My take on the Citibank bailout

By Libby Spencer

The legalized looting of the Treasury continues apace. The Fed apparently reached an agreement to guarantee $306 billion worth of Citibank's shitpile and toss them $20 billion in cash from Paulson's slush fund. And what are they going to do with the money? Send 1,000 jobs to the Philippines.

"We're investing in systems and processes, and next year we will have another 1,000 (workers)," Citigroup's country business manager Mark Jones was quoted as saying.

He added that the new jobs to be created in the Philippines would be for Citigroup's call center and financial reporting operations.

And why are they bailing out yet another corporate behemoth that outsources US jobs, yet refusing to rescue the Big 3 in Detroit, who despite their problems actually employ Americans you ask? Bob Reich has the answer.

...That's because Wall Street's self-serving view of the unique role of financial institutions is mirrored in the two agencies that run the American economy -- the Treasury and the Fed. Their job, as they see it, is to keep the financial economy "sound," by which they mean keeping Wall Street's own investors and creditors reasonably happy.

Because the public doesn't understand the intricacies of finance, it's easily persuaded that this is definition of "soundness" is the same as keeping savings flowing to the banks so that the banks can lend to them to Main Street. That's why the public and its representatives have committed $700 billion of taxpayer money to Wall Street and another $500 to $600 billion of subsidized loans to the Street from the Fed -- bailing out the investors and creditors of every major bank, including , any moment, Citi -- only to discover, at the end of this frantic and unbelievably expensive exercise, that American jobs and communities are more endangered than they were at the start.

I want to know why these thieves are going before the Fed for handouts instead of standing in front of a judge waiting for bail to be set.

(Cross-posted at The Impolitic.)

Born in the USA?

By Carl

You know, I was born and raised in a free country, not a socialist, totalitarian state:

WASHINGTON — Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks' balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

Effectively, this gives the US Federal government the right to dictate bank policy, decisions, and effectively makes the US Government a shareholder, directly dependent on the quarterly profit of these firms.

This is not freedom, folks. Banks will be obligated to conform not just to the regulations and laws the US Congress has passed, as overseen (however poorly) by the executive branch, but to the caprices and whims of whatever man sits in oversight, presumably Hank Paulson, Treasury Secretary until January 20, 2009.

And who knows who, beyond that?

Now, that person may make good decisions, possibly. And he may influence better oversight and policy from the bank managers and boards themselves. But he also may make terrible decisions, terrible choices, and that alone makes this a really bad idea. After all, underpinning each and every bank in America, each and every investment bank in America, is the hard-earned money of the American worker. Those are your savings accounts that WaMu leveraged out to lend to mortgagers. Those are your checking accounts that Wachovia invested to earn themselves an extra few pennies in income.

And these were people who were supposed to be experts! Now turn this power over to someone with a political agenda.

Do you see where this might go? Imagine a bank in New York state that has lent money to build an abortion clinic, overseen by a McCain Treasury Secretary shoved down his throat like Sarah Palin was. Or a bank in Arkansas that's been forced by court order to lend money to minority clients for affordable housing, something guaranteed not to give the same return as a commercial property in Little Rock.

Suddenly, the government is not only in a position to dictate policy, but enforce it from inside, with little or no dissent. Imagine if in the 1950s, Dr. Martin Luther King Jr. had a credit card from a bank run by the government, the same government that tacitly allowed the states to determine segregation policies? Do you honestly think they would listen to a lone nutcase? Or would they yank that card, freeze hsi assets, and bring him to "justice"?

It gets worse, folks. Just the other day, there was talk that the Treasury Department and Federal Reserve might step in to buy commercial paper issued by companies like General Motors, or IBM, or Campbell's Soup. Now take those banking scenarios and extend them to buying food, clothing, shelter, or transportation.

And the bad news is capped off with the little notice but plaintive wail of individual states now unable to make good on their own bond issues, unable to make interest payments, unable to provide sufficient collateral for the funds they've borrowed, in danger of default.

Not only are they having trouble making good on these bonds, but they can't even refinance them because the credit markets are effectively closed until the bailout funds are made available, which may take months.

Careful readers of this blog will note that more than two years ago, I predicted the worst economic meltdown this nation, this world, has ever faced.

I underestimated the threat. This will make the Great Depression look like a picnic.

(Cross-posted to Simply Left Behind.)

From bailing out to buying in

By Creature

This is the bailout plan we've been waiting for. From the NYT:

Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

I don't know much, but from all I've read this is the path we should have been considering from the start. It's good to see the Treasury, now that it has the billions it asked for, acting as their European counterparts have in trying to get a handle on this crisis. For the unhinged Right it's socialism; for the rest of us, with actual brains, it's sound policy.

For more reaction, see Meme.

(Cross-posted at State of the Day.)

Show me the veeps: Live-blogging the Biden-Palin debate

By Michael J.W. Stickings

UPDATED FREQUENTLY -- PLEASE ADD YOUR COMMENTS AND LET US KNOW WHAT YOU THOUGHT OF THE DEBATE.

THIS HAS BECOME A VERY LONG POST. SCROLL DOWN FOR OUR LATEST UPDATES.

8:51 pm - Okay, here we go. Less than ten minutes before the debate. Keep checking back. I'll be updating this frequently over the next couple of hours.

8:53 pm - First observation: CNN is populated with fools. In response to Jeffrey Toobin's poing that Palin's interview with Couric was a disaster, John "Magic Board" King said that everyone has a bad day now and then. Really? Palin's utter incompetence can be chalked up to a bad day? And don't get me started on Gloria Borger, who has yet to say a single intelligent thing in all my time watching CNN throughout this entire campaign -- okay, I'm exaggerating, but she's just so... trivial.

8:56 pm -- Here's the problem going in: expectations. According to Toobin, generally a solid Obama supporter and Democrat, Palin just needs to look competent. See how low the expectations are for her? I wrote about this yesterday. David Gergen at least argued that she needs to look like a leader -- in other words, much more than merely competent.

9:00 pm - By the way, I'm drinking Yamazaki single malt whisky (aged 12 years). The Japanese tend to like their whisky watered down, but I'm having it straight, with just a trickle of cold water. I prefer my whisky a bit smokier than this, but it's good stuff. Hopefully -- if I may take from my favourite song of all time by my favourite band of all time -- it'll keep me going through the show. (Hello, hello, hello... is there anybody in there, just nod if you can hear me...)

9:04 pm - Palin asks if she can call him Joe. Nice, populist touch, even if her plan is to attack him. And Biden's off to a good start: very sober and restrained, but hitting Bush hard. Yes -- focus on homeowners, talk about Main Street. He's making good points while contrasting Obama-Biden from McCain-Palin.

9:05 pm - Palin, predictably, is playing the populist card, but she's doing okay so far. There's no real substance to what she's saying, but at least she's speaking coherently and is looking straight into the camera. But praising McCain for the bailout bill? Putting politics aside? Bullshit.

9:07 pm - This is good. Biden talking about his record and bipartisanship. And calling out McCain for his stupid comment about the fundamentals of the economy. This is what Biden has to do: focus on McCain. Make this about McCain. And McCain wasn't talking about the workforce, which is Palin's defence. "A team of mavericks." More bullshit.

9:09 pm - Palin: Americans want something different? Yeah, Obama. Really, how are McCain and Palin going to stop the greed on Wall Street? Hockey moms, Joe Six-Pack. Yup, she's trying to be the folksy all-American.

9:11 pm - Biden is being so careful. Taking it to McCain -- on McCain's love of deregulation, for example -- but, again, being very restrained. Let Palin look like she's trying too hard. And here she is, attacking Obama and Biden on taxes. So predictable.

9:14 pm - My friend and co-blogger J. Thomas Duffy just sent me a post he's done. Check it out.

9:15 pm - Palin won't answer the questions the way the moderator wants? She'll talk straight to the people? Thankfully, Ifill cut her off. It's because she's just a wellspring of hollow talking points.

9:17 pm - Biden is right. This is about class. Higher taxes for the wealthy, who have already had their taxes slashed, doesn't equate to higher taxes for the middle class.

9:18 pm - Oooh, Palin has details of McCain's health-care plan. Biden needs to go after her on this. It's a market-oriented plan, with Americans required to find their health care on their own in the market. How does that sound at this time of financial crisis?

9:20 pm - Biden: solid. Tax breaks not for Exxon but for people from places like Scranton. Good job. He has such command. "The ultimate bridge to nowhere." Cheap, but a nice touch -- and one that drew a laugh from the audience.

9:23 pm - Stay in control, Joe, stay in control. She's just trying to taunt you. Really, though, she's attacking him for supporting Big Oil? She basically wants to allow Big Oil to rape Alaska.

9:24 pm - She didn't answer the question, by the way. What would she take back from her promises? She can't think of one friggin' thing? They'll keep all their promises? Bullshit.

Creature: "He has command, but he's coming across a bit too strong. I'm not sure he's playing well.

J. Thomas Duffy: "Palin just threw a Shout Out to the base conservatives, when she called on people to 'step out of the way and let the Private Sector handle it' ... She hasn't flubbed anything yet, but she's sounding awfully canned."

Creature: "Though her folksy shtick make me sick." I hear you, my friend. (Thankfully, this whisky is really good.)

9:28 pm - Come on, let's get to social and foreign policy...

9:29 pm - Palin just wants to read from her mental script, avoiding pretty much every question. It's crazy for her to defend her and McCain's record on alternative energy. Come on, Joe. Don't let her get away with it. Obama's the one with the viable plan for energy independence.

9:31 pm - Ah, climate change. As she told Couric, she doesn't think it's all man-made. No one says it's all man-made. But she clearly doesn't get it. You have to know and understand the causes in order to do anything about it. What an idiotic response.

9:33 pm - Yes! Biden makes that point. It's man-made. And you have to know the causes. McCain has voted repeatedly against funding alternative energy. Invest in clean technology, export that technology. Good stuff. All the Republicans have is more and more drilling.

9:34 pm - "Drill, baby, drill," says Palin. Insane. Drilling won't make much of a difference in the short-term, if any at all. We're looking decades into the future. Oh, and she neglected to answer the question (about clean coal). Again.

9:36 pm - "How do we deal with global warming with additional carbon emissions?" asks Biden.

9:37 pm - Social policy... Same-sex benefits. Good answer from Biden. Constitutional benefits. And Palin? -- no change to "traditional definition of marriage." Oh, but she'll be "tolerant." Thanks. "I have a very diverse family." Uh-huh. She she may be for equal treatment in terms of benefits, but... her answer is about marriage. Damn. This is where I can't stand Obama and Biden. They say they aren't for same-sex marriage. Come on. Let's get past this.

Creature: "She's not answering the questions and Gwen's letting her get away with it. What's up with that? I'll agree with JTD very canned (but it may work)."

9:40 pm - Foreign policy. Iraq. Palin's pro-surge talking points are, once again, predictable. "We have got to win in Iraq." Okay... and how? And what is victory? Where's Katie to ask some follow-up questions? "We're getting closer and closer to victory." Really? Evidence?

9:41 pm - Biden: Obama's plan is Maliki's plan. It's what the Iraqis want. Palin attacked Obama for voting against funding the troops, but, of course, that was a bill without a timetable. McCain voted against funding the troops on a bill with a timetable. Good for Biden for making that distinction. Biden: "We will end this war." For McCain, "there is no end in sight." Solid. Solid. Solid. And Palin's playing the surrender card. Bullshit. Backed into a corner, all she has left are inartful smears.

9:44 pm - Palin thinks she's got Biden and is so smug about it (about Biden once saying nice things about McCain). She makes the "cutting off funding" point again. She's running out of talking points. Good, Joe. Going after McCain for being so utterly wrong in Iraq from the beginning.

9:47 pm - Biden certainly knows his foreign policy. His discussion of Pakistan is pretty good. Palin: "central war on terror" is in Iraq? Right, sure. So she doesn't think Iran should be allowed to acquire nuclear weapons. But it's not like she actually has a plan or anything. It's all hollow rhetoric.

9:49 pm - Oh, Palin had a nice conversation with Kissinger. Great. We're back to last Friday's debate. Palin is making the misleading point that Obama wants to meet with America's enemies without pre-conditions. "Simply not true," responds Biden. He's clarifying. Talk, talk, talk -- this is diplomacy. Good point: McCain won't even sit down to talk with foreign leaders.

9:52 pm - Seriously, what does Palin know about the Israeli-Palestinian conflict? Let along a two-state solution? "We should never allow a second Holocaust." Obviously. Again, there's no substance to anything she's saying.

My friend T-Steel from TMV: "I'm trying to remain impartial but Governor Palin is just to general and sweeping. She is working her notes hard."

J. Thomas Duffy: "The longer this is going, the more Palin is going into the Tina Fey/Katie Couric mode, that she's splaying all over the place, almost that we can hear the words in her head being lifted on to the conveyor belt, going into the "Out" tube..."

9:54 pm - "The only thing on the march is Iran." -- Biden. Well said. Bush's policies have been abject failures. "We both love Israel." -- Palin. Fantastic.

9:55 pm - Jesus. Palin's not even coming close to answering the question. She's all over the place. Reform, McCain the maverick, yadda, yadda, yadda... There are blunders in every administration? Bush's blunders have been rather more significant, no? And Biden makes a good point in response: McCain's policies would be just like Bush's. I'd say: likely even worse.

9:57 pm - Wait, did Palin just say there's a safe way to use "nuclear weaponry"? Huh?

9:58 pm - Biden's confident. Maybe a bit too strong. But he's right that an Iraq-like surge won't work in Afghanistan. Which was Palin's point. She wanted desperately to talk about Afghanistan, but all she could say was that there should be a surge there.

9:59 pm - Biden on nuclear proliferation, one of Obama's strongest issues. Palin's back to the surge, though -- not answering the question. She's reading her notes. Stay in control, Joe. Biden: We've been calling for more money and more troops for Afghanistan, not McCain.

10:01 pm - Biden on Bosnia/Kosovo, Iraq, and Darfur. He's a hawk, there's no denying that. But he was right about Bosnia. He's a bit shaky on his support for the Iraq War, though: he was for it, but not really. Hmmm. But he does have a workable plan on Darfur.

10:03 pm - And Palin plays the outsider card. "Straight talk." Bullshit. But this is a weak spot for Biden, who has disagreed with Obama on Iraq. She gives a decent answer on Darfur, but without much substance. Divestment, that's it.

10:05 pm - Good. Biden's tying McCain to Cheney on Iraq. His own views may be somewhat contradictory, but he can get around that by focusing on McCain. In response, Palin is waffling. McCain know this and that. "He will know how to implement the strategies... He will know how to win a war." That's all she's got, folks. And I'm out of whisky. Damnation.

10:08 pm - If necessary, Biden would carry out Obama's policies -- and he does well to provide an overview of them. "There are such stark differences" between the two tickets. Palin: "What do you expect? A team of mavericks." Bullshit. Seriously. Bullshit. "Putting government back on the side of the people." Really? Like Bush's tax cuts? Like the ongoing Iraq War? Like more deregulation anywhere and everywhere. And she's folky again: Wasilla's Main Street. Oy. And, once more, she shows she's a good Republican by smearing Obama and Biden on taxes.

10:11 pm - Solid rebuttal from Biden on the middle class. Palin: "Say it ain't so, Joe." Well, I guess you knew that was coming. Oh, good, she winked at her dad. She doesn't know what she's talking about.

10:14 pm - What does a vice president do? Hey, everyone, it's civics class with Sarah Palin. Needless to say, Biden's response is much more substantive.

10:16 pm - Palin keeps reading her notes. Really weak. She's sounding like she did with Couric. Biden: "Dick Cheney is probably the most dangerous vice president we've had in our history." Something like that. Nice. And he understands the VP only presides over the Senate in case of a tie.

10:18 pm - What's Palin's Achilles heal? The CW is lack of experience, says Ifill. Palin, again, is not answering the question. She's talking about how great her experience is. "Beacon of hope." "Shining light." "We represent a perfect ideal..." Wow. So incredibly banal. So incredibly empty.

10:20 pm - Biden. The CW is lack of judgement, says Ifill. Biden acknowledges that, and moves on. Well done. And he's talking about his personal story, about being a single father. This may be Biden't best moment of the entire debate. He knows what it's like to sit around the kitchen table, he knows that people need hope. He's a passionate man. He is what he is. He won't change. And what do we get from Palin? More maverick talk, as if she and McCain are all about change. Come on. "Change is coming and McCain is the leader..." Bullshit. Biden: McCain is no maverick. He voted for Bush's tax cuts. He voted against health care for children. He didn't support tax cuts for people who want to send their kids to college. He hasn't been a maverick on the war. Kitchen table stuff again... very strong. "Maverick he is not," said Biden of McCain. Excellent.

10:24 pm - Biden's reading his notes. Stop it. And he's talking about judicial appointments. Good to bring up the Supreme Court, given Palin's appalling non-answer to Couric on SCOTUS cases. Palin says she's never had to compromise on anything important. But now she's talking about bringing both sides together. Oy. More bullshit.

10:27 pm - Biden needs to look directly in the camera. But he's making a strong, if convoluted, case for reaching out in a bipartisan way. And Palin's talking about her "diverse" family. But she's all over the place, like she's plucking out talking points, patching one-liners together.

10:29 pm - Final statements.

10:30 pm - Palin attacks "the mainstream media" as a "filter." We'll fight for the middle class, she claims. "We are so blessed... We have to fight for our freedoms... It was Ronald Reagan who said... There is only one man in this race who has fought for you..." Such mindless drivel.

10:31 pm - Good. Biden's looking into the camera, talking about paying the mortgage, sending kids to college... the bread-and-butter issues on Main Street. "It's time for America to get up together." Very well done.

10:33 pm - Alright, that's it.

**********

Creature: "This is disappointing. Palin played the agreeable role Barack Obama played Friday night and Joe Biden played the surly old man. She was canned, she was overly folksy for my taste, she spoke in generalities, she didn't answer the questions but she's was prepared and far from the ditsy caricature that she's been portrayed as recently. Unfortunately, a rejuvenated Plain will be the new narrative after tonight."

Well, this is what I feared going in, that, with such low expectations, a decent performance by Palin would be spun as a "comeback." And she certainly did... okay. But "rejuvenated"? We'll see. She did much better early on, discussing economic issues. I thought she was rather weak on foreign policy, and it showed. And, towards the end, her answers seemed canned, like talking points stitched together. And so much of what she said involved taxes, the usual Republican attack on Democrats. It doesn't work this year.

As for Biden, I think he did fairly well. He was strong on the issues and he avoided a major gaffe, and avoided coming across as arrogant and condescending.

10:37 pm: Gergen thinks Biden gave the best debate performance of his life. But the overall assessment seems to be that Palin held her own. Again, she beat expectations. Oh, so Borger does say something mildly perspective, if obvious: Palin didn't answer the questions. No substance, says Hilary Rosen. "On Iraq, she wandered all over the place." No game-changer, says Ed Rollins.

All so predictable. There was really nothing Biden could do to win, nothing he could do to stand out. It was all about Palin: Would she flounder and embarrass herself? Would she single-handedly sink the McCain campaign tonight. Obviously, that wasn't going to happen. As so many people were saying going in, myself included, she was bound to give a decent performance. And, well, she did -- in superficial debating terms. But she lagged far behind Biden on the issues, on substance, and I thought Biden had some particularly excellent moments.

So who won? Well, let me think about it for a moment...

10:44 pm - More Creature, from his post-debate post: "[Palin] was prepared and far from the ditsy caricature that she's been portrayed as recently. I think Biden did fine. He certainly ended very strong and I think he was genuine (and right on the issues, BTW). But, unfortunately, a rejuvenated Plain will be the new narrative after tonight."

10:55 pm - Yup, here's the spin. Rollins: "She's back." This is the point Creature and I are making. Palin may have won this debate simply by not embarrassing herself. The expectations for her were that low. Forget that she failed miserably on the issues. All she wanted to talk about was energy and taxes. On pretty much everything else, she was just regurgitating the talking points, often stringing them together incomprehensibly. No, it wasn't nearly as bad as her Couric performance, but that's the point. By doing better, she triumphed.

10:57 pm - But let's not look past Biden, even though all the talk is about Palin. He did very well. He did what he had to do. He showed a commend both of himself and of the issues, he didn't fuck up, didn't have to extricate his foot from his mouth, and, again, on substance, won easily. The problem is that media (and many voters) don't judge debates on substance. For them, it's about style and expectations.

10:59 pm - So who won? I'll call it a slight "win" for Palin -- and especially for McCain, who should get a boost from this. If nothing else, the media have something else to talk about other than Obama's surge in the polls and McCain's ridiculous behaviour in response to the financial crisis. And it's sad to say that it's a "win" for Palin -- a perceived win, that is. It's sad that this is what American politics, even at the highest level, has been reduced to.

11:05 pm - "Sarah Palin had a pretty good night tonight." Republicans will be energized again. See? Gergen agrees, but "it doesn't change the dynamic of the race." Let's hope not. Toobin agrees. This debate won't bring independents over to McCain. Hold on, I need to switch over to MSNBC. (I can't believe I just typed that.)

11:08 pm - Howard Fineman on Palin: "a wolverine attaching herself to the pantleg of a passerby." Something like that. Good line. And Olbermann's calling her out for not answering the questions. But, Fineman again: "She was more than ready for prime-time." Sure, if prime-time is pre-packaged excrement. Oh, wait, it is. Come on, talk about the substance... and they are. Fineman: "I don't think she helped at all."

11:11 pm - Ah, Rachel Maddow... finally, some intelligence. "She hammed it up" on the folksiness. "Joe Biden was boring." She comments on Palin's suggestion that the veep's powers be expanded: "the legacy of Cheney."

11:13 pm - Initial poll, reported by Olbermann: Biden victory on content, but not much moved in terms of the race itself. And we'll have to wait to see what the polls say. Remember that many pundits were calling the first presidential debate a tie or even a slight McCain victory. It wasn't until the polls came out that it was clear that it was a solid victory for Obama.

LindaBeth: "My big gasp came at the end, and I just got finished debating it with my b/f's dad: in her closing statement, Palin called herself a 'middle class family'. I was almost certain that wasn't at all true, considering that the Tax Foundation cites that $122,000 is the max family income that can be called 'middle income' (it's the top figure for the middle 60% of American families' incomes). Huff-Po cites her economic resources, including her $250k income, here."

11:29 pm - Newshoggers' Fester: "Gov. Palin played to her strength of being a nasty talking point repeated with a kindergarten teacher's voice. She also managed to string words in forms that resembled sentences and the occassional sentence group into paragraphs. Sen. Biden kept his feet firmly on the ground and out of his mouth while his fire was aimed straight at McCain."

An update from Creature: "The spin has begun and maybe I was wrong. Bob Schiffer gave huge props to Biden. Rachel Maddow also says Biden was more human. Though, Pat Buchanan -- speaking for the base, of course -- was head over heels for Palin... Early polls, according to CNN, give the debate to Biden. Maybe my first impression, pre-debate, was right after all. Interesting. Maybe the bloom is so off the McCain/Palin ticket that there's no going up for them."

12:23 am - Sorry, just took a break to decompress -- with some tea, some dessert, and Jon Stewart.

12:24 am - The Politico's Roger Simon, a guest on Hardball, thought Palin was amazing. Breaking news: Roger Simon is an idiot.

12:25 am - I thought Keith Olbermann did a fantastic job on Palin's Afghanistan blunder. First, she referred to the U.S. commander in Afghanistan as "McClellan." Actually, the current commander of the International Security Assistance Force is Gen. David McKiernan. Second, McKiernan did say, contrary to Palin's claim, that an Iraq-like surge wouldn't work in Afghanistan.

12:30 am - The polls -- CBS and CNN -- have Biden as the winner. Once again, the pundits are wrong.

12:32 am - Although, this headline from the AP could be the dominant spin tomorrow: "Palin stands her ground in VP debate with Biden." See, the expectations game. That's what Palin won.

12:33 am - For some other live-blogging of the debate, now in the past (so, according to McCain-Palin, it no longer matters), see Think Progress and Andrew Sullivan. Kos has some post-debate thoughts here: "Sarah Palin won! Actually, she survived, since she had no 'deer in headlight' moments... On the merits, Biden won easy. On the things that debates are scored on, it was a draw. And for us Democrats, that's the same as victory." (On another matter, Kos thought Gwen Ifill was "excellent." I thought she was just okay. Sullivan thought she was "intimidated, peripheral, neutered."

12:39 am - Sullivan has additional debate reaction here. He also makes some good points here, including: "Palin's inability to answer real questions, her capacity to avoid follow-ups, her slightly manic quality, and her inability to relate to working class voters came across... What we need now is a press conference with Palin. She needs to be forced to answer follow-ups. She needs to be made accessible to the press and thereby the American people." Indeed she does.

12:41 am - By the way, CNN has a transcript of the debate here. I'm sure it's a fantastic read.

12:42 am - And that's it for me for tonight. It's been long, but fun. Thank you all for stopping by, and especially to all of you who took the time to share your thoughts. (I encourage you all to read the comments. There are quite a few of them, and many of them are excellent.)

And thank you to Creature for his fantastic contributions throughout the evening, as well as to JTD and LB. I'll be back tomorrow, along with the co-bloggers, with more reaction. I'm sure there will be a lot more to say. Stop by and read us again.

Good night, everyone, and take care.

A real bailout

By Carl

OK, I've given this at least as much thought as McCain did to skipping Letterman last week, and I have a bailout plan. It's not simple, it won't be easy, and it will take a few months to work itself through the system. Please consider this as part of the "NotPresident" Campaign Platform ©.

Here goes:

1) End the invasion of Iraq, immediately. In totality, this has cost us nearly $700 billion over the past five years. I don't think this is a coincidence. I sometimes wonder, late at night after that cup of cocoa that's supposed to make me sleepy for three days, if indeed we aren't paying extortion money to Al Qaeda, instead of bailing out the banks.

2) Take that $700 billion bailout and pay it to every man, woman, and child in the country. It seems to me that this is a no-brainer. It's roughly $3,300 per person. People who need it for their mortgages will help bailout their local bank. People who don't need it will either spend it or invest it, which will raise both economic activity and available investable capital. More on this in a later post. And this way, accountability is directly to the American people.

3) Cut out the middle man. There ought to be a truth-in-lending law that traces who your specific mortgage is sold to. If you need to bargain for a refinance or a repackaging, that's the person who you ought to be speaking to. They have the skin in the game (by buying the mortgage, they take the risk out of your bank's balance sheet), plus this forces them to personalize their policies regarding refinances/repackagings. Right now, they can be bloodless, heartless bastards. Let's force them back into the pool.

4) Raise taxes on the rich. Obama has already said he would do this, but he needs to be clearer, much clearer about it. If I were debating McCain, and were challenged on this, I would look straight into the camera and say the following: "My fellow Americans, Senator McCain would like you to believe that I will raise your taxes. Well, I won't, and this is a promise you can take to the bank: I will not raise your taxes. I am going to raise theirs, and that terrifies them."

5) Create government work jobs, make work if necessary. $3,300 is a good start to jump starting the economy, but our workforce will be suffering layoffs. We will need a program to absorb as much of these folks and utilize them for the good of the nation. We have infrastructure problems, we have security issues, and we can create grand programs to modernize such things as Internet access in rural communities (yes, they still have dial-up in large swaths of the country!) and bring green-energy technologies to everyone.

6) Impose an excess profits tax on oil companies. 40% ought to do it, above and beyond the profit earned at the $50 a barrel level. Hey, we gave them a price support when oil was hovering around $15 a barrel, they ought to be *grateful* to pay.

7) Strong incentives to communities to develop mass transit. Transportation uses about two thirds of US energy consumption each year. That's ridiculous. This could be part of my public works program. Our economic freedom will never be assured until we can get people out of their cars and into work.

8) Treat corporations as second class citizens. Finally, I would nullify the 1979 Supreme Court decision that expanded the "civil" rights of corporations to actually make them more free than you or I. It's about time to acknowledge that in this nation, speech is not free, but is priced at what the market can bear and that corporations have an enormous advantage over true human citizens. If I had to pack the SCOTUS to do this, I would, but I would simply have Congress pass new legislation, and hold a figurative gun to the head of any Congresscritter who felt even the slightest temptation to vote his re-election coffers.

There should be more done, but this is the barebones outline (as I said, I've given this only a little thought) for a bailout plan that rewards human beings for surviving this far, and not faceless corporate entities.

(Cross-posted to Simply Left Behind.)

BREAKING NEWS: Senate to vote on Bailout Bill

By Michael J.W. Stickings

Any minute now...

It'll pass by a wide margin.

Note: It's not the House version. It's full of add-ons and is more expensive (not that anyone really knew, or was in a position to predict, the price tag of Paulson's plan).

CNN has the details of what's new in the bill. Here's the problem -- one of them, anyway: The bill is an attempt to appease, and bring on board, House Republicans. Along with raising the FDIC insurance limit from 100K to 250K, the bill prescribes a number of tax breaks. Overall, they're fine, especially the tax breaks on renewable energy for businesses and individuals. What's important, too, is that, as with the House, "the Senate would only allow the Treasury access to the $700 billion in stages." But is this now too much of an appeasement?

I'm still in principle opposed to the bailout. But, at the same time, it seems to me that something must be done, and soon, if only for the sake of public confidence and market stability. There are viable alternatives, but this is what's in play now. And perhaps, just perhaps, it's better than nothing.

(I'm trying to bring myself to accept what is about to happen. I worry that this is still, at its foundation, nothing more than a huge transfer payment to Wall Street, and that the add-ons, from both sides of Congress, are little more than disposable window-dressing, a vote-winning sham (particularly to get Democrats on board). The key is to protect homeowners, after all, not to stuff the coffers of Wall Street failures. And yet stuffing is what this is.)

Stay tuned.

UPDATE (9:00 pm): No vote yet. Do they have the votes?

UPDATE (9:11 pm): Alright, they're voting. And it looks like a landslide.

UPDATE (9:16 pm): Ben Stein and Karen Hughes are on Larry King. I feel like vomiting. Or watching Ferris Bueller.

UPDATE (9:20 pm): And it passed.

UPDATE (9:23 pm): 74 to 25. (Kennedy didn't vote.) That's pretty decisive. And so now... back to the House.

Activists still in a box

By Carol Gee

"We are in a box. The United States' current economic crisis has four corners, just like any regular box," was how I framed the issue in my Friday post, "Squaring off." Again today, activists -- people who are trying to influence what Congress does about the financial crisis -- are boxed in by fears,# by anger, by confusion, and by disappointment. Today's post examines how those prevailing emotions are driving what Democrats, Republicans, plain citizens and the power elites are doing to respond to the Bush administration's demands.* Activists turned loose by anger may have set new records this week, as they called* and e-mailed their Representatives.

Of two minds, with an uncomfortable feeling of ambivalence -- I really like what Rep. Dennis Kucinich (D-Ohio) said in his recent e-mail about what really should be done: "We are told that we must stabilize markets in order for the people to be protected. I think we need to protect peoples' homes, bank deposits, investments, and pensions, to order to stabilize the market." I also like what Rep. Chris Shays (R-Conn) said in an e-mail on the other side of the argument: "While this is not 1929 all over again, it could be if we step aside and let the wonders of the market work its will in this environment. We can’t let the foolishness and greed on Wall Street bring down Main Street; at least I don’t intend to." Perhaps this ambivalence is what kept me from trying to call members of Congress. But a huge unknown number of people had no such problem with mixed feelings. Their fierce opposition meant that, as reported by by Paul Kiel, ProPublica - 9/30/08, "Despite Lobbying, Popular Opposition Sinks Bailout Bill." And now there is a desperate GOP spin going on to shift the blame.

Democrats in the Senate did not let disappointment immobilize them. An article at Politico.com headlines an edgy reality: "Bailout not dead yet," by Ryan Grim & Martin Kady II (9/30/08). To quote:

Senate leaders have decided to take up the failed House version of the $700 billion economic rescue bill, and plan to add a widely supported change in the Federal Deposit Insurance Corp. caps.

In what is shaping up to be yet another historic vote, presidential candidates Barack Obama and John McCain will return to Washington tonight for a late night vote.

Sen. Charles Schumer (D-N.Y.), embraced the idea as well, but sought to give Reid credit for attaching the FDIC measure and a widely popular tax extenders bill to the bailout.

"I'm getting to the point in my life where I can't start over" signals a kind of resignation in the story of how fast the situation has evolved in just a few hours. Now people are looking at "a second chance (and thoughts) on the House bail-out vote,#" in Time (10/1/08). To quote:

Representative Elton Gallegly, 64, a California Republican . . . says he doesn't regret his "No" vote. Gallegly is adamant that the House must pass a bill to stabilize the nation's fragile financial markets. Whereas phone calls to his office were once running 40 to 1 against the bill, now they're "a mixed bag . . ."

It's amazing what a 778-point drop in the Dow Jones Industrial Average, wiping out $1.2 trillion in equity, can do to change public opinion. An ABC News/Washington Post poll taken following the failed vote showed that 88% of Americans are concerned that the collapse of the bill could worsen the economic turndown and that 51% are confident that a bill will eventually pass. And where the people go, politicians very quickly follow. Most members explained their votes opposing the bill Monday as a reflection of their constituents' anger about a rescue package for Wall Street. "Since the vote, it's about half and half," Representative Tim Murphy, a Pennsylvania Republican who voted against the bill, says of the calls coming into his office. "Half say, Do something — I'm worried about my business or my retirement; and the other half still say, Don't vote for the bailout."

Though we plain citizens remain anxious, angry, confused and disappointed, I am not sure that we can change now. I feel that the weight of influence has now shifted to the power elites, the investor class, such as the U.S. Chamber of Commerce, etc. Regarding who's likely to get the second chance, I conclude this post with a comment from Pseudocyants on my post from yesterday that presents a logical prediction by this reader, along with some good advice. To quote:

Barron's is attempting to set-up a soft-landing for the Republicans who will end up voting for the next version of the bail-out:
----------------
After the House of Representatives Monday dramatically rejected legislation to establish a $700 billion rescue package for the financial system and helped to trigger more than $1 trillion loss in the value of U.S. stocks, Congress worked Tuesday to put together a bill that could gain passage, perhaps by the end of the week.

What changed? Reports say that House members, who previously had been besieged with messages from constituents who reacted with blind anger over the prospect of laying out $700 billion in what they saw as a bailout for Wall Street fat cats, heard a very different tune Tuesday. America's investor class reacted just as angrily at the losses suffered in their retirement and college-savings accounts as what they saw as the result of the House defeat of the bill.

Randall W. Forsyth, "Congress Reads the Returns -- of Minus $1 Trillion," Barron's, October 1, 2008

Mighty broad definition of the "investor class", if you ask me. In reality, the investor class are those who are pissed off about how big a percentage of their wealth now needs to be expended purchasing their monocle polish.

A great number of the persons opposed to the bail-out lost money in their 401-Ks and children's college funds. It ain't gonna be the Democrats would walked after the ACORN initiatives were excluded from the package who will return with a yea vote, because ACORN is off the table. It just won't do for the "investor class" if po' folk get a piece of the bail-out pie.

The Barron's article goes on to describe the mark-to-market accounting rules required by Sarbanes/Oxley as a "relatively esoteric matter". Really? A financial institution having to mark their assets to present day valuations is called transparency, and if this passes, there will be more trouble down the road, guaranteed.

My prediction is that there will be a bail-out passed by no later than next Monday, and that many of the Republicans who voted no previously will be onboard. It will be billed as bipartisan cooperation. Whenever the word bipartisan is mentioned in the same sentence as $700 billion, go and put on your best pair of steel trousers, because politicians are about to tear you a new one.

The proper way to handle this crises is to force all corporations who need government funding to completely and honestly mark down their bad debt publicly, forcing their share price to tank down to the real market value. Then whatever monies they receive, the Federal Government should receive stock warrants on a dollar for dollar basis at that value. As soon as the market stabilizes, and the Government is able to realize a profit from these warrants, they should be sold to the highest bidders at open auction, and the monies derived from these sales to be placed directly into the treasury, not siphoned off into pet projects. If Congress played free-market hardball with the financial corporations, most would suddenly discover new avenues of previously untapped investment capital, and would no longer be crying for a hand-out. Never extend credit to a lousy gambler. It's like giving money to a junkie.

Additional References:

• "Breaking on the web -- Wall Street crisis edition." From ProPublica


• "History of U.S. government bail-outs" a fascinating "cloud" chart in color, from ProPublica


• "18 Tough Questions and Answers"# from Time Magazine


• "American financial crisis sparks German schadenfreude"# from The Local

Hat Tip Key: Regular contributors of links to leads are "betmo"* and Jon#.

(Cross-posted at South by Southwest.)

False truths

By Carl

My good friend, Britisher, makes a very cogent observation in comments from yesterday's post:

Im a technical ignoramus when it comes to high finance but...isn't this while mess ALL about debt? Debt incurred by gambling on future profits based not on tangibles but on "prospects"?.

It seems to me that for years now trade has not been based on identifiable tangible need ( barter as it were) so much as on desire.

I mean a lot of the money at stake is surely imaginary. A lot of the wealth accumulated was imaginary. Investments were made without any supporting collateral and then more investments were made on those investments that weren't supported by anything so everyone shuffling money got rich by pure accumulation.

In short investment banks started 'printing' money and trading that money for other money and more money which was also 'printed'.

This mess is actually a market adjustment.

Am I right? Or partly right?

Yes, Virginia, there was a Santa Claus.

I'm going to get financially technical for a moment, but bear with me. I think I can make it understandable.

All investments are speculations. When you purchase an investment, any investment, from your house to a 1952 Mickey Mantle baseball card to a diamond ring, you are placing a bet.

See, factored into the price you pay for your house/card/diamond/stock is what are called "future cash flows". These can either be income, like a dividend or an interest payment, or capital gains, meaning your purchase is going to go up in value.

This future income or profit is discounted and added to the cost of the investment (what it physically costs to create). In most investments, that cost is minimal (it is not in the purchase of a house).

As Michael Kinsley points out in Time:

How is the country any richer if the exact same stock of existing housing is suddenly worth, say, 20% more? Other markets produce things. They sell what they produce. When prices go up, they produce more. Not so with real estate, for the most part. This market consists primarily of trading the same thing again and again. And you know the old saw about land: They're not making any more of it. Real estate is the only major consumer market in which how much you'll pay someone depends on your belief about how much someone else will pay you. In this market, prices go up when people believe they will continue to go up. To restore confidence would mean restoring belief in the greater fool.

And he's right, of course. Land is a fixed commodity, but there is plenty of land in the country, believe it or not, since half the population lives within 150 miles of a coastline. Yes, you want to be close to your job, but on the other hand, the way the economy is trending and the way workforces are being distributed and outsourced, you might want to live away from a city and telecommute now.

Land prices should probably fall back further, based on this alone.

But I digress. Kinsley's larger point, that buying a home is betting that you can get a sucker to pay even more for it after you've lived in it and aged it, is valid. Not only valid, but has been the basis of real estate sales since postwar America in the 50s.

Too, the perception that, by mortgaging nearly 100% of the cost to purchase you are in effect playing with house money, feeds into this conceit. You are gambling with money you have little responsibility for, because if you walk away from the mortgage, hey, the bank will foreclose, sell your house, pay off your mortgage and you still have a little left over, if the system works "the way its supposed to".

That's not to trivialize foreclosures: they are painful processes and usually occur because of some other trauma to the family/owner: job loss, medical expenses, or divorce. But if you know the bank will be "taken care of", you have one less worry on your plate while dealing with the primary problem in your life.

The trouble is, as Brit points out, it's all a fucking illusion. All of it. Rather explicity, I might also point out.

When you purchase a house, you should be paying what you think it is worth now to you, to live in, to spend some time in, to establish a domicile. We're not talking about buying a stock. Stocks are like going to a casino: you shouldn't do it unless and until you can afford to lose all of the money you invest.

This is why brokers are formally referred to as "broker-dealers" because they're dealing cards at a blackjack table, and they hold all the aces. The investment game is rigged in their favor and so any bets you might make have to be carefully picked for you to beat the house.

A house is different. A house is real money for a real necessity. If it goes up in value, then that's a bonus. But that shouldn't be the reason you go out and buy a house. You should buy a house because you need a house.

Now, you're sitting there thinking I'm kicking the American homeowner while he's down. I am, but I'm also not, because I don't blame people for wanting to believe what they want to believe, or for believing that house prices would always go up.

That's what we've all been told. And there's where the blame lies. Who told us? The bankers, brokers and developers who right now stand to be bailed out. The people who marketed "zero money down, interest only loans" without warning us that in five years, you'd have to start paying down principal AND that interest rates would like double or even triple! There is no way in the world your income can triple in five years, unless you are extremely fortunate.

The difference here is, while those banks and you gambled that you might earn enough money in five years to actually pay down your loan, or that your house might accumulate enough new value to pay off the mortgage on a sale, you couldn't have known better, while they should have!

They are financially savvy and you are not. Or at least they are supposed to be, which is why they are supposed to be licensed mortgage broker-dealers. But past history dictates that even the "experts" are not expert when things get complicated enough.

Hell, even I couldn't have foreseen the depth of this crisis, altho I had an inkling and indeed let my "inner pessimist" run amok on this blog about the coming collapse of the American economy.

There's a bitter lesson to be learned from all this: nothing, no part of your life, is without risk, is not a gamble of one sort or other. Houses were supposed to be the safest investment you could make. Indeed, they were the single largest investment you could make.

You have to start thinking about what you buy and how much you pay for it in terms of purchasing a car (the second largest purchase most people will make in their lifetimes, and an object lesson): what can the actually asset you are buying do for you?

See, cars only lose value when you drive them off the lot, at least for the first twenty years, and even then, you have to have taken immaculate care of them for them to earn back your original purchase price, even. The rational decision with a car is to buy one you can drive into the ground, making it cost as little as possible for the value attained from it (hauling groceries, taking vacations, commuting). You want to drive the car so much that the cost to own per mile is as small as possible.

So it should be with your house. You ought to buy a house that means something to you in twenty years, that makes it worth the purchase price, and forget that it *might* increase in value enough for you to retire on.

And screw the economic royalists and their attempts to shove down your throat some illusion. You're better than that!

(Cross-posted to Simply Left Behind.)

Nasty, brutish, and short: The bullshit of John McCain

By Michael J.W. Stickings

He was the Hobbesian candidate during the debate -- nasty, brutish, and short, small and mean -- and he's been that way throughout the entire campaign. His "Hail Marys" -- picking Palin, "suspending" his campaign to go back to Washington last week -- get the attention, but what is characteristic of his campaign is negativity, coming in the form of lies and smears, bitterness and sarcasm. With nothing in the way of substance, other than his overwrought enthusiasm for the Iraq War, that's all he's got.

Last Friday, during the debate, he couldn't even look Obama in the face. And it was much the same today, as he took the opportunity of the lead-up to the House vote on the bailout bill to attack Obama, partisanizing the crisis, and the vote, as much as anyone in Congress, trying to score political points by going negative. Country first? No. As usual, it's McCain first, everything else somewhere in the distance. He attacked Obama again his his statement after the vote, and there will no doubt be much more negativity to come.

But what was truly amazing today was that he actually took credit for the bill... before the House rejected it. The Politico has the story:

Sen. John McCain (R-Ariz.) and his top aides took credit for building a winning bailout coalition – hours before the vote failed and stocks tanked.

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

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

"That's not leadership. That's watching from the sidelines," he added to cheers and applause.

First, bullshit. McCain has been partisanizing the issue all along. And his phony "suspension" of his campaign was just a desperate, arrogant, and self-serving stunt. He ended up going to Washington, but he didn't do anything to move the process along. He apparently made a bunch of phone calls. What he was really doing was meddling in a process that others were leading, on both sides of the aisle. And his interference contributed to the failure of the bill.

Second, Obama understood what was needed of him -- meet with Bush, talk to congressional leaders, comment when appropriate, participate constructively in bipartisan talks. He didn't force himself into the process and didn't install himself as leader. What he showed was good judgement.

Third -- and here's where it gets funny -- McCain took credit for something that failed. He obviously wasn't able to put together a winning coalition. But he still gave himself a presumptuous pat on the back. And while a majority of the Democrats voted for the bill (about 60 percent), less than a third of Republicans voted for it. So for what, exactly, was McCain patting himself on the back and trying to score political points for his presidential campaign? The overwhelming majority of his own party voted against him! (With some of them childishly blaming Pelosi for turning them against it.) Meanwhile, on the other side, Obama is standing with the leaders of his party, working to get something done.

He can flash his stupid grin, put his thumbs up, and spew sarcasm all he wants. It's all bullshit.

And just what we've come to expect from John McCain.

BREAKING NEWS: House rejects bailout bill

By Michael J.W. Stickings

The House of Representatives a short while ago voted 228 to 205 against the bailout compromise worked out over the weekend. (It needed 218 votes to pass.). As CNN is reporting, "[a]bout 60% of Democrats voted for the measure, but less than a third of Republicans backed it."

Quick notes:

-- Kucinich was right.

-- Bush is apparently "very disappointed" with the result. Presumably much of his disappointment is directed at the renegades in his own party.

-- Boehner: "If I didn't think we were on the brink of an economic disaster it would be the easiest thing to say no to this."

-- Frank: "If we defeat this bill today, it will be a very bad day for the financial sector of the American economy and the people who will feel the pain are not the top bankers and top corporate executives but average Americans."

-- It's certainly a bad day for the markets. As of 2:55 pm, the Dow is down 552.68 (or 4.95%) and the Nasdaq is down 144.08 (or 6.70%).

-- I still think a bailout bill in some form -- if not this one, after some arm-twisting, then this one with some alterations to appease both sides and to make Congress appear to be more united than it really is -- will be passed sooner rather than later. The leadership of both parties is behind it -- the Democratic leaders more than their Republican counterparts -- and there will be increasing pressure on Congress to do something. (And, right now, this bill is all they've got.) Not least because the markets are tumbling.

-- And tumbling... It's now 3:00 pm. The Dow is down 552.04, the Nasdaq 147.73. At 3:02 pm, the S&P 500 is down 76.26 (or 6.29%).

-- Up here in Toronto, at 3:03 pm, our leading index, the TSX Composite, is down 853.38 (or 7.04%).

Stay tuned.

Gravity sucks

By Carl

As anybody who's ever ridden a bicycle or even stood up knows, what goes up must come down.

This is as true for the stock market as it is for anything else. Granted, it's a whole lot harder for the market to fall back to sea level, something about retained earnings and asset values underpinning stock prices, but trust me on this: it is not impossible.

Enter Paul Krugman:

The bailout plan released yesterday is a lot better than the proposal Henry Paulson first put out — sufficiently so to be worth passing. But it's not what you’d actually call a good plan, and it won't end the crisis. The odds are that the next president will have to deal with some major financial emergencies.

Absolutely.

I'm not arguing that this is the mother of all financial crises. I am arguing, however, that the MOAFC stands a better chance of happening now, when the market is weakened and the solutions ineffectual, just like an opportunistic flu is more likely to incubate when the body's defenses are weakened.

The trouble with this bailout package is, it's like giving a bandage to a patient who's suffered a heart attack because he got a papercut filling in his admittance forms.

The real trouble is, well, ask a hundred pundits the cause of this problem, and you'll get a hundred different answers, all of them wrong.

Ask a hundred different economic pundits and you'll get a hundred different answers, of which 95% are incomplete.

Make no mistake about this: this crisis is pervasive and infiltrates the coziest sectors of our economy, and the world's economy. There was no single simple cause and there will not be a single answer, although the ultimate solution may end up being enormously simple. I think. I'll post more on my solution later this week.

We were worried about avian flu? This is an economic avian flu.

Curiously and coincidentally, this flu, like the avian one, has its roots in Asia. America exports debt. Period. We're good at it. We export roughly $700 billion annually (there's a reason that the bailout was pegged at that figure, and that's the reason right there).

Asian nations, flush with cash as their economies have overheated, have invested heavily in American debt, first in Treasuries bill and notes, and then when the purchase of those became unprofitable (for the same reason mortgages became attractive) in mortgage backed securities.

The gamble everyone made was that housing prices could only keep going up. Remember the title of this column?
As housing prices peaked and slid down a little, banks stopped lending money, forcing Fannie Mae and Freddie Mac to step in to keep the supply of mortgages consistent with the (overmarketed) demand.

How many Ditech.com and Countrywide commercials were there each hour just a few years ago? Five? Ten? Twenty? It's no surprise that these companies were the canary in the flu mine. They had the riskiest loans with the least capitalization, and needed to borrow the money they were lending.

And banks were only too happy to lend to them. Why? Because banks knew that the Fed and Treasury would step in when things got hairy. After all, the Fed helped arrange the bailout Long Term Capital Management. They'd have to step in where people's homes were at risk!

This is not the only cause of the current crisis and books will be written about them all, until eventually a comprehensive picture is put together, but I think this is a reasonable timeline of this crisis and how it unfolded. Call it the tree on which to hang the ornaments.

But like a Christmas tree, what goes up eventually must come down...

(Cross-posted to Simply Left Behind.)

Bailout skepticism

By Michael J.W. Stickings

Just FYI (and for what it's worth): Dennis Kucinich doesn't think the bailout plan has enough votes: "If the votes were there, this would be on the floor. The votes aren't there."

The bill is being opposed from both sides, with renegade Republicans favouring a more neo-liberal approach (of course) and Democrats like Kucinich and others in the so-called "Skeptics Caucus" objecting to what Rep. Brad Sherman (D-CA) called "the greatest shift of power to the imperial presidency and the greatest shift of wealth to a still wealthy Wall Street that anyone could imagine."

Note that the bill is being opposed by David Sirota on the left and Michelle Malkin on the right. (Now there's an odd couple.)

"The Dark Bailout"

By Grace

Here's an interesting take on the U.S. bailout proposal:



Brilliant.

BREAKING NEWS: Congress close to bailout deal

By Michael J.W. Stickings

So there's a deal... almost.

CNN:

Congressional negotiators "made great progress" toward reaching a deal on the White House's proposed $700 billion bailout of the financial system, House Speaker Nancy Pelosi said.

Pelosi, flanked by Senate Majority Leader Harry Reid and other congressional leaders, made the announcement at 12:30 a.m. Sunday after a long evening of talks on Capitol Hill.

Their goal has been to craft and announce a final deal on legislation by Sunday in time for the start of financial markets around the world.

Reid said he expected a deal to be finalized by Sunday afternoon.

House Republicans have not yet signed on the newest plan, but their negotiator, Rep. Roy Blunt, R-Missouri, said he would present it to the GOP caucus Sunday morning after it is written on paper.

I'll wait to comment until I see the specifics. I'm generally opposed to the bailout plan, but I do hope Barney Frank is right: "I do think we have reached as good a product as you can in this democracy given all the interests." And by that I mean I hope the "as good a product as you can" isn't just, for all intents and purposes, a blank cheque for Bush, Paulson, and the Wall Street oligarchs.

(More at the Politico: A "tentative agreement" is in place.)

**********

One quick note from Think Progress: "After declaring he'd return to Washington to help with the bailout negotiations immediately after last night's debate, Sen. John McCain (R-AZ) never went to Capitol Hill today. In fact, McCain stayed largely holed up in his Arlington apartment, leaving only to go to his campaign headquarters just around the block."

So much for the great John McCain, the maverick leader Washington just can't do without. So much for his desperate, arrogant, and utterly self-serving political stunt.

What a transparent farce it all was.

Spinning victory out of utter defeat

By Creature

I guess we all had it wrong. John McCain didn't blow the bailout deal, he paved the way for a new better one. Except not.

Here's the positive spin from House Republican Whip Roy Blunt (R-MO) [via AMERICAblog]:

"I do think that John McCain was very helpful in what he did. I saw him this morning, we've been talking with his staff. Clearly, yesterday, his position in that discussion yesterday was one that stopped a deal from, uh, finalizing that no House Republican, in my view, would've been for. Which means it probably wouldn't have passed the House. Now, Democrats are in the majority, they can pass anything they want to without a single Republican vote. But they don't seem to be willing to do that. I'm please we can have negotiations now that guess us back to things that we think can protect the taxpayers better, create more options, are, frankly, be better understood in the country than the plan, than the path that we were on just a couple of days ago."

And here's the McCain campaign's spin on how John McCain didn't blow the whole damn deal up [via TwoGlasses]:

"The difference between Barack Obama and John McCain was apparent during the White House meeting yesterday where Barack Obama's priority was political posturing in his opening monologue defending the package as it stands. John McCain listened to all sides so he could help focus the debate on finding a bipartisan resolution that is in the interest of taxpayers and homeowners. The Democratic interests stood together in opposition to an agreement that would accommodate additional taxpayer protections."

No. No. No. Up is down all over again. I really can't take much more of this.

(Cross-posted at State of the Day.)