Thursday, October 30, 2008

"Share." He keeps using that word. I don't think it means what he thinks it means.

The Kansas City Star notes that Barack Obama is joking about John McCain's charge that Obama is a socialist.
“I don’t know what’s next,” Obama said at an outdoor rally. “By the end of the week, he’ll be accusing me of being a secret communist because I shared my toys in kindergarten. I shared my peanut butter and jelly sandwich.”
Senator Obama: First, didn't you mean your caviar and crème fraiche canapé? Second, it's not your sharing of your toys and sandwich that's at issue. It's that you want to take mine so you can give them to other people in exchange for votes.

I can appreciate why your writers think this is a good analogy - they think I'm only allowed to use my property at the whim of the State. You liked it because you really can't see any difference between my stuff and other people's stuff.

A more appropriate tyke-focused-education analogy for the Obamanation may be found in the practices of the Hilltop Children's Center in Seattle where Lego blocks were banned because:
...the teachers at the private school wanted their students to learn that private property ownership is evil.

According to the article, the students had been building an elaborate "Legotown," but it was accidentally demolished. The teachers decided its destruction was an opportunity to explore "the inequities of private ownership." According to the teachers, "Our intention was to promote a contrasting set of values: collectivity, collaboration, resource-sharing, and full democratic participation."

The children were allegedly incorporating into Legotown "their assumptions about ownership and the social power it conveys." These assumptions "mirrored those of a class-based, capitalist society -- a society that we teachers believe to be unjust and oppressive."

They claimed as their role shaping the children's "social and political understandings of ownership and economic equity ... from a perspective of social justice."

...Legos returned to the classroom after the children agreed to several guiding principles framed by the teachers, including that "All structures are public structures" and "All structures will be standard sizes."
Aside from the irony of this being an elite private re-education camp school, the teachers probably practice forced lunch-sharing as a lesson in economic "fairness."

Wednesday, October 29, 2008

Read this

post-racial racialism


It supplements this cartoon.
Michael Ramirez

Looter

Barack Obama has made much of executive experience gained in running his campaign, so when a major decision is taken, it's his. For example, he decided to bypass normal credit card verification procedures that would help ensure the legality of contributions to his campaign. This laxity not only encourages illegal contributions, it allows robbery from people whose credit card number was used without their knowledge.

Couple Finds Unauthorized Charge on Credit Card from Obama Campaign
At least four credit card holders in Missouri have recently opened their statements and found unauthorized transactions, which charged $2,300 to the presidential campaign of Sen. Barack Obama.

It happened to Tom Brown and his wife a couple weeks ago. They became aware of it after Discover sent them an e-mail about an unusually large purchase.

"My wife said, 'Oh my God!' Right away, she called Discover to cancel the card," Brown said. "I talked to Discover about it, and they said it looks like it was keyed in from Chicago."

Specifically, the e-mail indicated the charge came from Obama for America Chicago Illinois.
Two Missourians report unwanted credit card charges from Obama campaign
Sandy Pogones of Camdenton and Steve Larman of North Kansas City each found a $2,300 charge on their credit card bills recently for the Obama for America campaign.
Check Your Credit Cards for Fraudulent Obama Charges
CALLER: My best friend had the same thing this month, three times on her credit card.

RUSH: Your best friend had a charge of $2,300 bucks to the Obama --

CALLER: No, no, not $2,300, but she had three separate charges to the Obama campaign, and she is a staunch Republican.

RUSH: What was the total, do you recall?

CALLER: I don't. She told me one of them was small, like $15. She said none of them were very big, but anyway, she called and immediately wanted it removed from her card, which the credit company did. The Obama campaign, she called them, and they tried to talk her into letting it stay, and she said no, I want it, and I want it before the election.
Donor Patrol: Obama’s Online Site Accepts More Fakes
There was a charge for $2,300 to the Obama for America Campaign. This was pretty shocking for Michael. He is a Republican. He is not supporting Senator Obama for President.
Well, he says he wants to spread the wealth.

Check out Obama Shrugged for updates.

PS, I noted that:
An honest, prudent person would not turn off an effective verification system and assume the costs of vetting contributions themselves unless they were convinced they could do a superior job. As we've seen, this ideal is unrealized.
I was naive, the increased risk of turning off verification incurs processing higher fees from the credit card companies - before any after the fact scrutiny. This decision cost Obama hundreds of thousands of dollars even before his inept vetting team went to "work."

Tuesday, October 28, 2008

I said I would never do this...

...But, I have reluctantly come to a decision to try to vote for John McCain.

"Reluctantly," because McCain represents the first half of the choice between statism and socialism. Rewarding McCain sends the wrong message. “Try to,” because I know that moment of truth in the voting booth will be a challenge.

Because my resolve is necessarily weak, I'm word-for-word memorizing Obama's redistributionist comments and his calls for surrender in Iraq. I've been slopped in the fetid swamp of ACORN and dunked in Obama's Chicago-style definition of campaign finance deform. I'm making up a mnemonic of his Chicago allies' names in order to repeat them to myself. Even so, blackening the box next to McCain's name will be a close run thing.

This choice eventuated from the machinations of RINOs who wanted a pavilion lavish enough (a tent would be insufficiently grand) to effectively include liberal Democrats, and who, like Colin Powell, Chris Buckley, Ken Adelman and Doug Kmiec are even now jumping ship to preserve their access to dinners at the White House. They're besmirching even the reputation of “country club Republicans.”

McCain's nomination and his (if not Sarah Palin's) subsequent campaign rhetoric have included shameful repudiations of principle - bashing free market concepts for actual government failures as a prime example. This is as shameful as George Bush's failure to veto McCain-Feingold, his imposition of steel tariffs or his enabling of the largest increase in entitlements of all time. However, Bush was already elected when he commited failures of principle. John McCain, as the nominee, has been the standard bearer of an effort to redefine the principles into oblivion - in order to satisfy his "maverick" self-vision as much as to appeal to Democrats and Independents.

Don't mistake the angst of my vote, it's not that I think McCain is your classic lesser-of-two-evils, he's set new standards; it's just that Obama has also set new standards - as the greater evil.

If you are looking for a cynical and corrupt Chicago ward-heeler who has the least relevant experience of any Presidential nominee in two generations, Barack Obama is your man. He sports the most leftist voting record in the Senate, lies about how he regards the 2nd Amendment and has voted in favor of what can only be described as infanticide. The damage of which he is capable is dismaying. And he'll not be doing it alone.

The Democrat oligarchy, emboldened by the the prospect of an Obama administration, is proposing to nationalize your 401(k), cut defense spending by 25% and is openly bragging about raising taxes... Eventually. They don't think it's such a good idea to raise taxes now, when the economy is as much in the tank as the media. The assumption seems to be that raising taxes discourages economic growth. So if raising taxes when times are bad is a bad idea, why is it ever a good idea? As Joe Biden might say, two words: “Redistribution of wealth.” You might say “purchasing of votes.” And you can count to three.

Democrats also favor eliminating the secret ballot in Union organizing votes and want to reintroduce free speech restrictions via the “Fairness Doctrine.” (Note that if the fairness of media was the point, there would already have been outrage from the left about the Obama cheerleaders in the Maim Scream Media™. Even some of the media are ashamed, though the Democrat party proper is not.)

With Obama and a Dem majority, you get all this and increased looting, too:
Frank envisions post-election stimulus from Democrats

Meanwhile, we've learned Obama was less circumspect about redistributing wealth in a 1995 NPR appearance than he was in answering Joe the Plumber's question. He obliquely blames the founders for not including "from each according to his ability, to each according to his need" in the Constitution.

Finally, we need barely touch on Obama's feckless foreign policy ideas which would see us withdraw immediately from Iraq in order to attack Pakistan while Obama is having an unprecondtional kumbaya roundtable with Mahmoud Ahmadinejad, Hugo Chavez and Kim Jong-Il to explain the invasion is because he needs to establish a reputation for toughness. Could be the crisis Biden is predicting.

In sum: John McCain may not deserve to win, but this country does not deserve to lose.



PS, If you can't bring yourself to vote for McCain, at least try to get non-Democrats into the House and Senate. That could certainly include rejecting putative Republicans; a Joe Leiberman, for example, would be far better than a Lincoln Chafee.

Hyper

Today we have a Canadian Court's decision on defamation liability for hyperlinks. Bloggers should pay attention.

Given the justified furor over various Canadian "Human Rights" Commissions' Star Chamber approach - punishing the publication of anything some wacko could find personally discomfiting while funding the wacko's complaint - the following may seem surprisingly sensible. The point is the courts require evidence and follow the law, while Canada's "Human Rights" Commissions do not.

From the judgment:

There are two issues for determination in this application. First, the defendant says that there is no evidence that any person followed the hyperlinks in question or read the words that are complained of. The plaintiffs have therefore failed to prove publication, one of the essential elements of the tort of defamation. Second, in any event, the defendant argues that creating a hyperlink to words that are defamatory is not publication of those words...

Regardless, the issue in this case is not how accessible the website is, but rather, if anyone followed the hyperlinks posted on the p2pnet site. Without proof that persons other than the plaintiff visited the defendant's website, clicked on the hyperlinks, and read the articles complained of, there cannot be a finding of publication. As in Crookes v. Holloway, the plaintiffs have not adduced any evidence to support this claim.
Counting visits could therefore be an absolute defense if no one ever used your link, or if you kept no logs AND IF the target site did not record "referrers." IOW a defense not to be depended upon.
I agree with the defendant that footnotes in an article are an apt analogy. Where a footnote leads a reader to further material, that does not make the author who provided the footnote a publisher of what the reader finds when the footnote is followed...

It is not my decision that hyperlinking can never make a person liable for the contents of the remote site. For example, if Mr. Newton had written "the truth about Wayne Crookes is found here" and "here" is hyperlinked to the specific defamatory words, this might lead to a different conclusion.
Well done.

Monday, October 27, 2008

Code word for socialism

It's not just a gaffe in an answer to Joe the Plumber. It's an Obama core principle. Saying so is racist, of course, because if socialism is a "code word," so must redistribution be, especially in the context of the Civil Rights movement - which Obama uses to begin a riff on his disappointment that the Supreme Court didn't mandate looting under the "forced equality" protection clause, as established in Bergeron vs Glampers.


In case you didn't get that...
It [the Warren Court] didn't break free from the essential constraints that were placed in the Constitution by the Founding Fathers ... it [the Constitution] doesn't say what the federal government or the state government must do on your behalf
Oh, but it does. It enumerates the powers precisely. They don't include redistribution of wealth but, according to Obama, that Founders' oversight is what's been wrong with America for over 200 years. He'll fix it by helping us "break free" from Constitutional law. It seems to hinge on how you interpret "essential," or maybe "constraints." Must be code words.

I'm waiting to hear how he's going to reconcile that position with this:
I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States.
Barack Obama: Change you Hope never to see.

None may be discontributionized

In line with their own campaign staff illegal registrations and a coziness with ACORN and its decade spanning voter registration frauds under the rubric of ensuring no voter is disenfranchised, the official position of Barack Obama's campaign appears to be that illegal campaign contributions are all in the eye of the beholder. For example, they may well argue, a person named Jgtj Jfggjjfgj probably views it that way.

Obama's website has* all credit card verification procedures turned off for campaign contributions. The default is "On," you have to turn it off deliberately. When you do, many wonderful things happen. You can accept contributions from Della Ware, John Galt, and Jgtj Jfggjjfgj. These fictitious people, though actual donors, may submit any address whatsoever, including foreign countries or Second Life.

Obama's people claim they vet the legality of their donors after the contributions are made. The effectiveness of this technique is demonstrated by a pair of donors noted at the New York Times: “Derty West” and “Derty Poiiuy.” They both live at “rewq, ME” and are both employed by “Qwertyyy.” They even do the same job - “Qwerttyyu.”

This is a fine example of the ethical acuity of Chicago machine politics, because it shows how to facilitate anonymous, falsely sourced or foreign contributions while simultaneously evading contribution limits. All of that is illegal, of course. It's why an honest person would not disable credit card verification. An honest person would not want to encourage illegal campaign contributions. An honest, prudent person would not turn off an effective verification system and assume the costs of vetting contributions themselves unless they were convinced they could do a superior job. As we've seen, this ideal is unrealized. Obama had good intentions, though: No one should be discontributionized.

The McCain campaign does not knowingly encourage such donations. They did not turn off the credit card verification system.

Commenter stevieray at thenextright.com sums it up:
“...Obama's system doesn't care what name is used, only that the credit card number is valid.

Obama's system doesn't care what address is used, only that the credit card number is valid.

Obama's system doesn't care if the security number is valid, it doesn't even ask for it.

Federal law limits the amount anyone can give to the campaign, and requires the campaign to keep track of the donors and report the info to the feds.

Obama cannot report his donors accurately, because he can't prove who gave ANY of the money to his campaign.

Every report he sent to the FEC is a fraud.

He can't prove ANYBODY is below the limit, because he doesn't know. His system made sure of that.”
A good summary of how this was discovered and has been documented may be found here.

Oh well, just another failure you can chalk up to the good intentions and false promise of McCain-Feingold. Strictly enforced donor disclosure requirements would have prevented it.



*
Or had, there are reports credit card verification has been reinstated after this fraud-hole was discovered - proving they knew what they had done.

Thursday, October 23, 2008

Palindrones

Hatin' Palin
By Daniel Henninger

If as Joe Biden suggests the U.S. is likely to be tested by a foreign enemy next year, who of the following would you rather have dealing with it in the Oval Office: Nancy (of Damascus) Pelosi, Harry Reid, John Edwards, Joe (the U.S. drove Hezbollah out of Lebanon) Biden, Mike Huckabee, Geraldine Ferraro, Tom DeLay, Jimmy Carter or Sarah Palin?
RTWT.

Then there's this CNN interview:

The REST of the story here by the guy who wrote the article that was "quoted."

The backtracking at CNN is a hoot. He was "being a gentleman." This is the way he asked the question, "Some conservatives have been pretty hard on you as well. The National Review had a story saying..." The implication is quite clear, and it isn't gentlemanly - it's lying. The fact that they deleted that part of the interview shows they know it.

Wednesday, October 22, 2008

Through the Looking Glass

There is no word of criticism that can be applied to Barack Obama that somebody won't find racist.

Shame on McCain and Palin for using an old code word for black
By Lewis Diuguid, Kansas City Star Editorial Page columnist

Mr. Diuguid presents an example of descriptions of black people who were, in fact, socialists.

J. Edgar Hoover, director of the FBI from 1924 to 1972, used the term liberally to describe African Americans who spent their lives fighting for equality.
I believe Mr. Hoover also called many melanin-challenged people "socialist" and "communist." I don't think he meant they were black.

The problem here is the conflation of the terms in Mr. Duiguid's mind.

Tuesday, October 21, 2008

The Right to Arm Bears

British Columbia resident Jim West clubbed a bear to death after it attacked him. Now he's being attacked by animal rights wackos for defending his life.

Bear-attack survivor faces new onslaught


PETA denies involvement in harassing Mr. West, but I'll bet they make a commercial out of it. PETA would consider it morally superior to be bear food rather than to be alive.

H/T Dust My Broom

Monday, October 20, 2008

The Torture of Hope?

Barack Obama says his tax policy is intended to "spread the wealth," and Joe Biden says electing Barack Obama is guaranteed to produce an international crisis such as JFK faced. IOW, the closest thing to nuclear war we've ever seen. Joe rounds that out by saying Obama will need support because "it won't be obvious that we are making the right response."

To summarize, the top Democrats claim: If Obama is elected there will be socialist fiscal policy, and America's enemies will be emboldened to attack a rookie who will appear to be making all the wrong moves.


It's like Obama and Biden are Karl Rove plants. In a sane world the election would be over.

PS
Clown Watch was interrupted by other duties and a potentially heavy load right after the VP debate when Biden confidently misstated a dozen or more "facts."

After this, it's over. McCain could never catch up.
The Winner

Executive privileged

I thought Obama had failed to mention his most important executive experience because running the Annenberg Challenge skated too close to Bill Ayers. Maybe that is part of it, but the major reason would appear to be that Obama was an utter failure as Chief Executive at Annenberg.
"There was a total lack of accountability. If you went back and asked, you'd be hard-pressed to find out how the money was spent," said Paul Vallas, the city's school superintendent when Obama chaired the Chicago Annenberg Foundation from 1995 to 1999.

Annenberg spent $49.5 million, mostly on grants to 211 public schools that partnered with community-based groups. But despite collecting millions, those schools performed no better than other public schools, a study found.
Well done, Barack. I can see how this prepared you for the Presidency.

Sunday, October 19, 2008

The League of Extraordinary Fellow-travellers

It isn't merely racist to mention Barack Obama's associates and mentors, it is indulging in guilt by association. He's denounced all those people. Get over it. He doesn't get to pick his supporters, they pick him.

On the other hand, those supporters who are the architects of Obama's political career may be worth examining, because indeed, they picked him.

Alice J. Palmer, a State Senator from Illinois, was an official of the U.S. Peace Council - a Communist front group according to the FBI. In 1986 Palmer wrote an article for the People's Weekly World, the house organ for the Communist Party USA (CPUSA). In it, Palmer lauded the 27th Congress of the Communist Party of the Soviet Union, which she attended. Alice Palmer is the woman who introduced Barack Obama as her chosen successor at Bill Ayers house in 1995.

I think someone needs to ask Obama if that first meeting with Bill Ayers was held without preconditions.

We are all aware of Mr. Ayers ongoing public advocacy for the Marxist overthrow of the United States, not excepting the use of violence. Less has been said about his plans for American children. His educational philosophy calls for indoctrination in radical politics; promoting activism over achievement.

Here is an example of Ayers in action - his 2005 presentation to AERA (American Education Research Association): "Shut Up and March: Patriotism and the Threat to Democracy in America's Schools." Ayers means American patriotism IS the threat. His friend Michael Klonsky would agree, his patriotism is reserved for Communist China.

In the 70s, Klonsky headed the Chinese version of the US Communist Party (Marxist-Leninist). He was one of the first westerners allowed to visit the People's Republic of China.

Lately, Klonsky has been a professor of education at the University of Illinois, Chicago. He is the director of the Small Schools Workshop, an outreach program co-founded in 1991 with Bill Ayers.

In 1995, with Obama as its chairman, the newly formed Chicago Annenberg Challenge gave the Workshop a grant of $175,000. The CAC provided almost $500,000 to the Workshop over the next few years.

Up until the time some bloggers pointed out Klonsky's past, he was a contributor to Barack Obama's website.

While these people are unlikely to be physically present in an Obama administration cabinet, they will indeed be there psychologically and philosophically. So will Father Pfleger, who was featured on the Obama campaign website as a spiritual endorser, as was Jeremiah Wright, pastor, mentor and race-baiter. Both have been disappeared.

Let us ask the association question in other ways. Do these people support Obama because they think his policies align with theirs? If John McCain's career had been launched and promoted by fascists and white supremacists would that be considered off limits and irrelevant?

Update: 4:55PM
How could I have neglected to mention Madeline Talbott and ACORN?

Thursday, October 16, 2008

Democrats' Coat-of-Arms: Racism Rampant on a Field of Fnord

Secret Service says "Kill him" allegation unfounded
SCRANTON – The agent in charge of the Secret Service field office in Scranton said allegations that someone yelled “kill him” when presidential hopeful Barack Obama’s name was mentioned during Tuesday’s Sarah Palin rally are unfounded.
So, of course, Obama repeated the charge in last night's debate, saying Governor Palin "didn’t mention, didn’t stop, didn’t say hold on a second."

Well, it since it didn't happen, that's only surprising to those "reality-based" people who have the word "racism" etched on their corneas.

Charles Krauthammer on the race baiting:
When John McCain runs an ad with a white woman, Paris Hilton in it, he is accused of racism. He runs an ad with Franklin Raines, the former head of Fannie Mae in it, who is African-American, and that's racist. And then he runs an ad with William Ayers, who is a white male in it, and that's racist.

If it weren't so comical, these promiscuous accusations of racism, it would be tragic.

The Obama campaign has been playing the race card over and over again.

...[Obama's] the one who raised the Barack Hussein Obama a year or two ago in which he said the Hussein is actually an asset [TOC note] and would be an asset in dealing with Muslims abroad.

He's the one who openly said that the Republicans will say I'm black, they will say he's scary. They will say he's different. They will say he doesn't look like the guy on the dollar bill.
And Ruth Ann Dailey, here, writing in John Murtha's racist state of Pennsylvania:
The Democrats' perversion of the race issue has gotten so brazen that someone who merely points out the undeniably true -- like Mr. Obama's controversial ties to radicals or felons of any race or nationality -- is accused of racism. Left-wing politicos have opined that racism motivates even Democratic voters who don't support Mr. Obama (as if ideas don't matter), while James Carville, the Dems' talking head from the House of Slytherin, fears rioting if Mr. Obama loses.
Disagreement with far-left statists who consort with Louis Farrakhan and Jeremiah Wright is become racism under Obama's newspeak onslaught - where welfare is a tax-cut, unrepentant terrorists are politically mainstream, capitalism is blamed for the failure of government intervention, free market means Fannie Mae, gun rights means gun bans, paying higher taxes is patriotism, feminism excludes strong women if you disagree with them, 14 errors of fact in a Vice Presidential debate show expertise, and voter fraud is promoting democracy.

This is nice

Everything I Know Is Wrong is back. Check it out.

Saturday, October 11, 2008

Racism: Ceasing to have meaning

If we do indeed see a "post-racial" presidency from Barack Obama it won't be because of the candidate's transcendence, but because of the ability of some of his supporters to discern racial components in just about any criticism of Democrats. It's become parodic. And boring.

For example, mentioning Obama and Fannie Mae in the same sentence is racist, even though the former head (he resigned over his Fannie connection) of Obama's VP search committee was Fannie's CEO, Obama is the second largest recipient of campaign funds from Fannie and the Washington Post reported that Obama received advice from another disgraced Fannie Mae CEO, Franklin Raines.

In the four years since he stepped down as Fannie Mae's chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case's D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters.
Barney Frank explains why associating Democrats with Fannie is racist:
Frank says GOP housing attacks racially motivated

...Rep. Barney Frank said Monday that Republican criticism of Democrats over the nation's housing crisis is a veiled attack on the poor that's racially motivated.
The AP points out that criticizing Obama's ideas is "racially tinged."
“Our opponent,” Ms. Palin told donors in Englewood, Colo., “is someone who sees America, it seems, as being so imperfect, imperfect enough, that he’s palling around with terrorists who would target their own country.”

She added, “This is not a man who sees America like you and I see America,” she said. “We see America as a force of good in this world. We see an America of exceptionalism.”

An Associated Press analysis characterized those remarks as “unsubstantiated” and carrying “a racially tinged subtext.”
Obama's associations with Father Pfleger, Jeremiah Wright, Bill Ayers, Mazen Asbahi, Frank Marshall Davis, Michael Klonsky, ACORN and his membership in the socialist New Party put him outside the mainstream, but mentioning that is racist. Comments about "clinging to guns and religion" and criticizing America in Germany are just normal politics, right?

Don't like Obama's policy leanings? You must be racist. Only if you're "The One" can you talk about "not being like those guys on the dollar bill" and not be racist.

Monday, October 06, 2008

Re-elect Cliff Taylor

Posting is going to be light this week, my son is getting married on the weekend and I've a got a long to-do list.

Nevertheless, you should read about a lying attempt to defeat Michigan Supreme Court Chief Justice Cliff Taylor, and note that the players tried something similar when Barack Obama was on the Board of the Joyce Foundation. It further demonstrates Obama wants to confiscate guns.

Sunday, October 05, 2008

Bailout notes

Two from Carpe Diem worth reading.

Pork Breakdown Of the Bailbout Bill + Ron Paul

Demystifying the Mortgage Meltdown

Some thoughts from Canada's John Galt:
The End of the Beginning

Attack of the Mutant Elephant

James Pethokoukis at USNews, Why McCain Goes Easy on Fannie and the CRA:
The McCain campaign is underestimating how absolutely furious conservatives are that free markets, and by extension Reaganomics and the last 25 years of American economic policy, are getting the blame for the housing and credit crisis. A real morale killer, they tell me. Over and over. Every day.
RTWT

Jeff Goldstein at Protein Wisdom:

Were McCain the “maverick” he claims to be, the first words out of his mouth in the next debate would be Frank, Dodd, Obama, Raines, Reid, Schumer, Pelosi, accounting irregularities, Enron, investigation, prosecution, government failure, and “let’s fix this mess for the long term.”

Because he’s not really a maverick, however, his first words will likely be to congratulate Obama on helping push through the bailout.

At which point he may as well speak to Obama after the debate and see if he maybe could replace Biden as Barack’s VP pick…
RTWT

Goldstein again here:
Recall that my early arguments for why I wouldn’t vote for John McCain — which I went on record with at NPR — boiled down to his willingness to do the job of Democrats when it came to demonizing conservatism and playing Godhead of the nannystate.

...Time to step up, McCain. Using big business as a convenient arch criminal for every crisis is why most conservatives mistrust you. Earn your support. Otherwise know that even if you do manage to become President, you will have done so on the strength of the Anybody But Obama vote.
There's the "Not Enough Difference to Matter, Don't Reward Betrayal" vote to consider, too.

I still think McCain can't make this case because he actually agrees that a free market is part of the problem. His reaction to the credit crisis is not different from McCain-Feingold suppression of the free-speech market, clamping down on steroids in baseball, federally regulating boxing, or voting for Sarbanes-Oxley, "Climate Stewardship," the Patients Bill of Rights, and against drilling in ANWR.

Yes, his record is better than Obama's, but there's no telling based on the principles of limited government or free markets where McCain will jump. I think "mutant" is a better term than "maverick."

Frankly, if we're going to have monster sized government the Democrats have proven more adept at it, or at least predictable.

Saturday, October 04, 2008

Bailout; brought to you...

...by the same people who got us into the problem.

Think about it. In July, Sen Charles Schumer asserted publicly that IndyMac, "Could face a collapse," precipitating the bank run that the Senator assures us had nothing to do with the bank's collapse.

That was the week after Senator Dodd assured us that everything was fine at Fanny Mae and Freddie Mac, "Just fine."

This week Majority Leader Harry Reid caused a huge drop in insurance company stocks, and your 401k, by announcing in a press conference that a major insurer was "about to go bankrupt."

Main Street vs. Wall Street
By Arnold Kling
The financial bailout isn’t as bad as Main Street thinks. It’s worse.

...The American people are being given two reasons to support the bailout, namely, that it is needed to prevent another Great Depression and that it will actually earn a profit for taxpayers. Both rationales are suspect.

The most credible evidence that the Main Street economy is in danger is that “Ben Bernanke is worried, so everyone should be worried.” In fact, no economic textbook, including Bernanke’s, offers any theory that predicts depression as a result of consolidation in the financial sector.

...The other claim that is made on behalf of the bailout is that Treasury will make a profit for taxpayers by buying distressed mortgage-related assets. However, this claim is being made by the same people who did not see the crisis coming, in large part because they do not understand how the values of these sorts of securities behave.
Read the whole thing

Friday, October 03, 2008

Fire Congress

It wouldn't be quite so galling if they could at least acknowledge it was their social engineering that cost a trillion dollars - and rising - did severe economic damage to the very people they intended to help and has screwed everybody except their corporatist buddies. Instead, Barney Frank promises to do a better job of social engineering next year.

Clinton Democrats are to blame for the credit crunch
For generations, America’s bankers have been firmly refusing credit to those they judged unworthy of it. Yet the mountain of toxic subprime debt that has threatened to overwhelm the entire financial system, and the astonishing number of mortgage foreclosures across the United States, is proof that, at some point in the relatively recent past, bankers radically altered their behaviour and began to shower mortgages on borrowers who had no realistic prospect of keeping up their repayments. What could possibly have induced them to act so recklessly, and so out of character? The facile answer to that question is greed, the lure of a fast and easy buck. The correct answer is that banks were bullied, cajoled and coerced into lowering their lending standards by politicians in pursuit of an ideological agenda.
How Government Stoked the Mania
Fannie and Freddie played a significant role in the explosion of subprime mortgages and subprime mortgage-backed securities. Without Fannie and Freddie's implicit guarantee of government support (which turned out to be all too real), would the mortgage-backed securities market and the subprime part of it have expanded the way they did?

Perhaps. But before we conclude that markets failed, we need a careful analysis of public policy's role in creating this mess. Greedy investors obviously played a part, but investors have always been greedy, and some inevitably overreach and destroy themselves. Why did they take so many down with them this time?

Part of the answer is a political class greedy to push home-ownership rates to historic highs -- from 64% in 1994 to 69% in 2004. This was mostly the result of loans to low-income, higher-risk borrowers. Both Bill Clinton and George W. Bush, abetted by Congress, trumpeted that rise as it occurred. The consequence? On top of putting the entire financial system at risk, the hidden cost has been hundreds of billions of dollars funneled into the housing market instead of more productive assets.

Beware of trying to do good with other people's money. Unfortunately, that strategy remains at the heart of the political process, and of proposed solutions to this crisis.
Government Made the Mess
Bankers and politicians say that the government needs to save the $62 trillion credit default swap market from collapse, but how can $700 billion fix a broken market that is nearly 90 times the size of that amount of money? The total derivatives market, which is the real source of the turmoil in credit markets, is $1,400 trillion.

That is 200 times the size of this $700 billion rescue plan. If either the credit default swaps market, which involves companies placing bets on and insuring risk against the likelihood of default on different types of bonds, or the derivatives market is really broken and going to collapse, this relatively small amount of money will not stop that process from happening.

... Nevertheless, the banks and their political friends are asking investors and taxpayers to "just trust them" about the value of these assets on bank balance sheets. If it already weren't obvious, this is the most blatant attempt yet by the "fat cats" on Wall Street and in Washington to sucker investors and the taxpayer. It's also strikingly similar to what the Japanese banks pulled off after their bubble burst with government support, and we know how well that worked. It took Japan more than a decade to work through its banking crisis.

It failed miserably and probably made their problems a lot worse. Is that the outcome we want here? My view is that the further away we move form honest and transparent markets, the worse this crisis of confidence is going to get.
Why the Bailout is Bad for America
When government tries to redistribute wealth from rich people to poor people, it causes economic damage by discouraging productive activity by the most successful and by discouraging productive activity from those who are lured into government dependency. The proposed bailout is even more pernicious. It would redistribute wealth from poor people to rich people, and simultaneously encourage reckless behavior by recipients and impose an immoral burden on those that behaved responsibly.
Re: Wooden Arrows — The Rest of the Story
Whatever the merits or not of tax relief on kids' bows and arrows, it's got nothing to do with a Super-Duper-Mega-Ultra-Urgent Act-Now-Or-Else Save-The-Global-Economy Bailout Bill. No reasonable person would expect to find the urgent issue of toy arrows addressed in such a bill. So, when it is, it's an arrow at the heart of one of the great bedrock principles of republican government: public accountability. No citizen can follow the dispositions of his legislature in a world in which the Highways (Emergency Paving) Bill also includes a tax credit for transgendered blow-up dolls. Earmarks are an affront to government by the people.
Reading all of all of the above is recommended.

This bailout is just one more in a series of disastrous attempts at central planning that began with Herbert Hoover and was perfected as a technique by FDR. When faced with what they were convinced was a crisis of hundred year proportions, Congress piled on to citizens by larding the bill up with pork and earmarks. They couldn't focus on the problem without their Pavlovian salivation over the opportunity to redistribute some loot in exchange for votes. They may have miscalculated. Everyone except the likes of Franklin Raines and Angelo Mozilo, and, of course Chris Dodd and Barney Frank et. al., should be outraged. If not, the experiment is over. Firing Congress is probably too late, and we're very likely to have Democrats controlling Congress and the White House going forward. Or Republicans who make inconsequentially different noises.

As a nation, we deserve what we're going to get. It isn't going to be pretty.

We also deserve to have some principled defense of capitalism in national elected office. But we don't: We have John McCain, who started this debate by accepting the statists' premises. I take little comfort in the fact that his principled lack of principle screwed him, too. Sleeping with the enemy is only a good idea if you're James Bond, and then only once.

This bailout was the largest single step on the Road to Serfdom this country has ever taken.

They call the wind pariah

TOC has been suspicious of T. Boone Pickens plan to get government to subsidize the infrastructure for his windmills, and we're pleased to provide links for your further edification.

Picking on the Pickens Plan?

Introduction.

The Pickens Plan: Questions Unanswered
Long. Comprehensive. Worth your time.

Thursday, October 02, 2008

World's greatest deliberative body? ROTFLMAO!

How Did the Bailout Bill Get So Long?
The original bill was just three pages long, now it's up to 450 - in a week. How did they read it all? Who wrote it? WTF does it condemn us to?

They don't know, either.

Senate Folds Mental Health Parity Into Wall Street Bailout Bill

Seems appropriate. They should have done the mental health thing before the bailout vote, though.

Bailout bill: rum, racetracks and wool research
Nelson says bailout money could come from China

I'm all for drunken Chinese racing-sheep research.
(Note to bettinak, See? Borrow from the ChiComs. Probably better if we'd just printed it.)

By the way, when did the House become the chamber of serious deliberation and sober second thought?

And as I go to post this, I note this from James Taranto:
By a vote of 74-25, the U.S. Senate last night approved a bill aimed at "providing stability to and preventing disruption in the economy and financial system and protecting taxpayers"--popularly called the bailout.

Or, as it is formally known, the Paul Wellstone Mental Health and Addiction Equity Act of 2007.

When the House rejected the same measure Monday, it was known as the Emergency Economic Stabilization Act of 2008. The Providence Journal explains what happened:

In part, it has to do with the U.S. Constitution. Article 7, Section 1 says tax bills must originate in the House of Representatives.

In order to improve chances that the bailout bill, which the House defeated on Monday, would be approved this time around, the Senate tacked on several popular provisions, such as extending the life of business tax cuts that were set to expire and changing the alternative minimum tax, a much-loathed part of the tax code intended to ensure that the well-to-do pay their fair share but that in recent years has increasingly affected the middle class.

And an element of the tax package was legislation advanced by [Rhode Island's Rep. Patrick] Kennedy that requires health-insurance companies to offer coverage of mental illness on a par with that of physical illness.

Once the Senate added those provisions to the rescue bill, it qualified as a tax bill, which the upper chamber is constitutionally prohibited from originating.

In order to get around the Constitution, the leaders turned to the time-honored stratagem of finding a live but dormant House bill--Kennedy's mental-health parity bill--to use as a shell.

"They take out the entire text" of Kennedy's old bill, "and then, by amendment, they substitute the other bill," said Don Ritchie, an assistant Senate historian.

So the bailout ended up attached to a measure that extends benefits to people suffering from depression and is named after a lawmaker who died in a crash. Never let it be said that the U.S. Senate lacks a sense of humor.
It's time for a revolution.

Ambisinistrous II

Yesterday's post elicited a comment from bettinak, who contributes to boycottrepublicans.com. She closed with "To be fair, I will post your article and my comment on my blog, http://boycottrepublicans.com. I hope you do the same."

Well, she "posted" my article as an unlinked URL (like those I just provided to her blog). No big deal except for her readers who might have appreciated a bit of, you know, context. In any case, I thought I would provide some context, and some education, by also posting my TOC comment response as a comment at her blog. Unfortunately, when I went to do that I found that it either doesn't like Macs, or it doesn't like Firefox. Couldn't get it done. So, I've decided to reciprocate at a higher level. This (you can also just scroll down) is my post upon which Bettina comments. Here's her comment:
Yes, rely on Sarah Palin to carry your libertarian agenda tonight. Good luck! :)

Your "fact sheets" on tax proposals (only 5% of those targeted for a tax cut by Obama pay taxes) and on bank bailouts are so flawed, it's amusing...Lehman was allowed to fail, AIG might still fail.

Wall Street investment bank giants are dead on arrival already. The only institutions "bailed out" will probably your and my community banks-- you know, the one that gives a you a small business loan when you need it as well as foreign institutions that hold a giant portion of our debt. But of course, you think, the world will continue to invest in US instruments even if they turn out as worthless as - say- Chechen junk bonds? You probably think we don;t need foreign investments to carry our one trillion dollar federal budget deficit, nor do we owe anyone pay back to restore the trust in our "this the greatest nation in the world's" financial system. Let everything default and money will continue to flow our way..:)

Yes, the poor minority homeowner wanna bes caused it all, along with the liberal political cronies who enabled them. How about your friend, Sen. John McCain's economic advisor and longtime ally, Republican Sen. Phil Gramm?

http://losangeles.injuryboard.com/miscellaneous/the-subprime-mess-and-phil-gramm-an-experiment-in-deregulation.aspx?googleid=242468

" In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act... allowing commercial banks, investment banks, and insurers to merge ... Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of "megamergers" took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm's Act. "Shortly after George W. Bush was elected president... Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision -- lobbied for by Enron, a major campaign contributor to Gramm -- that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm's wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act..."

The people who speculated with other people's debts caused this crisis and they were from your side of the fence.

Your experts say:

"Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen." Hey, I hope you come through for us!

Great idea to let everything bankrupt! That way, if AIG fails, and credit markets dry up, the municipal bonds insured by AIG and dependent on income from their investments will go to hell, too, taking with them the communities themselves. Then you Libertarians can sit there and live out your Libertarian utopia: No taxes, no infrastructure, no roads, police and schools-- a return to caveman society. a dog-eat-dog world of survival of the fittest. I prefer a society in which we take responsibility for each other's mistakes best as possible to help all of us out of this crisis with probably, positive returns in five years
Here is the response I couldn't make on her blog:

Bettina,

Thanks for your comment.

I can't see where I (or any of those quoted) claimed only 5% of those to whom Obama wants to give a tax cut actually pay taxes. What I said was 2/3's didn't pay taxes. That was a place holder from a draft and I neglected to change it. It's 41% of Americans who don't pay taxes, but will get a “refund” under Obama's plan.
http://www.taxfoundation.org/news/show/1410.html

I am correcting the post.

Actually, it's far worse than that, Obama's plan actually increases marginal tax rates at the low end of incomes:

"
As the chart shows, Obama’s give-and-take tax policy results in marginal tax rates of 34 percent to 39 percent in the $31,000 to $45,000 income range for this family. That’s an increase of 13 percentage points or more from the current rates.

What accounts for the higher rates? First, Obama expands the maximum child and dependent care credit for families with one young child from $1,050 to $1,500 and phases down the credit over a longer income range, from $30,000 to $58,000. Throughout this income range, the credit is phasing out at a rate of $30 per $1,000 of income, thus raising the effective tax rate by 3 percentage points. Obama also makes certain credits refundable, which introduces a tax penalty of 10 percent or 15 percent, depending on the income bracket.
"
http://www.american.com/archive/2008/august-08-08/the-folly-of-obama2019s-tax-plan

I don't know, but now that I think about it, maybe he's giving tax cuts to the people whose taxes he's raising and that's how he gets 95%.

Yes, Lehman failed. Your point? So did Bear-Stearns, IndyMac, WaMu, Wachovia... If AIG fails it will be with the US government as an 81% owner.
http://www.iht.com/articles/2008/09/17/business/17insure.php

I'm not going to bother to reply to inferential speculation about what I think. I will point out that much of our trillion dollar deficit is owed to the Chinese already, and they've threatened us with it.
http://www.telegraph.co.uk/finance/markets/2813630/China-threatens-%27nuclear-option%27-of-dollar-sales.html

So to get the $700 billion, we'll either borrow more from them or just print it. Which do you prefer?

If 0 down, interest only, ARMs were such good idea for the “homeowner wanna bes,” we can certainly ask Dr. Phil's question -”Hows that workin' out for ya?”

On the Glass-Steagall reform, I'll let Bill Clinton, who signed it, respond:
"
[When] asked ... whether he regretted signing that legislation. Mr. Clinton's reply: "No, because it wasn't a complete deregulation at all. We still have heavy regulations and insurance on bank deposits, requirements on banks for capital and for disclosure. I thought at the time that it might lead to more stable investments and a reduced pressure on Wall Street to produce quarterly profits that were always bigger than the previous quarter.

"But I have really thought about this a lot. I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill.
""
http://online.wsj.com/article/SB122282635048992995.html?mod=googlenews_wsj

The people who speculated with other people's money were first and foremost Fannie and Freddie as front-men for the Democrats in Congress. They wildly encouraged greed in Wall St. and no doubt Wall Street deserves to be punished – typically that would mean failure. These weren't capitalists, they were corporatists, so they expect to be bailed out as Fannie and Freddie promised. As Barney Frank said, "I want to roll the dice a little bit more in this situation towards subsidized housing." Snake-eyes, Barney.
http://www.usnews.com/blogs/barone/2008/10/06/democrats-were-wrong-on-fannie-mae-and-freddie-mac.html

I'll again skip over the parts where you tell me what I want, and go to the bottom line: It's fine that you “prefer a society in which we take responsibility for each other's mistakes best as possible to help,” it just isn't relevant to your hope for positive returns now or in 5 years, much less are your intentions useful to people with marginal credit who could have gotten loans before Fannie and Freddy screwed things up and now won't be able to – bailout or no bailout.

Finally, you do realize that the $700 billion was a number picked out of a hat? No one has a clue whether it will even be effective in anything except devaluing the dollar.

Wednesday, October 01, 2008

Ambisinistrous

On Monday, Nancy Pelosi infamously blamed "right-wing ideology of anything goes, no supervision, no discipline, no regulation" for the financial pickle in which we find ourselves.

Well, here are Pelosi's forces of "right-wing ideology."


Apparently she's talking about Democrats, and she can't tell sinister from dexter. She's equally clumsy on both sides.

Mona Charon points out that it's as if nothing Democrats said in the past counts.

Now you could make the case that before 2008, well-intentioned people were simply unaware of what their agitation on behalf of non-credit-worthy borrowers could lead to. But now? With the whole financial world and possibly the world economy trembling and cracking like a cement building in an earthquake, Democrats continue to try to fund their friends at ACORN? And, unashamed, they then trot out to the TV cameras to declare "the party is over" for Wall Street (Nancy Pelosi)? The party should be over for the Democrats who brought us to this pass. If Obama wins, it means hiring an arsonist to fight a fire.
Well, as things have unfolded I don't actually think you can make a case that these Democrats were well-intentioned. Half of them got sweetheart loans from Angelo Mozilo. Most of them got big campaign money from Fannie and Freddy. None of them were interested in talking about accounting practices that would have made Enron blush. They passed laws to force private enterprise to make bad loans, set up government run enterprises to "finance" those loans, and then refused to consider the possibility that anything could go wrong with that. Fannie Mae and Freddie Mac pushed bad paper at the instruction of these Democrats.

Thomas Sowell notes the essential fault: government manipulation of the market. Bailout Politics
If Fannie Mae and Freddie Mac were free market institutions they could not have gotten away with their risky financial practices because no one would have bought their securities without the implicit assumption that the politicians would bail them out.

It would be better if no such government-supported enterprises had been created in the first place and mortgages were in fact left to the free market. This bailout creates the expectation of future bailouts.
Jeff Jacoby: Frank's fingerprints are all over the financial fiasco
Barney Frank's talking points notwithstanding, mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.
We got where we are because of Democrats. Getting out of it is going to be hard. John Berlau: Doing Something?
So a substantial indirect effect of the bailout will be higher prices for food and gasoline, and this will probably hit ordinary households sooner than many politicians expect. When speculators expect the dollar to fall or be volatile, they immediately try to hedge an unstable currency through buying commodity futures. Thus, last week saw a big spike in oil prices, which had been steadily declining over the last few months. Other commodities, notably gold, also shot up. Corn and wheat prices, already boosted because of ethanol mandates, will also likely shoot up in response to a falling dollar. An article in Stocks, Futures and Options Magazine entitled "New Rules in the Commodity Game" notes that the dollar is now a stronger day-to-day factor in corn futures trading than even weather conditions.

On top of this inflation, the bill might even worsen the very credit contraction it is trying to stop. This is because of its effects on financial firms that have to follow mark-to-market accounting rules. As I wrote earlier this month in the Wall Street Journal, the credit "contagion" has been spread in large part by these rules, adopted by the Securities and Exchange Commission and bank regulators in the last few years, and subject to a big expansion last November with Financial Accounting Standard 157.

Because the mark-to-market rules require writedowns of even performing loans based on the last sale of similar assets, good banks holding mortgages that haven't been impaired often have to adjust their books based on another bank's sale -- even if they plan to hold their loans to maturity. And because the rules are tied to solvency requirements from the government's bank regulators, banks lose "regulatory capital," even if the loss is only on paper. Thus, in the scramble to conserve capital, financial firms have less money to lend.

But the bailout -- in addition to putting taxpayers on the hook and massively increasing government's role in the economy -- would likely make mark-to-market and hence the credit crisis worse, according to experts who have reviewed Paulson's plan. Paulson proposes a "reverse auction" approach by which government would choose a selling price to buy a financial firm's mortgage-backed securities. But unless mark-to-market rules were changed, this sale would force other firms to write down their assets to this price, which could further constrain the amount of money they can lend.

An Associated Press story paraphrases American Enterprise Institute scholar Vincent Reinhart, a former Federal Reserve monetary affairs director, as saying that "if the auctions set too low a price for mortgage-related assets, other institutions with bad debt may be forced to take the distressed valuation onto their books under mark-to-market accounting rules." Similarly a Washington Post story by financial reporter Neil Irwin says that the purchase could force more regional banks to write their assets down. Thus, regional banks as well as big banks will be subject to credit constraints.

As of today, some accounts say the bills will include authority for the SEC to suspend mark-to-market. But the SEC and the banking agencies already have the authority to suspend it and use any accounting rules they wish. Since they have been resistant to doing so thus far, even in the midst of this crisis, putting in what amounts to at best Congressional "wishes" will likely not move these agencies. The only way Congress could make a meaningful change would be to require this suspension of rules, and lawmakers do not seem willing to do that yet.
Note, the "mark-to-market" rule was deregulated yesterday.

Finally, getting government out of getting out of this mess seems like a good idea. Jeffrey A. Miron: Commentary: Bankruptcy, not bailout, is the right answer
This bailout was a terrible idea. Here's why.

The current mess would never have occurred in the absence of ill-conceived federal policies. [Regulations!] The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.
Today, the Senate takes up a slightly tweaked version of the bailout. Frankly, it's hard to see that passage of this bill will be better in the long term. But, since Obama is likely to be our next President and since the pain of a decades long government experiment in market manipulation won't be over for a long while no matter what; we're going to see more socialist intervention in the economy anyway. I don't think it much matters whether we have a bailout or not. The damage will take as long to undo as it did to set up.

So, advice for Sarah Palin and John McCain:

1-Don't accept the Democrat premise that we have free-market evil, "failure to regulate," and degenerate into a me-too populist hissy-fit, as John McCain has already done. This was a failure to regulate government - not a failure of government regulation. It's preponderantly the Democrats who have demonstrated failure in the first case. Unable to learn or be accountable, they will provide way too much in the second.

When "blame capitalism" frenzy seizes the Democrats, forcefully point out that it is precisely regulation that got us into this mess - mainly the Community Reinvestment Act requiring banks make bad loans or be fined, added to the cozy collusion with Fannie and Freddy of Democrats like Barney Frank and Chris Dodd. Be prepared to quote them extensively.

Further, make note that Angelo Mozilo and his ilk were not practicing capitalism, but were rent seeking corporatist welfare queens. Don't fail to point out that their government sponsored analogs, Jim Johnson and Franklin Raines were even worse.

Be prepared to say Bear-Stearns, Lehman and AIG should have been allowed to fail - except maybe since the government led them into failure we should fix it and never get into such a position again. If we had had a free market, they never would have taken on the risk they did. They thought it was mitigated by F&F.

If Katy Couric wants to know what other regulation John McCain has suggested (aside from reining in F&F) to stop this "corporate greed," tell her that's the wrong question. The question is, "What will government do to reform itself after causing this abject failure?" In this case, I know McCain has actually made his own campaign theme difficult to execute by jumping on the bandwagon of "Wall Street Greed" (which is true, but irrelevant), but Sarah Palin could distinguish herself in debate by rejecting McCain's goof and going after the statists who caused the problem.

Deregulation is - rescinding rules forcing banks to make bad loans. Deregulation is - never having set up Fannie and Freddy in the first place because of how statists will always prevert such entities. (Setting up F&F was regulation.)

2-While we're on advice, stop letting the Dems get away with talking about a "tax-cut" for 95% of Americans. Ask Obama what a tax cut for 95% of Americans actually means. Two-thirds Correction Forty-one percent of Americans don't even PAY taxes. Obama has to conflate welfare with tax-cuts to even make the claim. Ask him how much of an income tax refund should reasonably be given to people who haven't paid any income tax. What is being refunded? He'll natter about sales tax. Tell him that's a problem for the States and covered under the 10th Amendment.

3-Palin especially should have this ready: If Biden says in tomorrow's debate, as Obama did Friday, that the US has only 3% of the world's oil reserves, call him on it. We have far more. We don't know exactly how much more because the Democrats have prohibited offshore exploration studies for decades. Even so, ask Biden how much oil there is in either Colorado shale or in the Bakken Formation compared to Saudi Arabia. That oil isn't even counted in US "reserves." Mention his confusion on clean coal while you're at it.