Friday, 09.26.08
Debating the Bailout
Emmanuel Dunand/Getty Images
Tonight's debate was supposed to be about foreign policy, but for obvious reasons the candidates spent the first half talking about the economy. (Everyone is having a hard time talking about anything else.) But there was one line of the debate exchange that stuck out like a happy investment banker. Jim Lehrer asked both candidates, plain and simple: Did they support the Treasury's bailout plan? Obama said he hadn't yet seen the full text and wanted to suspend judgment until he had. And McCain said, "Sure." In case no one heard it, he went and said it twice: "Sure."
I'm not sure what's happening here. Early this week McCain made a decision to suspend his campaign and fly back to Washington, citing the "historic crisis in our financial system." He said leadership was needed, not partisan rancor. He then spent the next two days brooding in enigmatic silence, playing an aloof game of legislative footsie with various members of Congress and the media, and generally letting the bailout negotiations descend into more of a partisan bloodbath than anyone expected. And now, safely out of Washington and back on the campaign trail, he mentions that he supports the bailout package.
Further bafflement: 15 minutes after the debate ended, the McCain campaign sent out an email to announce that the Arizona senator "will return to Washington to resume negotiations with the Administration and Congressional leaders from both parties to forge a bipartisan solution to our economic crisis," which is necessary because "We must put our country first to solve this economic crisis." Perhaps this was an error. Perhaps the campaign meant to say that McCain will apologize for his prior indecisiveness, stand foursquare behind Secretary Paulson, and admonish his fellow Republicans for making a hash of the negotiations by hauling in an obviously implausible counterpropsoal in the 11th hour. Or perhaps McCain did not mean what he said during the debate.
Reasonable people can disagree about Paulson's bailout plan in particular or the helpfulness of a bailout in general. McCain has done neither. He showed up in Washington, failed to agree or disagree with much of anything, and then left before a bailout was finalized. He was, in a brilliant Kerry inversion, for it after he was against it. Except that I'm not longer sure he's for it.
And I'm not sure how this will play when McCain gets back to Washington. In tonight's debate, Senator McCain repeated a well-worn joke -- that he was never likely to be elected "Miss Congeniality" in the Senate. Such an election seems equally unlikely in the next few weeks. McCain's colleagues -- not to mention the administration, Wall Street, and the president -- can't be pleased with his behavior. It's a reason why he might not win in that other election, either.
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If McCain wanted to keep political rancor out of the process he would not have inserted himself into the process except as just another senator. McCain was a grandstanding politician when he diverted attention away from the financial situation to whether or not he would debate. You do not suspend democracy in times of crisis. That is what McCain proposed when he said he would not debate.
To use a phrase of Obama's, McCain was swinging his hatchet last week when the process demanded a scalpel.
With a a deftness and subtleness that McCain seems to lack, a person could make a show of support for Paulson's bailout and still convey the need for adjustments to Paulson's plan.
I have lived in Arizona longer than Senator McCain has been a Senator. He is neither maverick nor statesman, opportunist is a better descriptor of who he is. Check his voting record on funding for Veterans, education, children's health care and you will find a non-compassionate republican who will essentially give George Bush a third term. After losing to Bush in 2000 he immediately began "sucking up" to Bush and the right wing conservatives that he had to convince of his fealty. He is mendacious and has a knee-jerk personality evidenced by his statements about the economy over the past week. When George Will writes that McCain is not suited to be president, as he did, and essentially endorses Senator Obama then thoughtful Americans should pay attention.
McCain has consistently put his craven ambition above party and country. McCain's rash, impetuous actions over the past two months, his erratic twists and turns to claw his way to the presidency bodes ill for this country if he and the Republicans steal this election.
McCain did the country a favor, in last night's debate. McCain's sarcasic and bellicose nature emerged, immediately. McCain's refusal to make eye-contact with Obama, or even look his way, made it easy to imagine McCain's refusing to comunicate, negotiate or compromise with foriegn leaders with whom he was not already in full agreement. I''m afraid that Sarah Palin may be a heartbeat away from replacing Dr. Strangelove.
For those too young to remember Dr. Strangelove, Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb, a 1964 Stanley Kubrick film. The story concerns a mentally unstable US Air Force general who orders a first strike nuclear attack on the Soviet Union.
These Idiots are so out of touch with the interests of the American people that I just could'nt watch this sham of a debate anymore. "We need to stablize the Georgian economy" says obama? WHAT THE HELL IS THIS GUY TALKING ABOUT? Then McCaine want's Israel to be the capital of the United States by bombing all it's competition in the middle east? No wonder he's taking money from the Rothchilds. They are both controlled by by Rothschild political instruments. Obama is controlled by the Council on foriegn relations and Rothschild stooge George Soros. McCaine is directly controlled by the Rothschilds via personal relationships.
Anyone who thinks there is actually a difference between these two patsies is politically retarded. This is what the media has given us-no choice at all. Stupid sheeple
How can McCain solve the financial crisis when he admits he didn't read the 3-page report.
I don't want to see McCain making knee-jerk decisions regarding the country I love in times of crisis - especially in regard to our national security.
McCain just REALLY wants to be president - regardless of the damage it will do to the country he loves.
Thanks but no thanks.
Sandy - Tubac, Arizona
Come on, don't you want to say that there is no difference between G.W.B. and the so call maverick. Also, who keep calling himself a meverick. Isn't that for other to refer to him as such. You are no maverick if you have to call youself a meverick. The big question is why he (McCain) cannot look Obama in the eye, or look at him at all.
The bailout plan must be a GO. I believe the next president will approve on it but as of now they both are shaky on making a public statment on the matter. The average American does not understand that our funds are on other people's lands and if we bolo on this bailout, our funds will be gone forever. Not to mention its not a gift its a loan for the most part which means our money is going to be at work at home not in Iraq or Afghanistan. Terrorist world wide is winning and we are falling into their trap. No, there have not been a 9/11 but yes U.S. have loss face value, and yes U.S. Economy is shaking and that is exactly what terrorists leaders wants. They knew 9/11 will never destroy all Americans but they suspected war, and once the President invaded Iraq they knew less attention will be put into Afghanistan. They know all U.S. dependable region such as Latin America will look for another mother and that is why they are operating in those countries now more then before and thats why they are stronger then before. Ben Laden and his counterpart knew exactly what they want and how they going to get it, and we gived it to them. The next president of the U.S. Must be Obama. Obama will make modern decision to bring us the change we need economicly. McCain is living in the past and the past is where the terrorist wants us.
"Commonthought", come on? Who is the one that said, "people of the world, look at me..." What happened to the self proclaimed change agent and community leader that had all of us younger ideologic folks thinking that he was different. Now, he seems just like all the other on capital hill. He is not like he was in January 08. "Remember Jesus was a community organizer and Pontious Pilate was a governor", huh?
After last nights non-answer debates, I think it's time that we round up all the 'bankers' and put them in a camp in the middle of the desert. This exact same thing happened in Weimar Germany in the early 30's.
If we don't round up the 'bankers' and get rid of them, the rest of us will be ruined and we will be enslaved by them - just as it says in their precious talmud.
Outrageous! About the bailout plan "Obama said he hadn't yet seen the full text and wanted to suspend judgment until he had."
Why didn't Mr. Obama see the full text?
The $700bn bailout is the most important issue to face this country on my lifetime. For Mr. Obama not to have read and understood the bailout plan before engaging in this debate is inexcusable. His position is neutral now so can pick the "winning" side later.
I want a president who can make a decision based on conviction and fortitude, not a president who plays the political game of hedging against personal embarassment.
Shame on you Mr. Obama.
To Conor Clarke: please refrain from publishing bias work in the future. You are clearly a supporter of Obama and it shows in this article. This makes you unfit to report fairly on the debates. Journalistic ethic demands that you label your article "OPINION" if your article is more about you and your feelings than actual reporting of fact.
I don't think there is any mystery to McCain's actions. After watching the debate (until I got fed up and turned it off 3/4 of the way through) I think it seems very clear that McCain is in fact the type of person who says what he means and does what he says. Although he clearly does not have the rhetoric ability of Obama, I think he was a little more decisive in the answers and solutions that he proposed. However, I am not saying that this is a good thing. George W. Bush is the epitome of someone who says what he means and does what he says - he just hasn't done anything right. But let's not pretend that we wouldn't praise him if he had done some things right. The problem with American politics (and American society in general) is that we prize candidates who exhibit these so called "leadership" qualities above all others. We make them our leaders because they are so decisive and they refuse to compromise. They're someone we can depend on, someone we know will stick to their guns (Sarah Palin, pun intended) in any type of situation. Although McCain is not George W. Bush, he clearly has the same attitude of "my way or the highway." But ask yourself, would you want a boss like this? Or a school teacher? Or a parent? Or a friend? Or a spouse? Do you really want a president like that? And if you say it's not the same thing and that we need a president like that because the world is a dangerous place, wake up. The world will always be a dangerous place - it always has been. We came into the world running from lions and bears and we'll leave it running from something else - probably each other.
Contrary to the author's assertions, the bonds in question are not valued at zero. That is the false construct of mark-to-market accounting.
Mortgage-backed bonds do having performing qualities (ie. underlying mortgage payments) and therefore have value, as demonstrated by the sale of ML bonds by Thane at $.22 on the dollar. Ergo, price discovery is sufficiently established for an insurance premium. The bonds have a floor value, thereby removing the only doubt offered by the Time correspondent (which in my opinion was a weak argument to begin with.)
The issue now is how to acquire the bonds without full exposure to the taxpayer.
I suggest that the proposed $700b expenditure be in the form of loans to the holders of the debt instruments. The Treasury should take the underperforming, "temporarily impaired bonds" as collateral. These collateralized assets should be held on the shelf of the Treasury (without the burden of mark-to-market), where the bonds can be re-financed, consolidated or (declared worthless) over the full period of maturity rather than a worthless assessment declared as of today when the market is bogusly impaired.
As the bond market regains confidence, I surmise a large portion of these assets will be able to return to the marketplace as full-valued performing assets, to be re-sold to repay the original taxpayer loans.
As taxpayers, we may not see a real gain, but we will certainly avoid a MASSIVE loss.
In exchange, participating banks will cancel all dividend payments to equity holders until at least half the debt is repaid, all other debts are temporarily subordinated to the taxpayer, no commissions shall be paid on the bond sales, and no portion of the proceeds received by the participating bank may be part of any compensation plan.
After all -- this IS a bail out.
I couldn't agree more with the original post. I thought it was interesting that Obama laid out four specific principles that he expects to see in the plan, and McCain says "sure".
I'm particularly concerned that these financials are not being asked to fork over a senior stake in the company in exchange for the treasury printing more money for them. It just doesn't seem right. Democrats have an obligation to hold the line on this one.
I thank Sen John McCain. If nothing else he gave the country more time to think about this bailout. The original plan spelled disaster. Because He was against the original plan and Obama was all for it I am now voting McCain and will thank him for stalling on the bailout and will give him credit if it works. I will blame Obama and the dems if it fails. This issue was my deciding factor in the election.
Jeez, Chris, who peed in your Cheerios this morning? How about trying to be part of the solution instead of part of the problem?
One of my "beefs" in watching the debate is that McCain is NOT in favor of much legislation (except status quo). In fact he said he would "veto, veto, veto" everything. That means new legislative initiatives, proposals for energy reform, reforms for health care... would never make it in McCain's term. Obama needs to make that clear distinction again to the voters. He was too defensive and not, in my opinion, offensive enough to make that clear. The "bailout" is only one piece of legislation, not the only piece that will be decided on in the coming months.
If there are any doubts about the need for controls on executive compensation as part of the bailout, see this from the Wall Street Journal: http://online.wsj.com/article/BT-CO-20080926-713323.html?mod=wsjcrmain One of these bailout bonuses is a "separation payment." 130 bonuses were paid to AIG top executives under its retention program. I guess there must be quite a market for executives who can lead a company to failure. These guys are lucky to have jobs! Maybe we can get Selective Service to draft financial executives to work for civil service rates.
Shouldn't Obama be in Washington trying to influence a plan that will have a huge impact on the next administration? Instead he is waiting to see what Congress comes up with. Isn't that too late?
The Wall Street bailout plan proposed by the Bush administration is a poison pill for the Democrats. As with the Iraq war, he has put the fear into the Democrats that this problem must be dealt with immediately, or a mushroom cloud will swallow up our economy. To authorize hundreds of billions of dollars of middle class taxpayer's money to keep rich fat cats from losing some of their yachts will not fly in middle America, and any congressional candidate who supports this scheme will lose in the upcoming election. The people will not support this, and there will be hell to pay if it passes.
The best thing is to let the next administratiuon deal with the mess that this administration has created. To pass any bailout at this time will only make it impossible for Obama to implement the changes needed to fix the economy correctly.
For one thing, any bailout must be paid for by those who were responsible. A Securities Transaction Excise Tax, like Britain and Japan have, would reduce speculation and risky investment, while raising revenue to help fund a bailout. Removal of the capital gains tax rate would also raise revenue and reduce bad investments and speculation. A surtax on income over $500,000, or a more progressive tax rate like we had before Reagonomics would affect only those who are making out like bandits.
There is a clear concensus among the American citizens that enough is enough. A vote for this bailout might as well be accompanied by a letter of resignation, because the results will be the same.
When Bill Clinton eased banking restrictions, he dished out $8-billion dollars for "community reinvestment loans.” The money just evaporated. When the “creative financing” schemes fell through, as is their wont whenever 30-million Mexican nationals buy inflated properties and default, it left banks in the lurch. Never mind that the aforementioned demographic is the new face of the Democratic Party; the mortgages morphed into “toxic” instruments. Hillary Clinton counted on the loan giveaways to buy votes. Interestingly enough, had Hillary secured the nomination; she, instead of Barack Obama would preside over the bailout. So, why should Americans perpetuate the housing bubble? Because it’s a scam! And, this is its well-timed exit strategy. Where is that $8-bilion plus dollars? The Trilateral Commission and the Bilderbergers took my money; they even stole my car; now they’re coming after you. The bubble is the problem, let it burst: http://theseedsof9-11.com
chris-i think obama was talking about the fact that the russians pointedly destroyed critical infrastructure and institutions that would undermine and badly damage Georgia's economy--trying to destabilize them and get the president ousted. it actually wasn't a weird thing for obama to say.
Those &*(^ thieves Paulson, Pelosi, Dodd and Reid just had a happy happy joy joy new announcement that they've managed to push through a pork riddled $700 billion tab to taxpayers so we are forced to buy up crap assets from failing banks and repair the damage and fallout from Fannie & Freddie after those THIEVES refused to vote for any reform.
99% of the public is vocally opposed to the bailout, but they pushed it through anyways. I'm furious. I'm tea party furious. Watching Nancy Pelosi smile in her fat set of pearls while she tells us she's doing us a big favor by making us foot the bill for their wasteful, stupid corruption.
And Dodd and Obama top out the list of Senators who gobbled up Fannie & Freddie payouts.
Tar. Feathers. Pitchforks. Torches. Guillotine.
Shocking Video Unearthed, Congress in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis
http://www.youtube.com/watch?v=MGTcSi7Rs
Chris and Chester,
Please take your anti-semitism elsewhere or learn that bigotry and rationality are incompatible. There are ample problems in this world -- why add willful ignorance to the list.
For those who don't think this crisis is real and now, consider how difficult it would be to coordinate millions of transactions so that now real people and firms are buying real US government Treasury bills at essentially 0% interest! That the US government is a safer investment than any bank, stock, corporate bond, or overseas institution!
Take a look at http://www.bepress.com/ev/vol5/iss5/
And yes, Obama's answer -- listing four points -- is spot on. Four days later, McCain now has to ... ummmm, well, the plan that lost in the House was not what McCain supported, and what eventually will (must) pass will be even further away.
Almost $800 billion to fat-cats on Wallstreet? I think,not! Why don't we split that $$$ to EVERY taxpaying AMERICAN citizen then we can pay-off our credit-card debt & mortgages & even BUY groceries & gas for a nice change because that equals to about $250 thou/per person. The deficit would be lowered since hardly ANYONE would need Medicare/caid anymore freeing up those defunct agencies. Businesses will be created because retirement is BOOORRRing & cash is handy (in everyones hands.) You can't file for bankrupcy since you have a windfall(if you owe >$250 thou. you're really stupid.)It would lower divorce, anxiety, depression, child-abuse.... GIVE ME SOME $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
"Sure", a definite answer to a bill not yet finalized? Was the question from Lehrer flawed? Maybe, McCain should have given the same answer as Obama, "uh, I want to see the specifics." Did McCain know the specifics? Maybe he did, why did Obama not know or why did he say that he did not know? He had been in Washington the same amount of time to review the bailout? What is there not to understand about McCain's apparent silence? Maybe, he was keeping political rancor out of the process, just as Harry Reid was bringing up presidential politics. Conner Clarke writes, "And now, safely out of Washington and back on the campaign trail, he mentions that he supports the bailout package." You are not "baffled"; you are bewilldered that McCain did what he said he would do. He suspended his campaign to do his job as a senator. He kept silent(publicly) until he left town. You may be even more dazzled when he goes back to Washington and puts "our country first to solve this economic crisis." Dont expect him to "stand foursquare behind Secretary Paulson." The best thing for our country may take much more than a couple of nights of standing by ACORN(D) or a reduction in the capital gains tax(R). We are talking about a trillion dollars. McCain said, "sure" when asked if he supported "the Treasury's bailout plan?" It was the responsible thing to do. Let's take him on his word. Has Obama got his "specifics", yet, or read what the polls say about the plan; so, he can make a decision? Maybe not "Miss Congeniality": but, "Most likely to succeed." As Americans and footing the bill for this inevitable "bailout": we dont care if, "McCain's colleagues -- not to mention the administration, Wall Street, and the president" are displeased with him. Get the bill right for us, be a "Maverick!" Maybe, it will be why he wins the election!
Posted by Terry | September 27, 2008 4:13 AM