McCain Stops Bailout: My Hero?

40% of me wants to cheer for John McCain this morning. I'm still not convinced that the federal government needs to hand $700 billion to banks that made bad decisions. On the surface, it would appear that by declaring a faux suspension of his campaign, sitting silently through most of the White House meeting yesterday, and voicing only vague doubts at the end, McCain has thrown a monkey wrench in the great socialist works. Ah, the drama! the intrigue!

That's where the other 60% of me gets suspicious, of myself and of Senator McCain. I've spoken before of my love for great political theater... but as I get older, I'm realizing that my desire for great spectacle and surprise is great for directing plays but not so apt for sound government. Sure, a leader needs to make bold decisions and bring big ideas to the table. But citizens, the markets, and diplomacy also require a steady hand at the executive tiller. And over the past month, Senator McCain has shown increasingly erratic leadership, throwing everything—schedules, caution, reason, principles—to the wind in a desperate pursuit of personal political gain.

Let me try to live in Senator McCain's head for a moment. I'm not convinced (nor are those economists I mentioned yesterday) that a federal solution is necessary, but Senator McCain talks like he is. Senator McCain apparently believes that a solution is needed, and fast (McCain, Monday: "Congress must act and must act quickly"). Yet whatever the senator did in Washington yesterday, he does not appear to have made much effort to actively participate in crafting a workable solution. He's not even the leader of the revolt: it's House Republicans bolting from their President and offering an alternative insurance plan, while McCain follows along for reasons that don't square with his words about urgency (not to mention putting country first).

The more I watch, the more I see McCain playing Hamlet, acting melodramatic if not plain crazy to keep his enemies off guard, and driving the whole Danish crown to ruin (and into the hands of his opponent Fortinbras). Or maybe the more apt metaphor is old King Lear. My fellow English teachers, knock yourselves out with that one.

Senator McCain is showing a declining capacity for coherent political leadership and action. All he has left appears to be scheming and surprise. That's another reason why, contrary to my own theatrical inclinations, I'll find myself voting for someone known as "No Drama" Obama.

Blog Readers More Polarized Than General Public

The latest Madville Times poll has concluded, with a result that surprises me a little. I asked readers to take a look at the candidates for all the offices on their ballot—President, U.S. Senate and House, state legislature, PUC, and whatever local offices may be up for grabs (here in Lake County, that's just county commission). The results:It's a small sample, but the distribution of votes surprises me. Typical voting patterns and the American tendency toward split government would have led me to expect more folks in the middle rather than straight-ticket voters. But there they (you!) are, strict GOP and Dem partisans alike outnumbering the leaners and even-splitters.

Of course, it could just be that the real Independents out there don't bother reading all this nuttiness in the blogosphere.

Either way, thanks for your votes! There'll be more to come as the election approaches!

Drill Here, Drill Now... for South Dakota Wind Power!

Drill here, drill now? South Dakota's already on top of that. We're drilling all sorts of holes... for new wind turbines! The Tatanka Wind Farm was dedicated yesterday: it has 120 turbines straddling the North Dakota–South Dakota border in Dickey and McPherson counties.

And here's Scott Parsley Monday at Sanborn Central over by Forestburg, speaking at the groundbreaking of that school's new wind turbine, one of eight around the state sponsored by the Wind for Schools project.

Drill, baby, drill, indeed! And then stick a wind turbine in it, for clean power South Dakota can use now and never run out of!

South Dakota: Low Taxes, Low Wages, Low Business Ranking

The South Dakota Republican Party is not getting its money's worth from its paid online propagandists. Republican Tide, the official state GOP blog, touts the fact that South Dakota has the lowest individual state tax burden in the nation (click image to enlarge):Now we don't have a state income tax, but a large part of that ranking may come from the fact that the working man doesn't have much wealth to tax in the first place. South Dakota also ranks 51^st in the nation for wages¹:
Break it down this way²: when a South Dakotan gets done paying Pierre, the average wages left in his pocket would be $28,373. His neighbor in Minnesota pays St. Paul and has $37,907 left.

Ah, but surely our low state taxes make us a better place to do business than those socialist republics on our borders, right? Well, according to the most recent rankings from Forbes.com:
...we're better than Wyoming, and we beat Montana, barely. Yay.

Side note: Forbes.com ranks our state regulatory climate 46^th, worse than California's. So much for Governor Rounds's red carpet for business.

The South Dakota Republican Party continues to think that all they have to do to lure businesses to our state is chant "Low Taxes" over and over. But when our wages are the lowest in the nation, workers don't rush to move here. When we lack workers (see our low unemployment figures), businesses don't see opportunity for growth. Paying low taxes doesn't matter nearly as much as the opportunity to grow and make a tub of money that will help you afford whatever the taxes are (and enjoy better schools and roads to boot).
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1. Sorry, 2006 wage figures were the most recent I could find, even from the U.S. Department of Labor. Readers, if you can find newer numbers, do submit them!
2. Yes, I'm mixing years. Again, I invite you to do better.

Economists Urge Caution, Highlight Three Pitfalls of Bailout

Don't worry, Stan: I was kidding... sort of!

Tony points us to an NYTimes Freakonomics post on an "emerging consensus" view among economists that the $700-billion mortgage bailout is at least dangerous, if not unnecessary. To understand why, see this new open letter to Congress from almost 200 (as of this a.m.) economists of all political stripes who see three big pitfalls to the bailout:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

"Illiquid and opaque assets"—sounds like something warranting a call to the Lake Herman Sanitary District, not the Treasury Department.

You want to spend $700 billion helping bankers flush their bad assets? Oh my.

Couric Interviews Palin -- "Better Answers in Novice Extemp"

My wife watched Katie Couric's CBS interview with Republican vice-presidential nominee Gov. Sarah Palin last night (YouTube, transcript). My wife's assessment: "I've heard better answers judging a novice extemp round."

Novice extemp: a speech contest event in which ninth- and tenth-graders in often askew neckties have thirty minutes to prepare 4–6-minute speeches in response to randomly drawn domestic and foreign policy questions.

Why was Sarah Palin's performance so painful to watch? Palin repeats the same line, almost word for word, about Rick Davis "recusing himself from the dealings." Palin says things that don't make sense, like "I'm all about the position that America is in and that we have to look at a $700 billion bailout unless this nearly trillion dollar bailout is what it may end up to be, unless there are amendments in Paulson's proposal, really I don't believe that Americans are going to support this¹." When asked why she would say Americans are waiting to see what McCain will do on the bailout and not Obama, Palin recites what she likes and what she hopes Americans believe about John McCain, not evidence of expressed public opinion. Palin can't articulate a single policy detail she would recommend for the mortgage bailout, although she's sure it needs to be a "multifaceted" and "comprehensive, long-term solution." Asked for examples of McCain's calling for stricter financial sector regulations aside from his 2006 call for more regs on Fannie Mae and Freddie Mac, Palin dodges three times before her pathetic promise to "try to find ya some" and "bring 'em to ya."

It's not even funny anymore. It's not accurate to refer to the "McCain-Palin" ticket; it's nothing but McCain. Sarah Palin brings nothing substantive to the McCain campaign. She offers no clear policy vision. Even after four weeks, she can't elaborate on a single answer beyond her assigned and drilled talking points. Her understanding of world affairs sounds no deeper than a summary of the conservative talk radio commentary she perhaps hears on the radio in her motorcade on the way through Manhattan to the studio. She doesn't even understand her running mate's legislative history. She brings nothing but looks and fundagelicals to the McCain campaign.

Is that sexist? Anti-religionist? Just partisan? Believe what you want. But this isn't a beauty pageant (that was the '80s, Sarah): you're applying to be second-in-command of the free world. I expect a vice-president to be able to offer intelligent, direct answers with occasional factual support and policy detail. Evasive, uninformed answers like what Palin gave Couric wouldn't get her hired at McDonalds.

I seem to recall Doonesbury cartoonist Garry Trudeau regularly drawing George H.W. Bush as nothing, a blank spot in the cartoon panel with word bubbles popping out of thin air.

Word bubbles out of thin air—I can offer no more apt description of all Sarah Palin brings to the McCain campaign.

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Update 11:07 CDT: But let's balance the partisan hackery of the Madville Times with a more sensible voice from the right, reporter Philip Klein of the conservative magazine American Spectator:

On second thought, maybe it's a good thing that the McCain campaign is shielding Palin from the media. Her interview with Katie Couric was absolutely painful to watch. She clearly stumbled twice -- when asked how McCain has fought to reform Wall Street and about Rick Davis's ties to Freddie Mac. Her answer that not supporting a bailout could mean a Great Depression was off message and irresponsible. For the rest of the interview, it was just lots of tired cliches, and random jargon that made it seem as if she was reading off of mental index cards. I know a lot of conservatives like Sarah Palin and always rush to her defense. But it's absolutely not meant as an insult to say that she simply is not ready to be a heartbeat away from the presidency [emphasis mine; Philip Klein, "Palin's Silence," American Spectator blog, 2008.09.25].

Count on the Madville Times for more of the best of the conservative media....

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1. Update 2008.09.26 07:17: As some readers point out, Palin sounds like she says "ill," not "all." Whenever possible, I take quotes from written transcripts rather than audio/video. CBS's own transcript continues to list the word as all. I guess I should watch more TV....

Palin Convinces Me...

Hey, cut me some slack: I haven't mentioned Sarah Palin since Saturday!

CBS's Katie Couric asked Republican Vice-Presidential nominee Gov. Sarah Palin whether there could be another Great Depression if Congress doesn't approve the $700 billion bailout plan. Gov. Palin's response:

Unfortunately, that is the road that America may find itself on. Not necessarily this as it's been proposed has to pass or we're gonna find ourselves in another Great Depression. But there has got to be action taken, bipartisan effort -- Congress not pointing fingers at this point at-- at one another but-- finding the solution to this -- taking action, and being serious about the reforms on Wall Street that are needed. [Governor Sarah Palin, 2008.09.24]

Ooh, ya, maybe it's comin'....

O.K., I had my doubts, but now I'm convinced. There's no Depression coming. There's no crisis. Congress could go home now, let the banks take a bath on mortgages, and we'll still be better off than if we saddle our kids with $700 billion of debt to bailout people who weren't ready to move up from Monopoly money.

Get Out the Chicken Suit! McCain Asks to Postpone Friday Debate!

I just heard it on NPR's Talk of the Nation, and Greta Van Susteren says so, too: John McCain has asked to postpone the Presidential debate scheduled for Friday evening at Ole Miss!

What, don't tell me McCain needs more prep time. Sure, there's a lot going on with the bailout package before Congress, but the world is always busy when you're running for President. Suspend the campaign to work on the bailout? President Bush managed the war on terror without suspending his 2004 presidential campaign.

Or could it be McCain is getting nervous about going toe-to-toe with a resurging Obama? Sounds to me like McCain wants to stop someone's momentum....

You have a job interview with the American people Friday night, Senator McCain. We expect you and Senator Obama to show. Let's rumble!

Obama Respects Second Amendment; NRA Keeps Lying

The National Rifle Association just won itself a Pants on Fire rating from PolitiFact.com for its claim that Barack Obama would ban the use of firearms for home defense. Senator Obama proposes no such plan and has never voted for any such plan. PolitiFact explains the truth well; here's a highlight:

...Here's Obama speaking at a forum sponsored by WJLA-ABC7 and Politico.com on Feb. 12, 2008: "I think we have two conflicting traditions in this country. I think it’s important for us to recognize that we’ve got a tradition of handgun ownership and gun ownership generally. And a lot of people — law-abiding citizens use it for hunting, for sportsmanship, and for protecting their families (emphasis added). We also have a violence on the streets that is the result of illegal handgun usage…We can have reasonable, thoughtful gun control measures that I think respect the Second Amendment and people’s traditions.”

That doesn't sound to us like someone planning to "ban use of firearms for home defense." Quite the opposite, actually [PolitiFact.com, downloaded 2008.09.23].

Not that this will stop the NRA from continuing its lies. But I find myself increasingly annoyed at how much influence the NRA wields purely by lies and fear-mongering and not any rational proposal to solve the major problems facing this country.

Just what solutions has the NRA proposed or implemented to make life better for all Americans? What good has the NRA done, ever? All those pistols in your drawers and assault rifles in your closet: How well have they helped you keep your job? How much more food do those guns put on your table (and please itemize the full cost per meal, including ammunition, maintenance, and person-hours tromping through slough and shelterbelt)? How well have those guns helped you refinance your mortgage? Find affordable health insurance? Get your kids through college? Fight corporate greed and reform Washington?

In my younger days, I might have been persuaded that we need our guns so we can keep our government scared that a well-armed citizen militia might rise up to challenge any attempt at tyranny. But that's bunk: even if there are brave NRA members with great stockpiles of heavy weaponry in their bunkers, ready to play Minuteman, I haven't seen them lock and load and march on Washington over anything. The thought of Gooney McBuckshot oilin' up his AK-47 in the barn hasn't stopped President Bush from asking for $700 billion for his Secretary to play mortgage czar.

Senator Barack Obama offers plans to fix the economy, create green jobs, get America off foreign oil, give tax breaks to 95% of Americans, make health care more affordable, and tackle a bunch of other pressing problems, and the NRA spreads lies because they're afraid they won't get to shoot as many tin cans with their toys.

The NRA lies, and they miss the big picture. Guns offer no solutions to the real problems this country faces. A good economic plan will stop a lot more crime than Granny on the front porch with a machine gun.

No one's coming to take our guns, not Barack Obama, not Tim Johnson, not anyone asking for your vote. So put your rifle back on the shelf—or the locked cabinet—where it belongs, and let's focus on how we're going to solve the real problems of the economy, energy, and health care.

Tar Sands: Big Oil's Subprime Lending Collapse in the Works?

An eager reader recommends this article from the UK Guardian which highlights a new report that claims tar sands could turn to financial quicksand for Big Oil.

To review: tar sands are basically a mix of sand or clay, water, and really heavy oil called bitumen. It's hard to extract: instead of just punching a hole in the ground and drinking the milkshake, you have to use all sorts of steam, filters, chemicals, and whatnot just to separate the bitumen before it can be refined into usable fuel. All that extra work means extra expense. Extracting that "unconventional" oil from the muck only became profitable recently as conventional oil prices shot up.

We have tar sands in Utah; the Canadians have the mother lode in Alberta. That's the stuff TransCanada hopes to be pumping through our fair state in a couple years (and probably the stuff Hyperion hopes to be refining in Union County).

But now some market analysts worry that BP and Shell, the biggest backers of tar sands development, may be risking financial disaster by investing in the petro-equivalent of subprime loans, a risky investment that ignores market fundamentals:

Mark Hoskin, senior partner at the ethical investment advisers Holden & Partners, expressed concern about the increasing focus on tar sands at a time when oil companies are being shut out of traditional drilling areas such as Russia and Venezuela.

"The recent banking crisis has shown how the financial markets can totally misjudge both the risks and values inherent in company balance sheets," he said. "Oil companies depend on oil reserves for their market values. BP and Shell are two of our most trusted UK stocks, but it is a shocking fact that 30% of Shell's oil reserves are in tar sands.

"This report unveils how dangerous this approach is. There is a good chance that tar sands could be to the oil industry what sub-prime lending was to the banking sector" [Terry Macalister, "Tar Sands: The New Toxic Investment," Guardian UK, 2008.09.17, p. 27].

Greenpeace and Platform, co-sponsors of the report, cite four big factors that could negate the profitability of tar sands development:

1. Low carbon fuel standards under consideration by US presidential candidate Barack Obama and already implemented in California threaten to close sections of the American market to products derived from tar.
2. Acute labour shortages and the rising cost of delivering gas to the tar sands threaten to stifle the planned expansion of the sector.
3. An unrealistic reliance on untested carbon capture and storage (CCS) technology risks leaving the companies with huge stranded assets in the future, as international climate change regulations are strengthened at Copenhagen next year.
4. The extensive clean up operation and potential future litigation from local communities carry significant brand risk.

I suspect Big Oil won't be persuaded directly. The analogy to subprime lending feels tenuous. I get the feeling, though, that Greenpeace is trying a different tactic: instead of fighting directly with the industry, they are working on the investors, the fickle stock market speculators who are much more susceptible to whim and worry. By making even a metaphorical link between the great fiscal demon of the moment, subprime lending, to what some consider the greatest environmental demon of the decade, tar sands opponents hope to frighten some capital away from Big Oil.

No one said an argument has to be rational for the strategy to be effective. (Just ask the McCain campaign.)

John Sweet Blogs!

Today's RealMadison.org feature!

Can my world get any more topsy-turvy? Last November, I suggested that the Madison Central School District might engage parents, students, and the general public more effectively by starting a blog. A surprise visit to the comment section reveals that one Madison superintendent may have been listening... just not the current one. John Sweet is blogging! Dr. John Sweet, former Madison Central superintendent and not the most... garrulous fellow, is posting his thoughts online from his chair as chief executive officer of Delano Public Schools in Minnesota.

Madison folks may recognize some irony in Dr. Sweet's becoming a mogul of online interactivity (he has a podcast, too!), not to mention my favorable mention thereof. But there it is: Dr. John Sweet has a heck of an idea that our own Superintendent Vince Schaefer should jump on!

More commentary at RealMadison.org!

$700 Billion, Just to Stop a Recession?

Ben, is that the best you can do?

When the President asks for Seven Hundred Billion Dollars, more money than we'll spend in the next two years (by this estimate) on the wars in Iraq and Afghanistan, more money than we've spent in 50 years on space exploration, I expect the reason to be impending economic catastrophe.

And what does Fed Chairman Ben Bernanke say will happen if we don't pass the bailout?

Recession.

What? Recession? No depression? No collapse of the Republic? Dogs and cats sleeping together? Mass hysteria?

As my old-school friends in the debate-judging world would say, if you want us to vote for that plan, you've got put death on the flow. And Bernanke ain't doin' that for me, not against the disads Democrats and Republicans are throwing at Team Bush-Paulson:

Senator [Chris] Dodd [D-CT] called the Treasury proposal “stunning and unprecedented in its scope and lack of detail.”

Asserting that the plan would allow Mr. Paulson to act with “absolute impunity,” Senator Dodd said, “After reading this proposal, I can only conclude that it is not only our economy that is at risk, Mr. Secretary, but our Constitution, as well.”

Another expression of disgust came from Senator Jim Bunning, Republican of Kentucky, who said the plan would “take Wall Street’s pain and spread it to the taxpayers.”

“It’s financial socialism, and it’s un-American,” Mr. Bunning said.

Congress is going to do something, but it won't be Bush's plan. And unless Team Bush can put a bigger threat than recession on the table, it shouldn't be. Scale it down, keep your heads... and try to leave some money for our kids.

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Update 16:53 CDT: Even Herbert Hoover didn't throw as big a freakout as Bush:

In 1932, at the height of the Great Depression, the government created the Reconstruction Finance Corp. to make loans to banks, railroads and others. President Hoover asked for $2 billion—equivalent in today's money to $30 billion—and spent just under that amount in the RFC's first year. The country then was in the midst of an economic catastrophe. Economic output had dropped 45 percent. Production of steel and autos were each down by three-quarters. Unemployment was 24 percent, and so on.

The allocation sought by Paulson is 23 times bigger. And it is in addition to the tens of billions pledged to back loans to Bear Stearns, Fannie, Freddie and A.I.G. [Roger Lowenstein, "The Wrong Emergency," The New Republic online, 2008.09.23]

Update 17:22: But quit listening to me: check out this very detailed dissection of the Bush-Paulson plan at Naked Capitalism. Excellent explanation of what's wrong with this picture, including one unnamed source who claims to have heard Sec. Paulson tell the House Democratic Leadership that Treasury plans to pay above market rates for the mortgages banks can't unload.