I want to reiterate as plainly as possible a point that David and Josh Marshall both made yesterday.

McCain is now responding to the turmoil on Wall Street by saying things like, "We will have transparency and accountability and we will reform the regulatory bodies of government." American workers, he says, have been "betrayed by a casino on Wall Street of greedy, corrupt excess."

But why should we trust this guy to bring the proper regulation to the financial industry? Who is he to play the populist? He is a life-long supporter of deregulation, his campaign staffers made millions lobbying for failed lenders, and his top economic adviser, Foreclosure Phil Gramm, helped pass the deregulation that created this mess in the first place.

Update: The NYT mines this vein.

Here's columnist Bradley Burston in Israeli daily Ha'aretz:

I get it. I get that millions of Americans have a crying need for someone to stand up and say the things that Sarah Palin has been telling them. ...
But it wasn't until I got into the taxicab this morning, that I realized what the American voter truly faces this November. The radio was playing a clip from her ABC News interview, the one in which she was asked about the Bush Doctrine. The problem was not that she was unacquainted with the doctrine. Millions of Americans are unacquainted with it. The problem is that Sarah Palin was also asking those millions of Americans to put her first in line for the most important position in humankind. ...
Even my Israeli cab driver, a non-American through and through, knew more about the Bush Doctrine than Sarah Palin. And that is cause for serious concern. ... There is something in the smugness, the faith-based rigidity, the dismissiveness, that suggests that once again, we may have a national leader who knows better how to divide than to rule.

On the bright side, Burston continues, the realization that Israeli politics would never elevate such an inexperienced statesman to a top leadership position restored some faith in their country to the writer and his colleagues. "'This would never have happened in Israel, ever' remarked a journalist friend ... With irony bordering on the painful, the journalist added, 'Sarah Palin has restored my faith in Israel.' Israel is far from a model of good government, wise policymaking and exemplary leaders. But here, at least, voters and the politicians make it their business to know inside and out .... politics ... for what politics really is, in America and Israel both: a matter of life and death."

Yesterday morning, amidst financial disaster or near-disaster, John McCain said, "the fundamentals of our economy are strong." Today, the Obama campaign is making him pay.

In response to anyone who thinks they can use statistics and technical definitions to argue the fundamentals of the economy are strong, I would echo a point Paul Krugman made last night on MSNBC (video): Given the state of our banks, our homes, our jobs, and our wages, if we aren't in a recession yet we need to seriously rethink our definition of recession.

Paulson's Con

The natural result of the federal government response that emerged over the weekend around the Lehman Brothers catastrophe is to place the venerable Federal Deposit Insurance Corporation, the government institution that insures the bank deposits of hundreds of millions of Americans, in grave jeopardy. While Treasury secretary Henry Paulson and others talk about not sinking taxpayers' funds into saving Lehman, the real, unstated policy is just the opposite.

It is going to work like this: As it did with Merrill Lynch, the government's approach to the crisis will force commercial banks to swallow troubled Wall Street investment companies, flooding the commercial banks with the lousy junk bonds and faulty mortgages that the investment companies own, and that started this mess to begin with. More and more commercial banks will find themselves on the edge, and they will turn to the FDIC. But the FDIC can't possibly shoulder the growing burden. At that point, Congress will have to step in and shore up the FDIC. The deal doubtless will include some version of the S&L bailout, with the creation of a Resolution Trust Company type institution into which the banks can dump the sub-prime mortgages, junk bonds, and the like.

In other words, the public will end up paying for Wall Street's financial binge. And the leaders of the financial community who got us into this expensive mess? They'll get the traditional golden parachutes and lavish pension arrangements--huge payoffs for screwing the public.

It's worth noting that Sheila Bair, a longtime Treasury Department official who is now head of the FDIC, was one of only a handful of people in Washington who repeatedly warned then Fed Chairman Alan Greenspan about the dangers of unregulated banking in general, and the growing housing bubble in particular--warnings that Greenspan roundly ignored. As French economist said of Greenspan last year, "He created four major crises: savings and loans, LTCM [Long-Term Capital Management], new-technology shares, and subprime mortgages," and then won praise for his handling of these crises. "He's congratulated for his role as fireman," said Artus, "but he's the one who started the fire." Now its U.S. taxpayers who will get burned, through the very institution--the FDIC--that FDR created 75 years ago to protect them.

At the annual Washington gathering of the Christian right sponsored by the political arm of the Family Research Council, the Republican Party's emissaries have come in past years to bow before some 2000 right-wing foot-soldiers and the leaders who command them. However, this year's Values Voter Summit, a bit light on GOP dignitaries, made less news for its speaker line-up than it did for the sale of a breakfast food.

In the far corner of the exhibit hall at the conference, two entrepreneurs hawked "Obama Waffles," a product they described as "political satire." On sale for $10 apiece, the boxes of waffle mix were emblazoned with a cartoon image of a bug-eyed, toothy, dark-lipped Barack Obama eying a plate of waffles. A pat of butter on the waffles is stamped "2008." On the top flap, the Obama cartoon appears in a turban, next to an arrow printed with the text: "Point box toward Mecca for tastier waffles."

kaplan.jpgAs 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 Robert D. Kaplan, a national correspondent for The Atlantic and senior fellow at the Center for a New American Security. His latest book is Hog Pilots, Blue Water Grunts.

In Defense of the Pentagon's Small, Small World

It is important to realize that dozens of deployments simultaneously around the globe need not overstretch a military if those deployments are by and large small. But one big sustained deployment like Iraq can wreck the whole manpower system. It is also important to realize that all of these deployments are closely monitored by Congress. I was in Nepal in the middle of 2005, covering our military mission there, when its activities were halted for the time being by Washington because the king had suspended the political party process, in addition to other anti-democratic infractions. I was in Algeria the same year to witness the first US military mission there after that country had held free elections. Unlike during the Cold War, these missions for the most part are restricted to fledgling democratic countries.

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.

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:

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.

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.