic -- as they would like. McCain has been beset by deeper difficulties: an inchoate and inconsistent message that seems to reflect political exigencies more than principled convictions.
On the financial crisis, last week belonged to Obama.
(Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)
# posted by The Punisher @ Monday, September 22, 2008 0 comments
Captain James T. Kirk Speaks Out On Wall Street Bailout
# posted by The Punisher @ Monday, September 22, 2008 0 comments
Corporate Republic Continues, Taxpayers Buy Debt, Wall Street Continues to Bleed Us Dry.
Wall Street Leads the Socialist Revolution The Fake Free Market and the Meltdown of the American Economic System by John Kelley, 20 September 2008
Sometimes being able to say, “I told you so.” doesn’t feel good at all. As long ago as three years ago I along with a few financial experts (namely economists Nouriel Roubini of New York University and Paul Krugman) were predicting this financial meltdown, based on the arcane and convoluted treatment of debt instruments as commodities. Unlike these scholars, I didn’t even get it through the esoteric study of economics; I read it day in and day out in the New York Times, the Wall Street Journal and a variety of internet sites. Not exactly a secret if you were paying attention, yet most of the pundits exclaim shock and surprise at what Krugman predicted as the “great unraveling.”
The deregulation of a financial system based on greed took on full speed as the Bush administration did away with the safeguards implemented by Franklin Roosevelt after Wall Street robbed the public with delusional greed leading to the great depression. After 9-11 hit the economy hard, the Bush administration loosened regulation and pumped billions into the economy (essentially printing money) to prop up the economy and avoid a needed correction, further exacerbating the problem.
The financial elites sent lobbyists with bushels of money to influence congress to lower taxes on the rich, create higher debt with fees and usury level interest rates for average borrowers. They grabbed worker savings by shoving employees out of traditional retirement plans and creating new forms of indentured servitude by tightening bankruptcy laws. The result was the greatest “redistribution of wealth” in the history of this country.
This was supposed to result in massive capital infusion by the investment class in research, production, more jobs and all the wonderful benefits trickle down economics was supposed to yield. Unfortunately as history points out, when the very rich get even more money then they need, they are just like everyone else. Excess income is treated as gambling money, speculative investment that will bring higher returns because you already have so much you won’t miss it if you loose it.
This initially caused too much money to pursue to few “high return” investment products creating an ever inflating market bubble. The market was inflated further by fed policy that lowered interest rates to big banks, encouraging rich investors to basically double down on their bets, borrowing heavily to finance even bigger bets on the arcane financial instruments they were creating. The CEO’s, board members and top management used this artificial boom to pocket millions in salaries and stock options.
Now that the delusion of creating wealth out of paper shuffling is over, the thieves on Wall Street point to the victim’s bad judgment in taking their offers as the culprit. Workers who were achieving the highest level of productivity in the history of the planet were subjected to falling wages while corporate profits reached record levels. Cold calling, emails and letters coaxed consumers with more offers then a military recruiter to a high school senior, all done with government blessing.
Squeezed consumers, faced with the most sophisticated onslaught of advertising and enticement ever conceived, went into debt creating a negative savings rate. The debt was then packaged and sold as an amazing new array of “innovative financial products”.
The great masquerade of the “free market economy” was no such thing. It was a strategic and purposeful tilting of the rules towards the rich and powerful and away from the common welfare. It was in fact the much feared redistribution of wealth, only upwards.
Now that the chickens have come home to roost, the same folks who were robbed in the process will now get to pay the tab for those who robbed them. Somewhat akin to making the victim of a robbery paying restitution to the robber because he gambled away the money he stole.
What will happen to those who created this mess, the get rewarded of course. Daniel H. Mudd, the departing head of Fannie Mae, will get $9.3 million in severance pay, retirement benefits and deferred compensation not counting the $12.4 million he has already pocketed since becoming CEO in 2004. Richard F. Syron, the departing chief executive of Freddie Mac, will get $14.1 million, on top of the $17.1 million in pay and stock option gains since 2003. Ya gotta love such a system if you’re at the top.
Republicans Demand Socialist Intervention
What currently hides behind the label of the free enterprise system is actually a merger of corporate power and government. The argument that any assistance to workers and small business would be socialism is the most laughable argument on the face of the earth while nationalizing (socialism for the rich) the debt of American corporations.
The reality is that state communism and corporate fascism are not different except in name only. In state communism the state is the corporation, in fascism the corporation is the state. The opposite of both “pure” Communism and Capitalism is a mixed economy that provides a safety net and educational tools for workers and small business while allowing true free market principles that reward productivity and punish foolish speculation.
Instead what is proposed by Henry Paulson, our Treasury Secretary, is a get out of jail free card for the robbers including his former employer Goldman Sachs. What would be more productive is to fine the thieves the amount of their pocketed loot, send them to jail and invest the two trillion in tax dollars in education, healthcare, disability, retirement and infrastructure.
Killing the wounded
How do the Republicans promise to fix the situation? They want to streamline the financial system (i.e. more deregulation), lower corporate tax rates (2/3rds of the corporations don’t pay any taxes now, no matter what the rate is.) and take the bad debt off the books of the criminal companies and give them to the taxpayer. In other words nationalizing the debt, who thought the Republicans, would lead the charge in a socialist revolution? Of course the relief is only for members of the state capitalist party (Corporate Democrats & Republicans).
While they compare it to the Resolution Trust Corporation that dealt with the Savings & Loan Crises (you might want to look up John McCain and the Keating five) it is not comparable. First the amount of debt is staggering (at least TWO TRILLION DOLLARS) when compared to the S&L crises.
Second, instead of taking over the institutions and selling off their assets to pay the debt, this time we are going to take just the debt. Every man, woman and child in the country will shoulder a minimum of an extra $2,000 of national debt. Like the old centralized government of the Soviet Union, the party members keep the assets and tell the working class you will now have to work harder for the good of the state, the corporate state that is.
If workers lose enough to take to the street against this unprecedented theft by the privileged class they will use the fear of “chaos and anarchy” in the streets to justify authoritarian repression to control those rebellious ones who object to being robbed with a pen.
Meanwhile the economic pundits are telling average Americans to have faith, buy while stocks are low and that the government will make a big profit of their purchase of the bad debt. If that’s true why aren’t private investors buying it up like ice after a hurricane?
Killing the Messengers
While Paulson and the other corporate hacks talk about the problem being based in the mortgage market, other experts who predicted right caution that is just the tip of the iceberg. In addition to the mortgage based securities, the junk bonds issued by the leveraged buyout specialists, credit derivatives (like those issued by AIG) and inflated values of commodities will undermine the whole American economic system.
As the true costs of the bail out rises for the unknown government commitment to take on the debt of those “to big to fail”, federal debt will skyrocket over the $9 trillion Bush has already stacked up. The increased debt will be paid by printing more dollars which allows repayment with dollars worth less than borrowed but creating inflation because of its lost value to purchase goods and services. Decreasing production, falling wages and inflation equals stagflation.
To hide the fact that they couldn’t even see the bottom of the abyss Paulson and the wizards of Wall Street came up with a plan to rescue themselves, hide how worthless these stocks, derivatives and junk bonds really are. You prohibit short selling. Telling the public those who bet on stocks falling were the cause of the problem, they were blamed the short sellers for “crashing companies”.
The truth is short sellers provide an indicator of a products real worth, which they bet is much lower then advertised. Borrowing the stock they actually buy it when it drops to the price they predicted, pocketing the difference. The positive side of short selling is they must purchase the product at that lower price they predicted. The forced buying of the product many times prevents the value from going even lower, putting the brakes on a sell off.
Many traders are now saying there is nothing to indicate what the market will do; trading is purely a speculation on what the government does next not the market value of any product. Those complex financial products now being akin to the old fake missiles the Soviet Union used to put around to convince the Americans they were really powerful, Paulson and friends hide the true amount they’ve dumped on the American public.
The best part of being rich and powerful is you don’t have to pay for your mistake. The government plan gives them the incentive of continuing their bad behavior, much like bailing the alcoholic out of jail and dropping him off at the nearest bar. Meanwhile millions of working taxpayers will lose their homes, jobs, healthcare, businesses, retirement funds and any chance for higher education. The simple fact is that corporatists in both parties took a federal surplus and turned it into the greatest public debt in history and took a vibrant national economy and bankrupted it. John McCain promises more of the same.
How bad could it get? We could end up a third world country where a very few control most of the wealth while the rest are pitted against each other for survival. Stephen Mihm of the New York Times quoted economist Roubini referring only to the bad mortgage debt when it was estimated to be $600 billion, as saying, “Even if it’s closer to a trillion, we’re not even a third of the way there. We have a subprime financial system, not a subprime mortgage market."