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No Bailout

| Mon Sep. 29, 2008 4:18 PM EDT

NO BAILOUT....The bailout bill has failed. Two-thirds of the House GOP caucus — primarily the lunatics in the Republican Study Committee, I assume — voted against it. I have a feeling we might now get a bunch of emergency nationalizations whether we like it or not.

Our current financial crisis has never been explained well to the public because (a) it's mind-bogglingly complex and (b) even the experts don't entirely know what's going on. And the Paulson plan was never sold well because (a) the initial draft was indefensible and (b) the theory underlying it was uncertain and complicated. So Lou Dobbs and his brand of populist yahooism won out instead.

I don't know what happens next. Hopefully we'll get another bite at the apple, but with Congress adjourning and elections approaching, action is only going to get harder, not easier. In the meantime, I guess we just have to pray that all the Chicken Littles like me are worrying too much.

On another note, an upcoming debate whose main attraction is the possibility of Sarah Palin melting down amusingly is suddenly less appealing than it used to be. I'm not really in the mood for bread and circuses right now.

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After $700 Billion Bailout Collapses in the House, GOP Mounts an Absurd Blame Game

| Mon Sep. 29, 2008 4:08 PM EDT

It took only a few minutes for the blame game to begin. Moments after the House failed to pass the $700 billion bailout plan, the Republican leaders--who could not produce the expected number of Republican votes for the legislation--came before the cameras with an explanation for the bill's collapse: a speech Nancy Pelosi gave.

House minority leader John Boehner (R-Ohio) told reporters that prior to the 228-to-205 vote everything was hunky-dory. Then the House Speaker delivered a "partisan speech" before the floor vote began. This, Boehner said, "poisoned our conference and caused a number of members we thought we could get to go south." Representative Eric Cantor, a member of the Republican leadership, held up a transcript of Pelosi's speech and decried her "failure to lead."

What did Pelosi say that was so heinous? Here are some portions from the text that was issued by her office:

Mission Creep Dispatch: Catherine Lutz

| Mon Sep. 29, 2008 3:14 PM EDT

lutz.jpg As part of our special investigation "Mission Creep: US Military Presence Worldwide," we asked a host of military thinkers to contribute their two cents on topics relating to global Pentagon strategy. (You can access the archive here.)

The following dispatch comes from Catherine Lutz, anthropologist at Brown University's Watson Institute for International Studies, author of Homefront: A Military City and the American Twentieth Century, and editor of the upcoming book The Bases of Empire: The Global Struggle Against US Military Posts.


Welcome to Guam, USA

"Guam, USA" is the tagline on the western Pacific island's license plates. It resonates with the fact that fully one-third of Guam's territory is occupied by US military installations, from the giant Anderson Air Force Base in the north, to the Naval Magazine, where deadly ordnance is stored, in the south. For there is nothing more American, in many ways, unfortunately, than a place bristling with weapons and soldiers.

Olmert on Israeli Security

| Mon Sep. 29, 2008 2:57 PM EDT

OLMERT ON ISRAELI SECURITY....Laura Rozen points to a remarkable volte-face from Israel's outgoing prime minister:

Prime Minister Ehud Olmert said in an interview published on Monday that Israel must withdraw from nearly all the West Bank as well as East Jerusalem to attain peace with the Palestinians and that any occupied land it held onto would have to be exchanged for the same quantity of Israeli territory.

....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?"

....On Iran, Mr. Olmert said Israel would act within the international system, adding, "Part of our megalomania and our loss of proportions is the things that are said here about Iran. We are a country that has lost a sense of proportion about itself."

I wonder what Sarah Palin thinks of this? I especially wonder after reading this.

Limiting CEO Pay

| Mon Sep. 29, 2008 2:15 PM EDT

LIMITING CEO PAY....Henry Blodget says the provisions of the bailout plan limiting CEO compensation are "toothless":

The plan ostensibly prohibits golden parachute payments to CEOs and other "C-level" execs at bailed-out companies. However, it really only prevents payments on severance deals that are struck AFTER the bailout (specifically, it prohibits these deals completely). There is nothing about cancelling the severance payments that the executives are ALREADY contractually entitled to. What this means in practice is that bailed-out companies will have trouble hiring the best talent...because why would you work at Bailed Out Company A when you could go across the street and get a fat severance deal? It also doesn't mean the companies can't pay their CEOs $500 million a year. IN ADDITION: There's another absurd section that makes all compensation above $500,000 for the three highest paid employees at the company not tax-deductible for the company. This is LUDICROUS. It means the company can pay the executives anything it wants and that the penalty for this will be exacted on the company and its shareholders. (Unless we're mistaken, Americans are furious that CEOs make $50 million a year for running companies into the ground, not that the $50 million is tax deductible).

Unfortunately, this sounds about right to me. Sometimes symbolic stuff like this can be important, but it's symbolic nonetheless. The plain fact is that there's very little in this bill to genuinely limit executive compensation, and probably very little that could have been in the bill. It's better than nothing, but only barely.

Owning the Debate

| Mon Sep. 29, 2008 2:00 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 1:46 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 1:24 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 1:24 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 12:58 PM 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?"