DEBATE ANALYSIS

BY CINCINNATUS

The first presidential debate was an exciting tie, but it could have and should have been McCain’s. While he performed better on the issues, McCain was inarticulate and unable to improvise. Obama, on the other hand, was graceful and quick on his feet, but showed some serious flaws in both his logic and his policy agenda. McCain could have snatched a clear and much-needed victory if only he’d had the wherewithal to pounce on them with biting criticisms. But he choked.

The area where McCain was strongest was of course Iraq, but I was pleasantly surprised to see him outshine Obama when discussing flexibility in their spending agenda in the aftermath of the financial crisis. McCain’s strength, as seen in the Saddleback Forum, has always been clear, simple answers, whereas Obama has typically tried to sound nuanced and thoughtful but has come across as indecisive. In that vein, McCain managed to outmaneuver Obama by sounding eager to give Lehrer his answer: his spending agenda is so thin that the financial crisis will have little to no impact; in fact, he seeks to drastically cut federal spending as president, while his opponent’s plan calls for increases across the board. Obama, on the other hand, visibly stumbled. He was unwilling to identify which of his policy initiatives he would abandon even in the face of the financial calamity, managing nothing more than an acknowledgement that something would likely have to be cut.

Obama sought to turn the tables on McCain by attacking him directly on foreign policy (something that he had to do), attempting to frame the Iraq debate as a question of whether we should have invaded in the first place. McCain parried these attacks handily, but missed some serious opportunities to cut Obama down to size. I noted at least two items that lent themselves to a Reagan-esque retort. The first was Obama's criticism of the administration’s policy in Pakistan, saying we supported Musharraf despite the fact that he was a dictator because he was “our dictator.” Apart from this argument dismissing the fact that the United States pressed Musharraf relentlessly on democratic reforms (which resulted in the democratic Pakistan that exists today and Musharraf’s own resignation), he later seemed to contradict himself by blaming Iran’s ascendency on our toppling of Saddam, stating that Iraq was the only bulwark against Iranian influence. McCain should have jumped on this with gusto, asking Obama if he was suggesting a wiser policy would have been to keep Saddam in place to check Iranian influence, following up by remarking that Saddam was an undisputed dictator, and he wasn’t even our dictator. But the opportunity passed in what seemed to me like a frustrating silence. But another opportunity presented itself later in the debate, with Obama’s ill-advised and repeated statement that “no one was talking about defeat in Iraq,” which he employed as a defense against McCain’s criticism of his plan for troop withdrawal. McCain could have pulled off a zinger, and the one that immediately played over and over again in my head was, “You’re certainly being careful not to talk about defeat in Iraq, Senator Obama, but your policies speak for themselves, and quite loudly.” This could have been the sound-byte of the evening that the pundits were looking for. But again, McCain let it go by without a word of protest.

In order for him to have any hope of scoring polling points from the remaining two debates, McCain needs to work on his flexibility and improvisation. His attempts at humor were canned and lifeless, not to mention over-repeated (Miss Congeniality). But he remains more knowledgeable and comfortable on the issues and was very effective at showcasing his overwhelming experience. However, as these debates are 40% substance and 60% superficial, McCain must close that gap and get within striking distance of Obama.

“MARK IT TO MARKET” or “ACCOUNTING PRINCIPLES THAT SHOULDN’T BE ACCEPTED, GENERALLY”

BY SEACHRANAI

Having read through a recent line item breakdown of the bill, I am filled with fear and doubt at some of the liberties our federal government is taking. However, I must admit there are portions of the bill which do show some insight into the way our financial system works, and I believe will have a beneficial impact on our current crisis. One ray of light in the new Economic Stabilization bill that may add back some sanity to our system is granting the SEC the power to suspend a practice known as “mark-to-market” accounting.

Not to delve too deeply into the arcane of financial jargon, put simply mark-to-market is a method of bookkeeping that has been pushed to the forefront of modern business. This method requires that an assets and liabilities on a company’s balance sheet be “marked-to-market”, or rather, recorded at the current value any one item could be bought and sold for at present. At face value this seems intuitive – why say you have something worth X million dollars when you could only sell it right now for Y million dollars? Not telling people you have $Y million of that asset is deceptive, no? That is the argument of the Financial Accounting Standards Board, the independent body which governs how companies keep their books (through what is known as Generally Accepted Accounting Principles). The FASB, as America’s acronymophilia requires we refer to it as, has been pushing this practice for years and incorporating it more and more into GAAP. The problem is the answer to my previous question above is “no”, and the depth of our curious crisis is the “why”.

The concept becomes tricky when you begin to examine these bundles of loans which are floating around the system as mortgage-backed securities and collateralized mortgage obligations (MBS and CMOs, oh yeah baby yeah). So much risk surrounds these that, effectively, a liquid market no longer exists. As such, these investments are effectively worthless. Associated marks to market have dramatically impacted the “on paper” financial strength of many of the institutions which serve as the backbone for the American economy (I don’t think I need to name names). Of course, the actual value of these securities is not zero. If not traded, and their value SHOULD be equivalent to the cash flows generated by the underlying mortgages. Even if foreclosures reach great depression levels, the value of these cash flows will not be zero. In fact, there are probably a number of these bundles which will still pay most of the principle and interest promised. It is impossible, however, to know which these are.

So how do you value these? Classically, you record them at what you bought them. If, when all is said and done they don’t produce the intended cash, then you take the loss. Uncertainty is mitigated “on paper” until such a time when certainty exists, and everyone lives happily-ever-after-not-spontaneously-going-bottom-up.

Section 132 of the new bill gives the Securities and Exchange Commission the power to do this. Effectively, the SEC can tell the FASB “F U” (yum, alphabet soup), and set things back to the way they used to be. Marking to market it self isn’t a bad concept and can at sometimes have a stabilizing effect on transparency and the markets. In a specific situation however - such as our current liquidity crisis - it can be devastating (akin to building a house out of brick but using an accelerant as the mortar: sure in most circumstances it holds up a lot better than a wooden building, but set it on fire and burns a lot faster too). Usually, I am not in favor of giving a government sanctioned entity authority over a private entity like this. Then again, the FASB pretty much answers no one, so it makes me smile to know that someone is willing to spank them when they do wrong.

"ESSE ET PERCIPI" or "AFTER THE RED PILL: HOW DEEP THE RABBIT HOLE GOES"

BY LUSCUS

That we have reached an economic crisis is agreed upon by all parties. Our financial system is sick; of this, there is no doubt. What is in dispute is the remedy. However, before the reader ambles forth in lyrical conjecture, we must first settle the facts. There are plentiful articles that offer condemnation of events yet to occur, without any consideration for diagnosis of the situation at hand, let alone divining its true cause. This is not one of them.

The Secretary of the Treasury, Henry Paulson, and the Chairman of the Federal Reserve, Benjamin Bernanke, have presented a joint appeal to Congress to approve a $700 billon dollar budget with which to purchase large swaths of mortgage-backed securities of questionable value. But "questionable" does not mean that they are of zero value; this is not a case of throwing good money after bad. Those mortgage-backed securities were not insured by, but the insurance for the credit-default swaps, and formed the foundation for the securitized assets which (to use yesterday's figures) now amount to some $50 trillion. What the treasury seeks to do is to replace the questionable anchor in the chain with one of hard currency. This would limit the value of the "questionable assets" to $700 billion at most. With more stable securitized assets, banks will no longer need to hoard funds, credit would begin to flow again, and we have limited the losses to $700 billion, and only in a doomsday scenario where every single item purchased defaults to zero. This is unlikely. For a great analysis of this, see the Chris Matthews interview of Jim Cramer and Steven Pearlstein here.

Who, then, are the villains? It is easy to lump together "banks", "wall-street executives", and "speculators" into this role, but then we have done little more than create Hitler's Jew. Is it a crime to get rich? Is it criminal to accept multi-million dollar parachute clauses as terms for accepting a job? No, it is not. It is criminal, however, to present the false value of assets. This is called fraud. The reason the value of the anchors in the chain of collateralized-debt are questionable isn't because of speculation, excessive regulation, or excessive de-regulation: it's because 1) mortgage issuers were criminally negligent in processing mortgage applications, and 2) the function of the ratings agencies had been corrupted by collusion between its analysts and the issuers of the structured debt products. Lehmen Brothers, notorious for creating the most Byzantine products, has already faced the executioner. But this is a rare case of the punishment fitting the crime.

Capitalism and free-markets only work under the assumption of rational behavior. When markets act irrationally, as is the current case, the system allocates capital efficiently in neither the long term nor the short term, and fails in its raison d'tre. The whole system is founded on there being objective standards of measuring value. This standard has been called into question. Secretary Paulson's $700 billion dollar outlay would replace the questionable foundations with cold hard cash. But that won't mean a return to business as usual. Banks will have to unravel themselves from serious amounts of exposure, take moderate (but fair) losses, and restructure their entire risk-analysis models. This Christmas will be assuredly be dour for Manhattan's shops.

We now turn to the question of power, and whether this is an unholy expansion of government which will persist ad aeternum. This is putting the cart before the horse. It is highly doubtful that this or any Congress would hand over a blank check without conditions to the Secretary of the Treasury. There should indeed be conditions, but limited to these:

1. Time the office will exist for 9 months (three quarters), after which it will be terminated unless re-authorized by congress on a quarterly basis.
2. Scope the office to be established will exist solely for the purchase and eventual sale of distressed securities at the foundation of structured debt.
3. Statute of limitations the office to be established in the treasury is only to purchase securities issued on or before September 25th, 2008. This precludes the incentive for banks to continue issuing bad products.
4. Transparency - All efforts, purchases, or actions in the course of purchase must be recorded
5. Oversight actions will be monitored by a select group of appointed wise men (John McCain has suggested Warren Buffett, Michael Bloomberg, and Mitt Romney for roles in this, and I can't think of anyone more qualified)

The purchases should be made on one condition: full disclosure on the part of the seller. Any violation of this would be felonious. Attempts to impose salary restrictions or additional regulations on the sellers will only scare them away, and render this entire venture pointless.

This outlay is fundamentally necessary for America. We have the opportunity to eliminate over $49 trillion dollars of exposed risk, and hundreds of trillions in unknown and collateral risk in one fell swoop. While it would be nice for everyone to learn valuable lessons from this whole mess, the cost is unacceptable. If we fail to pass this outlay, or if congress attaches more strings than the above prescribed and causes it to fail, you will see not only banks fall, but the elimination of a nation's worth of pension and $401K plans (a boon for those of you who are comfortable with Social Security being the sole provider for all your needs in old-age), any and all health insurance companies (which would force national coverage by the government), the elimination of all savings over $100,000. The FDIC would be overwhelmed, and likely default, meaning that savings might not even then be safe. Without the prospect of future payments, the US would not only lose its credit rating, but bankrupt. The American dollar would fall to levels familiar only to Zimbabweans. It is hard to imagine this being an environment where civil society could survive, let alone flourish.

But this does not have to be so. We can shore up financial markets, re-establish the flow of credit, set a price floor for the housing markets, and begin to purge our system of the toxins that now threaten to kill their host. This is not a band-aid effort on the part of Mr. Paulson and Mr. Bernanke, nor is it the time to teach anyone a moral lesson. I urge you to call your representatives and demand that they support this endeavor.

PUBLIC SERVICE ANNOUNCEMENT: A CALL TO CALL

BY SEACHRANAI

My fellow Ohioans – those, at least, that are not already too jaded by the system. I think, while it is clear we all have varying perspectives on this so named “Bailout” currently winding it’s way through congress, there is a general consensus in this academy is that the path of socialism is not one we’d like Big Brother blindly leading us down.

While I enjoy expounding here as much as the rest of us, I invite you to opine with me to a new forum: Congress.

Ask these fine statesmen, compelled by their duties so outlined in our constitution, to carry your words to Capitol Hill:

Senator George Voinovich
US Senator for the State of Ohio
614.469.6697

Congressman Patrick Tiberi
Representative for Ohio’s 12th District
614-523-2555

Ben, you may be a little far south putting you in the 15th District… why don’t you give a ring to…

Congresswoman Deborah Pryce
Representative for Ohio’s 15th District
614-469-5614

For those manning our Cincinnati office, I believe you will wish to speak with…

Congresswoman Jeannette Marie Hoffman Schmidt
Representative for Ohio’s 2nd District
513-791-1696

Perhaps your voice will be heard. Perhaps a delicate pink “While you were out” memo generated by your call will make its way to Washington. Perhaps not. You could do nothing and just let things play out, but I don’t think a phone call is all that much to ask. Tell your kids you did your part in staving off the socialist revolution.

Good luck comrades… may your lines not be busy.

"FLIGHT OF THE PHOENIX" or "IF YOU GIVE A MOUSE A COOKIE"

BY HARIOLOR

The current financial crisis has come to the greatest head to date. I say to date because it will certainly get much, much worse. There are a number of things that have been battling inside my mind the past few days related to this, yet they have remained elusive whenever I attempt to corral them into the hardened context of speech. These feelings and thoughts are like a malevolent maelstrom of color and light, fueled by ironic rage and righteous indignance. I imagine, perhaps vainly so, that I have reached into a deep well of ageless frustration that knows no spatial or temporal bounds. I drink heady draughts from the same wellspring of defiance as John Hancock, Edmond Dantes, and V, all of us bound by an immortal sense of defiance in the face of hopeless odds. Perhaps I romanticize my frustration with the current state of affairs in the world economy, but perhaps that's a good thing. Perhaps we should all be so incensed as to hope for nothing more lofty than to see ourselves being dragged screaming to the pillory for blasphemy against the establishment, confident that we will have the last laugh if only we survive the fall. This sense has instilled in me a Zen like acceptance of the endtimes, a wu-wei passivity that assures me the best will come from the worst possible ends, and along with it a blessed release from the Samsara of partisanship as I realize that both sides are so very very wrong on this issue. Here's a few reasons why:

1. The “Bailout”

The latest in a series of schemes by our loving god-protectors in Washington to erode our liberty and opportunity, the Bailout reeks of sour precedent. The mortgage-backed securities that have spread their toxin throughout the economic system were to be insured by default-credit-swaps, complex instruments of financial insurance that have been mentioned here before. These credit swaps have evaporated, pulling the rug out from under Wall Street, sending banks tumbling into an embarrassed heap like so many drunken adolescents playing naked Twister. The total value of assets that these credit swaps represent is nowhere near the few hundred billion that is being proposed. Nay, we are talking trillions here, somewhere between fifty and eighty trillion dollars of unfunded debts floating out in the financial ether, sucking in all that strays too close. I feel the need to type these numbers out so you can see just how paltry this sum is:

$50,000,000,000,000 – the securitized assets that now have questionable value
$600,000,000,000 – the bailout

We are several orders of magnitude too small, no? Whatever partisan political issues you wish to raise about the allocation of funds to Wall Street instead of Social Security, health care, or whatever, you can just chuck out the window. The issue is not the dollar amount, everyone involved knows it's just a band-aid. Buffet and Paulson and the lot are banking on making some money off the fall. Everyone can profit from a fall as long as they know where the collapses will happen. That's the bailout, a timed collapse that makes it easier for some to survive. Not so bad you say? Well...read on...

2. The Precedent

I said the bailout reeks of precedent – it does. The issue is that on top of the precedent we have already sadly set off bailing out and nationalizing organizations that are “too big to fail”, we are now looking squarely at the possibility of creating a financial superbeast in Washington with virtually limitless authority that will be only answerable to its own benevolent conscience. We all know that precedent is easy to establish in America and nearly impossible to overturn. Whether it's the bastardly concept of stare decisis et quieta non movere, or the impossibility of passing a law in Congress that actually rolls back existing law without caveats or loopholes, we should all acknowledge that what is done in Washington overnight usually takes generations to correct. We are not merely nearing a slippery slope. This is not an issue of “sadly necessary”. This is a conscious decision by lawmakers and the powers-that-be in the finance sector to throw the nation off a cliff. They'll hand out parachutes to their buddies, and then lay a big fat pillow called “centrally planned economics” at the bottom of the fissure to break our fall. Sure, some legs will get broken, but we'll all be OK in our brave new world, right?

3. Wrong.

The socialization of Wall Street will not be the worst of it, just the first movement in a symphony of destruction that will end, once and for all, the dream of America. Oh sure, you'll still be able to work hard and make some money, you can do that in China too, or Venezuela. What we will lose is our freedom. Government will grow faster than we could even imagine, and I fear McCain will be little better than Obama. Imagine the New New Deal we will receive:

Even as the last aftershocks are still rippling through the global economy, America will be picking itself up and dusting itself off. Tattered and tired, we'll look at our once brave nation and see a broken husk. Oil will continue to skyrocket on the open market, foreign nations will turn their noses up at a Treasury stocked with toxic assets and saddled with trillions in corporate debt, and the dollar will plummet. We will cry out in our hour of need, the plaintive plea of desperation last heard almost a century ago the last time a meddling government freebased a giant hit off the ass of the people. Big government will step in with their plan to get America back on track – you've already heard it, but now they'll have their reason. Corporate equity owned by the government will be used as collateral for the Treasury to issue a new round of blank checks to subsidize health care. After a hundred trillion dollars in taxpayer burden, what's a few more hundred billion? We'll have the health care we all so dearly need, but what of our jobs? So many of us are now broke, saddled with higher taxes and a worthless currency, that we can't afford to feed ourselves. So in comes phase two – energy independence for all by creating a new arm of the Department of Energy that will institute public building of nuclear/wind/tidal/solar/etc energy sources at an unprecedented pace. Funded by more skin of the back of the taxpayer, the lower socioeconomic third of our country will be indentured slaves to the government, happily erecting monuments to our failure to earn a living wage on Uncle Sam's dole in the hopes that oil is the real problem and if we build enough windmills it will all go away. But it won't go away, people will grow restless, commodity prices will keep rising as transport costs increase and the labor base of the country finds that it no longer is worthy of being extended credit by private enterprise. So the government, now the most potent regulatory financial organ in the world, will give out credit to those who need it most (remember this old line, how quickly we forget), getting them back into their homes and driving consumption back up....Crash...

It doesn't have to be that bad. And maybe it won't be. Maybe our benevolent oppressors-cum-protectors will really be wise enough to steer the economy back onto a sound footing and then gently release the reins with a stern look down their noses and the admonishment not to let it get this bad again or they'll take away our toys for good. I just peed myself. You should have too – because any sane individual reading this knows that they will not give back the power, and the concept of a Washington that is responsible and wise was even rejected by the framers of our Constitution, so there's no reason to think politicians will become the “good guys” now.

What I do hope though, and this should be your hope too, is that we can have the vision to let it all fall apart. Capitalism, real capitalism, can work reasonably well, but only with strict private self-regulation and an absolute minimum of government interference. We'll still get booms and busts, and people will still do stupid things that break the system from time to time, but those have a way of sorting themselves out. Warren Buffet knows it, T. Boone Pickens knows it (though he missed the boat this last time around, it seems), and we should know it. The big question I've asked myself through all of this mess is, “Why should the average taxpayer really care if banks start going under?” Before the governent started bailing people out, the answer was that, aside from the sliver of the population that is in immediate need of liquidating their long-term investments, they shouldn't. This mess could have rippled on and on for years, burning itself out on its own, and we'd end up better for it. Sure, the American quality of life would be lower as a result of a damaged dollar (temporarily) and tighter credit standards (which we need anyway), but that's the correction that needs to happen, right? If we really believed in capitalism, we'd laugh as the losers went down, and those savvy enough to do so would maneuver themselves into position to profit from the loss. Consolidation, short-selling, all these things are good – people get richer when it happens. Sure, others get laid-off, but hey, dem's-da-breaks. I truly believe like the cleansing fires of the Phoenix's nest, a sudden crash will give rise to a wiser, stronger, better America, and by proxy a better world economy overall. And with the alternative being as grim as it seems to be, what have we to lose, really, by just closing our eyes and letting the tides take us where they may?

THE OLD SWITCHEROO

BY CINCINNATUS

I

I had planned on writing about this yesterday, which is when I first heard this rumor floated by an acquaintance. Since then, however, this rumor has started to gain momentum. Rush Limbaugh mentioned it during the second hour of his radio program today. Snopes now has a page devoted to it (it is ominously categorized as Undetermined). I’ve come to the conclusion that if it is true, the best thing for us to do is to publicize it as much as possible.

The rumor, which began with an email that has been circulating for at least a week or two, is that the Obama campaign is planning on dropping Joe Biden from the ticket on or about October 5th, just after the vice-presidential debate, and swapping him out for Hillary Clinton. The email states that Biden will cite health issues (he suffered two brain aneurysms in 1988) as the motivating factor behind his withdrawal and claims to have obtained the information from a reliable source within the DNC.

Normally I would casually disregard something like this, however Biden’s behavior on the campaign trail has me concerned. As I wrote in The Washington Gaffe Machine on August 24, Biden has a tendency to make unfortunate remarks at very public venues, and this charming character trait seems to have intensified just in the last week or so. The list is almost too long to relate, but includes some humdingers, such as:

1. Asking a state senator in a wheelchair at a rally to stand and be recognized
2. Calling Barack Obama “Barack America” and not correcting himself
3. Criticizing an Obama campaign ad that mocked John McCain for his computer illiteracy (McCain’s POW injuries actually prevent him from using a keyboard) and saying that if it were his campaign he would have done it differently
4. Claiming that FDR went on TV when the stock market crashed to effectively lead America (Wow)
5. The Big One: saying Hillary Clinton would have been a better VP choice

Biden’s problem was always going to be his habitual meandering off-script and Obama knew or should have known that when he picked him. But Biden has begun to take it even further and is starting to cut Obama out of the conversation altogether, abandoning his notes and lavishing all of the praise on himself (see this Fox News article). If he keeps this up, Obama will have little choice but to dump him. However, this is where my skepticism of the rumor lies. There’s no way that Biden will go quietly.

The Joe Biden we all know would never bow out of the race under phony pretenses and keep his mouth shut about it, even if it meant another presidential loss for the Democrats. This guy has a Senate career and an image to maintain, after all. The real reason behind his withdrawal would be painfully obvious to the American people (especially with this rumor circulating) and he would become even more of a cocktail party punch-line than he already is. What would his mother say? “Bloody their nose,” that’s what. And don’t think he won’t.

I think whether the rumor is true or not, the Biden pick has severely wounded Obama. If he remains on the ticket, the Democrats will have to sprint toward the White House hauling his dead weight. If they drop him, Biden will tell the whole world why. What’s more, it will call into question Obama’s judgment (just like the Palin picked called into question McCain’s, remember?) and ability to close the deal, basically amounting to him asking Hillary to bail him out. And I’m still very skeptical that Hillary is even willing to lend him a helping hand.

WE'RE HERE TO HELP...

BY CINCINNATUS

You, the American tax payer, should be watching with concern this week as Congress debates the president’s proposed “Wall Street Bailout,” which would offer up to $700 billion of your money to buy up distressed (not failed) mortgages. Unfortunately, this issue has become so murky due to some of the economic complexities that most Americans are watching with a befuddled helplessness rather than the more appropriate righteous outrage. But when you kick away the five-dollar terminology cluttering up this crisis, it once again comes down to the quintessential American debate: the size and role of government.

Let’s go back to the beginning. Contemporary political rhetoric paints this disaster as a function of ravenous Wall Street greed and a “Wild West” policy of deregulation in Washington. Nothing could be further from the truth. This financial implosion is a direct result of too much meddling in Washington, specifically Congressional mandates that advance a social agenda. Fannie Mae and Freddie Mac, which should be names that live in infamy, were the plaything of Congress for decades and are the symbol of federal mismanagement. Congressional Democrats literally used Fannie Mae and Freddie Mac as a social experiment, offering loans to high-risk candidates in the interest of providing housing to low-income Americans. Unfortunately, regular mortgage companies saw a bad example being set and, moreover, were forced to follow suit in order to remain competitive. Seeing signs of economic destabilization, the Bush administration attempted several times to force more oversight of the overseers, but were rebuffed repeatedly by Fannie Mae and Freddie Mac’s Democratic champions. In answer to one such attempt as early as 2003 to reform the government-owned mortgage giants, Democrat Barney Frank said, "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis."

I could go on and on about what a fiasco Fannie and Freddie represent, pointing, for instance, to the top five recipients of campaign contributions from these now defunct government corporations: Senator Christopher Dodd (D – CT), Senator John Kerry (D – MA), Senator Barack Obama (D – IL), Senator Hillary Clinton (D – NY), and Senator Paul Kanjorski (D – PA). But the important take-away is that these two institutions represent the root of our current economic crisis, and that should at least tell us one thing: if government meddling got us into this mess, government meddling will NOT get us out. But now President Bush is trying to ram through a gargantuan piece of legislation that will expand government authority and concentrate it in the hands of a single bureaucrat, Treasury Secretary Henry Paulson. And the two Senators chasing Bush’s job, particularly Barack Obama, are laughably blaming an out-of-control Wall Street and advocating even further federal regulation of private enterprise.

Whether anyone is willing to talk about it or not, we're slipping further and further into socialism with each new financial crisis that Washington is promising to save us from. They've set our house on fire and are asking to borrow our bucket to help put it out. They have rapidly nationalized major financial institutions and are clamoring to acquire even more substantial private interests. And this is just the Republicans. The Democrats, who have been dreaming of an opportunity like this for decades, are astonishingly criticising the administration for not taking its nationalization policy even further as Congress debates the $700 billion bailout proposal, demanding salary caps for CEOs and equal housing amendments be included before passage. This is absolute madness.

But whether or not this “Bailout” legislation is passed through Congress like a hot potato, this economic disaster is instructive for the American tax payer. For God's sake, the government does not know how to run a business, particularly your business. And the time-honored federal axiom of throwing more money at the problem should elicit angry howls from all of us, because our parents were promised that the pocket-picking would stop with their generation. At some point we need to slap the government's hand and take its toys away if it won't play nice, or we'll end up right back here in 2018.

THERE CAN BE ONLY ONE

BY CINCINNATUS

Clinton and Palin have finally stopped circling one another and have collided on the national stage for the first time in a shower of sparks and rhetoric (okay, no sparks). I am reminded of the climax of the film “Highlander”. There can be only one.

It was disclosed on Tuesday that Hillary Clinton cancelled an upcoming appearance at a rally outside the United Nations protesting the appearance of Iranian President Mahmoud Ahmedinejad. The cancellation came after Governor Sarah Palin accepted an invitation extended to her by the rally organizers on Tuesday morning. The event, scheduled for Monday, September 22nd, had been planned since August by the National Coalition to Stop Iran Now, which is a confederation of several American Jewish organizations. Clinton spokesman Phillipe Reines explained the reason behind the cancellation by saying, “Her [Palin’s] attendance was news to us, and this was never billed to us as a partisan political event. Senator Clinton will therefore not be attending." The explanation is unsatisfactory to some, myself included, who ask the question, “Why does Palin’s presence make the event partisan?” After all, Hillary Clinton is now (ostensibly) a vocal Obama supporter and a recent presidential contender herself. Her motives behind speaking at the event are certainly political, centered around pleasing her constituency and using her high profile to draw attention to the cause. Would her appearance be considered partisan? How about the long-scheduled appearance of revered author and Holocaust survivor Elie Wiesel, himself an ardent and outspoken conservative? I think the event would be partisan, Senator Clinton, if only one party was represented and the opposing view was shut out. If anything, Governor Palin’s appearance would further enhance the bipartisan credentials of the rally.

So what’s the real reason for Clinton’s sudden withdrawal? The simple answer is that the Obama campaign, in an act that is ironically the most partisan of this whole debacle, in all likelihood told her to. Their well-justified fear is that Clinton’s appearance would lend legitimacy to the Republican vice-presidential nominee. But by the time the dust had settled on Wednesday the one who came out on top was Governor Palin, who now has possession of the battlefield (read: the microphone) as a headlining speaker and the added gravitas of appearing at a foreign policy-related event that conservatives and moderates alike can support. Moreover, the Obama campaign came off looking petty and cheap, once again putting their interests ahead of larger issues of national import. A clever and biting retort by McCain campaign spokesman Michael Goldfarb aimed at Senator Obama was issued: “Instead of pressuring Senator Clinton to withdraw and pressuring the event's organizers to disinvite Governor Palin, we hope Senator Obama will consider lending his own voice to this cause. And if the Senator subsequently wishes to clarify any remarks that might be misconstrued, he will have the opportunity to meet with Iranian President Mahmoud Ahmadinejad without preconditions after he speaks at the UN the following day."

But don’t be fooled, I’m sure Clinton was more than happy to hand the Obama campaign the loaded gun and watch them shoot themselves in the foot.

NEW LOW

BY CINCINNATUS

I

The big news this morning is that a hacker calling himself “Anonymous” managed to break into Governor Sarah Palin’s email account and post screenshots of several messages. By the admission of “Anonymous” himself, there was nothing whatsoever of an incriminating nature to be found. Just to make it clear, hacking into anyone’s email is a federal offense. It was a gamble that didn’t pay off for “Anonymous,” not to mention all of his rabid liberal sympathizers that found themselves panting in anticipation of what sort of sludge would be uncovered.

But I have yet to see one article on any of the mainstream media websites condemn this action or mention the severity of the crime. All I’ve seen is them feasting on the scraps that came out of it. The screenshots are brazenly posted and there is talk of how Palin conducted government business on private email accounts. Once again, the media is trying to sniff out a Palin scandal that doesn’t exist, now that “Troopergate” has proven to be a boring non-issue. It’s difficult for me to once again sum up my level of disgust with the liberal treatment of Sarah Palin. They will literally do and say anything to discredit and destroy her, which is a testament to how much of a threat she is to them. Again and again, they step over the line and embarrass themselves, but they can’t seem to help themselves. Because they HATE her. They absolutely hate her. They are so consumed with their hatred of her that they can’t comprehend how much they are harming their own cause. Incidents like these just generate even more sympathy for Governor Palin and bring her right back into the spotlight as a victim, just when her popularity had seemingly peaked.

What really confounds me is that on message boards and even in news articles people are blaming McCain for making this an issue and distracting voters from real problems in our country. Seriously? It’s McCain’s fault that this happened and that it is (rightly so) a news story? I’ve included a sampling of some of the posts I’ve seen on the Christian Science Monitor website pertaining to this below to give you an idea of just how absolutely loony and hateful some of these liberals are:

9. Becca 09.18.08
I’m tired of the devastaing issues we face as a nation getting hijacked over nonsense.
Palin is barely on the scene, and there is the refusal to cooperate with an investigation that was voted on, by a Republicon majority in Alaska’s gov’t, well before McCain’s “choice.”
Now tell me: WHAT ARE WE GOING TO DO ABOUT THE STATE OF THE UNION?
I AM SICK AND TIRED OF GETTING A RED HERRING SHOVED IN MY FACE…….MCCAIN CAMPAIGN, DEAL IN The issues that are unraveling our country.

21. bob 09.18.08
Is this what Americans want?controversy manipulation lies abuse of power same old same old and that s whatMCCain call change?Let me choke….
liar liar liar liar….enough

26. Heidi Morgan 09.18.08
She’s so dirty. Everything about her shouts revival of the reviled administration sitting in the White House. How can this go and on and on and on and on and on without ANY accountability?

30. Timus, Powder Springs, GA 09.18.08
If Palin used Yahoo mail for official state business she is indeed a big idiot. What would she follow this up with? Leaving the missile launch codes on a rock in Afghanistan?

There seems to be no concern in the media over the fact that a crime was committed, and I've certainly heard nothing from the ACLU. I imagine when they do speak up it will be to blame the Bush administration for setting this trend with the PATRIOT Act. The bottom line is that the Left has thrown everything they can at this poor woman and not apologized for it, having now added federal crime to their toolkit, and nothing has done her in.

LIPSTICK JUNGLE

With Sarah Palin’s star in the ascent, John McCain’s presidential campaign is riding a wave of popularity that has taken him from presumptive loser to front-runner in national polls. Over the past week political analysts and pollsters have seen state after state tip from leaning Republican to solidly Republican. Similarly, Florida, which was recently a toss-up state, now looks to belong to McCain. Obama’s electoral lead has now been narrowed to a mere six votes. Most astute observers attribute this surge exclusively to Governor Palin, whose charisma, conservatism and lifestyle have attracted Americans in droves.

Obama has appeared positively stumped on the question of how to combat the so-called “Palin Effect.” If he attacks Palin directly, he will come across as a bully. The initial negative media blitz on Palin created a tremendous wave of sympathy for her and a backlash against the culprits, namely NBC, that has served as a valuable lesson for the Democrats. The McCain campaign has also been keen to drive this point home to Obama, in the event he had forgotten it, with their ferocious attack on his “lipstick” gaffe, which, while silly, is a case study in the protective aura that seems to surround the Republican vice-presidential nominee. Obama’s criticisms of Palin have been tentative and fleeting, focusing primarily on her short record and conservative views. But Obama is beginning to realize that the “inexperience” attack only serves to contrast his even shorter political career with hers… and she’s only running for the VP spot. So what is Obama to do if he’s to snatch victory from the jaws of Sarah Barracuda?

Fight fire with fire. Or in this case, lipstick with lipstick. Only Hillary Clinton can stand up to Sarah Palin without fear of a backlash. If she were to mobilize her notorious attack machine against the Alaskan upstart and show the bumbling Obama amateurs how it’s done, Obama may see a shift in the polls in his favor. Clinton has the necessary credibility, experience and pair of X chromosomes to stem the tide. But where is she? She’s been conspicuously absent from the campaign trail since McCain named Palin as his running mate, despite her pledge to unwaveringly support “her candidate,” Barack Obama, at the convention in Denver. Her window of opportunity to put Palin in her place is quickly dwindling, too. Her silence is telling.

Hillary Clinton has faced a public shaming unlike any in her political career (even after the Lewinsky scandal she came out clean), and, adding insult to injury, this time the perpetrators were part of a vast Left-Wing conspiracy. After her narrow primary defeat, her party forced her to swallow a bitter pill; concede her place in history to a young, inexperienced junior Senator. Then she was passed over for the vice presidential nomination (a wise choice by Obama, who would have regretted seeing her preside over his hastily-arranged impeachment trial in the Senate). Nevertheless, Clinton has done everything they’ve told her to do, bringing supposed party unity and healing wounds. But if they think she’s going to help Obama win the election, they’ve got another thing coming. The fact is that Hillary has her eyes on 2012, an election she is confident she can win. She has been deftly balancing the preservation of her image as Democratic Party loyalist with the subversion of the party’s candidate. And she has to be laughing on the inside, watching Obama the Clinton-Slayer clamoring for her help as he faces annihilation at the hands of a woman.

Oh, Hillary will be dutiful as she must be and offer lukewarm criticisms where needed, but you will not see her deliver the killing blow that the Obama campaign is praying for. Rather, she will stay her hand and polish her “I told you so” speech after the Democrats lose yet another presidential election to what was supposed to be a paper tiger GOP.

SIZE MATTERS

I had the opportunity last night to watch a Time Magazine-sponsored forum at which John McCain and Barack Obama appeared separately, addressing the importance of national service and its various forms. My first inclination, upon watching the introduction, was to change the channel. It seemed like the subject matter was pure fluff, all but certain to elicit feel-good platitudes from both candidates that added nothing to the national dialogue. But I was pleasantly surprised to see, as the program unfolded, that the moderators, whether they knew it or not, were giving voice to one of the central issues of the election, and that is the philosophy of government. On whatever issue Republicans and Democrats disagree, I will guarantee you that the root cause of the debate is their respective interpretations of the role of government in American society. And those differences were on parade last night.

Questions arose immediately about the role of government in national service. More specifically, should the government expand its own service programs, such as the Peace Corps and AmeriCorps, or offer incentives or sponsorship of private service programs? While McCain applauded the work of existing government service initiatives, he cautioned that the government is not always the answer. He cited the fact that private, often faith-based programs have been wildly more successful in dealing with poverty, crises and humanitarian issues. And more importantly, their work costs the American tax payer little to nothing. When repeatedly pressed on whether government programs should be expanded, McCain seemed almost impatient and dismissive of the premise of the questioning. He was asked about whether there should be compulsory forms of service other than the military, at which McCain balked, cautioning that national service can be corrupted when altruistic motives are taken out of the equation and replaced by government mandates. He had the following comments to make about government’s role in national service in general:

“I haven’t agreed with all of what Senator Obama has proposed, but I think they’re very good proposals there. Some of them are new, some of them are obviously not.

“But I also want to emphasize there, it doesn’t always have to be run by the government. That’s why we also ought to understand that faith-based organizations, other volunteer organizations that are completely separate from the government, have nothing to do with the government, are amongst the most successful.

“So let’s not get entrapped by the idea that the government has to run these voluntary organizations and volunteer kinds of programs, because a lot of times the job can be done better with our encouragement.”

He concluded, “But I want to be careful about expanding it (government) when — my philosophy is let’s not have government do things that the private sector can do, or other organizations can do. That’s just my theory of government.”

Obama drew a stark contrast, however. He was quick to embrace a larger role for government in national service, countering McCain’s argument about private service organizations by saying that government programs do not crowd out those groups or make them less successful, but rather there is a role for everyone to play. I would remind the reader that while more may seem to be better in some cases, in the realm of government more just means increased federal spending and higher taxes. This should be underscored by Obama’s proposal during the forum last night to not only expand existing national service initiatives, but create a Classroom Corps, a Health Corps and a Clean Energy Corps. His argument was that Americans should indeed be compelled to serve by the government in the face of increased challenges. Some of his comments on the role of government are below:

“I believe firmly that government should expand avenues of opportunity. I want to create an energy corps, a clean energy corps that can mobilize individual citizens to help create greater energy efficiency in our country. I want to mobilize seniors to get involved with their schools or their local hospital or health clinic.

“So there are going to be a whole range of ways that we can do it. Some of that is going to cost money, but mostly it requires government providing these opportunities and these avenues and a president who is willing to inspire people to get involved and get outside of themselves. That’s something we’re doing in this campaign, and that’s something I think I can do as president.”

I think something that needs more attention in this election is not personal narratives or experience and qualifications, but rather the underlying philosophy these candidates have about how much of a right government has to intrude into your private life and, just as importantly, into your pocketbook. Senator McCain’s comments about avoiding government redundancy by keeping it out of avenues that are adequately filled by private initiative are directly in line with the fundamental principles of our Constitution. Conversely, Senator Obama represents an adherence to Socialist tenets that would increasingly tie your life and well-being to the fate of the federal government, creating a dependency on the part of average citizens upon Washington. In an election season when both candidates are running on change and reform, the first question we should ask ourselves is whether that change will promote the ideals of our nation’s founding.

You can see the transcript of last night’s national service forum here.

"BLACK HOLES & REVELATIONS" or "HOW THE SWISS WILL LAUGH LAST"

BY HARIOLOR

Much is being made of the Higgs boson, the so-called “God particle” that could end the world (or at least religion) as we know it, which is the bull's-eye in the scattershot experiment at CERN's LHC. Hm, perhaps some background is in order before we proceed. If you don't feel like reading my summary, watch this informational rap video.

CERN is the fancy-pants French acronym for “Organisation Européenne pour la Recherche Nucléaire”. Located in Geneva, deep below gumdrop trees, chocolate-coated mountains, and scenic lakes filled with happy Swedish fish, is the Large Hadron Collider. Hadron is the fancy word for protons and neutrons, which themselves are fancy names for what stuff seems to be made of. The LHC at CERN, therefore, is a big loop that smashes stuff together at almost the speed of light in a giant metal tube under Switzerland. If that isn't a recipe for the end of the world, I don't know what is. But I digress.

The problem that modern particle physicists have is that they can't really explain why stuff is stuff, and not just energy. Anybody who paid attention in physical chemistry class in high school may well have repressed memories of the frightening revelation that all matter is energy, and therefore nothing should be anything (or at least it should all be the same). Clearly, though, we have reasonable evidence that there is, in fact, something. Therefore, we want to know how stuff is stuff and not not stuff. This is getting complicated...Matter has mass, we don't know why, the LHC might tell us.

The LHC experiments that began this week involved accelerating particles to near the speed of light around a giant loop. So far, all that has been tested is whether the beams travel all the way around in each direction. Once the scientists are satisfied that the beams work acceptably, they will proceed directly to the logical next step, which is smashing the beams into each other just to see what happens. The goal being to identify a lowly subatomic particle called the Higgs boson, which is believed to allow Hadrons (stuff) to have mass, and therefore stick to other stuff, produce gravity, and all kinds of other wonderful things that let life happen. Pretty fancy, but not all that profound outside of theoretical physics.

The initial tests will be at relatively low energies, and will likely not reveal a lot. Consider them trial runs. Sometime in the next three months, however, the LHC will get up to full power, and the particles will be blasted together at full speed. Alarmists have suggested this will destroy the universe. Other alarmists have suggested this will either reveal the face of God, or disprove his existence altogether.

The universe destruction theory is pure science fiction. I will not dignify it with further mention.

However, there is a lot of concern among the religious that this experiment will tell us too much about the creation of the universe, ruining their fun (much to the celebration of rabid atheists everywhere). They think this will happen, of course, because the lowly Higgs boson has been nicknamed the 'God particle' even though Higgs himself is an avowed atheist who hates the term. Indeed, all the particle does is hold stuff together, remember? Therefore it is only 'godlike' in that it (if it exists) is what allows creation to happen. In and of itself it has no creative force whatsoever.

What is more interesting, I think, is that this will give insight to the origins of the universe, and could clarify and even solidify the theory of the Big Bang. Atheists now celebrate the possibility that this scientific breakthrough could, somehow, bring into question religious beliefs that are predicated on a formal system of creation that is literally interpreted. Many even believe the discovery of the particle and even partial confirmation of the Big Bang theory would completely remove the human need for a creative force in the universe. Of course, this is silly, just like atheism.

This machine proves nothing about God, nor will any experiments performed with it. Read Pascal's wager, then read Godel's ontology. Smarter men than myself (and smarter than most atheists) have recognized that it is rational and fair to believe in a God, regardless of scientific progress. However, I will admit those who criticize the wrongdoing and scientific backwardness of some religious individuals/groups have every right to do so. Let us be reasonable, though.

I

Nothing written about above discredits the value of belief or the potentiality of God’s existence. The more important question from an epistemological standpoint is, “Do we have a better idea now about what is not true in any given religion, and what is true in science?” Not, “Have we proven there is no God?” The former question leads to moral and scientific growth, the latter is asinine.

"CHRISTIAN CONSTITUTIONALISM" or "WIPING LIPSTICK OFF PIGS"

BY HARIOLOR

Fashion plate-cum-governor Sarah Palin is the new darling child of the Republican party, and probably rightfully so. She seems to have strong views that are right in line with the fundamentalist Right that is so maligned by the loony Left. However, there has been a gross misrepresentation in the media of Palin as a “christian conservative”. We're not talking modest exaggeration, we're talking PT Barnum type stuff here. She is christian, and she is a conservative, but there have been claims that she has a number of 'dangerous' religiously-informed views. These are not always presented directly in mainstream media, but blogs and news commentary is rife with them. What's more, Googling the phrases “christian conservative” and “Sarah Palin” at the same time yields nearly 100,000 hits as of this writing. Indeed, you can't open a newspaper without seeing the epithet attached to her name. Whatever her personal views (which will be discussed below), there's cause for pause when looking at the rumors perpetrated by the left. Bust out the acetone and the cotton balls – this pig's ripe for a makeover...

1) Myth: Sarah Palin is unjustly opposed to homosexuality.

The record shows that while she does harbor personal disagreement with homosexuality, she has been diligent in applying the state constitution in Alaska with regards to those laws. Indeed, she has cited Alaskan constitutional law (with help from the Attorney General) in vetoing a proposed law that would have denied rights to same-sex couples. She would likely welcome amendments that are in line with her personal views, but so far has a clear record of constitutional adherence in these matters. Even gay blogs have figured this out.

2) Myth: Sarah Palin wants to teach creationism as doctrine in schools.

Again, this is apparently not true. Sarah Palin acknowledges theories of evolution, indeed her father was a science teacher. She supports the view that individual communities discuss various theories of creation and teach parallel theories that are in line with the values of a given community. Again, even religious blogs have recognized this. When pressed on the issue in 2006 she said:

“Teach both. You know, don’t be afraid of information... Healthy debate is so important and it’s so valuable in our schools. I am a proponent of teaching both. And, you know, I say this, too, as the daughter of a science teacher. Growing up with being so privileged and blessed to be given a lot of information on, on both sides of the subject -- creationism and evolution... It’s been a healthy foundation for me. But don’t be afraid of information and let kids debate both sides.”

3) Myth: Sarah Palin believes the Iraq war is a mission from God.

Sarah Palin certainly stresses supporting the troops, but has given no evidence that she believs it is a holy crusade. Indeed, she left the fundamentalist church of her youth in 2002 to join the more moderate, non-denominational Wasilla Bible Church. Even the pastor of the pentecostal church of her youth says of his congregation's view, “Our basic belief is that God is God and he knows where history is going and he has a purposeful plan and within the middle of that plan we live in an environment in our world where certain events would take place...Sarah wasn't taught to look for one particular sign.” This is a frequent argument against her, but I have no idea where it comes from, beyond the fact that some fundamentalist churches do preach a zionist rapture-oriented foreign policy based on their belief in the imminent parousia. She has said nothing more provocative than that the troops' lives in Iraq are part of “God's plan”. This is hardly pushing for the formation of a seven-nation army.

The swan-song of the Obamessiah's campaign will probably be the vicious lies perpetrated by his foam-mouthed followers. The most ardent supporters of any political party can be loony. Fortunately for the country, McCain has at least given all appearances of being moderate, and appeals as such. Obama, as far left a nut as there has ever been, will be dragged down like a lost soul in Dante's Inferno by the vorpal claws of his own rabid fans.

LIFE AFTER KIM

One of the top stories yesterday was that Kim Jong Il, the dictator of North Korea, had suffered a stroke that prevented him from appearing at a military parade celebrating the anniversary of his father’s coup. As of this morning a general consensus is developing in Washington, based upon intelligence reports, that the 66-year-old dictator is seriously ill. This is not the first time his health has faltered, however. South Korean newspapers reported that Il suffered a previous stroke on August 22, 2008, which was allegedly the reason that multilateral talks regarding North Korea’s nuclear disarmament between the United States, Russia, Japan, South Korea and China shut down around the same time. Today’s reports indicate that Kim is not fatally ill, but he is currently incapacitated an incapable of discharging his presidential duties.

Others speculate, based upon the bizarre and intriguing theory proposed by Japanese Professor Toshimitsu Shigemura, that Kim Jong Il actually died in 2003 of diabetes, and that the Kim of today is portrayed by several actors. Amazingly, there is some evidence to support this notion. Japanese analysts who ran tests on Kim Jong Il’s recorded voice prior to and after 2003 found that they were not a match. Furthermore, some videos show a Kim Jong Il of varying height. Shigemura postulates that this accounts for the fact that Il is always accompanied by high-ranking military officials, who he refers to as “handlers,” to ensure that the fake Il stays on message and in line. While this may only go to prove that Kim Jong Il, like many dictators, sometimes uses stand-ins (possibly due to his failing health) and isn’t quite dead, it still raises interesting questions about just how much Western analysts and intelligence experts know and can learn from a regime as unprecedentedly secretive as Il’s.

With a discussion of the North Korean dictator’s mortality suddenly on the front page, it makes one wonder what will become of that country after his death. We’ve been through this exercise recently with Fidel Castro who, while not dead (speculation abounds, however), has stepped aside in favor of his brother, Raul, due to his debilitating health. Would North Korea’s succession follow the same pattern, with power peaceably transferred to one of Kim Jong Il’s two illegitimate sons, or perhaps his brother-in-law? Or would an internal coup, military or otherwise, wrestle the country away from the path Kim set it upon? Either scenario is equally plausible, but no one is quite sure how North Korean policy would change in the aftermath. Would the nation begin a slow and measured opening to the West, engaging in further talks over its nuclear program and humanitarian issues? Would Western goods find their way to a whole new North Korean market? What sort of reforms might the new Korean regime pursue, if any?

And of course there are more dire possibilities. Would Il’s successor(s) pursue an even more hostile line with the West and their South Korean neighbors? Would a threatened Japan pull the United States into direct conflict with North Korea and perhaps even China? As terrible as Kim Jong Il’s reign over the people of his country may be, history has taught us that it can always be much, much worse. And we cannot forget that whoever inherits North Korea will be sitting atop an arsenal of nuclear weapons.

DROPPING ANCHOR

MSNBC has cleaned up its Election 2008 coverage, according to the management. Keith Olbermann and Chris Matthews have been removed from election anchor duties as of this weekend. NBC executives cited biased coverage as the reason for their decision. This is hysterical.

To be honest, I’m not sure what is funnier: that NBC executives are upset by coverage bias or that Olbermann and Matthews were put on election anchor duties in the first place? It’s no secret that both of these gentlemen are known liberal Democrats who have been vitriolic critics of the Bush administration and sniveling Obama sycophants. Olbermann’s MSNBC program “Countdown with Keith Olbermann,” has been a platform from which the host has launched self-righteous hit pieces against the president and the War in Iraq, labeling Bush a cold-hearted murderer and a war criminal. Matthews, the host of “Hardball,” has served in Democratic campaigns and administrations for the majority of his adult life and is a Clinton apologist. He makes no secret of his political allegiances.

And these two knuckle-heads were hand-picked by NBC to anchor MSNBC’s coverage of the 2008 presidential election, even with their demonstrable records of liberal bias. They were given the responsibility of presenting impartial news coverage of what may be the penultimate election of our lifetimes, and one of the most hotly contested to boot. So why did NBC just now decide to yank Olbermann and Matthews? Well, I suppose the overwhelming outrage on the part of Americans over the way that network has propped up Barack Obama and bashed Sarah Palin may have had something to do with it…

Let’s take a few examples. Following Sarah Palin’s speech accepting the Republican vice presidential nomination, Keith Olbermann had the following snarky comment to offer in criticism: “People who like this sort of thing will find this… the sort of thing they like.” Really, Keith? And you’re an anchor, right? Wow. He further criticized Palin as an “elitist” for attacking community organizers. Talk about the pot calling the kettle black. And Matthews famously embarrassed himself (and simultaneously made us all wet our pants with laughter) when he confessed to physical arousal after hearing Obama speak. Said the “Hardball” host, “It's part of reporting this case, this election, the feeling most people get when they hear Barack Obama's speech. My, I felt this thrill going up my leg. I mean, I don't have that too often.” I would love for you all to watch the video.

Olbermann and Matthews will be relegated to analyst duty while David Gregory assumes anchorship. The most critical outcome of this shake-up is that it serves as a vindication of Governor Palin’s comments in her acceptance speech about media bias and is an open admission on the part of one of the major networks that their coverage has been greatly skewed to the Left. Not that this is news to conservatives...

THE NUCLEAR BAZOOKA

BY SEACHRANAI

I had no idea last week's brief primer on our economic problems would become so topical so quickly, but here we are. You may have just heard over the weekend, perhaps you heard the whispers and rumors at the end of last week, or maybe you are like most of Americans and it went in one ear and out the other. If you are the latter, pay extra special attention, because you should care. The Federal Government is nationalizing Fannie Mae and Freddie Mac. The decision was officially announced Sunday at 11 AM (the government’s financial regulators, unlike any other government employees, typically like to work on the weekends).

What does this mean to you? Well, as the term implies, the companies will become part of the federal government. And who funds the federal government? Well you do, silly. That means any further losses the companies incur will be paid for by you. One must give the government some credit, however. Under the current scenario, existing shareholders will be wiped out too – so at least a portion of the losses will fall on those who benefited from the earnings the GSE’s reaped prior to their collapse. The government could have merely propped the entities up with taxpayer money while leaving existing public shareholders in place, in which case you would still be paying for the losses, but those that benefited from before the current mess would have gotten away scot free – a true redistribution of wealth if ever there was one.

The nationalization scenario has cutely been dubbed the “bazooka” option by the media. Appropriately so, because it uses existing banking regulations to allow the federal government to come in, wipe out management and shareholders (effectively “blowing up” the existing ownership structure) and scoop the companies into full regulatory receivership. I feel this name is lacking, however. A bazooka is an inherently destructive device, but is intended to only destroy the target at which you point it. The nationalization scenario (which was debatably the only viable option truly left on the table) does much more than that. We have all heard the term “nuclear option” before, and I believe this is a far more adequate description of nationalization. I choose this terminology for a reason. Much like detonating a nuclear device, this policy action is going to generate a great deal of “fallout”.

Like I said before, GSE stockholders will be punished. Our country’s banks (yes, those companies which hold all our wealth and have already been put under serious strain recently) own a good deal of common and preferred GSE stock. For some, these securities actually make up a material amount of their capital base. The “fallout” from our nationalization scenario, thus, is that a major piece of capital on bank balance sheets is going to disappear (for those of you that are not so savvy in the lingo, we call this a “write-down” – now try and keep up). Fortunately, a lot of this stock has already been written down, but there is a lot of value out there (especially in the preferred stock), that has yet to really be effected.

Ultimately what does this mean? In the most serious of circumstances, the value of the bank’s assets becomes less than the value of the bank’s liabilities and boom – bank failure. Expect to see this more than once in the months to come. In a practical sense what should this mean to you? Let’s just say this – the FDIC only insures you up to $100,000 for deposits in a single bank. If you are lucky enough to have more than that at one bank, move anything over $100,000 somewhere else – then at least you are covered. I cannot say whether or not we will see the mortgage giants continue as national entities into the future ad infinitum, or if we will try and establish a more fair, more stable system of public ownership going forward. What I can say is that at present, the weight of these behemoths in on all of our backs – let’s hope it isn’t too much for us to carry.

THE TEHRANIAN CANDIDATE

In recent days Nouri Al-Maliki has been pushing the United States to set a firm timetable for withdrawal from Iraq. Many have hailed his sudden assertiveness as a sign that the Iraqis are ready to stand up and take responsibility for their own security, and in large part this perspective is enthusiastically embraced by a war-weary American public, anxious to end this long and arduous chapter in their nation’s history. And indeed, self-determination in Iraq cannot begin without the country’s leadership taking adversarial stands against the US (for strictly political reasons) flavored with nationalistic rhetoric.

However some are troubled by the seemingly self-destructive intentions of Al-Maliki, who now has designs on disrupting the Sunni alliance that helped pacify Anbar province, disarming the myriad militia factions within the nation and antagonizing Kurdish forces. At such a tenuous moment, Al-Maliki seems to be lighting the fuse on a sectarian powder-keg that could tear his country apart at the very moment it is most unified. The American administration is nervous and uncertain, to be sure, about Al-Maliki’s motives. If he is looking to burnish his image as a strong leader and a patriot, that’s all well and good. But how can he benefit from his country being plunged into a renewed, bloody street fight between Shiites, Sunnis and Kurds that could end in his public lynching (literally)?

Speculation abounds that Al-Maliki, who frustrated the US last year by opening up dialogue with Tehran about peace-keeping assistance, is in Iran’s pocket. By demanding a US withdrawal that adheres to a specific timetable as only he could, they say, he is inviting the Iranians in to set up shop. This may be the answer to why he plans to challenge the Sunni and Kurdish militias, counting on (promised?) Iranian assistance to crack down on what would otherwise be an obvious losing battle for Al-Maliki’s armed forces as they currently stand. If this is the case, the US could have a serious problem on its hands.

But conspiracy theory aside, Al-Maliki in all likelihood is on a road to self-destruction. If he tries to challenge the militias at this critical time, his country will fall apart. And he should know that the Americans won’t let that happen, not after five long years of slow and bloody progress that has led them to the brink of victory with honor, and the promise of a return home. While direct American action against him is unconscionable, using some of the alliances they have developed with Sunni and Kurdish factions, who have a great deal to lose as well, could be sufficient to apply the political pressure needed to either remove Al-Maliki or get him to back off. This play has its obvious risks, however, and could upset the balance of Iraqi political power in a similarly destabilizing way. But if current talks between the US and Al-Maliki’s government over the withdrawal of American forces fall through, and the Iraqi Prime Minister makes aggressive moves toward minority factions in his country, the Bush administration may have little choice.

HIGH STAKES

The Republican National Convention will come to a close tonight with the acceptance speech of Senator McCain. His address, while not as breathlessly anticipated as Sarah Palin’s (a vindicating home run, by the way), will be closely scrutinized as setting the tone for the ensuing two-month foot race to the White House between himself and Senator Obama. Thusfar the campaign has used the convention in large part to play an aggressive defensive game against the sustained public tarring of Governor Palin, and has done so with measured success. However, Americans will look to John McCain tonight to articulate policy rather than continue the narrative of the past two nights, just as they did for Barack Obama in Denver. And McCain must deliver.

Americans are keenly aware of McCain’s stance on foreign policy, energy and social issues, and indeed it is in these areas where he is by far the stronger candidate. His weakness heretofore has been the economy, a weakness that Democrats have been enthusiastically exploiting without any significant challenge from McCain’s campaign. The Republican nominee needs to get smart and articulate on this issue and fast, and tonight is his best opportunity, especially as Obama campaigns in the critical battleground state of Ohio. If he fumbles, his hard won gains may be lost.

Among the key points McCain needs to drive home is first and foremost a reiteration of his commitment not to raise taxes as president. He must promise that the federal government, under his watch, will not pile on further financial burdens to the American citizen in the interest of creating more bloated and ineffective social programs. He must caution the nation against the snake-oil salesmen in the opposing party who peddle ideas and programs like an increased minimum wage, universal healthcare and windfall profits taxes on oil companies with the false promise that they come to the American citizenry free of charge and will put money back in their pockets; these initiatives do not represent change or a new direction for America, they are as old as the hills and come right out of the Democrats’ decades-old gimmick bag, and worst of all they will pick the pocket of tax payers and cripple free enterprise when they are the most vulnerable.

McCain must reaffirm that Americans, though troubled by our economy, are not looking for a hand-out from government, but rather are clamoring for an obese, do-gooder nanny state to get out of their way and allow them to keep more of their hard-earned money and remove burdensome demands on their employers that result in lay-offs and increased prices for consumers. He must extol the pioneering, independent spirit of American ingenuity, and promise that he will nurture that spirit by removing road-blocks and offering incentives, not regulations. Just as Governor Palin did last night, he needs to lay out how his energy policy will create more American jobs.

Finally, he needs to drive home the fact that his crusade to eliminate government waste and largesse through aggressive reform and budget control is the surest way to give Americans the financial relief they need. In this area he can point clearly to his experience and credentials and further bolster them with Palin’s record. This will create a stark contrast between McCain and Obama, who places a high premium on social programs due to his much-discussed experience as a community organizer.

If McCain can do all of these things and punctuate the speech with enough humor to get America comfortable with him, he’ll catapult himself into the final stretch of this campaign in strong fashion and poised to wreak havoc on Senator Obama in the upcoming debates.

OUR FINANCIAL SYSTEM: A PRIMER

BY SEACHRANAI

Fuel prices and healthcare costs are consuming ever increasing portions of our personal budgets. In Washington, our elected officials debate the ever contentious balancing act between burdensome taxes and record government spending on both domestic and international affairs. Both candidates have starkly differing platforms on these, the issues that are making the current economic downturn even harder for the average American. Mr. McCain and Mr. Obama are surprisingly similar in their silence, however, on an issue that is equally if not more important: the terrible decisions made by both branches of government and on both sides of the aisle that led to current economic troubles; and neither has spoken to how we rectify those mistakes. This is not political, it is pragmatic – and it cannot be addressed with rhetoric. As such, it has not been addressed at all. In the hopes that congressional and presidential candidates actually plan on doing their jobs once they reach elected office, I offer the following to help get up to speed.

One might ask where all of these troubles began. I could go on at length about the history of our banking system, and almost did (I had it written… be glad I spared you). Here it is in a nutshell. A bipartisan effort in the mid-1990s to ride the coat-tails of the successful small government policies of the Regan administration led to what libertarians have deemed an “over de-regulation” of our financial system. In an effort to increase competition through the removal of antiquated regulations on our financial services industry, President Clinton signed the Gramm-Leach-Bliley Act into law, repealing the Glass-Steagall Act of 1933. Glass-Steagall erected barriers between commercial and investment banking, and the reasoning behind its removal was contingent upon prudent congressional and FDIC oversight to mitigate the risks Glass-Steagall were meant to hedge. It was thought this would allow US financial institutions to become more competitive with one another (lowering costs to consumers) and more competitive on the international stage. As long as prudent oversight kept the system transparent, it should theoretically have been quite efficient. Then someone dropped the ball.

Removing these barriers opened the door for the creation of exotic and opaque financial instruments of which even seasoned financiers had trouble assessing the risk, let alone your average investor.

It is a hard and useless exercise to point fingers… but let’s try anyway. Clearly the FDIC was lax in its oversight. Private rating agencies like Standard and Poor’s must take some of the blame as well – they rated a lot of these arcane securities as risk-free which obviously was not the case. Ultimately however, the buck needs to stop at a public official – someone elected by the citizenry and subsequently appointed by his congressional peers to wield ultimate legislative authority (and responsibility) for our financial system. That man is the chairman of the Senate Banking Committee, Christopher Dodd.

Pointing fingers of course doesn’t solve anything, it just helps us know who not to go to when looking for solutions. Will Mr. Dodd ultimately answer to voters for being the man at the wheel behind the biggest financial system debacle in 20 years? Probably not. Hopefully someone will have the foresight, however, to take the keys and not let him drive again.

So what do we do? Many argue that Fannie and Freddie, government sponsored enterprises which facilitated the creation of these arcane mortgage securities, are dragging down our financial system and need to be allowed to fail. There is some empirical evidence to support this. The Bank of China, the single largest holder of US debt securities, reduced its holdings in the GSE’s by 25% ($4.6 billion) since June, and a number of our other foreign creditors have done the same. This lack of confidence may not worry you, but it should. Decreased confidence in the GSE’s is a direct reflection of overall confidence in the American financial system. Money talks, and capital flight of that magnitude talks very, very loudly.

At issue, of course, is that Fannie and Freddie can’t be allowed to fail. They have, unfortunately, become load bearing pillars in our current financial system. Any thought of eliminating their significance would have to be done slowly over decades. Personally, I am a proponent of a middle ground solution. Break the GSE’s up – put the weight of our massive mortgage banking behemoth onto ten or so load bearing pillars instead of two. Eliminate any semblance of a government guarantee, and give them the ability to fail. If one does so, the ceiling doesn’t come crashing down.

I suppose it should not come as a surprise in the final months of a contentious election that an issue such as this has not been addressed by either side. As evidenced by the endless dribble above, even a brief discussion of the topic is lofty and not terribly interesting. That does not, however, diminish its importance. At a time when “change” and “fixing Washington” is what both sides are peddling, at some point we the people have to push our government to address those policy items which are actually broken. And our financial system, at the moment, is very, very broken.