McCain Out-Hoovers Hoover

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Sure, the comparisons between Herbert Hoover and McCain were inevitable ever since McCain asserted "the fundamentals of the economy are strong."

But if you think about it, McCain’s about to do Hoover one better. After all, Hoover didn’t fuck up the response to a financial crisis until after he was President. McCain’s little photo op seems to have scuttled the Paulson deal, just as it was almost finalized.

Democrats complained of being “blindsided” by a new conservative
alternative to the plan first put forward by Treasury Secretary Henry
Paulson. And the outcome casts doubt on the ability of Congress to move
quickly on the matter, even after leaders of House and Senate banking
committees reached a bipartisan agreement Thursday on the framework for
legislation authorizing the massive government intervention.

It was McCain who urged President Bush to call the White House
meeting attended by House and Senate leaders as well as Obama, his
Democratic rival. But the candidates left without commenting to
reporters outside, and the whole sequence of events confirmed
Treasury’s fears about inserting presidential politics into what were
already difficult negotiations.

[snip]

At the same time House Financial Services Committee Chairman Barney
Frank (D-Mass.) said he feared McCain was undercutting Paulson by
appealing to conservatives in the House.

“McCain and the House Republicans are undercutting the Paulson plan,
talking about a wholly different approach,” Frank said prior to the
meeting. “This is the presidential campaign of John McCain undermining
what Hank Paulson tells us is essential for the country.”

What is it that I saw on those signs, again? "Photo Op First"?

Why the Bankruptcy Change is Important

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Thanks to Masaccio for explaining what Dick Durbin is trying to do with the bankruptcy provisions on the bailout bill. It sure sounds like it would be a pretty darned sensible way to keep people in their houses. -ew

The Bankruptcy Answer

Why are Democrats pushing to include the bankruptcy revisions in the bailout bill? Let’s see what happens to a troubled mortgage in a Chapter 13. Suppose we have a subprime mortgage. The note has an interest rate of 9%, principle of $200,000, and a 30 year term. The house cost $210,000, so there was a 5% down payment.

The family made the income level by aggregating the income of husband and wife. One loses a job, they get behind, and then they get a new job paying a lot less. They file Chapter 13. The point of the Plan is to offer a proposal to repay their creditors, including taxes, secured debt, and unsecured debt. The Bankruptcy Code dictates how much they have to contribute from their paychecks. The amount is basically the difference between their income and their allowed expenses. Both of these terms are defined in the Bankruptcy Code, and are sort of like your natural understanding, but not quite. The money goes to the Chapter 13 Trustee, who distributes it in accordance with the Plan. Read more →

Bush’s Speech Fails with Most Important Audience

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Via John Cole, it appears our bankers were none too impressed with Bush’s speech last night.

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

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

I guess this is where we start talking about paying for milk with wheelbarrows full of cash, fresh off the very busy printing press.

We’re Asking the Wrong Guys Trying to Solve the Economic Crisis

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Hank Paulson and Ben Bernanke are the wrong guys to solve this financial crisis.

I’m not talking, here, about Paulson’s very obvious conflicts of interest, though those are troubling. Paulson, after all, was CEO of one of the companies that in 2004 got an exemption on leverage limits–one of the moves that led to this crisis. And Paulson’s proposed bailout would disproportionally benefit his former company.

But I’m increasingly troubled by the ways in which Paulson and Bernanke are functionally inadequate to solve this problem–at least by themselves. By having Paulson and Bernanke solve this problem themselves, we guarantee that we’ll primarily address this as a finance crisis, and not an underlying structural crises in our economy.

While both Paulson and Bernanke have responsibility for the overall economy of the country, that responsibility is focused closely on monetary policy of the US.

The Fed describes its role as follows:

  • Conducting the nation’s monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices
  • Supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
  • Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
  • Providing certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation’s payments systems

And Treasury describes its mission:

The Treasury Department is the executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States. The Department is responsible for a wide range of activities such as advising the President on economic and financial issues, encouraging sustainable economic growth, and fostering improved governance in financial institutions. The Department of the Treasury operates and maintains systems that are critical to the nation’s financial infrastructure, such as the production of coin and currency, the disbursement of payments to the American public, revenue collection, and the borrowing of funds necessary to run the federal government. The Department works with other federal agencies, foreign governments, and international financial institutions to encourage global economic growth, raise standards of living, and to the extent possible, predict and prevent economic and financial crises.

The Fed talks about "full employment and stable prices." Treasury talks about "economic prosperity" and raising standards of living and "encouraging sustainable economic growth." Read more →

Bush Mouthpiece Admits: They’ve Been Sitting on this Plan

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Hidden in an article reporting that Cheney’s going to go hunt up some support for the $700,000,000,000 bailout is this admission that the Bush Administration has been sitting on it for some time:

Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough. [my emphasis]

Which raises three questions for me:

A) First, as we’ll discuss today in the book salon on Woodward’s War Within, the Bush Administration refused to admit Iraq was FUBAR even while, for seven months, they were drumming up a new strategy because it was FUBAR. They did so because they didn’t want to affect the mid-term elections.  So has the Bush Administration been formulating a plan to bail out their buddies, in secret, because they didn’t want to let the voters know how badly they had fucked up the American economy before November?

B) And if that is true, how much worse has the economy gotten–and how much more expensive will the bailout be–because the Bushies were trying to hide yet another colossal Republican failure?

C) Or, did they simply not tell us about their fuck-up so they could spring the $700,000,000,000 surprise on us on a Friday and demand results by Monday? The Shock Doctrine at work!

Though, I guess "A" and "C" are not necessarily either/or propositions. 

Well, I Guess We Knew There’d Be Demands…

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From Helena Cobban (h/t MinnesotaChuck).

China’s President Hu Jintao has now explicitly linked his country’s readiness to show good cooperation in resolving the US financial crisis to the question of Taiwan.

Beijing’s official Xinhua news agency reported today that Hu and Pres. Bush conferred thusly about the crisis yesterday evening (Washington time):

Bush briefed Hu on the latest development of the U.S. financial market, saying his government was well aware of the scope of the problem, and had taken and would continue to take necessary measures to stabilize the domestic and world financial markets.

Hu [said he] hoped the measures would soon take effect and lead to a gradual recovery of the financial market, which he said not only serves the interests of the United States, but also those of China, and benefits the stability of the world financial market and the sound development of the world economy.

… He said China is ready to work with the U.S. side to intensify dialogue, exchanges and cooperation, and properly handle issues concerning mutual interests and of major concern, particularly the Taiwan question, in a bid to push forward the sustained and steady development of the Sino-U.S. constructive and cooperative ties.

How long do you think Hu has been waiting for the moment he had Bush by the balls?

When you come begging to your banker, you’ve got to expect him to issue demands, I guess.

No

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noright.thumbnail.jpg

CR has posted the "bailout plan," as it currently stands.

Glenn Greenwald has an important response, as does gjohnsit over at DKos.

But here’s all you need to know. Hank Paulson is asking for $700,000,000,000. That’s $2,333 from every man, woman, and child in the United States.

In exchange for that money, Paulson is unwilling to accept any demands to make markets more transparent, limit executive compensation, or assist homeowners fighting foreclosure. The sole purpose of that $700,000,000,000 is to bail out Wall Street and only Wall Street, but not to fix it, or our larger economy.

He is asking to be absolutely unbound by any law when he spends that money.

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.

The only "string" attached is a semi-annual Congressional report–one in which they would have zero leverage to influence his choices. 

 Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Paulson didn’t even have the class to call this a "review"–which underscores the degree to which he wants to be unbound by any and all review, legal, congressional, or anything else. 

Hank Paulson–one of the CEOs who got us into this mess–is asking each and every American to give him $2,333 to do with as he sees fit, with absolutely no strings attached.

No. 

No Right Turn photo by greefus groinks

No, McCain, You ALREADY Fired the FEC Chair

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I can understand why John McCain would be demanding (former) FEC Chair David Mason’s head. After all, before Bush did fire Mason, the FEC Chair was poised to call McCain on his attempts to game the campaign finance system.

The White House today withdrew the nomination of “holdover” FEC Commissioner David Mason to serve as a Commissioner on the FEC. 

The White House dumped Mason after President Bush had twice proposed Mason for the FEC in the last two and a half years, in December 2005 as a recess appointment and in January 2007 as a nominee to the FEC for Senate Confirmation.

The only apparent reason for President Bush to drop Commissioner David Mason at this stage, an FEC candidate he had twice proposed for the Commission, is to prevent him from casting an adverse vote against Senator McCain on important enforcement questions pending at the Commission. The questions deal with Senator McCain’s request to withdraw from the presidential primary public financing system and the consequences of a loan the McCain campaign took out and the collateral provided for the loan.

Under these circumstances, President Bush’s dumping of Mason can only be viewed as a bald-faced and brazen attempt to wrongly manipulate an important enforcement decision by the nation’s campaign finance enforcement agency.

So I’m not surprised McCain called for FEC Chair David Mason’s head rather than SEC Chair Christopher Cox’s head. It was a predictable unconscious slip, one that probably happened because McCain was thinking about scapegoats he could attack to cover up his own complicity and screw-ups.

But I did think I’d be nice and remind McCain that he already got David Mason fired.

What You and I Bought Sarah Palin

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A number of people have pointed to this David Talbot article describing the bordello-red wallpaper Sarah Palin illegally plastered onto the walls of her mayoral office. But that’s not the most important part of the article. While Palin’s poor decorating taste offers one more piece of evidence she abuses power, her decision to redecorate is still an issue between the residents of Wasilla, who paid for the tacky makeover, and their former mayor.

Not so Palin’s reportedly ego-driven decision to build an emergency dispatch center for Wasilla.

Local officials are also highly critical of Palin’s decision to build an emergency dispatch center — even though Wasilla and nearby Palmer already shared the costs of an emergency operation for the Mat-Su Valley. As a result of the duplication, there are now two expensive operations for an area with 85,000 people, while the city of Anchorage, with a population of over 300,000, makes do with one emergency station.

"Don’t tell me about earmarks," snorts a borough official. "Because of Palin’s ego, she couldn’t stand the idea of sharing an emergency dispatch operation with Palmer, which has been Wasilla’s town rival ever since her high school basketball days. So she ran to [Senator] Ted Stevens to get an earmark for her own system. Now we have two expensive emergency systems and both are losing money. She’s no budget cutter — give me a break. She’s just the opposite." [my emphasis]

You see, according to Taxpayers for Common Sense, you and I paid $1 million for that dispatch center in 2002, and another $750,000 in 2003, all because Sarah Palin has an insecurity complex about Palmer, left over from her high school basketball days.  It was a terrible policy decision–one the Mat-Su borough, which has to operate the center, is still hemorrhaging money over. And it was decision that owes everything to Palin’s then cozy relationship with indicted Senator, Ted Stevens (immediately after Uncle Toobz got Sarah her dispatch center money, she served as Director of Stevens’ Excellence in Public Service 527, channeling corporate money into the Alaska Republican Party). You and I paid $1,750,000 in Stevens-tied earmarks so Sarah Palin could boast her home town was as good as the town next door.  

As early as seven years ago, Sarah Palin was already corruptly screwing you and me I with her bad policy decisions.

Update: Thanks to brendanx for correcting really stupid grammar Read more →

McCain Campaign Ad: Wanted, Economic Surrogate

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Now that we’ve become a socialist country (strike that–an 80% socialist country) under George Bush and now that McCain himself is channeling Herbert Hoover, the McCain campaign has a surrogate problem.

They’re actually fairly lucky–Phil Gramm, the architect of this year’s economic meltdown, had already gotten hidden away somewhere after he called us all a nation of "whiners." Had he still be out campaigning for McCain, it’d have made it a lot easier for us to explain how electing McCain (and putting Phil Gramm in charge of Treasury) would only exacerbate our economic crisis, since Gramm’s the guy who caused it in the first place.

But then yesterday, McCain’s top domestic advisor, Douglas Holtz-Eakin, claimed that John McCain had invented the blackberry. Holtz-Eakin is still out there boasting of McCain’s great accomplishments, but his credibility has declined from that of a carnival huckster to that of a clown.

On the same day, Carly Fiorina stepped in it too. She already was a terrible surrogate to talk about the economy. After all, she failed as CEO of HP. More importantly, one of the McCain campaign’s responses to this economic meltdown is to attack CEOs–like Fiorina–who devastate their company but still get multi-million dollar golden parachutes.

But things got worse yesterday. Fiorina–who after McCain spotlighted in an attempt to have a woman, any woman, defending Sarah Palin’s qualifications to be Veep–trotted out and asserted that Palin is not qualified to run a corporation. And for that matter, John McCain isn’t either. Somehow that comment, not Fiorina’s qualifications as a poster child for wasteful golden parachutes, was enough for the McCain campaign to start canceling Fiorina’s speaking engagements. 

McCain might have any of the number of highly-connected 170-odd Republicans running his campaign. Then again, seeing as how Obama’s making effective ads pointing out that McCain’s campaign is being run by the same special interests McCain claims he’ll take on, that doesn’t help McCain either. 

So who’s that leave? I understand Mitt Romney was out touting McCain’s ability on the economy last night. But given that Mitt agrees with the rest of the world that McCain is a pathological liar, Mitt isn’t the best surrogate for McCain either.

I gotta say, it’s a testament to how bad this economic crisis is when you’ve got a Republican candidate for President who can’t find an appropriate economic surrogate.