Bailout Bill Voted Down: We are in Hell (for now)

In one of the most stunningly stupid moves ever, yesterday a majority of the members of the House of Representatives voted down the $700 billion bailout proposed by George Bush, Treasury Secretary Hank Paulson and other more responsible minds.

It is hard to comprehend the rationale aside from political motives. The members of Congress obviously felt greater pressure from their constituents, and took that outpouring of disgust with the bailout to heart. Unfortunately, listening to the mass of voters is akin to letting your two year old convince you that vegetables are wholly unnecessary to healthy growth.

The Associated Press reports that:

Two-thirds of Congress' most vulnerable members — Republicans and Democrats alike — voted against the massive economic bailout package, opting to protect their seats on Election Day rather than follow their party leaders off a political cliff.

So basically, rather than follow the leadership off a cliff by possibly losing their seats (yet saving the country), the chose to send America off a cliff (and preserve the seats where their derrieres will sit).

And here, still more cowardice:

The 228-205 rejection of the $700 billion rescue package for the financial markets reflected the every-man-for-himself posture of lawmakers with no plan to prop up the economy five short weeks from the election. Of the 19 most vulnerable House lawmakers tracked by The Associated Press, 13 of them voted against the bill despite pleas from their party leaders to pass it.

The article quotes one representative who states the deal, "was a step toward socialism and a philosophical leap he could not make." Thus intellectual purity trumps financial judgment and practicality, avoiding the philosophical leap to take the economic plunge.

The Dow Jones Industrial Average slid 778 points for its biggest point drop ever as $1.2 trillion in market value was erased from American equities. The MSCI World Index of 23 developed markets slid 6.9 percent, the most in 21 years.

(Bloomberg)

The drop in the Dow yesterday by a good 700 plus points, and in the world markets today, should be ample warning to the politicians to get on it, and if not, we are truly in hell.

N.Y. Times Says (Wrongly): "Wall Street, R.I.P.: The End of an Era..."

If ever there was a time to ignore the press, and the financial press in particular, it is when they attempt to predict trends and the larger meaning of events. There is a lot of prognosticating going on lately about how this current financial crisis will change the world as we know it. Wall Street is dead, profits will be down, and nothing will be the same as before. That's what the times is pitching here, although their argument is not entirely coherent.

They state:

IF Mr. Hintz is right, and Goldman’s legendary returns decline, so will its paychecks. Without those multimillion-dollar paydays, those top-notch investment bankers, elite traders and private-equity superstars may well stroll out the door and try their luck at starting small, boutique investment-banking firms or hedge funds — if they can.

in some contradiction to this statement:

As leverage dries up across Wall Street, so will the outsize returns at many private equity firms and hedge funds.Returns at many hedge funds are expected to be awful this year because of a combination of bad bets and an inability to borrow. One result could be a landslide of hedge funds’ closing shop.

So, if I read correctly, at firms like Goldman that are changing (and possibly temporarily) to a bank holding company structure, they will face a drain of talent as employees leave to make more money in fields (hedge/PE) where there is an inability to borrow or make outsized returns? It seems they are simultaneously making a case for a landslide of hedge funds closing shop and a landslide of bored talent seeking returns by starting... boutique hedge funds and private equity firms.

Reality actually tells us that many of the small boutique firms grow bigger, and expand their scope.

The truly interesting development (assuming the bailout works as plans) will be the rise of firms like TPG, SAC, Citadel , Carlyle and Blackstone, filling the void in the existing financial system. Citadel itself has thousands of employees around the world.

Maybe what we should realize is that change is constant, bubbles are constant, human nature is constant, and talent is constant, and thus there will always be people, and firms, to take advantage of what the current economic condition is. Even when those conditions don't exist, money and energy flows toward making those conditions happen.

Our guess here is that everyone hunkers down in whatever financial structure proves most useful toward stabilizing value, and then, when the dust settles, all eyes will begin to look at where money can be made. So when Europeans, and Germans in particular, are also announcing the death of the United States as a financial superpower, they are making assumptions that defy the reality of human nature, and particularly the human nature as exhibited by creative Americans.

“The US will lose its status as the superpower of the world financial system. This world will become multipolar” with the emergence of stronger, better capitalised centres in Asia and Europe, Mr Steinbrück told the German parliament. “The world will never be the same again.”

(FT)

The above comments can be made by German government officials, and there is a kernal of truth there, but the world never being the same again is not one of those truths. Money will flow to those who know how to make money, and unless other parts of the world actually become massively more creative, ultimately, the United States will be fine, and with some tweeking and humility and focus on making the financial foundation sound.

This is another reason why this current presidential election is so important. If economics is not your strong point, and yet, economics is what is setting the country back in world standing, then McCain is woefully unprepared for the major challenges ahead.

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Bonus Thoughts:
Every now and then we read about some pretty responsible financial types. We are impressed precisely because they are the opposite of how we have been personally, and they represent clear thinking in dealing with financial issues while remaining unswayed by foolish temptations. They represent what we want to be. We are thinking of  people like David Swenson at Yale, who views his stewardship of their funds almost like a sacred mission, or the practices of Norway's Pension fund. The New York Times has a nice short question and answer piece about Norway's fund here.

Daily Update: Friday "Palin the Muppet" Edition

Never would we have imagined that the largest banking collapse in United States history would proceed so smoothly, taking place last night while we enjoyed a new episode of The Office. Perhaps the news is still being overshadowed by the $700 billion bailout legislation that is not being passed (as of right this instant), and despite presidential candidate McCain being on hand to lend his shaky handed mental stimulous.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution

(N.Y.Times)

The good news is that account holders are saved (though we wonder at J.P Morgan's hurculean strength to carry the wounded), and the bad news is that shareholders and a few bondholders will take one for the team. You just never imagine such wonderous things are happening while sipping some juice and aborbed in the television set. WaMu lived to be 119 years old, which is a ripe old age.

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Yea, back to that bailout thingy. We know how McCain said he would not show up at the debate tonight because he is needed in Washington to save the bailout, or something like that. Thus far nothing has been resolved despite Cain on seen, dispensing wisdom and whatnot. In fact things are "imploding", according to the N.Y. Times.  If we read correctly, the Republicans squashed the deal because they did not want McCain to look like a fool in coming to Washington for nothing. Oh yea, and they didn't want to do the deal using tax funds to begin with.

Interesting scene setting in the article:

Mr. McCain was at one end of the long conference table, Mr. Obama at the other, with the president and senior Congressional leaders between them. Participants said Mr. Obama peppered Mr. Paulson with questions, while Mr. McCain said little. Outside the West Wing, a huge crowd of reporters gathered in the driveway, anxiously awaiting an appearance by either presidential candidate, with expectations running high.

We assume McCain was in deep contemplation, calculating permutations of various bailout options in his head, and waiting for the opportune moment to solve it all.  One could argue that not doing the bailout, or not doing the bailout in the way it's being put forward by Treasury, could very well be the correct path, but you don't get the impression that certain congressmen are totally focused on finding a quick solution as much as they are intent on sticking it to the Democrats. In the end you have Republicans in Congress dragging their feet on the Republican administrations bailout proposal. Not quite sure how they think they will crawl out of this one unscathed.

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Of course we can't leave you with doubts about the country's future. In times like this where the men are playing with themselves in Washington, we turn to the women for wisdom. Or rather, Katie Curic turns to vice presidential candidate Sarah Palin for wisdom on any number of issues. And here, Palin the Muppet, a puppet in the craggy hands of Cain, does not disappoint. 

The L.A. Times:

Palin's unblinking certitude gave way at other times in the interview to a striking imprecision, as when she struggled to respond to Couric's suggestion that the $700-billion bailout might be better funneled through middle-class families instead of Wall Street firms.
"That's why I say I, like every American I'm speaking with, we're ill about this position that we have been put in . . ." Palin began, before meandering off in fruitless pursuit of coherence.
But I'll let the governor speak for herself:
" . . . where it is the taxpayers looking to bail out. But ultimately, what the bailout does is help those who are concerned about the healthcare reform that is needed to help shore up our economy. Um, helping, oh -- it's got to be all about job creation too. Shoring up our economy, and putting it back on the right track. So healthcare reform and reducing taxes and reining in spending has got to accompany tax reductions, and tax relief for Americans, and trade, we've got to see trade as opportunity, not as a competitive, um, scary thing, but 1 in 5 jobs being created in the trade sector today. We've got to look at that as more opportunity. All of those things under the umbrella of job creation. This bailout is a part of that."

When asked how geographical proximity to Russia made for actual experience with Russia, she offered:

"We have trade missions back and forth," Palin told Couric. "We, we do, it's very important when you consider even national security issues with Russia as Putin rears his head and comes into the airspace of the United States of America, where, where do they go? It's Alaska. It's just right over the border. It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to, to our state."

It's answers like this that have made some serious minded Republicans opt to switch and take a flyer on the Democratic Party candidate as one can hardly expected someone so unprepared to be even remotely competent in these delicate times. It's actually no knock on Palin, or Republicans in general. It's a knock on McCain and his raging desire to be president right before the very end.

We often wonder if that end will be his life, or the United States as we know and love it.

Wisdom of the Day:
Beware of Putin in your airspace!

McCain Wants to Skip Debate and Fix Economy on Friday Night Instead.

In a move to do an end run around Obama, McCain  suggested that everyone take a time out so that he can go to Washington and fully concentrate on our economic doom. Obama, rightly, suggested Senator McCain needs to multitask a bit more, given that as president, you can't stop the merry go round and, for example, send Iran to a timeout while you spank the naughty North Korean bottom.

 

The N.Y Times writes:

Although Mr. McCain was the first to emerge on Wednesday afternoon and announce a change in campaign plans, Mr. Obama began the exchange with his Republican rival on Wednesday morning.

“At 8:30 this morning, Senator Obama called Senator McCain to ask him if he would join in issuing a joint statement outlining their shared principles and conditions for the Treasury proposal and urging Congress and the White House to act in a bipartisan manner to pass such a proposal,” said Bill Burton, the spokesman for the Obama campaign.

“At 2:30 this afternoon,” he added, “Senator McCain returned Senator Obama’s call and agreed to join him in issuing such a statement.” Some Democrats reacted skeptically to Mr. McCain’s surprise announcement, charging that it seemed like a political ploy to try to gain the confidence of voters concerned about the economy.

Team Obama was surprised at McCain's sudden announcement to suspend the debate and campaign, and one can be sure this has nothing to do with a recent L.A. Times poll showing Obama in the lead (49-45). Nothing. It also has nothing to do with the recent news that one of McCain's staff was actually still receiving income from Freddie Mac, in contrast to McCain's previous assertions (lies). And it has absolutely nothing to do with McCain's desire to push back the vice presidential debate to some unspecified point in the future (like never) so that Palin can continue her crash course in understanding the world.

The real problem is not that McCain is unprepared, per se, but that he faces a conflict between the perception he would like to give in a debate, and the reality of what he will do to help (or not help) Secretary Paulson's bailout plan.  McCain himself is probably not sure what he will do, and does not want to be on the record Friday, only for reality to dictate a different position. That is, he would rather deal with reality first, and then shape that reality into advertising or campaign talking points.

Daily Update: Tuesday Sept 23: House of Cards

It's interesting that it takes the nation teetering on the edge, and an election cycle, to get candidates to start talking about reigning in federal spending, but it's never too late to sound responsible we suppose. Here we have Obama campaigning yesterday in Wisconsin, sounding sensible:

"I am not a Democrat who believes that we can or should defend every government program just because it's there," Obama said at a rally in Green Bay. "We will fire government managers who aren't getting results, we will cut funding for programs that are wasting your money and we will use technology and lessons from the private sector to improve efficiency across every level of government."

The only way we can do all this without leaving our children with an even larger debt is if Washington starts taking responsibility for every dime that it spends," he said."

On the other hand, this is not the time to chat up your spending plans, so this position, now, is not exactly bold.

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We kind of wonder what, exactly, is on Goldman's books that they can sound so upbeat. Or is this the voice of the man who knows his debt monkey burden will be lifted off his back and sent away?

Goldman Sachs, granted permission Sept. 21 to transform into a bank holding company, may raise capital to buy assets assuming it finds the right opportunities, said company spokesman Lucas van Praag in New York.


``If we see assets that are attractive, we might raise capital in order to be able to acquire them,'' he said yesterday, adding that Goldman has ``no immediate plans to raise capital.''

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Crude oil had it's largest one day rise yesterday, moving up $25 to around $130 per barrel, and a friend asked, "Should I be looking at some commodity ETF's?"  "No," we responded, not wanting to commit our friend to making a purchase based on irrational price movements not adequately explained in the financial press.  Supposedly data about supply and demand from over the previous weeks caused price movements that suddenly couldn't contain themselves, hence Monday pop.  The Commodity Futures Trading Commissions is "closely monitoring" prices.

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And in the LA Times, via Drudge Report,  we get Europeans outraged at America, with the finance minister of Italy actually making some valid point about what truly hurts America (and thus becomes the biggest threat).

"Greenspan was considered a master," Tremonti declared. "Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most. . . . It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis."

Greenspan's response? "I was never the biggest threat in the Big Brother House!"

Treasury to Dig Out Mortgage Assets in Attempt to Unclog Drain

What are we doing this delicate Sunday morning? We are waiting for the miracle to come; waiting for congress to act later this week on a $700 billion bailout of the financial system.

To put it simply, the sink is clogged, the water is overflowing, and stuff is getting wet and damaged. Rather than continually mopping up the overflow, the powers (Bern and Paulson) are making an attempt to unclog the sink. We say "attempt" because nobody is particularly sure if this cure is going to work, but all fingers are crossed in the right places.

There are some insufficiently astute people (placing theory over reality) who are taking the line that nothing should be done at all, especially at the expense of the taxpayer. Megan McCardle suggests that Fed head Bernanke tested that theory with Bear Stearns and it failed to show any result.

The purpose of this huge cash infusion will be to unclog the sink. Via US News/AP we get the disturbing details.

• treasury secretary broad authority to buy up to $700 billion in mortgage-related assets from any financial institution in the United States.

• Raise the $10.6 trillion statutory limit on the national debt to $11.3 trillion.

• Allow the treasury secretary to buy, hold and sell the assets in any way he sees fit. That includes the ability to go outside normal government contracting practices to hire private companies to manage them.

• Give the government power to designate financial institutions as "financial agents of the government" and require them to carry out any "reasonable duties" that entails.

• Require the government to report to congressional budget, tax-writing and financial services committees within three months of using the authority and every six months thereafter.

• Instruct the treasury secretary to consider both providing market stability and protecting taxpayers in using the bailout power.

• Expire two years after enactment.

The big questions are will this actually work, and will the U.S. Treasury be able to pull out a profit or at least minimize losses to taxpayers.  Exactly what assets the bank hold, and their quality remains a mystery to most of us and one would expect that taxpayers at least need a full accounting of what we are getting.

If this is about stabilizing house prices by making freeing up banks to loand, as suggested in this article:

Experts say that the government's enormous plan to relieve Wall Street banks of their bad investments has a decent chance of stabilizing home prices, at least in theory. If that happens, it will stop Wall Street's bleeding, but could still keep many families locked out of the housing market.

then we are thinking a bit too wishfully. Prices had moved up faster than income, or rationality, so there is no reason to expect prices to float above true value, nor should we hope for such.  The banks, burned once, are not likely to provide the liquidity and lax oversight that created the inflated prices in the first place.

The primary purpose of this bailout SHOULD be to stabilize the financial system by clarifying and recognizing losses as assets transfer to the Treasury, and with the expectation that the housing market has further to fall.

Daily Update: Tuesday September 16

Former secretaries of state all agree that the United States should talk to foes.

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Obama campaign costs taxpayers less; McCain sits with more cash available, much of it from the Feds.

McCain had about $200 million at the close of the Republican National Convention on Sept. 4, including $84.1 million in federal funds, $76 million in the Republican Party bank account, plus money left over from the primary campaign. Obama had about $95 million, with $77 million in his campaign account and $17.5 million from the Democratic National Committee.

(Bloomberg)

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Someone once said, by way of dismissing Obama's legal training as irrelevant, that "the president doesn't make law, the legislative branch does." As one rolls this around in the head, we think of Guantanamo, and the Supreme Court ruling back in June that said:

"...that detainees have the right to contest their cases in federal courts, and that a 2006 act of Congress forbidding them from doing so was unconstitutional. "Some of these petitioners have been in custody for six years with no definitive judicial determination as to the legality of their detention," the court said in its 5-4 decision, overturning Bush administration policy and two acts of Congress that codified it."

This is old but relevant news. A president and vice president's understanding of legal matters, and actually any training in that area, ought to enhance the likelihood that unconstitional policies are not pushed forward via executive order or congressional enthusiam. If a relatively well educated President Bush can get behind badly constructed policy, one wonders how the haphazardly educated Palin would fare, if stepping into that role. Just one more question to ask when thinking about the vote. ]

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Pakistani troops fire shots of warning at U.S. allies trying to enter Pakistan in hunt for al Qaida. Pakistan is becoming increasingly uncomfortable with U.S. methods, and U.S. is becoming increasingly aware that Pakistan is not up to the task at hand. Bush, Obama, and Palin all seem to agree on taking it to the streets of Pakistan.

US troops from the Chinooks then tried to cross the border. As they did so, Pakistani paramilitary soldiers at a checkpoint opened fire into the air and the US troops decided not to continue forward, local Pakistani officials say.

(BBC)

And in case you thought the policy about when and when not to enter a foreign nation was well thought out, well, think again:

The New York Times, in a report last week that the administration didn't deny, said President Bush had signed a secret order approving the deployment of U.S. forces in Pakistan. However, Bush appears to have acted without considering the impact on Pakistani domestic politics. Last week, Adm. Michael Mullen, the chairman of the Joint Chiefs of Staff, announced plans to draft a new strategy for Afghanistan and the Pakistan border area. Pentagon officials told McClatchy they're currently operating without a strategic plan.

(McClatchy)

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Ripples from the fallout of Lehman's collapse: Florida's pension funds take a hit.

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Wisdom for the Day:
Wall Street is Main Street, Main Street is Wall Street

Daily Update: Bridge to Nowhere Edition

Lehman is dead (filing for bankruptcy).

"A steady stream of employees carrying boxes and bags came out of Lehman Brothers’ mid-town Manhattan headquarters as darkness fell on Sunday evening and bankruptcy loomed for the 158-year-old Wall Street institution."

(UK FT)

Merrill sent to foster parents (selling itself to Bank of America to avoid collapse).

This is probably not the ending that CEO John Thain was reckoning on when he took the top job at the brokerage late last year, but it could have been much worse.

(N.Y. Times)

AIG on street begging for food to feed family (needing $40 billion from Fed).

Insurer American International Group Inc., succumbing to relentless investor pressure that drove its shares down 31% on Friday alone, is pulling together a survival plan that includes selling off some of its most valuable assets, raising more capital and going to the Federal Reserve for help, people familiar with the situation said.

(Wall Street Journal)

Long live K.K.R., Blackstone, JC Flowers and other private equity firms, who invariably represent the future of Wall Street.

We can also be floored and disturbed by the fact that Palin is back on the campaign trail, giving her same inaccurate stock speech, oblivious to, and unschooled by, reality.

Palin, the Putin of Alaska, Rewarding the Inner Circle

Daily we are stunned at what the McCain team is willing to do to manipulate perceptions (like in their false crowd size estimates), trusting that people will be too distracted by daily life (and the problems he should be focusing on) to pay close attention. 

And when observers point out the lies, and when caught, the Cain team quickly releases statements of outrage themselves, accusing Obama of invisible slanders, making much nonsense over Obama's "lipstick on a pig" statement to describe Cain's putting old wine in new bottles.

The biggest lie thus far has been Cain's attempt to give us Palin as the antidote to all his failures (in theme, in grabbing a crowd, in getting the support of his own base, in drawing attention), and it is difficult to fathom a person less qualified. One has to discount and trivilalize a lot of Obama's policy and world experience to make Palin worthy of the position in question, and this from the Cain team that spent the first wave of their losing campaign focusing on Obama's experience.

In the same manner that Cain has rewarded (and used) Palin for his own last chance efforts to run the country, so too Palin as Alaska's governor often reached out to the underqualified to fill positions:

So when there was a vacancy at the top of the State Division of Agriculture, she appointed a high school classmate, Franci Havemeister, to the $95,000-a-year directorship. A former real estate agent, Ms. Havemeister cited her childhood love of cows as a qualification for running the roughly $2 million agency.

Ms. Havemeister was one of at least five schoolmates Ms. Palin hired, often at salaries far exceeding their private sector wages.

The New York Times examines her governing style, and there is a lot that we should be concerned about: the hiring of friends, the attempts at avoiding examination by using personal email for state business, the habit of attacking foes.

 The response from Team Cain? What do you think?

Ms. Palin declined to grant an interview for this article. The McCain-Palin campaign responded to some questions on her behalf and that of her husband, while referring others to the governor’s spokespeople, who did not respond.

and

As Ms. Palin’s star ascends, the McCain campaign, as often happens in national races, is controlling the words of those who know her well. Her mother-in-law, Faye Palin, has been asked not to speak to reporters, and aides sit in on interviews with old friends.

Ah, not a surprise at all. Speak for Palin lest she trip herself up, or respond not at all. Chalk it up to media attacks and then attribute it to sexism or Obama..

Daily Update: Friday September 12th

Lehman continued to search for a buyer as shares fell (to $4.43) on Thursday, and in perfect timing for the weekend, which seems the designated parking spot to off yourself and wait for the Fed ambulance to come do something about your situation. We are thinking the Fed amubulance won't be doing any pickups, with too many people already inside (Freddie, Fannie, dead bear in the corner, some local bankers).

Dealbreaker does report that the Fed is trying to line up some Johns for Lehman.

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Oil has now fallen to $100.87 per barrel, despite hurricane Ike moving on Texas for a theoretical beat down. One would imagine prices will bounce around this level for a while before continuing downward. So I guess we can call the rise in prices to $147 back in July a case of speculation after all, world conditions not having radically changed in two months. Still think markets are rational?

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The oil bubble now deflating, CNN informs us that there might be a financial bubble in reverse, with too many people shorting bank stocks that seem to be healthy. They cutely call it a Pessimism Bubble. We are sure they have no idea what they are talking about right now, so long as Lehman is walking the streets with its best "check me out" streetwalker clothing on, and desperate for a buck. But in time, maybe 6 months from now when all the craziness is out of the political and financial sectors, banks will be pretty (reliable) again.

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We don't want to call the Russian incursion into Georgia a sin and thus have them pay a price for such actions. It's all good fun. Georgia threw a pebble at a giant and the giant through a boulder back, gashing Georgian head and taking a chunk off. Lessons learned all around. But maybe vice presidential candidate Palin is right with her belief in God and sin. For now the Russian markets are taking hits, and wealth is disappearing, and someone in the Kremlin is probably saying, "Uhm, should we have really built the whole house on a foundation of oil and gas?"

“In the end these changes are not dramatic,” Mr Medvedev said of the 49 per cent drop in the RTS index since its peak in May that has wiped out $750bn worth of capitalisation. “If the right decisions are made, the situation will straighten out,” he told RIA Novosti, the state news agency. “We will return to the levels that we saw at the start of the year. In any case, I believe this is in the power of the government.

The Financial Times continues:

Falls were driven by energy prices and increased political risk after the Georgia conflict.

Analysts said Russia was experiencing a liquidity crunch of the type that has affected western markets for more than a year. Business leaders engaged in expansion plans are being forced to liquidate positions to meet margin calls.

Remember the last time when things got quirky in Russia and Long Term Capital Management died and almost took the financial system with it? Yea we don't remember either. That was ages ago in the 1997's.

Wisdom for the Day:
Do unto others or your credit markets will tighten up.

Every Day is September 11th

Today is the anniversary of the date when a bunch of Islamic radicals who came largely from Saudi Arabia, and whose Al Queda leadership were harbored by the Taliban in Afghanistan, struck the beautiful Twin Towers in New York City.

I grew up in NYC, but visited the top of one of the towers only once, and that was when guests were visiting and we wanted to impress them. But I had been around them, shopping underneath them, using them as navigation points in the crazy downtown street patterns in Chinatown. I liked to wander downtown and see the Towers peeking from around various street angles. I miss those buildings, but more important, the people in them are surely missed by those who loved them. They often worked in companies and industries that helped assure and enhance the financial power of the United States. These were not perfect people, or saints, or heroes. But they deserved to live the life that God (or science) blessed them with. It is a cruel thing and great arrogance to think you have the right to take a life.

I think of Hitchcock's movie Rope, which is one of my favorites, and where certain enlightened young men imagine that they can choose who is worthy of living and dying. It is Jimmy Stewart as their professor who expresses the moral outrage and poses the hard questions. "What gives you the right?" he essentially asks.

We musk ask ourselves that question in everything we do.

Daily Update: Tuesday September 9th

Over at the Megan McArdle blog yesterday, our vegan libertarian D.C. blogger for Atlantic Monthly came to the triumphant conclusion that the Obama campaign is in trouble. She based this on polls taken during the Republican convention.  So here in this one post, you have the good, and the bad, of reading McArdle: interesting topics, yet sometimes completely over the top conclusions untouched by reasonable analysis. But mostly it's pretty good.

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The McCain staff has largely been preserving Sarah Palin's deeper wisdom for special moments, in the same way you don't make every day a Ruth's Cris dinner day. Wisdom is to be dispensed carefully, and like a mint upon the pillow to warm and delight you. But some souls are not warmed by Palin's comments on the Federal bailout of fornicating-with-danger twins Freddie and Fannie.  Apparently some people wonder if she knows how the entities function, and while we don't claim to understand every intricate detail of how those companies are run, we also don't claim to be worthy of picking up McCain's Secret President Blackberry and power control button should he prematurely go to the heaven that Palin believes in.

“They’ve gotten too big and too expensive to taxpayers,” said Ms. Palin, referring to the two entities. “The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.”

N.Y. Times' Dealbook goes on to ask:

But what did she mean? Did she mean, as some people are now saying, that she thought that Fannie and Freddie were government entities, which they are not, as shareholders of the two publicly traded companies painfully know? Or, did she mean that the bailout – whose final price tag will not be known immediately – was going to cost a lot of money?

I am guessing, given her early dedication to not staying at any one college for too long, that Sarah is a bit shaky on the details, which might also explain McCain's refusal to allow the Barracuda to talk to any press that might ask detailed questions.

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Of course the bigger issue is not whether Palin understands the details of such bailouts, but whether all the voters have a clear idea of how much trouble the nation is. This bailout represents a forced action, with the Treasury stepping in to reassure the foreign bond holders who have financed much of our economic activities over the years.  Scare that crowd, and much of the stability and luxury and flexibility that we enjoy goes to pieces.  This is the real issue at hand, and not unrelated to our continued reliance on debt to finance how America functions.  Any candidate that is not seriously looking at debt reduction and balancing the budget is in effect enslaving the nation.  

Kevin Hall at McClatchy writes:

When Treasury Secretary Henry Paulson announced the weekend seizure of mortgage-finance giants Fannie Mae and Freddie Mac, he cited the need to stabilize nervous financial markets and bolster the slumping housing market.

What he didn't say publicly is that foreigners, among other big institutional investors, had lost confidence in one of the most vital and plain-vanilla U.S. investments. In a sense, they were losing confidence in the world's largest economy, and he needed to reverse matters.

Hall goes on to mention that investors like China were bailing on the securities of the two firms. If this is not making you nervous, or making you think, it should.  If our level of thinking stops at Palin's looks, or McCain's Maverism, or even Obama's change, then we need to look deeper to make sure we know what they know.

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In case the rise of the stock market on Monday due to government bailout euphoria seemed to unmuddy the waters, Lehman Brothers would like you to know that they are still in the woods that Fannie and Freddie were fooling around in, and that Hansel and Gretal got lost in, and further, the Brothers Lehman cannot find their pants. In other words, they've not been able to come up with the capital infusion they need, and we kind of wonder how many financial firms the government can hold in its hands while chewing gum at the same time.

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Wisdom for the Day:
When you take a new job working with mostly women, for a man it is like discovering gold. But when you see the gold on the ring fingers, it like working in a coal mine.

Daily Update: Monday September 8th

Well, if you were too busy on Sunday hunting, or watching football, "snowmachine riding" or raising your many kids, we are happy to inform you that  the Treasury took control  (Reuters) of Fannie Mae and Freddie Mac yesterday via many mechanisms including the creation of a special class of preferred shares that can be used to inject capital into the institutions; apparently they had a poor grasp of capital requirements and now we the people own it... sorta. In any case, this just reminds us during this national financially delicate moment of historic proportions, we hardly need presidential or vice presidential candidates with legal experience, analytical abilities, or things like Harvard degrees (with all the intellectual stimulation that goes into getting one of them there things). McCain's Palin should have us thoroughly reassured that she will barracuda our troubles away, even if those troubles include a 6.1% unemployment rate, the highest level in 5 years (NYT).

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In light of the above economic news, Joe Klein at Time Magazine asks us what the election is about, concluding that Republicans are shifting the national conversation to, in our words, stupid stuff.  (We are as conservative as they come, but aside from potential judicial appointments, we hardly see anything worthy in presidential candidate McCain, who has so many faces that he can see the north and south poles simultaneously).

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The N.Y. Times brings us buyout godfather Henry Kravis as he attempts to take his firm, K.K.R., public by merging it with a troubled affiliate, thus killing a couple of vexing birds with one stone. We are all suffering now and just trying to pull together.

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The NFL began its season in full with all the teams we want to win (and pardon our biases), winning. This group included the Philadelphia Eagles, the Pittsburgh Steelers, and Indy (oops, not Indy). The New England Patriots won, but lost quarterback Brady for the season, so, they really lost.

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Ah, the harmonious mix of politics and music. Having succeeded in appropriating the song "Barracuda" by the band Heart for Sarah Palin to use as her theme song and ode to non-intellectualism, the McCain team defended their right to use the stuff of people who don't like them. The Wilson sisters spoke out against the thievery but the McCainites insist their use is legal, and have gone on to appropriate Obama's theme of change in a fit of kleptomania.

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And just in case your Monday is off to a nifty start, you are not losing money on financial stocks, your mortgage bill is current, your job is secure, and your life is just peachy, this is the news for you.  CERN, (European Organization for Nuclear Research), is ready to turn on its huge supercollider "Adam" smasher thingie. If U.S. vice presidential candidate Sarah Barracuda proves correct, and God did in fact make the world in 7 days or so, give or take translation errors, then things are cool around.

But if somehow a big bang type of event occurred, the itch of scientists to replicate that event might kill us all dead, although, presumably, seconds before it all ends, we will say to ourselves, "Ah, so that's how it all began".  According to AP, we have another month or so before they start firing beams of protons at each other. Some people are trying to stop the effort under the crazy rationale that scientists could create something of unknown and deadly consequence, like micro black holes, but we figure if that happens, Geneva, where the collider is based, and then Europe, will be the first to be sucked in, leaving the United States with more hegemony in its mental pocket. (Hegemony being a fine substitute for actual money in the national piggy bank).

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We wonder if Freddie and Fannie are sitting there outside Paulson's office, and blaming each other for messing up.  Happy Monday!

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Wisdom for the Day:
When a woman you have an interest in starts talking about some guy you never heard of, and describes him as "ugly" or "annoying," or if she says things like "Oh my god I am so not interested in him", and if she says these things over the course of an hour instead of talking about more interesting things like the end of the world or collapsing mortgage institutions, flee. Don't look back. Your heart will surely turn into a rock of salt as she eventually tells you a month later, "No really, he is the most delightful man ever!"

Drill, Baby, Drill and the McCain Thievery Speech

On Wednesday night Sarah Palin gave her speech in front of an enthusiastic crowd at the Republican National Convention. She was proceeded by a vicious tongued Rudy Guiliani, who brought the art of mockery as substance to a whole new level. It was especially amusing, even disturbing, to see the crowd chanting "Drill, baby, drill" or some such nonsense, taking a complex policy issue down to the level of a teacher leading the children in a phonics exercise. (To do so as oil prices have come off their peak is even more telling, with light, sweet crude settling at $107.89 today). Sarah, presumably a Christian, and probably born again at that, had no problem reading the speech created for her, and one that continued with the inaccuracies and diversionary points dipped in a batter of military and small town rhetoric meant to resemble something like patriotism and toughness, but not.

Meanwhile the Dow dropped 345 points for the type of reasons that should have the average voter thinking beyond whether the next vice president is a hockey mom, or good with the gun, or able to churn out children like pop tarts.  The Dow dropped as new applications for unemployment rose (AP) and retail numbers reflected a sluggish economy, and a gun and a highly productive birth canal won't fix those problems.

Of course everyone has been watching Palin and McCain, and the two, the team, have been focused on 1) distorting facts about Obama riducluing 2) playing up issues of family and military experience and 3) taking a rather un-Republican dip into identity politics, using sexism to defend Palin from close analysis, and using carefully coded racial appeals to tap into the subconscious of those so inclined. 

McCain has already fundamentally miscalculated America's greatest threat, naming terrorism as his supreme focus. But it is a battle that can never come to an end when you are of the opinion that there are no underlying factors that cause terrorism to begin with. Further it is a battle that cannot be fought and won when the house in which you live is tilting in economic collapse.


Will people drill down, and perhaps go here (for Obama) and here (for Palin), as a start, to compare what each person has really done?  Or will we continue to ignore the details while plastered to the trivia, to a level where we can dismiss education, community service, and legal study as noble and valuable pursuits.


(As I write this, and while likely voting for Obama, McCain is giving his speech, elements of which are actually quite good and serious sounding, unlike most of his campaigning. He just did a whole riff on change, and that every area of society needs to catch up to the modern global economy.   However I can't give him points for theme thievery, talking out of two sides of his mouth (sounding kind here, while vilifying elsewhere), and the repeated references to his past military suffering. He has given a speech that his past and future campaigning cannot live up to).