We Are Here

I understand the Dow is up a bit today, so maybe we’re not seeing financial Armageddon yet. Time for some evaluation.

The best analogy I can come up with to describe the federal government is as an organ riddled with cancer. And the cancer is the damn supply side trickle down pro-corporation anti-regulation free market ideology liberals gonna gitcha boogaboogabooga crowd that has shouted the rest of us down since 1980.

For too long, their voices drowned out all others in our national political discourse. But for all their bellyaching about elitists and liberals and how badly their opponents ran the government, they never worked out a coherent governing philosophy themselves. As Bill Scher says, the Right’s mantra is less government, lower taxes and a strong military. Those are sales points, not a comprehensive plan for running a country.

With that in mind, let’s look at what’s happened in the past few days.

The utterly corrupt and incompetent Bush Administration has claimed for the past several months that problems in the financial sector were contained. Then, suddenly their hair caught fire, and they proclaimed the financial sector on the brink of ruin and Congress must act now now now now. Then the Administration handed Congress a half-assed proposal that did little more than shovel money in the direction of people who had caused the crisis and give the executive branch more unsupervised power to deal with it.

(I want to add that this is a very familiar pattern. I’ve seen incompetent co-workers and managers do the same thing. It’s a three-step process. One, assure the suits in the executive suites that everything is just fine when it isn’t. Two, when the disaster can no longer be hidden, tell the suits that you can fix everything as long as they give you more time and authority and don’t look too closely at what you’re doing. Finally, if you haven’t already been fired, find another job and dump the mess on someone else.)

A broad consensus quickly formed in Congress that no way were they going to pass the Bush Administration’s proposal as it was. That was a promising sign. So how did it fall apart yesterday?

I’m not a finance whiz, but those who are say that the problem should be fixed through an entirely different approach from the one that the Bushies proposed. See, for example, Joseph Stiglitz:

We could do more with less money. The holes in financial institutions’ balance sheets should be filled in a transparent way. The Scandinavian countries showed the way two decades ago. Warren Buffet showed another way, in providing equity to Goldman Sachs. By issuing preferred shares with warrants (options), one reduces the public’s downside risk and ensures that they participate in some of the upside potential.

This approach is not only proven, but it also provides both the incentives and wherewithal needed for lending to resume. It avoids the hopeless task of trying to value millions of complex mortgages and the even more complex financial products in which they are embedded, and it deals with the “lemons” problem – the government gets stuck with the worst or most overpriced assets. Finally, it can be done far more quickly.

At the same time, several steps can be taken to reduce foreclosures. First, housing can be made more affordable for poor and middle-income Americans by converting the mortgage deduction into a cashable tax credit. The government effectively pays 50% of the mortgage interest and real estate taxes for upper-income Americans, yet does nothing for the poor. Second, bankruptcy reform is needed to allow homeowners to write down the value of their homes and stay in their houses. Third, government could assume part of a mortgage, taking advantage of its lower borrowing costs.

By contrast, US treasury secretary Henry Paulson’s approach is another example of the kind of shell games that got America into its mess. Investment banks and credit rating agencies believed in financial alchemy – the notion that significant value could be created by slicing and dicing securities. The new view is that real value can be created by un-slicing and un-dicing – pulling these assets out of the financial system and turning them over to the government. But that requires overpaying for the assets, benefiting only the banks.

Not all finance gurus may agree with Stiglitz on the Swedish model, but from what I have read a large majority agree that the Administration’s basic approach is deeply flawed.

However, Congress more or less tweaked Paulson’s approach rather than try something completely different. They improved it mightily, according to many. But my understanding is that the smarter people in Congress figured the more conservative members would dismiss the smart approach outright. So instead of the best bill, they put together the best bill they thought they could sell to the right-wing troglodytes in the House.

And it still didn’t pass.

Here’s where the cancer analogy comes in. The organ is being strangled by a malignant mass and is barely functioning. The best proposals are a non-starter because the cancer has to be catered to. But the cancer won’t let a “flawed but better than nothing” bill pass, either.

Matt Yglesias says,

The House conservatives who sank the bailout didn’t do so because they were listening to loud and angry voices. They sank the plan by accident. They were trying to double-cross the Democrats. First, they wrung lots of concessions out of Democrats at the negotiating table as the price for delivering 80 votes. Then, by not delivering 80 votes and forcing Pelosi to pass the bill as a partisan Democratic bill, they were going to wage a demagogic anti-bailout campaign. But Pelosi refused to be played for a sucker and so the conservative inadvertently sank a bill that, all evidence suggests, they actually wanted to pass. They just wanted to vote “no” on it for short-term political gain.

And, of course, when Pelosi didn’t fall for the trap they complained she had been “partisan.”

Yes, a minority of House Democrats voted with a majority of House Republicans against the proposal. Some Dems did so out of cowardice; they’re in a tight race, and it’s an unpopular bill — more about that in a moment. A few, I understand, voted against it because they wanted a better bill with more protection for taxpayers and homeowners. Noble, but impractical. As Paul Krugman and others say, probably all that can be done now is to patch something together that will keep the economy limping along until a new administration and Congress is sworn in. And pray that will be an Obama administration, because McCain clearly is out of his depth on this issue and will be no better, possibly worse, than Bush.

One of the reasons the bill is unpopular is that there is a colossal vacuum of leadership in Washington, which is another symptom of the cancer. It should fall to the President to explain to people that the consequences of not addressing the financial crisis will cost them more dearly than a “bailout.” However, for all practical purposes we don’t have a functioning POTUS. Now, too late, a large majority of the American people understand that George W. Bush is incompetent and cannot be trusted. So even if he had it in him to deliver an FDR-like address on the crisis, no one would listen to it.

And here we are.

Holy Bleep

The NYSE down 777 bleeping points today? Bleep.

I just saw this Moveon ad on television:

Thanks, Moveon.

Paul Krugman has been keeping up. See “21st century prewar crises,” “Bailout questions answered,” “OK, we are a banana republic,” “Politics of Crisis.”

Krugman quote: “Just worth pointing out: Henry Paulson’s decision to let Lehman fail, on Sept. 14, may have delivered the White House to Obama. ”

“Dan Quayle was Metternich by comparison.”

Sarah Palin endorses Hamas.

More tidbits:

The McCain campaign has banned Mo Dowd from the plane. I think in the spirit of bipartisanship, the Obama campaign should ban her also.

Paul Krugman on why McCain must not become president: “The modern economy, it turns out, is a dangerous place — and it’s not the kind of danger you can deal with by talking tough and denouncing evildoers.”

Shorter Stanley Kurtz: Community organizers caused the mortgage crisis.

Even shorter Stanley Kurtz: Blame black people.

Breaking: The House rejected the bailout plan.

Forests and Trees and Gimmicks

A USA Today/Gallop Poll just came out that says Obama beat McCain in the Friday night debate. This has to be disorienting for righties, who no doubt were whooping and high-fiving when the debate ended Friday. McCain was tougher, after all.

They probably believed also that patching together all the times Obama said he agreed with McCain would make a sure-fire winning video. Maybe it is — for anyone who didn’t watched the debate and thinks YouTube is a brand of toothpaste. But those are either non-voters or McCain voters, anyway.

Right now they’re pushing a controversy over the bracelet Obama wears bearing name of a soldier killed in Iraq. Obama blanked out for a second over the name — you try being on national television, with the lights in your face, and see what you blank out on. I doubt he planned to bring it up and only did so because McCain bragged about his bracelet to prove how much the troops love him.

Now they are saying the father of the soldier claims Obama was asked not to wear the bracelet. I’m skeptical; the soldier’s mother gave Obama the bracelet, not the father, and the soldiers’ parents are divorced. Divorced couples are not exactly famous for frank communication with each other.

Even if the claim is true, this is the kind of gimmicky crap that comes under the heading of “distraction.” I don’t think the electorate is in the mood for it now. It hardly balances today’s headlines about McCain’s ties to the gambling industry — read it; the headline might have been “John McCain: Maverick Reformer or Shameless Opportunist?” Plus, there are more details out about the financial relationship between McCain’s campaign manager and Freddie Mac.

And the righties are focused on a bracelet?

Joan Vennochi writes at the Boston Globe about the bracelets:

McCain is the old soldier who sees the world through the prism of the Vietnam War. He still doesn’t question the premise of Vietnam or the Iraq invasion. He still wants to win both. He said Stanley’s mother made him promise that “You’ll do everything in your power to make sure that my son’s death was not in vain.”

Comparing it powerfully as always to his own combat experience, McCain said, “A war that I was in, where we had an Army, that it wasn’t through any fault of their own, but they were defeated. And I know how hard it is for that – for an Army and a military to recover from that – we will win this one and we won’t come home in defeat and dishonor.”

Obama had to glance down at the bracelet around his wrist, as if to remind himself of Jopeck’s name. But Obama got to the fundamental question for the next president: “Are we making good judgments about how to keep America safe precisely because sending our military into battle is such an enormous step.”

If you listen carefully to what the two campaigns say about any issue, the same theme emerges. McCain sees trees, not forest. He latches onto gimmicky fixes, like firing the SEC chairman, or seems not to understand (or care) that congressional earmarks didn’t cause the Wall Street crisis. Tellingly, it’s McCain, not Obama, who mistakes a tactic for a strategy.

Obama, more often than not — I think his health care plan is an example of “not” — has a deeper understanding of the complexities of issues and proposes comprehensive strategies to address them. As president, he might not always make the best decisions, but I think he can be trusted not to make the worst decisions.

I can’t let David “Call Me Bwana” Broder’s “Alpha Male” column go without a comment.

It was a small thing, but I counted six times that Obama said that McCain was “absolutely right” about a point he had made. No McCain sentences began with a similar acknowledgment of his opponent’s wisdom, even though the two agreed on Iran, Russia and the U.S. financial crisis far more than they disagreed.

That suggests an imbalance in the deference quotient between the younger man and the veteran senator — an impression reinforced by Obama’s frequent glances in McCain’s direction and McCain’s studied indifference to his rival.

Whether viewers caught the verbal and body-language signs that Obama seemed to accept McCain as the alpha male on the stage in Mississippi, I do not know.

How many times can Broder prove himself to be a complete ass before his professional colleagues notice? Some others pointed out that McCain’s body language signaled fear, not dominance. Although I’m not sure he is afraid of Obama as much as he is afraid of his own temper. I think he couldn’t look at Obama because he feared he would lose control if he did.

The Times of London reports that the McCain campaign wants to stage Bristol Palin’s shotgun wedding before the election. A “McCain insider” thinks a highly publicized wedding would shut down the election for a week. I am skeptical about this report, also, and don’t expect it to happen. But it is the sort of stunt a wingnut political operative would think of.

The real verdict on the debate will be apparent as more polls bring out their post-debate results, and it’s possible later polls will be less favorable to Obama. I don’t want to celebrate yet, but I’m cautiously hopeful.

The Morning After

So I get up this morning and make the coffee and surf around to get reactions to last night’s debate.

The first reactions from pundits and bloggers last night was that [fill in name of preferred candidate] won on points, but [the other guy] held his own, and neither emerged a clear winner. Dana Milbank and other professional commenters complained that the debate was “tepid” and boring. Politics is just entertainment, after all.

However, there is evidence the television audience saw a different debate. Polls by CBS and CNN say that independents watching the debate came away more impressed by Obama. The Frank Luntz and Stanley Greenberg focus groups went overwhelmingly for Obama.

Why the difference?

One, I think most of the television audience was getting an unfiltered look at these guys for the first time, Obama in particular. And the meme Obama’s opponents have spread is that Obama is an empty suit, unsubstantial, a good orator but otherwise clueless. But the Obama who debated last night clearly was intelligent and knowledgeable as well as articulate. He may have pleasantly surprised people who haven’t been paying close attention to the campaigns until now.

Peter S. Canellos, Boston Globe:

McCain tried repeatedly to portray Obama as a neophyte, prefacing many answers with variants of the statement, “What Senator Obama doesn’t seem to understand,” and later insisting that Obama “showed a little bit of naiveté.”

But Obama didn’t seem either uncomprehending or naive, and McCain seemed so frustrated at times that he almost lost his cool.

After Obama followed a McCain jab about Obama’s failure to hold a hearing of his Senate subcommittee with a return punch that McCain had once claimed the United States could “muddle through” in Afghanistan, the Arizona senator clenched his teeth, flared his eyes, and seemed on the verge of losing composure.

Finally, he came out and said what he couldn’t demonstrate.

“I honestly don’t believe that Senator Obama has the knowledge or experience and has made the wrong judgments in a number of areas,” McCain insisted.

But the claim wasn’t backed up by what viewers had seen for the past hour.

John Dickerson:

McCain repeatedly asserted that on foreign-policy issues Obama “didn’t understand.” But Obama didn’t look like a man who didn’t understand. McCain was essentially calling Obama a Sarah Palin—but Obama didn’t look like one.

Second, I think way too much of McCain’s arguments for himself were grounded many years in the past, which to me made him seem stuck there. One of the focus group people in the video above said McCain was “sentimental,” and a young woman said she wanted to hear more from McCain about what’s going on right now.

Third is the “gumpy old man” factor. Richard Adams:

McCain refused to look in Obama’s direction – even as he was delivering his own attacks against the Democratic candidate, and so allowed his body language to undercut his spoken language, suggesting that he was uncomfortable or even embarrassed.

And that seemingly minor detail seems likely to have hurt McCain. CNN’s coverage of the debate carried an interesting feature: a real-time reaction graph from a focus group running along the bottom of the screen. Most of the time the graph was flat-lining – when McCain spoke the Republican audience members generally gave him higher marks and the Democrats gave him lower ones, with independent voters in the middle. But when McCain stridently attacked Obama his approval lines turned down, sometimes very sharply. So while grizzled journalists may have liked McCain’s fighting talk, it turned off the independent voters watching. Similarly, McCain’s aggression isn’t likely to have played well with female voters but better with male voters (according to the stereotype).

And, according to CNN, male viewers were evenly split on who won, but women overwhelmingly preferred Obama. I think women are less inclined than men to associated a hot temper with leadership ability.

Joan Walsh:

I wish I’d organized a drinking game around the number of times John McCain said, “Sen. Obama doesn’t understand,” or found some other way to sneer at Obama as naive and inexperienced. For the most part he refused to even look at Barack Obama over 90 minutes. What an ass. It was hackneyed and condescending and, to me, repellent. But did it work? …

…I think Obama more than held his own in this first debate, but if you’re looking for a grumpy, sarcastic put-down artist as president, your choice is quite clear.

Eugene Robinson:

Throughout the 90-minute debate, McCain seemed contemptuous of Obama. He wouldn’t look at him. He tried to belittle him whenever possible — how many times did he work “Senator Obama just doesn’t understand” into his answers? His body language was closed, defensive, tense. McCain certainly succeeded in proving that he can be aggressive, but the aggression came with a smirk and a sneer.

Fourth, several commenters said that after McCain’s erratic behavior for the past couple of weeks, he needed a big win tonight to “change the game” (and can I say I’m really growing tired of that phrase?). A tie might have been good enough for Obama, but not for McCain.

Fifth, as Nate at Five Thirty-Eight points out, Obama looked at the television camera and spoke to the televison audience; McCain did not.

Obama’s eye contact was directly with the camera, i.e. the voters at home. McCain seemed to be speaking literally to the people in the room in Mississippi, but figuratively to the punditry. It is no surprise that a small majority of pundits seemed to have thought that McCain won, even when the polls indicated otherwise; the pundits were his target audience.

Further, Nate says Obama is opening up a gap in “connectedness.” By a big margin, viewers thought Obama was “more in touch with the needs and problems of people like you.” This was supposed to be Obama’s big weakness — he couldn’t connect with those “ordinary” folks.

Last night, the pundits all criticized Obama for allowing McCain to hijack the first half hour or so of the debate by talking about earmarks and taxes. Nate disagrees, saying that earmarks are not an issue voters care much about right now. I don’t know how much people understand that earmarks, however egregious, did not cause the Wall Street financial crisis. However, I do think McCain might have come across as an ass by continuing to talk about Obama raising taxes even as Obama was standing there saying no, I’m going to raise taxes only on the wealthy, and close loopholes so corporations pay their fair share.

Finally — last night several of you expressed frustration that Obama wasn’t punching McCain hard enough. Given the way the post-debate memes are shaping up, I’m beginning to think Obama’s “gentlemanly” strategy may have been smart.

See also: Mark Halperin gives Obama the better grade.

Debate Live Blog

While waiting for the debate to start — will Palin be on the GOP ticket in November? Or will she decide she needs to spend more time with her family?

McCain really is one of the whitest guys on the planet, isn’t he?

McCain isn’t being specific about what he wants to do with the fiscal package.

Did McCain just say he was going to vote for the plan?

Why is he talking about D-Day?

McCain: Heads will roll.

Is there a connection between Washington spending and the financial crisis on Wall Street? It’s all earmarks’ fault.

So far McCain is not addressing the questions he’s been asked. However, I’m not sure if the average viewer would understand that.

McCain is smirking.

How do you think the two are coming across? McCain isn’t being honest or on topic, but would a less informed viewer know that?

Oh, please, most liberal voting record in the United States Senate my ass.

McCain is just talking about cutting costs, but not what he would do.

Spending freeze?

McCain is thinking old technology.

He’s still going on about the taxes. How many times does Obama have to repeat his tax policies?

We owe China a lot more than $500 billion, btw. It’s closer to a trillion, I believe.

Lessons of Iraq!

Please, ask McCain what “victory” in Iraq means.

I’m still not sure if a less well-informed viewer would be able to pick up on the problems with McCain’s answers.

McCain is repeating W’s talking points. “Central front in war on terror.”

Does McCain know that we’re having some, um, issues with Pakistan lately?

Bomb Bomb Bomb Bomb Bomb

Sending marines into Lebanon. Yes, John, remind us how old you are.

Do most Americans give a bleep about “victory” in Iraq?

We don’t like the UN, so we’ll create a counter-UN.

McCain is just about to explode.

McCain: Let’s do stuff just like W did!

McCain’s getting a bit worked up. Blow your stack, John.

McCain keeps saying Obama doesn’t understand this and that.

McCain doesn’t want to go back to the Cold War. He wants to battle the Old Russian Empire. Czar Putin?

McCain is claiming credit for the 9/11 Commission?

Largest re-organization of government. If McCain thinks that was done well, he’s nuts.

John, dear, al Qaeda doesn’t need Iraq to establish bases.

I believe Obama is correct that China is holding $1 trillion of our debt.

Good; make connection between $10 billion/month in Iraq and lack of money for domestic needs.

McCain is trying to connect Obama to Bush?

Hasn’t McCain voted against money for vets?

The fact checkers will be working on this for a week.

McCain was a POW? I didn’t know that!

Re fact-checking, Think Progress already has a lot of stuff up.

Post Game Show:

Matthews says that Obama seemed more presidential.

However, we’ve got Pat Buchanan and Norah O’Donnell saying McCain won. What’s going on on the other channels?

However, Buchanan admitted McCain seemed mean.

Joe Biden is on all the cable networks. Sarah Palin has been locked in her motel room.