The Mac is back (ROGER SIMON | 9/26/08, Politico)
[M]cCain not only found a central theme but hit on it repeatedly. Obama is inexperienced, naive, and just doesn’t understand things, McCain said.Sure, McCain is a pretty old guy for a presidential candidate, but he showed the old guy did not mind mixing it up. He stood behind a lectern for 90 minutes without a break — you try that when you are 72 — and he not only gave as good as he got, he seemed to relish it more.
At least twice after sharp attacks by McCain, Obama seemed to look to moderator Jim Lehrer for help, saying to Lehrer, “Let’s move on.”
McCain Was Good. But Good Enough? (Michael Crowley, 9/26/08, New Republic: The Stump)
For one thing, McCain certainly benefited tonight from low expectations--expectations fueled in part by liberal critics who have caricatured him as a doddering old fool. He outperformed them easily.McCain also had a clarity of message that Obama lacked. His core message is easy to sum up: Let's cut waste and spending. I'm a tough leader. Obama is naive and unprepared. Obama, by contrast, had no single message that he repeatedly drove home. He came across as sensible, studious, and thoughtful--but at times abstract and passionless. Obama did land some good shots at McCain's judgment over Iraq. But some of his other attacks--including his quips about McCain's "bomb Iran" song, and seemingly not wanting to meet with the president of Spain--seemed halfhearted, almost as though Obama was embarrassed to make them. (To his credit, perhaps.) I was almost reminded of Hillary's dead-on-arrival "change you can Xerox" crack from some primary debate 100 months ago.
And stylistically, McCain was more in control. He was the one setting the tone and introducing nettlesome topics, forcing Obama to respond and defend himself.
I'd guess the CW will be that McCain won on points, with nothing close to a knockout, and I'd echo that judgment. McCain had Obama on the defensive over earmark requests and his $800 billion in new spending, then later on the surge and those rogue-leader meetings. [...]My biggest problem with Obama is that he cedes almost all the emotional ground to McCain. For my money, the exchange that defined the debate was McCain sarcastically suggesting Obama would just tell Ahmadinejad "no" when he threatens to annihilate Israel. Obama tried to interrupt McCain several times during this mini-rant, then just kind of let the matter drop when he had a chance to respond. What he needed to do was look straight into the camera and inject a little emotion of his own. Something like, "Israel is one of our most loyal allies in the world. Their security is absolutely sacred to me. And if Mahmoud Ahmadinejad or any other tin-pot dictator thinks he can threaten Israel in my presence or anywhere else, he's in for a rude awakening. I would leave absolutely no doubt in his mind how we treat countries looking for fights with our allies."
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Obama Remains Firm on Meeting Rogue Leaders Without Preconditions (Susan Davis, 9/26/08, The Page)
“I reserve the right as president of the United States to meet with anyone of my choosing if I feel it would protect the United States,” Obama said, adding that Kissinger, a McCain friend and adviser, recently said the U.S. should negotiate directly with Iran without preconditions, although he said he preferred it be at the State Department level.McCain said it was “fiction” and that Obama was parsing words
“Senator McCain is right. I would not recommend the next President of the United States engage in talks with Iran at the Presidential level.”
Obama said during the debate that Kissinger, a McCain adviser, supports presidential talks with the Iranian president.
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Score one for John McCain (S.E. CUPP, September 26th 2008, NY Daily News)
Throughout the debate, which focused on both the economy and foreign policy, McCain had facts, figures and names at his fingertips, speaking from decades of experience in the trenches - literally and figuratively - and repeated the phrase, "Senator Obama doesn't seem to understand . . ." He called Obama naive, dangerous and inexperienced, and his attacks, which seemed to frustrate Obama, put him on the defensive for the majority of the night.Obama's expectations here were low. Foreign policy is McCain's strength and Obama merely had to hold his own to come away from this unscathed. He did - in the first third of the night, devoted to the economy, Obama performed well, invoking the clauses that Democratic voters want to hear. But he seemed at times too cool, even verging on arrogant.
In an early stumble, he couldn't give any concrete examples of how the current economic crisis would affect his budget were he to become President, even when pressed repeatedly by the moderator, Jim Lehrer. McCain proposed spending freezes and defense cuts.
When the debate turned to foreign policy, McCain pressed him on his failure over a long period to visit Afghanistan, though Obama repeatedly stressed that this was where he would focus his foreign policy efforts in the war on terror. And here, Obama awkwardly brought up his running mate Joe Biden, seeming to suggest that what Obama lacked, Biden would make up for.
But McCain's biggest score was when Obama relayed the lesson he's learned from Iraq: that we never should have gone there in the first place. McCain rightly pointed out that the job of the next U.S. president will not be to ruminate over why we went or whether it was a good idea, but to determine how and when to leave. Obama had a difficult time dancing around the success of the surge, which he has long been reluctant to admit.
And on Iran, Obama's past embrace of conditionless diplomatic meetings with Iranian President Mahmoud Ahmadinejad, Venezuelan President Hugo Chavez and other leaders of rogue regimes came back to haunt him. McCain effectively cornered him, asking, "We're going to sit down with Ahmadinejad, and he says he wants to wipe Israel off the map, and we say, No you're not?"
Frank predicts bailout deal by Sunday (Julie Hirschfeld Davis and David Espo, 9/26/08, ASSOCIATED PRESS)
The Bush administration and Congress anxiously revived negotiations Friday on a $700 billion financial bailout, one day after the largest bank collapse in U.S. history provided a brutal reminder of the risks of failure."I'm convinced that by Sunday we will have an agreement that people can understand on this bill," predicted Massachusetts Rep. Barney Frank, a key Democrat in eight days of up-and-down talks designed to stave off an economic crisis.
Battle with the Taliban: Pakistan could defeat militants in months: Pakistani troops are fighting a mountain battle that their generals claim will break the back of the Taliban insurgency within a matter of months. (Isambard Wilkinson in Tang Khatta , 9/26/08, Daily Telegraph)
The army claims it has killed over 1,000 militants in Bajaur, a place described by commanders as the "centre of gravity of the insurgency"."The threat from Bajaur radiates in all directions," said Maj Gen Tariq Khan, the commanding officer of the Frontier Corps, a paramilitary force engaged in the bulk of counter-insurgency operations in the tribal areas.
"If we dismantle this here and destroy its leadership then 65 percent of militancy will be controlled. If they lose this, they lose everything."
Khar and its surroundings are deserted. Soldiers have taken over the area's numerous schools and nearly a third of Bajaur's one million people have fled the fighting.
At Tang Khatta militants took cover in fields of half-harvested maize, caves and dried-up ravines a mile away. [...]
Washington has expressed its approval for the Bajaur operation but analysts have asked why Islamabad allowed parts of the area to be governed by a Taliban parallel government.
Before the operation militants had launched over 60 attacks on paramilitary troops, cut off all main roads, set up training camps and assassinated a dozen tribal leaders.
The battle for Bajaur began only after 2,000-3,000 militants overran a paramilitary post at Loi Sam, which the military has not yet retaken.
Economists not keen on GOP bailout (VICTORIA MCGRANE, 9/26/08, Politico)
The plan centers on insuring mortgage-backed assets at prices and premiums set by the government, creating a virtual backstop for the debt. This would not require an initial outlay of taxpayers’ funds in the neighborhood of Paulson's $700 billion. Democratic leaders say Paulson doesn’t believe a mortgage insurance proposal will work, though he hasn’t said so publicly.“I frankly don’t understand how this is supposed to work,” said Douglas Elmendorf, an economist at the nonpartisan Brookings Institution and an outspoken critic of the Paulson rescue plan.
People generally buy insurance for events that are unlikely to happen; a homeowner pays out a couple hundred dollars for fire insurance, and if their house burns down they get hundreds of thousands of dollars from their insurance company, provided by premiums collected from other policyholders, he explained.
“But with mortgage-backed securities, the bad thing has already happened,” Elmendorf said. “They’ve lost their value.”
The emerging GOP alternative does not resolve the problem of how the government prices the toxic assets at the heart of the crisis, experts said. In the Paulson plan, the government has to figure out how much to pay for the assets. But in the GOP alternative, the government would have to determine the premium prices to insure against the risk that the mortgages behind the assets don’t get paid off.
Many observers were buoyed by the modifications unveiled Thursday by Democrats and Senate Republicans that would allow the federal government to take out warrants — the option to buy shares — on some of the companies’ participating in the rescue. That way, if Treasury paid way too much for a firm’s assets, taxpayers would share in the windfall to the company.
John McCain falters as bailout swamps US election (Tom Baldwin and Suzy Jagger, 9/26/08, Times of London)
John McCain today hastily departed from Washington leaving behind the planned $700 billion Wall Street bailout teetering on a knife-edge.With both sides playing for the highest stakes, the Republican nominee appeared to blink first as he raced down to Mississippi to face Barack Obama in a presidential TV debate.
McCain's way out? (Domenico Montanaro, 9/26/08, NBC: First Read)
So what if McCain shows up and tonight and says, "I'm sorry I couldn't sign on to this Washington-Wall Street plan that I worried was putting an even bigger burden on taxpayers than this mess already has. Now, Sen. Obama, I understand that you are confident in these folks in Washington and New York who have everyone convinced this is the only plan. And I respect that, but I am hearing from people all over the country who don't get this plan and don't understand how it will work. And why should they trust a group of folks in Washington and New York who broke this system to fix it?"McCain is not winning this political battle right now as the media elite do believe the White House, Wall Street and Congressional Democrats on this. It's a pretty strong united front for us not to believe this. That said, McCain and House Republicans are channeling their inner populist, something the Republican Party hasn't done in quite some time. Don't write off this McCain strategy just yet if Obama appears too cozy with Washington and New York elites, and it's McCain who is the one looking like the outsider.
And there might be an immigration analogy here. Has McCain learned a lesson from that first battle that almost sunk his campaign and decided to listen to the base on this? This whole fight looks a bit like immigration with media, political elites on one side and “conservative populists” on the other.
On the other hand, Republicans were hurt in 2006 after running solely against immigration reform -- not helping them with Hispanics and female voters -- and it cemented the idea that Republicans were callous toward immigrants.
The Mark-to-Market Melee: Is an obscure accounting rule to blame for the credit market meltdown? (Daniel Gross, April 1, 2008, Slate)
In recent weeks, some have been arguing that just as Abraham Lincoln suspended habeas corpus in a time of war, perhaps regulators should suspend mark-to-market in this time of crisis. Paul Craig Roberts, a veteran supply-sider and former Reagan administration official, wrote on March 11 that the mark-to-market rule "is imploding the U.S. financial system by requiring financial institutions to value subprime mortgages at their current market values." His solution: Suspend the rule, let financial institutions "keep the troubled instruments at book value, or 85-90 percent of book value, until a market forms that can sort out values, and allow financial institutions to write down the subprime mortgages and other troubled instruments over time." In other words, let's assign an imaginary happy value to these assets until the seas grow calmer. Steve Forbes echoed the sentiment in his column in Forbes, calling for a 12-month suspension of mark-to-market in "exotic financial instruments (primarily packages of subprime mortgages)." The reason: "It's preposterous to try to guess what these new instruments are worth in a time of panic." This line of thinking quickly wormed its way into McCain's big economic speech. He put it more anodyne terms: "First, it is time to convene a meeting of the nation's accounting professionals to discuss the current mark-to-market accounting systems. We are witnessing an unprecedented situation as banks and investors try to determine the appropriate value of the assets they are holding, and there is widespread concern that this approach is exacerbating the credit crunch." For its part, the Securities and Exchange Commission issued an opinion letter, in which it told firms, "[I]t is appropriate for you to consider actual market prices, or observable inputs, even when the market is less liquid than historical market volumes, unless those prices are the result of a forced liquidation or distress sale."The language is technical, but the arguments here are simple and really quite silly—especially coming from folks who value market indicators over all else. These folks are saying that when markets are volatile and irrationally pessimistic, it's just not fair to force people to act as if the market prices are real.
But you'll notice that they never made that argument back when markets were irrationally optimistic, as they were from 2003-2006. No hedge fund manager ever told a bank that it should lend him less money because the value of the collateral he was putting up was clearly a product of unwarranted optimism or that he shouldn't collect management fees based on the assets under management because their value was clearly inflated. Nobody ever complains about the market's ruthlessness and inefficiency when it's making them money.
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A Conservative Case for the Paulson Plan (Robert T. Miller, September 26, 2008, First Things)
All intelligent conservatives, therefore, recognize that there are known classes of cases where markets do not work. Free-rider problems such as that with national defense present one example, and collective action problems are another. A third—the one relevant in this case—is a market panic. From time to time, market participants become so irrational that markets cease to function because no one is willing to buy or sell. That is exactly what has happened in the mortgage-backed securities market right now. Financial institutions all over the world are holding various kinds of mortgage-backed securities, and everyone knows that these securities are worth less than people paid for them. How much less, however, no one knows for sure. That will ultimately depend on what percent of homeowners default on their mortgages and how much the lenders recover when they foreclose on the loans.Now, no one believes that the default rate will be all that high (the rate is around 6% now, and even in the Great Depression it never got much above 40%), and everyone knows that when a lender forecloses on a home, it will receive at least most of its money back. Under normal circumstances, market participants would gather the available data, make some informed estimates about these matters, and calculate a price for the relevant securities. Pricing securities is always a very uncertain business, and under normal circumstances this doesn’t bother anyone. Right now, however, people are so panicked about mortgage-backed securities that they will either not buy such securities at all or will pay only absurdly low prices for them. Merrill Lynch, for example, sold some securities like these last July for as little as 22 cents on the dollar. We thus have the most extreme form of market failure imaginable: the total collapse of a market, not because the items traded in the market are valueless (in fact, everyone agrees that they are very valuable), but because people are too panicked to value them.
Such behavior is highly irrational, and savvy people everywhere know it’s highly irrational. Hence we saw that coolest of rational minds, Warren Buffett, buying into Goldman Sachs earlier this week. Once a market-collapsing panic starts, however, it is very difficult to stop. It’s like trying to convince the crowd in the theater that there really is no fire after all. Sometimes, a particularly respected market participant can stop the panic. J.P. Morgan did that in the financial crisis of 1907. Nowadays, however, no private party has the clout to do it.
Fortunately, the government does. What the Paulson plan amounts to is this: The government will buy up all the securities that the market is currently too irrational to value, and it will hold them for a while—long enough for the market to calm down and return to sanity. Then the government will resell the securities into the market. Since the government will have bought the securities at panic prices and sold them at more rational prices, the government may well turn a tidy profit on the deal. Exactly this has happened before. Back in 1998, the Federal Reserve organized the major investment banks to bail-out distressed hedge fund Long Term Capital Management, and when all its positions were finally unwound, the banks had made a profit. There is thus good reason to believe that the treasury will make money, not lose money, on the Paulson plan.
Boehner: I Won’t Allow White House to “Gang Up” on Me (The Page, September 26th, 2008)
The House Republican leader suggests in an afternoon presser that he’s unfairly taking the fall for stalling progress of the bailout bill.“I don’t know what games were being played at the White House yesterday. Gang up on Boehner. If they thought they were rolling me they were kidding themselves.”
McCain to attend the debate (Mark Murray, 9/26/08, NBC First Read)
The McCain campaign just announced that the Arizona senator will attend tonight's presidential debate. "The McCain campaign is resuming all activities and the Senator will travel to the debate this afternoon," the statement reads. "Following the debate, he will return to Washington to ensure that all voices and interests are represented in the final agreement, especially those of taxpayers and homeowners."
In the CNN/Opinion Research Corp. survey, 59 percent of likely voters said they expect Obama to do a better job in the debates, while 34 percent picked McCain.
Bill Clinton’s Return Poses a Test of Party Loyalty (PAUL VITELLO, 9/26/08, NY Times)
As comfortable as Mr. Clinton is in saying, “I like John McCain,” and “I like Sarah Palin,” no one seems to have heard him say the same for Mr. Obama. Instead, when speaking of Mr. Obama, the Democratic nominee, Mr. Clinton has assumed a professorial stance that sometimes drifts toward emotional aloofness and disregard.“Is it me, or he didn’t want to say the name ‘Barack Obama’?” the comedian Chris Rock asked with barely contained anger when he appeared Monday night on “Late Show With David Letterman” immediately after Mr. Letterman’s 15-minute interview with Mr. Clinton.
Answering Mr. Letterman’s questions, Mr. Clinton gave a dispassionate discourse on the cultural and political dynamics of the race, which, he said, would ultimately play in Mr. Obama’s favor. Mr. Clinton mentioned his wife, Senator Hillary Rodham Clinton, who had lost the Democratic primary to Mr. Obama, far more often than he mentioned the party’s standard-bearer. And in predicting victory for Mr. Obama, Mr. Clinton suggested that it would happen because people were hurting economically. He did not say that Mr. Obama’s victory would be because voters especially wanted Mr. Obama to be president.
“People will wind up liking both of them,” Mr. Clinton said. “People will go in that polling booth and say: ‘You know, I really admire Senator McCain. He gave about all you could give to this country without getting killed for it. But I’ve got to have a change, and I’m going the other way.’ ”
By “the other way,” he apparently meant Mr. Obama.
Against all the odds this is an extremely winnable election for the GOP, Uncertain Times (Andrew Kohut, 9/25/08, Pew Research Center)
In every recent election the public has accurately picked the winner by this time in the cycle. But not this year. Two weeks ago when we asked voters to put aside their own preferences and make a prediction, 39% said McCain would win and exactly the same number chose Barack Obama. Four years ago in September, the race was close, but by a 60%-to-22% margin voters thought President Bush would be re-elected.In 2000 at this time, voters believed Al Gore would win. But they changed their minds by late October and picked George W. Bush. In 1992 and 1996, boxcar majorities (61% and 75%, respectively) thought Clinton would win.
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Gut Check (Steven Pearlstein, September 26, 2008, Washington Post)
Now let me tell you something very simple and very important: You can try to prevent a financial meltdown or you can teach Wall Street a lesson, but you can't do both at the same time. [...][[W]e need to act quickly. The financial situation is now downright scary. Don't look at the stock market -- that's not where the problem is. The problem is in the credit markets, which are quickly freezing. I won't bore you with technical indicators like Libor and Treasury swap spreads, but if you talk to people who work these markets every day, as I have, they report that the money markets are in worse shape than they were last August, or even during the currency crises of 1998.
Banks and big corporations and even money-market funds are hoarding cash, refusing to lend it out for a day or a week or a month. Even the best companies are having trouble floating bonds at reasonable rates. And the shadow banking system -- the market in asset-backed securities that ultimately supplies the capital for most home loans, car loans, college loans -- is almost completely shut down.
People are so nervous, and there is so much distrust, that all it would take is one more hit to trigger the modern-day equivalent of a nationwide bank run. Financial institutions would fail, part of your savings would be wiped out, jobs would be lost and a lot of economic activity would grind to a halt. Such a debacle would cost us a lot more than $700 billion.
Third, the latest proposal hammered out between the Treasury and Democratic leaders won't cost anywhere near $700 billion unless we get a 1930s-like Depression, in which case we'll have much bigger problems to worry about. Depending on how the program is managed, and how things turn out with the economy and the housing market, the best guess is that the government could wind up either losing or making a couple of hundred billion dollars.
Wall Street to GOP: Drop Dead (James Pethokoukis, 9/26/08, US News)
Economic conservatives may be horrified at the thought of a trillion-dollar bailout of Wall Street, but the GOPers on Wall Street seem horrified that they are being left to wither on the vine by Washington. Take a look at this email I just got last night from a money manager:I am a lifelong ( 51 years old) "rock-ribbed" conservative.... What an eye opener this week has been! I now realize what a blowhard Newt truly is by advocating the GOP bail on the Paulson Plan. As a professional money manager I can tell you I am shocked, dismayed and depressed that the Speaker would excoriate the GOP to abandon this plan which is URGENT and necessary to avoid a financial catastrophe that once commenced may be irreversible. The level of ignorance of financial and economic reality displayed by the Speaker , Rep. Boehner, Sen. Shelby , et al, has been frightening and sad. I thought the GOP had a better grasp of such matters than the Dems. Apparently not.
Ever since their defeat in 2006, House Republicans have talked about how they lost their brand and needed to regain it if they had any hope to retake the House majority. And they've taken numerous steps since 2006 to try and rebuild the trust of fiscal conservatives, calling constantly for reduced spending and extending President Bush's tax cuts.Now they have the Bush Administration, as it's heading out the door, trying to thrust a $700 billion bailout package on them and they're not going to have it. It doesn't fit the narrative they believe will lead them back to the House majority.
The administration's problem is that House Republicans have little incentive to give in to the president who not only is soon to be the ex-president but is unpopular to boot.
House Majority Leader John Boehner and the rest of the Republican conference plan on being around for a while and they don't want to support a bailout package if it's going to severely damage their ability to re-establish their small-government, lower taxes and less-spending brand.
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Bush: “We are going to get a package” (MIKE ALLEN, 9/26/08, Politico)
President Bush declared Friday morning that both parties will “rise to the occasion” and pass “a substantial rescue plan,” despite a collapse of negotiations that resulted in some of the ugliest Capitol Hill finger-pointing in years.“The legislative process is sometimes not very pretty, but we are going to get a package passed,” Bush stepping out of the Oval Office into the Rose Garden for a brief statement that had been scheduled for five minutes after the New York Stock Exchange opened.
If it fails, McCain will have, I think, three alternative paths:1. Support Bush/Paulson/the Democrats. The rationale would be that the emergency is grave, the markets require action, and this is the only legislation that can pass. This is where most observers expect McCain to end up, it may well be where he has to end up, and it may be the right place to end up--IF the emergency is so grave and IF this is the only alternative that can pass. McCain could still stipulate he’ll improve the plan when he becomes president, that Bush and the Democrats messed this up, etc., etc. This outcome becomes likely if the markets start to meltdown today. It’s not particularly attractive substantively or politically, but....
2. Support House Republicans. Very dicey, obviously.
MSNBC reports the Arizona Senator meets with the House Republican leader along with Rep. Cantor and other GOP congressmen on the bailout legislation ahead of morning congressional talks.
Most elementary schools in California will fail to meet proficiency requirements by 2014 (PhysOrg, 9/25/08)
In California, student mastery in ELA and mathematics is measured with the California Standards Tests (CST). To determine how the challenge of mastery is being met, a research team led by UC Riverside's Richard Cardullo examined several years of CST data.The researchers report in the Sept. 26 issue of Science that mathematical models they used in their analysis predict that nearly all elementary schools in California will fail to meet the Adequate Yearly Progress (AYP) requirements for proficiency by 2014, the year when all students in the nation need to be proficient in ELA and mathematics, per the "No Child Left Behind Act of 2001" (NCLB).
Pakistan says top militants among 1,000 dead (AFP, 9/26/08)
Pakistan has said that troops have killed 1,000 Islamist militants in a huge offensive, a day after President Asif Ali Zardari lashed out at the US over a clash on the Afghan border.Five top Al-Qaeda and Taliban commanders were among the dead in a month-long operation in Bajaur district, currently the most troubled of Pakistan's unstable tribal areas close to the porous frontier, a top official said on Friday.
Selfless or Reckless? McCain Gambles On Voters' Verdict (Dan Balz, 9/25/08, Washington Post)
John McCain is a gambler by nature, and the bet he placed Wednesday may be among the biggest of his political life.The Republican presidential nominee is hoping that his abrupt decision to suspend campaigning, seek a delay of Friday's debate with Democrat Barack Obama, and return to Washington to help prod negotiations over a financial rescue package will be seen as the kind of country-first, bipartisan leadership he believes Americans want.
What he risks, if things don't go as he hopes, is a judgment by voters that his move was a reckless act by an impetuous and struggling politician that hardened partisan lines in Washington at just the wrong moment and complicated efforts to deal with the biggest financial crisis in more than half a century.
Stockmarkets were plunged into turmoil today after talks on a $700bn (£380bn) rescue for the US financial sector descended into chaos and the country's largest savings and loans company Washington Mutual collapsed in America's biggest banking failure.The FTSE 100 index in London dropped 90.2 points in early trading, a fall of 1.74%, and traded down 60.2 points at 5136.8 points mid-morning, a decline of 1.16%. All Asian stockmarkets slid, with Japan's Nikkei closing down nearly 1%. Oil prices were also hit by the uncertainty over the bail-out package, with US crude falling $3 to $105 a barrel. The yen jumped by more than 1% against the dollar as investors rushed to buy the safe haven currency. The dollar fell to ¥105.26.
Spread-betting firm GFT Global Markets predicted the Dow Jones industrial average would fall 147 points and the Nasdaq 29.5 points when the US markets open.
Since Wednesday, when McCain unexpectedly announced he would suspend his campaign to focus on the economic crisis, it has been unclear whether McCain would join Obama at the debate. And it remained that way after negotiations over a $700 billion Wall Street bailout plan broke down Thursday and late-night talks ended inconclusively.McCain senior adviser Steve Schmidt said Thursday night that the Arizona senator was focused on passing a compromise bailout bill and would be on the phone, cajoling colleagues and trying to get closer to a deal.
“He’s working very, very hard to try to get majority votes,” Schmidt said.
There were signs that, behind the scenes, skeptical Democrats and Republicans were beginning to move toward a compromise version of Treasury Secretary Henry M. Paulson's original plan, but it remained to be seen whether there would be enough votes to pass legislation."I'm seeing both Republicans and Democrats start to move toward voting for it," Rep. John Campbell (R-Irvine) said. "I can't tell you that there's a majority at this point, but there's movement."
The working proposal contained most of the features that critics of the administration's original plan had been demanding: limits on compensation for executives of companies that take part in the bailout, a provision for taxpayers to share in any profits from the sale of distressed assets, and payout of the $700 billion in three stages instead of one. The final $350-billion tranche would require a congressional vote.
Negotiators broke off talks Thursday night with no agreement and with plans to reconvene in the morning, without House Republicans. It was the Republicans' surprise championing of a competing plan late Thursday that derailed a carefully crafted compromise previously taking shape.
Here, all that matters (because of the narrative of the McCain and Obama candidacies) is that Maverick be seen to have helped broker a deal. The shape of the deal isn't significant. House Republicans have no leverage because passage of a deal that they voted against would be so harmful to their own presidential candidate as to inflict grave losses in November.
The main similarity would thus end up being that the GOP leadership was inept in both showdowns.
Ironically though, the GOP's best hope of being saved comes from the Democrats and the possibility that they are so reactionary and anti-business that they'll squander the gift they've been handed. After all, consider how easyt it would be for them to salt away the election this weekend:
Friday Morning: Barack Obama press conference in which he says: "Look, I don't agree with George Bush on a lot of things but I agree with him--and Henry Paulson, Ben Bernanke, Warren Buffet, Paul Volcker, and Robert Rubin--on the importance of this deal to the economy. I, therefore, urge all my colleagues t set aside partisan differences and pass the Paulson Plan.
Friday evening: House passes plan--ideally without many GOP votes--every Democrat announcing that despite his own reservations he's following the example of his party leader.
Saturday: Senate passes plan -- with enough Republicans to avoid a filibuster -- forcing John McCain to either follow the Unicorn Rider or side with House Republicans who are so partisan they wouldn't even vote with W.
That's ballgame, folks. The narrative of both candidacies is that: "I'm the post-partisan agent of change who can get things done in Washington." John Boehner is trying his best to prove that it is Barack Obama's narrative that is true.
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Talks Implode During a Day of Chaos; Fate of Bailout Plan Remains Unresolved (DAVID M. HERSZENHORN, CARL HULSE and SHERYL GAY STOLBERG, 9/26/08, NY Times)
When Congressional leaders and Senators John McCain and Barack Obama, the two major party presidential candidates, trooped to the White House on Thursday afternoon, most signs pointed toward a bipartisan agreement on a grand compromise that could be accepted by all sides and signed into law by the weekend. It was intended to pump billions of dollars into the financial system, restoring liquidity and keeping credit flowing to businesses and consumers.“We’re in a serious economic crisis,” Mr. Bush told reporters as the meeting began shortly before 4 p.m. in the Cabinet Room, adding, “My hope is we can reach an agreement very shortly.”
But once the doors closed, the smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.
Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand.
Having been firmly in control of the campaign narrative for more than a week and surging in the polls, Senator Obama has been knocked off his stride. Senator McCain stumbled in addressing the Wall Street crisis from the outset with his "fundamentals are strong" statement and then lurched first one way and then the other. Then, suddenly, he seized the initiative.Obama was put on the defensive immediately after McCain's shock announcement when President George W. Bush - in a move that appeared to bee coordinated with the Arizona senator - called to invite him to Thursday's White House summit. The Democratic nominee could hardly refuse and it looked like he was following McCain's lead.
Polls show that Obama's biggest vulnerability is on whether he can be commander-in-chief and whether he's ready to lead. McCain's Achilles heel is his links to Bush. The acrimonious White House summit boosted McCain on both fronts.
Bush's lack of political capital - he's as bankrupt as Lehman Brothers - meant that he lost control of the meeting and of his own rescue package. Inside the room, McCain largely kept his own counsel but he ended up in the driving seat.
Strangely, rather than McCain being the one supporting Bush, it was Obama. Having based his campaign on running against Washington, it was the Illinois senator who found himself defending the package fashioned and championed by the Washington insiders at either end of Pennsylvania Avenue.
With no done deal on the $700 billion Wall Street bailout, John McCain and Barack Obama last night intensified their extraordinary staredown over whether to hold their first presidential debate tonight.McCain, who is insisting that a bailout agreement be in place first, said only that he was "very hopeful" the debate would go ahead. Obama said that voters deserved to hear the candidates, that he planned to be there, and that "I hope he will be there as well."
Both candidates returned to Washington yesterday for a private meeting with President Bush and congressional leaders on the bailout, but Obama's camp disputed whether McCain had truly suspended his campaign as he had promised.
Everything seemed to be headed toward a deal -- and then Sen. Richard C. Shelby emerged from the White House with a bit of bad news."We hadn't got an agreement," said Shelby (Ala.), the ranking Republican on the Senate banking committee. "There's still a lot of different opinions. Mine is: It's flawed from the beginning."
Shelby has made no secret of his distaste for the plan all week. His strong opposition was a primary reason that Sen. Robert F. Bennett (Utah), a close friend and political ally of Senate Minority Leader Mitch McConnell (Ky.), was leading talks on the package for Senate Republicans.
But it is also what made Shelby's inclusion in White House talks, which were designed to reach agreement on a $700 billion recovery plan, something of a surprise. Inviting a lawmaker completely opposed to a plan to a negotiation usually is not a recipe for reaching a deal.
A renegade bloc of Republicans moved to reshape a massive bailout of the U.S. financial system yesterday, surprising and angering Bush administration and congressional leaders who hours earlier announced agreement on the "fundamentals" of a deal.At a meeting at the White House that included President Bush, top lawmakers and both presidential candidates, House Minority Leader John A. Boehner (R-Ohio) floated a new plan for addressing the crisis that has hobbled global markets.
Democrats accused Boehner of acting on behalf of GOP presidential candidate Sen. John McCain (Ariz.) in trying to disrupt a developing consensus. The new proposal also displeased White House officials, including Treasury Secretary Henry M. Paulson Jr., who chased after Democrats leaving the meeting and -- half-jokingly -- dropped to one knee and pleaded with them not to "blow up" the $700 billion deal, according to people present at the meeting.
The simple truth is that Washington is petrified about this crisis and will pass something. There are dark fears floating through the city that foreign investors, particularly the Chinese, might begin to pull their billions out of our system.Scarier than the bad mortgages are those unregulated credit default swaps that financier George Soros has been warning about. There are $45 trillion of those esoteric instruments sloshing around the global financial system. They were invented as a hedge against debt defaults, but even the financial smart guys don't fully understand their impact or how to price their real value.
Fear is a terrible motivator for careful legislating, but it's a heck of a way to bring about a lot of bipartisanship. McCain jumped into this game in the fourth quarter. Many of the players on the field, caked in mud and exhausted but determined as they approach the goal line, wonder why this new would-be quarterback has suddenly appeared in their midst.
McCain could yet play a constructive role by rounding up votes from restive Republicans. Oddly, the biggest obstacle to a bill may not be Democrats but Republicans who refuse to go along with their own president. And -- yes, there is an election coming -- Democrats will be wary of going forward unless a substantial number of Republicans join them.
Deal or no deal?A day that began on an optimistic note devolved into an evening of partisan bickering and finger-pointing, as Democratic supporters of a $700 billion Bush administration plan to bail out the financial sector accused Republicans of trying to scuttle the deal at the last moment.
And they also suggested that the man who had come into town to save the deal, John McCain, had, in fact, wrecked it by encouraging the fracas, after a White House summit billed as a chance for both parties to work together ended with no agreement and perhaps more division on the issue than ever.
With leaders in Congress working on a controversial financial-rescue plan, rank-and-file lawmakers face a crucial election-year question: If they back the proposal, will they pay at the polls?Populist outrage has been spilling out across the country from people of all political stripes. Lawmakers say they have received hundreds of calls and emails in recent days, almost uniformly against the idea of giving the government the power to buy billions of dollars in distressed assets to keep the financial system afloat.
A dizzying day of high-stakes Washington drama has left everyone confused and unsure about whether the $700 billion bailout to save the nation's financial system has any chance of making it through Congress. Whereas yesterday's papers were filled with optimism that a compromise would be reached, today no one knows whether the breakdown in negotiations means the plan is doomed or if it just represents a brief stumbling block.
Critics immediately accused the Arizona senator of political grandstanding in the face of faltering poll numbers, noting that congressional leaders and Bush administration officials already were resolving differences over the massive package.Supporters argued that Mr. McCain's move meant he would be able to claim a large share of responsibility if a package ultimately passed because his support was needed to get enough House Republican votes to create the bipartisan support Democratic leaders demanded.
In fact, both critics and supporters may be right.
Mr. McCain's move was clearly political, since he was not directly involved in hammering out the complex legislation. But his role as the party's de facto leader may give him leverage over GOP congressmen who would otherwise not fall in line.
Indeed, the Republican standard-bearer seems to have acted less to rescue the talks than to ease the potential damage to himself and his party for opposing, or even killing, a bipartisan bailout proposal.
Circumstances leading to his announcement Wednesday strongly suggest that.
When Sen. Barack Obama was given the floor to speak during White House negotiations, according to White House aides, he did so raising concerns about a House Republican alternative to the Paulson/Bernanke $700 billion bailout. But those concerns weren't necessarily his, as he was not aware of the GOP plan before reviewing notes provided him by Paulson loyalists in Treasury prior to entering the meeting. [...]"Paulson and his team have not acted in good faith for this President or the administration for which they serve," says a House Republican leader who was not present at the White House meeting, but who instead is part of the team hammering out the House GOP alternative. "We keep hearing about how Secretary Paulson is working with Democrats on this or that, yet he never seems to consider working with the party that essentially hired him.