I heard on CNBC this morning that Obama and Mccain were engaged in a yelling match after the cameras were turned off yesterday at the white house.

I hope my "chair and popcorn" comment doesn't come across like I enjoy this. Quite the opposite, I am terrified. But the fact of the matter is I cannot think of a situation that could be anymore messed up. From a historic standpoint this is interesting to watch unfold.

People are outraged. I'm visiting my mother here in Temple, Texas (just a few miles south of Bush's ranch) and this morning the local newspaper had a front page article saying the local Representative Carter's office has been inundated with calls--the vast majority opposed to the bailout. This seems to be pretty consistent with reports I've seen on TV from across the nation. Another poll I saw said 78% are in favor of a bailout, but not this bailout. They want a trickle up bailout, not the trickle down bailout proposed by the administration. But one thing is sure, this is an extremely salient issue with many voters.

So has Obama flunked political entrepreneurship 101, as the NYT alleged in an editorial yesterday?

Given Mr. Bush’s shockingly weak performance, the only ones who could provide that are the two men battling to succeed him. So far, neither John McCain nor Barack Obama is offering that leadership.

What makes it especially frustrating is that this crisis should provide each man a chance to explain his economic policies and offer a concrete solution to the current crisis.

http://www.nytimes.com/2008/09/25/opinion/25thu1.html

And that populist voice that carried Obama to such stunning victories in the primary? Has it been forever sacrificed on the altar of campaign donations from an all-powerful banking industry?

And what about the 80% of Americans who aren’t upside down on a mortgage, who can still pay their bills, and who don’t see the logic in turning the country’s purse strings over to the 20% who can’t? Which presidential candidate speaks for them?

Apparently neither.

So there exists a great opportunity to make political hay with the vast majority of Americans. And yet from Obama we hear nothing. Has he abandoned us? Should we be reaching for the tar bucket and feathers?

Well maybe not. At least not yet.

I say this because, if we take a look at Franklin Delano Roosevelt the first time he ran for president, he was also a far cry from being the champion of the rank and file—from being the president that captures the popular imagination today. It wasn’t until some years later, upon accepting the nomination in 1936, that he would stridently declare: “I should like to have it said of my first Administration that in it the forces of selfishness and lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.”

In 1932 when Roosevelt ran for president the first time we see an America in much more dire straits than what we see today. Three years had passed since the collapse of Wall Street, since Black Friday, and the depression had had time to work its way down into every nick and cranny of American business and life. In that year Roosevelt would form his “brains trust,” a group of university professors to gather ideas and help him formulate his programs. But, as Frederick Lewis Allen tells us,

...at first Roosevelt was very cautious in his use of such material or in taking a definite position upon anything. He was handsome, friendly, attractive; he had the smiling magnetism, the agreeable voice which Hoover so dismally lacked... [A]ll he apparently needed in order to win the nomination—and the election, for that matter—was to exercise his charm, just conservative enough to fall heir to the votes of Republicans who were sick of Hoover, look just radical enough to keep the rebellious from turning socialist or communist, and not make enemies. So he spoke kindly of “the forgotten man at the bottom of the economic pyramid” but failed to specify exactly how this man should be remembered; he said that “the country demands bold, persistent experimentation” but engaged, in his speeches, chiefly in the sort of experimentation practiced by the chameleon. So gentle was he with the Tammany graft being disclosed by Samuel Seabury, and so tentative was he in expressing economic ideas, that Walter Lippmann warned those Western Democrats who regarded Roosevelt as a courageous progressive and “an enemy of influence” that they did not know their man.

“Franklin D. Roosevelt,” wrote Lippmann, “is an amiable man with many philanthropic impulses, but he is not the dangerous enemy of anything. He is too eager to please. …Franklin D. Roosevelt is no crusader. He is no tribune of the people. He is no enemy of entrenched privilege. He is a pleasant man who, without any important qualifications for the office, would very much like to be President.”

--Frederick Lewis Allen, Since Yesterday

So what happened in those four years between 1932 and 1936 to change Roosevelt so much? I think there are two things. To begin with, Roosevelt’s first response to the economic crisis was to institute a program in which Wall Street and Main Street were to self-police themselves in order to rein in some of their worst abuses. This didn’t work. It has never worked. As Allen goes on to explain:

The evidence was fast accumulating : the Administration’s great experiment in “business self-rule” had come into full collision with the ingrained determination of business executives to hold down their costs of doing business, to push up prices if they could, and in general to run their companies as they please, come hell, high water or General Johnson. Where they could turn the machinery of the NRA to their own ends, they did so—and it was they, not labor or the consumers, who held the initiative in framing the codes. Where they could not turn this machinery to their own ends, some of them complied, others fought the law or nullified it.

The situation with Wall Street was even worse. Lewis continues:

Intermittently throughout the year 1933 the Senate on Banking and Currency…had been putting on one of the most extraordinary shows ever produced in a Washington committee room: a sort of protracted coroner’s inquest upon American finance. One by one, a long line of financial overlords—commercial bankers, investment bankers, railroad and public-utility holding-company promoters, stock brokers, and big speculators—had filed up to the witness table; and from these unwilling gentlemen, and from their office files, had been extracted a sorry story of public irresponsibility and private greed. Day by day this story had been spread upon the front pages of the newspapers.

The investigation showed how pool operators in Wall Street had manipulated the prices of stocks on the Exchange, with the assistance of men inside the companies with whose securities they toyed. It showed how they had made huge profits (which represented the exercise of no socially useful function) at the expense of the little speculators and of investors generally, and had fostered a speculative mania which had racked the whole economic system of the country—and this not only in 1928 and 1929, but as recently as the spring of 1933, when Roosevelt was in the White House and Wall Street had supposedly been wearing the ashes and sackcloth of repentance. The investigation showed, too, how powerful bankers had unloaded stocks and bonds upon the unwary through high-pressure salesmanship and had made millions trading in the securities of their own banks, at the expense of stockholders whose interests they claimed to be serving. It showed how the issuing of new securities had been so organized as to yield rich fruits to those on the inside, and how opportunities to taste these fruits had been offered to gentlemen of political influence. It showed how that modern engineer of financial power, the holding company, had been misused by promoters: how some these promoters had piled company upon company till their structures of corporate influence were seven or eight stories high; how these structures had become so complex that they were readily looted by unscrupulous men, and so unstable that many of them came crashing down during the Depression. It showed how grave could be the results when the holding-company technic was applied to banking. It showed how men of wealth had used devices like the personal holding company and tricks like the sale of stock (at a loss) to members of their families to dodge the tax collector—at the very moment when men of humbler station had been paying the taxes which supported the government. Again and again it showed how men occupying fiduciary positions in the financial world had been false to their trust.

Naturally the corporate picture blocked out by these revelations was not fair to the financiers generally. The worst scandals got the biggest headlines. Yet the amount of black in the picture was shocking even to the most judicial observer, and the way in which the severity of the Depression had been intensified by greedy and shortsighted financial practices seemed blindingly plain. So high did the public anger mount that the New Deal was sure of strong support as it drove on to new measures of reform.

The second thing that happened in the 1930s was the evolution of a radical populist left. This drove Roosevelt further leftward than what he normally might have gone. The most memorable of these was Huey Long, the Kingfish of Louisiana, with his ringing criticism of Roosevelt and his cries to “Share Our Wealth.” He was joined by Father Coughlin, Dr. Francis E. Townsend, Upton Sinclair, Governor Floyd Olson of Minnesota and the farmer-labor movement that coalesced behind him, as well as the communists: “few in number compared with these other groups,” as Lewis explains, “but the influence of their scattered agents in provoking labor disputes and offering aggressive labor leadership was disproportionately great…”

Great leaders are forged in the crucible of great turmoil. And Roosevelt certainly lived up to the challenge. As Lewis elaborates:

In dealing with these various political menaces on the left the quarterback showed himself to be a brilliant broken-field runner. Roosevelt smiled upon Sinclair—without embracing him. Pushing forward the Social Security Bill, he gave implicit assurance to the Townsendites that he intended to secure for them at least half a loaf. Not without a side glance at Huey Long and Father Coughlin, he suddenly produced in the summer of 1935 a proposal to increase the taxes upon the rich—to levy a big toll upon inheritances and large incomes and a graduated tax upon corporation incomes.

When I look at the historical precedents from the 1930s, I see three hurdles that modern-day advocates for the rank and file, in order to be successful, must overcome:

1) They must elect friends and allies in the House and the Senate from safe, left-leaning districts and states who are not afraid to drag the titans of finance and business onto the carpet and ask them the tough questions.

2) They must find some form of communication of disseminating their message that is not so heavily biased toward the interests of business and finance, and

3) They must nurture and encourage a rebirth of the radical populist left. I’m very much a centrist, and hope that the center holds. But the threat to the center today comes not from the left, but from the right. And the radical populist right, its latest incarnation taking the form of Sarah Palin, is very much alive and well. On the other hand, the radical populist left, after eighty years of inexorable bashing by right-wing punditry, has almost disappeared from the political landscape.

The chore of saving ourselves, therefore, falls upon ourselves. If we think we have found in Obama our savior, we are soon to be very disappointed.

The NYT has a piece on it asking why it is that McCain announced he was suspending his campaign with fanfare to go back and work on the bailout and when he shows up:

At the bipartisan White House meeting that Mr. McCain had called for a day earlier, he sat silently for more than 40 minutes, more observer than leader, and then offered only a vague sense of where he stood, said people in the meeting.

He sure is accomplishing a lot by suspending that campaign! I think this is political theater on his part because bad economies favor democrats in general so he's trying to create the impression that he's competent economically. I think he's also in a bad situation. Which side of the Republican party does he go with? The president's side, or the rank and file side?

I also think it's interesting that earlier this week Boehner was calling on everyone to support the presidents plan, and now he's leading the opposition to the compromise bill. What's wrong with this picture? The compromise bill is surely more palatable to anyone except the wall street people because it gives a much better chance to recoup tax payer losses, why would he reverse? I suspect the rank and file revolted against him.

I can't tell if this is funny or sad. Each party and even individuals are taking turns claiming credit for the 'bailout' or opposing it. Sometimes on the same day. The democrats tried to get a deal done before McCain got there, then the republicans scuttled it in the WH?

Just what in the hell is going on?

What worries me is they will come up with a grand deal and will vote on it before anyone really has a chance to review it. I was going to wait until a deal was done to write my congresspeople again but we might not get the chance.

edit: But after yesterday, I'm almost hoping the whole thing degerates into partisan bickering and nothing gets done. I know, I know, it's hardly ever happened before, but there's a first time for everything...

It's disgusting to watch all these vermin playing CYA, especially the Dems. They're willing to roll over and play dead for this power grab, as long as the Repubs do it too. I personally despise the principles of the Repub cabal from the House who monkeywrenched the deal, but by God I do admire 'em for stickin' to their guns and standing by their principles. The only principle I can detect being held by the Dems is an obsessive desire to win.

A plague on all their houses.

Am I hearing right? The Dems are shooting arrows at the GOP for not backing Bush???

Obama and Bush on the same page? A month to go to the election and the Democrats are siding with the most unpopular (and grand nominee for worst ever) president of the United States? Is that right?

Biden is supporting a package that would give the Bush cronies unlimited power in the waning days of this administration? A package deal that almost everyone -- except for those fearless marketeers -- thinks stinks?

All so that they don't catch the muck when TSHTF?

Don't they know, TS is going to HTF anyway? Why not try a little integrity for once.

As this bizarre fiasco unravels, and the outrage explodes, I'm not sure the distinction will be easily made between the white and black hats, b/c everyone will be covered with the same brown goo.

Yuck!

Paulson and the administration are using the Rove playbook in the way that they frame the discussion. If we don't do the bailout, then such and such will happen. Such and such may happen no matter what is done. Don't allow these people to presume cause and effect. They don't know what they are talking about. They are intent on preserving their folks, their tribe. I quote Henry Kissingers comment on the Balkans to illustrate this mess: "whatever we do may be wrong, including nothing."

Sometimes there IS a difference between politicians.

http://www.nytimes.com/2008/09/26/us/politics/26campaign.html?_r=1&hp&or...
"Still, by nightfall, the day provided the younger and less experienced Mr. Obama an opportunity to, in effect, shift roles with Mr. McCain. For a moment, at least, it was Mr. Obama presenting himself as the old hand at consensus building, and as the real face of bipartisan politics.

“What I’ve found, and I think it was confirmed today, is that when you inject presidential politics into delicate negotiations, it’s not necessarily as helpful as it needs to be,” Mr. Obama told reporters Thursday evening. “Just because there is a lot of glare of the spotlight, there’s the potential for posturing or suspicions.”

According to one congressman the calls his office was receiving were running about 50-50.
50% no, 50% hell no.

No matter what happens, 'Things' will go downhill fast.

If the bailout becomes law, gasoline prices will skyrocket. The $700 Billion tab will be paid at the pump.

Why? Follow the bouncing $700B:

The Treasury doesn't have the cash so it has to be borrowed. From whom? China, Saudi Arabia, Russia, Venezuela; the usual suspects. Why? Because, they have the money. So far, so good ... except these creditors look at America as a bad credit risk made worse, by the need for constant bailouts. So ... they want to hedge their risk and do so effectively, getting their investment 'back' as quickly as possible. Where can they do this? The oil futures market! The lenders can be repaid the $700b in that market within a year.

So ... the bailout's lenders will pile into the crude futures market with some spare change and drive the prices for their 'residues' higher and higher. If they can sell $150/bbl oil for a year, they've earned back the loaned $700b ... just in the futures market itself. They will sell more trillions of oil that are not part of the hedge. They can rationalize this because of the direct effect of the $700b loan on the value of the US dollar.

Simultaniously, the citizens of the USA will still owe the same lenders the original $700 billion! Not a good deal, eh?

Meanwhile, back at the ranch, the $700 billion is a 'stimulus package' in disguise; the funds will trickle down into the real economy. What will that money be spent on? More expensive gas! So ... the Saudis will win at the gas pump as well as the futures market and later, when the taxpayers have to repay the original loans.

Citizens will get hooked by high prices now and high taxes later ... or the Treasury will default.

The only country that will be able to afford the higher oil prices will be the US. China, Europe and Japan will fall into severe recessions as $150 oil is economically unsustainable for them. We will export recession to our primary trading partners and Christmas cheer to ... Hugo Chavez.

Good grief!

An alternative would be to spend $700 billion on non- fossil fuel energy infrastructure. This would work against the interests of the oil producers and benefit the country in the longer term. Fat chance of that.

If the bailout fails, the 'cheap capital; companies will fail and the recession will hit hard here. Gas prices will fall, cancelling out the higher price of credit. I think most Americans would make that trade off. We would have more wherewithal to finance alt energy and that would help restart the 'Niewe Economy'.

It's not a complete coincidence the summer peak in oil prices coincided with the last 'stimulus package'... about a fifth the size of the proposed one.

Hold onto your wallets!

There are many things about engineering that I understand, and there are many things about finance as it is played at present in the U.S. that I don't understand. However, it seems to me that if we keep adding to the national debt by nationalizing the results of the bad choices of the rich, there may come a time when all Americans - including those who are not in debt and who own their own property - may be required to forfeit all their possessions to service the national debt.

This could be via a number of foreign governments demanding repayment of debt certificates issued by the U.S. government, to which the Feds would respond by raising the tax rate on anyone with hard assets (including real estate) to such an extent that no one would be able to afford the tax. Then the Government could foreclose on the personal properties of people who could not afford the tax, and turn those properties over to foreign creditors in an attempt to repay some of the national debt. Is this a farfetched scenario? I'd like to think so, because the present governmental shenanigans are rather spooky.