JustOneMinute

Friday Open Thread

Happy Halloween.

Obama's cloud of BS (?) on the unimportance of judicial philosophy is troubling - what is he hiding?  (As if we don't know.)  Why does he want to pretend that most Supreme Court Justices agree most of the time?

SHADES OF GRAY:  Matt Yglesias offers a superficially plausible rebuttal that collapses when pushed a bit:

This seems to totally miss the point. The reason Supreme Court decisions are rarely unanimous isn’t that cut-and-dry legal issues are rare. The reason is that the Supreme Court has absolute discretion over which cases to hear, and they disproportionately choose the “hard” cases. There are lots of cases where the Supremes could choose to offer a 9-0 affirmation of a Circuit Court decision, but that would be a waste of time.

Why limit this 'most of the issues are obvious' argument to Supreme Court Justices?  In 2000 Ralph Nader insisted that Al Gore and George Bush were scuffling over the political center without offering a dime's worth of difference.  And why limit ourselves to 2000?  In the current election,  both Presidential candidates agree on the need for a modestly revised Federal income tax, the need for troops in both Iraq and Afghanistan, the need for changes to our health care system, the need to address global warming, the need to expand alternative energy, offshore drilling and nuclear power, and so on.  I would guess that McCain and Obama are in rough agreement on 99% of issues, if we define "issues" as broadly as Matt does in invoking every cut and dried case to enter the Federal courts.

No differences between Obama and McCain? Only if we look at the hard details of the hard issues.  Sort of like with the Supreme Court.

Who Is This Guy?

Barack Obama has an aunt (OK, a half-aunt) living in Boston and we need a British newspaper to tell us this?  What else are we going to learn about Obama after we elect him?  And will we learn it from our own ever-vigilant press, or must we rely on the kindness of foreigners?

Let's see - in Ohio the state routinely checks people in the news, or so we are told.  OK, as if.  But Obama's half-aunt has reportedly contributed to his campaign, prompting this tap-dance from the London Times:

While Mr Obama was on his voyage of personal discovery in Africa, his aunt and uncle were engaged in their own journey in his homeland.

The Times could not determine their immigration status and an official at Boston City Hall said that Ms Onyango was a resident of Flaherty Way but not registered to vote on the electoral roll. However, that Ms Onyango made a contribution to the Obama campaign would indicate that she is a US citizen. Records at the Boston City Hall confirmed Zeituni Onyango’s birthdate as May 29, 1952.

It is not clear when Ms Onyango first came to the US. She said: “I have been coming to America ever since 1975. I always come and go.”

The Obama campaign seems to have taken the position that donations are legal unless someone can prove they are not.  I don't suppose we can rely on Deval Patrick to clear up Ms Onyango's immigration status, but if George and Condi get involved I can imagine the howls.

That said, I can't find a donor with a last name of "Onyango" from Masachusetts at Open Secrets or the FEC.  Brit magic?

Whatever - maybe she is here illegally, maybe she is contributing illegally; this will be looked into after Nov 4.  It's not as if this is important, like Joe the Plumber.  What, you think Obama's stance on illegal immigration would be affected by his relatives' situation?  That's the old style politics of division - there is no evidence that Obama has any interest in this woman at all, other than as a useful prop in his own global biography.

The Non-Traditional Wednesday Open Thread

Sorry, I am taking a bit of a sick day today.  Well, unless this Day-Quil has the stimulants it advertises...

Obama's Health Plan - Details Would Make Business Sick

The NY Times finds space for a hard look at Obama's health care plan back on page A16 (the front page includes breakthrough coverage of whites willing to vote for a black man):

Businesses Wary of Details in Obama Health Plan

By KEVIN SACK

AGAWAM, Mass. — Dave Ratner, owner of Dave’s Soda and Pet City, is pretty sure he is about to get “whacked” by the new state law that requires employers to contribute to health care benefits for their workers or pay a $295-per-employee penalty. In order to avoid thousands of dollars in fines, Mr. Ratner is considering not adding part-time workers at his four pet supply stores in Western Massachusetts.

But the penalty in Massachusetts is picayune compared with what some health experts believe Senator Barack Obama, the Democratic presidential nominee, might impose as part of his plan to provide affordable coverage for the uninsured. Though Mr. Obama has not released details, economists believe he might require large and medium companies to contribute as much as 6 percent of their payrolls.

That, Mr. Ratner said, would be catastrophic to a low-margin business like his, which has 90 employees, 29 of them full-time workers who are offered health benefits.

“To all of a sudden whack 6 to 7 percent of payroll costs, forget it,” he said. “If they do that, prices go up and employment goes down because nobody can absorb that.”

Obama will take office as we await data on whether the US economy is in a recession or merely tottering on the brink.  The notion that in such an environment he will go full speed ahead on both a tax hike on "the rich" (i.e., couples earning over $250,000, not the rich rich) and a new payroll tax more or less guaranteed to quash employment is absurd.

Yet people will vote for him in a week because Obama "gets it" and has a better plan for dealing with the economy.  Uh huh.

More from the Times on Team Obama's plan to hide the ball:

But when [Obama] announced the plan in May 2007, he emphasized that employers would share in the cost.

“We will ask all but the smallest businesses who don’t make a meaningful contribution today to the health coverage of their employees to do so by supporting this new plan,” he said.

Left undefined has been what size firms would be exempted, what constitutes a “meaningful contribution,” and how much noncompliant businesses would be required to pay. Senator John McCain, the Republican nominee, badgered Mr. Obama in two of their debates to define the penalty, but Mr. Obama did not rise to the bait.

“We made a decision even before the plan was rolled out not to decide,” said David M. Cutler, a Harvard economist who speaks for the campaign on health care. “It’s not that there’s a decision out there that we’re not telling. It’s literally that we’ve decided not to decide.”

That may be smart politics. But it makes business groups nervous that Mr. Obama might impose an unmanageable burden. They also worry that any time his health plan faces a shortfall, businesses will be asked to up their ante, as has happened in Massachusetts.

Not deciding on the extent of the new business tax is a slick gambit if the press will let them get away with it.  Wait, what do I mean, "if"?  The Times could have covered this anytime between May 2007 and today. And why do they frame the story as that of business being suspicious of the plan?  Who bears the burden of layoffs?

Let's hear from some economists:

Economists believe the cost of health benefits is ultimately shifted to employees through lower wages. When wages cannot be lowered, layoffs may result. Katherine Baicker of Harvard and Helen G. Levy of the University of Michigan have projected that play-or-pay might push 224,000 workers into that category.

Layoffs and lower wages - change we can believe in.

WE BELABOR THE OBVIOUS:  Organized labor loves anything that depresses wages and employment in the non-union sector, so do not look to them to criticize Obama's plan in defense of the little guy.  C'mon, this is why they support him.

Patterico Has Been Hijacked

Patterico's domain registration has been taken over rather high-handedly.  If you can find his site (with a ".net", not the old ".com", and well worth looking for) you will find good stuff like this.

Times Columns

David Brooks is very interesting on the American political center, progressive conservatives, and McCain's failure to appeal to this group despite his natural instinct for them.

There are two major political parties in America, but there are at least three major political tendencies. The first is orthodox liberalism, a belief in using government to maximize equality. The second is free-market conservatism, the belief in limiting government to maximize freedom.

But there is a third tendency, which floats between. It is for using limited but energetic government to enhance social mobility. This tendency began with Alexander Hamilton, who created a vibrant national economy so more people could rise and succeed. It matured with Abraham Lincoln and the Civil War Republicans, who created the Land Grant College Act and the Homestead Act to give people the tools to pursue their ambitions. It continued with Theodore Roosevelt, who busted the trusts to give more Americans a square deal.

Members of this tradition have one foot in the conservatism of Edmund Burke. They understand how little we know or can know and how much we should rely on tradition, prudence and habit. They have an awareness of sin, of the importance of traditional virtues and stable institutions. They understand that we are not free-floating individuals but are embedded in thick social organisms.

But members of this tradition also have a foot in the landscape of America, and share its optimism and its Lincolnian faith in personal transformation. Hamilton didn’t seek wealth for its own sake, but as a way to enhance the country’s greatness and serve the unique cause America represents in the world.

Members of this tradition are Americanized Burkeans, or to put it another way, progressive conservatives.

Tom Friedman offers a cautionary point about the problems with having the US Government as a major shareholder in big banks, belaboring illustrating the notion that the government is normally not a creative, entrepreneurial risk-taker but is subject to political favoritism and influence:

“Government bailouts and guarantees, while at times needed, always come with unintended consequences,” notes the financial strategist David Smick. “The winners: the strong, the big, the established, the domestic and the safe — the folks who, relatively speaking, don’t need the money. The losers: the new, the small, the foreign and the risky — emerging markets, entrepreneurs and small businesses not politically connected. After all, what banker in a Capitol Hill hearing now would want to defend a loan to an emerging market? Yet emerging economies are the big markets for American exports.”

Friedman also notes that not all banks drove themselves off a cliff and calls for better management.  What I would like to see (but won't) is a serious discussion of what, in the current organizational structure of Wall Street, went wrong.  Dems will glibly blame greed and failed regulation, as if greed has not always been a part of Wall Street and as if regulators possess uncanny vision and insight unavailable to the rest of us.

Personally, I remain mystified.  Jimmy Cayne of Bear Stearns had a billion dollars of the company stock and held a position of great influence with free access to the company's books - did he really need a regulator to remind him not to lose a billion of his own money?  Did Dick Fuld of Lehman really not understand his won business, and the impact of a Lehman collapse on his own net worth, better than some civil servant at Treasury or the Fed?

Obviously something went wrong, just as something went wrong with the spectacular over-investment in technology in the late 90's.  I am sure we can look forward to a nuanced airing of alternative viewpoints under a Dem congress controlled by super-majorities.

Finally, in a clear sign of over-confidence Frank Rich rallies to the defense of most white people and criticizes the media's coverage of race in the Presidential campaign:

But the other, less noticed lesson of the year has to do with the white people the McCain campaign has been pandering to. As we saw first in the Democratic primary results and see now in the widespread revulsion at the McCain-Palin tactics, white Americans are not remotely the bigots the G.O.P. would have us believe. Just because a campaign trades in racism doesn’t mean that the country is racist. It’s past time to come to the unfairly maligned white America’s defense.

That includes acknowledging that the so-called liberal media, among their other failures this year, have helped ratchet up this election cycle’s prevailing antiwhite bias. Ever since Obama declared his candidacy, the press’s default setting has been to ominously intone that “in the privacy of the voting booth” ignorant, backward whites will never vote for a black man.

A leading vehicle for this journalistic mind-set has been the unending obsession with “the Bradley effect” — as if nothing has changed in America since 1982, when some polls (possibly for reasons having nothing to do with race) predicted erroneously that a black candidate, Tom Bradley, would win the California governorship. In 2008, there is, if anything, more evidence of a reverse Bradley effect — Obama’s primary vote totals more often exceeded those in the final polls than not  —  but poor old Bradley keeps being flogged anyway.

I am hoping for a McCain win just to watch Rich explain that without invoking racist whites.

Sunday Speculation

With the election a week from Tuesday, let's have an Eerie Prescience Challenge - predict for us Obama's share of the popular vote and the closing level of the Dow Jones Industrial Average on Tuesday Nov. 4.

Since the Dow has a much wider likely range than Obama's vote share, the final score will be calculated as the sum of two absolute values, namely, Obama's actual share less predicted share times 300 plus the difference in actual and predicted Dow.

FWIW, the Dow closed Friday at 8379.

My gueses: Obama 51, Dow 9000.

ERRATA:  For folks who want to overthink this: the VIX is at 80% for annual volatility; for a one week period, that implies a 22% range for the Dow - yike.  (22 = 2* 80/Sqr Root 52 - roughly).

SINCE YOU ASK:  Eventually, the Dow closed at 9625 on Tues, Nov 4, boosted by a no-news rally of nearly 900 points on Oct. 28.

Obama garnered 52.9% of the popular vote.

Sunday Open Thread

Good morning, all.

"Hints Of Racism"

The NY Times, in its surprise endorsement of Barack Obama, accuses the McCain campaign of racism:

In the same time, Senator John McCain of Arizona has retreated farther and farther to the fringe of American politics, running a campaign on partisan division, class warfare and even hints of racism.

The Times does not offer a hint of evidence backing that charge so it is difficult to rebut them.  Whatever.  There was  time when the charge of racism carried some weight.  As the Times demonstrates, it now comes so casually from the left as to not require justification or evidence.  Nor need it be taken seriously - many times, "racist" simply means "disagrees with me" or "doe not support Obama.

Too bad.  I suspect there is a lingering problem with racism in this country, but the term is so overused and politicized as to be meaningless.

FUNNY:  I loved this:

Mr. McCain could have seized the high ground on energy and the environment. Earlier in his career, he offered the first plausible bill to control America’s emissions of greenhouse gases. Now his positions are a caricature of that record: think Ms. Palin leading chants of “drill, baby, drill.”

Mr. Obama has endorsed some offshore drilling, but as part of a comprehensive strategy including big investments in new, clean technologies.

In other words, Obama said "Me, too" to offshore drilling but we can count on him not to mean it.  Of course, McCain has touted his "all of the above" energy plan, but so what.

WE HAVE NOTHING TO FEAR BUT TOYS THEMSELVES...

This made me laugh in August and gets funnier every time I read it:

In his convention speech in Denver, Mr. Obama said, “Government cannot solve all our problems, but what it should do is that which we cannot do for ourselves: protect us from harm and provide every child a decent education; keep our water clean and our toys safe; invest in new schools and new roads and new science and technology.”

From "The era of big government is over" to keeping our toys safe - thank heavens Dems have their eye on the ball.

Oh, geez, a distraction - there is a cat stuck in a tree in the front yard.  I've been watching for over ten minutes and no one from the federal government has intervened.  Time to vote for change.

Moneyball, Moneyhealth

An unlikely triumvirate writes on health care in the NY Times - Billy Beane (Oakland A's manager and star of Moneyball), Newt Gingrich and John Kerry laud a statistical approach to health:

IN the past decade, baseball has experienced a data-driven information revolution. Numbers-crunchers now routinely use statistics to put better teams on the field for less money. Our overpriced, underperforming health care system needs a similar revolution.

Eventually they offer some examples:

Similarly, a health care system that is driven by robust comparative clinical evidence will save lives and money. One success story is Cochrane Collaboration, a nonprofit group that evaluates medical research. Cochrane performs systematic, evidence-based reviews of medical literature. In 1992, a Cochrane review found that many women at risk of premature delivery were not getting corticosteroids, which improve the lung function of premature babies.

Based on this evidence, the use of corticosteroids tripled. The result? A nearly 10 percentage point drop in the deaths of low-birth-weight babies and millions of dollars in savings by avoiding the costs of treating complications.

Another example is Intermountain Healthcare, a nonprofit health-care system in Utah, where 80 percent of the care is based on evidence. Treatment data is collected by electronic medical records. The data is analyzed by researchers, and the best practices are then incorporated into the clinical process, resulting in far better quality care at a cost that is one-third less than the national average. (Disclosure: Intermountain Healthcare is a member of Mr. Gingrich’s organization.)

All I know is I want CC Sabathia on the mound for the Yankees next spring.

Friday Melt Down Blogging

As of 7:15 Asia is down about 10% (Nikkei at 7649), Europe is down 8% (FTSE 3787) and Dow futures are down about 500.  Why?  Great question.

In currencies the yen has gone from 100 on Wednesday to 92.  Nice to see calm, temperate swings between the world's two largest economies.

The Fed bi-weekly report came out yesterday.  Excess bank reserves continue to soar - after averaging under $2 billion for most of the year they rose to $68 billion on Sept 24 (post Lehman and AIG), $136 billion on Oct 8, and $282 billion on Oct 22.  I take this as a sign that banks are not yet fully comfortable lending to each other.

3 mo LIBOR is down a bit at 3.52%.  The 3 mo bill is steady at 0.97% but the rest of the curve is up 10-20 bp in a flight to quality.  The TED spread is steady at just above 2.50%.

Almost Like Analysis

The Times pretends to evaluate the foreign policy temperament of the Obama and McCain campaigns.  Their coverage of the Georgia situation this summer struck me as especially amusing:

Dealing With Great Powers

Within hours of the Russian attack on Georgia in August, Mr. McCain was on the phone to his foreign policy advisers, seeking to calibrate the right response. It was a critical moment for a man who has surrounded himself with members of both warring camps in the Republican Party — the neoconservatives nursing their wounds after Iraq went bad, and the pragmatists who rose again in Mr. Bush’s second term.

“He had people telling him, ‘John, you want to think about the long term — we need the Russians on Iran, and the Georgians sort of invited this,’ ” a friend who talked to him in that period said. But in the end, Mr. McCain stepped out with a strong defense of Georgia, while Mr. Obama issued a more even-handed statement, calling for all sides to return to the uneasy status quo that had prevailed in South Ossetia.

While Mr. Obama’s reaction was much closer to the Bush administration’s, Mr. McCain seized on the moment to portray Mr. Obama as weak. Mr. McCain’s friends say his criticism of Russia was a direct outgrowth of his prisoner-of-war experience and his cold war upbringing. He regularly reminds voters than when he looks into the eyes of Vladimir V. Putin, the Russian prime minister, he sees three letters: K.G.B.

Left unmentioned - after his initial statement urging both sides to hold hands and sing "Give Peace A Chance" Obama did in fact get in line behind McCain (as did others) and offer much tougher rhetoric.  Even the Times noticed last August.

Senator Barack Obama, his Democratic rival, trod more carefully, a characteristic of his approach to foreign affairs. In an initial statement released by his campaign, he did not directly blame Russia and instead offered a more measured response, which largely echoed the official comments of the European Union, the North Atlantic Treaty Organization and President Bush.

“Now is the time for Georgia and Russia to show restraint and to avoid an escalation to full-scale war,” Mr. Obama said in the statement, which focused on negotiations and concluded that “all sides should enter into direct talks on behalf of stability in Georgia.”

Mr. Obama did harden his rhetoric later on Friday, shortly before getting on a plane for a vacation in Hawaii. His initial statement, an adviser said, was released before there were confirmed reports of the Russian invasion. In his later statement, Mr. Obama said, “What is clear is that Russia has invaded Georgia’s sovereign — has encroached on Georgia’s sovereignty, and it is very important for us to resolve this issue as quickly as possible.”

Do Your Backups!

The Times reminds everyone to do their backups of their computer files and mentions some online services.  However, I question this:

Much of the competition revolves around the amount of data and the price. Companies like Mozy and Carbonite offer an unlimited amount of backup space for a fixed price, currently $4.95 a month or $50 a year. Competitors snipe at these grand, all-you-can-eat offers, whispering that the services use slow Internet connections to prevent people from taking advantage of all of this space. This accusation is impossible to verify but it may not matter because most home users have connections that make it practically impossible to upload more than several gigabytes a day.

Hmm - I am using a free Mozy service available for amounts less than 2 gigabytes.  So far so good - I have not had a disk failure but I have retrieved a few files just as a test and everything seemed to work as advertised.

Oh, yeah - don't forget to floss regularly, too. 

Forgetting The Talking Points

It's a bit embarrassing when the Old Grey lady goes tottering away from the standard lib talking points.  Time to adjust the meds?

I refer to this Times article from a couple of days back describing the come-uppance likely to be faced by Russia, Venezuela and Iran with oil under $70/barrel.  It all seems perfectly innocent and plausible:

It is not clear whether the new pressures could create opportunities for the United States to ease tensions, or whether the three countries’ leaders will rely more on angry words even if they cannot afford provocative actions. Mr. Chávez has continued his overtures to Russia. He, Prime Minister Vladimir V. Putin of Russia and President Mahmoud Ahmadinejad of Iran may now see the United States, hobbled by financial crisis, as even more vulnerable.

...

Iran

When President Ahmadinejad  presented his budget to Parliament in 2007, the United Nations Security Council had already imposed economic sanctions on Iran because of its nuclear program. The president said it did not matter.

“Even if they issue 10 more such resolutions,” he said, “it will not affect Iran’s economy and politics.”

Why is this so wry?  Lest you have forgotten (as the Times has) there was a time when only a right wing fool could have imagined that Ahmadinejad was the leader of Itan.  That was back in the day when earnest libs such as Joe Klein were defending Obama from the charge that his promise to meet with the leader of Iran without pre-conditions was an implicit promise to meet with Ahmadinejad.

Evidently, Amadinejad is back in charge.

Thursday Open Thread

Let me toss this up to tread water while I, well, tread water.  Metaphorically, of course.

Torn From The Playbook Of Michelle And Jeremiah

I deplore the tactic but find this ThinkProgressive headline to be amusing:

Right-Wing Ad Tries To Frighten Minorities By Comparing Embryonic Stem Cell Research To Tuskegee Study

Those righties shouldn't do that - it smacks of Michelle Obama and Jeremiah Wright. That said, ThinkProgressive may be unaware of that linkage, since they don't seem to have any coverage of either Michelle's or Jeremiah's thoughts on Tuskegee.

Wednesday Open Thread

I have a funny feeling about my schedule today...

There They Go Again

Bill Burton, a spokesperson for Obama, categorically denied the obvious - Obama did in fact provide a blurb for Bill Ayer's 1997 book on juvenile justice.

Why the lies?  I don't know.  But I don't know why their story about the Obama-Ayers relationship has been changing and evolving since February.

However, even though we have no real idea what the relationship is or was, libs are confident in their assurance that it is meaningless.  How that is reality-based and not faith-based I don't know.

MORE:  I am inclined to give at least a temporary pass to Obama spokesguy Robert Gibbs who may have been commenting on the Obama blurb, or on his own level of knowledge.  The transcript:

HANNITY: Wait a minute. Wait, he did blurbed his book, you know?

GIBBS: No.

HANNITY: No, no. Barack Obama did blurb Ayers's book.

One might argue that Gibbs' intent was to communicate the notion that "No, I don't know anything about a blurb" in response to Hannity's "You know"?  I can't get the tape to roll just now, naturally.  That said, Gibbs was otherwise argumentative, unreasonable, and unpersuasive with his notion that Hannity's choice of a guest says as much about Hannity as Obama's multi-year (Multi-decade?  Who knows - can we get a bid for 1988?) association with Ayers says about him.  But I'm sure libs loved it.

Tuesday Melt [Guess Direction Here] Blogging

On Tuesday before the open the credit market signs are good - 3 mo LIBOR is down 22 basis points to 3.83% and the 3 mo T-bill yield is steady at 1.23%, so the TED spread is down.

Gold is also down (Dec futures at $779/oz.) which may be a flight from quality or yet another sign of a strong dollar - the Euro is down again, with the Dec future at 1.32.

However!  At 10:30, the S&P 500 is down 4 at 981 (up from the open.)  VIX is down to a still high 53.

Today is pay-up day for the Lehman credit default swaps.  Reuters says not to worry; making it through the day without some other firm announcing a ghastly surprise would be nice.  That said, the settlement amounts have been known for over a week, so regulators and lenders should have already been alerted if anyone has a liquidity or solvency problem due to Lehman.  One hopes.

Down So Far Everything Looks Like Up

No, I am not talking about the financial markets.  I am utilizing my retroactive genius to note the now-so-obvious-it-was-inevitable media surge in support of Sarah Palin.

Her Saturday Night Live appearance even won kind words from the NY Times.  And CBS News runs what might fairly be called a fawning puffer - evidently Ms. Palin is the only one of the four candidates talking to the press and they are in love with her for it.  The NY Times bloggers also noted with praise her new direction with her press corps, and included this detail:

A reporter who transcribed her comments for a pool report later Sunday evening sounded his approval. “In her continuing evolution from the least accessible to the most accessible of the four candidates, Palin took questions from your pooler at the Coldstone Creamery in Colorado Springs.”

Two weeks left - plenty of time for them to resume loathing her again.  However, let me echo the thought of The Anchoress, who noted that the Bush-bashing on Saturday Night Live seemed sooooo yesterday and suggest that Sarah-bashing may have become ancient history in our fast-paced media age.

I DEPLORE THIS SEXISM:  A bunch of bored, paunchy male reporters hanging out with the Hot Chick and liking it - imagine my surprise.  My question is, what took the McCain geniuses so long to figure this out? 

Monday Melt-Up Blogging

At 11AM the quick credit market indicators are good - the three month T-bill is up in yield by about 10 bp and the TED spread has left low earth orbit and re-entered the upper stratosphere (we applaud its downward direction!).  Troublingly, financial stocks are mixed - the XLF index of major financial institutions is up 1.6% but the IAT regional bank index is down 0.9%.  Both lag the S&P 500, up 2.1% to 960.

ING got a 10 billion Euro investment from the Dutch government, which is helpful.  This seems to be a pre-emptive strike against rumor and innuendo rather than a response to a real capital deficiency, but that is fine with me.

AFTERNOON UPDATE: At 3:25 we have a great flight from quality going on in Treasuries, where the 3 mo bill is up in yield by 31 bp to 1.10%.  The S&P 500 is up 3.1% to 969 (+28).

Here is a story on regional bank woes:

NEW YORK (AP) -- Shares of regional banks were mixed Monday as signs of easing in the credit markets weren't enough to offset investors' concerns about the effects of a worsening economy on the financial sector.

...

But analysts and investors are still worried that a worsening economy will only further exacerbate banks' credit woes.

Barclays Capital analyst Andrea Jao said in a note to clients Monday that she expects higher credit costs and a weaker operating environment to weigh on the earnings of smaller regional banks.

At 3:30 the IAT is down 0.5%.

A Rocky Road For Obma If Elected

If Obama becomes President his popularity will sag and he will make unpopular decisions widely viewed as unsound.

No, that's not my opinion.  My source is the always entertaining Joe Biden, who seems intent on lowering expectations to the point that the nation will marvel if Obama has the competence and vision to remember to show up on Jan 20 to be sworn in.

"I promise you, you all are gonna be sitting here a year from now going, 'Oh my God, why are they there in the polls? Why is the polling so down? Why is this thing so tough?' We're gonna have to make some incredibly tough decisions in the first two years. So I'm asking you now, I'm asking you now, be prepared to stick with us. Remember the faith you had at this point because you're going to have to reinforce us."

"There are gonna be a lot of you who want to go, 'Whoa, wait a minute, yo, whoa, whoa, I don't know about that decision'," Biden continued. "Because if you think the decision is sound when they're made, which I believe you will when they're made, they're not likely to be as popular as they are sound. Because if they're popular, they're probably not sound."

I don't like the sound of that.  The good decisions won't be popular?  The suspense is killing me.  And speaking of killing me, what about this fear-mongering from Biden?

"Mark my words," the Democratic vice presidential nominee warned at the second of his two Seattle fundraisers Sunday. "It will not be six months before the world tests Barack Obama like they did John Kennedy. The world is looking. We're about to elect a brilliant 47-year-old senator president of the United States of America. Remember I said it standing here if you don't remember anything else I said. Watch, we're gonna have an international crisis, a generated crisis, to test the mettle of this guy."

"I can give you at least four or five scenarios from where it might originate," Biden said to Emerald City supporters, mentioning the Middle East and Russia as possibilities. "And he's gonna need help. And the kind of help he's gonna need is, he's gonna need you - not financially to help him - we're gonna need you to use your influence, your influence within the community, to stand with him. Because it's not gonna be apparent initially, it's not gonna be apparent that we're right."

Oh, great - so per Biden, after Obama gets the 3 AM phone call we will all think he blew it.  I deplore this negative, attack-oriented campaigning.  C'mon, Joe, give me a reason to Go With O!

Hmm - people deplored similar fear-mongering from Hillary and Rudy.  Seasons change.

MORE: Jim Geraghty worries that the Senate won't be able to advise and consent in a crisis:

I'm hoping that, if Obama is elected, he nominates the best attorney general, secretary of state, secretary of defense, secretary of homeland security, etc., he can find. But if a crisis is unfolding, the Senate will probably be under enormous pressure to confirm the nominees and get them into their jobs as quickly as possible. That seems like less than ideal circumstances for the Senate to exercise appropriate scrutiny.

When did we expect scrutiny from Harry Reid and his 59 fellow Dems?

Jennifer Rubin has fun:

Well, golly, if Obama is so untested that we will have a series of international crises — at the very time we are in a financial meltdown — which will make the Cuban Missile Crisis look like a walk in the park, shouldn’t we vote for the other guy who will keep all the miscreants in their place? Now, maybe we should rest easy because, according to Biden, “I’ve forgotten more about foreign policy than most of my colleagues know, so I’m not being falsely humble with you.” (Maybe Hezbollah’s occupation of Lebanon was one of the things he forgot.)

The Captain reminds us of Kennedy's meeting with Krushchev "without preconditions":

What resulted?  The Berlin Wall and the Cuban missile crisis. Kennedy wound up trading strategic intel and missile installations in western Asia in exchange for Soviet withdrawal of the nuclear missiles from Cuba.  The entire Kennedy administration turned out to be a foreign-policy disaster that was only overlooked because of the tragic assassination of Kennedy in Dallas in 1963.

I agree with Biden.  Obama is exactly like Kennedy in this regard, and our enemies will test us by threatening our interests around the globe if we elect Obama.  I’d rather avoid the problem altogether and elect a man who puts enough fear into the minds of our enemies to keep them from testing us at all.

Biden is trying to put lipstick on the Bay of Pigs.

We're Not Biased, It's Our Darn Readers!

Beleagured Clark Hoyt, Public Apologist for the NY Times, is evidently cracking under the strain.  His latest defense of the Times Obama '08 campaign editorial process explains that the perception of bias is really the fault of the pesky readership:

Throughout this election season, most of the thousands of messages I have received about Times news coverage have alleged bias — bias in headlines, photo selections, word choices, what the newspaper chooses to write about and what it ignores, what it puts on Page 1 and what it puts inside. Most of the complaints, but by no means all of them, have come from the right. Nobody acknowledges the possibility that, because of their own biases, they could be reading more, or less, than was intended into an article, a headline or a picture. Many go a step beyond alleging mere bias to accuse The Times of operating from a conscious agenda to help one candidate and destroy the other.

...Richard Stevenson, the editor in charge of political coverage, says reporters and editors know they are under close scrutiny and work hard to keep bias out of their work. He acknowledges, “We no doubt fall short occasionally.” But that does not mean the newsroom is engaged in an organized effort to tear down McCain — or Obama, as some think — and raise up the other candidate.

Bias is a tricky thing. None of us are objective. We like news that supports our views and dislike what may challenge them. We tend to pick apart each article, word by word, failing to remember that it is part of a river of information from which facts can be plucked to support many points of view. Perversely, we magnify what displeases us and minimize what we like.

There is an entire body of scholarship devoted to what social scientists call the “hostile media” syndrome, the belief of people with strong feelings about an issue — any issue — that the news media are hostile to their side.

“Journalism is not brain surgery; it’s more difficult than that,” said Andrew Cline, an assistant professor of journalism at Missouri State University, who has written on the perception of bias in news coverage. He said it was impossible for a reporter, in a single article, “to cover a situation in a way that everyone involved sees themselves the way they understand themselves.” News coverage has to be judged for fairness over a period of time, he said.

Judge for fairness over a period of time? Dare I mention the Times coverage of the Kerry campaign in 2004?  Did I ever prepare that summary post I promised myself?  Here is some 2004 year-end mockery of Daniel Okrent, Kerry's health, Kerry's heroism, Kery's taxes... comic gold.  I would link to their repeated calls for Kerry to sign a Form 180 and release his military records but... there aren't any!  Back to Mr. Hoyt and his request for a long view.

So, why is The Times coming under such relentless fire? Conservatives are sure they know and have anecdotes to support their view. But a lot more feeds into the stream of dissatisfaction, some of it beyond the newspaper’s control. The Times is aggressive this year in assessing the truthfulness of the candidates’ statements and ads, often putting it in an adversarial position with them. The newspaper has run many interpretive articles in the news columns, increasing the opportunities for bias, real or perceived. Finally, the McCain campaign has gone on the attack against The Times and the media since the economy turned sour and his poll numbers began sinking.

...Like a lot of news consumers — and at least some Times readers — O’Reilly appears to have a hard time with information that does not fit his view of the world. It is a tough reality every news organization faces.

Now that he has explained to me that I am the cause of the perceived bias at the Times I feel awful.

ERRATA:  Studies from George Mason were mentioned.  Over the summer Obama got great imagery from his televised world tour but was panned for his surge dance.  Now the media is back to kind words.

Sunday Chat

Away we go.

Oil Prices Fall, So Stoke Me Up Again

With oil prices having fallen to near $70/barrel the window has re-opened on the revenue-neutral energy tax described by Greg Mankiw last year (my thoughts).

The basic idea is simple - raise the gas tax and offset that revenue stream with a cut in the payroll tax.  (But what about seniors who drive?  Hmm...).  Hard to do that with gas at $4 a gallon, easier with gas under $3.

Obviously this won't happen in a lame duck Congress but if oil prices are low next spring/summer maybe it could be an agenda point for Obama.  An added bonus - we can all reminesce about Al Gore's BTU tax of 1993, which of course was not revenue-neutral.

Waiting For Tuesday

Here is a good post from Mitch Townsend of the Chicago Boyz on the breathless anticipation with which the financial markets await the settlement payments on the many and varied Lehman Credit Default Swaps.  Who owes what to whom?  Who knows!  AIG is expected to be writing checks, but what will be disclosed?  I'll guess that since the amount was set at an auction last week, no one will perish on Monday due to an inability to cover their losses.

Large amounts will slosh around the financial system; one hopes that the appropriate regulators have been apprised of threats to anyone's liquidity or solvency.

Obama Bitterly Clinging To "What's The Matter With Kansas"

Obama takes another bite of the bitterly clinging apple in a long interview with Matt Bai of the NYT Magazine.  However, even with six months to reflect Obama hasn't figured out why his remarks were problematic:

For a guy who just four years ago was running his first statewide campaign, Barack Obama has made startlingly few missteps as a presidential candidate. But the moment Obama would most like to take back now, if he could, was the one last April when, speaking to a small gathering of Bay Area contributors, he said that small-town voters in Pennsylvania and other states had grown “bitter” over lost jobs, which caused them to “cling to guns or religion or antipathy toward people who aren’t like them.” That comment, subsequently posted by a blogger for the Huffington Post, undercut one of the central premises of Obama’s campaign, an argument he first floated in his famous 2004 convention address — that he could somehow erode the tired distinctions between red states and blue ones and appeal to disaffected white men who had written off national Democrats as hopelessly elitist. Instead, in the weeks that followed, white working-class primary voters, not only in industrial states like Pennsylvania but also in rural states like Kentucky and West Virginia, rejected his candidacy by wide margins, and he staggered, wounded, toward the nomination.

Let me pause for the Mayhill Fowler post that started it all as well as some early Times coverage, Jake Tapper of ABC News, my early thoughts, and some "What's the Matter With Kansas" debunking.

The initial criticism of Obama's comment centered on the point that rural voters may actually believe in guns and God independently of their economic circumstances.  Here is Jake Tapper:

It seems to me that this comment could be interpreted fairly easily as dismissing people who hold views on guns, or religion, or immigration, or trade because they believe in those views -- and not because they're "bitter" or lashing back at a system that has discarded them.

And Hillary, as reported in the Times:

Mrs. Clinton suggested that Mr. Obama saw religious commitment, hunting and concern about immigration as emotional responses to economic strain rather than as deeply embedded values.

Seems simple.  So now Obama tackles this head on, six months later with a sympathetic Matt Bai:

“That was my biggest boneheaded move,” Obama told me recently. We were sitting across from each other on his plane, the one with the big red, white and blue “O” on the tail, flying some 35,000 feet above Nebraska. “How it was interpreted in the press was Obama talking to a bunch of wine-sipping San Francisco liberals with an anthropological view toward white working-class voters. And I was actually making the reverse point, clumsily, which is that these voters have a right to be frustrated because they’ve been ignored. And because Democrats haven’t met them halfway on cultural issues, we’ve not been able to communicate to them effectively an economic agenda that would help broaden our coalition.”

So far so good - the hicks have been ignored on cultural issues, independent of economic strains.  But then Obama heads straight back into the ditch (my redundant emphasis):

“I mean, part of what I was trying to say to that group in San Francisco was, ‘You guys need to stop thinking that issues like religion or guns are somehow wrong,’ ” he continued. “Because, in fact, if you’ve grown up and your dad went out and took you hunting, and that is part of your self-identity and provides you a sense of continuity and stability that is unavailable in your economic life, then that’s going to be pretty important, and rightfully so. And if you’re watching your community lose population and collapse but your church is still strong and the life of the community is centered around that, well then, you know, we’d better be paying attention to that.”

Why can't guns and church simply be important to these people because they are?  Why does Obama insist on linking their importance to economic distress?  Is there any learning process happening here at all?

This explanation about how embarrassed Obama was when the mask slipped is classic:

“No. 2 [in appealing to working class voters] is how we talk about issues,” Obama went on. “To act like hunting, like somebody who wants firearms just doesn’t get it — that kind of condescension has to be purged from our vocabulary. And that’s why that whole ‘bittergate’ episode was so bitter for me. It was like: Oh, this is exactly what I wanted to avoid. This is what for the last five or six years I’ve been trying to push away from.”

In Obama's vision it is not what the candidate believes that is important, it is what the candidate says.  What Obama believes seemed clear six months ago and, with this new opportunity, he has made it clear again.

Two weeks and two days to his victory.

BLAZING AWAY:  Obama in a small town on guns:

“I just want to be absolutely clear, O.K.? I just don’t want any misunderstanding when you all go home and you talk with your buddies, and they say, ‘Oh, he wants to take my gun away.’ You heard it here, and I’m on television, so everybody knows. I believe in the Second Amendment. I believe in people’s lawful right to bear arms. I will not take your shotgun away. I will not take your rifle away. I won’t take your handgun away.

“So if you want to find an excuse not to vote for me, don’t use that one!” Obama said, eliciting laughter and cheers from the crowd. “It just ain’t true!”

He has sensibly dropped " “Even if I want to take them away, I don’t have the votes in Congress,’’, so there is some learning going on here.  As to whether you believe him, caveat emptor.

BITTERLY CLINGING:  The normally laser-like Ann Althouse runs Obama's first explanatory paragraph but skips past his renewed linkage of guns, church and economic distress.  She does promote the connection from her comments section, however.

Mr. Ethics Reform

Jim Lindgren of The Volokhs remembers the days when the press actually vetted the candidates and not the people who questioned them:

I was stunned to see some document showing Joe the Plumbers' tax problems on my 10pm (CT)newscast on the local NBC affiliate in Chicago on Thursday night. They have very little time for any national news and they actually spent time on Joe the Plumbers' tax problems. Amazing!

But when an actual candidate — Barack Obama — released his tax returns, which on their face seemed to show an ethics violation of Illinois law, the press couldn't care less.

Just to remind you, Illinois prohibits state legislators from taking speaking fees, and Barack reported "speaking fees.":

He explains in detail and concludes wistfully:

I really don't blame Obama for not addressing this; he released his tax returns after all. The problem is the press, which seems to be having more trouble than usual doing its job this season.

Yes, but - what about Fox News?  Where has the WSJ been on this?  Rush?  Geez, for what kind of Right Wing Noise Machine am I toiling, anyway?

And let me add a "Things I Would Like To Doublecheck" caveat here - if Obama donated his speaking fees to charity (possible!) how would they be reported?  If the check went straight to the charity from the payer, Obama would show nothing on his tax return.  But if Obama cashed the check then wrote an equal check to charity, that might comply with Illinois ethics rules and explain the tax reporting.

POWER OF GOOGLE: It will surely change and I am not taking a screen shot but right now this Google search -"Barack Obama" "speaking fees" - turns up this March post from Jim Lindgren, a Patriot Files link to Lindgren, and a lot of coverage of speaking fees received by Rudy Giuliani and Bill Clinton.

Our watchdog media.  Great job on Joe the Plumber though.

WASTED PIXELS:

TO:  [email protected]

Dear Mr. Hoyt;

Great job reporting the news that Joe the Plumber has tax liens.  Shouldn't the Times follow with something dismissive about (a) the tax liens on the treasurer of Obama's campaign, and (b) Obama's apparent ethics violation in reporting speaking fees fon his 2000 and 2002 tax returns that are barred by Illinois State ethics laws that apply to state legislators?

The NY Times search is quite bare on that coverage as of now.

That does not even make me feel better.  Would Nov. 5 be a good day to cancel my subscription?  I only hesitate because that will be the day they begin to turn on Obama in disillusionment and pent-up frustration.

Immigration As An Issue?

A new ad attacking Obama's support to giving driver's licenses to illegal immigrants is being aired.

I thought Obama would catch more flack for this before now, from Hillary or someone other than McCain.  Hillary caught flack for flip-flopping away from the same absurdly unpopular position that got laughed out of the voting booth (and off the NY Times pages) last fall.  Yet John Edwards also flip-flopped and Obama, in an unexpectedly principled moment, attacked Hillary then forgot to prepare a coherent explanation of his own unpopular view.

Reach Out, He'll Be There

The great Levi Stubbs of the Four Tops has passed away.  Brian Williams of NBC News offered a one minute tribute available here.

I DID NOT KNOW THAT:  Jackie Wilson, Mr. Excitement, was a cousin.  There's gonna be some sweet sounds comin' down the nightshift.

Firiday Melt [Insert Direction Here] Blogging

As of 1:30 we are due for some melt-up blogging.  The Dow, down over 250 at the open, is now up 230 to 9210.

Signs from the credit markets are encouraging.  The three month t-bill has been deemed radioactive, or associated with global warming, or male pattern baldness, or something.  Anyway, its yield has roughly doubled, up 0.41% to a still low 0.83%.  IIRC, earlier this week it was around 0.15%, so this flight from quality is hopeful.  Not suprisingly, the TED spread is also lower.

If you need a splash of cold water, consider that with the S&P up 3% the XLF fund of major financial insitutions is up a mere 1.6%.  For even worse news, note that the IAT fund of US regional banks is essentially unchanged.  I would be surprised if we had a solid recovery in which these sectors lagged rather than led (but I am happy to be surprised.)

APPROACHING THE CLOSE:  CNBC reports that several corporate and municipal bond deals got done today (including the State of California) and were able to increase the size of their offerings.  That bodes well for a thawing credit market and the marketing savvy of the deal managers, who were bound to come in with a low offering amount to avoid embarrassment.

GOOSING MONDAY'S OPENING:  An interesting late story in the WSJ:

NEW YORK -- Signs pointing to a hefty drop in a key interbank lending rate Monday pulled the flight to safety bid out of the government bond market Friday.

Trading Friday indicated that three-month Libor, a benchmark for corporate and consumer borrowing, could be fixed around 3.103% Monday in London, down from Friday's 4.418% rate. The move was driven by reports that J.P. Morgan Chase had lent out a large amount of three-month funds. A person familiar with the matter said that J.P. Morgan lent between $10 billion and $15 billion to mostly European banks Friday morning in overnight to ...

RELATED:  Tiger Hawk notes that bubbles are a recurring element of financial history.  Folks who insist that this housing bubble could have been foreseen and stopped ought to ponder this - it was foreseen and not stopped.  In May 2005 Greenspan finally expressed concern about regional housing bubbles.  Others, including James Grant, had been more emphatic earlier. 

Why was nothing done?  Well, in many people's minds a recession tomorrow is better than a recession today.  The Fed kept rates low after the tech collapse and 9/11 in order to prop up the US consumer, who in turn propped up the world economy.  The time for higher rates and stricter mortgage lending standards was always "later", when our economic footing was a bit more secure.  George Bush was promoting an ownership society; Democrats were pushing easier access to credit for their constituencies; and Wall Street thoght that, just like all the other times, this time things were different and housing prices would rise forever.

In another world the Fed would have watched the tech collapse and 9/11 create a nasty recession in 2000/2002, after which the US economy would have moved forward on a firmer foundation.  Instead, we floated forward on an ocean of easy credit and home equity loans.  But the bill eventually comes due.

Bum Assets Auction Idea

Steven Landsburg at Slate floats an interesting idea for the Treasury TARP auctions:

Treasury Secretary Paulson has committed $250 billion of his $700 billion war chest to purchasing bank equity but that leaves plenty (if he receives full funding) to buy troubled assets directly.  However...

The big question about those distressed assets is: What price should Treasury pay for them?

You might reasonably say that the fair price for an asset nobody wants is zero. But bailout proponents tell us that these assets are plenty valuable; it's just that nobody's stepping up to buy them because it's hard to borrow right now. So how do you set a fair price for an asset that nobody else is bidding on?

Last week I couldn't have answered that question. Today, thanks to a conversation with my University of Rochester colleague Mark Bils, I can. Bils proposes to adapt an auction scheme designed (in an entirely different, currently irrelevant context) by Harvard professor Michael Kremer.

Here's (roughly) how a "Bils-Kremer" auction would work: First, put 10 similar distressed assets (such as a series of collateralized debt obligations) up for auction. At the close of the auction, the Treasury pays the winning bids for nine of these properties. The 10^th property (chosen randomly) gets sold to the winning bidder.

The advantage of a Bils-Kremer auction is that the Treasury buys assets and recapitalizes the firms holding those assets while paying only what some private bidder thought each property was worth. Now repeat with 10 more properties. And so on. Under this plan, nine-tenths of the liquidity comes from the Treasury, but ten-tenths of the price setting comes from the assessments of private investors with the incentive to bid judiciously. In other words, the prices can reasonably be considered fair.

Hmm.  I would propose one modest tweak - have the Treasury commit to keep its assets off the market for, say, five years.  A slight reduction in supply might help prices as well.

I also have a large question about the meaning of "fair" in this context.  At current Treasury rates Paulson could fund his purchases for ten yars at a rate below 4%.  That is absurdly lower than the hurdle rates for debt an dcapital that any private investor could be contemplating.  However, low hurdle rate or not, it means that Paulson could (attempt) to estimate the expected cash flows of these assets, discount them at four percent, and pay that price.  Over the next ten years Treasury will then break even on a cash flow basis.  Bid a bit lower, et voila!  Treasury makes a profit.

Now, that is not a "profit" in the sense that it reflects proper risk adjustments.  That said, as a practical matter even if every investor came to agreement about the expected cash flows of an asset, no other investor would be able to match Treasury's discount rate.  Consequently, Treasury can always "afford" to bid more; the question is, why would it make sense to pay more than the next highest bidder?

On the other hand, this is the Treasury bidding, with a public duty to bail out the economy; they are not simply some profit-seeking private capital pool looking for an attractive return on their capital.

Under the proposed bidding scheme Treasury will end up earning private capital rates of return on assets funded at Treasury rates.  That is a great deal for the taxpayer, but may not represent the salvaton of the financial system.

Covering The Story While Burying It

Who among us does not embrace NPR?  For earnest yet utterly false "objectivity" they have no peer.  Their recent "coverage" by David Schaper of the Obama-Ayers relationship is a classic.

On the bare facts they are laudably (OK, plausibly) thorough.  All that is missing is any context about the evasions and deceptions put out by the Obama campaign since this issue arose in February.  Why the evasions and cover-up?  What evasions and cover-up?!?

Watch for the palmed card in this key passage:

Here's how Obama first described the nature of his relationship with Ayers, when asked about it in a Democratic presidential debate against Sen. Hillary Clinton in April: "This is a guy who lives in my neighborhood, who is a professor of English in Chicago, who I know, and who I have not received some official endorsement from. He is not someone I exchange ideas (with) on a regular basis."

Obama went on to say Ayers "engaged in despicable acts 40 years ago when I was 8 years old," and to suggest that "that reflects on me and my values doesn't make much sense."

How Well Do They Know Each Other?

But Palin suggests Obama is downplaying how well he knows Ayers.

"Barack Obama said Ayers was just someone in the neighborhood. But that's less than truthful. His own top adviser said they were 'certainly friendly.' In fact, Obama held one of the first meetings of his political career in Bill Ayers' home. And they've worked together on various projects in Chicago," Palin said Sunday.

Did Obama "pal around with," Ayers? And, more importantly, is Ayers still considered a terrorist?

On the first question, there is some evidence to suggest Obama knows Ayers a little better than he acknowledges. They certainly ran in the same liberal Chicago circles in the 1990s and early 2000s. They lived within blocks of each other, and Obama's two daughters now go to the same school Ayers' children attended, though they are now grown.

The Obama campaign says he first met Ayers in 1995, when Obama became chair of the board of the Chicago Annenberg Challenge, a $50 million fund that awarded grants to groups trying to implement new programs to improve inner city education in Chicago.

NPR does note Obama's early "guy who lives in my neighborhood" evasion.  They then boldly aver that there is "some evidence" (lots, actually) to "suggest" (try "prove") that Obama knows Ayers "a little better" (i.e., a lot better) than he admitted. 

Next NPR provides an explanation from the campaign that dates the relationship to the inception of the Chicago Annenberg Challenge in 1995.

So what is missing?  The reader is given no hint that the explanations from the Obama campaign have been changing and evolving since February.  Briefly:

February - their kids went to the same school (Axelrod to Ben Smith, Politico)

April - some guy in the neighborhood (Obama, debate).

April Fact Check - recycles news reports but does not volunteer the Chicago Annenberg Challenge connectioon.

May - They met at a political meet-and-greet in 1995 (campaign aides to NY Times).

August/October - OK, they met on the Chicago Annenberg Challenge in early 1995 but Obama knew nothing of Ayers' stormy Weather past (Axelrod, Obama).

And these are the people whose current story we are meant to uncritically accept.  Had the NPR troubled to mention the previously shifting sands people might have been more inclined to take the current story with a grain of salt.  But in NPR world there is only the faintest, faintest whiff of cover-up.

Let me toss out a couple of reasons for skepticism of the current Obama explanation.  First, there was a push in Chicago for school reform in 1988, which Obama mentions working on before he left for Harvard ("Dreams From My Father", p. 289).  Obama's Developing Communities Project ended up in the ABCs Coalition coordinated by Bill Ayers.  Why didn't they meet then?

Secondly, how in the world did Obama, with no background in education, become tapped as the chairman of the Chicago Annenberg Challenge without being OK'ed by Bill Ayers, a leader of the Challenge effort who had spent a year bringing the project together?  The current Obama story defies common sense.

In my view there are two stories here.  One is the ongoing Obama cover-up; normally the press pokes at cover-ups because they figure (often correctly) that the candidate is concealing something worth concealing.  What might that be here?  I don't know, but I do smile at the many, many people (including those in the press) who believe that even though they do not know the extent of the Obama-Ayers relationship they know it is not relevant.  Judgment first, evidence later - is that reality-based?

Secondly, it seems to me that since Obama is covering something up he has become indebted to people (such as Bill Ayers) who are abetting that cover-up.  What favors are acruing here, and how deeply does the Chicago machine have their hooks into Obama?  I don't think we will find out by ignoring this.

But ignore it our watchdogs in the media will!  At least until they figure out Joe the Plumber's tax situation, if not the tax challenge faced by Obama's treasurer.  Then it will be back to Alaska; I heard Sarah Palin scribbled in a library book when she was in second grade - that's destruction of government property, is it not?

A New Direction

Mark Coffey of the soon to be renamed "Decision '08" opines that McCain has been barking up the wrong tree:

What Has Doomed The McCain Campaign?  The Wrong Strategy

Sigh…there are apparently a number of conservatives, both prominent and rank-and-file, who think that Americans right now are riveted by accusations of associations with anti-American radicals in Barack Obama’s past. Maybe this is so, and I’ve slipped off into some Bizarro alternate universe - but in the world that I’m living in, people are concerned about the economy, about their credit, about their mortgages, about their jobs, and about their future. I don’t see a lot of appetite for dwelling in the past.

Hmm.  Since I have been pushing at the Ayers story for months one might wonder how I feel about that.  In a word, conflicted - I think it is stunning that the press has coronated a man with a vaporous resume about whom there are so many unanswered questions, so I am happy to thump the press for failing to even pretend to fulfill their watchdog function.

However, I have ocassionally held out the faint hope of a positive, issues-oriented campaign from McCain.  I thought he could ride his perceived strength on national security and a politically more palatable "all of the above" energy plan into the White House.  As a bonus, McCain could have talked about education reform and hoped the conversation drifted inevitably to Bill Ayers by way of his repeated collaborations with Obama on public school reform in Chicago.  Bush never took the lead in kicking the Swift Boat accusations into the news in 2004 so it was plausible that McCain could let others promote the Ayers issue this time around (or what use is this Right Wing Noise Machine, anyway?)

Enough of my kvetching and back to Mark's kvetching:

But there is nothing new about this, and in no way, shape, or form, is this the ‘October Surprise’ that those flogging these stories seem to think it is. We already knew about Obama’s associations with Wright and Ayers, and we know their views already. If Wright and Ayers have not harmed the Obama candidacy irreparably already, there is little reason to believe they will now.

However, by pursuing this angle relentlessly, McCain proponents are actually doing him a giant disservice, and to the extent McCain plays along, he is harming his prospects even further. There is ample evidence that the McCain camp is seen by a substantial part of the voting public as overly negative, and that this perception is harming McCain. McCain’s greatest strength has always been his character, and the tone of the campaign has sullied that reputation, much as the negativity of the Clintons harmed their public standing.

I understand that McCain is behind, and this strategy might be somewhat more understandable if it were having a positive impact in the polling, but that is clearly not the case. The McCain campaign was making real progress towards making the race competitive with the “Obama is the most famous guy on the planet, but is he ready to lead?” punchline…but the selection of Palin made that pitch untenable, and he has been flailing around helplessly ever since, with the exception of a brief bounce during the convention fueled, in large part, by Palin’s admittedly quite strong debut in her convention speech. But as Palin becomes more and more an object of ridicule rather than admiration, the former emphasis on experience that is now forgone is increasingly missed.

I don't know.  Part of "Is he ready to lead?" is "Who is Obama?" and that questions segues nicely to Bill Ayers, hard left education reform and the repeated lies from the Obama camp.

However, this sure works a lot better when the press does its job without constant goading from the candidate.  Look at Joe the Plumber - he has received more media scrutiny in a day that Ayers received in a year, yet Ayers reflects much more closely on Obama's judgment than Joe TP does on McCain.

As to Sarah Palin - groan.  I was not a fan but a lot of Republicans are and there is still the possibility that her crowds and energy will tip the race in a few key states (of which mine was not one).  I also thought that McCain was making a mistake in tossing away the leadership card but obviously before the convention his strategists concluded that they were about to ride "Ready to Lead from Day One" right to a second place finish alongside Hillary.  [Hmm - Mark and Peggy, sitting in a tree.  Sorry, sittin'.]

More gloom:

Those of us who revere the memory of President Reagan can only speculate as to how he would have handled the [economic crisis] if he were alive today and campaigning, but I can state with 100% certainty that he would have delivered a rousing defense of the animating ideas of such stalwarts of free markets as the late, great Milton Friedman, and I also feel quite confident that his own innate optimism would have inspired Americans far more than the current hand wringing so in vogue.

...

This message, though, essential as it is, has been made ineffective by McCain’s inconsistency, praising the market on one hand, while slapping at the ‘greed’ of modern Wall Street with the other. Further, his policy prescriptions for what ails us do not show a faith in the market. To give one example, his proposal for a systemic renegotiation of mortgage principal would be enormously expensive and probably unworkable, and a massive government intervention in marketplaces when we are already swimming in such interventions.

You go to the polls with the candidate you have.  McCain has never been a big free markets guy and here we are.  It's maddening, one example being McCain's mortgage meltdown.  Mark's Big Finish:

Those who criticize McCain as weak for not bringing up Ayers more show a fundamental misunderstanding of the man, and of the moment. Now is not the time for negativity and dwelling on the past - now is the time for a positive vision of America’s future. And right now, Barack Obama is doing a better job of meeting that objective.

Yes, Obama is.  But this is far from over!  Did the Red Sox quit last night when trailing 7-0 in the seventh?  They did not!  Did they quit when the Cleveland Indians had them down three games to one last year?  They did not!  Did they quit when the Yankees had them down three games to none in 2004?  They did not!  And am I sick of hearing about the 'effing Red Sox, who cried like shcoolgirls after Mariano stifled them in 2003?  Yes I am!

(Passive) Resistance Is Futile

Jiminy, Dice-K showed nothing and after five the Red Sox are getting shelled 5-0 by the Rays.

Evan Longoria has yet another home run, giving him four against Boston and two against the Chi Sox.  Don't anyone wake him up and tell him he's a rookie in the playoffs.

THUNDER AND LIGHTNING:  My goodness, over their two playoff series the Rays have 19 home runs and 16 stolen bases.  By way of comparison, the Phillies managed 10 and 7.

For the stats mavens - what team(s) managed more home runs through the first two rounds?  More stolen bases?  More of both in the same season?  A per-game comparison would be even more interesting, since if the Rays wrap it up tonight they will have only played two over the minimum.

BOMBS AWAY:  Not quite an answer, but the 1956 Yankees had 12 HR in the Series; the 2002 Giants with a steroid-enhanced Bary Bonds had 14 while losing to the Angels.

SADDLE UP THE COMEBACK PONY:  Down 7-0, the Red Sox use a blast from Ortiz to come half-way back, 7-4 in the 7th.

BEDLAM IN BEANTOWN:  JD Drew makes it 7-6 in the 8th with the Red Sox still batting and no one out. 

The inning ends at 7-7.  The biggest post-season comeback is the ancient 10-8 game won by the Philadelphia As over the Cubs, who led 8-0.  Hmm, that was the Crash of '29.

I did not tun this on at 5-0 with the thought of being subjected to free baseball.

A MOMENT LATER:  And I won't be - Red Sox exploit a two out throwing error by Evan Longoria and JD Drew delivers the game-ending single in the ninth.

The Name Game

Marc Ambinder does not allow for much personal liberty or free expression in the matter of people's names:

Sam The Not-Officialy-A-Plumber

16 Oct 2008 04:14 pm

(I.e., Joe The Plumber's name isn't Joe, and he's not officially a plumber. Discuss.)

Well, it is his middle name that is "Joe".  I understand that in the new America glimmering over the near horizon it will not be patriotic to mention the middle name of the President (Hussein!  Come and get me!), but surely we will retain our right to use our own middle names if we so choose, won't we?  Or does that whole middle-name thing embarrass The One and his supporters that much?

Well.  As a bit of a nostalgia piece, maybe Mr. Ambinder would like to pass the time trying to figure out who these figures from history might have been:

Arthur Chamberlain
Stephan Cleveland
Dorothy Dunaway
John Hoover
Ralph Earnhardt
Ralph Earnhardt, Jr.
Yitzak Asner
 Willard Romney
Anna Roosevelt
 Henry Perot
William Pitt

I can get some of them!  As a bonus, how about

Chester Lott
James McCartney
   Thomas Connery
John Coolidge
  John Ferrell
Francis Fitzgerald
Richard Fuller
Malcolm Forbes
William Gable
Henry Gehrig
 
Now we can add Samuel J. T. Plumber to the list.  As American as apple pie.  Well, the old America.
 

                                                      

Obama's Real Beef With Joe The Plumber

Joe the Plumber, opponent of Obama's plan to raise taxes on folks earning more than $250,000 a year because he hopes one day to buy his boss's business and join that lofty income bracket, was the star of last night debate.

Obama poo-pooed the whole notion:

"He's trying to suggest that a plumber is the guy he's fighting for," Obama said. "How many plumbers you know that are making a quarter-million dollars a year?"

But Obama's real problem with plumbers was documented by James Taranto last summer while evaluating Obama's time as a community organizer:

These efforts at economic development having failed, Obama "began to focus on providing social services for Altgeld Gardens," a government-owned and -operated apartment complex:

"We didn't yet have the power to change state welfare policy, or create local jobs, or bring substantially more money into the schools," [Obama] wrote. "But what we could do was begin to improve basic services at Altgeld--get the toilets fixed, the heaters working, the windows repaired." Obama helped the residents wage a successful campaign to get the Chicago Housing Authority to promise to remove asbestos from the units; but, after an initial burst of activity, the city failed to keep its promise. (As of last year, some residences still had not been cleared of asbestos.)

It is both funny and scary that one of America's major political parties would offer this record of sheer futility as its nominee's chief qualification to be president of the United States. Even more striking, though, is how alien the world in which Obama operated was by comparison with the world in which normal Americans live.

Reader, when your toilet breaks, do you wait around for some Ivy League hotshot to show up and organize a meeting so that you can use your collective strength to wring concessions from the powers that be?

Or do you call a plumber?

As a "community organizer," Obama toiled within a subculture of such abject dependency that even home repairs were "social services," provided by government (or, in Obama's Chicago, not provided). It was an utterly bizarre intersection between the cultural elite and the underclass. By Judis's account, Obama's Columbia degree was useless. He would have been more helpful if he'd gone to vocational school instead.

Well, Obama didn't go to vocational school.  And now Joe not only wants to show up at people's homes and unclog toiliets without the intercession of a community organizer, he aspires to make as much money as a successful author or a vice president for community and external affairs at an urban hospital.

But don't call Obama a snob.

THE BEAT DOWN:  A round-up of the left's assault on Joe.  Andrew Sullivan provides a classic:

"Joe" The Plumber Actually "Sam"

No, I'm not kidding. Not a plumber either. Next up: not actually a man?

Hard to think of a rejoinder that is neither superfluous nor inappropriate.

                                                             

Meltdown Blogging, Thursday Edition

People who can overlook the swoon in the equity markets (Dow down 187 to 8319, up from down 400) can find glimmers of hope in the credit market.

The short end of the Treasury market shows evidence of a flight from fear - the 3 mo bill rate is up 11 basis points to a still low 0.32%; 6 mo bill are off 20 bp to 1.08%.

The TED spread is down, but bring a hand lens to see that if looking at the 3 month chart.

On the dark side the VIX indicator of implied volatility has set a new record, taking out the high set last Friday before the Monday rally.

And while I have been typing the Dow has risen to +24 at 12:15; the S&P is unched.  Volatility in action.

Sol Stern On Bill Ayers

Sol Stern describes Bill Ayers' educational philosophy in the WSJ.

The WSJ essay appears to be a condensed version of this 2006 Stern look at Ayers' goal of teaching for social justice.

Mr.Stern also penned this on Obama's problem with Ayers.

The mainstream media will be resolute in ignoring this for the next three weeks.  Set aside that most of them rooting for Obama; at this point, any reporter pressing on Ayers is risking the ire of the Obama campaign and may diminish his/her access to the likely next President and his circle.

Post Debate Thread

Here is the Times transcript.

Mark Halperin is kind to John McCain.

Byron York has interesting background.

I thought Obama's ongoing attempt to run out the clock was successful.

MORE:  The Captain on a couple of Obama's whoppers we can't believe in.

Debate Night Open Thread

I have a longish presentation of Obama's shifting stories about Bill Ayers in the preceding post.  Let's see if the distraction arises tonight.

LIVE, IT'S WEDNESDAY NIGHT

I hate McCain's tie.

On taxes and the economy - McCain goes after Obama for telling Joe the plumber he wants to "spread the wealth".  Would it kill McCain to say "I want to grow the wealth, not just spread it."?  I guess so, since he never does.  However, he comes close, saying he wants Joe the plumber to spread the wealth.

GROAN:  McCain is defending his mortgage buyback scheme.  When last we looked he was buying lenders out at face value - pain-free and a sweet deal for them, but couldn't he spread the pain a bit? As a taxpayer, I prefer not to bail out lenders on busted loans.  Not at par, anyway.

NATIONAL DEBT:  Obama says again that the national debt has doubled under Bush.  Hmm, the last time someone fact-checked that they noted that, while strictly true it was misleading - debt held by the public has grown by much less.  The Social Security and Medicare trust funds probably make a big part of the difference.

TO HIS FACE: The candidates are asked whether they want to repeat to each other's faces the nasty stuff that has been said on the trail.  McCain leads off with John Lewis comparing him to George Wallace.  Then he whines about Obama having more money and breaking his promise on public financing.  Yeah, this is getting it done.

McCain does mention Obama's negative, misleading ad distorting McCain's position on stem cell research.  Obama eventually acknowledges that Lewis was over the line with the Wallace remark.  Here is more on the reporting about hateful crowds at McCain events.

"Palling around with terrorists" comes up twice (and the moderator tosses in a plaintive "does he?"), but no one has said "Bill Ayers" and the conversation seems to have moved on.

Oh, now it moves back to Ayers and here we go - McCain does make the point that Obama has been evasive on this bit of personal history and that we need to know the full relationship.  Obama is going to set the record straight.  Ayers was active forty years ago (groan - nothing about the 1981 Brinks robbery while Obama was a student in the area), Obama has condemned it, they met on the Chicago Annenberg Challenge.  I still don't believe it.

Well, it would help McCain if he could point out that Obama and his team have been full of misinformation up to now.  Why the confusion and cover-up?  And why should we believe them now?

ADENDUM:  Circumstances called me away mid-debate.  Here is the Times transcript.

The Obama-Ayers Connection - Follow The Bouncing Ball

What is the history and extent of the relationship between unrepentant domestic terrorist Bill Ayers and Barack Obama?  Good question, and one that has stumped the Obama campaign since they delivered their first misinformation about it last February. In a different political environment this level of deceit and evasiveness would spark press coverage of an obvious cover-up, but you go to elections with the media you have.

As part of the prep for tonight's debate let's reprise their shifting evasions explanations:

In February of 2008 the theme was "nothing to see".  Here is Ben Smith of The Politico:

I didn't get to ask Obama about his relationship with Bill Ayers today, but did ask his chief strategist (and reigning expert on Chicago's political tribes), David Axelrod, about the two men.

"Bill Ayers lives in his neighborhood. Their kids attend the same school," he said. "They're certainly friendly, they know each other, as anyone whose kids go to school together."

That barely survived the day; from an UPDATE:

UPDATE: There's been a bit of confusion about Axelrod's line on the kids, who -- as the Guardian's Daniel Nasaw noted -- aren't the same age. Obama's kids went go the the University of Chicago Lab Schools, where Ayers kids, who are much older, had gone. However, Bernardine Dohrn is still active at the school, and an Obama aide said that was the connection.

Ahh, kids in the same school.  That story held up for a little while.  In April George Stepanopolous asked Obama directly during the Democratic debate in Philadelphia. Hillary Clinton seemed to know more about the relationship than either George or Obama, who gave this reply:

This is a guy who lives in my neighborhood, who's a professor of English in Chicago, who I know and who I have not received some official endorsement from.  He's not somebody who I exchange ideas from on a regular basis.

Bill Ayers is a professor of education, as Obama had excellent reason to know since in 1995 and for several years thereafter he had worked with Ayers on education reform as part of the Chicago Annenberg Challenge.  Hillary joined in, noting their association as board members on the Woods Fund of Chicago.

Following that debate the Obama campaign put out a "Fact Check" to clarify the Obama-Ayers relationship.  No mention was made of the years the two men spent working together on the Chicago Annenberg Challenge.  Puzzling.

Obama had a slightly clearer memory when asked about Ayers during a Fox News interview a bit later in April:

OBAMA:  ...Now, Mr. Ayres [sic] is a 60 plus year old individual who lives in my neighborhood, who did something that I deplore 40 years ago when I was six or seven years old. By the time I met him, he was a professor of education at the University of Illinois.

We served on a board together that had Republicans, bankers, lawyers, focused on education, who worked for Mayor Daley. Mayor Daley, the same Mayor Daley probably who when he was a state attorney prosecuted Mr. Ayres’s wife for those activities, I (INAUDIBLE) the point is that to somehow suggest that in any way I endorse his deplorable acts 40 years ago, because I serve on a board with him.

One might guess that Obama is referring to the Chicago Annenberg Challenge, which focused on education reform.  However, although Bill Ayers was deeply involved in founding and working with the Challenge, he was never on the board. However, Obama sat on a successor board with Ayer's father.

In May the NY Times took a turn (my emphasis):

Mr. Obama also fit in at Hyde Park’s fringes, among university faculty members like Bill Ayers and Bernadine Dohrn, unrepentant members of the radical Weather Underground that bombed the United States Capitol and the Pentagon to protest the Vietnam War. Mr. Obama was introduced to the couple in 1995 at a meet-and-greet they held for him at their home, aides said.

Can't trust those aides!  This response came before the mainstream press was reporting on the Challenge, although bloggers were discussing it.  The first board meeting of the Chicago Annenberg Challenge was in March of 1995, with Bill Ayers and Barack Obama in attendance.  The Politico has reported that the 1995 meet-and-greet was in the second half of 1995.

So let's see - as of May David Axelrod had lied to or misled Ben Smith of the Politico, "aides" had misled the NY Times, Obama had misled the nation and the Obama "Fact Check" was fact-free.  Credibility, where art thou?

Recently we have had a min-breakthrough.  Following Stanley Kurtz' well-publicized attempt to make sense of the Chicago Annenberg Challenge archives in August the Obama campaign has admitted the bare minimum  - Obama did in fact work with on the Challenge (as Obama spokesperson Ben LaBolt conceded to the Times).  Their current contention is that this is when the two men met; per David Axelrod (him again!) Obama was unaware of Ayers' terrorist past.

Obama himself joined in with a similar interpretation:

"The gentleman in question, Bill Ayers, is a college professor, teaches education at the University of Illinois," he said. "That's how i met him -- working on a school reform project that was funded by an ambassador and very close friend of Ronald Reagan's" along with "a bunch of conservative businessmen and civic leaders."

"Ultimately, I ended up learning about the fact that he had engaged in this reprehensible act 40 years ago, but I was eight years old at the time and I assumed that he had been rehabilitated," Obama said.

What does "Ultimately, I ended up learning about the fact..." mean?  It reads to me as if Obama only learned later about Ayers' past.  How odd.  Let me toss in a widely-overlooked fact - in the famous 1981 Brinks robbery in which two policemen and a security guard were killed, members of the Weather Underground had partnered up with members of the Black Liberation Army.  And why did they need the money?  Well, they were making bombs and protesting against South Africa.

This should have been a big deal at Columbia, where young Barack was newly enrolled, since a major demonstration was at JFK Airport (protesting the departure of South Africa's Springboks rugby team, on a world "goodwill" tour.)  The Brinks robbery was in New York and well-covered by the NY Times.  Beyond that, Obama (per Dreams From My Father) had a special interest in the South African divestiture issue.  So how did this politically attuned young campus activist manage to never get a glimmer of the Weather Underground's involvement in criminal activity in 1981, long after Obama was eight years old?  Doesn't he read the Times?

Well, the Obama camp's current story is that Obama knew nothing about that and that the two men met in 1995.  How firm is that date?  Well, there was a city-wide push for school reform in 1988.  Obama was about to leave for Harvard but...

"The months passed at a breathless pace, with constant reminders of all the things left undone.  We worked with a citywide coalition in support of school reform."

Obama's Developing Communities Project ended up in a the ABCs coalition coordinated by Bill Ayers.  Odd that they did not meet.

DEVELOPING...

I Hope This Is BS From Bernanke

Fed Chairman Ben Nernanke spread gloom at a speech to a Wall Street crowd, then spread fear afterwards with this Q&A:

Asked about whether the government should have stepped in to prevent the mid-September bankruptcy of Lehman Brothers Holdings Inc., Bernanke said the government's hands were essentially tied. "There were no rules and no funding that allowed us to address that situation."

While the Fed and Treasury officials "worked very hard with potential acquirers," the trouble plaguing Lehman was beyond the capacity of the existing regulatory framework."

I score that as a 95% probability of being BS, the idea being Bernanke does not want to engage in finger pointing or admit that the steady hands on the tiller blew it.

But if he is serious in telling us that the Fed and Treasury lacked the resources and authority to bail out Lehman, whose prospects for demise had been discussed for months (resources they discovered 48 hours later to prop up AIG after it was suddenly struck by lightning), then, well, yike!  Let me go buy some T-bills while I ponder the fragility of our financial system and the impotence of the people in charge.

           

Wrong Answer

Some young punks missed the memo on Obama's great racial burden:

Asked about the influence of race in the campaign, several white students at both the Kentucky and Cincinnati campuses were quick to say that it helped Mr. Obama, but seemed not to consider that it might hurt him.

Whit Chafin, a 19-year-old white sophomore at Kentucky who has not yet chosen a candidate, said: “I think it’s playing a heavy role, honestly, because Obama’s taken that side pretty much, like he’s got it on lock. I went to a high school where I was pretty much a minority in the school. They’re all for Obama.”

Adam French, a 21-year-old white senior and supporter of Mr. McCain, said: “It would be interesting to consider if Barack Obama had the same credentials but was John Smith, a white guy from Texas, that he would be in the same position to run. I don’t think anyone with his credentials could come anywhere close to being on a presidential ticket” without being black.

Shades of Geraldine Ferraro!

As to the reporter's insight that the students "were quick to say that it helped Mr. Obama, but seemed not to consider that it might hurt him", maybe we can split the difference - although there is surely someone somewhere who would have voted for a white Democrat, even a woman, that won't vote for Obama because of his race, on net being black has helped Obama. 

If he were white he would be a telegenic, charismatic John Edwards with an even lighter resume, if that can be imagined.  A white Obama riding a message of hope and change would never have created a tidal wave of "Let's make history!" excitement and swept to the Democratic nomination against Hillary. 

The Department of the Painfully Obvious is now closed for lunch.

Meltdown Blogging

The NY Times summarizes and compares the economic visions of the two candidates.

At noontime the Dow is off 328 to 8,982 on weak sales figures and recession fears.

In the Treasury market yields are down, which is not the hope and change we can believe in.  Nor is it the flight from quality and re-liquefaction of the credit markets we are looking for.  The 3 month bill is yielding an absurd 0.28%, down 0.05% from yesterday; the two year is down in yield by 0.07% and the ten year is roughly unchanged.

Bill Ayers, Yet Again

WSJ columnist Thomas Frank defends Bill Ayers.  Ann Althouse attacks.

Obama v. Change We Could Have Believed In

Obama did not stand tall when the prospect for reining in Fannie and Freddie was debated in the Senate in 2005:

Finally, on the matter of deregulation and the financial crisis, Sen. Obama should consider his own complicity in the failure of Congress to adopt legislation that might have prevented the subprime meltdown.

In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it. To get the bill to a vote in the Senate, a few Democratic votes were necessary to limit debate. This was a time for the leadership Sen. Obama says he can offer, but neither he nor any other Democrat stepped forward.

Instead, by his own account, Mr. Obama wrote a letter to the Treasury Secretary, allegedly putting himself on record that subprime loans were dangerous and had to be dealt with. This is revealing; if true, it indicates Sen. Obama knew there was a problem with subprime lending -- but was unwilling to confront his own party by pressing for legislation to control it. As a demonstration of character and leadership capacity, it bears a strong resemblance to something else in Sen. Obama's past: voting present.

He did not stand tall, but neither did he stand alone.  Is there any history to support the fantasy that Obama will buck his party's conventioinal wisdom on any topic?

Meltdown Sideways Blogging Resumes - With A Near-Gotcha!

We resume our coverage of the ongoing financial debacle by focusing our keen eye on a Treasury give-away sure to incite howls of outrage (and silence this singing!) once noticed.  Or not.

This is a key detail of the Treasury proposal to buy preferred shares plus warrants on bank stock describing how the warrants will be priced (my emphasis):

In conjunction with the purchase of senior preferred shares, Treasury will receive warrants to purchase common stock with an aggregate market price equal to 15 percent of the senior preferred investment. The exercise price on the warrants will be the market price of the participating institution’s common stock at the time of issuance, calculated on a 20-trading day trailing average.

The market wipe-out took hold in earnest one week ago so one might think that the 20 day moving average is well above the current share price for the big banks that were purportedly press-ganged into this.  But one would be wrong!

I only checked three firms.  Morgan Stanley's trailing average is $22.28; at this moment it's shares are at $22.07, up $4.07.

Citigroup has a trailing average of $17.87; its shares are at $18.60, up $2.82.

Goldman Sachs has a trailing average of $121.67; its shares are at $125.37, up $14.37.

Well.  At last night's close this was a sweetheart deal for Goldman and Morgan Stanley, although it is no surprise that their share prices rose.  Hmmph - a near-gotcha.

OTHER ACTION:

In Treasuries we were seeing a nice flight from quality:

 	COUPON	MATURITY
DATE	CURRENT
PRICE/YIELD	PRICE/YIELD
CHANGE	TIME
3-Mo 	0.000	01/08/2009	0.32 / .32	0.14 / .142	13:06
6-Mo 	0.000	04/09/2009	0.9 / .92	0.1 / .102	13:00
12-Mo	0.000	09/24/2009	1.18 / 1.21	0.17 / .175	13:00
2-Year	2.000	09/30/2010	100-11 / 1.82	-0-15 / .243	13:08
3-Year	4.500	09/30/2011	106-28+ / 2.08	-0-21½ / .223	13:07
5-Year	3.125	09/30/2013	100-19+ / 2.99	-1-03½ / .240	13:08
10-Year	4.000	08/15/2018	99-23+ / 4.03	-0-14 / .054	13:08
30-Year	4.500	05/15/2038	104-03+ / 4.25	-2-02 / .118	13:08

Those are still comic book figures for the three month bill but the direction is right.  There will be the customary three and six month bill auctions on Thursday and a one month auction today.  Headlines we want to see include news of successful investment grade and high yield bond issues.

At 1:15 the Dow is up 34 and the S&P up 5.

MORE:  Brad DeLOng is very interesting on depressions, preferred shares and zombie banks:

So what to do? We don't want to let the banking sector collapse into bankruptcy--Lehman Brothers was bad enough, and we don't want to replicate the Great Depression. But we also don't want to repeat Japan's mistakes of the 1990s, with zombie banks neither alive nor dead failing to do their job for the economy as they focused on getting back above water to create some value for shareholders and executives.

And here is my worry about the current plan to buy preferred rather than common stock of the banks. Preferred stock runs a risk of creating zombies--if shareholders and executives conclude that the preferred has all the equity value if they continue business as usual, then they will not continue business as usual but will instead start behaving like the Japanese banks of the 1990s. And we don't want that.

I am not quite clear on how he thinks the Japanese banks performed and why the US banks would perform in a similar fashion.  We had zombie thrifts in the late 80's and the worry at the time was that they were making increasingly risky loans with the (sensible) strategy that if the loans went bust it came out of the government but if the loans surprised everyone by paying off then the equity holders would be back in black.  My impression is that Japanese banks weren't lending to anyone, not that they were only lending on risky (high variance) projects.  In Japan in the 90's, the goal of a top bank official would have been to avoid giving grounds for dismissal, not to promote shareholder value.

But if zombies are the worry, let me approach the issue from a different direction - what impact will restrictions on executive compensation have on a bank's risk taking and innovation?

Suppose the top executives at Citigroup cannot get either stock options or bonuses.  What, other than testosterone and patriotism, is their incentive to push their banks to lend and take risk?  In such a circumstance a prudent bank executive with no opportunity for upside would run the bank with an eye to not getting fired.  In the current environment, that would mean a focus on short, safe loans, no innovation, and no activity that has even a whiff of creativity.

Sounds like a zombie bank to me, but who am I?  Since Brad DeLong is an important liberal voice on all topics economic it will be interesting to see his perspective.  As I understand Chuck Schumer's perspective, he wants all these top execs to go out and save the world economy with no upside and a paycheck that is, by Wall Street standards, derisory.  If one's sense of social justice can be suspended briefly (or can be balanced against the injustices likely to attend a global depression), is this likely to be an effective approach?

ON SCHUMER:

In a letter to Mr. Paulson on Monday, Mr. Schumer, chairman of the Joint Economic Committee, urged the Treasury to demand that banks receiving capital eliminate their dividends, restrict executive pay and stick to “safe and sustainable, rather than exotic, financial activities.”

“I don’t think making this as easy as possible for the financial institutions is the way to go,” Mr. Schumer said in a call with reporters. “You need some carrots but you also need some sticks.”

I am 110% in support of suspending dividends.  Well, 110% diluted down to 99% after noting these second-order caveats.

 

I For One Two Welcome Our Deranged Lefty Overlords

Rick Moran lays out his terms of surrender in a good piece titled "IF ELECTED, OBAMA WILL BE MY PRESIDENT":

This is how it should be. And whether Obama wins – if he wins – by one vote or millions shouldn’t matter. It doesn’t matter if you believe the reason he won was because the press was in the tank for him, or ACORN cheated, or McCain didn’t get a fair shake, or any other legitimate or illegitimate reason you can think of. At the very least, Barack Obama will deserve our acknowledgement that he is the legitimate elected president of the United States.

That doesn’t mean we have to slavishly follow him or join his cult like groupies. What it means is that where what he proposes to do is reasonable and doesn’t conflict with our principles, he should expect our support. It means that we don’t have to delegitimize his presidency to oppose him either. People of good will and good conscience can disagree without tearing each other and the country apart. And in this day and age, such an outcome would be unbearable.

An Obama election will mean changes – not all of them for the better. So be it. We will fight like hell against what we believe to be wrong. But we not do it by trying to delegitimize the elected president. Get personal, sure. Satirize and make fun of him, absolutely. Argue on the merits, most definitely.

But when push comes to shove and crisis erupts somewhere in the world involving American interests – and no president in recent memory has escaped such a challenge – I plan on backing my president’s play. I may give voice to skepticism about the path he chooses. This is our right and duty.

Let me add this - I thought the 2005 debate over Bush's proposed changes to Social Security was a positive example of how issues can be debated.  I have a clear recollection of distortions and over-simplifications from both sides but often enough there was a sense that people were talking to, rather than screaming past, each other.

As another example, what about the immigration debate?  Hmm, maybe not so much.  But let's take hope that reasoned debate is still possible in this country and will occur after Jan 20, 2009 (if not sooner.)

OR. FROM THE OTHER SIDE:  The VodkaPundit braces for the day that Dems revive the Fairness Doctrine.  If that does not worry you enough, worry about this - what will become of the huge investigative apparatus built up by the left over the last eight years?  There won't be any governmental abuses to investigate once the White House, Senate and House are controlled by well-intentioned Democrats, so where will they turn with their investigative fervor?

A possible clue - the NY Times put Andy Martin, a deplorable Obama critic, under a microscope, thereby confirming for all and sundry that Sean Hannity hosts a right-wing agit-prop show.  Who knew?  But investigate The One who might be President?  You jest.  So maybe we should look for the legacy media and crazed lefty bloggers to focus on every right-wing critic out there in order to pass the time and fill their days while the powers in place deliver paradise on earth.

Why Obama's Columbia Years Went AWOL

What did Barack Obama do while at Columbia from 1981 to 1983 and in the year after his graduation?  That part of his life is scarcely mentioned in "Dreams From My Father"; the Wall Street Journal remarked in the mystery a month ago and the NY Times puzzled over it a year ago.

Let me just toss out the outlines of a theory that has just hit my inbox and left me agog.  First, the usual disclaimers - this is speculative, there are gaps and leaps of logic, and nothing can be proven. However, that said... well, see if you are agog as well.

1.  From Dreams From My Father and other sources we know that Obama was interested in South Africa divestment in the early 80's.  For example, he had a moment of awakening at Occidental College when he gave a brief but well-received speech to kick off an anti-apartheid demonstration.  Other sources indicate he maintained that interest while at Columbia.

2.  A major focal point of the anti-apartheid movement in the fall of 1981 was the Springboks rugby tour - they were an integrated South African rugby team on a "goodwill" tour of the US, creating controversy and drawing protests everywhere.  Some of the protests were violent, including one at John F. Kennedy Airport (from whence the team departed, I believe), and bombs were exploded.

3.  Did I say "bombs"?  Yes, and here is the jaw-dropping connection - the Weather Underground was involved in some fashion and the Brinks robbery which left two police officers and a security guard dead was apparently undertaken to finance activities such as the Springboks bombings.  A flavor from the Times:

The police said they had several links between the robbery suspects and other people associated with radical activities in the past. Federal officials said they were looking into possible links between the holdup gang and the Black Liberation Army, which, like the Weather Underground of years ago, has been linked more recently to bombings, attacks on police officers and other violence aimed at toppling ''the establishment.'' Getaway Car Recovered

A yellow Honda used as one of the getaway cars, for example, was recovered and found to have been registered to Eve S. Rosahn, who was a Barnard College student in the late 1960's and was arrested in radical demonstrations at Columbia University then and more recently at a New York City airport demonstration against the Springboks, the South African rugby team.

These are just dots and it may be impossible to connect them, but we have Barack Obama at Columbia working on South African divestment (as were many peaceful protestors) while other radical elements with a Weather Underground flavor are setting bombs, killing cops, and working on South African divestment.  As a bonus, Bill Ayers is studying at Bank Street College a quarter mile from Columbia towards his Masters in Education and Kathy Boudin, one of the Brinks getaway drivers, was working at a progressive Upper West Side School.  Eventually Bill Ayers and Bernardine Dohrn raised Kathy's child while she was in jail, so it seems a fair guess that they were close.

A small, small world in which Obama never met any of these people despite their shared passion for justice in South Africa.  Never heard them speak at a rally, never heard anyone describe the Weather Underground to him, and felt comfortable assuming that Bill Ayers had been rehabilitated by 1995.  In fact, a world so small that Obama won't talk about it now.

For clarity, let me emphasize that I am not alleging that Obama was making bombs with Kathy Boudin. I am wondering how he managed to be active on South African divestment without ever encountering these radicals, I am wondering why he won't talk about his Columbia years, and I am wondering why he and his campaign have consistently provided misinformation when asked about Bill Ayers.

Three more weeks to keep the lid on.

FROM THE TIMES LOOK AT COLUMBIA:

When the Times peered into Obama's Columbia past they found this:

In a long profile of Mr. Obama in a Columbia alumni magazine in 2005, in which his Columbia years occupied just two paragraphs, he called that time “an intense period of study.”

“I spent a lot of time in the library. I didn’t socialize that much. I was like a monk,” he was quoted as saying.

He said he was somewhat involved with the Black Student Organization and anti-apartheid activities, though, in recent interviews, several prominent student leaders said they did not remember his playing a role.

Odd.  Here was a guy who had spent his life hanging with radicals and seeking out causes.  Now, at what was practically Ground Zero for campus activists, he decides to hide in the library.

MORE:  From this book, Bill and Bernardine surfaced in NYC in December 1980.

And the Ace was quicker to the Columbia/Weather link but did not note the South African connection.

LATE ADDITION:  A heavily researched article just can't prove the link between Obama and the violent anti-apartheid protests,but it is surely suggestive.