Date ►►► September 30, 2008

The Pearlstein Option Reconsidered

Hatched by Dafydd

Clearly, we need a new proposal for the credit catastrophe... a proposal that is both workable and passable in the current 110th Congress (the 111th will almost certainly be worse). But allow me to start by looking at one that is obviously un-workable and un-passable.

Read this war statement by Rep. Michelle Bachmann (R-MN, 100%) "explaining" her Nay vote on the Paulson rescue plan; she first exults in her triumph, then enunciates her putatively new proposal. The statement was quoted rather approvingly by John Hinderaker as a good example of the "conservative case" that could be made against the plan:

Today marks an historic moment for America as a solid bipartisan majority of Congress rejected the fatally flawed Paulson Plan. Standing shoulder to shoulder with taxpayers, we declared that we can do better.

As I’ve stated previously, this plan was rushed, unworkable, and short-sighted. A majority of House Republicans have parted ways with President Bush on this plan and we demand that alternative proposals be put on the table. There is universal agreement that this plan was bad, but its supporters claimed it was the only option. There were alternatives available, but Speaker Pelosi and the Administration chose to ignore them and used every parliamentary trick in the book to stifle debate. Now, they will have to listen to the voices of American taxpayers who refuse to open their checkbooks to Wall Street to write a $700 billion check with no strings attached.

I support a plan that would have Wall Street bail itself out, not hardworking taxpayers, by requiring institutions to insure troublesome assets that are causing today’s credit crunch. It would suspend mark-to-market accounting, which forces companies to take losses on artificially devalued assets on an artificial timetable, to give investors more confidence.

The plan I support would break up Fannie Mae and Freddie Mac -- government sponsored enterprises that are at the heart of this crisis -- so that the encumbered taxpayer no longer backs them -- implicitly or explicitly -- and so that they do not artificially grow larger than the market will allow. We cannot pass legislation that sets America up for a Groundhog Day reprise of this mess and that means changing the problem at its core - the GSEs.

Furthermore, the plan I support suspends capital-punishing tax rates to bring more capital into the U.S. markets rather than our foreign competitors. And, the plan ensures the Federal Reserve’s attention is focused on long-term price stability rather than short term economic growth. Finally, it requires the US Treasury to write rules keeping executives who made the risky decisions from personally profiting from them with excessive compensation or golden parachutes all at the expense of taxpayers. We can't have a market that only condones risky behavior. The balance between risk and reward is an important part of the free market.

My colleagues and I stand ready and willing to negotiate with any parties on a plan that will help stabilize our financial markets and relieve the liquidity crisis without exposing taxpayers to a $700 billion bailout debacle.

What is wrong with this picture? Two things:

First of all, in the first blue-highlighted passage, she falsely -- even mendaciously -- caracatures the Paulson plan as a bid to "open [taxpayer] checkbooks to Wall Street to write a $700 billion check with no strings attached."

This is demagogy, pure and simple; it's as bad as Squeaker of the House Nancy Pelosi's (D-Haight-Ashbury, 93%) "history lesson" on the Bizarro-world origins of the crisis in the "unregulated, anything goes" economic policy of the Bush-McCain administration.

Bachmann knows better; she knows that nobody is writing a check to "Wall Street" (is that what Paulson scribbles on the "pay to the order of" line?); that we would in fact be buying securities that are underpinned, at their core, by real property; that the initial cost would be much less than $700 billion; and that the most likely outcome is that those securities would rise in value, so we would make back much of what we spent... and maybe even make a profit.

(We know that House Republicans understand this, else why would they have fought so hard to get a provision ensuring that all "profits" would go to pay down the federal debt?)

But apart from the libelous description of the rejected plan, there is another problem with Bachmann's statement: The centerpiece of Bachmann's own alternative is the same insurance-only option Democrats already rejected.

Why would the Democrats make an abrupt about-face and support it now? After deliberately (most now agree) killing the plan in the first place, does anybody honestly believe that they will now do everything in their power to give the Republicans a huge, huge victory -- right before the election?

The insurance option was never very well explained, and I for one cannot fathom how anyone could think that it, all by itself, would inject enough liquidity to unfreeze the credit market. For one reason, it requires massive insurance premiums to be paid on very, very insecure securities by the same firms that have no capital to pay anything. That's the whole problem... they have no liquidity, and they cannot borrow any money.

What are we supposed to do -- lend them the money to pay for the insurance premiums we charge them? Isn't that a lot closer to "opening taxpayer checkbooks to Wall Street" than the plan they rejected?

It is surreal to offer as a "plan" for resolving a congressional impasse the very provision the other side has already declared a deal-killer. It is absurdist to pretend that this time, everything will be different. Why -- does she think Democrats are now contrite? And it is breathtakingly hypocritical to reject a plan on the grounds that it constitutes writing a check to Wall Street... and then offer in its place a plan that constitutes writing a check to Wall Street.

If there were other new ideas in her "plan" besides the insurance option, something that Democrats had not already emphatically rejected, it might be a good basis to begin negotiation on a compromise. Here are the other ideas she proposes; see if any strikes you as either original or able to resolve the current crisis in any reasonable period of time (that is, before the axe rolls):

  • Suspend (why not eliminate entirely?) "mark to market" accounting, which forces even those firms that have no intention of selling a security nevertheless to revalue it everytime some other panicked or desperate institution dumps it below the current price -- thus devaluing the reserves of even healthy financial institutions, holding them hostage to the sickest.

This is a good idea -- but not only was it already in the previous bill she voted against, it can only help somewhat... and almost by definition, only helps those institutions that are the healthiest anyway. We need a way to prevent hundreds of unhealthy firms from going belly-up right now.

  • "Break up" Fannie and Freddie "so that the encumbered taxpayer no longer backs them -- implicitly or explicitly."

I have no idea what she means here: just remove their status as government sponsored enterprises (GSEs), so they become private institutions instead? Or forcibly dismantle them?

While that takes the taxpayer off the hook for propping them up, which is a worthy long-term reform, how does that make either more solvent right now? Wouldn't both Fannie Mae and Freddie Mac then immediately collapse, forcing them to flood the market with more than a trillion dollars (!) of currently toxic, illiquid instruments?

  • Temporarily suspend the capital-gains tax.

Again, a wonderful idea for the long-term (but let's make it a permanent elimination)... but how does this help now? Does Rep. Bachmann actually think that those firms currently in danger of sinking under the waves are worried about being taxed on some huge capital gain? In fact, as we discussed earlier, suspending the tax removes the incentive for firms to write off bad debts for tax purposes, pushing them towards bankruptcy instead.

  • Prevent "executives who made the risky decisions from personally profiting from them with excessive compensation or golden parachutes all at the expense of taxpayers."

An interesting argument to make from a congresswoman who goes on, two sentences later, to extol the "free market!" But again, the Democrats are foresquare behind this -- and it would have no short-term impact whatsoever on frozen credit.

  • [Ensuring] the Federal Reserve’s attention is focused on long-term price stability rather than short term economic growth.

This isn't a proposal; it's a description of the result that Bachmann hopes will accrue from the other elements of the plan. Congress cannot order the Fed to focus on one thing or another and expect to be obeyed:

Owen Glendower: I can call spirits from the vasty deep.

Hotspur: Why, so can I, or so can any man. But will they come when you do call for them?

Shakespeare, Henry IV, Part 1, act 3

What we need is a plan that is both workable -- that is, it would actually help resolve the present credit crisis, not simply a grab-bag of great ideas for making the system better far in the future -- and also passable... something both conservatives and liberals can back. To propose something that is neither is the pinacle of irresponsibility (and electoral stupidity).

I believe several points are imperative; for workability:

  1. Such a compromise plan must give a gigantic incentive for somebody with enough liquidity to take the toxics off the backs of the struggling financial institutions before they all collapse, taking the larger economy with them.
  2. This "somebody" must be able to make them thoroughly transparent, to give the market a chance to revalue them, allowing subsequent sale.
  3. Thus, Mr. Somebody must be able to compel compliance by the former owners in investigating the history of the security.

These three requirements narrow that "whoever" down to some branch of the administration or a proxy that holds the same powers, in my opinion; in other words, this program must be administered by the Treasury, FDIC, the SEC, some other regulatory body, or a corporation administered by one of the above and granted pass-through authority by Congress. Nobody else has the trust, the ready capital, and the regulatory power to make it work.

This doesn't mean that private capital cannot compete with the government for those securities... so long as, in the end, financial institutions are compelled to cooperate with some entity to detoxify their frozen assets and get the credit market moving again.

And for passability through Congress:

  1. The plan cannot be something already rejected by one or the other side as a "deal killer." (Liberal Democrats cannot ram through a Pelosi dream-list -- at least not for four months -- because (a) the Senate would filibuster it, and (b) the president would veto it.)
  2. Yet it must resolve the central problem stopping House conservatives like Michelle Bachmann from supporting it: putting taxpayers at risk for the huge price tag of what they have dubbed a giveaway to Wall Street.

In an earlier post here, we briefly mentioned an intriguing suggestion, the "Pearlstein Option":

There are some other proposals floating about. Steven Pearlstein in the Washington Post has a very interesting one... Treasury sets up a resolution corporation (as per Paulson-Bernanke); but then instead of buying the illiquid securities with cash, they swap them for preferred stock in the new resolution corporation itself:

My own suggestion would be to structure the rescue around a new government-owned corporation that would be capitalized, initially, with $100 billion in taxpayer funds. The company would use auctions or other mechanisms to buy the troubled securities from banks and other regulated institutions, but instead of paying for them in cash, the government would swap them for an equal number of preferred shares in the new company. (Preferred shares are something of a cross between a bond and common stock.) Those preferred shares would pay a government-guaranteed dividend and could be redeemed by the government at any time. But they could also be used by banks to augment the capital they are required to maintain by regulators.

The beauty of this arrangement is that, rather than protecting taxpayers by having the government take an ownership stake in hundreds of privately owned banks, it would be the banks that would own a stake of the government's rescue vehicle. The government would suffer the first $100 billion in losses from buying and selling the asset-backed securities, but any further losses would be borne by the other shareholders. And should the rescue effort actually wind up making a profit, then the banks would share in that as well.

I believe this could be the basis of a new compromise (sorry, more bullets incoming):

  • It would remove the risk from taxpayers and put it back on Wall Street institutions who accept the preferred stock; the only money spent would be the initial capitalization of the resolution corporation, and perhaps some later recapitalization in the early phases (probably less than the $85 billion required by the takeover of AIG... let alone if, say, Bank of Amerca were to go under).
  • Nevertheless, by allowing those institutions to count such preferred stock as reserves against whatever they have leveraged, it removes the pressure to sell, sell, sell to get their reserve-to-debt ratio down below the legal minimum.
  • Since no significant taxpayer money would be going directly to failed financial institutions, there is no way that any rational voter could consider this a "bailout" of Wall Street.
  • The resolution corporation (fully government-owned, not one of those pesky GSEs) would have the legal authority to compel cooperation by former security owners, thus allowing them to create a paper trail of each security. This will make it possible for the market to "reset" those securities by auctioning them off -- generally for much more than they paid for them.
  • But because even a government-owned corporation is still a corporation, not the U.S. Treasury itself, other institutions should be allowed to bid against it to buy securities. This creates market forces at both ends, buying the illiquid asset and reselling it.
  • Assuming all goes more or less as planned, the resolution corporation will make a profit... thus giving a big incentive to institutions to participate, since the value of their preferred shares in the resolution corporation will rise, giving them even more reserves.
  • The Democrats evidently had no problem with allowing the federal insurance idea as an option, not the entire plan, since it was an option in the last bill; I presume this means they'll allow it as an option again.

I hope this idea is at least brought up; I'm sure that a sizeable minority of Republicans now regrets its Nay vote and are looking for an excuse to change it; and I further suspect the majority of conservative Naysayers is quite willing to consider voting Aye -- for a less statist, more free-market proposal such as the Pearlstein Option.

But whatever we do, we need to do something quick. This isn't just the "do something!" disease; we really are on the brink of catastrophe. You know I'm not given to Cassandra-like dire warnings of pending doom... but let's all remember that Cassandra was right, and Troy did indeed fall.

Like a blinking VCR clock, even a prophet of doom can be right once a day.

Hatched by Dafydd on this day, September 30, 2008, at the time of 3:24 PM | Comments (17) | TrackBack

Date ►►► September 29, 2008

For Those Who Still Think Republicans Can Win the Blame War...

Hatched by Dafydd

You think so? You really think that the American people will somehow realize that it's all the fault of the Democrats -- which it is -- in time to vote for John S. McCain and Republicans in Congress?

Watch this... but watch it from the perspective of someone who doesn't already know the history behind the collapse of the mortgage market. This is the infamous pre-vote speech by Squeaker of the House Nancy Pelosi (D-Haight-Ashbury, 93%). But don't watch it saying, "Oh, such lies! We all know what really happened," because we don't "all know" what really happened; most people have not heard anything but the liberal, anti-free-market narrative.

I am particularly thinking of Hugh Hewitt.

If speeches like this one from the Squeaker is all that voters hear, imagine what they will think. And believe me, for at least the next few weeks, this is all they will hear: The vast majority of undecided voters still get their news from elite-media sources... not from blogs (which reach a tiny number of people), nor from talk radio (whose listeners are already for the most part in the Republican camp).

Make your mind a complete blank on things you have learned from Rush or Hugh or Michael Medved, everything you've read on Power Line or Instapundit or Patterico's or Wolf Howling -- or even here. Just watch and tell me: Does Pelosi come across on this video as a raving left-winger, a bomb-throwing radical, a poison-spewing harpy? Because honestly, I think she comes across as very reasonable and even-handed -- even as she fires lie after lie after vile, despicable lie into the heartland:



Democrats are 8-dan blackbelts at twisting the blame away from themselves and onto us; while we only visit the swamp occasionally, liberals live there 24-7. They're so good at flinging poo, they even do it among themselves, just for fun and practice.

The most likely response, of course, is that the House Democrats will put all the horrible socialist provisions, stripped out by the HRs, right back into the bill... and then they'll pass it in the House by attracting back the most radical of the 95 Democratic Dr. Nos.

And the American people will decide that they were right after all: The Democrats (and Barack H. Obama) are the party to trust on economics! And then, years and years down the line, Republicans may have the enormous satisfaction of saying "I told you so."

But nobody will be listening... because once again, Democrats will blame their own failures in this very bill on us.

Hatched by Dafydd on this day, September 29, 2008, at the time of 4:31 PM | Comments (16) | TrackBack

Did House Conservatives Just Hand the Election to Obama?

Hatched by Dafydd

They invite John S. McCain to Washington D.C. to get them a better deal on the bailout. They accept his help in negotiating with the Senate. They strongly praise him when the deal is improved, and their own negotiator strongly implies that they will accept it -- or at least oppose it only narrowly, so that it will still pass with substantial Republican support.

Then on the vote, perhaps miffed at Squeaker of the House Nancy Pelosi (D-Haight-Ashbury, 93%), they betray McCain and instead vote against the rescue measure en masse, triggering a cascade failure that causes the bill to collapse, the stock market to record its biggest one-day drop in decades, and to plunge the entire country -- and world -- into financial chaos.

...And this leaves the American voter with the sour impression that:

  1. John McCain is completely ineffectual even at managing his own party;
  2. He is not the person to turn to on economic matters;
  3. He is not ready to be president.

Hey, nice strategy, Mr. Conservative! Perhaps next, they can openly question whether McCain should be the nominee and call for him to be replaced by Mike Huckabee. Or Bob Barr. That would make everything much, much better.

The American people are now terrified that they'll lose everything... and when terrified to this extent, we have a disturbing tendency to turn to the man on the socialist horse, who promises (like Woodrow Wilson, like Benito Mussolini) that a massive government takeover will fix everything and comfort the masses -- by relieving them of all future responsibility.

There is now only one chance for McCain to turn this around: He must return to D.C. and somehow, someway, get enough of those ideology-plated "conservative" morons to change their votes -- it only takes a few, but they all should do it -- that a (slightly) modified version of the bill actually passes.

And this time, when Pelosi, who senses that she can goad and manipulate House Republicans as easily as the hysterical, chained-up dog in the yard next door, gives another insulting, gloating, triumphalist speech, the HRs have to swallow hard and just vote for the damned rescue anyway, even if it wounds their pride.

If they want to introduce more market-based incentives and regulations into the process later, they will have the best opportunity since the era of Newt Gingrich (during which they never bothered to do much about the issue). But for right now, not passing a rescue bill is not only a political catastrophe (for John McCain and even for congressional Republicans) but an economic disaster as well.

Whose fault is it? Certainly it's as much or more the fault of the Democrats as Republicans. But anybody who thinks the GOP is going to be able to convince the American voter that it's really Pelosi's fault (and by extension, Barack H. Obama's fault), that Republicans can persuade voters to punish Democrats, not Republicans, in November, is living in sin with Prince Nemo in Slumberland.

Logic and rationality fly out the window when voters panic, hysteria and demagogy rule the day. And Democrats are, if nothing else, masters of demagogy in a way that Republicans have never been able to match. If this election becomes a contest to see which party is the better at flinging poo, Republicans will be buried.

To put it in a nuthouse, if the HRs fold their arms and simply say "Nyet" over and over, then we will wake up on Guy Fawkes Day to President Barack Obama -- and a 60-vote, fillibuster-proof Democratic majority in the Senate.

I know there are some putative "conservatives" who call for exactly that; they believe that the Democrats will overreach, and in two years, they will recapture the House and Senate... "just like in 1994!"

But I have another date for them to bear in mind: I say the current political mood -- if they don't change their minds on this bailout -- is more akin to 1932 than 1994... and there certainly is no Gingrich waiting in the wings, as there was (and already very well known and trusted) in 1994.

The 1932 election was falsely sold as a choice between the "progressivism" of FDR and the "failed laissez-faire capitalism" of Herbert Hoover; in fact, Hoover had enacted virtually every "progressive" policy that Franklin Roosevelt later tried in response to the Great Depression, and neither version worked. Yet not only was the Democrat elected president for the first time in 16 years, but both houses of Congress went overwhelmingly Democratic... and they both stayed Democratic for fourteen long years, through seven congressional elections.

The Democrats continued to hold the White House for twenty years, until 1952; and the only reason Republicans won that year was that Eisenhower, who had never said what party he belonged to while on active duty, declared himself a Republican. Had he declared himself a Democrat, he still would have won; and the Democrats would have continued to hold the White House until 1968, which would have given them a 36-year run.

As of 1946, after fourteen years of a Democratic president and a thoroughly Democratic Senate, seven justices on the Supreme Court had been appointed by Franklin Roosevelt... and the other two (Justice H.H. Burton and Chief Justice Frederick Vinson) were appointed by Harry Truman. All nine justices were Democratic appointees.

Democrats controlled the Court until 1958, when Dwight David Eisenhower nominated his fifth justice, Potter Stewart, ending a twenty-year run of Democratic control of the Court, starting when the Warren Harding appointee George Sutherland retired, and Roosevelt nominated Stanley Reed to replace him.

This period includes one of the worst runs of judicial activism in our history. Yeah, that 1932 election sure worked out well for the Republicans... and so too would the election of Barack Obama, if it comes to that.

And it will come to that, if House Republicans don't get their minds out of the ideological clouds. Please, for the love of God, stop lecturing us on how the free market would have built a better boat, and start bailing out the water that's pouring through the hole in the hull. The time to rethink boat-building, which we desperately need to do, is when you're home safe in drydock... not when you're rounding the tip of Africa.

But here is a contrary scenario: Obama dithers, blaming Republicans; but McCain immediately flies back to D.C., and by mid-week, he is able to get HRs to agree to a modified version of the bill. The vote is held on, say, Thursday or Friday... and this time, it actually passes.

In which case, John McCain becomes the man on the white (and capitalist) horse who has saved everything... and he might -- might -- make this rescue work politically as well as economically.

So the ball is now in the court of the House Republicans. They have two choices:

  • Continue to be obstructionists -- and prepare for a rerun of the horrific 1932 election;
  • Become problem-solvers -- and help elect John McCain president... and hold their own or even pick up seats in the congressional races, if they can successfully don McCain's mantle as a principled but practical reformer.

Pick a hand, Mr. Conservative. Which shall it be?

Hatched by Dafydd on this day, September 29, 2008, at the time of 2:53 PM | Comments (13) | TrackBack

Date ►►► September 28, 2008

Done Deal - at Least, Very Likely Done

Hatched by Dafydd

It appears that John S. McCain's intervention has borne fruit: All of the major players -- the White House, the Senate and House Democrats, the Senate Republicans, and now even the House Republicans (HRs) -- appear to have signed off on a credit-rescue deal tonight.

As we predicted, it is basically the original deal with some of the HRs' proposals rolled in... notably the insurance option, which would be one of the choices that Secretary Henry Paulson has at his disposal and is required to set up and at least attempt before buying the toxic assets on behalf of the government:

At the insistence of House Republicans, who threatened to sidetrack negotiations at midweek, the insurance provision was added as an alternative to having the government buy distressed securities. House Republicans say it will require less taxpayer spending for the bailout.

But the Treasury Department has said the insurance provision would not pump enough money into the financial sector to make credit sufficiently available. The department would decide how to structure the insurance provisions, said Sen. Kent Conrad, D-N.D., one of the negotiators.

This story doesn't quote any House Republicans directly; but I don't think they would stay silent if they were once again being rolled by the other players. Still, the AP story is cautious -- having been fooled once by Squeaker of the House Nancy Pelosi (D-Haight-Ashbury, 93%) and Senate Majority Leader Harry "Pinky" Reid (D-Caesar's Palace, 85%):

It was not immediately clear how many House Republicans might vote for the measure. With the election five weeks away, Democrats have said they would not push a plan that appeared sharply partisan in nature.

(That is, "Fool me once, shame on you; fool me 527 times in a row, and you can call me an Obamaton.")

The New York Times story did manage to corral Rep. Roy Blunt (R-MO, 96%), lead negotiator for the HRs, but he was in a "show-me" mood:

Representative Roy Blunt of Missouri, the chief negotiator for House Republicans, who have been among the most reluctant to support the plan, expressed some satisfaction but did not commit his members’ support.

“We need to look and see where we are on paper tomorrow,” Mr. Blunt said. “We have been talking about how we can make these things work in a way that our conference can come together.”

Some other concessions to the free market and conservative principles were obtained by Blunt, McCain, and the HRs:

  • The salary and bonus caps would only apply to "fired executives of financial firms, and executives of firms that go bankrupt," as AP puts it, not to every executive at every company that sells distressed securities to the federal government, as Democrats originally demanded.
  • The "equity interest" that the Democrats wanted in all firms that sell assets to the resolution corporation will be limited to only some of them, but I cannot discover the criteria that will determine which do and do not have to give up some stock to the Treasury-created corporation.
  • The Democrats had demanded that 20% of any profits that the feds might make on the deal, as they auction off value-added securities in an improved market, be ploughed into affordable housing -- which is what got us into this mess in the first place; but the HRs appear to have killed that provision.
  • Democrats also have given up on their scheme to allow bankruptcy judges to unilaterally alter the terms of first mortgages in bankruptcy proceedings; instead, the Treasury will have the authority to attempt to renegotiate mortgage terms if that would reduce the liability facing the government by reducing the risk of default or even foreclosure. That is, only when such renegotiation is good for the United States... not whenever it's advantageous to the over-extended borrower (buying a $400,000 dream house when he really could only afford a $200,000 fixer-upper).

But for the timely intervention of John McCain, no one would have talked to the House Republicans, and none of these concessions would have been made; therefore, the deal would never have gone through. McCain has kept in constant contact with the negotiators, relaying information back and forth, pushing for the necessary compromises, and selling the HRs on the plan.

Barack H. Obama, meanwhile, has also been "active," as the Times insists:

Early in the day, the two presidential nominees were active from the sidelines. Mr. McCain telephoned Congressional Republicans to sound them out, and Mr. Obama got regular updates by phone from Mr. Paulson and top lawmakers.

Evidently, the word "active" in Obama's case means standing anxiously by the phone, waiting for a call to bring him up to speed, so he won't look ridiculous.

Finally, I find this tidbit to be most illuminating:

While Congressional Republicans sent only their chief negotiators, Mr. Blunt and Senator Judd Gregg of New Hampshire, at least nine Democrats with competing priorities piled into the meeting, surprising the Republicans but apparently not unsettling them.

It fills my heart with patriotic joy to see the Democratic Party put aside its petty, internecine differences to resolve a true national crisis.

Hatched by Dafydd on this day, September 28, 2008, at the time of 4:04 AM | Comments (7) | TrackBack

Date ►►► September 26, 2008

The Roads Must Roll, Along With a Few Heads - slight UPDATE

Hatched by Dafydd

Here is the bailout problem in a nutbag. There was indeed a deal before John S. McCain arrived... a completely bicameral deal between House Democrats -- and Senate Democrats. The deal also included (evidently) the White House; and the Senate Republican conference climbed aboard the bandwagon.

The outlines of the deal were that President George W. Bush gets the Paulson-Bernanke emergency rescue plan -- and the Democrats extort a number of their domestic welfare programs:

  • Long-term extension of unemployment benefits, so that fewer people will go back to work;
  • A "housing trust fund" that would funnel taxpayer money to ACORN and other radical groups;
  • Salary caps on everyone who makes more money than members of Congress;
  • A secret, back-door restoration of the ban on shale-oil development, which Majority Leader Harry "Pinky" Reid (D-Caesar's Palace, 85%) tried to sneak into the rescue bill;
  • Fascistic government ownership of the banks, and so forth.

Of course, if you pore over the list above of participants in this deal, you will of course notice one missing piece: House Republicans. The House Republican conference is consistently more conservative, free-market, and even libertarian than any of the other four groups... and not surprisingly, they completely rejected this deal.

But nobody was speaking for the House Republicans; in fact, it appears that nobody was speaking to them, either. So despite the fact that McCain is a senator, not a representative, he nevertheless realized that without the House Republicans (HRs, from now on), no deal would ever be inked. Even though Democrats have a majority in the House (and no filibuster rule), they refused to pass legislation without the "cover" of a majority of the HRs along for the ride. (Which itself is a telling sign: The Democrats did not want to "own" the package.)

Thus, McCain thought it important enough to temporarily (for a few days) suspend his campaign, fly back to D.C. -- which is where his actual job is (and Barack H. Obama's too, by the way) -- and see if he could restart the dialog between the HRs and Everybody Else.

I believe every element of the House plan is worth some consideration in itself, and several would probably help the situation; but I do not believe that even all of them put together would actually resolve the illiquidity of the mortgage markets.

The core of their plan is to get the financial institutions to buy the toxic assets themselves by federally insuring them:

Under the alternative Republican plan, the government would set up an expanded insurance system, financed by the banks, that would rescue individual home mortgages. The government would not have to buy up the toxic mortgage-backed assets that are weighing down financial institutions.

They've also proposed a two-year suspension of the capital-gains tax -- which might actually be counterproductive in the short-term: These toxic assets are of course worth much less than the institutions paid for them; which means if they sell them, they would actually have a capital loss, not gain. Under the current system, they can claim a deduction for that loss; but if we suspend the cap-gains tax for two years, the financial institutions won't be able to deduct their losses.

In the long run, reducing or even eliminating capital-gains tax is a great idea. But it's not going to help in the present crisis.

In the end, I suspect the HRs will relent and compromise: They will accept the guts of the Paulson-Bernanke proposal in exchange for some significant trimming of the Democrats' grab-bag of socialist-populist goodies, particularly including the "equity stake" that the federal government would take in the affected institutions; my reading of the tea leaves tells me this is something that Senate Republicans love but of which House Republicans are very, very skeptical, for the same reasons I enunciated yesterday.

There is already some movement towards a compromise:

Cantor said that some of the "exotic sliced and diced" mortgage-backed securities at issue for the financial institutions are of such little value -- because the underlying mortgages are already in foreclosure -- that using the Republicans' preferred approach of federally insuring them is pointless. "So you've got to go with Paulson's model," Cantor said today, endorsing the federal purchase of those securities to clean up the books for financial firms in distress.

In exchange, Cantor said he is seeking some sort of assurance that that the Treasury secretary would be allowed to create an insurance program for the other mortgages, charging premiums to the firms holding securities tied to those mortgages.

There are some other proposals floating about. Steven Pearlstein in the Washington Post has a very interesting one... Treasury sets up a resolution corporation (as per Paulson-Bernanke); but then instead of buying the illiquid securities with cash, they swap them for preferred stock in the new resolution corporation itself:

My own suggestion would be to structure the rescue around a new government-owned corporation that would be capitalized, initially, with $100 billion in taxpayer funds. The company would use auctions or other mechanisms to buy the troubled securities from banks and other regulated institutions, but instead of paying for them in cash, the government would swap them for an equal number of preferred shares in the new company. (Preferred shares are something of a cross between a bond and common stock.) Those preferred shares would pay a government-guaranteed dividend and could be redeemed by the government at any time. But they could also be used by banks to augment the capital they are required to maintain by regulators.

The beauty of this arrangement is that, rather than protecting taxpayers by having the government take an ownership stake in hundreds of privately owned banks, it would be the banks that would own a stake of the government's rescue vehicle. The government would suffer the first $100 billion in losses from buying and selling the asset-backed securities, but any further losses would be borne by the other shareholders. And should the rescue effort actually wind up making a profit, then the banks would share in that as well.

I don't believe this would have happened without John McCain's presence: It took the support of a man so universally respected on the Republican side, even by those Republicans who frequently oppose him -- ironically, the very same House Republican conservatives whose cause he champions today -- to get the corrupt Democrats and the blowhard Senate Republicans to pay their House brethren any attention at all.

My guess is that many of the HRs' proposals (and several proposals of other critics, such as Pearlstein's "preferred shares" swap) will be rolled into the plan; much of the Democratic garbage will be stripped out; and the guts of the Paulson-Bernanke plan will be enacted with near universal support in both the House and Senate, to be signed by the president into law.

The liquidity crisis will be averted; companies will stop going under; the stock market will rebound (it hasn't dropped all that much, really); the Democrats will be exposed (well, by us, at least) as the venal rats who caused the problem in the first place; President Bush will seem a bit more presidential; John McCain will seem a lot more presidential.

The biggest loser will be, I think, Barack H. Obama, as more and more voters start to ask -- "Who is this guy anyway?"

And he'll lose tonight's debate, too.


These two videos are making the rounds; they fit so perfectly here, I just have to include them.

First, here is the blunt Rep. Roy Blunt (R-MO, 96%), official negotiator for the HRs in the Big Blowout, discoursing on how helpful John S. McCain has been during the negotiations, appointing himself Speaker to Animals... that is, guardian angel for the House Republicans. Watch this one first...



Now, here is the "same" video -- as creatively edited by the Barack H. Obama campaign, or some surrogate. Notice a few very subtle excisions, almost too small even to notice:



Team Obama is pointing to the truncated video to claim that even Roy Blunt agrees that McCain has been nothing but a roadblock, toppling a done deal and plunging America into a dark night of the financial soul.

Want to know just how corrupt, mendacious, and dishonorable is the campaign by the One We Have Been Waiting For, campaigning by what we call "Chicago rules?" That's how.

If in fact they have nothing to do with this disgraceful knife-job on Blunt's praise, there is a simple way to show it: The campaign can denounce this bearing of false witness. Let's see if any such denunciation forthcomes.

Hatched by Dafydd on this day, September 26, 2008, at the time of 6:03 PM | Comments (7) | TrackBack

Brad Weighs In with a Question for Dafydd (and the Massmind)

Hatched by Brad

Our friend and worth co-conspirator against creeping statism, Brad Linaweaver, has a question for me; but I'd like you all to answer as well. This is your forum, too!

Here's Brad:


Regarding the latest McCain/Obama symbolism, aren't we conflating two things? McCain taking some days off from the campaign trail to go back to the Senate during the economic crisis is not the same as McCain canceling his participation in a scheduled debate unless Washington agrees on a deal. Democrats and Republicans are not making this distinction, because all they care about is the purity of their guy and the perfidy of the other guy.

Do you agree with my distinction or not?


Dafydd responds:

Yes, of course they are two separate things. They are distinct. I don't see that it's an important distinction, but it is a distinction.

However, what McCain actually suggested was not to skip but to postpone the debate, just for a few days. I see a much bigger distinction between what McCain said and how Brad characterized it ("canceling his participation in a scheduled debate") than between that postponement request and the decision to work on the liquidity catastrophe rather than jet around the country giving stump speeches. He was only saying that these negotiations were intense enough that he might not be able to break away from them in the middle... or he might, depending on how much progress had been made.

In any event, as you see, there was sufficient progress that McCain feels comfortable flying down to Mississippi for the debate, and then flying right back up to paradise on the Potomac; so the question is to some extent mooted.

But honestly, I really don't think that it's very important whether the debate is held tonight or next Tuesday or Wednesday night... which is really all that the debate flap was ever about.

All right, anybody else who wants to toss in your two centavos in the comments, feel free.

Hatched by Brad on this day, September 26, 2008, at the time of 4:29 PM | Comments (2) | TrackBack

Date ►►► September 25, 2008

Democrats Channel Hugo Chavez in Rescue Demands

Hatched by Dafydd

It appears a deal in principle -- but perhaps an unprincipled one -- has been struck on the Paulson-Bernanke market-rescue plan. Early reports are that the Democrats demanded and received two very dangerous concessions as their price to agree to prevent the complete disintegration of the American economy:

  1. Some sort of government control of compensation (salary, bonuses) on the salaries of executives of companies embroiled in this crisis;
  2. Much worse, the government would gain an "equity interest" in those companies.

Squeaker of the House Nancy Pelosi (D-Haight-Ashbury, 93%) says the deal is done:

House Speaker Nancy Pelosi, D-Calif., said Bush's agreement with Democrats on limiting pay for executives of bailed out financial institutions and giving taxpayers an equity stake in the companies cleared a significant hurdle.

But in a miracle of clear and concise journalism, the same article claims -- two paragraphs later -- that it's still under discussion:

It was not yet clear how lawmakers had resolved lingering differences over how to phase in the eye-popping cost - a measure demanded by Democrats and some Republicans who want stronger congressional control over the bailout - without spooking markets. A plan to let the government take an ownership stake in troubled companies as part of the rescue, rather than just buying bad debt, also was a topic of intense negotiation.

Don't we love the feeling of security we get from those multiple layers of editing at the elite media? The New York Times weighs in, saying that it is indeed part of the plan:

But lawmakers in both parties said that few substantive differences and no major obstacles remained....

They also said that there would be limits on pay packages for executives whose firms seek assistance from the government and a mechanism for the government to be given an equity stake in some firms so that taxpayers have a chance to profit if the companies prosper in the months and years ahead.

The latter especially is a key element of Woodrow Wilson, Benito Mussolini style fascism; it invariably leads to the State, as the $700 billion gorilla on the board of directors, exerting overwhelming control over corporate decisions... which it will exercise on the basis of politics, not profits.

When people read "fascism," they immediately tend to envision concentration camps, jackboots, and Nazis goosestepping at mass rallies; but the real danger of fascism, especially liberal fascism (fascism with a smiley face, as depicted -- against author Jonah Goldberg's wishes -- on the cover of his book Liberal Fascism), is government control of corporations. The more control is handed over to politicians and bureaucrats who have no hand in actually producing the product (loans and securities, in this case), the more critical decisions will be made on irrelevant political considerations, often leading to financial disaster... and another bailout, leading to even more government control. Eventually, the State completely hijacks the corporation for political purposes... and we're well on our way to Hugo Chavez-land.

Imagine the possibilities!

  • The next Democratic president could threaten to order American banks and financial institutions to completely divest from Israel, in order to "pressure" Israelis to accept a suicidal deal with Hamas and Hezbollah terrorists.
  • The administration can flex its "equity stake" to force companies to offer benefits to same-sex partners on the same basis as spouses.
  • It can bully the companies it partially owns into ruinous union contracts, into making corporate donations to 527s, pressure executives into raising campaign cash for favored candidates... and it can certainly demand sweetheart loans to the very politicians who inherit such unearned power -- from the crisis they themselves created, à la Countrywide's deal with Chairman of the Senate Committee on Banking, Housing, and Urban Affairs Chris Dodd (D-CT, 93%).

There are some things that could be done to partially mitigate the horrific damage to free markets by government ownership of the nation's financial institutions. I would hope, even if Democrats demand an equity stake before they will agree to rescue the American economy, that conservative Republicans can at least limit that stake to non-voting stock, and put in place oversight that prevents some representative of the next administration from sitting on the institution's board of directors.

I don't know how long such limitations may last; the next president could still intimidate the company into political compliance by threatening to dump equity at "going out of business" prices (literally!), tanking the market capitalization. But it might hold back the tide of liberal fascism for a little while.

John S. McCain appears to be concentrating his efforts on responding to the oversight and spending misgivings of conservatives about this deal and getting some of their ideas incorporated into the deal; he is thus corralling their support for the eventual deal:

Rogers said McCain didn't participate in that [negotiation], but was in talks with Republican leaders afterward. Conservative Republicans were among the holdouts, and there were indications they were waiting for McCain to make a move before they did.

As Thursday began, McCain said he didn't believe the administration's plan had the votes to pass without changes. "We are running out of time," McCain said. However, he said he still was confident a bipartisan compromise could be reached before markets open on Monday, one that would stabilize the markets, protect taxpayers and homeowners and "earn the confidence of the American people."

Meanwhile, Barack H. Obama is showing his own kind of leadership, demonstrating what an Obama administration would actually be like:

For his part, Obama urged a swift resolution that would get the legislation passed, saying "action must be taken to restore confidence in our economy ... Now is a time to come together -- Democrats and Republicans -- in a spirit of cooperation on behalf of the American people."

Obama also rolled out a new 60-second TV ad to run in "key targeted states" in which he cited economic policies endorsed by Bush and McCain as essentially to blame for the troubles.

"For eight years we've been told that the way to a stronger economy was to give huge tax breaks to corporations and the wealthiest. Cut oversight on Wall Street. And somehow all Americans would benefit," Obama says in the ad. "Well now we know the truth. Instead of prosperity tricking down, the pain has trickled up. We need to change direction. Now."

Evidently, Obama believes that Democrats and Republicans should "come together" to cooperate on covering up for Democratic complicity in this crisis by slandering Republicans.

In fact, we already know who caused this problem... and we also know who is trying to resolve it, and who is trying to use the crisis to extort more socialist populist policies to damage the capitalist system.

Once McCain has satisfied himself that he has modified the deal enough to bring conservatives in Congress aboard, and that the deal is going to pass, he will return to full-blown campaign mode; and I hope he then releases his own advert, along the lines I suggested in the first link in the paragraph above, explaining how this crisis actually came about: through Democratic market manipulations and interventions for populist-political, non-economic reasons (giving other people's money to the poor to buy votes). The truth from McCain will surely be much more believable and convincing -- than Obama's handwaving, boilerplate fantasies about "huge tax breaks to corporations."

Hatched by Dafydd on this day, September 25, 2008, at the time of 3:23 PM | Comments (3) | TrackBack

Date ►►► September 24, 2008

John McCain Chooses Sarah Palin... Again

Hatched by Dafydd

Today, John S. McCain announced that he will suspend his presidential campaign for a few days, so he can return to Washington D.C. and -- funnily enough -- work on the people's business; to wit, participate in the negotiations on the Paulson-Bernanke rescue proposal.

The announcement knocked the Barack H. Obama campaign, the Democrats, the congressional leadership, and the elite news media (to the extent that those are not simply synonyms) back on their heels... like walking up an unlit stairway and taking that last step that isn't there. They scrambled around like prats, denounced McCain, called it a "political stunt," contradicted each other (and themselves two minutes later), and in general, ran around like chickens with their legs cut off.

In other words, just exactly what they did when McCain named Alaska Gov. Sarah Palin as his vice-presidential running mate.

The decision by Sen. McCain to return to the Senate and worry about the country before his own political interests is the same bold, maverick move as the Palin choice... and it tells us once again, if more proof were needed, who the real "change agent" is in this campaign: Consistently, from the moment the Democratic primary was settled, John McCain has been the leader and Barack Obama the reactionary, either following or angrily denouncing. Today was a "denouncing" day:

Some Democrats reacted skeptically to Mr. McCain’s surprise announcement, charging that it seemed like a political ploy to try to gain the confidence of voters concerned about the economy.

“What, does McCain think the Senate will still be working at 9 p.m. Friday?” Gov. Ed Rendell of Pennsylvania said in an interview, referring to the scheduled start time of the debate.

Yes, actually, I think he does. Or they should, for God's sake.

“I think this is all political -- I wish McCain had shown the same concern when he didn’t show up in the Senate to vote on the extension of the renewable energy tax credit.”

Oh yeah. That was certainly a comparable emergency.

Representative Barney Frank of Massachusetts, who is leading House Democrats in negotiating the bailout deal with the administration, was dismissive of Senator McCain’s announcement. “It’s the longest Hail Mary pass in the history of either football or Marys,” Mr. Frank told a group of reporters outside the House chamber.

Great leaping horny toads. Is Barney Frank, of all people, calling John McCain a Mary?

Meanwhile, Obama at his presser was reduced to hemming and hawing that he didn't know whether he would go to D.C. even for the vote; he allowed as how he might go... if his own party thought he was "needed" and wouldn't be a superfluous bump on a log.

This is a truly bizarre response: We know with certainty that the next President of the United States will be either John S. McCain or some fellow named Barack H. Obama; I think we also know to a fare-thee-well that it will fall to the 44th POTUS to implement this legislation, considering how close we are to the next term. So of course both presidential nominees are "needed" -- even the One -- because it does no good for Congress to enact legislation that the One or the Other rejects, because then it will just be slow-rolled into oblivion.

All parties to the final implementation must be represented: congressional Democrats and Republicans, Obama, McCain, President Bush, Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke, and of course, financiers and banking executives, consultants, and other experts. And none should be allowed to vote "present."

I believe this will be another turning point in the election; it will take a few days to sink in (Palin's effect was immediate), but it may be more long-lasting: The shock of Sarah Palin's investiture was electrifying, but the amour was soon damped out under the relentless resistance of the elite media, probing, poking, prying (and preening at their own perspicacity). I believe Palin will continue to lift the campaign; but we no longer hear so many hosannas (to Mrs. Palin's probable relief) as we settle into the daily grind of the final days.

But McCain's simple ode to the country, his country, will resonate more quietly but echo longer and deeper into the campaign. I don't recall any other candidate suspending his campaign so close to the finish line, just for a few days, and just to do the people's business.

You remember the people, don't you? Us, the living, the demanding, the voting?

But in the clutch, Barack Obama was not so gallant. When the spotlight suddenly shone on the One, he froze, like a -- like a young actor on stage in his first improv, lips moving but mind a blank. Like a beach bum watching in horrified fascination as the eight-story tidal wave washes up to engulf him. Like a hobo sleeping on the railroad tracks, waking up to the fearsome scream of the Midnight Special, too hypnotized even to roll to one side.

Obama baubled, fumbled, stumbled; he stood aloof, so painfully befuddled... until the president personally summoned him to join Bush and McCain in the White House. Reluctantly, like a young wastrel ordered home from wanderjahr, scuffing his feet, Obama slinks back to the ringing of the klaxton, the tumble of the drum. And much of the pixie dust is scraped from his butterfly wings.

John McCain demonstrates himself not only to be the man of change in this race, but the man in this race. Planned or not -- and everything in a presidential race is planned -- it was a brilliant political chess move, not least because it shines the light of reality on the shadowplay of Obama's silver-screen candidacy.

Hatched by Dafydd on this day, September 24, 2008, at the time of 11:58 PM | Comments (12) | TrackBack

Date ►►► September 23, 2008

Democrats: the Party of Fiscal Prudence and Political Streamlining

Hatched by Dafydd

Democrats bolster their already sky-high reputation for fiscal responsibility

The Democrats are skeptical, even suspicious. They're not going "simply hand over a 700-billion-dollar blank check to Wall Street and hope for a better outcome," as Squeaker of the House Nancy Pelosi (D-Haight-Ashbury, 93%) said, referring to the rescue plan proposed by Secretary of the Treasury Henry Paulson and Chairman of the Federal Reserve Ben Bernanke:

Lawmakers said brisk talks toward a deal by week's end included an agreement that the US Treasury could acquire some equity from banks in exchange for bailing out bad debts, and an accord on an oversight plan.

But as markets plunged amid impatience and uncertainty with the process, some senior politicians warned they would not be hurried into agreeing to the biggest US bailout since the Great Depression of the 1930s.

No pig in a poke for them!

Chairman of the Senate Banking Committee Chris Dodd (D-CT, 93%), has already pronounced the Paulson-Bernanke rescue plan D.O.A.:

Getting the action right is key, Dodd said: "There is no second act to this." He later spoke disparagingly of the administration's proposal. "What they have sent us is not acceptable," he told reporters.

Sen. Chuck Schumer (D-NY, 95%) is well known for his prudence in spending taxpayer money. He believes the price tag of $700 billion -- he means spending authority, of course, since much of that money will be made back when the resolution corporation auctions off the newly revalued assets it acquired at discounted prices -- is simply too high; he wants to save the government money:

Paulson, seated next to Bernanke at the Senate hearing, objected strongly when Chuck Schumer, D-N.Y., asked if $150 billion might be enough to get the program started, with a promise of more to come.

In fact, they're so concerned about spending so much money without adequate debate, discussion, and without the American people being able to see exactly what we're getting, that they're willing to debate until the cows come home to roost, rather than rush into some massive spending authorization. After all, they haven't even seen the full plan on paper yet!

It should be clear by now that the Democrats are the party which can be trusted to be good stewards of the people's money, spending hawks, and champions of spending transparency.

Democrats: Politics you needn't worry your pretty little head about

In a completely unrelated story that we're including in this post only because of space limitations, efficiency-minded Democrats in Congress are attempting to push through a $488 billion omnibus spending bill:

Congress is scrambling to pass the Pentagon budget, aid for flood and hurricane victims and $25 billion in loans for Detroit automakers in a late-session burst of activity that's flying under the radar compared with efforts to bail out Wall Street.

Funding for veterans health care and homeland security programs is also in the mix as Democratic leaders ponder what other items should catch a ride on must-do legislation to keep the government running beyond the Oct. 1 start of the 2009 budget year.

A stopgap bill must pass to avoid a government shutdown, so Democrats are viewing it as a locomotive to pull past a skeptical White House measures such as the automaker loan and a doubling of home heating subsidies for the poor.

Enough blah-blah... the people want action, action, action!

In an effort to speed up the process (and not allow the opposition to confuse matters by participating in the discussion), they are crafting the bill entirely within the Democratic caucus, bypassing the contrarian Republicans and not letting them amend the bill -- or read it -- before the final vote. For even more streamlining, Democrats have eschewed informing Americans of each and every piddling detail, so as not to bore or confuse them:

Details of the emerging legislation remain secret, but its outlines have come out in interviews with aides to both the House and Senate Appropriations committees, as well as aides to top House and Senate leaders.

The legislation is coming together in a remarkably secretive process in which decisions are concentrated in the hands of just a few lawmakers such as House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and House Appropriations Committee Chairman David Obey, D-Wis.

To better service their constituents -- the people, not the powerful -- they have helpfully included many billions of dollars of congressionally directed spending, which they have inserted after strong, bicameral debate in joint conference between the House Democrats on the one hand and the Senate Democrats on the other:

The unusual process means thousands of lawmakers' pet projects of the very sort blasted by GOP presidential nominee John McCain on the campaign trail would escape scrutiny, including up to $5 billion worth of such "earmarks" in the defense budget alone.

It should be clear by now that the Democrats are the party that can govern swiftly and unobtrusively, unencumbered by odious and divisive Republican demands for "democracy"... and the party that can keep a secret!

The Democratic caucus: A little something for everybody.

Hatched by Dafydd on this day, September 23, 2008, at the time of 6:07 PM | Comments (4) | TrackBack

Date ►►► September 22, 2008

Democrats Try to Hijack the So-Called "Bailout"

Hatched by Dafydd

Republicans see the collapse of the mortgage market as a potential catastrophe that requires emergency measures... but an aberration caused by government intrusion into the market, not an indictment of capitalism and free markets.

Democrats see it as proof positive that capitalism has been proven to be a fad that will soon pass away, like pet rocks... and a golden opportunity to reintroduce failed liberal fascist economic policies straight out of the platforms of Woodrow Wilson, Franklin Roosevelt, and Jimmy Carter.

Which George W. Bush will show up... the veto-wielding Bush with a spine that we've seen in Democratic spending legislation after the 2006 elections -- or the wimpy, appeasing Bush that we've seen in legislation on racial preferences, Israeli-Palestinian "negotiations," and Republican spending prior to the 2006 elections? The choice will spell the difference between a small-footprint intervention or a massive repudiation of decades of progress on free-market economics.

But first, let's again talk about how we got into this mess.

Subprime mortgages, securitization, and toxic assets

This is the crux of the crisis: Back in the cretaceous period, when a bank or S&L issued a mortgage, it held that mortgage until the borrower paid it off. But in the contemporary era, what starts out as a mortgage is typically bundled with other mortgages into a "mortgage-backed security" (MBS) -- essentially bonds that can be traded on the open market. Bizarrely, in the process, bad debt automagically becomes good investment.

How are MBSs created? Let me quote from an excellent sumary in a newsletter by John Mauldin (free registration required):

Let's jump back 18 months. I spent several letters going over how subprime mortgages were sold and then securitized. Let's quickly review. Huge Investment Bank (HIB) would encourage mortgage banks all over the country to make home loans, often providing the capital, and then HIB would purchase these loans and package them into large securities called Residential Mortgage Backed Securities or RMBS. They would take loans from different mortgage banks and different regions. They generally grouped the loans together as to their initial quality as in prime mortgages, ALT-A and the now infamous subprime mortgages. They also grouped together second lien loans, which were the loans generally made to get 100% financing or cash-out financing as home owners borrowed against the equity in their homes.

Typically, a RMBS would be sliced into anywhere from 5 to 15 different pieces called tranches. They would go to the ratings agencies, who would give them a series of ratings on the various tranches, and who actually had a hand in saying what the size of each tranche could be. The top or senior level tranche had the rights to get paid back first in the event there was a problem with some of the underlying loans. That tranche was typically rated AAA. Then the next tranche would be rated AA and so on down to junk level. The lowest level was called the equity level, and this lowest level would take the first losses. For that risk, they also got any residual funds if everyone paid. The lower levels paid very high yields for the risk they took.

Then, since it was hard to sell some of the lower levels of these securities, HIB would take a lot of the lower level tranches and put them into another security called a Collateralized Debt Obligation or CDO. And yes, they sliced them up into tranches and went to the rating agencies and got them rated. The highest tranche was typically again AAA. Through the alchemy of finance, HIB took subprime mortgages and turned 96% (give or take a few points depending on the CDO) of them into AAA bonds. At the time, I compared it with taking nuclear waste and turning it into gold. Clever trick when you can do it, and everyone, from mortgage broker to investment bankers was paid handsomely to dance at the party.

So what started as mortgages -- ranging from very secure prime mortgages, which are doing fine, to lousy subprime mortgages for too much money to borrowers who really didn't have either the credit history or income to justify such loans, many of which are currently in default 60 days or more -- were, by the magic of "securitization," turned into bond-like securities; and in the process, many of the bad and even defaulted loans were transmaugrified into AAA-rated investments.

The banks and other financial institutions that securitized mortgages (and resecuritized already securitized MBSs) would make their nut by skimming some percent, typically fifty basis points (0.5%), off the loan rate; thus, if they began with a package of mortgages at 6.5% (they tried to bundle like with like), they would securitize them into an MBS that paid 6%, keeping the difference -- and hoping there would be few enough defaults that the mortgages would produce more than 6% net.

What happens when loans are defaulted is very complicated and not really germane to this post; they created different tiers, or "tranches," with different ratings -- AAA down to junk -- for different prices, that distributed the losses from worst tranch up to best. Not important here.

But defaults, of course, are where the whole pyramid scheme broke down. While housing prices continued to rise, everybody was happy and there were few defaults. But starting a couple of years ago, when the housing bubble burst and the mortgage default rate shot up, a bunch of banks found themselves holding very insecure securities, losing money hand over teakettle. The crash began among the lenders and spread to secondary markets (the MBSs and CDOs) and even tertiary markets (insurance underwriters like AIG). In short order, institutions all over the world found themselves holding pieces of paper whose value was impossible to determine -- which are referred to as toxic assets.

Toxic assets are illiquid, meaning they cannot be bought or sold because nobody knows how much to offer for them; they are frozen. If you hang onto them, they might regain some value later... or they could disappear completely. Worse, illiquid securities see their ratings drop; and current law forbids some types of funds from holding anything but AAAs... which means they may be forced by law to sell -- but unable to sell because of illiquidity!

Not only that, but current law also requires that such securities be "marked to market," meaning they must be valued at the last price offered by some institution that was desperate to sell -- because of the law in the previous paragraph. Thus, even institutions that didn't have to sell their toxic assets had to reprice them; this meant that a number of financial institutions suddenly did not have sufficient reserves for the amount of loans or leveraging they had out. That meant they needed to get hard cash and fast... which meant they would have to panic-sell a bunch of securities, precipitating a new round of re-rating and re-valuating.

Eventually, nobody had a clue what anything was worth anymore; and nearly every financial institution in the world, it seems, was involved up to the fourth cervical vertebra in this mess.

It was that uncertainty that caused the mortgage market to collapse. It's like trying to buy a car when all you can see is a grainy photo in a newspaper: You can't test-drive it, inspect it, or even kick the tires. You don't even know whether it contains an engine... how can you possibly make any kind of offer whatsoever?

Worse yet, the seller has never seen the car either, and he knows no more about it than you!

So what is to be done? Obviously, since the problem is the inability to set a value for these instruments, which makes them impossible to buy or sell (illiquid), the solution is to find a way to value them. Enter the Paulson-Bernanke emergency rescue plan.

Treasury presses the reset button

As proposed by Secretary of the Treasury Henry Paulson and Chairman of the Federal Reserve Ben Bernanke, the putative "$700 billion" "bailout" is actually neither: It will neither cost that much, nor will it bail out those financial institutions that wrote bad loans for people they knew were not likely to be able to pay them off.

As I understand it, here is the basic plan. Note that I'm drawing this from many sources, it's not yet written in stone -- or even in ink -- and I can't give you sources. If you want more information, you're on your own! But here is what I've been able to glean:

  1. The Treasury is given authority to spend up to $700 billion (outstanding at any particular moment) to buy MBSs, CDOs, and related instruments that have become "illiquid." These "toxic assets" will be purchased from their current owners at a huge discount... meaning the banks and other investors who purchased these pigs in pokes will, in fact, take a significant financial hit... they're not being "bailed out."

So the Treasury can buy up these toxic assets; what do they do with them?

  1. I believe the plan (which has not yet been formalized in legislation) is to create a Treasury owned and managed resolution corporation that will take ownership of these toxic assets. Analysts will then pore through each MBS, determining the status of all the underlying mortgages and making a report publicly available. This will make the opaque assets completely transparent. All the financial fundamentals will be visible, so analysts at private companies can examine all of the securities and decide how much they would pay for each.
  2. The resolution corporation will then auction off each of the the now-transparent MBSs, selling it to the highest bidder; that very action allows the market to reset the value of the security.

That is why I characterize this rescue operation as "pressing the reset button."

Once some corporation has examined the fundamentals of the security and offered the winning bid for it, the MBS becomes (by definition) liquid; it is no longer a toxic asset. Its value has been reset... and it can go up or down after that point based upon subsequent, well-understood events (defaults, repayments, prepayments) in the underlying mortgages and reevaluations based upon other, market-based criteria. In other words, it becomes just like a mutual fund.

The crisis was the inability to value MBSs; the solution is to reset their values. The beauty of the Paulson-Bernanke plan is that this resetting is done by the free market, not by government decree.

Finally, note this point:

  1. When the Treasury-owned resolution corporation auctions off the now-transparent MBSs, it can use that money as income. Since the asset is now much more valuable than before (having been scrubbed into transparency), if it becomes saleable, then it will certainly sell for more than the discounted rate at which the corporation bought it. In other words, the resolution corporation will make a profit on every security it resells -- so the program will not actually cost $700 billion... it may even end up completely in the black.

That's why the Paulson-Bernanke plan is neither a bailout -- the so-called beneficiaries in fact must pay dearly for their folly -- nor massively expensive, since it resells most of the securities it bought, and at a profit. It could still end up costing money, depending on how many of the MBSs end up still toxic even after the complete report (if too many of the underlying mortgages are in default, for example); but the losses won't be anywhere near $700 billion, and they may be less than the profits.

Democrats: fingers in the pie, finger in your eye

But the loyal opposition is not content to use the Paulson-Bernanke emergency mortgage-market rescue plan to rescue the mortgage market from the current emergency; how dull that would be, especially in an election year. Rather, they see America's crisis as their opportunity to enact or re-enact by extortion every awful, failed, thoroughly discredited, socialist-populist scheme they have tried, or always wanted to try, over the past century. Senate Democrats demand:

  • Contingent stock in every, single company that sells its toxic assets to the resolution corporation; this would give the federal government a degree of ownership of virtually every bank, savings and loan, or other financial institution in the entire country. It is liberal fascism at its purest, and it would lead directly to much greater government control of private capital.
  • They demand that bankruptcy judges be allowed to rewrite the terms of the underlying mortgages, in order to "provide direct assistance to homeowners caught in the foreclosure crisis"... in other words, to allow people who took out loans much too big for houses they could not afford to nevertheless keep those houses, even though they cannot make the payments. All at the expense of financial institutions that are teetering at the brink as it is.
  • Democrats demand "limits on the pay of top executives whose firms seek help." That is, Congress would set the salaries and bonuses of executives working at companies that are in serious trouble because of the mortgage meltdown... and that's always worked out so well in the past!
  • They also have structural demands:

    The 44-page Senate proposal, pulled together by Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the banking committee, would require the Treasury to run the rescue plan through a new "Office of Financial Stability" to be headed by an assistant treasury secretary. It would also establish an "Emergency Oversight Board" to monitor the bailout effort, made up of the Fed Chairman, the chairman of the Federal Deposit Insurance Corporation, the chairman of the Securities and Exchange Commission; and two non-government employees with "financial expertise" in the public and private sectors, one each appointed by the majority and minority leadership in Congress.

    In addition, the Senate proposal would require monthly reports to Congress, rather than the biannual reports that would be required under the Bush administration’s proposal.

    This sounds like an invitation to micromanagement -- and unless I miss my guess, the "Emergency Oversight Board" will somehow end up stuffed with former members of the Clinton administration and/or Barack H. Obama's campaign, like Franklin Delano Raines, James Johnson, and Jamie Gorelick... the same people who ran Fannie Mae and Freddie Mac into the ground and ran many of the very multinationals that offered subprime loans, hedge-funds and other derivatives, or that insured these toxic assets, thus creating the crisis in the first place.

  • While former Clintonista (and now Charlie "Tax Ducker" Rangel's lawyer) wants the Democrats to go even further:

    Barack Obama has tried to run as a unifying centrist. Now it may be time for him to clear the fog and talk, walk and sound like a true FDR liberal -- reminding the American people that at times like this, the government is a friend, not an enemy, contrary to conservative theology. Indeed, now may be the time for him and the Democratic Congress -- urged on as recently as Thursday by Treasury Secretary Henry Paulson -- to take the next 30 days to enact something reminiscent of FDR's first 100 days. It should be more than just a $700 billion bailout. It should also include billions to help homeowners avoid foreclosure, to assist the auto industry, to upgrade the nation's infrastructure, and to spur development of alternative energy sources.

One can always trust Democrats to find a way, in any crisis, to throw gasoline at the bull.

President Bush (and the upcoming President John S. McCain) must remain stalwart and demand an up or down vote on a clean version of the Paulson-Bernanke rescue plan... no add-in spending, no wage and price controls or upgrading the nation's infrastructure, and specifically, no damned earmarks.

Anything less than this standard of rectitude and disinterested statesmanship would be an economic betrayal of America... and must lead to electoral ruin for any party which puts immediate self-gratification ahead of national economic survival.

Hatched by Dafydd on this day, September 22, 2008, at the time of 4:23 PM | Comments (30) | TrackBack

Date ►►► September 21, 2008

"Lazy," "Violent," or - Huh?

Hatched by Dafydd

John Hinderaker of Power Line descent -- my favorite blogger at my favorite blogsite -- has a nice post up about that silly survey that tries to set the stage for Democrats to claim, when they wake up to President-elect John S. McCain on Guy Fawkes Day, that Barack H. Obama only lost because of anti-black prejudice and racism among whites. Or at least white Democrats.

John quotes from a survey conducted by Stanford University on behalf of the yahoos at AP-Yahoo, then effectively analyzes the output. He finds the result less than persuasive -- as it quotes selectively from sections of the survey results unavailable to anybody but AP reporters. But I believe John missed one point, the donkey in the room that is so obvious, it's easy to overlook (like Poe's "Purloined Letter"). Here is the first paragraph of the AP story:

Deep-seated racial misgivings could cost Barack Obama the White House if the election is close, according to an AP-Yahoo News poll that found one-third of white Democrats harbor negative views toward blacks—many calling them "lazy," "violent" or responsible for their own troubles.

So now it's "racist" to believe that blacks, like everybody else, are "responsible for their own troubles?"

I certainly understand why blacktivists, liberals, liberal fascists, and other Democrats would believe this. But do the survey designers themselves share the belief that blacks are unique in not being responsible for their own troubles, and that anybody who believes an individual black person should be held accountable for problems that, in a white person, would be called "self-inflicted," is therefore racist?

If so, then I think we have all the information necessary to evaluate how accurate or authoritative this survey really is.

Hatched by Dafydd on this day, September 21, 2008, at the time of 5:52 PM | Comments (2) | TrackBack

Date ►►► September 18, 2008

And While We're On the Subject of Capitalism...

Hatched by Dafydd

How about this from that long-time champion of free markets, the New York Times?

In extending a last-minute $85 billion lifeline to American International Group, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad.

I think that Washington D.C. "turned away from decades of rhetoric about the virtues of the free market" a long time ago -- say, back in 1977, when Democrats overwhelmingly passed Jimmy Carter's Community Reinvestment Act.

That act of semi-nationalization of banking directly precipitated the collapse of the mortgage market, leading to the collapse of several secondary investment groups (e.g., Lehman Brothers, Bear Stearns, Merrill Lynch) who bought the "securities" (that is, repackaged bad mortgages) offered by Fannie Mae and Freddie Mac... as well as the insurers, such American International Group, duped into guaranteeing them.

When the government has already intervened in a market, distorting and corrupting it beyond the point of no return, then obviously it takes another act of government to get the government out of the business of trying to run the banking industry and back to something more or less approaching a free market. Statist intervention never fades away on its own; like the hydra, each individual head must be severed, and the stumps must be seared with hot iron.

And by the way; since when does the collapse of a fraud-laden insurance company -- whose nearly 40-year CEO Maurice Greenberg was ousted in 2005, whose top executives were subsequently criminally prosecuted, and which was forced to pay a $1.6 billion fine for its fraudulent accounting practices... all years before the Freddie-Fannie crisis -- implicate "the virtues of the free market?" The only thing implicated with AIG is the lack of adequate supervision of yet another Statist scheme pushed by Democrats... who now abdicate all responsibility for fixing the problem they, themselves created!

Only economic imbeciles who imagine that a free market means no regulation whatsoever -- including no laws against fraud, embezzlement, theft, tax evasion, or obstruction of justice -- could make such a leap of bad faith.

Which evidently includes the New York Times and everybody who shares its thinking. And while I hate to judge before all the facts are in, that would appear to implicate, not free-market economists, but liberals, socialists, liberal fascists, and other Democrats.

Or did I miss some big, deathbed conversion by Milton Friedman to Keynesianism?

Hatched by Dafydd on this day, September 18, 2008, at the time of 4:32 PM | Comments (4) | TrackBack

By "No One," He Means...

Hatched by Dafydd

How helpful -- and I mean that sincerely:

The Democratic-controlled Congress, acknowledging that it isn't equipped to lead the way to a solution for the financial crisis and can't agree on a path to follow, is likely to just get out of the way.

Lawmakers say they are unlikely to take action before, or to delay, their planned adjournments -- Sept. 26 for the House of Representatives, a week later for the Senate. While they haven't ruled out returning after the Nov. 4 elections, they would rather wait until next year unless Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke, who are leading efforts to contain the crisis, call for help. [In the meanwhile, Americans with pensions, investments, houses, or who pay taxes can just go hang.]

Hip hip, chin chin, we're all for the Democrats getting out of town early; so long as Senate Majority Leader Harry "Pinky" Reid (D-Caesar's Palace, 85%) and Squeaker of the House Nancy Pelosi (D-Haight-Ashbury, 93%) are sitting in their magisterial thrones issuing decrees (such as, "we have already lost this war" or "Democrats bear no responsibility for this economic crisis"), no one is safe. And especially no one's wallet.

In fact, we emphatically agree with Sen. Johnny Isakson (R-GA, 96%):

"The last thing you need,'' he said, "are 535 people, not many of whom are that well-versed in financial markets, trying to do quick fixes to a market correction that's one of the more significant that we've ever seen.''

But I found Sen. Reid's explanation for why he and the Speaker should get the heck out of Dodge in a week or two unintentionally hilarious:

One reason, Senate Majority Leader Harry Reid said yesterday, is that "no one knows what to do'' at the moment.

No one? Somehow I can't shake the suspicion that by "no one knows what to do," Sen. Reid really means "none of us liberals knows how to deal with this crisis... other than by dismantling Jimmy Carter's Community Reinvestment Act, that forces banks to make bad loans to poor people who can't pay the mortgage; and we just can't imagine ever agreeing to such a drastic affirmation of free-market Capitalism and the American way!"

  1. If the National Republican Congressional Committee and the National Republican Senatorial Committee don't run against the Democrats on the issue of their abdication, disconnect, and denial on the single greatest economic crisis of their brief tenure running Congress, then Republicans are insane.
  2. Republicans are not insane.
  3. Ergo, they will run on this issue, and run hard and deep.

I am astonished that the Democrats have simply left this door wide open. But for heaven's sake, let's charge through it, before Nancy and Pinky come to their senses!

For one example, I hope the Republicans quickly put together the best ideas from their own last several attempts to overturn the CRA, reform plans that were very well thought out and would have helped immeasurably:

  • Start with the Gramm deregulation of 1999 (which removes the requirement that banks must make those bad loans);
  • Add back in a certain amount of the regulation proposed by President Bush in 2003, which we now realize is necessary when corrupt Clintonite Democrats run Fannie Mae and Freddie Mac;
  • Finally, pore through the 2005 reform co-sponsored by John S. McCain and Sens. Chuck Hagel (R-NE, 79%), Elizabeth Dole (R-NC, 92%), and John Sununu (R-NH, 84%) for any good ideas not already covered.

We would then have a very strong, effective, and attractive reform bill. Call it the Fix Your Fannie Act of 2008.

...Which the Democrats would certainly refuse to return to Congress to vote upon, thus giving Republicans in Congress and McCain a perfect platform to demonstrate that it is they, not the corrupt-to-the-core Democrats or Mr. Chicago Machine, Barack H. Obama, who are the real reformers on this bus.

Hatched by Dafydd on this day, September 18, 2008, at the time of 1:46 PM | Comments (1) | TrackBack

Date ►►► September 17, 2008

Sub-Prime Crisis On a Nutshell: Corrupt Democratic Mortgage Manipulation

Hatched by Dafydd

The good: President George W. Bush; Sens. John McCain and Phil Gramm; Senate Republicans.

The bad: Presidents Jimmy Carter and Bill Clinton; Sens. Chris Dodd and Barack Obama; Congressional Democrats; the propagandistic "news" media.

The cowardly and flummoxed: House Republicans.

All else is dicta. (Dicta follows below.)

Credits: I am indebted to a post by "Karl" over on Patterico's Pontifications; Karl has all the information... but (pace) I found his explanation a bit compressed and opaque. I wrote this post as much to understand it all myself as to explain to anybody else! I also call your attention to an excellent post on Wolf Howling, from which I learned a great deal. Also, a pair of posts by Captain Ed Morrissey at Hot Air explain much of this (with links galore).

Note that I am not a lawyer, and I really don't understand all this as well as do those who actually work in the field as lawyers, mortgage brokers, or loan agents. If anyone who knows what he's talking about can correct any misinformation I have here, I will pay close attention. Thanks!

I hope you have all taken note that Barack H. Obama has been rising in the polls and is now ahead of John S. McCain on several major tracking polls. If McCain doesn't do something quick, we will head right back to where we were six months ago, in early March, with Obama consistently leading by 5% in the polls. Obama could win and Democrats take huge majorities in both House and Senate.

If you're wondering why this is happening now, it's unquestionably because McCain is losing again on the economy -- what with the whole ongoing, slow-motion collapse of the entire charade of "sub-prime mortgages"... which the Democrats, aided by the elite media, of course, have blamed entirely on President George W. Bush -- and on McCain. This allows the Democrats to campaign on fear, their favorite "issue."

Economic fear drove the huge sell-off on the stock markets today. Money panic drives people to the Democrats, who promise to "tax the ultra-wealthy" and give that money to everybody else. If McCain doesn't calm voters down immediately, he will lose.

At the end of this post, I suggest that McCain cut a new commercial with him speaking directly to the American people, himself. This is what I suggest he say:

My friends, let me give you some Straight Talk about the economy. The American economic system is not the problem. The free market is not the problem. The problem is sub-prime lending, where the government forced banks to lend too much money to people who cannot meet the payments; when they default, the taxpayer picks up the bill. This is nothing less than housing welfare.

Now it's time for some straight talk from my opponent. Sen. Obama blames the Republicans; but he knows the entire failed program was created by his fellow Democrats, who have stopped Republicans from reforming it for decades.

He talks the talk of reform but refuses to walk the walk. Any plan that doesn't get the government out of the business of forcing banks to issue bad mortgages is a sham and will only make the crisis worse.

There's no time left for Sen. Obama and his fellow Democrats to dither. We must reform mortgage lending now. I've put a detailed plan on my website to resolve this crisis, reform the system, and return to fiscal sanity, giving a powerful, short-term boost to the economy. The long-term fix must come from cutting out-of-control spending, letting you keep more of your own money, and producing dramatically more real energy right here in America.

I'm John McCain, and I emphatically approve this message.

For the rest of the story, please click the Slither On.

Where things stand

John McCain must speak directly to the American people about the economy, lest Obama and the Democrats get a chance to "define" McCain as an old, out of touch beltway boy. Voters can see that we're in the midst of a collapse in the mortgage market, as lender after lender (and now insurers, like American International Group) goes belly-up or must find a buyer; and folks want to hear what McCain himself has to say.

But perhaps the public doesn't understand -- as I didn't until this month -- just how much of that collapse was in fact orchestrated by the socialist hijinks of congressional Democrats (including Obama), by Bill Clinton, and by Jimmy Carter: Between them, they forced banks and S&Ls into the volatile and risky sub-prime market; and then the Democrats repeatedly prevented any attempt by congressional Republicans (and by President Bush) to oversee and regulate that market.

Why would they do this? First, because Democrats have long been getting huge campaign donations from banks and other mortgage lenders; in fact, the top two recipients of such money are Sens. Chris Dodd (D-CT, 95%) and Barack Obama. Both subsequently encouraged exactly the sort of loan speculation they now decry, an act that reeks of corruption. In addition, many former members of the Clinton administration, including Franklin Delano Raines, former Commerce Secretary William Daley, and Deputy Attorney General Jamie Gorelick (of "Gorelick's wall" infamy), ended up running Fannie and Freddie or lobbying for them... and incidentally raking off tens of millions of dollars for themselves.

But the real culprit in this collapse isn't just Democratic corruption; it's the leftist demand to increase minority home ownership by lending low-income borrowers more money than they qualify to borrow, with higher mortgage payments than they are able to pay. That is, offering mortgages that violate the most basic rules of banking, as a form of "housing welfare." That is the crux of this very real, but very specific crisis.

What caused the sub-prime mortgage crisis?

One of the most evil, anti-capitalist movies ever made is also one of the most beloved by audiences and critics (including supposedly capitalist critics and pundits such as Michael Medved and Hugh Hewitt): It's a Wonderful Life, directed by liberal fascist Frank Capra and starring conservative Jimmy Stewart.

In that movie, George Bailey (Stewart) is shown to be a great guy because he offers mortgages to people who cannot afford to pay them -- and then lets them slide on their payments without foreclosing. Such a wonderful life! (Well, not for the bank's investors; and not for the depositors, when the bank fails -- as it inevitably will do.) In a sense, then, Philip Van Doren Stern (author of the short story, "the Greatest Gift," that was the basis for the movie) invented the utopian idea of "sub-prime mortgages."

It's a Wonderful Life makes great theater but lousy economics, and the financial events of the past few months illustrate why.

The primary rules to prevent the collapse of banking are (1) not to lend money to unqualified borrowers -- you can't give a mortgage to someone who cannot possibly pay it -- and (2) to maintain a sufficiently high cash reserve that people who need to draw out all their money can do so -- the bank can't lend out all its depositors' money. But those rules make it more difficult for the poor (disproportionately minorities and Democrats) to obtain housing loans: They're restricted to much smaller mortgages for a smaller percentage of the total cost of the house; and because the bank can't lend out every penny, it must pick and choose to whom to lend.

This infuriates liberals, who believe the very purpose of a bank is to give the poor a chance to own their own home (even without pulling themselves out of poverty first). Thus, liberals have long championed a supposed "reform" that is actually an element of unbridled liberal fascism: That government should force private banks to make bad loans to Democratic constituents, under threat of massive fines from the SEC... or even loss of their license.

Democrats in Congress forced that act of semi-nationalization on the banks as long ago as 1977, where they pushed through Congress the anti-capitalist, Carter-era Community Reinvestment Act (CRA) of 1977. That was the year that was: Democrats in the 95th Congress, still surfing the tsunami of Watergate, enjoyed a 61% majority in the Senate and a 67% majority in the House; and in Jimmy Carter, they had the most left-liberal Democrat in office since FDR. It was the perfect storm of socialism.

The umpires strike back

In 1999, Republicans, who by then controlled the House and Senate, tried to do away with that horrible piece of utopianism. Sen. Phil Gramm, then chairman of the Senate Banking Committee, offered a sweeping deregulation of the financial industry (S. 900, later called the Financial Services Modernization Act, FSMA). It was true deregulation that left the financial institutions free to decide what activities to engage in and with whom, but left them accountable for their actions; and it explicitly removed the CRA mandate to offer mortgages to poor people who couldn't afford them.

Democrats voted en masse against this version of the FSMA, with only one Democrat -- Sen. Ernest F. Hollings -- voting for it. Nevetheless, it passed the Senate by 54-44; every single Republican voted for this clean version, including John McCain. But President Clinton threatened to veto the bill for that very reason: He wanted to strengthen the CRA, not gut it! Clinton wanted to make it even easier for low-income borrowers to get a mortgage... and even easier to find somebody else to make the payments (while the borrower kept the house) when the inevitable happened. So President Clinton made it clear that the bill, as passed by the Senate, would never become law:

Administration officials say the President would veto the Senate version because it would dilute requirements that banks make loans to minorities, farmers and others who have had little access to credit. The legislation also contains provisions that have been criticized by Treasury Secretary Robert E. Rubin because they reduce his department's oversight of banks.

But privately, some Democrats and Administration officials say that Mr. Clinton might agree to legislation if the objectionable provisions in the Senate measure were watered down or eliminated when the House and Senate negotiate a final bill in conference.

Alas, that is exactly what happened. Throwing gasoline to the winds, Senate Democrats insisted on retaining the It's a Wonderful Life provision, Jimmy Carter's CRA; the final version of the FSMA, passed in 1999, still compelled banks and S&Ls to issue sub-prime mortgages. The provision was inserted during the House-Senate conference, and no senator or representative ever got to vote for it... very similar to an earmark, except it was designed to protect Democratic votes (the poor and irresponsible being their natural constituency), rather than enrich some particular Democratic crony.

Shamefully, the Senate Republicans eventually agreed to this version, which passed 90-8. The only Republicans who did not vote for it were Richard Shelby (R-AL, %), who voted Nay, and John McCain, who did not vote.

I suspect McCain wanted to vote Nay, but he did not want to oppose his longtime friend and ally Phil Gramm -- who voted for this version, since it did contain most of the deregulation he wanted. Gramm and the other Republicans who went along probably thought the sub-prime lending was just a small "bone" they'd thrown to the Democrats.

But it was exactly this Democratic bone that led to the current collapse, the Law of Unintended Consequences in full cry.

President Bush tries to reform Freddie and Fannie

Fannie Mae (Federal National Mortgage Association) was part of Franklin Roosevelt's New Deal; founded in 1938, its purpose is to buy mortgages from banks and savings & loans to inject more liquidity (cash) into the mortgage market. In other words, it's a legal way for the government to pump more money into the banking industry... exactly the sort of government intervention in the market that is rightly dubbed "liberal fascism." It was turned into a quasi-private corporation in 1968, to get it off the government accounts due to its perennial shortfalls. (This sort of quasi-private company is called a "government sponsored enterprise," or GSE.)

Freddie Mac (Federal Home Loan Mortgage Corporation) is another GSE, this one founded in 1970; its purpose is to create the illusion of competition with Fannie Mae. Fannie and Freddie have been in near constant financial deep water for decades because of their very nature -- but especially after they became the primary avenues for implementing Jimmy Carter's vision of housing welfare, the CRA.

As of September 7th, 2008, both Fannie Mae and Freddie Mac were placed under conservatorship of the federal government, due to extraordinary mismanagement by the former members of the Clinton administration who have been running the two GSEs.

In 2003, Bush proposed a major reform of Freddie and Fannie. Specifically, he wanted regulation to be put under the Treasury Department, which would tighten the lending rules... again, trying to bring some capitalist rationality to Carter's CRA. But again, the Democrats threw themselves athwart fiscal sanity and cried "stop!" As the New York Times reported:

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

Bear in mind that to Democrats, "affordable housing" is code for giving Democratic constituents mortgages that they cannot pay to buy houses they cannot afford -- with the proviso that when they default on their loans (as so many do), you, the American taxpayer, will pick up the tab so that other fellow can keep his house.

Bush's reform attempt went nowhere, due to lack of congressional support, primarily by Democrats but without much help from Republicans, either. (In this sense, it was very much like Bush's attempt to reform Social Security. Thanks, GOP Congress!)

Republicans' last shot at averting the looming disaster

Republicans, including John McCain, made one more valiant effort to stave off the implosion that he and others actually foresaw; in 2005, just three years ago, McCain joined as a co-sponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005.

The bill sought to shift authority over Fannie and Freddie from HUD -- which historically pushes lenders towards quasi-socialism and liberal fascism, including the It's a Wonderful Life provision -- to an independent agency, the Federal Housing Enterprise Regulatory Agency.

McCain spoke powerfully in its favor; but Democratic Sen. Chris Dodd killed it in the Senate Banking Committee, in which he was ranking minority member. (Thanks, Senate parliamentarians!)

Bottom line

Here are the "straight talk" bullet points you need to know about the sub-prime mortgage crisis:

  • Starting three decades ago, Democrats have used every parliamentary trick in the book to construct exactly the system we have today, where banks are bullied into making bad loans to borrowers who cannot afford them; then they sell those bad loans to Freddie Mac or Fannie Mae; and when a borrower defaults, taxpayers pick up the bill for the defaulter's nice, new house. This amounts to housing welfare for Democrats;
  • Republicans have tried repeatedly to kill that program, warning that such an anti-capitalist practice can only result in a complete, diastrous collapse;
  • Democrats "denounced" those warnings as "exaggerated." Because of the arcane rules in the House of Representatives and especially in the Senate, Democrats have repeatedly managed to squash those attempts at real reform -- whether they were in the majority or the minority;
  • Now that the warnings are proved prescient, and the collapse is underway and impossible to conceal any longer, Democrats point their fingers at President Bush, John McCain, and Republicans in general -- "Look what you made us do!"
  • Democrats pretend that the collapse was caused by a lack of regulation and government control -- when it was actually caused by overregulation, amounting to quasi-nationalization of mortgage lenders, vigorously pushed by Democrats in 1977, 1999, 2003, and 2005 -- the It's a Wonderful Life provision;
  • Democrats pretend that John McCain was pushing for complete deregulation of Fannie and Freddie, when in fact he was pushing for greater oversight -- but favored the rescinding of the particular Democratic provision that has now led to the collapse. Barack Obama and Joe Biden have consistently supported this provision -- and now blame McCain when its inevitable, predictable, and predicted consequences come crashing down upon us.

What's to be done, then?

Very simple: It's time for some straight talk from Mr. Straight Talk himself.

So far, McCain hasn't said anything stupid about this crisis. But he hasn't said anything smart, either. In fact, he has barely said anything at all.

John McCain needs to move and move quickly. He needs to jump out in front of this issue and not allow himself to become "Katrina-ed." McCain needs to cut a commercial; and taking a page from his opponent, he should simply talk straightforwardly to the camera and say something along the following lines:

My friends, let me give you some Straight Talk about the economy. The American economic system is not the problem. The free market is not the problem. The problem is sub-prime lending, where the government forced banks to lend too much money to people who cannot meet the payments; when they default, the taxpayer picks up the bill. This is nothing less than housing welfare.

Now it's time for some straight talk from my opponent. Sen. Obama blames the Republicans; but he knows the entire failed program was created by his fellow Democrats, who have stopped Republicans from reforming it for decades.

He talks the talk of reform but refuses to walk the walk. Any plan that doesn't get the government out of the business of forcing banks to issue bad mortgages is a sham and will only make the crisis worse.

There's no time left for Sen. Obama and his fellow Democrats to dither. We must reform mortgage lending now. I've put a detailed plan on my website to resolve this crisis, reform the system, and return to fiscal sanity, giving a powerful, short-term boost to the economy. The long-term fix must come from cutting out-of-control spending, letting you keep more of your own money, and producing dramatically more real energy right here in America.

Both parties contributed to this collapse, and it's time to hold both accountable... and come together to fix this problem before it wrecks our otherwise strong economy.

I'm John McCain, and I emphatically approve this message.

I agree we should let John McCain be John McCain; but for God's sake, can't he be John McCain a little faster and louder, please?

Hatched by Dafydd on this day, September 17, 2008, at the time of 10:55 PM | Comments (11) | TrackBack

Date ►►► September 16, 2008

Sarah Palin Should Rest Her Case With This

Hatched by Dafydd

CBS's Marketwatch columnist Jon Friedman smirks that "the Sarah Palin phenomenon is doomed" (hat tip to frequent commenter Wtanksleyjr, through the Lizardly Tips e-mail link here... this is what it's for, sending us hot tips!):

But it's not because of her lack of foreign policy experience or her deer-in-the-headlights look during part of her interview last week with ABC's Charles Gibson.

The primary reason why the Palin bubble will burst is that the media will decide that they are bored with her. They'll need to move to shine a light on a fresh issue or individual.

This is how the world works in the age of 24/7 news cycles. Whether the subject is Britney Spears, Michael Jordan or Sarah Palin, we inevitably raise stars to mythic levels, out of all reasonable proportions. Then we knock them down. (Look out, Michael Phelps. Your time is coming, too.)

So according to Friedman, We made you and we can break you! Anytime we want! You big phony baloney! The miasma of hubris is thick enough to choke a dinosaur.

But towards the end, he offers a searing indictment of her unpreparedness... which in fact turns out to be one big, fat admission against interest:

Specifically, Palin seemed to have little idea about the Bush Doctrine, in which the U.S must spread democracy around the world to halt terrorist acts. When Gibson put it to her and asked if she agreed with the doctrine, she answered, "In what respect, Charlie?"

Some analysts [where "analysts" here means "liberal media pundits"] have suggested that Gibson knew more about the Bush Doctrine than the vice-presidential candidate.

"She sidestepped questions on whether she had the national security credentials needed to be commander-in-chef," the Associated Press noted.

Really? Is that what the "Bush doctrine" comprises -- that "the U.S. must spread democracy around the world to halt terrorist acts?" Well yes, actually; that is the Bush doctrine... one of them.

Alas, it's not the same Bush doctrine so smugly enunciated by Charlie Gibson, as he mocked Palin for not knowing what "the" Bush doctrine was:

GIBSON: Do you agree with the Bush doctrine?

PALIN: In what respect, Charlie?

GIBSON: The Bush -- well, what do you -- what do you interpret it to be?

PALIN: His world view.

GIBSON: No, the Bush doctrine, enunciated September 2002, before the Iraq war.

PALIN: I believe that what President Bush has attempted to do is rid this world of Islamic extremism, terrorists who are hell bent on destroying our nation. There have been blunders along the way, though. There have been mistakes made. And with new leadership, and that’s the beauty of American elections, of course, and democracy, is with new leadership comes opportunity to do things better.

GIBSON: The Bush doctrine, as I understand it, is that we have the right of anticipatory self-defense, that we have the right to a preemptive strike against any other country that we think is going to attack us. Do you agree with that?

PALIN: I agree that a president’s job, when they swear in their oath to uphold our Constitution, their top priority is to defend the United States of America.

I know that John McCain will do that and I, as his vice president, families we are blessed with that vote of the American people and are elected to serve and are sworn in on January 20, that will be our top priority is to defend the American people.

GIBSON: Do we have a right to anticipatory self-defense? Do we have a right to make a preemptive strike again another country if we feel that country might strike us?

PALIN: Charlie, if there is legitimate and enough intelligence that tells us that a strike is imminent against American people, we have every right to defend our country. In fact, the president has the obligation, the duty to defend.

Let's compare and contrast the two pronunciamenti from two of the many mouths of the elite news media:

  • Charlie Gibson of ABC World News knows for a fact that the Bush doctrine comprises "anticipatory self-defense... the right to a preemptive strike against any other country that we think is going to attack us."
  • Jon Friedman of CBS Marketwatch knows for a fact that the Bush doctrine comprises "the U.S.... spread[ing] democracy around the world to halt terrorist acts."

And both castigate Palin as a dunce, as does practically the entire massed elite media, for responding to Gibson's question, "Do you agree with the Bush doctrine?", by asking, "In what respect, Charlie?"

If there is any better demonstration that there is no one "doctrine" that can fairly be called the Bush doctrine -- and that therefore Sarah Palin was absolutely right to ask Gibson which one in particular he meant -- I cannot imagine what it is. (And as soon as Gibson clarified which particular Bush doctrine he was interested in, Palin answered -- not "sidestepped" -- the question quite forthrightly: The answer is Yes, we do have the right of "anticipatory self-defense.")

Charles "the Sauerkraut" Krauthammer -- who has never been called "Charlie" in his entire 93 years of life -- was absolutely correct in his column in pointing out that there are in fact four distinct Bush doctrines, as dubbed by various elements of the elite news media (Krauthammer himself created the term for the first version):

  1. Rejecting or withdrawing from useless and unenforceable diplomatic hand-waving agreements, such as the ABM Treaty and the Kyoto Protocol (pre 9/11);
  2. "Either you are with us or you are with the terrorists" -- no neutrality in the war against the al-Qaeda/Iran axis (immediately post-9/11, September 2001);
  3. Anticipatory self-defense (shortly before the Iraq war, late 2002);
  4. "The survival of liberty in our land increasingly depends on the success of liberty in other lands. The best hope for peace in our world is the expansion of freedom in all the world" -- spreading liberty to drain the fever swamp that sustains militant Islamist terrorism (Bush's second inaugural address, January 2005).

Had Gibson asked me the same question, I would have been just as stumped as Gov. Palin... and I have been avidly following the news, voraciously reading everything on the subject I could find, since long before George W. Bush was elected. I wouldn't have come up with the first definition above, but I certainly knew about the last three [I suspect Palin would say the same; pace, Sauerkraut, but nobody remembers the first except you].

I passionately believe that Friedman's thesis shatters against the rock-ribbed common sense and basic reason of the American voter. The drive-by media did not create Sarah Palin and John McCain, and they cannot "knock them down," either. They've been trying desperately to do just that for two years now -- and failing miserably.

They tried to build Barack H. Obama into a superstar who is beyond criticism; but he is now almost universally seen as just another politician. And they've been trying to blot out John S. McCain, who they always recognized as the most dangerous opponent for the One, since he first declared his candidacy for president.

True, his campaign faltered at one point; but that was not due to attacks by the mainstream media so much as by McCain's own maverickness (conservatives deserted him for various alternative GOP candidates). But even then, the media were unsuccessful in driving a stake through the heart of the Straight Talk Express, and McCain rose again like a phoenix, the namesake of Arizona's state capital. Today, McCain is running ahead of Obama in nearly every poll (excepting only Hotline), despite the elite media's best efforts at knocking him down.

And they will fail just as surely trying to knock down Sarah Palin; because, when all is said and done, she is far more real to most people than are the entire elite news media.

One of the five greatest movies of all time, Mary Poppins, offers the best summation ever of the self-inflicted immolation of the news media -- even though the movie dialog is directed at a very different target. The children's father, George Banks, has been summoned to an emergency board meeting of the Dawes, Tomes, Mousely, Grubbs Fidelity Fiduciary Bank... whence he has just been sacked:

Mr. Dawes Sr.: Well, do you have anything to say, Banks?

George Banks: Well, sir, they do say that when there's nothing to say, all you can say...
[He feels his son Michael's tuppence in his pocket, takes it out and looks at it]

Mr. Dawes Sr.: Confound it, Banks! I said do you have anything to say?

George Banks: [begins giggling hysterically] Just one word, sir...

Mr. Dawes Sr.: Yes?

George Banks: Supercallifragilisticexpialidocious!

Mr. Dawes Sr.: What?

George Banks: Supercallifragilisticexpialidocious! Mary Poppins was right, it's extraordinary! It does make you feel better! Hee hee hee hee!

Mr. Dawes Sr.: What are you talking about, man? There's no such word!

George Banks: Oh yes! It is a word! A perfectly good word! Actually, do you know what there's no such thing as? It turns out, with due respect, when all is said and done, that there's no such thing as you!

This is perhaps the best epitaph ever for a once-great -- or at least once-trusted and respected -- institution.

UPDATE from Sachi: The day after the interview, the news spread all the way across the Pacific to Japan, where I was temporary stationed in my capacity as a civilian employee of the United States Navy. On a political analysis show, they showed the ABC segment; after a newscaster characterized Palin's reaction as "ignorant about foreign policy," one of the commentators protested: "That was an unfair question," he said; "there is no one thing called 'Bush doctrine'. It was a word invented by the media, composed of many different aspects. Palin was right to ask which aspect of it Gibson was talking about."

So even the Japanese are learning, on their regular news talkshows, that it was Charlie Gibson, not Sarah Palin, who was confused about the so-called "Bush Doctrine." I wonder how long it will be before Americans get to hear that?

Hatched by Dafydd on this day, September 16, 2008, at the time of 3:38 PM | Comments (7) | TrackBack

Date ►►► September 15, 2008

Novel New Criminal Defense: Globaloney Made Me Do It!

Hatched by Dafydd

The headline raises immediate and insistent alarm bells: Jury decides that threat of global warming justifies breaking the law.

The Independent reports that a British jury has just acquitted eco-vandals of spraypainting the smokestack of a coal-fired power plant, causing damages to the tune of £35,000 ($63,000); the successful defense was that the defendants had to "tag" the plant -- because of the urgent imperative to stop global warming:

Jurors accepted defence arguments that the six had a "lawful excuse" to damage property at Kingsnorth power station in Kent to prevent even greater damage caused by climate change. The defence of "lawful excuse" under the Criminal Damage Act 1971 allows damage to be caused to property to prevent even greater damage -- such as breaking down the door of a burning house to tackle a fire.

The not-guilty verdict, delivered after two days and greeted with cheers in the courtroom, raises the stakes for the most pressing issue on Britain's green agenda and could encourage further direct action.

"Lawful excuse" was, in fact, the only defense offered by the six defendants, members of Greenpeace all.

However some might try to spin this, it is not an example of "jury nullification" -- where a jury accepts that the defendants committed the criminal offense but hold that the law itself is wrong, throwing it back in the teeth of judge and prosecutor. By contrast, this judge actually allowed the defense that vandalizing the smokestack was necessary to prevent global warming... which is tantamount to begging the jury to run with it.

Whatever one thinks of jury nullification, what happened in Great Britain is far worse and more dangerous. It's utterly clear that the legal defense of "lawful excuse" was never meant to include the kind of situation in this trial. As the example cited above illustrates, the law was meant to cover immediate and urgent actions taken to stop an already extant and undisputed threat from spreading -- e.g., breaking down the door of a house to put out a fire inside.

This is entirely different from what happened in this case:

  • The supposed peril the defendants were trying to avert -- global warming -- is highly disputed. There is no scientific "consensus;" many respected, oft-published scientists working in the relevant fields argue that it either isn't happening at all; or that the damage is less than people like the high priest of globaloney, James Hansen, claim; or that to the extent that such damage might occur, it is caused much more by factors outside of human control, such as sun activity.
  • The supposed peril is not at all "imminent," as Hansen claims; even he speaks in a time frame of decades and centuries.
  • And most pointedly, the defendants' actions have no direct connection whatsoever to averting the supposed peril.

Unlike firemen smashing down a door to put out a fire, where the connection is obvious and direct, spraypainting insulting comments about the prime minister, Gordon Brown, as the defendants intended -- or even just spraypainting "Gordon," which is all they succeeded in doing -- has only the most tenuous, indirect effect on the energy policy of Great Britain... and an even more gossamer effect, if any at all, on global energy policy, which is driven far more by the ravenous energy needs of India and Red China and the energy policies of much more influential countries like the United States. Very few Americans will decide to oppose clean-coal technology because some idiots climbed a smokestack in Kingsnorth and sprayed the word "Gordon" at the top.

The judge had to fold himself into a Gordian Knot to equate the political war waged by Greenpeace against energy production with a burning conflagration that had to be extinguished. It's as ludicrous a stretch as arguing that bombing a random tube station in London is utterly necessary to bring the world to Islam.

Nevertheless, the judge allowed the defense team to make the argument to the jury, presenting numerous "expert" witnesses (including James Hansen himself) to speak about "the gravity of the climate danger," the "imminent peril," and the "bleak picture" of Britain's future if more coal-fired plants are allowed to be built. In other words, to hell with the voters and the government officials they elected; Greenpeace knows best, and it has license to force its own agenda on Great Britain by any means necessary.

(Hansen, you no doubt recall, was the putative scientist -- has he actually committed any real science since the early 1980s, when he made his bones? -- who recently called for energy-company executives and even other climate scientists to be criminally prosecuted for "high crimes against humanity and nature"... for daring to dissent against the "consensus opinion" of globaloney. At least Hansen didn't call it an "intergenerational crime," as co-globaloney religionist David Suzuki did.)

A verdict cannot be "jury nullification" when it is encouraged, practically demanded, by the judge. In this trial, the judge twisted court rules to admit "evidence," such as "experts" in AGCC -- including "the world's leading climate scientist," as the Independent's "Environment Editor," Michael McCarthy, characterizes James Hansen -- to testify that a childish graffito scrawled on a smokestack, with the intent to change election results towards the Left, has the same kind of "lawful excuse" as breaking down a door to put out a fire. This isn't jury nullification; the correct term for this is "legislating from the bench."

The best conclusion to be drawn is that the judge himself is an ardent believer in anthropogenic global climate change (AGCC), and he saw this trial as an opportunity to force an acquittal, embarass the government, and foster further such "actions directes," thus furthering his own political goals.

Either that, or the judge is a baboon.

What is "direct action?" In essence, it means any action taken outside the normal legal, constitutional, political, and elective mechanisms to institute political changes or circumvent the will of the voters. For example, when Earth Liberation Front activists burn down condo complexes in order to prevent development, that is direct action -- but it's also direct action when militant Islamist terrorists raid a Jewish hospital's maternity ward and shoot to death all the mothers and babies.

Although the term can theoretically refer to actions on both left and right, in practice, only lefties proudly use it; they use it to label themselves as heroic resistance fighters when they vandalize other people's property or interfere with other people's lives. Or when they assassinate innocent victims from ambush.

In this case, the damage was minimal: painting "Gordon" on the smokestack. But the precedent set by the acquittal -- that a fervent belief in the leftist cause celebre du jour gives the anointed license to commit a crime in order to "call attention" to the politics of the issue -- is terribly corrosive to civil society. It may well hasten the destruction of the once great nation of Britain. In fact, this verdict could become precedent for a defense against the crime of terrorist murder; does anybody really believe that the "Kingsnorth Six" believe in AGCC any more fervently than the "Leeds Four," who committed the London bombings on July 7th, 2005, believe in radical, Salafist Islamism?

If a judge will allow six members of Greenpeace to get away with criminal activity because of their "honestly held belief" that they must save the planet from global warming, then what is to stop another judge from allowing future "holy warriors" to get away with blowing people up because of their honestly held belief that they must save the planet from heresy and blasphemy against Allah and His prophet Mohammed?

As an immediate stopgap to prevent its use as precedent, British lawmakers had better get busy and rewrite the Criminal Damage Act of 1971; but you know they will not, because most of those in both the major political parties in the UK believe in globaloney almost as fervently as the Kingsnorth Six. And even if MPs found their huevos and did make explicit that the defense is not meant to excuse politically motivated violence and thuggery, I suspect the British courts would swiftly declare that the original law had created a "right," which would then preclude a subsequent law from "taking away" that right.

Take note, Americans: More and more American judges are looking not to our own Constitution but to "international law and standards" to judge cases here in the United States; this includes even Supreme Court justices, such as John Paul Stevens and Anthony Kennedy. If this becomes the norm in Europe and the UK -- a sincerely held leftist worldview gives the anointed license to commit crimes to further their vision -- then it will swiftly become the norm here in America, as well.

One presidential candidate, John H. McCain, will nominate judicially conservative judges and justices who will fight this trend. The other, Barack H. Obama, will work feverishly behind the scenes to appoint federal judges who would backdoor it into the Constitution.

Please express your preference by sending money to the party of your choice... and of course on November 4th as well.

Hatched by Dafydd on this day, September 15, 2008, at the time of 3:36 PM | Comments (3) | TrackBack

Date ►►► September 12, 2008

Raking Whoopi

Hatched by Dafydd

Today, John S. McCain was a guest on the View, where he has in the past been treated more kindly -- when he was nought but a maverick Republican tweaking President George W. Bush's nose. Now that he is the Republican nominee for president (and leading in nearly all the polls), it's a whole different kettle of horses.

Among the challenging and deranged questions he was asked, the best of the worst came from noted political scholar and seasoned electioneer Whoopi Goldberg, now ensconced in the Rosie O'Donnell memorial deep-analysis chair. During a discussion of the types of federal judges McCain would name, bouncing off of the overly obvious Roe v. Wade "crisis," the following hijinks ensued:


Sir, can you just -- and I don't want to misinterpret what you're saying -- did you say you wanted... strict constitutionalists? Because that -- that --


No, I want people who interpret the Constitution of the United States the way our Founding Fathers envisioned them to do.


Should I be worried about being a slave, we'd be returned to slave -- because certain things happened in the Constitution that you had to change. [Wild cheering from audience]

Alas, McCain did not really respond to Whoopi Goldberg's "question;" he seemed a bit stunned by the audacity of her stupidity, and he just placated her, telling her it was a good point and he understood. He all but patted her head, the way one would a child who was particularly thick.

So we lizards must take up the smart man's burden and explain, in words of few syllables, what is so terribly wrong with Ms. Goldberg's argument... for argument it was; it certainly was not an actual question to which she wanted an answer.

Goldberg, like most liberal Democrats, is confused about judges, John McCain, and the Founding Fathers; she imagines that a judge who is a "strict constitutionalist" -- an expression I confess having never heard before -- wants the Constitution returned to its pristine condition as written in 1787, before even the Bill of Rights was added.

I supposed it's barely possible that there may be a lawyer or law professor somewhere in America who wants such a thing; it's a big country. But certainly such a static thinker would not have been found among the Founding Fathers themselves. We must recall the Founders were rather revolutionary thinkers.

The Founders of our republic never intended the Constitution to remain changeless; that is why they included an elaborate amendment process to change it, which has successfully been invoked 27 times in the last 217 years -- an average of once every eight years (or once every 12 years, if you count the Bill of Rights as a single agony in ten fits).

One of those changes was the Thirteenth Amendment, ratified 143 years ago, which reads in toto:

Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

Section 2. Congress shall have power to enforce this article by appropriate legislation.

As this more-or-less duly enacted amendment* would allay Ms. Goldberg's fears about "being a slave" once more (perhaps she believes she was a slave in a previous life), the only logical explanation is that she thinks the judges that "President" McCain would appoint reject that amendment as marring the original beauty of the Constitution. In fact, I suspect that all hysterical Democrats think that's what "strict constitutionalist" judges believe. It's one of the sure signs of hysterical dementia.

In the real world, however, judicial conservatives and strict constructionists -- terms I am more familiar with than Whoopi Goldberg's term -- have no desire to roll the Constitution back to what it was the day it was ratified in 1789. They don't reject subsequent amendments; but they do insist upon ruling on the basis of what is actually in the Constitution today: the original text, all constitutional amendments that have been ratified, plus the actual words of relevant statutary law. Where none of the above decides the case, then judicial conservatives turn to previous interpretations and understandings of the law from court precedent; this is to resolve ambiguities, contradictions, and countervailing rights or interests.

A judicial conservative asks only that changes in the Constitution come about by the amendment process the Founders carefully enunciated in the document itself.

By stark contrast, the sort of judge supported by Democrats like -- well, like Whoopi Goldberg -- do not rule on what's actually in the Constitution; instead, they rule on the basis of their own personal gut feelings, which they would insert into the Constitution if only they could. Since they can't, however, they pretend it's there anyway and rule according to their whim du jour. That, as I understand it, is the difference between a strict constructionist/judicial conservative and a judicial legislator.

But you know I'm not a lawyer; I'm just playing sea-lawyer here. So if some lawyer who actually knows what he's talking about (unlike me) wants to correct my quickie definition, please feel free. Beldar, Patterico, and XRLQ, this means you!

I wonder if Whoopi Goldberg reads Big Lizards? Nah; can't picture it.


* Yes, I know that some or all rebellious Southern states had not been readmitted to the Union and Congress when the 13th Amendment was ratified; tough. They may have gotten the short end of the totem pole, but they buttered their own petard, and now they can smoke it.

Hatched by Dafydd on this day, September 12, 2008, at the time of 9:21 PM | Comments (9) | TrackBack

Date ►►► September 11, 2008

Obama and the Old Switcheroo? Not a Chance.

Hatched by Dafydd

From several unrelated sources, I have heard or read the suggestion that Barack H. Obama might dump the ineffectual Slow Joe Biden -- whose only accomplishment is breaking the world record for stupid verbal gaffes (in the United States Senate, a remarkably tough league!) -- and name Sen. Hillary Clinton (D-Carpetbag, 100%) instead as his running mate.

Alas, I don't think there is a chance in a thousand that Obama will dump Biden for anybody... and most especially not for Hillary. He's savvy enough to realize that if he did, he would lose even worse than he's already likely to do.

Several reasons:

Judgment day

It's not that making such a switch "reeks of desperation," as some suggest. That might have been the case had he picked her first; but to dump his first pick and grab for Hillary now would raise a far more serious question about Obama's fitness: Such an obvious U-turn screams "bad judgment," which is already the biggest slam against him.

When a gaffe plays directly into the gaffing candidate's worst quality, it resonates out of all proportion:

  • John F. Kerry's two most questionable characteristics were deferring to the world community, rather than putting America first, and his inability to make up his mind. Thus his own statements -- calling for a "global test" for U.S. policy and his boneheaded explanation that, "I was actually for the $87 billion before I was against it" -- became the two defining moments of his campaign.
  • The issue that most dogged George H.W. Bush was whether the man who called Ronald Reagan's tax cuts "voodoo economics" in 1980 was any more committed to them as president; so his "read my lips, no new taxes" promise, followed by a big tax increase, sealed his doom in 1992.
  • And the biggest question voters had about Michael Dukakis was whether he was qualified to lead American forces in the event of war; his "bobblehead" ride in a tank, as it served left and right, wandering aimlessly, destroyed his shot at the White House.

In this case, Obama's Achilles' heel is the question of judgment: Dumping his running mate only a couple of weeks after naming him conjures up memories of Gerald Ford -- remembered (wrongly but strongly) as a bumbler who was as clumsy in his judgment as he was on his feet.

(Yes, I know he was an athlete and his proclivity for tripping was greatly exaggerated by Chevy Chase; but I'm talking about perception not reality.)

All the cows come home to roost

Others argue that picking Hillary would bring back all those disaffected former Hillary Clinton supporters, who were only turning to Sarah Palin out of disappointment at not getting the gal they really wanted.

If Barack Obama had picked Hillary first, that might have helped him, if he could overcome the "desperation" charge. But to first pass her over, and then, to dump Biden and pick Hillary only after John S. McCain picks Palin... well, not only would that not bring back those PUMAs ("Party Unity My Ass") who are now jumping ship to McCain -- the blatant disrespect for women inherent in such a cynical ploy would accelerate the trend.

Picking a powerful, self-made woman as running mate is exciting and galvanizing to the many women who believe -- not without some justice -- that one major reason no woman has ever been elected vice president or president is that a lot of people, especially the "old boys" in the upper ranks of government, really don't believe women as a class can handle the job.

But to dump one's first VP pick, a man, and quickly stick a woman on instead -- to "counter" the woman that your opponent chose -- is tantamount to saying, "You chicks are only supporting McCain because you want to vote for a women. Fine. Here! Here's your lousy woman! Now you can vote for me."

It shows contempt for female voters. Rather than reaching out to a qualified woman -- as McCain did -- Obama would be turning to a woman he already rejected, who he didn't even think was worthy of being shortlisted, just because she is female; and he thinks he has to have his own token woman to lure lure female voters away from his opponent.

What he said

Finally, such a defensive reaction would transform Obama from an "agent of change" into the Sour Kangaroo's joey from "Horton Hears a Who"... the baby kangaroo whose only line is -- "Me too!"

What is Obama supposed to say in his announcement? "I know I should have picked her earlier, but I was too cowardly and sexist to do so. But now that John McCain has blazed the trail, I'm going to run right up behind him and slap his butt." (In a manly, congratulatory way, I mean.)

A mighty wind

Some suggest, however, that it doesn't matter what Obama does, because the mainstream media will always have his back; they will defend any decision he makes, so it won't hurt him.

Yes, the elite media would frantically spin such a switch; but we mustn't fall into the trap of many Republicans who have an unexamined assumption that the media are not only all-in for Obama, which is true -- but also all-powerful at achieving their goals, which is provably false: If they really had that power, don't you think they would have managed to defeat George W. Bush at least once?

So far, the elites have been spinning and spinning the meme that Sarah Palin is an inexperienced, incompetent, gun-clinging, earmark-hugging, animal-murdering, secession-supporting, child abusing, rabid, fascist, right-wing, creationist, Jeebus Crispie, book-banning lunatic. How has that project worked out?

You can fool some of the people all the time -- but they're already Democrats

Such a transparent switcheroo would make Obama look so small, so sexist, so reactionary, that he would lose whatever shred of credibility, gravitas, and "presidentiality" he currently retains. He is an intelligent man; he's not an idiot. He realizes this; and that is why he will never even consider dumping Slow Joe for Hillary.

Barack Obama will stick with his first choice and just try to get lemonade out of a sow's ear.

Hatched by Dafydd on this day, September 11, 2008, at the time of 5:22 PM | Comments (13) | TrackBack

Pigs Will Fly

Hatched by Dafydd

Tom Bevan at Real Clear Politics nails the Obama pig comment to the wall today. Here is his killer point:

Imagine for a moment if John McCain had used a similar shopworn phrase in reference to Barack Obama's policies. Suppose he said, "Obama says he's going to cut your taxes but he's really going to raise them. My friends, it's time for some straight talk about taxes, it's time to call a spade a spade."

Do you think for a second the Joe Kleins, Andrew Sullivans, and Josh Marshalls of the world wouldn't scream from the rooftops that McCain had used a racial slur against Obama? Of course they would -- and they'd scoff at the notion that McCain was somehow unaware of how that phrase would be interpreted. Anyone who tried to argue that McCain was simply using a well known phrase that predated the current presidential race would be tagged as an apologist for racism. Even if McCain hadn't meant it that way, it wouldn't matter.

However... Five bucks says that within a couple-three days, that "call a spade a spade" line will be circulating on lefty blogs as something McCain actually said, rather than as Tom Bevan's analogy!

Hatched by Dafydd on this day, September 11, 2008, at the time of 2:41 PM | Comments (5) | TrackBack

Date ►►► September 9, 2008

Obama's Macaca Moment: It's a Gaffe, Gaffe, Gaffe! UPDATED

Hatched by Dafydd

Studiously avoiding all buoyancy, pneumatic, and materials-science analogies, the presidential campaign of Barack H. Obama certainly appears to be in trouble. One symptom of failing candidacies is the tendency to magnify the external problems with personal mistakes, misjudgments, and gaffes.

Here is the newest... and it could well become a seam-splitting, steam-leaking, presidential amibition-sinker:

With voters craving change and Obama offering it, McCain has started pushing hard to reclaim the reformer mantle he owned eight years ago. His running mate, Sarah Palin, has energized his conservative base while attracting droves of white women to the Arizona senator's candidacy. The GOP ticket has soaked up a great deal of attention over the last 10 days, between Palin's selection and the party's convention.

That has left Obama, the change candidate of the primaries, spending much of his time explaining to voters why McCain and Palin don't deserve the label....

"You can put lipstick on a pig, but it's still a pig," he said to an outburst of laughter and applause from his audience in Lebanon, Va., Tuesday. "You can wrap an old fish in a piece of paper called change, but it's still going to stink after eight years."

Obama left himself some squealing room; but as indicated above (and in all other accounts of the gaffe), his audience in Lebanon, Virginia certainly understood him to be referring to Palin's quip at the Republican convention that the only difference between a hockey mom, such as herself, and a pit bull was "lipstick" -- thus, the "pig" in Obama's ungentlemanly, snarky riff was Sarah Palin herself. (McCain is obviously the target of the "old fish" that stinks after eight years insult.)

Obama insists he didn't mean that Gov. Sarah Palin is a pig; he was talking about the "reform" slogan of the McCain-Palin ticket. But he's not such a fool that he didn't know how the audience, both immediate and over TV, would take it.

Besides, it was only the first hoggish reference the Democratic nominee made; later in the same event, after hearing the audience's reaction to Obama's first Palin/pig joke, he essayed another porcine jape:

Hogs were a theme of Obama’s town hall. Later in the event, while discussing the No Child Left Behind policy that puts stress on teachers to test students, he made another swine reference. “There’s a saying in Southern Illinois that you don’t fatten a hog by weighing it. You can weigh it everyday, that’s not how you fatten it up,” Obama said.

Well, no; but that is how you decide whether it still needs more "fattening up." This attack doesn't even make sense; has anybody argued that giving a student a test, by itself, educates him? So far as I've seen, proponents of No Child Left Behind argue that testing a student allows the school and parents to track the student's progress, so you know whether he is learning -- or whether he needs urgent attention so he won't fail.

Is that really such a difficult concept?

But the real point is this, from the AP article:

Even so, the Illinois senator's focus on bringing down McCain and Palin underscores the worry among some Democrats that the Republican ticket is gaining, and in no small part because of the addition of the first-term Alaska governor who is the first Republican woman on a presidential ticket....

Democrats, if not Obama himself, seem unsure how exactly to go after Palin, and some Democratic strategists say they hope Obama will assign Biden the task of countering Palin, rather than do it himself.

McCain has jumped to a tie or lead in national polls, depending on the survey, with Palin helping to drive the gains, particularly by solidifying the conservative base and attracting swing voters as well as a slew of white women.

A "gaffe" is defined not by the intentions of the speaker but by the reactions of the listeners. Everybody in that audience "heard" Obama call Sarah Palin a pig and John McCain a rotting fish; if B.O. didn't realize it before speaking, he must have figured it out -- being the smartest man in the universe -- when the audience roared, laughed, and applauded. And the McCain campaign is making the most of it... as they should.

The problem for Obama is the same as the one that hounded former Sen. George Allen to defeat in his 2006 re-election campaign, also in Virginia. Allen used the term "macaca" to refer to the mole that opponent Jim Webb kept sending to Allen's campaign rallies with a videocam, hoping for something to use -- like being called "Macaca." Allen swore over and over that when he used the term (at one speech, singling out the mole, S.D. Sidarth), he had no idea that "macaca" was actually a racial slur in the Belgian Congo early in the 20th century.

The fact that nobody else in the United States was familiar with that slur either made no difference at all: Allen had clearly intended the word as an insult, a low-blow slam belittling Mr. Sidarth -- who was, obviously, of East Indian ancestory, not Congolese. And voters don't like such schoolyard taunts.

Neither will it make any difference to voters whether Obama actually meant to call the McCain-Palin ticket a "pig," rather than Palin herself; voters in the swing states will likely label the attack boorish, unmannerly, and sexist.

Obama needs to apologize immediately and plead fatigue; it's better to look old and tired than young, condescending, and pissy. But he won't; I don't think he can bring himself to be humble, especially not to the "rival false prophet" (as Scott Johnson put it on Power Line) who came bubbling up like the Swamp Thing to grab Obama's halo. If Obama goes even farther and begins exploding whenever he's asked about the comment, then he can add "paranoid and defensive" to his list of undesirable and unbecoming attributes.

Political campaigns are all about two antagonistic forces: momentum and labels. Both teams compete to see who can attach a label to both himself and his opponent (thesis), a task made more difficult the greater the momentum of the campaign (antithesis). The resulting synthesis defines the arc of the campaign.

In the early days of the primaries, Obama succeeded in attaching the labels of "ideological purity" and "change" to his campaign and the label of "old-style politics" to Hillary Clinton's; Mitt Romney and Mike Huckabee succeeded in attaching the label of "old coot" to McCain's campaign but couldn't get any label to stick on their own; and John McCain made the "maverick" label his own.

But then momentum took hold. Hillary Clinton's campaign juggernaut used every dirty trick in the book to rip the self-adhesive labels from Barack Obama, and they succeeded in removing the first, the "purity" issue. Alas, that was not enough to derail Obama, because he still had the "change" label... but it was a darned close primary.

McCain's relentless campaigning on his biography, his record, and his now firmly ensconced "maverick" label produced sufficient momentum to blast away the "old coot" label; instead, he became "dynamic" and a "reformer." The graceful dropping out by the other Republican candidates and the Sarah Palin pick increased the momentum and solidified the "maverick" and "reformer" labels.

But Obama is now in danger of moving so slowly, with so little momentum, that McCain has the opportunity to attach any label he wants to the Democrat's campaign; Mr. Audacity can't get himself out of first gear and has become a more or less stationary target.

At the moment, McCain is jogging alongside Obama, trying to attach the labels of "ultraliberal," "inexperienced," and "Chicago machine" to the Democratic campaign. Obama's hit job on Palin -- calling her a pig -- accentuates the third label: I believe it will strike voters as exactly the sort of dirty pool to which the "Daley machine" would stoop.

Labels, once attached, are darned hard to tear off; you need enough momentum that they will be borne away by the wind in your wake. But Obama just isn't fast enough off the mark... and I believe the labels applied by McCain will stick.

We'll see; but the gaffes Obama is committing now are entirely unforced. They come from deep in the bowels of him.

UPDATE: See? That didn't take long:



Barack Obama can whine until the cows come home to roost that he wasn't calling Sarah Palin a pig -- he was just calling the McCain-Palin ticket a pig. But this slur has a dynamic too large to contain with a simple huck and smirk. The meme of "Obama called Sarah Palin a pig" isn't going away; it's going to stick, and it's going to hurt Obama badly.

He's not a stupid man; he knew well how his cutesy aphorism would be taken in this context. Clearly, Obama was giggling inside like a junior-high student, tickled pink at how he "got" Palin. I know that many hard-left Obama fans openly cheered and laughed when he said it (I've read their posts): They knew exactly what he meant.

Well, he baited the hook -- and now he's got a tiger by the tail. I wish him a long and consuming acquaintance with that ferocious feline of his own fabrication.

Hatched by Dafydd on this day, September 9, 2008, at the time of 11:58 PM | Comments (13) | TrackBack

Date ►►► September 8, 2008

Final Convention-Bounce Numbers

Hatched by Dafydd

The first completely post-GOP convention releases of the Gallup and Rasmussen daily tracking polls are now available; this allows us to calculate the net bounce from the Democratic and Republican conventions... who won the "battle of the bounces?"

As we promised, here they are:

Gallup Daily Tracking
Poll release date Obama McCain Advantage
August 25th 45 45 Tie
September 8th 44 49 McCain +5


Rasmussen Daily Tracking (without leaners)
Poll release date Obama McCain Advantage
August 25th 46 42 Obama +4
September 8th 46 47 McCain +1


Rasmussen Daily Tracking (with leaners)
Poll release date Obama McCain Advantage
August 25th 48 45 Obama +3
September 8th 47 48 McCain +1


Average of Gallup and Rasmussen (without leaners)
Poll release date Obama McCain Advantage
August 25th 45.5 43.5 Obama +2.0
September 8th 45.0 48.0 McCain +3.0

To summarize:

  1. Before the Democratic convention began, a rolling 3-day average from Gallup found Barack H. Obama tied with John S. McCain; the same poll released today -- with all respondents having had a chance to see McCain's and Palins' acceptance speeches -- has McCain ahead of Obama by 5 points.
  2. The equivalent polling numbers for the Rasmussen Daily Tracking poll (not counting leaners) finds McCain going from a deficit of 4 under Obama to an advantage of 1, again a movement of 5 points.
  3. The average of these two polls shows McCain skyrocketing from a deficit of 2.0 before the Democratic convention to an advantage of 3.0 at this point. As predicted by Big Lizards, it was McCain, not Obama, who came out of the conventions with a significant net bounce of +5.0.
  4. Even more spectacularly, in the polls taken entirely in between the two conventions (September 1st), Obama had received a bounce of 2.5 (from 2.0 to 4.5); thus the full bounce that John McCain received from both the announcement of Sarah Palin and the convention is 7.5 points. Obama got a 2.5-point bounce from his convention, while McCain received a 7.5-point bounce from his (hence the net of 5 points).

This is what happens when voters actually get a look at both candidates, each putting his best foot down.

I mentioned our prediction from August 22nd; this is what we wrote:

I have a feeling this is going to be a very disappointing "bounce" for the Democrats this year, just as I (correctly) predicted the same for 2004. I think Obama's bounce is going to be no more than a jumping flea... say, 5% at most; and it will be gone by the time the GOP convention begins on September 1st, just four days after the Democratic convention ends.

Contrariwise, a lot fewer people know anything about John S. McCain, other than the disrespectful and risible caricature pushed by the elite media and by Obama himself in campaign ads. I suspect that a lot more truly undecided voters will watch the Republican National Convention, many of them moderate Republicans, independents, and even moderate Democrats; and they will come away much more favorably impressed by McCain than they were beforehand. Therefore, McCain will get a bigger bounce from the GOP convention than will Obama from the Democratic convention.

We were right; he did.

But let's expand to other polls. The Real Clear Politics average of all polls on August 25th -- the last day when all polling was conducted before the Democratic convention -- showed Obama with a 1.6 lead (45.5 Obama to 43.9 McCain); today, the RCP average shows a McCain lead of 3.2 (45.4 Obama to 48.6 McCain) -- a bounce of 4.8% for John McCain. (You can find the historical average for any date by hovering your pointer over the histogram and sliding left or right until you reach August 25th; the upper part will tell you the actual averages, the bottom only tells you the spread.)

This 4.8-point bounce matches up perfectly with the 5-point bounce from the two tracking polls, indicating that they are not out of line; this is real movement being picked up across the board.

Here is another point to mull: In this campaign, John McCain has been a "closer;" he went from a big deficit to victory at the end. McCain's primary campaign was dead in the water by July of 2007; but he came roaring back, of course, winning in Florida, New Hampshire, and North Carolina just six months later. The next month, he won a majority of states on Tsunami Tuesday, knocking Mitt Romney out of the race a couple of days later.

Note: Mike Huckabee hung on, but only because he nursed the hope that he would pass Romney in the delegate count, ending the campaign in second place, rather than third. Had he done so, it would have set him up to be the Republican front-runner in 2012.

He didn't; he remains in third place with 267 to Romney's 274 -- even though Huckabee campaigned for months after Romney dropped out of the race!

Barack Obama, by contrast, started out way ahead; but then it was Sen. Hillary Clinton (D-Carpetbag, 100%) who came back strongly, almost taking the nomination away from the One. In fact, were it not for the huge lead that Obama had built up in early caucus states that were "winner take all," Clinton would almost certainly have been the nominee.

McCain is already ahead; if the general campaign follows the same pattern as the two primary campaigns, then John McCain will expand his lead before the final vote.

McCain is now in very good position not only to win the race but to do so convincingly, something that President George W. Bush could not do in either of his two victories: In 2000, the vote was dead even; and even in 2004, he won by only 2.4% nationwide. In neither case did the president even crack 290 electoral votes out of 538 possible: 271 in 2000 (one point more than the smallest majority possible) and 286 in 2004.

By contrast, in Bill Clinton's two elections, he achieved 370 electoral votes in 1992 (receiving 5.6% more total votes than President George H.W. Bush) and 379 in 1996 (8.5% ahead of Sen. Robert Dole).

If McCain wins this election by, say, 6-7 points, he will almost certainly receive more than 300 electoral votes, probably more than 350; with no significant third-party candidate, to suck away votes, he will be at 53%; and he will definitely have coattails in the House and Senate races.

That would be a resounding victory. Though it will not silence the Democrats -- they will once again claim the election was "stolen" from them (this is so obvious, I don't even count it as a prediction) -- it will indelibly pin a powder-blue "L" on their frocks... L for liberal; L for loser.

Time to replace our dilithium crystals, recharge our ki, and redouble our efforts; let no one rest until John S. McCain charges across that finish line.

Hatched by Dafydd on this day, September 8, 2008, at the time of 4:08 PM | Comments (2) | TrackBack

Date ►►► September 7, 2008

Funniest Quote of the Week...

Hatched by Dafydd

We innaugurate a new feature of Pig Lizards tonight: the Quote of the Week!

(The label "Quote of the Weak" attached to such posts does not constitute any warranty or guarantee that a post will in fact be selected each seven-day period and dubbed the "Quote of the Weak." Past results do not guarantee future performance. All the glistens is not gold. Reader waives all responsibility and liability for the non-appearance in any given week of a "Quote of the Weak." Now git. Adios, muchachos. 23 skiddoo.)

I plan to trot this hoary, old chestnut out whenever somebody on the web or the air writes or says something that makes me laugh out loud.

This week, the miscreant is Wolf Howling; here, grok this:

As the left becomes more frightened by the popularity of Sarah Palin, they are becoming ever more unhinged in their attacks. The first one is an article in the "LA Progressive" that, as Michelle Malkin notes, reads like something out of the Onion. Apparently, the author has found a bevy of unidentied people in Alaska who are willing to tell a sordid tale of racism and sexism by Gov. Palin, but too afraid to be identified lest they be sent to a secret Alaskan Gulag and . . . snowboarded, I guess.

Oh. The rest of the post is good, too. But I howled at GW's one-liner. Of course, I'd had one of my "special" apple martinis (Sky vodka, Dekuyper apple schnapps, lime juice, molasses, Sterno, absinthe, cocktail cheese wedge anchored w/peppermint flavored dental floss) and was listening to No Doubt at the time, which might have aided the effect.

Hatched by Dafydd on this day, September 7, 2008, at the time of 10:29 PM | Comments (4) | TrackBack

Date ►►► September 6, 2008

Interim Progress Report on Convention Bounces

Hatched by Dafydd

Today is the first day that Gallup and Rasmussen daily tracking polling includes some respondents (one third of them) who saw (or could have seen) John S. McCain's acceptance speech on Thursday. These polls are each three-day rolling averages; thus today's poll release includes polling from Wednesday, Thursday, and Friday; but the Thursday polling ended before McCain's speech, so only the Friday polling reflects any bump that might give him.

The last polling release where all polls were conducted before the Democratic convention was Monday, August 25th; the first polling release where all polls will have been conducted after the Republican convention ended will be Monday, September 8th... so consider this a "progress report" of sorts.

For the Gallup numbers, go the linked page and hover your pointer over the trend lines to see the results for each day. The Rasmussen numbers are found here.

Note: The poll "Rasmussen Daily Tracking (with leaners)" means that those respondents who say they can't decide are pushed to say which way they lean. Only Rasmussen did this (reporting both sets of numbers); Gallup did not. Thus, in the fourth table, we average the most equivalent two data sets, Gallup and the Rasmussen Daily Tracking (without leaners). Nevertheless, Gallup polls registered voters, while Rasmussen polls likely voters; this is a difference that cannot be resolved given the companies' respective releases.

We also have final numbers on how many viewers tuned in to watch each convention. Let's jump right in....

Tracking poll numbers and averages

Gallup Daily Tracking
Poll release date Obama McCain Advantage
August 25th 45 45 Tie
September 6th 47 45 Obama +2


Rasmussen Daily Tracking (without leaners)
Poll release date Obama McCain Advantage
August 25th 46 42 Obama +4
September 6th 46 45 Obama +1


Rasmussen Daily Tracking (with leaners)
Poll release date Obama McCain Advantage
August 25th 48 45 Obama +3
September 6th 49 46 Obama +3


Average of Gallup and Rasmussen (without leaners)
Poll release date Obama McCain Advantage
August 25th 45.5 43.5 Obama +2.0
September 6th 46.5 45.0 Obama +1.5

To summarize:

  1. Before the Democratic convention began, a rolling 3-day average from Gallup found Barack H. Obama tied with John S. McCain; the same poll released today -- with two-thirds of respondents not having had a chance to see McCain's acceptance speech and one-third not having had a chance to see Sarah Palin's speech -- has Obama ahead of McCain by 2 points.
  2. The equivalent polling numbers for the Rasmussen Daily Tracking poll (not counting leaners) found Obama going from an advantage of 4 over McCain to an advantage of 1.
  3. The average of these two polls shows Obama dropping from an advantage of 2.0 before the Democratic convention to 1.5 at this point. He has already lost ground and is likely to lose more, as more respondents will have had a chance to have seen McCain's speech.

We will, of course, post the final results on Monday.

Nielsen ratings of both conventions

Nielsen has released the ratings for the two conventions; the ratings are the total number of televisions tuned to each show, calculated from the "Nielsen boxes" on some large number of viewer's TVs that accurately measure whether the TV is turned on, and if so, to what show it's tuned. (It cannot measure whether the viewer is actually paying attention or even watching. Surprise, surprise.)

Note: The story linked above also mentions PBS numbers, which are highly suspect: They are not tracked by a Nielsen box; instead, PBS reports "a more imprecise estimate based on samples in a few big cities." Alas, "big cities" will lean more towards Obama, while PBS can be seen in small cities, too. So I omit those numbers and run only with the main networks that are tracked by Nielsen.

Here are the Nielsen ratings; the operative number is "Persons 2+" for each day... that is, the total number of persons over the age of 2 who watched (I'm not sure how they calculate that, but it's the same formula for each party's convention):

Nielsen ratings for each convention
Convention Nominee speech VP speech Daily average
Democratic 38.4 million 24.0 million 30.2 million
Republican 38.9 million 37.2 million 34.5 million
Advantage McCain + 500,000 Palin + 13.2 million GOP + 4.3 million

(For the "daily average" figure, found on page 2 of the PDF, the operative number is persons 2+ in the "Live + Same Day" column, meaning those who either watched live, or who watched a recording of the events on the same day (as I did).

So as spectacular as were the ratings for Barack Obama's acceptance speech, John McCain's acceptance actually beat the celebrity Democrat... and for that matter, even Sarah Palin came very close. Combining the presidential and vice presidential acceptance speeches, the Republicans outdrew the Democrats by 13.7 million viewers.

How could that be? How could John "McAncient" beat "Britney" Obama? I suspect voters are starting to wake up to the realization that fame (or infamy) is not the most important issue: They have evidently begun seriously to consider judgment, accomplishment, managerial skills, courage, and character instead.

Barack Obama may win the "George" trophy -- the political equivalent of the Oscar, the Grammy, the Hugo, or the Edgar; but that's not why we're holding an election a scant 59 days from today.

Hatched by Dafydd on this day, September 6, 2008, at the time of 7:08 PM | Comments (1) | TrackBack

Date ►►► September 4, 2008

McCain's Thing: Much Better Than I Expected (Updated)

Hatched by Dafydd

I surprised myself by how much I liked the speech. Part of my satisfaction was actually relief; "prompter" speeches are not John S. McCain's forte. But I found it more Reaganesque than any speech I've heard him give... in fact, more than any speech I've heard anybody give since Reagan himself.

I particularly appreciated the retelling of his POW history, but this time with a completely different theme: How his long captivity changed him from a narcissistic, jerky nasal radiator into a real mensch, a grownup, a man of humility and recognition of a cause larger than himself, and therefore a man of sagacity. I'd heard the "McCain as war hero" meme many times in this campaign, but this is the first time I've seen this version.

I liked it; it finally connects in a visceral way to the growth of his character (which, as I pointed out in a previous post, grew even more in just the last few years).

But what impressed me the most intellectually -- as opposed to what merely moved my emotions -- was the "laundry list" section in the middle; he articulated, whether by accident or design, almost every conservative theme that I share with you guys, while avoiding those that merely irritate me.

I may well be close to the target audience of McCain's speech, even though I'm already a committed anti-Barack H. Obama voter, which of course means a committed GOP voter: I'm not a conservative, yet I share many conservative values; I'm libertarian (though not Libertarian) but nevertheless believe in a robust and preemptive national defense; and I really want to hear how McCain, or any other GOP candidate, plans to get the damned government off our backs so we can get on with living long and prospering.

In that section, McCain came out foursquare for:

  • School choice, to bring a kind of "free market" to educational opportunity;
  • Expanding energy production, including drilling for oil and gas, using clean coal, and building nuclear reactors -- the only energy sources that will actually make a difference over the next 50 years;
  • Vetoing any earmark-laden bill that lands on his desk. I don't fool myself that we can cut off every ear; but at least, with a president so hostile to them, they can be kept to a dull roar. And, as McCain promised, made very public;
  • Making health insurance portable, so we don't have to stick in a lousy job we hate because we can't afford to lose the insurance;
  • Cutting taxes and spending (no explanation necessary);
  • Job retraining -- I loved the line that, instead of trying to recreate old-economy jobs that are never coming back, we'll train people for new-economy jobs that are never going away.

That's one heck of an audacious domestic agenda; the only policy I missed was 100% privatization of Social Security and Medicare, but I can certainly understand why that would be too controversial to discuss in a nomination acceptance speech.

UPDATE: Something just occurred to me: Each of these is something that George W. Bush promised but couldn't deliver. Except for cutting taxes -- and even that is temporary and due to expire, if Obama and the Democrats have their way. So this list might be another subtle way to disassociate the anticipated McCain presidency from the just-ending Bush administration.

Also notable was the absence of pandering:

  • No call for a massive bailout of idiots who got in trouble by taking bigger mortgages than they could afford (or of the banks and S&Ls that talked them into it);
  • No pledge to increase the minimum wage to a "living wage," as if teens working the popcorn counter at the local movie theater should be able to support a family of four on that paycheck;
  • No paean to a new immigration-reform bill. I fully expect -- and hope! -- there will be one; but that can only be worked out during a non-election year, as the negotiations will be as tenuous and delicate as gossamer. This isn't the time -- so he wisely left it out;
  • And no call for a vast increase in the number of species mollycoddled by the Endangered Species Act, no demand for ever more stringent EPA red tape -- and not a single mention of a vast, new Department of Anthropogenic Global Climate Change! In fact, I don't think he even mentioned global warming, or if he did, it was in passing (and quickly passed).

McCain had so many options available to royally screw up this opportunity, wounding his candidacy and forcing us to spend the next few weeks playing damage control; somehow, he dodged them all. In fact, I believe this speech actually advanced his candidacy -- and I predict a fairly substantial bounce (which won't show up in the Gallup and Rasmussen tracking polls until Saturday, since they stopped polling today before McCain's speech ended.

(However, tomorrow is the first day we'll get to see whether there is a Sarah Palin bounce from yesterday's speech.)

All in all, I am in reasonable raptures... no matter what the Fox News panel said. (They seem to have yawned their way through it; shockingly, every single person who opined on the speech tonight is a metaphorical "Beltway boy" -- Fred Barnes and Morton Kondracke, of course, but also Mara Liasson, William Kristol, Charles Krauthammer, Howard Wolfson, Chris Wallace, Jim Angle, and Brit Hume.)

I'll bet this speech plays a heck of a lot better in the real world than it does inside Pundistan.

Hatched by Dafydd on this day, September 4, 2008, at the time of 10:22 PM | Comments (12) | TrackBack

Date ►►► September 3, 2008

Sarahphobia: Fear the Teddy!

Hatched by Dafydd

First, John Hinderaker at Power Line posted about a Peggy Noonan column in which she noted that John S. McCain's running mate, Sarah Palin, "could become a transformative political presence;" Noonan goes on to say, "So they [the feminist Left] are going to have to kill her, and kill her quick."

In response, Paul Mirengoff demurred:

Noonan notwithstanding, the Democrats I know don't see Palin as a "real and present danger to the American left."

Alas, I believe that Paul is out of touch with the today's mainstream Democratic activist.

The response among lefties to Palin's selection has been so over the top, so bizarre, so disturbing, that I now fully understand the genius of Charles Krauthammer in "diagnosing" a new delusional thinking called Bush Derangement Syndrome. These are the people that Noonan is talking about. They are the New Left in full squeal. (They don't call themselves that; most think they're centrists, but only because they define the "center" as running right through their own belly buttons.)

They do not of course overtly say that Sarah Palin is "a real and present danger to the American left;" but their viperous attacks upon her sink to levels far worse than what they say about McCain -- which itself is far worse than anything they said about Bush (hence the term "progressives;" their attacks grow progressively viler) -- belie their overt claims that Sarah Palin will "sink the fascist ticket."

If they really thought that, they would applaud her selection and encourage her to speak out at every opportunity. Instead, they lament the stupidity of the Jesus freaks they think will elect her for no reason other than theocratic yearnings.

Over two days, for example, there were more than a hundred posts on a bulletin board I read, in several threads, exploring how the campaign would be affected by the "fact" that Sarah Palin faked her pregnancy in order to shield her daughter Bristol; they finally concluded that such deviousness clearly proved that Palin was "unfit to serve," and should immediately be dropped from McCain's ticket.

But when the actual facts emerged, when they finally realized the biological impossibility of a pregnancy that began a month before the first one ended, they finally, grudgingly, let go the absurdist allegation about the faked pregnancy.

...And then promptly concluded that the real facts -- that Bristol and Levi had gotten pregnant, had decided to keep the baby, and decided to get married -- was even stronger evidence that Sarah Palin was "unfit to serve." She was obviously a horrible mother; her fanatical "abstinence-only" program clearly was a disaster; and in fact, Bristol's pregnancy showed the moral bankruptcy of the entire population of religious people in America -- for which population the New Left has various colorful epithets.

Paul knows too nice and rational a group of Democrats. Even having been a leftist activist himself 35-40 years ago -- I know John was, and I think I recall Paul was as well -- I don't believe Paul understands the depth of insanity of today's D-activists.

Honestly, it's worse than in the 60s-early 70s: We have our own version of Weather Underground in ALF and ELF and the various Palestinian and militant Islamist groups embraced by the Left; but the madness extends much farther today than it did during the Vietnam war, stretching right up into the Democratic leadership in Congress and the Democratic nominee for president.

Even George McGovern was not as loopy in 1972 as Barack Obama is today; for one thing, McGovern was a war hero (B-24 bomber pilot in WWII), and a true, if misguided, patriot; if a preacher had said "God damn America" in McGovern's presence, he would have hauled his family out of that church and never set foot in it again. I don't recall McGovern ever trying to justify the 9/11 attacks by pointing to America's own putative perfidies.

In 1973, the Democrats in Congress legislated defeat in the Vietnam war; they attempted to do it again during this war -- and this time, they didn't even have the fig leaf of a corrupt, lying president. They had to manufacture one by calling every mistake or policy difference a "lie" that amounted to a "crime against humanity." Taking a page from William Randolph Hearst, they more or less told their dirty-tricksters, "you supply the protests, we'll supply the lies."

And lie they did and still do today, bearing false witness against John McCain -- e.g., fabricating the charge that McCain had said he wanted us to fight the Iraq war for a hundred years (lefties, including those in Congress, started calling Iraq the "Hundred Years war"). And just yesterday, Mark Bubriski, an official spokesman for the Barack H. Obama campaign, falsely asserted that Sarah Palin was a Pat Buchanan supporter -- and then even more falsely asserted that Buchanan was a "Nazi sympathizer," making Palin a "Nazi sympathizer" as well.

The Left is even madder, even more reckless of the truth, and even more prone to lying in their teeth today than back when they were doing the bidding of their Stalinist and post-Stalinist masters in Moscow. Back in the Vietnam era, the New Left were the footsoldiers; but the Old (Soviet-inspired) Left were in charge... and the latter kept the former in check -- most of the time. When they failed, when the tools broke out of the toolbox and began smashing up the joint, it was a rare enough event that it was memorable -- the 1968 Democratic National Convention protests, for instance.

But today, when "anti-violence" protesters hurl bags of sand and cement down onto buses from a highway overpass and attack a schoolbus full of Cub Scouts, rocking it back and forth and terrifying the children inside, it doesn't even warrant an editorial -- let alone a call for restraint.

Today, the New Left inmates are thoroughly in charge of the asylum, and they recognize no limits beyond which they shall not go. Sarah and Bristol Palin are starting to find that out, as is John McCain, e.g., in the claims that the torture inflicted upon McCain -- by the erstwhile Vietnamese allies of the forbears of today's Left... "Ho, Ho, Ho Chi Minh!" -- that the torture McCain experienced itself renders him "unfit for service," because it must surely have emotionally unbalanced him!

Oh, yes; they fear Sarah Palin. They fear her for three reasons:

  • They're so mired in identity politics themselves, they cannot imagine that the rest of us are not; thus, many on the left believe that even Democratic women for whom abortion is a sacrament will vote for McCain because he has a woman on his ticket. (Which may well be true of women on the left, but the rest of them will vote for the person they consider best for the presidency.)
  • More generally, they fear any strong woman who rejects what Noonan calls "Abstract Theory feminis[m]," just as they fear Clarence Thomas and Ward Connerly far more than they fear Antonin Scalia or Gary Bauer: Apostates who leave the liberal reservation represent a much greater threat than outsiders, because they can become trailblazers.
  • Finally, I believe Dave Ross is right: Democrats fear Palin because she exposes their own inadequacy, their own cowardice... because she's more of a man than they are.

The attacks on Palin are not simply overblown, they're overwrought, hysterical, desperate. They are of a completely different character than the partisan savaging of McCain and the ideological hatred of Bush. If I had to characterize the Palin attacks, I would say they exhibit the wild, out of control rage of a man lashing out at the female friend who caught him cheating on his wife: Equal parts guilt projected as anger, fear of the consequences if she talks, and a deliberate warning (threat) that she had better keep her mouth shut if she wants to stay healthy.

Don't be deceived by the innate desire to see everyone as more or less rational; Democrats and especially leftists deeply fear the teddy, Sarah Barracuda. It has become a sick fear, driving them to stop her by any means necessary.

We have already seen Bush Derangement Syndrome; now we have to deal with Sarahphobia. Can't someone please get the Democrats the help they so urgently need?

Hatched by Dafydd on this day, September 3, 2008, at the time of 5:28 PM | Comments (7) | TrackBack

A Female T.R.

Hatched by Dave Ross

She’s a pistol, and she’s packing one. Just as it took Nixon to go to China, apparently it takes a Republican to name a truly appealing woman to a national ticket. And she’s just as combative as any Democrat woman has ever been, except that she’s not afraid to wear skirts. That may be because she actually looks good in one.

Republicans have never had a problem supporting strong women, we just don’t like them to remind us of our ex-wives or mothers-in-law. Consider, if you must, the Geraldine Ferraros, Hillary Clintons, Barbara Boxers and Diane Feinsteins. They make a vow of celibacy seem appealing.

Sarah Palin, on the other hand, reminds you of the dish that you always wanted to steal a kiss from, except that Governor Palin could kick your butt!

I was sitting at a barbecue with five men on Saturday whose combined ages were probably about 400. One of them looked over at me and remarked. “We’re forming a club of guys who think that Sarah Palin is hot!”

Of course, it’s always been a canard that the GOP was hostile to women and minorities, despite the misinformation campaign that the Democrats have waged all these years. The first woman named to the Supreme Court was nominated by a Republican. The first and second black secretaries of state have been Republicans. Bobby Jindal, the incredibly competent governor of Louisiana, an Indian (of India), is wildly popular among the GOP.

John McCain (who, I want to remind everyone, including myself, that I still hate) is well known for his admiration of Theodore Roosevelt. Roosevelt, before he was named to be McKinley’s vice president -- in part to get him out of the hair of the New York political establishment -- was, among other things, a passionate outdoorsman and practitioner of the strenuous life. He was a reformer who wasn’t afraid to go after anybody, who made enemies right and left, who took on the powers that be and, largely, beat them up. He littered the New York political scene with his broken enemies. He was also a devoted husband who reputedly never looked at another woman, and had tons of kids. And he was a war hero.

Whom does this remind you of?

That’s right. Sarah Palin is a female T.R. She’s such a good shot that she dismissed her state police guard since she figured she could probably wing anybody who tried to mess with her. When warned that the next few weeks could be rough, she is said to have remarked that in Alaska they have a saying, “the difference between a hockey mom (which she is) and a pit bull is the lipstick.” She is a former beauty queen. She loves to hunt big animals. She is an athlete who supposedly earned the nickname “barracuda. ” She is, in short, a man’s man. Except for the beauty queen part.

Although probably the best example of her innate toughness is that she consciously chose to bring a Down Syndrome child to term and raise him. Oh yes, she also has a son going to Iraq to fight.

So, don’t expect her to be ruffled by this kerfuffle about her 17 year old unwed daughter being pregnant, or the fact that she dismissed a state police commissioner who refused to fire a state trooper who happened to be her brother-in-law and happened to have threatened her sister with violence. This is Alaska, the final frontier, after all. I’m surprised she didn’t shoot the miscreant personally.

Yes, her family has a past. But don’t tell me, and don’t tell the great majority of blue collar, pickup truck drivin', beer drinkin’, church goin’ Americans she is likely to appeal to, that her past doesn’t compare well with the effete Barack Obama or his mouthy surrogate, Joe Biden. Let the games begin!

Hatched by Dave Ross on this day, September 3, 2008, at the time of 4:42 PM | Comments (5) | TrackBack

John McCain: Change We Can See (Blind "Belief" Unnecessary)

Hatched by Dafydd

A McCainiac commenter to Big Lizards noted -- well, crowed is the better word -- that I had long opposed John S. McCain's nomination and had supported Mitt Romney; but now, Mr. Commenter notes, I won't even support Romney for vice president. Isn't that hypocritical?

The exact charge is easily answered: If Romney had won the nomination, his best choice for running mate wouldn't be John McCain, either. The running mate must complement the presidential nominee... and Romney's fitness to be president doesn't translate into rightness as vice president. (I have always thought stupid the traditional Republican tactic of the winning candidate picking his bitterest rival as his vice president; that's as bone-headed as, say, John Adams picking Thomas Jefferson.)

But the snarky comment did start me examining why I consistently disliked McCain back in 2004-2006, and off and on through 2007 -- but actually started liking him as 2008 rolled along. Am I simply rationalizing, since he won the nomination? If so, I'm in good company; an awful lot of people have made the same mental journey anent McCain... some from considerably farther away.

But as I pored through old Big Lizards posts, I realized with pleasant surprise that I am not the one who moved: The mover here has been John McCain, who quite simply became a better Republican and better candidate. He evolved; he grew in office (actually, in campaigning) -- but in the proper sense of that term.

Let me tell you how; but first, it's critical we discriminate between two different kinds of "changing one's mind":

  • A flip-flop is a policy reversal made solely for political reasons, whether macro-politics (an election or fund-raising) or micro-politics (to align yourself with you boss, your spouse, your friends).

    For example, Barack H. Obama violently opposed the very idea of the Iraq war in 2002. But then in 2003, when we appeared to be winning and sentiment for the war ran high among voters, Obama argued that we should stay and finish the job; to leave prematurely would be catastrophic.

    However, the next year, we appeared to be losing -- and the public turned hard against the war... and Obama returned to his 2002 position that the war was a horrible mistake from the beginning, and that we should just pull out immediately, and damn the consequences.

    That is a perfect example of a flip-flop.

  • A policy evolution generally means a reversal made because of a bona-fide shift in how one thinks about the issue.

    You may change your mind because the fact-base your previous position relied upon has shifted (to quote John Maynard Keynes, "When the facts change, I change my mind. What do you do, sir?"); or because somebody has made a new and persuasive argument; or because you have simply thought it through a second (or thirtieth) time and surprised yourself with an epiphany.

    For example, a man might fight for socialism in his callow youth, then undergo an economic "road to Damascus" moment and turn more conservative and capitalist in his maturity. This isn't a flip-flop, it's wising up.

The point is that changing policy is not ipso facto evidence of hypocrisy, flip-floppery, or shallowness; it depends how you changed -- and why. With that bit of pedantry out of the way, let's MoveOn.

The commenter's point begins with a small nugget of truth... but then he goes so far overboard that this tiny kernal of validity is buried under an avalanche of nonsense.

I did dislike, even despise John McCain -- back in 2004-2006; but not "around Feb/March 2008," as the commenter suggested. I felt that way because at the time, McCain was doing fairly despicable things.

First, he held a number of policy positions that could only be described as frankly Democratic, in the worst sense: The BCRA was fresh in our minds; then there was the Gang of 14, which prevented good judicial picks from being voted upon by preserving the "judicial filibuster." He opposed drilling anywhere, anytime, for any reason. And of course, he fought against the Bush tax cuts with ever fiber of his being, not only after they were proposed but even before Bush was elected, during the 2000 campaign.

Since then, however, McCain has reversed himself on several of these issues; this is why I made such a fuss above about the distinction between flip-floppery and policy evolution: I believe each of McCain's reversals is sincere, an actual evolution of his thinking; for in each case, subsequent experience has proven McCain's earlier position wrong.

  • He now sees the need for more judicial conservatives on the bench, likely because he watched as Justice Anthony Kennedy played "swing vote," taking the Supreme Court into uncharted waters, where there be dragons.
  • He now supports drilling everywhere except ANWR -- now that gasoline prices are skyrocketing and ruining the American economy. (And I have high hopes that Sarah "Barracuda" might lead McCain to the light on drilling in a tiny flyspeck of the Arctic National Wildlife Refuge... the part of it that was specifically set aside for drilling when ANWR was first created.)
  • And he has "come to Jesus" on tax cuts, realizing that funding more and more government programs is not as important as letting the people who created the wealth, at all income levels, keep more and more of their own money.

(I believe he was also right on a number of issues where others were wrong, including immigration, but notably the Iraq war -- specifically the counterinsurgency we implemented on McCain's insistence; I didn't really understand McCain's position, its similarity to my "whack a mole, plug the hole" strategy, until late 2007.)

But my objection wasn't just to policy differences; after all, Rudy Giuliani's policies differ more from mine than do McCain's, and I never despised Giuliani. My real objection to the earlier McCain was his character.

McCain spent most of his time bashing George W. Bush, even to the point where I believed in 2004 that the senator was trying to elect John F. Kerry (D-rich widows, 95%); he certainly went to the mattresses defending Kerry from the charges of the Swift-Boat Vets -- and sliming the SBVT in the process. This was below and beyond what was needed to stand up for vets; after all, by definition, the Swift Boat Vets were also Vietnam vets... just like McCain and Kerry. And brutally bashing the president during his reelection campaign was completely over the top; I am as certain today as I was then that it was entirely personal (see below, the South Carolina incident of 2000).

In fact, in general, the McCain of 2004-2006 slimed anybody who disagreed with him. Back then, his hysterical temper was in full display (again, more on that later), and so forth. I considered him -- at that time -- burning with presidential fever but unfit for the office.

In August of 2006, I summed up what I disliked about McCain and why he differed from Giuliani, who had similar political positions. About McCain, I wrote:

  • The man is untrustworthy;
  • He stabs friends in the back;
  • He has a volatile, at times uncontrollable temper;
  • He holds a grudge longer than Richard Nixon did;
  • And he believes the absolute, bloody worst about anyone who disagrees with him.

I concluded the piece thus:

The primary "values and philosophies" demanded [by Tom Bevan of Real Clear Politics] are not found in either man's position on the issues Bevan examines, but rather in both men's characters in a time so fraught with peril. Everything I know, I learned from Zorro, including this: "No man can govern others until he has first learned to govern himself." John McCain cannot even govern himself; I will not trust him with my country.

However, as the facts change, I change my opinion; and McCain evidently took to heart much of the criticism that was launched against him by fellow conservatives. It took a while, but he slowly reformed the worst elements of his character... and that was probably the hardest reformation he has ever undertaken.

As he did, he began to win me over. I didn't really notice it at first. I always admired his feistiness and refusal to quit and accept defeat; but it only gradually dawned on me that the gaps between McCain doing something stupid and offensive were getting longer and longer.

John McCain had one more serious lapse in late January, 2008; I took him to task (in harsh terms) here:

If this report is true -- and it certainly seems to be -- then John McCain has done a despicable thing... and has made it clearer than ever that in his heart, he is a Democrat -- and in the Clintonian mold:

John McCain accused Mitt Romney of wanting to withdraw troops from Iraq, drawing immediate protest from his Republican presidential rival who said: "That's simply wrong and it's dishonest, and he should apologize...."

I was quite angry about the false accusation McCain leveled at Romney; it was uncalled for, and it appeared to be a flat lie. But what bothered me most was that I had begun to admire McCain -- and he suddenly reverted to his older, colder self. I concluded with temper-driven intemperance:

I can draw only two possible conclusions from this shameless attack on Mitt Romney by John McCain:

  1. Either Mr. "Straight Talk" has demonstrated that he will (if he gets desperate enough) stoop to fabricating accusations against his enemies... that is, to flatly lying about them;
  2. Or else, that John McCain rejects the Petraeus plan as a betrayal and believes there should never be any drawdown in Iraq; in addition, he doesn't want even internal, secret milestones to gauge our progress there... McCain will simply know, via mystic gnosis, how it's going and what to do next.

That is, John McCain wants us to maintain our current level of 160,000 troops in Iraq indefinitely, no matter what the facts on the ground may be, and no matter what the commanding generals in the field would prefer. I can only conclude that under a John McCain presidency, Navy Captain John "Full Throttle" McCain will simply overrule his own generals and admirals based on his gut feeling and micromanage the war, as Lyndon Johnson did.

Conclusion number one means that McCain is fundamentally dishonest. Number two means that, despite his military leadership being the only real selling point he has ever had, he would in fact be a catastrophic Commander in Chief.

I wonder which conclusion is correct?

Neither, as it happens; there was a third alternative I should have considered: Back when "Hotspur" McCain was unable to govern his temper, he made many false accusations; but he didn't realize they were false, because his biliousness got the better of him and he spoke without thinking.

For an earlier example, back in 2000, some nitwit launched a vicious, dirty, push-poll attack on McCain in South Carolina, spreading the lies that McCain had "fathered a black child," that he was gay (yes, I know they contradict), that Cindy McCain was a doper, and so forth. McCain leapt to the conclusion that Bush was behind it, despite the complete lack of any evidence pointing that way, the lack of previous instances where Bush had done any such thing, and Bush's repeated denials. It was years before McCain finally let his rage at that supposed attack subside.

Thus, it is entirely possible that McCain heard something Romney said -- and leapt to the conclusion that Romney was calling for withdrawal. All Romney had said was that he hoped the White House and the Iraqis had their own secret timetables, so they could tell whether the counterinsurgency was working; McCain seems to have misheard or misunderstood this to mean Romney was demanding public timetables for withdrawal. Thus, John McCain wasn't lying... he was just grossly negligent and evinced what came perilously close to a reckless disregard for the truth.

But just a few days later, I realized it wasn't a reversion; it was a one-time lapse... and in fact, it was the last such; ever since January, McCain has not allowed his Vesuvian rage to leap up his throat and throttle his brain. At the end of January, even before Tsunami Tuesday (on February 5th), while Romney was still a viable candidate (I voted for him in California), I wrote the following, calling McCain's charisma his "greatest asset":

I believe Mitt Romney would make better decisions as president; but John McCain would be much better at explaining those decisions to the American people. Communicating with ordinary Americans has, of course, been the bête noire of the current president, and we see how vital that skill is....

So I take heart in the fact that, even though I still think Mitt Romney would be the better policy maker in the White House, John McCain is considerably more likely to keep the property in Republican hands.

And who knows? I strongly suspect his ability to connect with, and therefore communicate with the American people will actually make McCain more effective at selling the 80% of his policies that actually match those of mainstream Republican conservatives -- than a candidate who is with them 100% of the time, but just can't move people the way McCain can. In other words, McCain will probably end up being a more effective conservative Republican president than any of the current flock of actual conservative Republicans.

It's a sobering thought, but one that is hard to deny. Such is the power of the greatest asset.

Again, Mitt Romney was still a viable rival to McCain at this point; it wasn't until two days after Tsunami Tuesday that Romney suspended his campaign. My post then hardly fits the bill of someone who thought "that McCain would be a disaster and Romney would be a triumphant march to the WH," as Mr. Commenter wrote.

The commenter's memory of the contretemps is largely irrelevant; but I'm glad he brought it up, for it gave me a chance to review my past posting and realize how far John McCain has come in making himself -- for want of a better term -- a "kinder and gentler" campaigner. I am convinced that the McCain of two years ago would absolutely have picked Joe Lieberman (I-CT, 70% D) -- or at least Lindsey Graham (R-, 83%) -- as his running mate... not Gov. Sarah Palin.

And that, I believe, is why so many conservatives, who once despised him, now embrace him: Not because they have changed what they demand in a presidential nominee, not because they are hypocritical or simply pragmatic, but because McCain himself, like good cheese, has finally mellowed with age.

Hatched by Dafydd on this day, September 3, 2008, at the time of 4:47 AM | Comments (9) | TrackBack

Date ►►► September 1, 2008

The Verdict Is In: McCain Chooses "Transformative" Over "Kicking the Can"

Hatched by Dafydd

I think John S. McCain (or his staff) must have been reading Big Lizards back in March. If so, they can't have missed our pair of posts on selecting a running mate, in which we argued that McCain must eschew the "known quantities," like Mitt Romney, Tim Pawlenty, or Rudy Giuliani... and instead pick his VP with a wow factor in mind; only then can the 2008 election be transformative, not simply kicking the can down the road:

In those two posts I tried to develop the concept of a transformative election: one that established a new direction for a party, ferrying it into the future. A transformative election required two criteria:

  • A new, future-looking direction, taking the party away from yesterday and towards a new tomorrow;
  • A significant enough victory that the candidate who embodies that new direction -- whether the president, vice president, or both -- has a mandate to move with authority to establish it.

Here is how I phrased it, from the first post:

What are we looking for? Maybe someone a little bit dangerous, a man or woman who sometimes is the story, just as McCain often is the story. A William Jennings Bryan, a George S. Patton. But young enough that he or she could plausibly follow McCain as president in four or eight years -- so nix on Bud Selig, who is actually older than McCain.

And from the second:

Simply put, if Republicans care about the future of the party, we cannot afford yet another narrow presidential victory. Of course it's better than a narrow loss; but it does nothing to build the brand. People are drifting away, because there is no longer anything exciting or daring about being Republican -- as there was in the 1980s.

We're losing the vision edge to the Democrats in the twenty-first century. You always must bear in mind that the Left has an automatic edge on "vision," because they're entirely defined by their vision of utopia and bringing about heaven on earth, right here and now.

This is a huge draw, especially to the young, as Jonah Goldberg argues in Liberal Fascism: Yutes always want to believe there is something sui generis about them that makes them uniquely qualified to rule the world. We on the anti-liberal side must first batter down this autogenerated conceit before showing them why our philosophy is more exciting.

Narrow victories like 2000 and 2004 do little to awaken people to the implicit failure of progressivism, and to the alternative philosophies out there... Capitalism, conservatism, and individual and family responsibility, as opposed to statism and "it takes a village (or a nation) to raise a child." With an unorthodox candidate like John McCain, we have the opportunity to wrench this election out of the normal mode on the Republican side... and we're fools if we don't roll those dice.

But I want to focus like a Fresnel lens, pulling in all the disparate threads and sending them off in parallel: Exactly what "newness" is it that John S. McCain brings to this election, and how could Sarah Palin use it four years hence to rebrand the Republican Party?

Principled pragmatism

Pragmatism has historically been associated with socialism -- code for the unprincipled will to power. Jonah Goldberg equates the fascist and liberal fascist appeals to pragmatism to mindless motion, to the socialist mantra of "action, action, action!" Constant movement prevents the masses from thinking but offers the illusion of progress; they have no idea where they're being driven, but by God they'll get there quickly! The mob depends upon its leader, who of course mercilessly exploits the rabble' brute energy.

Contrariwise, the Republican and conservative philosophIes have always been about principles, not pragmatics. I would even say we're sometimes too principled for our own (and everyone else's) good. To over-oversimplify, the utopian-socialist impulse is towards chaos reigning supreme, while conservatism all too often degenerates into "stasis über alles." In practical terms, the GOP is known derisively as "the party of orderly succession;" it's what gave us George H.W. Bush in 1988 (and almost in 1980) and Blob Dole in 1996.

McCain's great insight is that the two philosophies don't contradict, they complement each other. Pragmatism without principle is indeed utter chaos; this is what we see from Barack H. Obama, where, like Walt Whitman, he contains multitudes of contradictions. You never know what Obama will do from one moment to the next, because he is guided only by political calculation of the moment. When the parting on the left becomes the parting on the right, he turns on a dime and gives two nickles change, flipping from calling the Iraq war a crime against humanity to saying we need to stick it out until we win to saying we need to pull out immediately, no matter what the cost of defeat.

But on the other shoe, principled stances without practical means of implementing them equal magnificent failures. Ronald Reagan understood this; and he was the last transformative president of either major party: Politics is more than the art of the merely possible; it must be the art of the workable. McCain gets it, while most Republicans in the House and Senate do not. Time and again, John McCain looks at all possible options and picks therefrom those which have plausible paths to victory, discarding the rest as childish utopianism.

Sometimes this means raising the pot with the worst hand, believing that the hand will improve, as he did by talking President George W. Bush into authorizing the Iraq counterinsurgency. Sometimes it means folding a busted hand without losing too many chips, hoping for a stronger hand tomorrow -- as he seemingly did on the issue of judges. And yes, many times I have disagreed with McCain's vision of what is realistically achievable: He was clearly right on Iraq, but I still believe he was egregiously, madly wrong with his "Gang of 14."

Regardless of whether we agree with his analysis of any one particular issue, McCain's philosophy is clear: He believes that even if X is the most principled cause, if there is no plausible way to implement it, and if repeated attempts cause Republicans to lose power, then how does that advance cause X?

Reaganless Reaganism

It amazes me that we really haven't taken such an approach since Reagan. Reagan famously said that if half-a-loaf were all he could get, he would take it -- then use that as a springboard to try for the other half. But Reagan, recall, was followed not by a Reaganite but by the man who dubbed Reagan's economic ideas "voodoo economics," George H.W. Bush. Then Clinton, who obviously wouldn't follow in Reagan's footsteps, and then George W. Bush.

Bush-43 came closer than either of his two predecessors; but I think he might have been trying too hard to be different from his father -- and instead of harkening back to the Reagan style, Bush-43 tried (in his first term) to go for the pure principles of conservatism (with some concessions made for it being "compassionate" conservatism), rather than marrying principles to pragmatic considerations. Then in his second term, he pendulumed back towards too much pragmatism -- particularly on foreign policy (except Iraq).

In the meanwhile, after Republicans took over Congress after the 1994 elections, they seem to have driven the party into an "all or nothing" stance anent conservative principles: If we can't get everything, then we'd rather have nothing at all. We saw this most clearly in the debate over the immigration bill, where hard-core conservatives killed the entire bill -- thus assuring crushing levels of illegal immigration into the forseeable future -- rather than allow even one, single illegal-immigrant to come out of the shadows without having to flee back to Mexico or El Salvador or Venezuela first.

As a statement of principle, it was consistent, clear, and unambiguous; as a workable policy, it was a colossal failure.

A mighty wind

We see the Reaganesque approach today, I say, in McCain's response to Hurricane Gustav threatening the Gulf coast during the Republican National Convention. John Hinderaker at Power Line is in a lather about McCain kow-towing to the Democratic line on Hurricane Katrina by "cutting back" on the GOP convention this year. John writes:

This preemptive hurricane hysteria reflects, of course, the unfair beating the Bush administration took over Hurricane Katrina. Liberal reporters were worried about the ascendancy of the Republican Party, as President Bush had been elected the preceding November with more votes than had ever been cast for a Presidential candidate. As a result, reporters and editors were not above misleading and outright fabricated reports of events in New Orleans, as long as such reports could be twisted to reflect badly on the Bush administration.

When, in the following days and weeks, it developed that much of what television networks and newspapers had reported about Katrina was false, there was no investigation into the sources of this journalistic malpractice. Rather, the facts were quietly buried and the myth of Bush indifference lives on.

The Republicans would be much better served to proceed with their convention as scheduled, but devote some prime time to revisiting Katrina and rebutting the false claims that have circulated for the last three years. [Emphasis added]

Hinderaker's diagnosis is naturally correct; of course McCain is thinking of Hurricane Katrina. But Hinderaker's prescription, just bulling ahead with the presidential bacchanal as planned, would be disastrous: Imagine the elite media broadcasting images of the usual celebrating and clowning at the convention -- accompanied by bursts of "rebutting the false [Katrina] claims," that would come across as self-righteous and peevish lectures -- juxtaposed with heart-rending images of towns and cities being destroyed (maybe even split screen!)... with frequent interruptions from elite anchors warning, in sepulchral tones, of devastation "even worse than Katrina."

It would be like 2005 all over again. And again. And again.

But if the entire convention has a somber but hopeful tone to it, urging Americans to help out -- to donate blood and money, to send food, to open their houses to any refugees -- with politicians all talking endlessly about emergency plans and delegates having to return home to see to their families, and all the speeches altered to highlight the best of American generosity and common cause... can you not see, on the crassest level, how much better theater it will be, how much more effective to the larger cause?

(On an even cleverer tactical level, it gives us the perfect opportunity to forgo a speech by the widely and deeply unpopular president and vice president -- without it appearing that we're dissing George W. Bush or Dick Cheney. The pending natural disaster gives us an ironclad excuse. And if we get really lucky, Democrats will repeatedly accuse McCain of cutting back on the convention as a political ploy. The Democrats will thus appear as paranoid weirdos, and we'll win a second round.)

This, I believe, is what Reagan would have done under similar circumstances... because he truly cared about people (as McCain does), but also with the deep understanding that a curtailed GOP convention that almost turns into a telethon for the hurricane victims (as John suggested, not entirely seriously) will serve us much better politically than a typical quadrennial nominating circus. It's what voters love most: Americans coming together to help those in need.

Back to the future

So John McCain's "new" idea is to return to a process that worked extremely well, for the most part, in the early to mid-1980s: Establish strong conservative and Republican principles, but then be pragmatic about achieving as much of them as possible.

(In an ironic twist, one of the few areas where the Reagan technique failed utterly was amnesty for illegal aliens. But we learned a lot from that bitter betrayal by the Democrats; and the Comprehensive Immigration Reform Act of 2006, which spawned from the ashes of 2005's McCain-Kennedy, was carefully written to avoid that particular pitfall.)

Reaganism prevailed primarily because of his own overwhelming charisma and indominable will; his success was largely personality-driven. But when Reagan left office, many of his reforms (e.g., tax cuts and tax-code simplification, his military buildup, his firm line against Communist states) were undone by subsequent presidents and Congresses: They had been held in place only by Reagan himself.

McCain has a lot of charisma, but certainly not at the level of Ronald Reagan. This means that for McCain to succeed, he will have to do so by force of argument, not force of personality. (If Reagan is George Washington, the McCain must be more like John Adams.) The upside is that, should McCain succeed -- which I think he will -- his success will be longer lasting... it will survive his retirement, which was not true of many aspects of Reaganism. I believe McCain will be able to craft pragmatic but principled compromises that will last generations.

This is especially true now that he has chosen Sarah Palin as his running mate. More than anybody except perhaps Gov. Bobby Jindal of Louisiana (who was not available), Palin embodies the exact kind of principled conservative pragmatism and reform that Ronald Reagan demonstrated but could never pass along -- very possibly because Reagan, for his own VP, he followed the traditional route of picking his closest competitor for the nomination. If so, it was a failure of nerve that undid Reagan's legacy.

McCain has enough experience to be a plausible candidate for president today; Palin will accumulate enough experience to be a plausible one in 2012... as will Jindal, though by a different route (four years of governorship). I expect the Republican nomination battle between Jindal and Palin will be a clash of the titans.

If McCain beats Obama by a substantial margin, as I anticipate, accompanied by Sarah "Barracuda," then they will truly transform the Republican Party and conservatism, finally and irrevocably establishing their direction for the first decades of the twenty-first century.

Thank goodness McCain didn't pick a "known quantity" like Romney or Pawlenty.

Hatched by Dafydd on this day, September 1, 2008, at the time of 6:49 AM | Comments (17) | TrackBack

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