Monday, September 22, 2008

McCain Campaign Manager Paid Millions To Lobby for Fannie & Freddie

Senator John McCain’s campaign manager Rick Davis was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations. Check out the story in The Washington Post:

Mr. McCain, the Republican candidate for president, has recently begun campaigning as a critic of the two companies and the lobbying army that helped them evade greater regulation as they began buying riskier mortgages with implicit federal backing. He and his Democratic rival, Senator Barack Obama, have donors and advisers who are tied to the companies.

Incensed by the advertisements, several current and former executives of the companies came forward to discuss the role that Rick Davis, Mr. McCain’s campaign manager and longtime adviser, played in helping Fannie Mae and Freddie Mac beat back regulatory challenges when he served as president of
their advocacy group, the Homeownership Alliance, formed in the summer of
2000. Some who came forward were Democrats, but Republicans, speaking on the condition of anonymity, confirmed their descriptions.
Read on…

Barack Obama and Joe Biden need to jump on this story and keep hammering away until the corporate media can no longer ignore it. The U.S. stands on the brink of the next Great Depression thanks to Bush/McCain deregulation policies and now we find out that the man who runs the McCain campaign was paid handsomely to lobby for these fatal policies on behalf of Fannie Mae and Freddie Mac, even as he repeatedly tries to tie Obama to those companies.

Voters need to know how we got into this mess and who is responsible. It was John McCain, his elite lobbyist cronies and the Republican party. I agree with John:

There should be a campaign to demand that McCain’s campaign manager, Rick Davis, give ever penny back to the American people. There had better be an ad about this out by COB Monday, and calls for Davis’ resignation.

The McCain campaign thinks we’re a nation full of whiners and cowards who should just STFU, take a second or third job and cancel our vacations and be thankful for what we’re fed. The lack of respect is stunning — is this the kind of leader you want?

A Conservative for Obama

By Wick Allison, Editor In Chief

THE MORE I LISTEN TO AND READ ABOUT “the most liberal member of the U.S. Senate,” the more I like him. Barack Obama strikes a chord with me like no political figure since Ronald Reagan. To explain why, I need to explain why I am a conservative and what it means to me.
In 1964, at the age of 16, I organized the Dallas County Youth for Goldwater. My senior thesis at the University of Texas was on the conservative intellectual revival in America. Twenty years later, I was invited by William F. Buckley Jr. to join the board of National Review. I later became its publisher.

Conservatism to me is less a political philosophy than a stance, a recognition of the fallibility of man and of man’s institutions. Conservatives respect the past not for its antiquity but because it represents, as G.K. Chesterton said, the democracy of the dead; it gives the benefit of the doubt to customs and laws tried and tested in the crucible of time. Conservatives are skeptical of abstract theories and utopian schemes, doubtful that government is wiser than its citizens, and always ready to test any political program against actual results.

Liberalism always seemed to me to be a system of “oughts.” We ought to do this or that because it’s the right thing to do, regardless of whether it works or not. It is a doctrine based on intentions, not results, on feeling good rather than doing good.

But today it is so-called conservatives who are cemented to political programs when they clearly don’t work. The Bush tax cuts—a solution for which there was no real problem and which he refused to end even when the nation went to war—led to huge deficit spending and a $3 trillion growth in the federal debt. Facing this, John McCain pumps his “conservative” credentials by proposing even bigger tax cuts. Meanwhile, a movement that once fought for limited government has presided over the greatest growth of government in our history. That is not conservatism; it is profligacy using conservatism as a mask.

Today it is conservatives, not liberals, who talk with alarming bellicosity about making the world “safe for democracy.” It is John McCain who says America’s job is to “defeat evil,” a theological expansion of the nation’s mission that would make George Washington cough out his wooden teeth.

This kind of conservatism, which is not conservative at all, has produced financial mismanagement, the waste of human lives, the loss of moral authority, and the wreckage of our economy that McCain now threatens to make worse.

Barack Obama is not my ideal candidate for president. (In fact, I made the maximum donation to John McCain during the primaries, when there was still hope he might come to his senses.) But I now see that Obama is almost the ideal candidate for this moment in American history. I disagree with him on many issues. But those don’t matter as much as what Obama offers, which is a deeply conservative view of the world. Nobody can read Obama’s books (which, it is worth noting, he wrote himself) or listen to him speak without realizing that this is a thoughtful, pragmatic, and prudent man. It gives me comfort just to think that after eight years of George W. Bush we will have a president who has actually read the Federalist Papers.

Most important, Obama will be a realist. I doubt he will taunt Russia, as McCain has, at the very moment when our national interest requires it as an ally. The crucial distinction in my mind is that, unlike John McCain, I am convinced he will not impulsively take us into another war unless American national interests are directly threatened.

“Every great cause,” Eric Hoffer wrote, “begins as a movement, becomes a business, and eventually degenerates into a racket.” As a cause, conservatism may be dead. But as a stance, as a way of making judgments in a complex and difficult world, I believe it is very much alive in the instincts and predispositions of a liberal named Barack Obama.

Write to wicka@dmagazine.com.

Thinking the bailout through

As we beging to debate how we best get out of this mess, and whether we should go with the Paulson Treasurey plan, Senator Chris Dodd's plan, or some other alternative not seen yet, it is important to be firm on the idea of what this bailout is supposed to do.

What is this bailout supposed to do? And can the bailout actually serve this purpose?

Paul Krugman provides a capsule analysis of the crisis.

1. It all starts with the bursting of the housing bubble. This has led to sharply increased rates of default and foreclosure, which has led to large losses on mortgage-backed securities.
2. The losses in MBS, in turn, have left the financial system undercapitalized — doubly so, because levels of leverage that were previously considered acceptable are no longer OK.
3. The financial system, in its efforts to deleverage, is contracting credit, placing everyone who depends on credit under strain.
4. There’s also, to some extent, a vicious circle of deleveraging: as financial firms try to contract their balance sheets, they drive down the prices of assets, further reducing capital and forcing more deleveraging.

Public intervention is most likely needed, yet we need to make sure that mortgage-backed securities are addressed in this package. If we do not solve any of the issues coming out of the housing collapse, and the devaluing of mortgage-backed securities. If this is not addressed the bailout will fail.

Also the financial system is seriously undercapitalized, causing a credit crunch — and any plan has to address that.

Also public injections of capital needs to lead to greater oversight and intelligent regulation.

THE DODD ALTERNATIVE

Senator Dodd this morning unveiled an alternative to Paulson's Treasurey plan. Paul Krugman has not supported Paulson's plan, says that this is a major challenge to Paulson’s approach, and that this sounds like a big step in the right direction.

Bloomberg has more.

Bush’s Legacy Of Squandering Taxpayer Money»

This weekend Think Progress had a very insightful post as to why we should be worried about giving the Bush Administration a 700 Billion dollar blank check.

Yesterday, President Bush announced his $700 billion plan to buy out troubled financial institutions. Demanding enormous faith in his administration’s stewardship, the plan “would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt,” and to hire outside firms “to help manage its purchases.” Further, the proposal provides no oversight mechanism:

Sec. 8. Review: Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Bush is demanding unprecedented control over billions of dollars — with no oversight. His history of mismanaging taxpayer dollars should make Americans skeptical of his buyout plan:

IRAQ RECONSTRUCTION

-$142 million wasted on reconstruction projects that were either terminated or canceled. [Special Inspector General for Iraq, 7/28/08]

-“Significant” amount of U.S. funds for Iraq funneled to Sunni and Shiite militias. [GAO Comptroller, 3/11/08]

-$180 million payed to construction company Bechtel for projects it never finished. [Federal audit, 7/25/07]

-$5.1 billion in expenses for Iraq reconstruction charged without documentation. [Special Inspector General for Iraq Reconstruction report, 3/19/07]

-$10 billion in spending on Iraq reconstruction was wasteful or poorly tracked. [GAO, 2/15/07]

-Halliburton overcharged the government $100 million for one day’s work in 2004. [Project on Government Oversight, 10/8/04]

KATRINA

-Millions wasted on four no-bid contracts, including paying $20 million for an unusable camp for evacuees. [Homeland Security Department Inspector General, 9/10/08]

-$2.4 billion in contracts doled out by FEMA that guaranteed profits for big
companies. [Center for Public Integrity investigation, 6/25/07]

-An estimated $2 billion in fraud and waste — nearly 11 percent of the $19
billion spent by FEMA on Hurricanes Katrina and Rita as of mid-June. [New York
Times tally, 6/27/06]

-“Widespread” waste and mismanagement on millions for Katrina recovery, including at least $3 million for 4,000 beds that were never used. [GAO, 3/16/06]

DEFENSE CONTRACTS

-A $50 million Air Force contract awarded to a company with close ties to senior Air Force officers, in a process “fraught with improper influence, irregular procedures, glaring conflicts of interest.” [Project on Government Oversight, 4/18/08]

-$1.7 billion in excessive fees and waste paid by the Pentagon to the Interior Department to manage federal lands. [Defense Department and Interior Department Inspectors General audit, 12/25/06]

-$1 trillion unaccounted for by the Pentagon, including 56 airplanes, 32 tanks, and
36 Javelin missile command launch-units. [GAO, 5/18/03]

Given Bush’s history of gross fiscal mismanagement — including an unprecedented number of no-bid contracts and Bush’s resistance to closing fraud loopholes or increasing oversight of contracts — why should Americans trust another $700 billion to his care? Paul Krugman writes, “Let’s not be railroaded into accepting an enormously expensive plan that doesn’t seem to address the real problem.”

What Experts Are Saying About the Bail Out

Some reactions to the Bush administration proposal for granting unfettered authority to the Treasury Department to buy up to $700 billion in distressed mortgage-related assets from private firms: Dean Baker, Paul Krugman (1, 2, 3), CalculatedRisk, Douglas Elmendorf, Ed Paisley, Henry Blodget, Yves Smith, Mish, Willem Buiter, Luigi Zingales, William Greider, Sebastian Mallaby, Robert Reich.

Juan Cole: Are We a Nation of Masochists

Professor Juan Cole of Informed Comment has an interesting view of the American public. I have to agree, what could possibly be going through the conscious of this nation, that we might consider putting another Republican ticket in charge of this nation.

Professor Cole believes we may be a Nation of Masochists. Is he right? Read below and see what you think.

Let's get this straight.

The Republican Party came to Washington, DC, in 2000 with a solid majority in both houses of Congress and on the Supreme Court, allowing them to steal the presidency, as well. If you wanted to know what a pure Republican-Party government unhindered by the Democrats, Libertarians, Greens or Socialists might look like, this was the moment.

So they came to power when there was a budget surplus bequeathed by a Democratic president.They immediately ran up a big deficit every year since, doubling the national debt from $5 trillion to $10 trillion. You don't run big deficits of $300 and $400 billion a year in good times according to Keynes. You save the the deficit spending for a recession, when the economy needs a jolt. If you're already racking up a big deficit every year in a good economy, you have no way of making a difference during a significant downturn except by then going for a truly mega-deficit, which risks destroying the value of your currency abroad. In a service economy like that of the US, a dollar with a declining value might not even help the economy via exports very much, since the manufactured goods are being made down in Mexico now, anyway.

Note that Clinton had been talking about using the surplus to pay down the debt or to fix the looming crisis in social security.

With the government encumbered with $5 trillion in new debt before September, and now with another trillion and a half (probably when it is all said and done with), how exactly will social security be fixed?

(Hint: Republican leaders such as Ronald Reagan and Newt Gingrich hated social security, because the people are grateful to the Democrats for it. Bush tried to privatize it and McCain would have helped him; you wonder if they are trying deliberately to destroy it. Social security is the main reason for which the elderly are not now, as they were in the 1930s, the poorest and most miserable section of society.)

Then many the Republicans came to Washington with a crooked plan to use fraudulent methods to ensure that campaign financing went almost exclusively to them through super-lobbyists like Jack Abramoff.
Grover Norquist's K-Street Project aimed at guaranteeing big corporate dollars for the Republicans in exchange for their granting the corporations the right to write the legislation affecting their industry. Thus, laws governing pharmaceuticals were written by the pharmaceutical industry lobbyists and just signed off on by the Republicans.

This scam goes beyond Marx's fear that government in a business society was just a "managing committee" for the business classes.
Tom Delay, from 2002 the Republican Party majority leader in the House, was too lazy even to be the managing committee! The K-Street crowd just let the business classes run the legislature directly, themselves, having the regulatory laws written to suit them.

So Abramoff, Delay, the K-Street crowd are busted. Once upon a time such a thing would have been a huge political scandal and would have haunted the party that produced it. But because US Big Media is mostly Republican-owned, it just quietly subsided as a story.

It is not just that the rap sheet against the Class of 2000, 2002, and 2004
among the Republican politicians is longer than a trans-Atlantic cable, it is that so much of the corruption took the form of a conspiracy.

All parties have people in them looking to get rich on the side. But the K Street Project and various other such scams weren't just about individual aggrandizement. They were about fixing the whole American system permanently to kow-tow to the super-rich without so much as a whimper, and to positively punish the middle classes.

After the 2002 mid-terms, even George W. Bush wanted to do a tax cut for the middle classes. But Cheney over-ruled him, insisting on another deep tax cut for the very wealthy. We won the mid-terms, Cheney said. This is our due. Deficits don't matter. "Our" due? Cheney is saying that the Republican Party is the party of the super-rich, of the 3 million at the top of American society who own 45% of the privately held wealth (as though we were Brazil), and they are the ones that will be exclusively benefited by Republican rule.

Of course, there were many other conspiracies by the pirouetting pirates of plunder.

There was the Iraq War, one of the great criminal conspiracies of modern times. Barton Gellman has how related the story of how Dick Cheney lied to Dick Armey before the vote on the war, telling him that Saddam's family was all al-Qaeda and that Saddam's evil scientists had made a suitcase nuclear bomb that he would certainly turn over to Bin Laden, and such rank horse manure as that. Dick Armey weeps, says he deserved better than to be bullshitted by the vice president of the United States.

They took us to war against a country that had not attacked the United States; they killed or maimed 33,000 Americans, and turned a whole Arab Muslim country into a burned-out hulk, displacing millions and continuously bombing the very cities that they had conquered and occupied, killing and disfiguring.

They propagandized us with implausible lies about mobile biological weapons labs and Baathist al-Qaeda, and our journalists and their corporate bosses bought them hook line and sinker, as did the public.

Cable and satellite television "news" tells us nothing of elections in India or constitutional crisis in Thailand, and barely mentions a major workers strike at Boeing. Dozens of car bombs go off in Iraq and we are told it is "calm" now. It is a vast electromagnetic form of bread and circuses, wherein hapless celebrities and philandering politicians are fed to the lions before millions of cheering plebes, by corporate moguls desperately hoping that the marks will not notice the legion of pickpockets in the arena, relieving them of their purses.

This crew in Washington thought nothing of assiduously attempting to induce the press to out a covert CIA operative working against Iranian nuclear proliferation, Valerie Plame. Their culture of lies is such that they attempt to divert attention from all the phone calls to journalists by Irv Lewis Libby and Karl Rove trying to get the press to print her name by saying that those two did not succeed. As if the attempt were not dastardly!

Why is trying to inform the Iranians of the identity of a CIA field officer assigned to spy on Iran not an act of treason? After all, you can't inform the world without also informing the Iranians. Isn't the punishment for treason hanging?

The Republican Party conducted a vast illegal spying operation on Americans and on foreign diplomats. We still don't know why exactly, and that the operation had domestic political motivations cannot be ruled out.

They imposed on us this so-called PATRIOT act that gutted the Constitution. The peaceful protesters in St. Paul at the RNC were actually charged with being terrorists, in this Brave New World.

By their incompetence and cupidity the Republican politicians deeply damaged the relief effort for one of America's great cities, New Orleans, which will never see the $33 billion pledged for its reconstruction. Not to mention that levies and bridges are breaking and falling down all around us because Cheney did not want to tax his billionaire friends to pay for the country's infrastructural upkeep.

And then they so radically deregulated and removed any oversight from the banking system that they came within hours of presiding over a 1929-style absolute meltdown of the entire financial and securities system. To cover the criminal activities of their cronies, they are now proposing to impose a fine of one trillion dollars on the middle class, to ensure that their partners in crime will receive their $25 million Christmas bonuses and be held harmless for their misdeeds.

And in the wake of the greatest and most sustained act of systematic plunder since the Mongol hordes appropriated to themselves the riches of everyplace in Asia from Beijing to Isfahan, the reaction of the supine and slave-like American voting public is to scratch their heads and have a hard time deciding if they would like more of the same.

Despite his aristocratic prerogatives and connections in high society, even the Marquis de Sade himself was brought down by a lowly maid, who complained to the police of his cutting her while having his way with her, leading to his arrest.

In contrast to that plucky domestic servant, the American public appears to enjoy being lacerated while being badly used, moaning with delight at each new act of abuse and abasement, while, blue-lipped, gasping for air.

One worries for our children, threatened with the fate of the homeless street children so common in the sort of third world country into which we are being turned by our managing committee.

But, well, if you are determined to bend over on November 4, at least I hope you enjoy pain. In that case, you are going to be ecstatic.

posted by Juan Cole

Saturday, September 20, 2008

Hank Paulson To Dems: Not Allowing CEO’s to Keep Multi-Million Dollar Salaries Is A “Poison Pill”

You knew that the Republicans had to figure out some way to screw this up. Henry Paulson is now saying that to impose compensation limits on Wall Street executives as part of the Bailout is a "poison pill."

Say what?

A poison pill?

The executives who drove their banks into insolvency should get to keep their golden parachutes?

Is Paulson saying that Republicans will stop any bill that reigns in executive compensation in exchange for a bailout?

If Congress is to hand over 700 billion dollars, it should do so with meaningful conditions.

Call or fax your Congressman and tell them not to accept this. The bailout must have impose some realistic compensation limits on the Wall Street executives who are being bailed out. Contact the Obama campaign and tell them that the Senator has to demand compensation limits on the Wall Street executives.

More Real Time: Sarah Palin Way

Naomi Klein and Andrew Sullivan continue their debate, and go after Sarah Palin. Sullivan hates the pick of Palin as the Vice Presidential candidate. Personally I have to agree with him. I really can not understand how Palin has the following that she does. She is not ready to be the President, she does not have a firm grounding in economics, in foreign policy.


LibertyAir Blog

Naomi Klein on Real Time

Naomi Klein and Andrew Sullivan went at it on Real Time. There are things that I really like about Andrew Sullivan, I think he is a real conservative, who has long gone after George W. Bush and the phony conservatives who are the current leadership of the Republican Party. However I do not agree with his take on the current economic crisis.

Naomi Klein on the other hand I believe is one of the best journalists in America, and I believe she has it right when it comes to this economic mess.


LibertyAir Blog

Naomi's appearence reminded me of a great blog post John Cusack had on the Huffingtonpost.com last week. I highly recommend you read his piece, Calling Things What They Are: More From My Conversation with Naomi Klein.

Satellite Images Show Ethnic Cleanout in Iraq



Satellite images taken at night show heavily Sunni Arab neighborhoods of Baghdad began emptying before a U.S. troop surge in 2007. For a while now there have been people saying that ethnic cleansing had taken place in Baghdad, that Sunni Arabs were driven out of many neighborhoods by Shi'ite militants enraged by the bombing of the Samarra mosque in February 2006. Neoconservatives and Fred Kagen in particular called the ethnic cleansing of Sunni Arabs in Baghdad a 'myth.' Fred Kagan has once more been proved wrong.

These satellite images gives strong evidence that the ethnic cleansing of the Sunnis by Shiite militias accounts in large part for the fall in violence in Baghdad, not just the extra troops Bush sent, called the 'surge.' These satellite images were part of a study, published in the journal Environment and Planning A.

This is not the first time stories about the ethnic cleansing of Baghdad. In December 2007, the Washington Post published the maps below, comparing the sectarian make-up of Baghdad’s neighborhoods in April 2006 and November 2007, and revealing the transformation of the city resulting from sectarian cleansing:


The Government Accountability Office, also stated in congressional testimony in October 2007 that sectarian cleansing was “an important consideration in even assessing the overall security situation in Iraq”:

We look at the attack data going down, but it’s not taking into consideration that there might be fewer attacks because you have ethnically cleansed neighborhoods, particularly in the Baghdad area. […]

It’s produced 2.2. million refugees that have left, it’s produced two million internally displaced persons within the country as well.

And in August 2007, the Iraqi Red Crescent Organization indicated that “the total number of internally displaced Iraqis [had] more than doubled, to 1.1 million from 499,000″ since the surge started in February. Center for American Progress Iraq analyst Brian Katulis estimated that Baghdad, which once used to be a 65 percent Sunni majority city, “is now 75 percent Shia.”

Baghdad hs undergone drastic transformation and a great deal of suffering attended that transformation. And the sad fact is that some of the most intense and violent periods of sectarian cleansing took place under the aegis of the military escalation known as the Surge.


Count the Lies


The DNC's New McCain Lie Counter is here.

Friday, September 19, 2008

New Obama ad attacks McCain’s economic advisers


LibertyAir Blog

Barack Obama's Speech Women for Change

LibertyAir Blog

How Sound Is the Economy?

The Center for American Progress and Scott Lilly have posted a very good analysis of the current state of the US economy. I believe Mr. Lilly hits it right on the head when he points out that the world can no longer trust the American government to do the right thing or the needed thing in these trying times. I have long held that Republicans had gone insane when it comes to the free markets, and that they were more interested in ideology than in common sense economic stewardship. I believe this article backs this up.
When Bank of America, the largest commercial bank in the United States, agreed on Monday morning to buy the beleaguered brokerage firm Merrill Lynch & Co. for less than a fifth of the price the firm traded for at the beginning of last year, BofA investors were so disturbed that they launched a sell off of the bank’s stock, eliminating $32 billion or 21 percent of the bank’s market capital in one day. That was on the heels of the demise of the 158-year-old Wall Street investment house Lehman Brothers Holdings Inc. and more than four months after Treasury Secretary Henry Paulson pronounced that the worst of the financial crisis was behind us.

So, what is going on? How did we get into this mess, and how will we get out?

It is clear to any detached observer that the travails on Wall Street are not simply a superficial kink in the circulation of the nation’s money supply. There are deep-seated problems here that will impede growth, and accelerate business failures and job losses if not objectively identified and forcefully addressed. While we have recklessly disregarded the need for prudent supervision of our banking and financial systems, the real problem is even deeper.

For eight years we have papered over the fact that American consumers do not have the purchasing power to sustain economic expansion. As a
report I authored a little more than a month ago details, the wage and salary increases that have occurred since 2000 have not been sufficient to even maintain the level of income that most families enjoyed at the beginning of this decade. Employment has not kept pace with population growth. And even though worker productivity has increased by nearly 20 percent over this period, weekly wages are barely higher than they were on the day the current president took office.

Under normal circumstances, we would have seen the effects of slow wage and job growth much sooner in the economic cycle. But the Bush administration and their enablers at the Federal Reserve Board found a way to inoculate the economy
temporarily from the fact that the paychecks which Americans were taking home
were insufficient to buy the goods and services the economy was capable of producing. The prescription was easy credit—car loans, credit cards, and most
importantly, mortgages.

Families from the bottom of the income ladder to the very top were showered with offers of cheap credit driven by the fact that our central bank was willing to loan money at or even below the rate of inflation. Americans were given the opportunity to use their homes as ATM machines; between 2002 and 2007 borrowing against homes exceeded the amount spent on homes and home improvements by $1.7 trillion. While incomes were not rising at a rate to support a growing economy, credit made up the difference.

Today we have an economy that has not only suffered from stagnant wages and
falling incomes for nearly eight years, but one which is far more burdened by debt—debt which in a growing number of instances is beyond the ability of families to repay. Our failure to recognize the fundamental underlying causes of the current malaise not only delay the prospects for recovery but will make recovery more difficult and costly.

Stephanie Pomboy, the founder of the economic consulting firm MacroMavens, has been right repeatedly in forecasting the severity and duration of the housing and credit crises. She was quoted in this week’s Barron’s:

Once again, we can't resist pointing out had Paulson and his bailout crew used their powers for 'good' from the get-go, they could have saved a lot of time, energy and, most importantly, money. Had they simply established a fund to buy up the surplus housing inventory, presently valued at just over $1 trillion, they could have stitched up this wound for less than they've spent layering Band-Aid after Band-Aid on top of it.

The erratic shifts by this administration between radical free market laissez fairism and heavy-handed government intervention in financial markets is making it increasingly apparent that its officials refuse to exercise detachment in examining the underlying problems that face the U.S. economy and are incapable of addressing those problems in a deliberate and effective manner. That perception is adding further to the traumas now plaguing U.S. and global markets.



Scott Lilly is a Senior Fellow at the Center for American Progress

Taxpayers to the Rescue






Bail-Outs Will Cost America $1-2 Trillion

Kenneth Rogoff, professor of economics at Harvard University and former chief economist of the International Monetary Fund, thinks the financial crisis will cost American taxpayers between one and two trillion dollars . He writes in the Financial Times:


Were the financial crisis to end today, the costs would be painful but manageable, roughly equivalent to the cost of another year in Iraq. Unfortunately, however, the financial crisis is far from over, and it is hard to imagine how the US government is going to succeed in creating a firewall against further contagion without spending five to 10 times more than it has already, that is, an amount closer to $1,000bn to $2,000bn.

That’s a massive increase, and it’s going to effect everyone somehow.

A large expansion in debt will impose enormous fiscal costs on the US, ultimately hitting growth through a combination of higher taxes and lower spending. It will certainly make it harder for the US to maintain its military dominance, which has been one of the linchpins of the dollar. The shrinking financial system will also undermine another central foundation of the strength of the US economy. And it is hard to see how the central bank will be able to resist a period of allowing elevated levels of inflation, as this offers a convenient way for the US to deflate the mounting cost of its private and public debts.


One and two trillion dollars, and we already have trillions in debt. This nation has serious problems, and we need serious people addressing it. We cannot afford more Republicans running this country.

McCain Defends Retirement Accounts

McCain is clueless, and Barak Obama has to hammer John McCain on this. John McCain still defends his support for privately investing Social Security money in the same markets that had tanked earlier in the week. McCain and his top economic adviser, former Texas Senator Phil Gramm, have pushed the idea of a privatizing the Social Security system as far back as 1988.

This is a horrific idea during normal times. During a Wall Street meltdown it's idiotic and criminal.

Even the Wall Street Journal

Even the Wall Street Journal's Editorial Page is calling out John McCain, and even use the word 'unpresidential'

The Wall Street Journal:
John McCain has made it clear this week he doesn't understand what's happening on Wall Street any better than Barack Obama does. But on Thursday, he took his populist riffing up a notch and found his scapegoat for financial panic -- Christopher Cox, the chairman of the Securities and Exchange Commission....Mr. McCain clearly wants to distance himself from the Bush Administration. But this assault on Mr. Cox is both false and deeply unfair. It's also un-Presidential....In a crisis, voters want steady, calm leadership, not easy, misleading answers that will do nothing to help. Mr. McCain is sounding like a candidate searching for a political foil rather than a genuine solution.

Category 4 Financial Crisis

Steven Pearlstein writes in The Washington Post: "This is what a Category 4 financial crisis looks like." It is a well thought out article that can be read here:

Giant blue-chip financial institutions swept away in a matter of days. Banks refusing to lend to other banks. Russia closing its stock market to stop the panicked selling. Gold soaring $70 in a single trading session. Developing countries' currencies in a free fall. Money-market funds warning they might not be able to return every dollar invested. Daily swings of three, four, five hundred points in the Dow Jones industrial average.

"What we are witnessing may be the greatest destruction of financial wealth that the world has ever seen -- paper losses measured in the trillions of dollars. Corporate wealth. Oil wealth. Real estate wealth. Bank wealth. Private-equity wealth. Hedge fund wealth. Pension wealth...

"What is really going on, at the most fundamental level, is that the United States is in the process of being forced by its foreign creditors to begin living within its means."