Set Sarah free!

I mostly listened to the Vice Presidential debate on radio, though I did get to see some of it on TV. Palin held her own and well exceeded the low expectations that the media had set for her. She was confident, poised and articulate -- even as she faced off against the verbosity machine that is Joe Biden. Biden was...Biden. He spoke quickly with an authority that is designed to make his statements seem like fact -- even when they aren't. Palin took him on effectively, and wasn't afraid to confront Biden's frequent exaggerations. I thought that had John McCain done that well last week against Obama the Republicans would be in better shape today.

Palin missed some chances tonight, specifically to refute the Obama-Biden claim that McCain was responsible for deregulation which got us into this mess. That's clearly only part of the story; Congress has been a big part of the problem by forcing too much regulation on Fannie and Freddie. If Fannie and Freddie had been forced to react to market risks on loans, they would never have made the vast number of sub-prime loans that they did.

Palin also missed a big chance to wack Biden on the War in Iraq -- specifically on his claim that Obama supports the same withdrawal plan that Maliki and Bush are negotiating about. Hello? The only reason anyone is talking about a withdrawal now is because of the surge that John McCain supported and Biden and Obama opposed. I wish that Palin had hit him over the head with that.

One thing that I didn't like about Palin's performance tonight: her consistent use of "corruption" and "greed" to describe Wall Street.  Certainly, some corruption always exists at the nexus of money and public policy -- but to make blanket statements that tar and feather an entire sector of our economy is populism worthy of John Edwards, not the Republican Veep candidate.  The mess we are in is more about the corruption of Capitol Hill and the lax interest rate policies of the Fed than it is any systemic disease on Wall Street.  Banks took advantage of the rules and pushed the limits to make money.  With risk comes reward -- and often failure. 

Also, I would have liked to hear Palin say also that the behavior of  borrowers played a role in this mess, too -- and that it wasn't just the responsibility of "predatory lenders".  People have to take personal responsibility for their decisions, and if this is not a theme promoted by McCain-Palin then they become nothing more than the victim-baiters that Obama-Biden are. 

In any event, my suggestion to John McCain is this: Set Sarah Free!

Let her go. Let her be spontaneous. Let her be the maverick, fun woman that she is. She's the only candidate who can relate to the American people as a real person. It is something that helps to differentiate the McCain-Palin ticket from Obama (effete, Chicago intellectual) and Biden (career Senator). It's what turned on the Republican base and got independents excited about McCain after the Convention. He needs to let her work her magic.

McCain's campaign -- and thus his chances to be president -- are in bad shape at this point. All polls in the battleground states are now leaning for Obama. He needs to do something dramatic to turn this around.

The Howard Beal election

It's hard to turn on the TV these days. The news and images from Washington are like a train wreck. The height of hypocrisy: the crooks who made this mess posturing for a bailout on the backs of the taxpayer... looking stern and serious while they sit in gilded offices paid for by the investment banks and mortgage firms -- those that provided them with cheap loans to their poor constituents, while profiting handsomely from complex, opaque financial instruments that no one understands. While Washington slept the market ran wild, fueled by impossibly cheap money and overabundant credit. The Wall Street Journal ran a picture of J.P. Morgan the other day. He looks like a banker: stern, serious, practical. I wonder if he'd have given people $400,000 stated income loans; not a piece of paper to prove their earning or their ability to pay it back. That's what we did in the hyper-fueled lending world of Freddie and Fannie. You need to buy a house. Can't afford it? No problem, we'll cover you. Can you imagine J.P. Morgan doing anything so stupid?

And now comes the final indignity: the "bail out". The House yesterday decided not to pass a $700 billion bailout bill. They did so to prove that we are still a free market. They did so to save their reelection chances. They did so to protest the Bush Administration and their total mishandling of this crisis from start to finish. Whatever the reason: it failed. And rightly so.Does anyone really think that the Bush, Paulson or Bernanke have any idea what is really going on here? Fortune Magazine reported last week that the $700 billion number that Paulson chose has no analysis behind it:

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

Wow. How comforting is that? We know that markets operate on psychology, and that the large number is designed to provide confidence in the market that the government has a big enough solution to take care of the problem. I understand that.

But I also understand something that George W. Bush and his team have never understood: this is also a political issue during a presidential election. The Bush Administration remains totally tone deaf to the concerns of the American people. While the $700 billion number may calm financial markets, it has shocked, dismayed and infuriated the American taxpayer.

Hello? Is anyone out there? Does George Bush really want Barack Obama to become president? It sure looks that way.

In fact, Bush's handling of this issue looks a lot like the war in Iraq before General Petraeus went to Baghdad. It looks incompetent, poorly planned and poorly executed. It looks just like the mess that Gens. Casey and Abizaid got us into, with American soldiers dying daily amid violence and chaos on the television. Total mis-management. The American people lost confidence in Donald Rumsfeld in 2004. And what did the President do? He held his course, kept Rummy on and took a beating in the 2006 midterm elections. Bush was shocked to take such a shellacking. He didn't understand the level of discontent among the voters then -- and he doesn't understand it now. Americans in vast numbers are angry at Washington. Mad as hell, as Howard Beale famously yelled out the window in the movie Network. And they aren't going to take it anymore.

[photopress:180px_Network12_1.jpg,full,pp_image]

Who will pay the ultimate price for this debacle? John McCain. He's been swallowed whole by this mess and his campaign will never recover. Yes, he miscalculated -- the whole "suspending his campaign" gambit backfired. Frankly, his instincts on the bailout were wrong; his behavior showed him as a legislator. A compromiser. Not as an executive who had to make a tough call in a crisis. He temporized and vacillated.

In fact, McCain missed a golden opportunity: He could have taken the momentum and initiative away from Obama and come out forcefully against the bailout from the beginning. He could have stood up in the debate and said:

I'm against this because I don't believe in taxpayers footing the bill for what is essentially a $700 billion entitlement program. Yes, I know the situation is serious and that we need to provide relief to the credit markets. But there is a better, less-intrusive way to do this: change the "market-based" accounting rules so that firms can revalue their portfolios to something that reflects their true intrinsic value. Provide loans and guarantees that the firms will pay interest on, etc. etc. etc.

But McCain didn't do that. He didn't see the opportunity for bold action and decisive decision-making. He could have put Obama in a corner. And with public opinion running 2:1 against the bailout, the polls would have been on his side.

In the end, this is the kind of crisis that either makes or breaks a candidate. The odds were against McCain from the beginning, but his handling of this issue has fallen short. He was dealt a bad hand by Bush and his bumbling lieutenants; in this case, running against Bush would have been smart for McCain. But it was the kind of "game changing" opportunity that comes about only once in a campaign. If you seize it, you win. If you don't, you lose.

So far, McCain hasn't seized it, and unless Palin pulls out a miracle against Biden and McCain can rally in the last two debates, the Republicans will lose on November 4.

MMS: Don't license the brothel, close it

Hearing of the sex scandal involving government employees of the Minerals Management Service, my first thought was “Are they hiring?” But seriously, why should it come as a surprise that government officials charged with oversight of any industry – and in position to influence policy and hand out favors – should be (literally) in bed with those over whom they hold power? This is a classic case of “your scratch my back, and I’ll scratch… ooh, a little bit lower...” Equally predictable are the reactions of those favoring ever more government intervention into (and oversight of) every aspect of our lives. They are shocked – SHOCKED – that such activities could take place, and immediately call for more investigations and (you guessed it) increased oversight, expanding the agency and imposing even more regulations.

But perhaps the problem lies in the nature of the beast. Why even have such institutions as the MMS in the first place? Why should government agencies be in the business of picking winners or even being in the position to “grant official favors” to industries or commercial enterprises under their “oversight?” Shouldn’t government activity in the economic sphere be limited to that of an impartial “referee” enforcing fair play, enforcing rules and contracts, and preventing fraud, theft, and other force?