Tuesday, September 30, 2008

Sounds like

In today's shock announcement by Irish minister for finance Brian Lenihan that he is guaranteeing all current and immediate future liabilities of 6 IrishRepublic of Ireland-based banks (not just deposits), he stated the rationale that these institutions have no other state or entity "to look to for succour". Or suckers. These 6 banks may now be the most backstopped banks in the world -- assuming that the government can actually pay up should their assets go pear-shaped.

[More Irish banking analysis from us here and here]

Tell him in October

Not that the Irish finance minister makes saying it makes it any more or less true, but he's right about this --

Mr [Brian] Lenihan said that that much of the current crisis followed on from the collapse of Lehman Brothers.

"My personal view is that the United States authorities were mistaken in permitting that bank to go to the wall. It has led to very serious consequences for the world financial system, and it illustrates the dangers of permitting banks to become insolvent through the process of private liquidation."

And the decision to let Lehman go was US Treasury Secretary Hank Paulson's call. Next month many of the world's finance ministers will be in Washington for international financial institution meetings. They should tell Paulson to join Lehman in the scrapheap.

Monday, September 29, 2008

The failed bailout vote

Isn't this yet another failure of the US Constitution? If this was a parliamentary system, this would be a clear no-confidence vote, the government would collapse, and we'd get a new one in short order that could get a bill passed. But we're stuck with the Leader of Free World for another 4 months regardless of how little power he has.

Sunday, September 28, 2008

The loophole

The trickery in the Wall St bailout -- The Emergency Economic Stabilization Act of 2008 -- seems to be in the alternative to the TARP suggested by House Republicans and midwifed into the bill by John McCain. This has the government providing bad asset insurance, which doesn't like a good business to be in, and firms opting for bad asset insurance can avoid all the regulatory and compensation restrictions in the rest of the bill. It'll be interesting to see how these provisions are greeted this week.

Here's a non-technical explanation of the bill by section

Saturday, September 27, 2008

Say it ain't so

Above is the banner on the McCain campaign website of "Arab Americans for McCain". It also appears on the site for "Lebanese Americans for McCain". One can see the Maverick-in-Chief, Cindy, and Lindsey Graham. But who else is always in any such photo? Who appears in the banner for the Jewish advisory coalition?

But we haven't yet been able to find the original picture to prove they used that blue haze to crop out Joe Lieberman.

[Note: they still haven't fixed another banner image issue]

They do hate the troops

National Review's The Corner --

No Disrespect [Mark Hemingway]

...to soldiers who suffer from PTSD, but have Democrats ever met a vet that didn't suffer from it? My father's a retired Marine colonel and Vietnam vet, so I've met a few vets in my day and while it's not unheard of, it's pretty rare in my experience. So why do Democrats always bring it up? Are they trying to create the impression that somehow every soldier is wounded, even if they don't appear that way?

Leave aside the fact that going off to war with the possibility of killing or being killed probably has an impact. Just read the news and know about Traumatic Brain Injury. Too much for an armchair Iraq war booster to look up.

The debate

John McCain seems to have misheard something at the Friends of Ireland event in Scranton earlier in the week. Ireland's corporate tax rate is 12.5%, not 11%. And as Obama points out, he's not comparing US corporate tax rate with other countries on an effective (i.e. after loophole) basis.

But so far (25 minutes in), it's a stalemate. Obama is slightly sharper but both are just reusing their stump speeches.

McCain has no answer to the question of what additional cuts he would make to the pay for the bailout. Remember, this is $700 billion of new cuts that he needs on top of all the other things he promised to cut.

Does John McCain think that Pakistani people won't notice a US attack if it's not announced?

Pakistan was a failed state when Musharraf took over? Does McCain know that Nawaz Sharif could be back in power in Pakistan very soon?

Final impression: a draw. Both have things to work on. McCain needs to drop that slightly demented voice he takes on when's trying to sound extra serious. And Obama needs a way to defuse the point about meeting Ahmadinejad "without preconditions". It's an idiotic point but McCain is going to keep bringing it up and clearly had his "What we will say: No you won't?" line ready for it. But by the same token, the point is also McCain at his worst. He keeps talking about wanting to be bipartisan but he thinks that the presidential nominee of the other party has a policy that is "dangerous". Nor will he or Palin explain exactly what it is that they would encourage Israel to do about Iran. Now that policy -- not being clear about military intentions -- is dangerous, my friends.


UPDATE: McCain may be 10 years off in his assessment of Pakistan as a failed state. It's looking like one now.

Friday, September 26, 2008

Whinger in Chief

George Bush's big Friday morning statement about the stalled troubled asset relief program? His favourite phrase: It's Hard Work.

More foreign policy experience

[Sarah] Palin will be at the Irish Pub [Philadelphia] on Walnut Street on Friday night for a public debate watching party, if the debate between John McCain and Barack Obama continues as planned.

This will add to the knowledge of Ireland gained from her Shannon stopover en route to Kuwait.

UPDATE: She was indeed in the pub while everyone else was in Mississippi.

Thursday, September 25, 2008

Original sin

George Bush, during his transparent attempt to co-opt Democrats in general and Barack Obama in particular to his Wall Street subsidy plan --

First, how did our economy reach this point? Well, most economists agree that the problems we're witnessing today developed over a long period of time. For more than a decade, a massive amount of money flowed into the United States from investors abroad because our country is an attractive and secure place to do business.

This large influx of money to U.S. banks and financial institutions, along with low interest rates, made it easier for Americans to get credit. These developments allowed more families to borrow money for cars, and homes, and college tuition, some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.

Unfortunately, there were also some serious negative consequences, particularly in the housing market.

Why might it be that over the last decade, more overseas money needed to come into the country?

Chart via Perotcharts

Wednesday, September 24, 2008

Bring it on

US Treasury Secretary Hank Paulson --

The events leading us here began many years ago, starting with bad lending practices by banks and financial institutions, and by borrowers taking out mortgages they couldn't afford.

US Federal Reserve Chairman Ben Bernanke --

Ongoing developments in financial markets are directly affecting the broader economy through several channels, most notably by restricting the availability of credit. Mortgage credit terms have tightened significantly and fees have risen, especially for potential borrowers who lack substantial down payments or who have blemished credit histories. Mortgages that are ineligible for credit guarantees by Fannie Mae or Freddie Mac--for example, nonconforming jumbo mortgages--cannot be securitized and thus carry much higher interest rates than conforming mortgages. Some lenders have reduced borrowing limits on home equity lines of credit. Households also appear to be having more difficulty of late in obtaining nonmortgage credit ... In the business sector, through August, the financially strongest firms remained able to issue bonds but bond issuance by speculative-grade firms remained very light. More recently, however, deteriorating financial market conditions have disrupted the commercial paper market and other forms of financing for a wide range of firms, including investment-grade firms. Financing for commercial real estate projects has also tightened very significantly.

If your crisis diagnosis is that too many people got loans, isn't it part of the crisis resolution that fewer people, er, get loans? It's as if there's something they're not telling us.

Tuesday, September 23, 2008

Get that man a column

From Bono's Financial Times blog (for UN General Assembly week) --

Sarko is a real physical presence in a room. He might even be taller than me… animated, funny one minute; annoyed the next ... The meeting started with the beautiful Carla Bruni, a great ally in our efforts to better our storytelling about the effectiveness of good aid. Both the first lady and the president change the molecular structure of any room they are in - he speeds them up, she calms them down. A great team.

Monday, September 22, 2008

She's back in style

A few days after Gordon Brown's "We want our money back" reprise of Maggie Thatcher, could Sarah Palin be seeking the mantle? The McCain campaign has released the text of a speech she was to deliver at Iran protest rally at the UN today. Her planned appearance was a transparent stunt to burnish her foreign policy and Hillary-seeking credentials at the same time -- Hillary was scheduled to be there and was not told that Palin had been added to the list. So she pulled out and the organizers (or at least besides the one that was in cahoots with the McCain campaign) then withdrew invitations to all politicians.

But anyway, the speech:

Ahmadinejad may choose his words carefully, but underneath all of the rhetoric is an agenda that threatens all who seek a safer and freer world. We gather here today to highlight the Iranian dictator's intentions and to call for action to thwart him.

He must be stopped.

Stopped, how? There is a precursor for those tough words:

Q: Could you just recall the exact nature of that first conversation with George Bush. As you say, the President said to you "Margaret, what should we do?"

Thatcher: "Margaret, what is your view?" and so indeed I told him that aggressors must be stopped, not only stopped, but they must be thrown out. An aggressor cannot gain from his aggression. He must be thrown out and really, by that time in my mind, I thought we ought to throw him out so decisively that he could never think of doing it again.

At that point of course, Saddam Hussein had invaded Kuwait and the job was to get him out. Iran hasn't invaded anywhere.

Logic to nowhere

Sarah Palin, who says she wants to clean up the culture of corruption in Washington represented by politicians like Ted Stevens, wants to stall a legal hearing on her possible ethics violation until after the election.

Ted Stevens, symptomatic of the culture of corruption in Washington that has been attacked by politicians like John McCain and Sarah Palin, wants his criminal trial finished before the election.

Saturday, September 20, 2008

Gordon get your handbag

Wall Street Journal --

LONDON – U.K. Prime Minister Gordon Brown said Saturday that he is working with U.S. authorities to get billions of dollars returned to Lehman Brothers Holdings Inc.'s London operations from the firm's U.S. business.

Responding to questions at the start of his Labour Party's conference, Mr. Brown said he wanted to make sure the money was returned in the interest of the investment bank's U.K. employees.

The transfer of $8 billion has become a target of inquiry by Lehman clients as well as PricewaterhouseCoopers LLP, which is overseeing the insolvency proceedings of Lehman units in London.

One wonders if part of Gordon's comeback plan includes following the path of Margaret Thatcher, who of course he is known to admire. Because his demand sounds a lot like her legendary "I want my money back!" European Community summit in France in 1984.

She got her money back.

That's the problem

US National Security Adviser Stephen Hadley in the context of George Bush's schedule for the UN General Assembly meetings next week --

This is a man who is remarkably unaffected by eight years as President, in terms of who he is, what he stands for, how he thinks of himself.

So nothing -- Enron, 9/11, Iraq, Afghanistan, Katrina, deficits, and now the financial meltdown -- has affected him. Isn't that the diagnosis of a sociopath?

Friday, September 19, 2008

The poor are revolting

Conservatives have been struggling for an explanatory meme for a financial crisis that has blown up after 8 years of Republican rule. They are inching towards one --

[National Review - Lisa Schiffren]

I always listen to Mark Levin while making Friday night dinner. Tonight he is giving the most serious, intelligent, cogent explanation of the current economic crisis I have heard or read anywhere. He is giving a precise political and legislative history going back several administrations, but concentrated in the Clinton Administration, where the major changes that led down this road were initiated. Funnily enough, he has explained just what it is community organizers do. Advocating, for instance, for affordable housing for the poor — the poor who traditionally rent, because they are bad loan risks. The day that reasoning by banks was junked as "racist," was the day this crisis became a possibility.

That's right: the crisis is due to poor black people getting too many loans. David Brooks, channelling Megan McArdle, comes close to embracing similar reasoning (as does Jonah Goldberg). You'd think someone might stop to wonder how people who own so little could cause so much damage. Here are homeownership rates by ethnicity from 1994 to 2007. Blacks had a 42% ownership rate in 1994 and 47% in 2007. So a 5 percentage point increase in their rate brought the system crashing down?

In fact, the increase for non-Hispanic whites was nearly the same, but the key point is: there are way more white people. If you're looking for hundreds of billion dollars of dodgy mortgages, that's where to look for them. Anyway, virtually all the increase in black home-ownership happened under Bill Clinton, so the conservative theory requires believing in an 8 year mortgage time bomb -- as opposed to role, for example, of Alan Greenspan. If you're trying to understand how huge valuations can disappear, you look where the money is.

[Here is the Census Bureau homepage for relevant statistics]

Common people

George Bush, explaining his affinity with the NBA champion Boston Celtics --

And I welcome the Boston Celtics team that has brought great pride to the Boston area. You know, I was telling them, I went to school up there

"school up there" = Phillips Andover and Harvard Business School.

White House photo by Joyce N. Boghosian

And now the Decider

George Bush just said he wants to "solve" the financial problems before sorting out the origins of them ("There will be ample opportunity to debate the origins of this problem. Now is the time to solve it."). Apparently there are also outrages due to investors doing things for "personal gain". Country First! He also claims that money spent on these assets can be recovered, so implicitly, no need to raise taxes. After bashing America's financial regulatory institutions as being too old, he then hails the 60 year history of the Federal Deposit Insurance Corporation.

The new acronym

TARP: Troubled Asset Relief Program. A lot of US taxpayer money to buy bad mortgages. At what point does George Bush explain how he will raise the revenue needed to pay for it?

It gets worse. Paulson is going to have Fannie and Freddie along with the Treasury itself buy more mortgage-backed securities (and the Fed is buying more FM stuff too). And place any assets they can't buy into the TARP or some other toxic waste dump.

One other thing. Bush this morning gave Paulson another $50 billion --

I approve the use of funds from the Exchange Stabilization Fund to provide up to $50 billion as a guaranty facility for certain money market mutual funds

That is a Great Depression fund that is supposed to be used for exchange rate purposes. When Bill Clinton used it in 1995 to give loans to Mexico -- loans which at least did have an international financial stability purpose -- conservatives screamed in outrage.

Don't mention the Gulf

Condi Rice, in the Q&A part of her big Russia speech --

QUESTION: Madame Secretary, Russia is a petro-state, and its level of assertiveness pretty much correlates to the price of oil. The price of oil is down by 30 or 40 percent, and the oil markets look like they’re going to get softer. Would you expect Russian behavior to be at all modified because of the price of oil and its importance to their economy?

SECRETARY RICE: Well, I don’t know if their behavior will be modified. I do know that there are significant vulnerabilities for petro-states that do not diversify. And there are significant vulnerabilities for petro-states that depend on their ability to engage in monopolistic behavior during good times, when those – when the price of oil is down and that monopolistic behavior doesn't pay off in terms of customers. So those are facts that I understand and realities that I understand that are independent of Russia in particular ...

But there are just certain structural problems with being a petro-economy. And if you look at places that have handled it well, for instance like Norway, they have taken very different course, and of course, as a democratic state, have had to take a different course.

The petro-state/oil price concept comes from Tom Friedman. And it's not clear that on a systematic evidence basis, it's correct. But leave that aside. Everything she said about Russia and oil could be applied to Saudi Arabia.

Thursday, September 18, 2008

New Spain

Josh Marshall has a hilarious series of posts this evening dealing with John McCain's apparent declaration that Spain is a new enemy in the War on Terror. But here's a hypothesis as to what happened: McCain seems to have gotten confused when the interviewer, for Union Radio, switched from talking about the usual Latin American rogue states to Spanish PM Zapatero. McCain almost certainly thought it was a reference to the Zapatista rebels in southern Mexico -- after all, how many bad dudes beginning with Z can there be? Thus the basis on which war policy would be made under a President McCain.

UPDATE: A complementary possibility is that McCain has internalized the right's hatred of Zapatero since his post 11-M victory in 2004.

FINAL UPDATE: Unbelievable. McCain's campaign is going with the 11-M/Iraq interpretation.

Wednesday, September 17, 2008

The curse of sponsorship

The following is a list of sponsors and their line of business for each English Premier League club at the start of the 2008-09 season. The title is sponsored by Barclays.

Arsenal -- Emirates (airline)
Aston Villa -- Acorns (charity)
Blackburn Rovers -- Crown (paints)
Bolton Wanderers -- Reebok (sportswear)
Chelsea -- Samsung (electronics)
Everton -- Chang (beer)
Fulham -- LG (consumer products)
Hull City -- Karoo (communications)
Liverpool -- Carlsberg (beer)
Manchester City -- Thomas Cook (travel)
Manchester United -- AIG (insurance)
Middlesbrough -- Garmin (navigation equipment)
Newcastle United -- Northern Rock (bank)
Portsmouth -- Oki (printers)
Stoke City -- Britannia (building society)
Sunderland -- Boyle (bookmaker)
Spurs -- Mansion (casinos)
West Bromwich Albion -- T-mobile (telecom)
West Ham -- -- XL* (travel)
Wigan -- JJB (sportswear)

So from the list we have one club beginning the season with a sponsor since gone bankrupt, one now owned by the US government, and one now owned by the UK government. There's almost enough there for a correlation. And that's before one notices that there is still some awkward sectoral exposure for other clubs.

*sponsorship cancelled with bankruptcy of XL.

The no-doc borrower-in-chief

National Review's Ramesh Ponnuru --

[quoting Joe Biden] "We should try to correct the problems that caused this [financial crisis]. And what's caused this? The profligate tax cuts to the very, very wealthy that John [McCain] wants to continue."

Note that the first culprit Biden mentions is tax cuts. I think it is very hard to connect the "tax cuts for the rich" with no-doc loans, but Biden has a very high IQ (just ask him). Clearly, the solution is higher taxes.

Fed chairman Ben Bernanke, back when he was Fed governor --

A second issue concerns the uses of international credit in the United States and other industrial countries with external deficits. Because investment by businesses in equipment and structures has been relatively low in recent years (for cyclical and other reasons) and because the tax and financial systems in the United States and many other countries are designed to promote homeownership, much of the recent capital inflow into the developed world has shown up in higher rates of home construction and in higher home prices. Higher home prices in turn have encouraged households to increase their consumption. Of course, increased rates of homeownership and household consumption are both good things. However, in the long run, productivity gains are more likely to be driven by nonresidential investment, such as business purchases of new machines. The greater the extent to which capital inflows act to augment residential construction and especially current consumption spending, the greater the future economic burden of repaying the foreign debt is likely to be.

So in fact there is a link between tax cuts, huge deficits (since it's the tax cuts to the rich that result in the most foregone revenue), the foreign capital inflow to help finance those deficits (and to meet the private sector borrowing needs with the government sucking in so much available savings), and the riding of a housing bubble (such as no-doc loans) and the financial mess the country is now in.

Another way to think about the question: would the financial world really look the same without the $2 trillion in public debt that George Bush has added in the last 8 years?

UPDATE 15 OCTOBER: Bernanke is even clearer about the link between capital inflows and the crisis --

Large inflows of capital into the United States and other countries stimulated a reaching for yield, an underpricing of risk, excessive leverage, and the development of complex and opaque financial instruments that seemed to work well during the credit boom but have been shown to be fragile under stress. The unwinding of these developments, including a sharp deleveraging and a headlong retreat from credit risk, led to highly strained conditions in financial markets and a tightening of credit that has hamstrung economic growth.

Big government

Tuesday evening --

The precise details of the government's plans were still being formulated. The primary option being hammered out involved the Fed providing AIG with a short-term loan of $85 billion, according to people familiar with the situation. In exchange, the government would receive warrants in AIG representing the right to buy its as much as 80% of its stock under certain conditions, according to one person familiar with the matter.

Monday evening --

J. C. Flowers & Company, a buyout firm focused on financial services firms, offered $8 billion for preferred shares in A.I.G. — but the offer also included an option to buy all of the insurer down the road at a discounted price. Two other firms, Kohlberg Kravis Roberts and TPG, also said they would buy preferred shares in the insurer, but only with a backstop from the Fed.

So AIG rejected private deals because it thought -- correctly as it turns out -- that it could get a better deal from the government. Not that anyone needs reminding, but this happens under a president who thinks that there's a risk of too many children having publicly funded health care.

UPDATE: How bad can the private terms have been? AIG will pay 2.88+8.50=11.38% on its government loan (3 month LIBOR + 850 basis points)! AIG will be bleeding cash at that rate.

2nd UPDATE: The rejected bid from JC Flowers is important, since the legal authority being used by the Fed to lend to AIG requires showing that AIG could not obtain bank credit from any other source. Did JC Flowers have lenders lined up to support the company if its bid was accepted?

Tuesday, September 16, 2008

Where the action is

One little detail in the just released Federal Reserve statement that it is not cutting interest rates --

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; ... Ms. Cumming voted as the alternate for Timothy F. Geithner

Geithner is the president of the New York Fed, who apparently was too busy to even attend the meeting by telephone. Is the AIG situation that bad?

UPDATE: It is.

Lending freely against dodgy collateral

John McCain is sounding pretty confused about the Wall Street turmoil. He comes very close to claiming that a bankruptcy for AIG would actually be a good thing --

"There are great efforts being made to try to raise sufficient capital to keep AIG in business," McCain said in an interview with CNBC. Taxpayers shouldn't be held responsible for the bad performance of U.S. institutions and "the moral-hazard issue is something that we have to take head-on," he said.

One possibility is that the Federal Reserve could be lending a lot of money to the other banks that might end up lending a lot of money to AIG. Is that taxpayer funding? It's definitely taxpayers exposed to risk and lending at interest rates so low that the private banks couldn't get such rates anywhere else. As the Fed is already doing under all the lending facilities that were added over the last year. So does McCain oppose those too?

McCain also doesn't understand that moral hazard isn't just something caused by governments. It's also caused by limited liability. There's only so much you can recover from a dude who has cost you a billion dollars. Maybe McCain wants to bring back debtor's prison.

UPDATE 17 SEPTEMBER: McCain is forced into a reversal of his incoherent position --

On Wednesday, McCain repeated that he didn't want to bail out AIG and knew of no one else who did. But, he told "Good Morning America" on ABC, millions of people with retirements, investments and insurance tied to AIG were "going to have their lives destroyed because of the greed and excess and corruption."

Elaborating on the charge of corruption, McCain said that many Wall Street executives had claimed "everything's fine, not to worry" and that Congress and regulators had paid no attention. "All of them were asleep at the switch," he said, and went on to blame special interests and lobbyists as well.

Asked for specific examples of corruption regarding AIG, senior McCain campaign adviser Steve Schmidt offered none.

Sunday, September 14, 2008

Other people's liberties

Interesting Washington Post article (buried in the Metro section) about the aggressive terrorism prosecution tactics of Assistant U.S. Attorney Gordon Kromberg, which have drawn the wrath of a prominent judge and civil rights groups. One noteworthy point about what he was doing before 9/11 --

An NYU Law School graduate who worked as a military defense attorney for the Army in the 1980s, Kromberg was using cutting-edge legal tactics before Sept. 11, 2001. After joining the U.S. attorney's office in Alexandria in 1993, the wiry, quick-witted prosecutor became an expert in forfeiture -- seizing money and property gained from crime.

He highlighted his approach during a 1999 speech at the Cato Institute in Washington, saying the government should seek the assets of drug dealers even if they are not charged. "Does that mean you should just walk away and let the activity continue? . . . Not if you want to punish the defendant in some way short of prosecuting him," he said, according to a videotape.

During the 1990s, Kromberg helped the government seize fees defense attorneys had received from drug dealers, an uncommon tactic that led to denunciations from defense lawyers nationwide.

Civil forfeiture comes very close to a run-around the presumption of innocence. Example: your car is pulled over by police and a drug-sniffing dog reacts to the car. Among the possibilities: that the dog is wrong or that there was once someone who smoked pot in your car. Civil forfeiture says that the prosecutor can still seize the car. It's the kind of things that libertarians used to get upset about. But now the mentality that could come up with that system is prosecuting terrorism cases. And the 1990s libertarians have run to the hills.

Saturday, September 13, 2008

Eye of the Nile

Is there anything he can't do? In the details of the emergency flights to get stranded customers of the XL tour company back home --

The lead singer of Iron Maiden, Bruce Dickinson, who works as a pilot for the UK charter airline Astraeus, flew a plane back to the UK from Sharm El Sheikh. He said people had given up leave to get a crew together for the flight.

Change he could believe in

The White House has put out a Friday night press release which disputes the conclusions that Bob Woodward draws from Bob Woodward's book about the crisis in Iraq war policy in 2006. One interesting thing about the release is that it neatly, if unintentionally, summarizes Bush's thought process that led him to the surge. It had just two steps.

1. There had to be a radical change in troop levels, up or down: At a December 12 NSC meeting, the President explained, "'We have to do something different. . . . We have to demonstrate that we're doing something fundamentally different.'

2. A radical change down was out of the question: In early December, "Hadley realized the president was going to go with the surge. It was the only option that seemed to offer a bold change. Talk of an exit seemed absurd to Bush."

So he wanted more or fewer troops, but couldn't conceive of the logical implication of fewer troops. So the decision was more.

Thus the process by which the Churchill of our time was led to the greatest strategic decision ever. Think they could use a few more of those troops in Afghanistan right now?

Friday, September 12, 2008

Matters spiritual and temporal

Pope Benedict meeting Alitalia's bankruptcy commissioner, who asked for Benedict's prayers. Benedict replied that he had been already been praying for Alitalia. Whether he had also included Europe's imploding charter and package tour business in his prayers is unclear.

Photo: REUTERS/Osservatore Romano

It's flog spelt backwards

George Bush was in Oklahoma today. The main public event was a meeting to promote health savings accounts, although this was merely the official cover story to stick the taxpayer with the cost of getting him to a closed-door fundraiser for maverick reformer John McCain. So his heart wasn't really in the public event. Here's part of his justification for health savings accounts --

These are products that enable somebody to, you know, move from one job to the next and keep their health care with them, which is important in the 21st century. They're ways for employees [sic] to take care of their employees.

This ability to, you know, move from one job to the next and keep your health care has been a feature of that Communist National Health Service from the start. And as Paul Krugman has long argued, Bush's verbal slips (see last sentence above) are often revealing of the real agenda, since under these accounts, everyone takes care of their own health budgets, linking quality of care directly to ability to pay.

Anyway, recognizing the need to attach some Hurricane Ike significance to his trip, Bush decided to promote volunteerism and so met with a few volunteers --

THE PRESIDENT: I'm privileged to be the President of a country that produces citizens such as these. The United States is a country of volunteers -- three such volunteers are with us, Oklahoma citizens who serve in a variety of ways ... The Major here, a golf pro, who is going to go on his third tour in Iraq, has used his position in the golfing industry to raise money to help Gold Star families. How cool is that? This guy is going to Iraq on Monday, and yes, he served that way, but he also serves in a very compassionate way.

But Bush himself has declared golf to be a frivolous pursuit at a time of war -- something that he felt compelled to tell people he was giving up. Presumably he didn't tell the Major.

Thursday, September 11, 2008

7 years on

The speeches at the Pentagon memorial dedication are strange. Of course it's a memorial to the people murdered when Flight 77 was crashed into the Pentagon. But in the speeches of Donald Rumsfeld and George Bush, so far, you'd never know about the 3 other planes or the World Trade Center.

UPDATE: Bush now gets around to the other victims. Then: 2557 days he says without a terrorist attack. This is really an atrocious speech. It's a cut and paste from all his other terror speeches.

Let's hope Osama isn't sexist

In the Wall Street Journal Asia, columnist for The Australian Janet Albrechtsen explains the brilliance of Sarah Palin to the benighted sophisticates --

She is a happy feminist who doesn't moan about female victimhood.

Script of John McCain ad which chops a Barack Obama quote about his policies and declares it a reference to Sarah Palin --

BARACK OBAMA: Well, you know, you can, you know you can...put...uh...lipstick on a pig...it's still a pig.

CHYRON: Katie Couric On: The Election

CBS' KATIE COURIC: One of the great lessons of that campaign is the continued and accepted role of sexism in American life.

CHYRON: Ready To Lead? No
Ready To Smear? Yes

The full context for McCain's pathetic attack is explained here. Come to think of it, he's never demanded that Osama apologize for 9/11. It must be that words are more harmful or something.

Wednesday, September 10, 2008

Military-Industrial Complexity

The Pentagon has announced that it will delay its decision about the re-awarding of a huge air fuel tanker contract until the next President is in office -- much as every other decision is being dumped in this fashion. What's notable here is that the contract was originally awarded to an EADS (Airbus) consortium at the expense of Boeing, Boeing having been a major target of one-time Maverick John McCain's criticism of military contracts. The award of the contract to EADS had been a big headache for McCain in states where the Boeing consortium would have generated jobs. Apparently the need of the military for a new refuelling tanker can be postponed for the electoral benefit of McCain.

Tuesday, September 09, 2008

Nation building is hard

George Bush gave another of his war on terror speeches today. The best one can say is that these speeches have gotten more sober over the years, at least relative to the delusional Iraq speeches from the summer of 2003 onwards. A few observations --

The important task in the period ahead will be to work toward the conclusion of a strategic framework agreement and a status of forces agreement between the United States and Iraq. These agreements will serve as the foundation for America's continued security support to Iraq once the United Nations resolution authorizing the multinational forces there expires on December 31st of this year. They will allow us to establish a bilateral relationship between the United States and Iraq like those we have with dozens of other countries around the world.

Note the distinction between the status of forces agreement and the strategic framework; the previous spin had been these were the same agreement, hence the Senate shouldn't be complaining about Bush negotiating treaties that he doesn't intend to have ratified because he already has the power to negotiate a status of forces agreement. But now apparently there really is a difference. Which will again raise the question of whether this is a back-door treaty -- although since Bush is already dumping the war itself into the lap of his successor, perhaps an additional piece of paper won't make that much difference.

Anyway, on Afghanistan, Bush endorsed Barack Obama's long held position that this is where the real problem is. The good news is that

Afghan fighters are good fighters.

Someone might want to hand him some Kipling.


Local Afghan forces were key to our successes in 2001 and 2002, when we combined the 21st century capabilities of the American military with the courage of Afghan fighters on horseback.

That period would include the botched siege of Tora Bora, when the delegation of part of the battle to local fighters (since General Tommy Franks was already conserving US troops for Iraq) allowed Osama bin Laden to escape.

In a phrase he may come to regret, he referred to the NATO troop build-up in Afghanistan as a "quiet surge", which will be complemented by what is in effect a switch of forces from Iraq --

The mission of these forces will be to work with the Afghan forces to provide security for the Afghan people, protect Afghanistan's infrastructure and democratic institutions, and help ensure access to services like education and health care.

Don't tell Condi that battle troops might again be escorting kids to kindergarten!

Finally, Bush was more explicit than before in including Pakistan as a front in the war on terror --

Each of these three places I've discussed today -- Iraq, Afghanistan, and parts of Pakistan -- pose unique challenges for our country. Yet they're all theaters in the same overall struggle.

While this again follows Barack Obama's lead, it raises the question of how the territorial aspects of the war in Pakistan will be reconciled with Pakistan having an elected government that does not want foreign intervention on its soil.

Special friends

We'll get an idea of who George Bush considers to be his closest foreign political friends from the visiting schedule over the next few months as his presidency winds down -- and especially who he doesn't mind being seen with before the election. So here is Silvio Berlusconi explaining to Dick Cheney his next visit to the USA:

[as translated] And the Vice President Cheney also renewed the invitation by President Bush to attend a dinner in my honor in the United States. I told them that considering the present situation, they could do without it, but he renewed the invitation, so this time I have to say, yes, I will accept. And I accept the invitation with deep gratitude. I'll be attending this dinner on Columbus Day in the United States, and on that occasion, I will renew my friendship and my gratitude toward the friendship that they have for me.

Columbus Day is Monday 13 October. No doubt Silvio approves of the choice of Sarah Palin. After all, Silvio likes to shake things up with appointments of women to top positions.

The jury is still out

Dan Senor, former spokesman for the Coalition Provisional Authority in Iraq and now a security consultant/political operative takes to the editorial pages of the Wall Street Journal to bash Joe Biden on the grounds that Iraqis were opposed to his partition plan --

The uproar was unsurprising, as partition would have involved expelling Iraqis from their homes. How would a partition work, for example, in major cities like Kirkuk, which is majority Kurdish but also has a large Sunni population, and substantial Christian and Turkomen populations? The likely outcome would have been forced relocation. This could have sparked a wave of renewed sectarian violence, if not civil war.

So no partition plan, no problem? Not exactly. Here's one recent report from the New York Times --

This month [August], legislation in the national Parliament to set the groundwork for crucial provincial elections collapsed in a bitter dispute over Kirkuk, as Arabs and Turkmens demanded that the Kurds be forced to cede some of their power here. But with the Kurds having already consolidated their authority in Kirkuk, there seemed little chance — short of a military intervention — of that happening.

Kurdish authority is visible everywhere in the city. In addition to the provincial government and command of the police, the Kurds control the Asaish, the feared undercover security service that works with the American military and, according to Asaish commanders, United States intelligence agencies.

The fact is that Biden looked at Iraq and not unreasonably saw another Bosnia-Herzegovina. Perhaps his plan was the wrong reaction, but it's not like the issues that it was trying to address have been solved. Instead, like so many other issues, they've been left to the next Administration.

Monday, September 08, 2008

It's still a sin

If the Iraq war has a spectre, it was surely hovering at this meeting between Dick Cheney and Jose Maria Aznar in Lake Como over the weekend. Remember that Aznar is one of 4 people in the world --- the others being George Bush, Tony Blair, and Jose Manuel Barroso -- who know exactly how the final offer to Saddam Hussein was structured to be an offer that he couldn't accept, guaranteeing a war. Incidentally, the caption for this photo describes Aznar as former President of Spain. Don't tell Juan Carlos about that or he'll say ¿Por quĂ© no te callas?

A passport too far

National Review's Mark Steyn in the course of defending fellow National Reviewer Jay Nordinger takes aim at the meanies on Irish radio call-in shows:

I wonder if there's a Bog Trotters 4 Bog Trotters* lobby group over there.

*Don't bother with the "Racist!" emails. I'm Irish.

Sunday, September 07, 2008

And such small portions

Andrew Sullivan, in his regular Sunday Times (UK) slot --

What we have learned about John McCain from his selection of Sarah Palin is that he is as impulsive and reckless a decision-maker as George W. Bush. We know this not because of what we have learned about this Pentecostalist populist since she exploded on the scene last Friday morning (and God knows we have learned more than we ever wanted).

Andrew Sullivan, when the Palin-ain't-the-Mom "controversy" was at its height --

Now they've cleared the air on this - and good for them - what harm would it do to release the medical records showing that Sarah Palin delivered Trig on April 18 in Wasilla? This is not hard: there must be an obstetrician, medical records, and data that can easily refute this rumor.

Saturday, September 06, 2008

Down to real business

Dick Cheney 3 days ago --

All peoples are best served when market principles are allowed to work; when there is transparency of information; when energy export routes are diverse and reliable.

Dick Cheney's recent meetings --

On energy, the U.S. has stressed pipeline construction that bypasses Russia. In Azerbaijan, Cheney met privately with William Schrader, president of London-based BP Plc's Azerbaijan venture, and Robert Dastmalchi, San Ramon, California-based Chevron Corp.'s Azerbaijan country manager, according to the vice president's office. A spokeswoman for BP in Baku declined to comment on the talks. Chevron couldn't be reached for comment late yesterday.

Cheney met today in Cernobbio with Peter Sutherland, British Petroleum Plc and Goldman Sachs International board chairman. No aides were present at the meeting and Cheney spokeswoman Megan Mitchell declined to comment on the talks.

Battle of the photo captions

While it's not clear what military assistance Georgia and Ukraine will get from the USA in current or future conflicts with Russia, the White House is using Dick Cheney's visit to the region to send a strong message -- with the official photographs. Here's a sample:

A member of the clergy walks past the gold-domed St. Michael's Monastery in the early morning light of Friday, Sept. 5, 2008 in Kiev, where Vice President Dick Cheney is currently visiting during a multi-day tour of ex-Soviet republics. The monastery, originally constructed in the 12th century, is named after the Archangel Michael, patron saint of Kiev, and was destroyed by Soviet communists between 1934-36 and reconstructed in 2000.

Seen through the Holodomor Memorial, Vice President Dick Cheney observes a moment of silence Friday, Sept. 5, 2008 in Kiev, to remember the millions of Ukrainians murdered between 1932-33 during a Soviet enforced artificial famine.

Vice President Dick Cheney is joined by Mrs. Lynne Cheney, President of Ukraine Viktor Yushchenko and Mrs. Kateryna Yushchenko, in presenting memorial baskets Friday, Sept. 5, 2008, at the Holodomar Memorial at St. Michael's Square in Kiev. The Holodomar, Ukraine's famine of 1932-33, was imposed by Soviet communists and killed an estimated three to seven million.

While serving the purpose of pushing an implicit equation of Russia with the USSR, and thus no doubt generating applause lines for speeches back home, there's not much here for the near-abroad countries to rely on.

Nice timing

An apparent lesson of the collapse of Silver State bank: if you're the son of a presidential candidate, and suspect that everything is about to go pear-shaped at your day job at a bank, but you want to get out without attracting attention -- tell everyone you're quitting to work on your Dad's campaign! --

[Wall Street Journal (subs. req;d)] Founded in 1996, Silver State specialized in construction and land-development loans to finance real-estate projects in Nevada and Arizona. In July 2007, Silver State raised about $30 million through an initial public stock offering. Its shares debuted at $20.

The business unraveled this year. By June 30, borrowers had fallen behind on about $252 million worth of loans, compared to about $11.5 million six months earlier, according to the Federal Deposit Insurance Corp. The bank's capital ratios, which represent the bank's cushion to absorb losses, have dropped sharply.

Andy McCain's ties to Silver State date to 2006, when he became a director of Choice Bank, a small Scottsdale, Ariz., lender that Silver State acquired that year. Mr. McCain's family was an early investor in Choice, according to people familiar with the matter ... If Mr. McCain had remained on Silver State's board another four days, his position on the audit committee would have required him to sign off on the company's second-quarter financial statements.

Three weeks after Mr. McCain quit, Silver State had to revise those second-quarter numbers to reflect a loss of $72.3 million, which was larger than previously reported. It warned in the Aug. 15 regulatory filing of "uncertainty about the company's ability to continue as a going concern," a sign the bank's survival was in doubt.

Silver State said at the time its insurance carrier planned to cancel policies protecting Silver State's directors and executives from liability due to the bank's elevated risk profile, effective Oct. 7.

Mr. McCain's public role in his father's presidential campaign has been mostly limited to appearances at several events last month. A person close to Mr. McCain says he left Silver State's board because his busy schedule meant he wouldn't be able to devote enough time to the struggling bank.

Argentina of the North

Wall Street Journal story (subs. req'd) on the imminent government takeover of Fannie Mae and Freddie Mac --

In recent weeks, Treasury officials have been reaching out to foreign central banks and other overseas buyers of securities or debt sold by the two companies, to reassure them of the creditworthiness of these instruments.

In one such conversation, at the end of August, the Treasury sought to reassure the Bank of Mexico, according to a person familiar with the matter, of the soundness of agency securities held by the bank. Treasury officials have also had similar conversations with Japanese investors who are buyers and holders of agency debt.

Got that? The US Treasury Department, on the phone to Mexico, assuring them that US debt is sound.

Friday, September 05, 2008

After January, a healthier VP no matter what happens

Bad camera angle, weird light? What is the story with the huge red areas around Dick Cheney's eyes and nose (seen here with Mikheil Saakashvili)?

UPDATE: Atrios comment thread determines that Cheney likely has rosacea.

FINAL UPDATE: One irony now is that Cheney has bigger facial skin problems that the infamously poisoned President of Ukraine Viktor Yushchenko.

Photo: David Bohrer /White House

Maggie Maggie Maggie

Barbara Amiel (Lady Black of Crossharbour) writes at length in the Wall Street Journal about the similarities between Sarah Palin and Margaret Thatcher. Several times Amiel makes a claim that Maggie was eventually deposed because she never had the faith of the Tory old guard --

Mrs. Thatcher would have recognized the guns aimed at Sarah Palin as the weapons of the left with feminist trigger-pullers. She also would have known that Mrs. Palin has less to fear from East-Coast intellectual snobs in egalitarian America than she had to fear from her own Tory base in class-prejudiced Britain. She would have told her to stand her ground and do her homework. Read your briefs, choose advisers with care, and, as she once said to me, my arm in her grip and her eyes fixed firmly on mine, "Just be yourself, don't ever give in and they can't harm you."

No doubt that there was a faction in the Tories with a class bias against Maggie. But were they decisive in her ouster? You'd read Amiel's entire piece and never know the role that the poll tax and European Union played in splitting her party over her leadership -- the latter split being one that David Cameron still has trouble keeping a lid on today, nearly 20 years later.

Thatcher-Palin is a very strained analogy, not least given the very different routes to power in parliamentary and presidential politics. But if Palin is brought down at some point, it won't because of her policies. At the moment, she doesn't have any.

Timing the market

Gordon Brown, speaking to CBI Scotland --

But at its peak in 1999 the North Sea produced 2.9 million barrels a day. This year 1.5 million barrels a day - the largest reduction of any oil producing nation - making Britain a net importer of oil.

And five years ago oil was less than 40 dollars a barrel - in July it was 147 dollars a barrel and today 107.

He goes 5 years back when oil was $40/barrel -- but it was closer to $10/barrel at peak production. Hindsight is of course 20-20, but the oil should have been left under the sea in 1999.

Chart from US Energy Information Administration

The only military parent

Apparently one of Sarah Palin's campaign events next week will be to say goodbye to her son Track when he leaves for military duty in Iraq on September 11, 2008 (geddit?) having signed up on September 11, 2007 (geddit?) -- so said a Washington Post reporter on the Diane Rehm show this morning. The event would be at Fort Wainwright.

Surely there are rules about military facilities and events being used for campaign purposes? There were when Barack Obama was in Germany.

McCain speech thoughts

These idiots disrupting his speech are handing the Republicans a talking point.

The warm up video for his speech is a good case study in the problems with presidential systems. Can any one person be the giant that this crowd seems to believe he is?

Note the first states he mentions. Michigan, Pennsylvania. It's the same message as from Palin's speech.

A telling lack of applause for his criticism of corporate welfare for oil companies. Similarly for his (correct) statement that the hypothetical daughter of migrant workers is American. And there's the Vatican's phrase, culture of life.

A load of tax cut and spending promises. And a bigger federal role in education. No explanation of how he'll be getting involved in what are now local government decisions.

Georgia gets solidarity and prayers -- anything else?

"I hate war" -- but it sounds like it's going to involve some more war to get to peace.

Did he know that his stirring lines at the end were being drowned out by applause? [K-Lo agrees]

Conclusion: we might have forgotten how vigorous an intellectually deranged party can be.

Trig, the Down's baby is on stage again. No baby sitters in Minnesota?

No wonder they didn't want this thing too close to a hurricane. The post-speech song selection is all party music -- on a day when the Dow fell 350.

Thursday, September 04, 2008

The market is efficient

According to the Larry Kudlow school of financial economics, the stock market should be through the roof today following the Greatest Speech Ever at the Republican convention. The Dow is down nearly 300 points.

Too much exaggeration even for Cheney

Georgian President Mikheil Saakashvili and Dick Cheney didn't have one aspect of their talking points straight in Tblisi today --

Mr. President, you've been fearless in response to the occupation of your territory, and steadfast in your principles. America respects you, and we respect the noble people of this country -- more than 100,000 of whom came out this week to demonstrate their support for Georgia's independence and sovereignty.

PRESIDENT SAAKASHVILI: Actually, 1.5 million.

VICE PRESIDENT CHENEY: 1.5 million. Well, it was more than 100,000.

(Laughter.) Good, 1.5 million.

One wonders where Cheney's team got their estimate from.

The battleground

View Larger Map
Sarah Palin's speech -- reflecting the heavy overwatch of Karl Rove -- made mention of very few specific US states. But it did mention most of the states that feature in the map. Clearly this is where the strategists expect the election to be won and lost. Forget all that stuff about one side chasing the other's sure things on the east coast or the plains. The action will be on a belt from the Appalachians and along the Great Lakes. Unfortunately for Rove, just as Obama impressed a crowd in Germany most of whom don't have the vote, Palin's hockey mom schtick was likely big in Ontario.

The Sarah Palin speech

An interesting exhibit. The Party of Lincoln reduced to 20,000 people chanting "Drill baby drill" and "Zero". She never once made a positive case for her own credentials as a vice presidential candidate, at least no case that wouldn't apply to any other mayor of a town of 10,000 people. She became noticeably detached from the speech -- segments of which were written for a generic candidate -- on the foreign policy and tax sections. She and Dick Cheney now have a weird bond since his sneering at energy conservation was matched by hers at community work, although she merely took the baton from Rudy Giuliani in that regard. The speech even had a good jab at George Bush, tracing the opposition of special interests to McCain back to his primary campaign in 2000 -- the one won by Bush.

Finally, the full family on stage at the end, teen fiancé included, and Trig (the Down's baby) shown to everyone. In that sense, the content of the speech was irrelevant. The 20,000 true believers wanted signs.

UPDATE: One other thing -- guess who must share George Bush's pronunciation nucular?

Wednesday, September 03, 2008

One way transparency

Dick Cheney in Azerbaijan --

America also appreciates Azerbaijan's commitment to working with Western countries on energy issues. All peoples are best served when market principles are allowed to work; when there is transparency of information; when energy export routes are diverse and reliable.

Dick Cheney has never voluntarily revealed which energy industry special interests wrote the report of his 2001 Energy Task Force.

Tuesday, September 02, 2008

A post that could disappear

National Review's Byron York spoke to Steve Schmidt "a senior strategist in the McCain campaign". The conversation included some Rove-style pushback from the strategist on why Governor Sarah Palin was trying to get her ex brother in law fired as a state trooper --

"The reason that members of the Palin family were having discussions with the head of the state police about this state trooper, who was her ex-brother-in-law, was because he had made threats against the family. He threatened to kill the governor's daughter, her father, and her sister. He tasered her 11-year-old stepson. And that is why the Palin family was concerned about this trooper."

Presumably they've had a lawyer look over those statements before going public with them.

Are they even trying any more?

The following Deep Thought from John McCain appears on his website as the context-setting quote for tonight's festivities at the Republican convention --

"Love of country, my friends, is another way of saying love of your fellow countrymen."

When is it not about oil?

George Bush sees one clear lesson of Gustav --

One thing is for certain: When Congress comes back, they've got to understand that we need more domestic energy, not less; that -- and one place to find it is offshore America, lands that have been taken off the books, so to speak, by congressional law. And now they need to give us a chance to find more oil and gas here at home. I'd much rather American consumers be buying gasoline produced from American oil than from foreign oil. I'd rather our dollar stay at home than go overseas.

And I know the Congress has been on recess for a while, but this issue hasn't gone away. And this storm should not cause the members of Congress to say, well, we don't need to address our energy independence; it ought to cause the Congress to step up their need to address our dependence on foreign oil.

Somehow, that's his number 1 priority after the storm. Incidentally, John McCain's non-pick for vice-presidential running mate, Lousiana governor Bobby Jindal, has asked for a release from the US Strategic Petroleum Reserve to relief refinery shortages in the Gulf. Bush's administration is still thinking about it.

Heh Indeed

Photo: REUTERS/Jason Reed

Monday, September 01, 2008

Be careful about what becomes an issue

Laura Bush this morning on ABC's Good Morning America --

Q You've had a chance to meet Governor Palin in the past.

MRS. BUSH: That's right.

Q Tell us what you know about her, and what you think she brings to the ticket.

MRS. BUSH: Well, I'm thrilled that she's on the ticket. I'm getting my wish -- I'm going to get to vote for a Republican woman for vice president this time, and I'm so excited about it.


And then, of course, she has the experience of raising five kids while she has had these jobs, and I think for a lot of people, a lot of women especially, we look at her and we admire her, the way she's lived her life. She comes from a state where people are strong, and a Western state, that state of Alaska, that produces really strong women, particularly. And I like her good, sound judgment and her good, common sense. I think that's what she brings to this ticket.

And on CNN --

Q So is that a suggestion that at some level she has more experience than Senator McCain?

MRS. BUSH: Well, I think she has a different experience. She's the mother of five kids. She's doing that while she's worked. She was pregnant when I was last with her at the National Governors Association and since had that baby. I just have a lot of admiration for her, and I think she brings a judgment and a common sense to this that is just terrific.

[context for the Bristol Palin situation here and here]

Elitist Hawaii and that other place

Above is the graphic header that appears on John McCain's website which has been modified to emphasize Hurricane Gustav relief. Note the thousand points of light, if you will, coming from the outline of the USA.

Which states are missing?

UPDATE: Here's the Alaska-less original should the campaign take notice and make it a 50 state depiction on the website.

FINAL UPDATE: Spelling seems to be a problem for McCain's website too --

Our Marines have done a superb job fighting alongside Iraqis to defeat Al Queda,