Archive for September, 2008


Bush to Speak at 8:45

September 30, 2008

MIchelle Malkin is reporting this morning.

This got me thinking.  Perhaps this isn’t McCain’s moment to shine, but Bush’s. The man is a leader and has shown deftness and skill at putting the nation at ease.  We all remember his bullhorn speech from ground zero.  I can’t remember a time when he was so inspiring.  A strong Bush showing can raise his approval and work to benefit the party.


Financial Crisis in Bullet Points

September 30, 2008

Found this linked from Redstate. It is pretty much a verbal distillation of what went wrong. From the adam smith blog

  • Anti-redlining laws in the US, passed in 1977 and strengthened in 1995, forced lenders to give mortgages to people they knew might not be able to afford repayments. People who haven’t had a full-time job in years were lent six figure sums.
  • In order to manage the risk this exposed them too, lenders packaged these sub-prime mortgages up with other ones and traded them as derivatives (collateral debt obligations, or CDOs).
  • People start to default on mortgages, but because the CDOs are so opaque, no one knows how much liability they, or others, are exposed to. So the banks stop lending to each other and the credit crunch begins.
  • Now the banks which have overextended themselves – lending far more money than they have in deposits, and relying on being able to borrow cheaply to finance their business model – are in serious trouble. Ultimately, it’s a cash flow problem.
  • Word gets out and Britain witnesses the first run on a bank in over 100 years. Confidence evaporates on both sides of the Atlantic. Share prices plummet, as one bank after another is infected. Investment banks, which do not take deposits and therefore rely most heavily on the ability to borrow, are hardest hit.
  • Two possible policy responses emerge. One, motivated by the idea of moral hazard, says that banks must be allowed to fail. If government bails them out, they’ll behave even more riskily in future. Plus, why should the taxpayers fund a welfare state for bankers? The other school of thought stems from the idea of systemic risk, that allowing banks to collapse would endanger the entire financial system (and, by extension, the capitalist economy).
  • Fears about systemic risk win out. Governments intervene to try and restore confidence. In the US, the Bush administration attempts to buy up all the bad debt, aiming to get banks lending to each other again.
  • This what happens when a bubble bursts. For years, the availability of cheap consumer goods from emerging economies like India and China kept down inflation. This meant governments and central banks thought they could flood the market with liquidity (i.e. cheap credit) and get away with it. They couldn’t. With too much money chasing too few goods, an asset bubble built up. House prices, in particular, were hugely over-inflated. It got worse after 9/11 when, facing an economic downturn, the US and the UK both pumped even more liquidity into the market. With breathtaking arrogance, politicians claimed to have abolished the economic cycle. In reality, they had simply swapped an immediate and relatively minor readjustment for a much harder landing several years down the line.

Karl Rove Destroys Pelosi

September 30, 2008

The blame for this mess falls squarely at the feet of Nancy Pelosi. SHe had the ability to force this turd sandwich through but failed to lead.


Megan McArdle: Pelosi’s Big Screw Up

September 30, 2008

Megan McArdle at the Atlantic:

Pelosi screwed up royally.  She is the Democratic Tom DeLay.  Newt Gingrich was an ideologue, but Tom DeLay was simply a partisan, most keenly interested in maximizing his party’s political power.  Pelosi cut a deal in which, as far as I can tell, every single Republican in a safe seat had to vote yes so that the Democrats could maximize their no votes.  Given that the Republican caucus is pretty much in open revolt, this was beyond moronic.  She then spent a week openly and repeatedly blaming the Republicans and the Bush administration for the current crisis.  The way she set things up, it was “Heads I win, tails you lose”:  vote for the deal and I’ll paint you as heartless reactionaries bailing out your fat cat friends.  If you’re going to do that, you’d better make sure you have some goddamn margin for error in your own party.  She didn’t.  Then she got up and delivered yet another speech blaming the Republicans for the bailout deal she was about to pass.

Great take on this. Pelosi’s battle cry was ridiculous. She will be remembered as one of the worst speakers of the house. She couldn’t pry ten more votes? Did she even try?


Will Pelosi Bailout Number Two Include ACORN?

September 30, 2008

A number of Republican House members and staff, along with others who are plugged in, are telling me that Nancy Pelosi and the Democrats will come back with a new bill that includes all the left-wing stuff that was scrubbed from the bill that was defeated today in the House.

As this scenario goes, the House Democrats need 218 votes, and they have to pick up a number of black and Hispanic House members who jumped ship because the Wall Street provisions, in their view, were too benign. So things like the bankruptcy judges setting mortgage terms and rates, the ACORN slush-fund spending, the union proxy for corporate boards, stricter limits on executive compensation, and much larger equity ownership of selling banks through warrants will all find itself back in the new bill. Of course, this scenario will lose more Republican votes. But insiders tell me President Bush will take Secretary Paulson’s advice and sign that kind of legislation.

UPDATE: Allahpundit at Hot Air’s take on this


Freddoso Interviews Cantor

September 30, 2008

David Freddoso interviews Eric Cantor at National Review:

Barney Frank, Barack Obama, and other Democrats have suggested that this problem resulted from a philosophy of deregulation. Is that explanation fair, or what’s really at the heart of this?

A basic explanation of how we are where we are is the devalued state of the real estate market. We’ve had monetary policies that have allowed free credit to flow. We’ve had oversight regulators that have not done an adequate job in certain instances. But let’s see where we first started going off course. That was during the Carter administration, when Congress began this process of pushing lending institutions into extending credit to uncreditworthy borrowers. 

This is the Community Reinvestment Act that you’re talking about?

Yes. And in fact, as the regulations developed, banks would be punished if they couldn’t demonstrate a certain number of loans on their books that were extended to those who were not worthy of that type of credit. It started a very bad trend. And then we had Fannie and Freddie, who continued this cycle and really ramped up that kind of lending in an exponential way with a very ineffective oversight regime, a fault of both Congress and the administration.

If there were one or two changes you could make to get more Republicans on board, what would you do in order to have the bill pass in an improved version?

First of all, an insurance program that would apply to certain classes of assets would help reduce the amount of money flowing out of the Treasury. Also, I think if you put in language about the mark-to-market rule — repealing that instead of just asking for a study about it. There’s not unanimity, but there’s a growing consensus about the impact of the implementation of that rule by the regulators as well as the accounting firms. 

I also think that folks are very concerned about the short-selling situation at the FEC. We absolutely have to reinstate the uptick rule, and from what I’m told there’s runaway naked short-selling (the short-selling of stocks one does not actually possess) that tends to imperil the market. We need much stricter enforcement on the naked short-selling.


Failout Vote – Pelosi’s Lack of Leadership

September 29, 2008

     Although the Republican leadership told Pelosi they would be able to get 70 to 80 votes today, but only ended up with 65 or so, you cannot overlook the complete failure that is Pelosi’s leadership of the Dems in Congress. Sure, her comments preceding the vote scared a handful of Republicans orginally in that 70 or 80 – Pelosi’s ill timed speech and its partisan tone, combined with her calling the GOP lawmakers unpatriotic, isn’t bipartisan coalition building whatsoever.  Notwithstanding the fact that the Democrats have a majority in the House and Senate and can pass this thing, they insisted on GOP votes as a cover (polls show heavy disfavor to this package).  So here are things of note:

Over ninety Democrats voted against it.  Pelosi didn’t whip her Dems on the floor like she would on some lesser issues such as organized labor.  She failed.

** 5 committee chairman voted no – this is the Democratic leadership – voting no?! **

**Every Dem member of the House Financial Services Cmte except for Barney Frank voted against it! All but Barney Frank!

Over 5 California democratic reps close to Pelosi voted no?!

Her remarks were clearly ill timed and ill suited – she pulled the thread on this fragile bipartisan group supporting this bill and let it fall apart.  I’m not a fan of this bailout / failout package – but her complete lack of leadership is ridiculous.  What was Obama doing?  Where is he during this time and what has he been trying to do?  Why was Obama not working with his party, the holders of the majority in both houses, and building consensus? 

B/C Obama loves staying on the periphery on this issue, criticize McCain who went to Washington, and is more worried about himself politically.  Always has.  Obama’s party is in the majority – they have the votes to pass it, whether the political climate is difficult or not, they have this on THEIR plate and THEIR leadership failed.  Remember it was the Dems who told McCain to “get out of town” b/c he was making it more difficult.  Right …. Failout Pelosi and “they’ll call if they need me” Obama are to blame – their party is in the majority, one is the House speaker and the other their nominee for president.  Good grief.

– AP


Like a dog chasing a fire truck…

September 29, 2008

we yelled loud enough to stop a bad bill, but at what cost?

Oh, 1.1 trillion dollars. I take a panglossian view of most everything in the news, but for the first time in my adult life, I feel as though I am living under the Carter Administration.  Unfortunately, it will be a little more than four years from now (at least) before Bobby Jindal can pronounce, on his inauguration day that “It’s morning in America again.”


Obama Proven Overly Optimistic – Changes Remarks Post Vote

September 29, 2008

– If you listen to Obama speak on difficult issues while they are developing (Georgia, Financial Bailout) notice how his remarks are similar to what a reporter would be saying, with a few very broad “we should ….” or “during these times it is important to ….” – just reporting and very broad insight. – AP

Obama’s prepared remarks, from earlier today in Colorado.

And today, Democrats and Republicans in Washington have agreed on an emergency rescue plan that is our best and only way to prevent an economic catastrophe.

Not so much.

After seeing the bill fail, Obama scapped the originial script and talked of Rocky Mountain-like turbulence

And today, Democrats and Republicans in Washington have a responsibility to make sure that an emergency rescue package is put forward that can at least stop the immediate problems we have so we can begin to plan for the future. As I said, this is a hard thing to do. And right now Democratic and Republican leaders have agreed but members have not yet agreed.

There are going to be some bumps and trials and tribulations and ups and down before we get this rescue package done. It is important for the American public and for the markets to say calm because things are never smooth in congress and to understand that it will get done. That we are going to make sure an emergency package is put together because it is required for us to stabilize the markets and to make sure that when a small business-person wakes up tomorrow morning, he will be able to make payroll. 

We are not going to lose jobs at an even faster clip than we are doing right now. I am confident we are going to get there but it’s going to be sort of rocky. It’s sort of like flying into Denver. You know you’re going to land but it’s not always fun going over those mountains.


Politico: McCain on the Failout

September 29, 2008

From Politico:

Shortly after the bailout vote, a statement from the campaign of Sen. John McCain (R-Ariz.) blamed the loss on “the Democratic leadership: Senators [Barack] Obama and [Harry] Reid, Speaker [Nancy] Pelosi and others.

“Their partisan attacks were an effort to gain political advantage during a national economic crisis. By doing so, they put at risk the homes, livelihoods and savings of millions of American families,” said the statement, released in the name of senior policy adviser Douglas Holtz-Eakin.


“From the minute John McCain suspended his campaign and arrived in Washington to address this crisis, he was attacked by the Democratic leadership: Senators Obama and Reid, Speaker Pelosi and others. Their partisan attacks were an effort to gain political advantage during a national economic crisis. By doing so, they put at risk the homes, livelihoods and savings of millions of American families.

“Barack Obama failed to lead, phoned it in, attacked John McCain, and refused to even say if he supported the final bill.

“Just before the vote, when the outcome was still in doubt, Speaker Pelosi gave a strongly worded partisan speech and poisoned the outcome.

“This bill failed because Barack Obama and the Democrats put politics ahead of country.” — McCain-Palin senior policy adviser Doug Holtz-Eakin

Before McCain Came To Washington, Senate Democrats Called On McCain For Leadership In Economic Crisis