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Lovely Sarah

| Mon Sep. 15, 2008 2:57 PM EDT

LOVELY SARAH....Tyler Cowen says lots of peculiar but interesting things. That's why I like reading him. Today he suggests that, Cleopatra-like, Sarah Palin has a lot of conservative men thinking with their gonads instead of their brains:

Andrew Sullivan is calling Sarah Palin "Rovian." Maybe, but her first order of business has been to fool the Republican establishment, not the American people....Which narrative do you find more plausible?:

"Lovely Sarah, she's saying and doing everything we want her to. What a quick learner. How pliable she is. Remember Descartes on tabula rasa?"

"Once John and I are elected, they'll need me more than I need them."

The people who are right now the happiest may end up the most concerned. For better or worse, they're about to lose control of their movement.

This is both peculiar and interesting. But is it right? My own guess is that McCain doesn't need her at all once the election is over. If he wins in November, Palin will be sent overseas to funerals and into the heartland for occasional speeches to the moral values crowd, and that's about it. She'll beaver away on a "special needs portfolio" or some such, while the big boys worry about which country to yell at next.

On the other hand, if John McCain loses, Palin might well be in line to be the GOP's next star. (Assuming she avoids some kind of career ending catastrophe on the trail, of course.) In other words, if she were really smart and devious, maybe she'd be slyly working to ensure McCain's defeat, not his victory. So maybe Tyler is right, but just has the wrong timeframe.

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Judis on the Money

| Mon Sep. 15, 2008 2:11 PM EDT

John Judis over at TNR puts himself in Obama's shoes and describes how he would respond to the financial situation. I think he's spot on.

I would call a press conference tomorrow to discuss the financial crisis. Do it in New York City. Even better, on Wall Street. Begin with a fifteen minute statement outlining why the crisis has occurred and what, generally, the government should do about it. Contrast your approach sharply with that of McCain and the Republicans. Take questions for an hour from reporters. Finally, issue a challenge to McCain to debate the issue by week's end. And offer to allow McCain to bring Sarah Palin and Phil Gramm at his side if he needs them to advise him on the issues.

I particularly like the "take questions for an hour" part. Contrasts nicely. The only potential pitfall? If McCain heads to the Senate the same day and introduces serious legislation to address the failing financial industry. Then Obama looks like a showboat and McCain looks like a serious, pro-active leader.

Kazakhstan-onomics

| Mon Sep. 15, 2008 2:08 PM EDT

KAZAKHSTAN-ONOMICS....Felix Salmon on our brave new world:

The "shadow banking system" is now so big and so global that for all we know a series of bad decisions by a mid-level technocrat in Kazakhstan could precipitate cataclysm across America and the world.

That's true, but only if the financial system is fundamentally unbalanced to begin with — and it's the job of governments and central banks to regulate the financial system to keep that from happening. They don't regulate in order to produce the results they want, or to prevent people from making money, but to keep the financial system within at least the very broad boundaries of basic stability.

Alternatively, you can let the unfettered market have its way and then clean up the messes afterward. This is pretty orthodox Republican thinking, shared by Hoover in 1930, Reagan and Bush during the S&L crisis, and now Alan Greenspan and George Bush during the housing bubble. This ends up hurting lots of little guys, of course, but the irony is that it ends up hurting lots of big guys too. Frankly, they'd do better — in fact, they do do better — with Democrats running the show. They never really seem to figure that out, though.

McCain Blasts Wall Street Failure, Neglects To Mention His Adviser Helped Cause It

| Mon Sep. 15, 2008 1:44 PM EDT

As the news broke of the Lehman Brothers meltdown and the rest of the latest financial crisis, John McCain, speaking at a campaign rally in Florida on Monday, angrily declared,

We will never put America in this position again. We will clean up Wall Street. This is a failure.

And in a statement released by his campaign, McCain called for greater "transparency and accountability" on Wall Street.

If McCain wants to hold someone accountable for the failure in transparency and accountability that led to the current calamity, he should turn to his good friend and adviser, Phil Gramm.

As Mother Jones reported in June, eight years ago, Gramm, then a Republican senator chairing the Senate banking committee, slipped a 262-page bill into a gargantuan, must-pass spending measure. Gramm's legislation, written with the help of financial industry lobbyists, essentially removed newfangled financial products called swaps from any regulation. Credit default swaps are basically insurance policies that cover the losses on investments, and they have been at the heart of the subprime meltdown because they have enabled large financial institutions to turn risky loans into risky securities that could be packaged and sold to other institutions.

Lehman's collapse threatens the financial markets because of swaps. From Bloomberg:

Rove Attacks the Fact-Checkers

| Mon Sep. 15, 2008 1:34 PM EDT

An integral part of the conservative noise machine is discrediting national newspapers and networks — if you can't trust the New York Times and NBC, you're increasingly reliant on Fox News and Rush Limbaugh for all of your news and analysis. But what to do when nonpartisan outlets devoted exclusively to refereeing the campaign in a fair and unbiased way start to call you on distortions and deceptions? Discredit them too, of course.

Despite Palin's Rhetoric, Alaska Still Pursuing "Bridge to Nowhere"

| Mon Sep. 15, 2008 1:26 PM EDT

Sarah Palin has repeatedly made the (false) claim that she "told Congress 'Thanks, but no thanks' on the bridge to nowhere." Actually, when Palin campaigned for governor in 2006, part of her platform included supporting the bridge, even though by then it had already become a controversial symbol of federal pork. She didn't change course on the bridge until September 2007, almost a year after she was elected, when it became clear that Congress would not allow the earmarked money to be spent on the original bridge project. But on Monday, ProPublica's Paul Kiel reported that the Palin administration is still pushing for a bridge between the city of Ketchikan, Alaska and its international airport on nearby Gravina island:

Gov. Palin's administration acknowledges that it is still pursuing a project that would link Ketchikan to its airport -- with the help of as much as $73 million in federal funds earmarked by Congress for the original project.
"What the media isn't reporting is that the project isn't dead," Roger Wetherell, spokesman for Alaska's Department of Transportation, said. In a process begun this past winter, the state's DOT is currently considering (PDF) a number of alternative solutions (five other possible bridges or three different ferry routes) to link Ketchikan and Gravina Island.

ProPublica has more, including an Alaska Department of Transportation map of all the "different" bridges the Palin administration is considering building.

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One of the Worst-Timed Op-Eds Ever, By One of John McCain's Economic Advisers

| Mon Sep. 15, 2008 12:55 PM EDT

Both Kevin and I have noted the absurd Washington Post essay by Donald Luskin titled "A NATION OF EXAGGERATORS: Quit Doling Out That Bad-Economy Line." It was published on Sunday morning, 12 to 24 hours before news broke that the American economy is basically in shambles, making it one of the most poorly timed pieces of punditry ever.

But what Kevin and I both missed is that Luskin advises John McCain on the economy! He admits it halfway through the piece, saying, "Full disclosure: I'm an adviser to John McCain's campaign."

Get a load of the wisdom Luskin is providing McCain. This is from the piece:

Things today just aren't that bad. Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too. None of this, however, is cause for depression -- or exaggerated Depression comparisons.

Luskin follows this with a number of arguments (bolstered by statistics, of course) that would cause anyone with a rudimentary grasp of the American economy to spit out their coffee. Like this one:

The Republican Mess

| Mon Sep. 15, 2008 12:50 PM EDT

THE REPUBLICAN MESS....Obama on the financial crisis:

I certainly don't fault Senator McCain for these problems, but I do fault the economic philosophy he subscribes to. It's a philosophy we've had for the last eight years....It's a philosophy that says even common-sense regulations are unnecessary and unwise, and one that says we should just stick our heads in the sand and ignore economic problems until they spiral into crises....This country can't afford another four years of this failed philosophy.

I dunno. Do Mr. and Mrs. Heartland really respond to complaints about failed "philosophies"? I continue to be a little puzzled by Obama's unwillingness to plainly brand this as a failure of the Republican Party. People may or may not understand nebulous philosophies, but they can pretty easily be convinced that DC Republicans are basically shills for Wall Street and the rich and should therefore get 100% of the blame for this mess. At least, they could be convinced if Obama just went ahead and said it. After all, if the tables were turned do you think McCain would be so chary about blaming it on Democrats? I don't think so either.

Proof That the Economy is in Bad Shape

| Mon Sep. 15, 2008 12:33 PM EDT

PROOF THAT THE ECONOMY IS IN BAD SHAPE....Like Matt Yglesias, I too don't understand why the Washington Post would publish a piece on the state of the economy by Donald Luskin. It's not just that Luskin is a hair-on-fire conservative idealogue. So is Charles Krauthammer, and despite the fact that I think the Post would be better off without him, I understand that Krauthammer carries a certain amount of intellectual heft and appeals to a certain crowd. The same really can't be said of Luskin, who routinely makes mistakes like not accounting for inflation or discarding data points for no reason except that it helps prove some theory or other he wants to peddle. It's sort of kindergarten hackishness compared to Krauthammer's grad school hackishness.

So here's my guess: the Post wanted to run a "balancing" piece in the Outlook section arguing that the economy was basically OK and Bush had done a good job running it. Apparently no one smarter or more intellectually honest than Luskin — which includes just about everyone — was willing to do it. Which should tell you something.

McCain on Today's Economic Events: "The Fundamentals of Our Economy Are Strong"

| Mon Sep. 15, 2008 12:13 PM EDT

Via Steve Benen, John McCain's take on today's financial insanity:

Here's the text version of that quote: