Vote McCain, Get a 25% Chance of President Palin

Now, for something from the "worth considering" department: According to the Associated Press, actuaries have determined that John McCain has a 25% chance of not surviving a second term in office, should he win the presidency on Nov. 4. 

Discuss.

Why Main Street Needs to Bail Out Wall Street

On Monday I left my New York financial district office to get some lunch and Jesse Jackson was out on the street leading a protest of union members against the government's financial bailout plan.

"Bail out working people, not Wall Street," was among their chants.

What they didn't understand was that "working people" (I resent the implication in this phrase, incidentally, that non-union, white collar employees don't really "work") are inextricably tied to Wall Street.

It's understandable that many citizens are struggling to grasp why it's so important for the government to spend $1 trillion or thereabouts to buy the troubled assets of financial institutions, many of whom wound up in this mess because of their own irresponsible behavior. Populist rhetoric from lawmakers on both sides of the aisle isn't helping. In his column in today's New York Times, Thomas Friedman lays it all out perfectly:

"This is a credit crisis. It’s all about confidence. What you can’t see is how bank A will no longer lend to good company B or mortgage company C. Because no one is sure the other guy’s assets and collateral are worth anything, which is why the government needs to come in and put a floor under them. Otherwise, the system will be choked of credit, like a body being choked of oxygen and turning blue.

Well, you say, “I don’t own any stocks — let those greedy monsters on Wall Street suffer.” You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street’s new sewer system, and your local car company depended on the credit markets to finance your auto loan — and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.

We’re all connected. As others have pointed out, you can’t save Main Street and punish Wall Street anymore than you can be in a rowboat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too. The world really is flat. We’re all connected. “Decoupling” is pure fantasy.

I totally understand the resentment against Wall Street titans bringing home $60 million bonuses. But when the credit system is imperiled, as it is now, you have to focus on saving the system, even if it means bailing out people who don’t deserve it. Otherwise, you’re saying: I’m going to hold my breath until that Wall Street fat cat turns blue. But he’s not going to turn blue; you are, or we all are. We have to get this right."

Actually, I think Mr. Jackson understands this perfectly, but he'd rather exploit citizens' fears than tell them the truth, because doing the former preserves the tattered remains of his political standing. The nomination by Democrats of Obama — who, unlike Jackson and other liberals of his generation, prefers to appeal to the better angels of our nature than to our basest anxieties and class resentments, is ushering in a new era for the left. And that era has little room for demagogues like Jackson.   

Have I Entered a Parallel Universe?

Last night as I was falling asleep I caught a few minutes of the film "Bowfinger," particularly the scene where the Hollywood star played by Eddie Murphy becomes convinced that aliens are determined to swoop down and steal his reproductive organs for scientific study.

Turns out it was a fitting way to end the day. For what I witnessed today had me truly wondering whether I had entered a strange alternative universe, one that looked and felt very much like ours except for the fact that every living soul had irretrievably lost his marbles (but, thankfully, not his privates).

First, I finally got around to viewing a bit of Sarah Palin's interview with Katie Couric, particularly the passage lampooned on Saturday Night Live this past weekend by Tina Fey. I am simply flabbergasted. The video speaks volumes. Watch it here.

This woman simply is not qualified to serve as vice president. I have no other words to describe my utter incredulousness in the face of her candidacy.

Of course, we have the freedom to not vote for Palin. What our elected leaders in the House of Representatives did today by voting down the $700 billion bailout package that the Bush administration and congressional leaders hammered out over the weekend is an example of ineptitude and malice on the grandest of scales — and, unfortunately, there is little we can do about it in the near term.

With giant, blue-chip financial institutions falling like dominoes on a daily basis, countless others on the brink of failure, credit markets seized up and securities markets plummeting worldwide, a majority of House members stared into the abyss this afternoon and said "Bring it On!" The stock market responded with its worst day in two decades. We are in uncharted financial territory here. People are worried that the money in their savings accounts will disappear. The price of oil plummeted on widespread fears of a deep global recession.

Legislators, after scuttling the bailout for craven political reasons last week, had a second chance to behave like adults who cared more about their country and their fellow human beings than about their re-election prospects, and they blew it. Republican or Democrat, it does not matter. Our leaders have failed us and have thrown the United States and the rest of the world within a hair's breadth of a serious economic depression. Citizens should punish every last legislator who abandoned his country today by voting them out of office at our very next opportunity.

Barney Frank's CEO Pay Fantasy

I think Barney Frank is a good man with fine intentions. But he is dead wrong to have insisted upon attaching limits on financial executives' pay to the $700 billion plan reached yesterday to bail out the country's troubled financial institutions. Frank, chairman of the House Financial Services Committee, is wrong not only about the wisdom of the government regulating what private companies pay their CEOs, but also about Congress' history of meddling with private-sector paychecks. 

"This is the first time in the history of the United States that anything has been done by the Congress to curtail excessive CEO compensation," Frank said about the plan yesterday. 

Wrong. 

Set aside for a moment the quite thorny issue of how to define "excessive" — as well as the general consensus among our elected leaders that the bailout is an unfortunate, if necessary, incursion by government into the free market — and consider the following: 

In 1993 Congress enacted legislation that drastically altered the tax law surrounding executive compensation, rescinding the tax-deductibility of any cash compensation over $1 million. Supporters of the measure thought it would force companies to curb runaway executive compensation. Instead, it prompted smart people in private sector, chiefly in Silicon Valley and on Wall Street, to begin granting executives gobs of stock options, which were not subject to the new tax. 

So, rather than keeping executive pay down, this measure contributed to the orgy of options grants in the late 1990s and early 2000s that fueled the dot-com bubble and a wave of accounting frauds involving companies such as Enron, WorldCom, Tyco International and Adelphia Communications. In many of these cases CEOs and other top-level executives had so much financial gain riding on their stock prices that they succumbed to accounting chicanery that would artificially inflate those stock prices. The collapses of these corporations and the collateral damage to financial markets cost investors — including mutual fund shareholders and beneficiaries of union pension plans, 401(k)s and IRAs, the very Joe Sixpacks that Frank and other Democratic members of Congress are pandering to with this addition to the Paulson bailout plan — tens of billions of dollars.  

Frank is right to complain about the prolonged failure of government to sufficiently regulate the financial-services sector, a failure that contributed greatly to the crisis from which we are now struggling to emerge. He and his peers should push for more sensible oversight as part of a broad restructuring of our financial-regulatory infrastructure, once the dust settles from this bailout. I believe firmly that a limited dose of thoughtful, balanced government regulation of the private market is absolutely necessary to prevent capitalism, the best organizing principle mankind has yet devised, from eating itself. But attaching unrelated, willy-nilly limits on the free market such as this harebrained executive-comp measure — and then claiming such nonsense as an unprecedented victory for the Little Guy against The Man — is disingenuous at best and, indeed, as the history of legislative unintended consequences illustrates, potentially harmful to our country.  

Irresponsible. Reckless. Dangerous. McCain.

I know this is supposed to be a non-partisan, fair-minded blog. I'm really, really, really trying to keep it that way. But I'm getting angry. Very angry. 

As I write this stock markets around the world are plummeting in response to Washington's failure to agree on a rescue package for the badly battered global financial system. 

My reading of the events of the past few days leads me to the conclusion that McCain is primarily to blame for this outcome. 

The market crisis deepens with every hour: today the federal government seized Washington Mutual, which has so many bad mortgages on its books it can no longer fund itself. This is the biggest bank failure in American history. 

Treasury Secretary Hank Paulson unveiled his bailout plan on Sunday. In an interview on Tuesday McCain said he couldn't say whether he supported it or not because he'd not yet read it:

Hmmmmmm. He hadn't had a chance to see it "on paper" yet. Well, what if we try "The Google?"

Hold on, be right back. 

There. In 0.31 seconds I found the text of the plan in an article from Sunday's New York Times

Senator, the plan is two and a half pages short. It took me about three minutes, just now, to read from beginning to end. So, in less than four minutes, while writing this post, I learned more about the plan than you did in the two days after its release. 

As a United States Senator, and ranking member of the Commerce Committee, shouldn't you have been paying more attention? Granted, you're not particularly facile with them newfangled computers, but I'm willing to bet 1,000 shares of WaMu that Paulson probably would have picked up the phone and read the whole plan to you, the old-fashioned way, had you thought to ask. 

Yet on Wednesday we were supposed to believe that you had grown so concerned with the imminent threat to the economy that you had to suspend your campaign, including Friday's debate with Senator Obama, and rush to Washington to fix things. (But not before an interview with that hard-hitting journalist Katie Couric, a sample of whose award-winning work is embedded below).

 

Then, on Thursday, House Republican leader John Boehner, during the White House photo-op you and your party orchestrated so that you might somehow glom the credit for a bailout that already looked all but certain to pass, announced that his caucus could not support the bailout plan. Why? Because they felt that the Democrats wanted to speed up announcement of the agreement to head off your brazen attempt at exploiting this crisis for political gain. 

So, in summary, our leaders in Washington had finally come to their senses and appeared ready to behave like adults for a fleeting moment to solve a major crisis and you, Senator McCain — the self-styled problem solver who is supposedly above politics-as-usual — have singlehandedly derailed that effort. 

Congratulations on undoing an entire career of honorable service to our nation.