2008 - %3, September

Owning the Debate

| Mon Sep. 29, 2008 1:00 PM EDT

OWNING THE DEBATE....Ezra Klein on the Paulson rescue package:

One point Paul Krugman makes here is that the terms of the bailout were sharply constrained by the political strategy chosen by the Democrats. When Pelosi and Reid decided that this bill would not go through without Republican votes because Democrats would not be demagogued for cleaning up the mess caused by deregulation, they took more sharply liberal options like nationalization off the table.

That's true, but I think I'd make a different political point. Henry Paulson unveiled his plan on Friday the 19th, and that was when the frame of the debate was set. And that frame was: purchase of troubled assets. At that point, virtually no one had so much as mentioned large scale nationalizations as a potential solution to the banking crisis. It just wasn't on the public radar screen.

Now, maybe that wouldn't have mattered. Maybe our current political coalition wouldn't have been willing to consider it regardless. But virtually everyone agreed that action needed to be taken quickly to prop up the financial markets, and under circumstances like that there's simply no chance of popping up at the last minute with a huge new proposal and thinking it has any chance of passing. If large-scale nationalization was really the preferred solution among liberal activists, the time to start pushing it was before Paulson and Bernanke introduced their bill. Doing it in the middle of last week, and then complaining that it didn't get seriously considered, displays a failure of vision on the left, not from its congressional leadership.

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McCain the Patriot: "Country First or Obama First"

| Mon Sep. 29, 2008 12:46 PM EDT

John McCain put the choice rather directly during a campaign rally on Monday afternoon when he declared, "Country first or Obama first." In other words, there is only one way a true patriot can vote--and Obama does not love his country as much as McCain does. Anyone care to argue that such an argument is not a scoundrel's refuge?

January 21st

| Mon Sep. 29, 2008 12:24 PM EDT

JANUARY 21st....Matt Yglesias isn't happy with the bailout bill:

Under the circumstances, it looks like a bill that'll be good enough to stave off collapse of the financial system, but probably won't wind up addressing the full extent of the problem. This subject is going to have to be revisited after the election. But the unfortunate reality is that the current configuration of power in Washington still leaves the conservatives whose policies and ideology is largely responsible for the collapse in command of too many levers of power to simply implement a solution that's not tainted by their misconception of the problem.

I'm less unhappy than Matt. I think there's a decent chance the bill will provide enough systemic relief to prevent a scattershot government takeover of failed banks, and I'm OK with that. More to the point, though, if the bailout doesn't solve the problem completely, I'm perfectly happy to put off further action until after the election. If widespread nationalizations do turn out to be necessary, there's a way, way better chance of doing it decently on January 21st than there is today. One thing is certain, after all: we're not going to end up with a Swedish-style political solution in which both parties put down their hatchets and sing Kumbaya as they announce a rescue plan. Events of the past week have made that crystal clear. If it happens at all, it will only be because Democrats manage to push it through on sheer muscle.

Olmert Says Israel Should Pull Out of West Bank

| Mon Sep. 29, 2008 12:24 PM EDT

In a remarkable development and transformation from his former Likud days, outgoing Israeli prime minister Ehud Olmert has given an interview to an Israeli newspaper in which he says Israel should pull out of the West Bank, and more broadly, rethink its strategic defense doctrine from one that is so heavily military-based.

In an unusually frank and soul-searching interview granted after he resigned to fight corruption charges — he remains interim prime minister until a new government is sworn in — Mr. Olmert discarded longstanding Israeli defense doctrine and called for radical new thinking in words that are sure to stir controversy as his expected successor, Foreign Minister Tzipi Livni, tries to build a coalition.
"What I am saying to you now has not been said by any Israeli leader before me," Mr. Olmert told Yediot Aharonot newspaper in the interview to mark the Jewish new year that runs from Monday night till Wednesday night. "The time has come to say these things."
He said traditional Israeli defense strategists had learned nothing from past experiences and seemed stuck in the considerations of the 1948 Independence War. "With them, it is all about tanks and land and controlling territories and controlled territories and this hilltop and that hilltop," he said. "All these things are worthless."
He added, "Who thinks seriously that if we sit on another hilltop, on another hundred meters, that this is what will make the difference for the State of Israel's basic security?"

Biden vs. Palin: Who Can Shut Up More?

| Mon Sep. 29, 2008 11:58 AM EDT

Next door, Kevin says that Biden's path to victory in Thursday's debate against Sarah Palin has gotten easier in recent days as Palin's confidence has fractured: "Biden just needs to show up, talk normally, and wait for her to implode."

That's easier said than done, of course, especially for Joe Biden. This debate will not be a test of his knowledge; it'll be a test of his restraint. He will likely win if he shuts up, stops trying to prove how much he knows, and simply gives Palin enough rope/time to hang herself.

His advisers and handlers know this. That means Biden will likely come into the debate with a strategy of saying as little as possible. And due to her plethora of recent gaffes, Palin will come into the debate the strategy of... saying as little as possible. Can you imagine Gwen Ifill's position? "Senator? Governor? You both have one minute and thirty seconds left. Would anyone like to speak?"

Biden vs. Palin

| Mon Sep. 29, 2008 11:33 AM EDT

BIDEN vs. PALIN....Nancy Gibbs, like many other people, wonders how Sarah Palin is going to do against Joe Biden on Thursday night:

With Charlie Gibson the waters were smooth if shallow; with Katie Couric she seemed forever at risk of drowning in her own syntax. But if she's growing less surefooted with each passing day of cramming, who can blame her, when the highly experienced Republican pols around her don't seem to trust her to talk past her talking points....All I know is that with each passing day, Palin's road gets harder, the expectations higher, the margin for error smaller.

No kidding. But there's a flip side to this too: it takes a lot of pressure off Biden. When Palin was first nominated, pundits fell all over themselves to advise Biden to watch his tongue when he faced Palin in debate. Don't look like a bully! Don't be sarcastic! Don't talk down to her!

Well, guess what? It turns out he doesn't need to. Attacking Palin — all the while worrying about whether this attack is too much or that attack will turn off women — is completely unnecessary. Biden just needs to show up, talk normally, and wait for her to implode. That's got to be a relief, no?

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Palin Reportedly Said Humans and Dinosaurs Coexisted

| Mon Sep. 29, 2008 11:05 AM EDT

A Wasilla-based music teacher and liberal political blogger is claiming that then-Mayor Sarah Palin told him after a 1997 commencement address for home-schooled students that "dinosaurs and humans walked the Earth at the same time."

Young Earth Creationism is a relatively common strain of Christian evangelicalism. It believes God created the earth over the course of six days roughly 6,000 to 10,000 years ago. It has always struggled with dinosaurs. The scientific establishment says dinosaurs went extinct 65 million years ago and have fossils to prove it. YEC believers are often forced into the argument that the Devil planted the fossils to fool faithless humans, or that human footprints can be found alongside preserved dinosaur tracks.

Which explains why, on the third day, God created the Remington bolt-action rifle.

Whoever does the next Palin interview — and since Katie Couric proved to be too tough an interrogator, I have to assume it'll be Regis and Kelly — needs to ask if Palin believes in Young Earth Creationism and what her views are dinosaurs are. Matt Damon wants to know!

Mayor of SC Town "Just Curious" if Obama is the Antichrist

| Mon Sep. 29, 2008 10:51 AM EDT

When PolitiFact did a fact-check of the "Is Obama the Antichrist?" question back in April, I thought it was a touch ridiculous. They got multiple professors of religious studies to chime in and did a serious examination of the text of Revelation. They found that not only is Obama not the Antichrist (stunning!), the chain email that suggests he is has no familiarity with the Bible and is a pretty pathetic piece of work, even for a smear email.

But that's not a surprise, right? This is an email claiming a prominent American politician is the Antichrist. Of course it's insane. No one needs a fact-check to prove that. Right?

Oops. The mayor of a South Carolina town apparently does. He forwarded the email after receiving it and when called on the fact that he was perpetuating a smear, he said, "I was just curious if there was any validity to it. I was trying to get documentation if there was any scripture to back it up."

I'm going to start sending out emails claiming that this man is a half-wit. I'm just curious if there is any validity to it.

Hedge Fund Watch

| Mon Sep. 29, 2008 12:30 AM EDT

HEDGE FUND WATCH....The end of the third quarter is nearly upon us, and hedge fund managers are feeling nervous:

Even as Washington reached a tentative agreement on Sunday over what may become the largest financial bailout in American history, new worries were building inside the nearly $2 trillion world of hedge funds. After years of explosive growth, losses are mounting — and so are concerns that some investors will head for the exits.

....The big worry is that a spate of hurried sales could unleash a vicious circle within the hedge fund industry, with the sales leading to more losses, and those losses leading to more withdrawals, and so on. A big test will come on Tuesday, when many funds are scheduled to accept withdrawal requests for the end of the year.

"Everybody's watching for redemptions," said James McKee, director of hedge fund research at Callan Associates, a consulting firm in San Francisco. "And there could be a cascading effect, where redemptions cause other redemptions."

The article says optimistically that "No one expects a wholesale flight from hedge funds." But no one ever does, do they?

The Rise of the Technocrats

| Sun Sep. 28, 2008 10:51 PM EDT

THE RISE OF THE TECHNOCRATS....The New York Times on the Paulson bailout plan:

The rescue package, if successful, would make the recognition of losses and the inevitable winnowing of the banking system more an orderly retreat than a collapse. Yet that pruning of the banking industry must take place, economists say, and it is the government's role to move it along instead of coddling the banks if the financial system is going to return to health.

...."The lesson from Japan is that tough love for the banks is what's needed," said Kenneth Rogoff, an economist at Harvard. "In the current crisis, you do want to get rid of the bad assets from the banks, to get markets working again. But the key is going to be in the details of how the bailout works. You don't want it to be a subsidy in disguise that keeps insolvent banks alive. That would just prolong the economic pain."

Words to live by. The Treasury technocrats and asset managers who end up running the bailout are going to have a tremendous influence over whether it's successful or not. If they do it right, the plan should shine a bright light on which banks need to fail and which ones can be saved. If they do it wrong, we could be in for a long, gray twilight of economic stagnation.

In other words, we all better cross our fingers and pray that the Treasury department still has good technocrats these days. I wonder what the odds are?