Hullabaloo

digby at Hullabaloo comments on Greenspan's reckoning with consequences: "This is the fundamental problem with Randian thinking. They really do believe that capitalism is a moral system in which the people become wealthy because they are morally and intellectually superior to those who don't. Why, it would be wrong for them to not self-regulate and endanger the whole economy, right? It wouldn't make any sense."

Except, well, there's this:

"Let's hope we are all wealthy and retired by the time this house of cards falters," wrote [an analyst] in an email obtained by Waxman's committee.

Being able to pass on all your risk to someone else while personally coming out on top is a pretty glaring and obvious flaw in the system unless you think that wealthy people are too wise and moral to ever do such a thing. The only people who believe that are Randians and Joe the Plumber. Everybody on Wall Street certainly seemed to know the score and acted accordingly.

Our Whole Industrial and Financial Class

Michael O'Hare watches Frontline's Heat: "I kept saying to myself as I watched this show, and watched the lords of Wall Street amid their own wreckage the last few weeks, is that these guys seem to absolutely suck at what they do! Without a Niagara of public welfare payments and public protection from the marketplace they profess to worship, they can't make a dime on a long-term basis nor build enduring enterprises. What a bunch of overpaid jerks. It wasn't just the government being trashed by smirking, self-satisfied incompetents prating ideological nonsense these last couple of decades, it was our whole industrial and financial leadership class."

The (re)Birth of the Conservative

Tony Blankley - Townhall.com:

"With the rise to enduring power of President Franklin Roosevelt's New Deal in 1933, a new type of Republican emerged in reaction to FDR's attractive and overawing power: the me-too Republican. Until the election of President Reagan five decades later, these me-too Republicans supported, rather than opposed, Democratic Party policies but claimed they would administer them better. Of course, this led to a half-century of Democratic dominance of American government and politics."

I cannot vouch for the genuineness of Blankeley's quoting of FDR, below, but it is among the best summaries I've ever seen of Nixon's politics, shorn of its anti-communist hysteria and Southern Strategy racism.

"FDR himself cruelly mocked this pathetic breed of spineless, protect-your-career-at-any-cost Republican politicians:

'Let me warn the nation against the smooth evasion which says: 'Of course we believe all these things. We believe in Social Security; we believe in work for the unemployed; we believe in saving homes. Cross our hearts and hope to die, we believe in all these things; but we do not like the way the present administration is doing them. Just turn them over to us. We will do all of them; we will do more of them; we will do them better; and best of all, the doing of them will not cost anybody anything.''

"

Here's the good part, though -- the projection forward of the Republican politics of the next few years.

Sarah Palin . . . will be among the leaders of the about-to-be-reborn conservative movement. I suspect that the conservative movement we start rebuilding on the ashes of Nov. 4 . . . will have little use for overwritten, over-delicate commentary. The new movement will be plain-spoken and socially networked up from the Interneted streets, suburbs and small towns of America. It certainly will not listen very attentively to those conservatives who idolatrize Obama and collaborate in heralding his arrival. . . .

The new conservative movement will be facing a political opponent that will reveal itself soon to be both multiculturalist and Eurosocialist. We will be engaged in a struggle to the political death for the soul of the country. As I did at the beginning of and throughout the Buckley/Goldwater/Reagan/Gingrich conservative movement, I will try to lend my hand. I certainly will do what I can to make it a big-tent conservative movement. But just as it does in every great cause, one question has to be answered correctly: Whose side are you on, comrade?

Obama's campaign, from its very beginnings, has played a strategically brilliant game, targeting that slice of rational, reality-based, secular conservatives, who were most repulsed by Bush, and by the descent of the Republican Party into the hands of religious reactionaries. The Party of Gerald Ford and Bob Dole, of Kevin Phillips and Colin Powell, has been alienated from the GOP. And, that is a major reason that Obama will win, and the Democrats will win Congress, where Gore and Kerry could not win, and the Democrats could not achieve a working majority in Congress after 1994.

And, it is a major reason, why the swing away from the Democrats after Nov 4 will be slow and muted. Tony Blankeley tells us why the secular Republicans will not be rejoining their Party any time soon: they will not be welcome.

The Republicans, after Nov 4, should be blaming Sarah Palin and "the base" of religious reactionaries, who required McCain to ruin his own brand in a series of awkward flip-flops and betrayals. That's what the polls will show. But, mostly, they won't. They will be busily "forgetting" that George W. Bush ever existed, or was ever their wetdream come alive, of a decisive President. And, they will blame McCain, who represents Republican moderation, to the Republican Right. The Republican Party that was ruthlessly pursuing a "permanent majority" will busy itself pursuing "permanent minority" status. The internal dynamics of collapse and defeat will make it difficult to rebuild the Republican brand and coalition.

The secularists will want to go back, but will do so, only if they are handed control. And, they won't. On the other side -- the right-wing reactionary side -- the Republican Right will have largely lost in this election the decisive asset built by Rove and talk radio: the base of authoritarian voters, who didn't vote before, but who turned out in 2000 and 2004 in record numbers. They are not voting this time, Palin notwithstanding. This is obvious in the early voting in Virginia, North Carolina and Colorado. (Obama is up only 5% in Colorado in the public opinion polls, a State with a large number of these authoritarian, religious-right voters, but McCain's campaign is already giving up; early voting is telling the tale.)

The Republican coalition has broken.

Tribune endorsement: Barack Obama for president -- chicagotribune.com

One of the more interesting aspects of the political campaign for me has been the way that Barack Obama has masterfully co-opted the secular conservative wing of the Republican Party. The key to the overwhelming election victory now in prospect for the Democratic Presidential Candidate and his Party has been the shift of a small, but vital slice of the Republican electorate out of the Republican Party and into support of the Democrats. Today, the Chicago Tribune endorsed a Democrat for the first time, since its founding in 1847.

chicagotribune.com: "We are proud to add Barack Obama's name to Lincoln's in the list of people the Tribune has endorsed for president of the United States."

In its way, this is just stunning, and a measure of the completeness of the political storm that is sweeping the country in this election.

"The liberals were right."

Ezra Klein on the latest bailout:

. . . my take on this will make David Broder cry: The liberals were right. Not the Democrats. The liberals. They were right that deregulation had gone too far. They were right when they spent the last few years offering unpopular predictions that the Housing Bubble would pop. They were right that a liquidity problem had become a solvency problem. They were right that government intervention on a massive scale was needed to stabilize the capitalist system. They were so right, in fact, that Hank Paulson and George W. Bush couldn't hold the line, and will now sign into law the most profoundly socialist measure this country has seen since the 1930s.

I make this point not to wrap myself in a warm blanket of Schadenfreude -- there's little joy in seeing your allies proven perspicacious by a catastrophe -- but because it's actually important. The liberal understanding of the economy and its problems has been, in recent months and years, superior to the conservative understanding of the country and its problems. And this has only sharpened in recent weeks, as the Republican Party has spun off into the Gamma Quadrant with laughable theories about ACORN and Fannie Mae and Freddie Mac and the Community Reinvestment Act of 1977. Their argument isn't wrong in the sense that it's a serious engagement with the situation that happens to be less empirically sound than competing theories. It's just nonsense. And this isn't a time when we can afford governance powered by nonsense. We need governance by people who understood the magnitude and nature of the problem, and have some idea how to go forward fixing it.

Halfway home

We've gotten thru the fourth wave of the financial crisis, but most of the recession is still in front of us, as well as at least half of the losses, which must be realized on mortgages.

Bloomberg.com: Worldwide: "Roubini said total credit losses resulting from the meltdown of the subprime mortgage market will be ``closer to $3 trillion,'' up from his previous estimate of $1 trillion to $2 trillion. The International Monetary Fund estimated $1.4 trillion on Oct. 7. Financial firms have so far reported $637 billion in losses, according to data compiled by Bloomberg."

''The stock market is going to stop rallying soon enough when they see the economy is really tanking,'' Roubini added.

Bloomberg.com: Worldwide

Fannie and Freddie become TARP

Rats . . . Ship . . . Sinking

As McCain Goes Negative, a GOP Senator Makes a Positive Turn | The Trail | washingtonpost.com#more#more#more: "[Minnesota Senate candidate]Coleman told reporters that he would not be appearing at a planned rally with McCain this afternoon."

A bit of horserace commentary — Crooked Timber:

"I hear (via a prominent member of the sane Republican faction) that the word on the right side of the street is that the Republican National Committee is about to pull the plug on its joint ads with the McCain campaign, and devote its resources instead to trying to save a couple of the senators who are at serious risk of losing their seats. Now this is gossip, albeit of the high class variety; take it with the requisite pinch of salt. But it points to some real vulnerabilities in the McCain campaign’s finances. McCain’s decision to opt for public funding has meant that he’s had enormous difficulty competing with the Obama money raising machine. He’s been able to partly compensate by co-financing ads with the RNC (this skirts the limits of the legislation that he himself co-wrote but is just about legal). This has kept him competitive in TV advertising, albeit still significantly outgunned. But if the Republicans are as worried as they should be about the impending elections, there will be a lot of calls on that money, and the RNC is going to have to make some tough choices.
Should it keep spending money on the presidential campaign in the hope that McCain will win despite the polls, or should it instead try to minimize the damage of a McCain defeat by doing its best to stop the Democrats from making big gains in the Senate? Decisions, decisions …"

FiveThirtyEight.com: Electoral Projections Done Right: Does McCain Have Cooties?: "There are at least three groups of Republicans that might have an interest in distancing themselves from John McCain. Firstly, purple-state moderates like Coleman and Gordon Smith who don't like the campaign's tone. Secondly, the anti-bailout economic populists in the House who might be looking ahead to 2010 and 2012. And thirdly, true conservatives who never trusted McCain that much to begin with.

Far more so than Obama, McCain is dependent on the goodwill of fellow Republicans. With McCain having opted for public financing, RNC funds are an important part of his advertising budget. Because he's way behind Obama on McCain-branded field offices and ground operatives, he is depending on assistance from state and local party organizations. Republican enthusiasm lags behind that of Democrats, and so volunteer resources are scarcer; conservative activists will need to decide if they're going to make phone calls to support McCain or to help save their local Republican Congressman"

It's Over

David Brooks: [Sarah Palin] "represents a fatal cancer to the Republican party"

David Brooks is a reliable Republican mouthpiece. Last week, he was spinning the V-P debate in Palin's favor. This week, evidently, he has other marching orders.

GOP Strategists Whisper Fears

GOP Strategists Whisper Fears - washingtonpost.com

Republican strategists fear that an outpouring of public anger generated by Congress's struggle to pass a rescue package for the financial industry may contribute to a disaster at the polls for the GOP in November.

"The crisis has affected the entire ticket," said Jan van Lohuizen, a Republican consultant who handled the polling for President Bush's reelection campaign. "The worse the state's economy, the greater the impact."

Republicans are trying to defend at least 18 House seats in Michigan, Ohio, Pennsylvania and Florida, economic trouble spots that double as election battlegrounds. Rising unemployment, the meltdown in the housing market, and a credit crunch besieging consumers and manufacturers alike were factors in Sen. John McCain's decision Thursday to pull campaign resources out of Michigan. The McCain campaign's exit from the state leaves a pair of vulnerable Republicans, Reps. Tim Walberg and Joe Knollenberg, with a weakened party infrastructure heading into Nov. 4. . . .

In the Senate, . . . , Republican incumbents are suddenly teetering in North Carolina, Kentucky and Georgia because of the economic crisis, . . . .

The pessimism in the GOP ranks reflects a striking shift in momentum in the four weeks since the Republican National Convention, . . .

"If you turn the clock back two or two and half weeks, you could make a plausible argument that if a couple of things go our way we will lose three to four Senate races," said one Republican strategist. "Now we will lose six to eight." Polling in most Senate races over the past 14 days has shown a five-point decline for the Republican candidate, the strategist said.

The picture in the House is similar. The generic ballot test -- a traditional measure of broad voter attitudes -- has also moved decisively in Democrats' direction in recent days. The latest NBC-Wall Street Journal and Associated Press polls showed voters favoring a generic Democratic candidate for Congress over a generic Republican by 13 points, while a recent Time magazine poll gave Democrats a 46 percent to 36 percent edge. . . .

In the most recent Washington Post-ABC News national poll, more than half of all voters said they were "very concerned" that the failure of the first bailout vote would cause a "severe economic decline." By a ratio of 2 to 1, they blamed the legislations' defeat on Republicans.

Neil Newhouse, a partner in the Republican polling firm Public Opinion Strategies, echoed van Lohuizen's sentiment. "The bailout crisis has had a corrosive effect on the national political environment, and that impacts not just John McCain, but GOP candidates up and down the ticket," he said.

The proximity to the election added to the chaos on Capitol Hill this week as lawmakers sought to pass a $700 billion package to stabilize banks and financial markets. In the House, most vulnerable Republicans opposed the version that failed on Monday, as well as the revamped legislation that passed easily yesterday. But in the Senate, which voted Wednesday, just two vulnerable Republicans, Sens. Elizabeth Dole (N.C.) and Roger Wicker (Miss.), opposed the bill (along with the only Democrat who is seen as endangered, Louisiana Sen. Mary Landrieu).

Seven Republicans who are being targeted for defeat by Democrats backed the plan: Senate Minority Leader Mitch McConnell (Ky.), and Sens. Saxby Chambliss (Ga.), Ted Stevens (Alaska); Norm Coleman (Minn.); Gordon Smith (Ore.), Susan Collins (Maine) and John E. Sununu (N.H.). . . .

. . . the current financial crisis provided a new opportunity to remind voters that President Bush remains the leader of the Republican Party. "The 'GOP candidate equals George Bush' argument was growing stale in the absence of any fresh proof points," said Singer, [a campaign adviser to several Democrats]. . . .

Compounding Republican problems is a continued fundraising deficit that has left the party largely powerless to defend its congressional candidates against a televised Democratic onslaught. At the start of September -- the last time financial figures were available -- the Democratic Congressional Campaign Committee held a $40 million cash-on-hand edge over its GOP counterpart and was advertising in 41 House districts, compared with just two districts in which the National Republican Campaign Committee was on the air.

The gap was less daunting on the Senate side, where the Democratic Senatorial Campaign Committee held a $7 million cash edge over the National Republican Senatorial Committee at the start of September. However, the DSCC spent $13.6 million in August -- largely on television ads -- while the NRSC dropped just $3.6 million.

That spending deficit and the economic reverberations are being felt most strongly in North Carolina, where Hagan appears to have moved into a lead over Dole. The DSCC has spent more than $3.5 million on ads painting Dole as out of touch with average North Carolina voters, and even Republicans acknowledge that the attacks have taken their toll. Independent polling puts Hagan's lead at three to eight points.

In Oregon, state House Speaker Jeff Merkley (D) has taken to the television airwaves to attack Sen. Gordon Smith (R) for his vote in favor of the rescue plan. "In this economy, who is really on your side?" asks the narrator in Merkley's ad, saying that Smith supported a "trillion-dollar blank check for Wall Street." Polling in that race shows a virtual dead heat.

This is a classic political storm, which has been long postponed by the fecklessness the Media, but, which, with the full accumulation of failure, goes from strength to strength.

They don't want what you want

The Perfect Storm has come at last, which makes the rationale for this blog somewhat tenuous.

But, even as we confront the bad consequences of bad policy, it is interesting to see revealed the preferences and prejudices of the Right.

The Problem Is Still Falling House Prices - Martin Feldstein thinks peonage will help: "The federal government would offer any homeowner with a mortgage an opportunity to replace 20% of the mortgage with a low-interest loan from the government, subject to a maximum of $80,000. This would be available to new buyers as well as those with mortgages. The interest on that loan would reflect the government's cost of funds and could be as low as 2%. The loan would not be secured by the house but would be a loan with full recourse, allowing the government to take other property or income in the unlikely event that the individual does not pay. It would by law be senior to other unsecured debt and not eligible for relief in bankruptcy."

The problem, to Feldstein, is not the ill-gotten gains of the banks and rich folks, or the oppression of the merely middle-class. The problem is that the middle class are feckless. You cannot build a reliable financial pyramid scheme on the foundation of people, who might walk away from a bad investment. The people at the bottom have to be made to pay. No bankruptcy for them.

Stiglitz: Bailout Blues - The Bruce Blog - San Francisco Bay Guardian

Stiglitz: Bailout Blues: "There is a growing consensus among economists that any bailout based on Paulson’s plan won’t work. If so, the huge increase in the national debt and the realization that even $700 billion is not enough to rescue the US economy will erode confidence further and aggravate its weakness.
But it is impossible for politicians to do nothing in such a crisis. So we may have to pray that an agreement crafted with the toxic mix of special interests, misguided economics, and right-wing ideologies that produced the crisis can somehow produce a rescue plan that works – or whose failure doesn’t do too much damage."