Sure, the comparisons between Herbert Hoover and McCain were inevitable ever since McCain asserted "the fundamentals of the economy are strong."

But if you think about it, McCain’s about to do Hoover one better. After all, Hoover didn’t fuck up the response to a financial crisis until after he was President. McCain’s little photo op seems to have scuttled the Paulson deal, just as it was almost finalized.

Democrats complained of being “blindsided” by a new conservative
alternative to the plan first put forward by Treasury Secretary Henry
Paulson. And the outcome casts doubt on the ability of Congress to move
quickly on the matter, even after leaders of House and Senate banking
committees reached a bipartisan agreement Thursday on the framework for
legislation authorizing the massive government intervention.

It was McCain who urged President Bush to call the White House
meeting attended by House and Senate leaders as well as Obama, his
Democratic rival. But the candidates left without commenting to
reporters outside, and the whole sequence of events confirmed
Treasury’s fears about inserting presidential politics into what were
already difficult negotiations.

[snip]

At the same time House Financial Services Committee Chairman Barney
Frank (D-Mass.) said he feared McCain was undercutting Paulson by
appealing to conservatives in the House.

“McCain and the House Republicans are undercutting the Paulson plan,
talking about a wholly different approach,” Frank said prior to the
meeting. “This is the presidential campaign of John McCain undermining
what Hank Paulson tells us is essential for the country.”

What is it that I saw on those signs, again? "Photo Op First"?

Via John Cole, it appears our bankers were none too impressed with Bush’s speech last night.

Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

I guess this is where we start talking about paying for milk with wheelbarrows full of cash, fresh off the very busy printing press.

Help me with the timing on this.

Sometime–either earlier today or earlier this week–Sarah Palin sat down and taped an interview with Katie Couric. The first part of that interview airs this evening.

Then instead of showing up for a scheduled interview with David Letterman, and at a time when he said he had to run back to DC for emergency work to save the American economy, McCain did an interview with Katie Couric. In other words, after the McPalin campaign assessed how the Palin-Couric interview went, they put together a last minute interview between McCain and Couric.

As of this moment, CBS News has, as its lead story, McCain’s debate cancellation stunt. Not Sarah Palin’s second interview with a straight reporter. McCain has effectively pre-empted the interview with his running-mate. 

I get the feeling that Palin-Couric interview went even worse than the Charlie Gibson one.

And perhaps not coincidentally, McCain is now trying to postpone the VP debate.

Let me just clarify what seem to be the underlying issues behind McCain’s latest gimmick.

First, the bailout is in deep trouble. There are several reasons why the bailout is in trouble. It’s a crappy plan that, experts believe, does not really fix the crisis. So for those assessing the plan rationally, there is great skepticism about it.

In addition, Democrats are rightly suspecting this is another case of the boy-Bush who cried wolf. At the very least, the Bush Administration is springing this bailout in a irresponsibly political manner.  Add in Paulson’s dishonesty about the bailout, and the Administration simply can’t be trusted as honest partners in trying to solve this problem.

Meanwhile, Republicans are unwilling to accept what this crisis clearly proves: their ideology is dead. Rather than deal with the crisis the country is in, they are instead trying to turn the crisis into a campaign gimmick–an opportunity to distance themselves from Bush.

All of these things: the problems with the plan, Bush’s lack of credibility with Democrats, and Bush’s inability to get his own party to put country over campaign gimmicks, demonstrate the depth of Bush’s leadership failure.

At the same time, Republican promises to politicize this issue–along with Paulson’s promises–made McCain the key political stumbling block to crafting a deal.

So Obama did the right thing–showed leadership. At 8:30 AM, Obama reached out to his rival to propose they come up with a bipartisan statement. By making this effort, Obama gave up the opportunity to show just how much better he and his team are responding to this issue and instead prioritized finding a solution that would work.

McCain received that offer.

And he sat on it.

For six hours.

Finally, at 2:30 PM, McCain accepted the offer to put country ahead of politicking.

Only McCain couldn’t afford to do that. It seems that, during those six long hours when McCain was mulling Obama’s proposal, McCain was inventing a way to turn this into yet another political gimmick. Twenty minutes after accepting Obama’s proposal, McCain pulled this stunt of calling for a suspension of the campaign and postponement of the debate.

Bush’s failure of leadership, Obama’s assumption of that leadership, followed by McCain’s empty stunt. That’s the state of our country right now.

And as for the guy whose failures got us into this mess? Bush is willing to accept Obama’s and McCain’s "bipartisan support," but not an actual bipartisan discussion of how to solve this problem.

Obama takes 9 point lead in national poll and Palin gimmick has worn off entirely.

…

…

What? You thought I was announcing that McCain is suspending his campaign to go back to his day job?

Truth be told, this appears to be McCain’s attempt to get credit for making these discussions bipartisan, when in fact, Obama made the first move. From Obama’s Press Secretary, Bill Burton:

At 8:30 this morning, Senator Obama called Senator McCain to ask him if he would join in issuing a joint statement outlining their shared principles and conditions for the Treasury proposal and urging Congress and the White House to act in a bipartisan manner to pass such a proposal.  At 2:30 this afternoon, Senator McCain returned Senator Obama’s call and agreed to join him in issuing such a statement.  The two campaigns are currently working together on the details.

John McCain has a narrow road to the Presidency. He has to bank on his claimed greater qualifications to be Commander-in-Chief to attract the votes of those who still believe the Global War on Terrorists and the Nations We Occupy (GWOTANWO) is our biggest concern. To win his Commander-in-Chief argument, McCain has to downplay the fact that Obama’s gradual withdrawal from Iraq is in fact the plan Maliki supports (and McCain has to hope Bush remains successful in shutting Maliki up about it), emphasize the spin that Obama has said the surge was a success, and hope no one remembers that McCain was a big hawk on the Iraq war back when we could have avoided it.

Oh, and he has to hope no one talks about how the McCain-Bush Iraq myopia led to the utter neglect of Afghanistan, thereby letting the terrorists regain a foothold in Pakistan’s tribal areas.

And to that end, the Bush Administration will not tell us what its NIE on Afghanistan says.

Officials say a draft of the classified NIE, representing the key judgments of the US intelligence community’s 17 agencies and departments, is being circulated in Washington and a final "coordination meeting" of the agencies involved, under the direction of the Office of the Director of National Intelligence, is scheduled in the next few weeks.

According to people who have been briefed, the NIE will paint a "grim" picture of the situation in Afghanistan, seven years after the US invaded in an effort to dismantle the al Qaeda network and its Taliban protectors.

After all, the only way the Iraq surge can look even remotely successful is if we remain ignorant of the opportunity costs we paid to execute it.

Hank Paulson and Ben Bernanke are the wrong guys to solve this financial crisis.

I’m not talking, here, about Paulson’s very obvious conflicts of interest, though those are troubling. Paulson, after all, was CEO of one of the companies that in 2004 got an exemption on leverage limits–one of the moves that led to this crisis. And Paulson’s proposed bailout would disproportionally benefit his former company.

But I’m increasingly troubled by the ways in which Paulson and Bernanke are functionally inadequate to solve this problem–at least by themselves. By having Paulson and Bernanke solve this problem themselves, we guarantee that we’ll primarily address this as a finance crisis, and not an underlying structural crises in our economy.

While both Paulson and Bernanke have responsibility for the overall economy of the country, that responsibility is focused closely on monetary policy of the US.

The Fed describes its role as follows:

• Conducting the nation’s monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices
• Supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
• Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
• Providing certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation’s payments systems

And Treasury describes its mission:

The Treasury Department is the executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States. The Department is responsible for a wide range of activities such as advising the President on economic and financial issues, encouraging sustainable economic growth, and fostering improved governance in financial institutions. The Department of the Treasury operates and maintains systems that are critical to the nation’s financial infrastructure, such as the production of coin and currency, the disbursement of payments to the American public, revenue collection, and the borrowing of funds necessary to run the federal government. The Department works with other federal agencies, foreign governments, and international financial institutions to encourage global economic growth, raise standards of living, and to the extent possible, predict and prevent economic and financial crises.

The Fed talks about "full employment and stable prices." Treasury talks about "economic prosperity" and raising standards of living and "encouraging sustainable economic growth." But both entities envision doing so–as their missions reveal–primarily by ensuring the health of the financial system. That is, built into their current mission is the assumption that the finance industry is the privileged industry in this country from which all other economic success comes.

Consider what Kevin Phillips had to say about what got us into this problem:

However, I would say that the two most important underpinnings of financialization lay in the rise of public and private debt as a mainstay of American culture and economics and the perpetual liquidity and bail-out support of the Federal Reserve Board under Alan Greenspan. During Greenspan’s 1987-2005 tenure, the sum of public and private debt in the United States quadrupled from just over $10 trillion to $43 trillion. Finance became the industry that was not allowed to fail but was permitted to enlarge and metastasize its behavior almost at will. Regulation was minimal. Favoritism was omnipresent.

The result, alas, has been all over recent headlines. America’s biggest ever housing bubble, with 57 varieties of exotic mortgages and home prices now plummeting at rates unseen since the 1930s. The United States turned Credit Card Nation, with a citzenry in thrall to plastic, 20% interest rates and late fees for just about everything. Huge banks like Citigroup feel no shame in paying billion-dollar fines for colluding with Enron’s tax and accounting deceits. And since mid-2007, national and world credit markets have been panicked and paralyzed by hitherto obscure instruments — the stand-outs are collateralized debt obligations (CDOs) — that not even their designers and packagers can explain. [my emphasis]

We made a decision under Reagan to privilege our finance industry at the expense–especially–of manufacturing. And in doing so, set up the underlying permissiveness  that got us into this crisis. Yet, by having Bernanke and Paulson lead the response to this crisis, we’re guaranteeing that that underlying privilege of finance continues. Bernanke, especially, and Paulson to a large degree are justified in seeking to solve the financial crisis that threatens to undermine the rest of our economy. That’s their job. But by letting them take the lead on this, we avoid taking a critical look at the overall structure of our economy.

There’s a parallel that I keep thinking of. When David Petraeus, as the commanding General in Iraq, testified before Congress last September, members of Congress repeatedly asked him whether the surge troop levels were taxing the military more generally. Petraeus answered correctly, but in a way that exasperated those people who asked, that it wasn’t his concern. Petraeus’ job, after all, was doing everything he could to ensure the success of Iraq. Whether Afghanistan succeeded or failed wasn’t his concern (until he took over CentComm recently, that is). Yet the guy Congress consulted about whether the surge was hurting our other military priorities was a guy whose job it was to focus exclusively on Iraq.

Now, I realize that Bernanke and Paulson would have to be significantly involved in solving this crisis. But we ought to be including the Secretaries of Commerce, Ag, HHS, and Labor (no, I don’t actually pretend that Elaine Chao is going to help here), to consider the ways that solving other structural problems in our economy ought to be part of our approach to solve this current fiscal crisis. For example, if we were addressing the reasons why most Americans’ incomes have been stagnant over the last decade–and as a result they have instead been coping with inflationary pressures by using their house as an ATM–we’d be more likely to devise a solution that would work over the long term.

Thing is, though, the person who should be ensuring we situate this crisis in our larger economic weakness–the President–is totally unqualified to do so. I’m frankly reasonably happy that he’s quivering in the White House weeping about his legacy. But that doesn’t mean we should forget the larger picture because we have a President who is incapable of seeing the larger picture.

Hidden in an article reporting that Cheney’s going to go hunt up some support for the $700,000,000,000 bailout is this admission that the Bush Administration has been sitting on it for some time:

Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough. [my emphasis]

Which raises three questions for me:

A) First, as we’ll discuss today in the book salon on Woodward’s War Within, the Bush Administration refused to admit Iraq was FUBAR even while, for seven months, they were drumming up a new strategy because it was FUBAR. They did so because they didn’t want to affect the mid-term elections.  So has the Bush Administration been formulating a plan to bail out their buddies, in secret, because they didn’t want to let the voters know how badly they had fucked up the American economy before November?

B) And if that is true, how much worse has the economy gotten–and how much more expensive will the bailout be–because the Bushies were trying to hide yet another colossal Republican failure?

C) Or, did they simply not tell us about their fuck-up so they could spring the $700,000,000,000 surprise on us on a Friday and demand results by Monday? The Shock Doctrine at work!

Though, I guess "A" and "C" are not necessarily either/or propositions. 

Here’s an interesting question. Who told the Palin-friendly TrooperGate witnesses not to show up? It’s relevant, you see, because two Democrats are thinking of asking the police to investigate whether there was any witness tampering in the case. It seems they’re not focusing on the more incendiary possibility that Murlene Wilkes’ financial incentive persuaded her to lie to Stephen Branchflower about being pressured to deny a Wooten workers comp claim. Rather, these lawmakers are considering whether the mere act of instructing witnesses to ignore a subpoena constitutes witness tampering.

Separately, two Alaska Democrats said they are considering asking state police to investigate why subpoenaed witnesses, including Palin’s husband, did not testify before the legislative committee last week. The lawmakers, Rep. Les Gara and Sen. Bill Wielechowski, said state law bars witness tampering, but that they did not have enough information to file a formal complaint in the case.

In other words, the people who told Todd Palin and about seven state employees to blow off a valid subpoena may be on the dock for witness tampering.

I don’t know whether that argument withstands legal scrutiny (bmaz?). But the McCain team is taking no chances. They say they didn’t tell witnesses not to show.

Griffin said the campaign has not advised any witnesses on how to respond to subpoenas.

Which makes me wonder whether this is one of the reasons why Palin’s lawyer, Tom Van Flein, is lying about having terminated his contract with the state.

Last week, Governor Palin’s lawyer Tom Van Flein was quoted in the Anchorage Daily News as saying that his "firm last Friday terminated its state contract, worth up to $95,000, to represent the governor’s office."

Not true. The contract wasn’t canceled.

Van Flein has a written contract with the State of Alaska. Like all such contracts with the State, it has provisions governing termination. Termination requires notice to the State, typically in writing.

According to my sources, Van Flein did not provide notice of termination to the state, either in writing or orally.

See, back when I was trying to count all the conflicts of interest among Palin’s legal teams in Alaska, I speculated that maybe Van Flein had terminated his contract because it made it possible for him to represent both Sarah and Todd Palin, getting around the fact that 1) the state shouldn’t pay legal fees for a non-state employee, and 2) the state shouldn’t pay a lawyer to represent two parties whose interests may not coincide, and 3) the state should not pay a lawyer if the Attorney General decides to un-recuse and stick his nose in the case.

But Van Flein hasn’t, apparently, terminated his contract with the state. Which means the state is still paying for badly conflicted legal representation even though one of the reasons they’re paying for it (because the AG had supposedly recused) is no longer operative.

More importantly, Van Flein, at a time when he was employed by the state and consulting with McCain’s fancy terrorism prosecutor, almost certainly advised Todd Palin he could simply blow off a valid subpoena.

Doing so on the state’s dime, it seems, raises the stakes on that advice.

From Helena Cobban (h/t MinnesotaChuck).

China’s President Hu Jintao has now explicitly linked his country’s readiness to show good cooperation in resolving the US financial crisis to the question of Taiwan.

Beijing’s official Xinhua news agency reported today that Hu and Pres. Bush conferred thusly about the crisis yesterday evening (Washington time):

Bush briefed Hu on the latest development of the U.S. financial market, saying his government was well aware of the scope of the problem, and had taken and would continue to take necessary measures to stabilize the domestic and world financial markets.

Hu [said he] hoped the measures would soon take effect and lead to a gradual recovery of the financial market, which he said not only serves the interests of the United States, but also those of China, and benefits the stability of the world financial market and the sound development of the world economy.

… He said China is ready to work with the U.S. side to intensify dialogue, exchanges and cooperation, and properly handle issues concerning mutual interests and of major concern, particularly the Taiwan question, in a bid to push forward the sustained and steady development of the Sino-U.S. constructive and cooperative ties.

How long do you think Hu has been waiting for the moment he had Bush by the balls?

When you come begging to your banker, you’ve got to expect him to issue demands, I guess.