Bailout Quagmire Courtesy of John McCain

John McCain suspended his campaign to do what most legislators in Washington D.C. do, nothing! He could have done that from the campaign trail. Instead, he declares this banking industry and Wall Street crisis his top priority so he can go the White House and offer nothing to the equation. Did he or did he not say that he was going back to the capitol to end the bipartisan debate and fix the problem? Instead we get more of McSame only this time he’s not even taking sides with his President or the bipartisan group that has put together this bailout package.

Shaking my head in disbelief but this is what Reuters has to say on it…

Angry W. House meeting roils Wall St bailout talks
By Kevin Drawbaugh and Thomas Ferraro

WASHINGTON (Reuters) - Negotiations in the U.S. Congress toward a massive bailout for Wall Street fell into disarray on Thursday night after a contentious White House meeting, with lawmakers later offering conflicting reports about the position of presidential candidate Sen. John McCain.

The White House meeting -- attended by McCain, Democratic rival Sen. Barack Obama, President George W. Bush and lawmakers from both parties -- "devolved into a contentious shouting match," according to a statement from the McCain campaign.
"At today's cabinet meeting, John McCain did not attack any proposal or endorse any plan," the statement said.

Senior Democrats said they came away from the afternoon White House session with the impression that McCain was backing an entirely new Wall Street rescue plan, one differing markedly from a Bush administration proposal under discussion for days.

Massachusetts Democratic Rep. Barney Frank, chairman of the House of Representatives Financial Services Committee and a participant in the White House gathering, said negotiations could be set back by the confusion.

"House Republicans, in some kind of arrangement with McCain, went off to wherever. I don't know whether they're ready to negotiate this. Their thing was some totally different mortgage insurance plan ... that would clearly delay this for a week or more," Frank told reporters. - Reuters

Hold the freaking presses. Let me get this straight… President Bush, Senator Chris Dodd, Represenatative Barney Frank, Secretary Paulson, Fed Reserve Chairman Bernake had a working proposal pretty much agreeable to all parties and McCain stepped into the equation and squashed it? To back an insurance plan?

Anyone that knows insurance knows that it is always in favor of the house, just like the odds favor the house in Las Vegas! So we have the Maverick Senator from Arizona coming into the discussion, the Conservative right wing general of his party, the less government, less regulation is best candidate, and he backs a never ending mortgage insurance plan on the backs of the American people? How sweet of a big business, big banks deal is that? Let’s not only put the taxpayers in for $700 Billion Dollars but lets make this pig fest into a never ending feed trough!

John McCain has just shown where his loyalty is and it is not in the interest of homeowners or soon to be homeowners. Now on top of PMI (Private Mortgage Insurance) you will get a double dipper with MMI (McCain Mortgage Insurance) because Wall Street has not raped the American people enough.

Mind you, this insurance that McCain is backing isn’t because you as a homeowner made bad decisions, it’s because the people making bad loans on Wall Street might continue making bad decisions and it’s only fair that all of us be punished for it. Pass out them golden parachutes and screw you Joe Q. Voter.

Vote Obama and vote often!

Papamoka

The Next Great Depression?

Not since the days of the late 1920’s and early 1930’s has this nation seen such large financial institutions collapse as we are seeing currently on Wall Street. Lehman Brothers after 158 years in business is folding up its business table and calling it quits. This is not a good sign of a prosperous economy my friends. Is this the tell tale sign of the next Great Depression or just a bump in the road for the American economy?

Over at the New York Times and Deal Book they have this to say on the matter…

Lehman Expected to File for Bankruptcy Protection
September 14, 2008, 5:55 pm

According to people briefed on the matter, Lehman Brothers will file for bankruptcy protection on Sunday night, in the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago. (Should be 18 Months Ago)

Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings, these people said. A consortium of banks will provide a financial backstop to help provide an orderly winding down of the 158-year-old investment bank. And the Federal Reserve has agreed to accept lower-quality assets in return for loans from the government.

But Lehman’s filing is unlikely to resemble those of other companies that seek bankruptcy protection. Because of the harsher treatment that federal bankruptcy law applies to financial-services firm, Lehman cannot hope to reorganize and survive as a going concern. It will instead liquidate its holdings.

It was not clear whether the government would appoint a trustee to supervise Lehman’s liquidation, or how big the financial backstop would be. - Deal Book/ NY Times

For some odd reason I can’t fathom why John McCain says that the fundamental economy is in great shape and sound? When you have huge financial companies like Lehman Brothers and Merrill Lynch out right going under, do you think it might be a tell tale sign of an economy in trouble? Maybe John McCain doesn’t read the newspapers or watch television from one of his seven to eleven houses? Bank of America may have saved Merrill Lynch in a last minute deal for $44 Billion but Lehman Brothers is a been there and shouldn't have done that legacy for the history books.

Even the Federal Reserve Board is taking unusual steps to fend off the worries in the markets. This is unheard of news.

Papamoka

Selective "Free Markets": Time To Reconsider

BY MICHAEL LINN JONES

This doesn't make an immediate connection to the presidential campaign, and yet is has more to do with it than one could imagine.

I am very leery of those who expound upon the virtues of the "free market," as if such is a panacea, a cure-all to economic questions. Particularly the selective aspect of its proponents.

Consider this: in the 1970's, Chrysler was in trouble, big trouble. Despite objections from many Congress voted to loan Chrysler $2 billion. The labor unions made concessions, Lee Iacocca came along, and within years Chrysler was back on its feet. It is arguable that it worked to a certain degree.

Now go back to the 1930's. The economic mess that existed at that time had one unusual characteristic: DEflation. Most of us alive today have never lived it and therefore would find it difficult to think of falling prices as a bad thing.

But they were. Farmers in Iowa could not get enough for their corn to justify the cost of shipping it to market. Long before bio-fuels became a household word many people were using corn for heat.

Along came Franklin Roosevelt and his New Deal. No one had all the answers; it was more a quest to end the Depression and government had a role in doing so. It was true "thinking outside the box" in that for the first time farmers were going to be paid NOT to produce. Hog farmers could not understand how their crops and animal products could give a greater return by lowering the supply.

It was inflationary, but that was a price to be paid in an effort to preserve American capitalism. Within the context of the 1930's it made sense to tax some people in order to pay other people not to produce. There was a human cost too; in the South many sharecroppers were made homeless since the land owners did better by not having anyone produce anything. These people, black and white, became part of the great internal migration of that time.

Up until the last year or so no one would have thought much about this process' impact on their lives. But.....we're over 70 years away from the Depression. The continuance of these farm subsidies is akin to building Civil War cannons for the modern Army. In the 1930's over 25% of Americans lived on farms. Now it's something under 2%. Most agricultural activity is through huge agri-business combines.

It is absurd for people like Sam Donaldson or Ted Turner to be receiving payments from the U.S. government for NOT doing anything with their land. Particularly at a time when Americans (and everyone else on the planet) are paying a lot more for food because of the emergence of ethanol as the answer to all of our energy problems. Which it is not, of course.

While not an economist, I question what the government is doing, and also question the wisdom of continuing to have government manipulation of agricultural products. With the high inflationary nature of ANYTHING to do with corn or grain, why are people being taxed to give money to people who own land but don't grow anything on it?

Why is the government STILL carrying out an inflationary program in an inflationary time? I know there's votes in them there milk buckets and corn cribs, but it seems absurd to apply an early 20th century solution to a 21st century situation that is the reverse of the program's original intent.

There's not much glamor in this subject. But there's a lot of money. It's brought home to me every time I see the latest price increase in food, always because of the high cost of corn products, wheat products, etc.

The "free market" is supposed to make thing more abundant when prices increase. It is never going to happen if we are spending money to do the opposite.

Next thing you know, the fire department will use kerosene to put out housefires. They'll only be following the example set by the geniuses.
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Cross-posted at Michaellinnjones.com