Follow the money

The market closed down 770 points today, on the news that the House rejected the bail-out plan -- although it was down 300 even before the vote. I’m guessing investors fear two things: 1] that this problem dwarfs even a $700 billion slush-fund’s capacity to solve it and 2] our political leaders are too inept to act in time to stop significant damage occurring to the economy from a credit freeze.

The complexity of the situation is overwhelming. No one knows how big the problem is. No one knows if this plan will fix it. No one knows what shoe will drop next – or on whom.
One thing we know for sure, however, is that the problem was known to be on its way and growing for a long time. (One observer has called it the world’s slowest moving train wreck.)

Another thing we know for sure is that members of Congress in both parties are scrambling to be the most outraged at the “corporate greed” that caused this mess. They’re working on CEO salary caps and can’t wait to hold hearings so they can wag their fingers and scold a few fat-cats for the cameras. It’ll look great on the local news back home.

But not only did Congress and the Executive branch do nothing to stop it, they were like the sweepers in a curling match, sweeping their brooms along the ice to make a nice smooth path for the stones being tossed by their Wall Street contributors.

Barry Ritholtz, who publishes a blog read by in-the-know financial-types, published an opinion piece in this week's Barron’s that lays out the path of destruction in simple, clear language in his essay "Uncle Sam the Enabler."

(Before any of your knees jerk, or fingers point to one party, you might be interested to know that Goldman Sachs, the biggest political contributor among financial institutions, has given more to Democrats than Republicans in each of the last ten national campaigns, and by increasingly large margins. See: http://www.opensecrets.org/) There is plenty of blame to go around here.

Oh, the photo. Benjamin Disraeli: “What we learn from history is that we do not learn from history.”

RIP Paul Newman

“Cool Hand Luke” came out the year I graduated from high school and forever defined what it meant to be cool for me. And he was cool at every stage in life, from “Hud” and “The Hustler,” through “Absence of Malice” (one of my all-time favorite movies) and “Nobody’s Fool.” In between he was Butch and the brains of “The Sting.” He may have been ever cooler in real life; a long marriage to a very cool woman, the inventor of a successful line of consumer products that benefited disadvantaged children, a beer drinker, and a for-real race car driver – not some celebrity poser. And of course, he was a Buckeye, and an American original. I’ll miss him.

McCain and Obama talk to a tie

It’s late, so I’ll just make a couple of very broad observations to get the conversation started. I thought the debate was very close. I suspect that who you liked going in is the guy you liked 90 minutes later. That was probably good news for Obama since foreign policy is McCain’s strength.
Neither man seems to really know much about economics, and that portion of the debate was superficial, with both candidates playing it safe.

Once it moved to foreign policy they both gained confidence, and my overwhelming impression was that both men displayed sophisticated knowledge and had nuanced positions on all the major issues. Again, who you liked going in was probably the winner in your mind on these topics, but perhaps I’m wrong. Tell us what you think.

Would you lend this man $2300?

This would be your share of the $700 B he wants to use to buy back the bad investments his life-long pals on Wall Street made in mortgage backed securities and other investments they really didn’t understand, beyond recognizing an opportunity for making a easy buck. By-the-way, your spouse and each of your children owe $2300 also. Actually, scratch that; you and I won’t pay anything; we don’t have the $700B so we’re borrowing it. Only your kids, and their kids, will get stuck with the tab. Nice legacy.

I’ve been wanting to write about this for days but who knows what to say? It’s changing minute-by-minute, and the whole thing is unbelievable. Not only is no one taking the blame, the people responsible – financial executives, Congress, and the regulatory agencies – are basically saying, “who could have foreseen such a situation?” Well, I did, for one. Not that I have any expertise or a crystal ball, but the major business books and economic pundits have been warning about something like this happening for years. There were even funny emails in broad distribution about the housing bubble; my favorite was the roller coaster view of housing prices.

So now the guys who got us into this mess want to help us out. It’s not so much a loan as extortion: “Lend us the money – now, without oversight, debate, or controls, no promise of success or payback (but with immunity from future liabilities) – or we’ll have our friends bring down such a financial shit storm on your heads you’ll wish you had.”

Fortunately, it looks like Congress has actually grown a pair since they were last asked to consider anything of importance, and may demand a different approach in which we the people at least get some equity in the firms we’re bailing out. I’m guessing some variation of the plan Senator Dodd put forth will be the final word.

Unfortunately, first we’ll have to listen to a week or two of Congressional hearings in which, Captain Renault-like, they express, “shock!” at the discovery that there was gambling going on below Canal Street.

Call me Hamlet

Well I guess I’m just Hamlet, unsure and uncomfortable with my choices. I’ve already changed my mind a couple of times (in my mind if not in print), and I may switch a couple more times before November. This condition puts me in awe of the total confidence and certainty so many of you have for your man Obama.

At best, I’m at about the 60% level for McCain – down from higher levels, after the Palin pick and as the tone of his campaign degenerated, although I understand the political conditions that made him think they were necessary.

But you! You are impressively certain. No point conceded and no doubt shown. I sincerely hope that if I’m still writing this blog a year or two from now that you’ll all be saying, “I told you so,” as President Obama delivers on the vision you’re buying.

That said, I’m a little surprised at the amount of grief I’ve taken for daring to even raise the question of who is the better man for these times. (It came more in private emails than in blog comments, but they were stinging none-the-less.)

I ask these questions because Presidents tend to surprise us. It was the conservative, Texan, military man Eisenhower who sent the Army to Little Rock to integrate the schools. It was the liberal icon Kennedy who first sent troops to Viet Nam and who invaded Cuba. LBJ voted with the worst southern racists in the Senate for decades before pushing the most comprehensive civil rights laws ever through Congress. The communist-baiter Nixon opened relations with China. The liberal, master politician Clinton blew health care reform through political ham-handedness, and then made welfare reform the most notable achievement of his eight years in office. And anyone knowledgeable on the topics will tell you that the hated George W. Bush has done more than any other world leader to solve the crisis in Darfur and of AIDS in Africa.

So just eight years after we first elected a man with a political career too short to have generated a record that revealed much about him, it seems to me a worthwhile exercise to ask these questions about a man who walks but leaves few footprints.

OK but…

I asked and you answered. Thank you for your responses to the question of “why Barack?” which I read several times. They ranged over many issues, but especially leadership. We can continue to debate the candidates for another 45 days or so, but I’m bothered by a nagging question I just can’t resolve. Perhaps you can help me with it.

Right or wrong, when it comes to the world of work (and the Presidency is a job after all) I divide the leaders I’ve worked for into two groups: those who get things done and those who talk a good game. And I suspect we could all agree that there are a lot more of the latter than the former.

I just can’t shake this impression that Obama is a talker, not a doer. I don’t denigrate his role as a community organizer, but he himself has said he left the field for law school because he could not get anything important done. I don’t dismiss the value of being a law professor, or a published author either, but those are essentially solitary pursuits in which one talks (or writes) but bears no direct responsibility for results.

I start really questioning his record when he enters politics; the 130 “present” votes in the Illinois Senate trouble me, but more troubling is his role as a US Senator. Not one hearing of the Afghanistan subcommittee that he chairs? A country where we have 30,000 troops? I find that hard to understand. There are a bunch of emails floating around that list his legislative achievements, but I think we all know these lists are not meaningful. The Senate leadership in both parties dole out “co-sponsorship” credits to all so everyone can say they did something.

A man with Obama’s ambitions should have dared something bigger – an alternative energy bill, a healthcare reform act – something that demonstrates vision and daring. But he seems very undaring to me. Careful to a fault. More afraid to fail or disappoint than to challenge the powers that be.

I don’t want to run the guy down; I may vote for him in the end – it really depends on the debates. But this nagging feeling that the man is an articulate, ambitious, poser just will not leave me. What say the rest of you?

Your turn

I’ve offered all the reasons I have in support of Senator McCain, and Lord knows we’ve heard plenty of objections to his candidacy in response. Now it’s time to hear the rationale for Senator Obama, and you, fellow bloggers, should be the ones to supply it. It’s not that I can’t think of any myself, it just that propaganda is best brewed by true believers, as many of you seem to be.

I went back and reviewed many old posts and found plenty of arguments against John McCain, but nearly nothing supporting the Obama agenda. What is it about Barack Obama that makes you think he should be the next President of the United States?

I plan to make this the only post this week, so take your time and formulate an answer you really like, and use all the space you want. (Although I can tell you for a fact that your fellow bloggers’ interest level drops sharply after about 300 words.)