In this process we are vastly rewarded by Obama's desire to harness the effort of people of differing views on behalf of improving the problems facing the country.
Sources on both sides said Obama did not offer McCain a cabinet job, but focused on how the senator for Arizona could help to guide through Congress legislation that they both strongly favour.(Guardian-UK)
This is good, even if it turns out to be symbolic.
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Meanwhile over at The Economist were are told that the government's initial analysis and efforts in dealing with A.I.G. were flawed.
A bankruptcy was avoided only because of the size of the holding company’s book of toxic credit derivatives, which senior executives barely understood. These left AIG so intertwined with other financial firms that its failure was judged by the Federal Reserve and Treasury to endanger the financial system.
Whether that judgment was right remains unknowable. But it is now clear that the original plan was flawed. That may be understandable: panic was in the air, AIG faced crippling collateral calls and Lehman Brothers had just folded. And the authorities lacked the wide powers granted by the Troubled Asset Relief Programme (TARP) approved by Congress in October. Unorthodox options, such as splitting the systemically threatening credit derivatives from AIG, were not under discussion.
The article ends oddly:
"Plenty of time to reflect on how an offer of a temporary loan, to a company that barely made the list of systemically vital firms, spiralled into one of the biggest corporate bail-outs ever."
One would think that the company did in fact make the list of systemically vital firms by mere example of the actions of the government. One cannot be sitting on a stack of credit derivatives and not be considered vital. It was not so much a company moving from "non-vital" to vital, but merely the governments inability to deal with multiple moving parts (different companies, different products affecting the books, constantly changing valuations, etc).
And absent the alternative result (collapse), it is really too early to tell how bad a deal this will ultimately be for the taxpayers, regardless of the title of the piece. One imagines that most of the hand wringing is the type of analysis of the now that gets proved wrong with time and perspective.
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In our ongoing blathering, we have always recommended watching what the wise investor does and use that information to gain clues on where the world is headed. Thus we have hedge funder John Paulson beginning to buy some mortgage backed assets after making huge gains in 2007 betting the opposite way.
John Paulson, the hedge fund manager who was called before Congress last week to discuss the big profits he made by foreseeing the collapse of the subprime mortgage market, has started to buy securities backed by residential mortgages.
Mr Paulson’s move marks the latest example of a famously bearish investor shifting gears to profit from depressed prices in the global credit markets.
(FT-UK)
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Hillary must be giving Bill the major frown right now, knowing that her future job as secretary of state is predicated on his purity.
Obama's advisers have begun looking into Bill Clinton's foundation, which distributes millions of dollars to Africa to help with development, to ensure that there is no conflict of interest. But Democrats do not believe that the vetting is likely to be a problem.(Guardian-UK)
While we've always had a major dislike for Hillary, though never doubting her smarts or ambition, this seems like it might be a good move. Given the complexity of the chaos, having a strong person handling the "outside" issues will allow Obama freedom to focus on the economic internals. Unless Hillary wants to sabotage him from the inside. Hmmmm. (We actually think that would be ridiculous, and that most people are motivated by good, intially).
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