Monday, September 29, 2008

So I've got good news and bad news...

First, the good news.

McCain: Obama Is To Blame For Bailout Failure

Desperate bluster from a small, angry man. The same man who bragged about his central effort in securing a compromise just this morning.

McCain is really on his last legs here; his stunt was a disastrous failure. The bailout may not have passed in any case, but his pretence of going to Washington to fix the mess was a complete farce.

At best, he did nothing to facilitate negotiations, and at worst, actually sabotaged them. Of course, he mostly kept his mouth shut while the grownups debated, but what he did do was inject presidential politics into a delicate situation. Then, after doing nothing to achieve compromise, he nevertheless took credit for achieving the compromise, and then on the very same day, the bill is defeated in the House by members of HIS OWN PARTY. And he has the balls to blame Obama for its failure!

I honestly don't see how McCain recovers from this. Combine today's events with the inevitable trainwreck on Thursday, and I think we're looking at 300 electoral votes minimum for Obama in November.

Isn't it time for McCain to "suspend" his campaign again?

So that's the good news: McCain, already in a deep hole, just dug it a little deeper.

But the bad news is that this is some serious shit. Largest ever one-day drop on the Dow. Same for the TSX. World markets will no doubt follow suit.

For all the ignorant crowing by some on the Left, what happened today is bad for everyone, rich and poor alike. Look, no reasonable person wants the crooks on Wall Street to be bailed out. It's a tough pill to swallow, and that's precisely what is making this politically untenable for so many incumbent Congressmen (read Nate Silver). And maybe there are better ways to do this.

But what happened today just erased more than $1 trillion worth of wealth. And Wall Street fat cats aren't the only ones suffering (in fact, they'll suffer less than most). It's people's retirement funds. It's their jobs. If nothing is done to fix this, everyone is going to feel the effects, and don't fool yourselves into thinking otherwise.

UPDATE: Ezra Klein's take on the failure of the bailout:

With leadership -- and elites -- so aggressively behind the bill, the massive defections suggest that congressmen are sensing a towering populist outrage. Like on the immigration bill, the opposition did not fear their party but their voters. The implication here is that the politics of the bailout are much more intense than most currently recognize.

The question is what comes next. The Dow has plummeted. It's lost 700 points in a single day. It's the sort of freefall that suggests the markets may well begin to lock, that the continually available credit that oils the economy may dry up, with catastrophic consequences. The pressure from the market collapse could sober some congressmen into voting for the next iteration of the bill after having extracted some quick and cosmetic changes. Few want to be judged, either by their constituents or by history, for crushing the American economy beneath their own political cowardice. Alternatively, House Democrats could construct a new strategy: Rather than looking for bipartisan agreement on a muddled bill, they could take full ownership and seek partisan agreement on aggressive bill. They could move away from the bailout model and towards outright nationalization. Only Pelosi knows if she's got the votes for that.

Above all, though, this is a failure of politics. Like with global warming, with health care, with the national debt, with immigration. It is further proof that we have a calcified political system incapable of responding to either long-term threats or short-term crises. The electoral and partisan incentives have made actual action too dangerous and rendered obstruction everyone's easy second choice. And in politics, you just about never get your first choice. And so the Republicans killed this bill. Without their cover, the Democrats couldn't save it, because politically, they couldn't take ownership of it.

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