"spared him from having to go through much debate prep" Huh??? If I have homework due and instead, go rescue a cat from a tree and therefor fail to do my homework, I don't get credit for not doing my homework!! Any difficulties McCain has this evening will be his own fault, and the press will certainly not cut him any slack. After all, the Washington trip can now cleary be seen as a campaign stunt. (It also doesn't help that the press is royally peeved at McCain/Pailin.)

He needed to throw the government into turmoil so he could take a study break?  Can't they get this guy a friggin' Wii?

Oh, and the couris interview got buried...

Is there an upside to this whole debacle?  Well, of COURSE there is.  It's made McCain look like a fool, and thus less popular with the electorate.  It has lowered his chances of being elected.  This is a huge upside.

Is there an upside for him?  Who cares?

[Someone at McCain HQ reads a report on a liberal website that McCain had hopelessly damaged his campaign and that the race is now "over."]

McCain [agitated]: "Over? Did you say 'Over'? Nothing is over until we decide it is. Was it over when the Germans bombed Pearl Harbor? Hell no!"

Schmidt: "Germans?"

Pawlenty: "Forget it, he's rolling."

McCain: "And it ain't over now! 'Cause when the goin' gets tough.....(pauses, trying to remember)...the tough get goin'! Who's with me? Let's go! [runs out alone...]

Of course there's an upside to it- the  upside is that McCain's less likely to get elected :p

Seriously though I expect the rhetoric from his press release to make it into his answers to any questions he wants to dodge.  "I'll talk about the judgment involved in pushing for a war with Iraq, but first let me talk about the judgment of Senator Obama in putting politics before America and demanding that we talk about change instead of doing something to reform the fat cats in Washington"

The 2008 United States Presidential Campaign, in a nutshell:

Obama: ...well, let's see, we have on the bags, Who's on first, What's on second, I Don't Know's on third...

McCain: That's what I want to find out.

Obama: I say Who's on first, What's on second, I Don't Know's on third.

McCain: Are you the manager?

Obama: Yes.

McCain: You gonna be the coach too?

Obama: Yes.

McCain: And you don't know the fellows' names?

Obama: Well I should.

McCain: Well, then, who's on first?

Obama: Yes.

McCain: I mean the fellow's name.

Obama: Who.

McCain: The guy on first.

Obama: Who.

McCain: The first baseman.

Obama: Who.

McCain: The guy playing--

Obama: Who is on first!

McCain: I'm asking YOU who's on first.

Obama: That's the man's name.

McCain: That's who's name?

Obama: Yes.

McCain: Well go ahead and tell me.

Obama: That's it.

McCain: That's who?

Obama: Yes.

PAUSE...

McCain [agitated]: Look, you gotta first baseman?

Obama: Certainly.

McCain: Who's playing first?

Obama: That's right.

McCain [highly agitated]: When you pay off the first baseman every month, who gets the money?

Obama: Every dollar of it...

The upside is that he has so lowered expectations that anything short of drooling on his tie and storming off the stage in a hissy fit will be viewed as a victory.

Call it whatever you want - a stunt, a ploy, whatever, but McCain's intervention stopped this P.O.S. plan from being stuffed down our throats. Finally, can we demand that Commissar Paulson, provide us with solid, hard _evidence_ for why we should believe him this time, when a few months ago he assured us all was well. And can we avoid this foolish and potentially catastrophic rush to grant him extraordinary powers that are not necessary and that have never even been discussed properly by the public and its representatives.

yeah, tep, sure. Paulson's plan was already stopped by the Democrats, they were putting an a stopgap measure to get us through to the election. Do you think it will be etched in stone for all time? That the next treasury secretary must follow Paulsons dictates to the letter? Do you think he is going to blow through 250 billion in 4 months?

Another day, another sky is falling from Tep.

The upside for McCain is that most low information viewers only know he went to DC, held high level meetings, and then went to the debate. (if they even know that much, personally all they think they need to know is that McCain is white and Obama is black)

Everybody here is saying McCain's bailout gambit was a failure. (When I offered the observation "It

Tep, leaving aside whether or not we're now in a better position, based on McCain's incoherent public statements, you can't possibly believe he consciously thought through all you've attributed to him.

I don't know, it seems to me that he's going in to it with everyone in the audience and the Ole Miss community in general really pissed off.  I wouldn't want to go in to a debate with that vibe coming at me.

The upside is that it might deviate a bit from talking points.  

PS I know this is petty, but the man needs to have his teeth cleaned, dyed whatever.  Hopefully by tonight.  It grosses me out to look at him.

That would be true, tep, except for the fact that McCain's intervention did no such thing. Every party to this negotiation -- everyone except the House Republicans and McCain (And you -- some company you've got there!) had agreed to some oversight for Paulson. Now we've got no deal and a lot of blow-hardiness.

Thanks, John!

Poor blackie, he's got it backwards. I'm saying the sky is NOT falling. We do not need to panic and cave before a Cheney-esque power grab when private investors can and will assess what's sh*t and what's gold, and pay proper prices for bank assets.

Perfect case in point: today we learn that JP Morgan is buying WaMu. If they can turn around, great; if not, then they will bear the loss. So why the f*** should you and I and Bill Yard and the rest of the public have been forced, via the POS Paulson Plan, to jump in here and absorb WaMu's sh*t?

Politico.com nails it:

"Wall Street giant J.P. Morgan is poised to take over the assets and deposits of Washington Mutual, one of the major national banks on the verge of failure, CNBC has reported.

"Why this matters to Washington and Capitol Hill: It shows the private sector swooping in to take over a bank with troubled assets regardless of where the bailout stands. According to the CNBC report, the Office of Thrift Supervision would seize Washington Mutual's assets, secure its deposits, and J.P. Morgan would take over. In theory, a failing bank like Washington Mutual could have been eligible for some piece of the bailout if it had the troubled debt that Treasury wants to purchase, but if the bank's assets are taken over by J.P. Morgan, then it might not need a bailout."

Wow. Black is white, up is down. Liberals at The Plank are defending a sweeping power grab by an ex-Wall Street piggie using nearly a * * * trillion dollars * * * in your and my money in order to pick up the sh*t-- not just sh*t mortgages, mind you, but now we're talking credit-card sh*t and student-loan sh*t as well-- from private sector financial behemoths.

You guys amaze me. Never a dull moment at tnr.com

The Paulson approach will give rise to an orgy of arbitraging, risk-shifting and cherry-picking. Many, many fortunes will be made. It is foolish in the extreme to assume that the public will come out whole-- let alone ahead-- when the hurly-burly's done. We've seen this before. Can we please at least learn from the massive corruption involved in Mexico, Asia, Russia etc when bailout plans are joined with panicked granting of sweeping powers to a few individuals.

"I'm saying the sky is NOT falling."

That's interesting.  Around two weeks ago you were berating everyone for thinking about whether Palin was remotely qualified or not (which turned out to be a prescient question) at a time when the entire financial universe had gone into free fall and the U.S. economy was in a meltdown.

Do you realize that you have about one scraggly thread of credibility left on this board, tep?

Irony - go ahead, keep stepping in it. In the massive shit that is this plan.

Yes, the patient's sick. No, we should not grant sweeping power to a quackish recommendation that the patient be subjected to electroshock therapy costing the public nearly a trillion f***ing dollars in PUBLIC money. Bad medecine. Bad politics. Bad for US democracy.

But hey, rock on with your partisan pissfest. Just don't blame me for the sh*t that's up your knees by now.

Tep, the public won't come out ahead, I agree.  But it won't be out $700 billion (which is not really "nearly a trillion") either.  More like a small fraction of that.  Bad?  Sure.  No bailout at all?  Worse.  Whose fault?  Market fundamentalists, who today refuse to clean up the mess their policies createed.  In Hooveresque (or communist) fashion, they would let the heavens fall for an ideology.

I don't particularly like this plan, and I didn't particularly like it a few days ago either.  I think there is a good if frustrating argument for helping to solve a credit/liquidity crisis that could have some global ramifications, but do it for pete's sake with strong independent management from a dedicated agency (NOT the Treasury), proper political accountability, control of executive compensation in affected companies, and looking to secure as much benefit to the taxpayer at a later date as possible.  However, I wasn't going around screaming the apocalypse is coming a couple of weeks ago.  You were.

But McCain didn't change Paulson's plan. He can't claim credit and most likely created more confusion than clarity.

Paulson's coup attempt was dead day one in Congress.

I agree Jason, there is that possibility. I can't wait to see him tonight. He's a cynical, tacky, hysterical, narcissist but he makes great copy. Like an ageing star going out in a blaze of madness; Oliver Reed vs The Codeine of Hope.

Best show in town.

tep,

If a guy gets drunk, passes out at the wheel, and crashes into a storefront, and the store owner subsequently realizes there's some dry rot around the window the guy drove through, might be a good idea to fix it before it gets worse, WE DON'T GIVE THE DRUNK DRIVER A MEDAL.

You're saying McCain's intervention is justified because the bill is flawed. Never mind the fact that it's the first significant action with the support of both parties of Congress and the White House since going to war after 9/11. Never mind that McCain has no idea what it's about. Never mind that he first said he was bailing on a debate that millions of Americans have wanted to see for months--especially moderate, undecided Americans. Never mind that, according to people in the room, he said nothing for the first 43 minutes he was in the White House meeting, then offered brief, vague generalities. Never mind that he still hasn't taken a stand on the bill or said one thing of substance about it. Never mind that the "power grab" of which you wrote was long out of the bill, a non-starter, before McCain showed up, and that the group he ostensibly was there to support, wants LESS regulation than any of the other parties to this deal. Never mind that GOP--GOP!--aides said McCain was clueless about the particulars of the bill.

Now that McCain has stepped in it, big time, you're trying to shift the argument away from him as quickly as you can to the merits or demerits of the plan itself. And you've sunk to name-calling ("liberal") because you have nothing left.

You describe arguably the most bipartisan action by the United States government in the last decade as a "partisan pissfest"? Creative, tep. Here's a clue: when we criticize your guy for not being bipartisan, that doesn't make it a partisan pissfest.

Do I think the plan's perfect? No. Do I think it will mean the death of America and the impoverishment of myself? No. Do I think there's a chance we'll get some of our money back. Yes; probably not all. Do I think things will be worse if the bill doesn't pass. Absolutely. Do I applaud the Democrats and Republicans in Congress and the White House for trying to keep the system afloat without nationalizing all of Wall Street? Absolutely. Do I condemn McCain for using it as a grandstanding ploy and nothing more? Absolutely.

This thread is not about the Paulson plan. It's about your attempt to defend John McCain.

Keep defending the drunk guy, tep. You want to give him a medal for trashing the storefront, help yourself. Count me out.

tep, the Paulson plan wan't going forward in any case.  McCain's "intervention" had nothing to do with it.

I predict that within the next few days we'll see approval of a bailout along the lines of the bipartisan compromise package--initial outlay of $250 billion, equity stakes for the the Feds, oversight...

When that comes to pas, it'll be clear that all McCain has done is delay the outcome by a few days.

I'm sorry but I don't see how the gov't's purchased loan portfolio will make money unless there is some kind of compulsory mechanism involved. Am I missing something? Is the government going to compel asset sales? From whom, where, by what criteria?

There are plenty of deep pocketed investors, not least the gentleman from Omaha, who could be buying up these distressed loans now at attractive prices. They are not doing so, either because their owners are refusing to offer them at a low enough price to be taken seriously or because the potential buyers expect the current price to go lower, or both.

Will Paulson's auction mandate which loans are to be included, or is it purely voluntary? If the latter, then how, exactly, will he get a better deal than is currently available to private investors? Why is it necessary to use my money to buy this sh*t when JPMorgan or Buffett or Jamie Diamond et al are refusing to buy it? What does Paulson know that Buffett et al do not know?

The goal is supposed to be unlocking the credit markets, not making the banks whole again. There are plenty of ways to achieve this, including putting a floor under the credit swap market, which is IIUC what Eric Cantor's bond insurance provision would help achieve. By delaying passage of this thing, McCain's intervention has enabled Cantor  and other intelligent, levelheaded congressmen to force greater scrutiny of this bill and at least get rid of some of its more vague and stupid provisions.

And another thing, tep, no more than one week ago, you were lauding Paulson as masterly leader in this crisis.  'Paulson for president,' you said.  Did I misread you?  Was that you crack at irony?  What gives?

Today's been busy, between the bailout machinations and debate news, so we've decided to roundup

aero- I'm really shocked at what emerged from this process. I expected Paulson to do what the economists said he should do: deleverage and then recapitalize the banks by wiping out shareholders. This is pretty standard stuff. I'm not a financial wizard but I still don't understand why, if unlocking the credit markets is the goal, it's necessary for the public to buy all their sh*t. It seems crude and heavyhanded, and potentially beside the point.

Also, I find it bizarre that Congress was bending over backwards to give him so much power. Again, I never expected this. It stinks.

Well, tep, maybe so.  I don't know too much about this stuff.  But then, maybe it's not an argument about profits, just a limit on the loss.  The unwillingness of the private sector to buy these debts says only that they don't see any potential for growth; it doesn't mean the assets are completely worthless.  Some of those debts will get paid off with interest, some won't.  En bloc they're a net minus, but there will be local eddy currents of profit.  I thought the debate was about setting it up so that the govt could recoup pennies on the dollar wherever possible.  

If there are other ways to unfreeze the credit markets, I'm interested.  Like I say, I don't know anything about this stuff.

But don't go giving McCain credit.  If the man had made a statement--ANY statement--about how he saw the issues, maybe you'd have a point.  But he hasn't said a damn thing.  

aero - read Martin Wolf's take, in the FT. He's as bewildered by what emerged as I am:

www.ft.com/.../a09b317e-898d-11dd-8371-0000779fd18c.html

"The fundamental problem with the Paulson scheme, as proposed, is then that it is neither a necessary nor an efficient solution. It is not necessary, because the Federal Reserve is able to manage illiquidity through its many lender-of-last resort operations. It is not efficient, because it can only deal with insolvency by buying bad assets at far above their true value, thereby guaranteeing big losses for taxpayers and providing an open-ended bail-out to the most irresponsible investors.

Furthermore, these assets are illiquid precisely because they are so hard to value. The government risks finding its coffers stuffed with huge amounts of overpriced junk even if it tries not to do so. Also objectionable, though more in design than in the fundamentals, were the unchecked powers for the Treasury. Such a fund should be operated professionally, under independent oversight. Finally, if the US government is to bail out incompetent investors it should surely also provide more help to the poor and often ill-informed borrowers.

Yet, above all, a scheme for dealing with the crisis must be able to remedy the looming decapitalisation of the financial system in as targeted a manner as possible. A fascinating debate on how to do this is under way in the economists’ forum on FT.com. To the contributions, including Tuesday’s Comment page article by Dominique Strauss-Kahn, managing director of the International Monetary Fund, I would add one by Luigi Zingales of Chicago University’s graduate school of business.*

The simplest way to recapitalise institutions is by forcing them to raise equity and halt dividends. If that did not work, there could be forced conversions of debt into equity. The attraction of debt-equity swaps is that they would create losses for creditors, which are essential for the long-run health of any financial system.

The advantage of these schemes is that they would require not a penny of public money. Their drawback is that they would be disruptive and highly unpopular: banking institutions would have to be valued, whereupon undercapitalised entities would have to adopt one of the ways to improve their capital positions.

If, as seems plausible, a scheme that imposes such pain on the financial sector would be rejected out of hand, the next best alternative would be injection of preference shares by the government into decapitalised institutions, on the lines proposed by Charles Calomiris of Columbia University. This would be a bail-out, but one that constrained the behaviour of beneficiaries, not least on payment of dividends. That would make it far better than dropping benefits on the unworthy, via mass purchases of overpriced toxic paper.

tep is absolutely right.  There is no reason for the taxpayer to pick up the tab here.  Cantor's plan is far better--it makes the banks pick up the tab for their own mistakes.  They have to pay a premium for the govt to back the securities, but hey too bad.  As I've said elsewhere, my husband has been doing this stuff for 30 years and he agreed with Paulson when he first heard the news, but when the details came out he said NO WAY.  I have little hope that the idiots who dominate Congress will understand this.  And certainly very few American voters can grasp all this.  Someone has to step up and fight for the Cantor plan.  I think the Democrats just always assume the taxpayer should pay--it is hardwired in their systems.   I guess that's why I don't like my party so much any more.  

I don't know John McCain as well as David Brooks does. In fact, I don't know him personally at