The worst news of the year

Nine days ago in this space, I took a lot of heat for pronouncing John McCain’s selection of Sarah Palin as politically “brilliant.”

My assumption, of course, was that McCain had actually seriously vetted the most important decision of his campaign (I was wrong), but, scandals and ugliness in Palin’s past notwithstanding, that judgment is looking pretty sound. I praised the selection as giving McCain his best, perhaps only, shot at winning in November, and after this week’s convention and media coverage, the McCain strategy has become pretty clear: make November a referendum on personalities, not issues or records. Over the next eight weeks we’ll hear lots from the Republican camp about McCain’s war heroism and Palin’s ability to gut a moose, and virtually nothing about how they would actually govern — because to talk honestly about that would guarantee the White House to Obama.

So is that strategy — and Palin’s selection — working as planned? Judge for yourself. This weekend, from the Sunday chat shows to the daily newspapers to the blogosphere, it’s all about Palin. Meanwhile, an administration that has perfected the art of quietly letting slip bad news in the slow news cycles of the weekend let slip Friday night the worst news of the year — maybe of the decade (and yes, 9-11 was this decade). And thanks to Sarah, it is going all but unremarked:

The Treasury Department is expected to announce as early as this weekend a plan to bail out and recapitalize collapsing home mortgage giants Fannie Mae and Freddie Mac in one of the biggest government rescues in U.S. history. […]

According to media reports citing unnamed sources close to the negotiations, the government is expected to take at least temporary control of Fannie Mae … and place the troubled firms under the umbrella of the Federal Housing Finance Agency. […]

Fannie and Freddie hold roughly $1.5 trillion in direct debt, guarantees on what could be as large as $5 trillion and possibly off-balance sheet obligations that could reach $3 trillion, according to recent estimates from Ladenburg Thalmann & Co.

This is a disaster of epic proportions. In the best case scenario, we’re looking at a federal bailout that will make the savings and loan bailouts of 20 years ago (remember the Keating Five?) look like an ordinary earmark for Wasilla. At worst, the federal government just bought itself a major depression:

Today, we are back to the 1930s with large financial institutions reaping huge profits and paying obscene salaries to their CEOs in good times and with government bailing them out with public money when things turn sour.

And that’s not even the worst part. The takeover was reportedly forced by the foreign central banks that own much of America’s debt, particularly the Chinese.

Remember when red-meat conservatives used to rail (rightly) about the “red menace” of China? Well, while John McCain was crowing about his empty (and illusory) “victory” in Iraq Thursday night, his party’s government was capitulating completely to a far more serious global adversary on an issue that will likely spell ruin for tens of millions of Americans. And it was all made possible by economic policies McCain has enthusiastically signed off on, and a deregulatory law (the Commodity Futures Modernization Act) pushed through Congress by McCain head financial advisor and campaign co-chair Phil “Nation of Whiners” Gramm.

So much for “Country First.”

In any educated country, this news would drive a stake through the heart of the McCain campaign (as well as earning Bush unassailable honors as the Worst President Ever). But most Americans don’t even know what a “secondary mortgage market” is, let alone why it’s important, let alone why this news is so devastating. Our media certainly doesn’t help: instead of explaining it to us, we’re being inundated this weekend with moose drool. Which, absent the particulars, was (along with firing up the conservative base, and perhaps snagging a few credulous Hillary supporters) the entire logic behind the Palin pick: bad for the country, but good for McCain and friends.

That shouldn’t surprise us: it’s how Republicans govern. Cronyism and “America Last” is the overriding theme throughout the entire, ruinous eight-year Bush kleptocracy. And now taxpayers will be bailing out all the (well-heeled) decision-makers who exploited banking deregulation, kept all the fabulous profits, and now are sticking us with the inevitably staggering losses — in a course of action forced on the United States by a foreign adversary.

The American Empire may just have been permanently buried (though we may expect what Dick Cheney might call the “last throes” for some time to come). Thanks in large part to Sarah Palin, with a big assist from a lazy, celebrity-based media culture, the American people mostly aren’t even noticing. But when the economy subsequently tanks — and it will — we’ll notice in a big way. Republicans are simply hoping that will be some time after November 4.

Comments

  1. 1

    spews:

    Nice analysis. That was a good read. I’m still thinking about it. That’s why I originally came to this blog, to read well-written, original perspectives on political issues.

  2. 2

    Right Wing Nasty Troll spews:

    And yet not one sentence dedicated to how Obambi will stave off the coming economic depression. Just more smears.

  3. 3

    YellowPup spews:

    Geov: outstanding post. I caught an hour of CNN this morning and heard the news about the takeover, but nothing of value re: the implications. These kinds of issues don’t lend themselves to “I love the 80s,” expert roundtable-style cable news staple political analysis.

  4. 4

    Firedoglake comments spews:

    #2 Geov did refer to you with this sentence:

    “In any educated country, this news would drive a stake through the heart of the McCain campaign (as well as earning Bush unassailable honors as the Worst President Ever).”

  5. 5

    Oh my spews:

    @2 I see that you are not disputing Geov’s argument about the terrible job you rightwingers have done at governing. Is it because you agree with him, or because his argument is irrefutable?

  6. 6

    YLB spews:

    Excellent post.

    If McSame pulls it out in November, we’ll still have the last laugh.

    McSame will just fulfill the second term of Herbert Hoover.

    Who then will be the next FDR? It won’t be Obama until he jettisons his Chicago School advisers.

    You wingnuts are so fucked!

  7. 8

    YLB spews:

    Geov – question.

    What was so “rightly” about the “railing” coming from the red-meat conservatives over China?

  8. 9

    Don't you think he looks tired? spews:

    And now the auto makers want federal loans too: http://ap.google.com/article/A.....gD932083O0. $50 billion in loans so they can build fuel efficient automobiles. Of course the feds have been unsuccessfully pressuring the auto makers to improve fuel economy since the late 70s. Why weren’t the auto makers preparing for this back when oil was cheap and they were making money hand over fist selling SUVs? The repugs tell us that we have to get out of the way and let the market work so that we get all these wonderful efficiencies, but look where it gets us.

    I checked on line and Ford’s market capitalization is around $10 billion. GM’s is more like $6 billion. So these companies are asking us to loan them more money than they’re worth. I think the government should demand equity interest and seats on the board in return for these loans. The ultra-free market repugs have proven that they can’t run financial institutions and they can’t run auto companies. Not matter how bad government bureaucracies may be, they couldn’t do a much worse job. Time to give a mixed economy a chance.

  9. 10

    YLB spews:

    9 – Whoa! You’re on to something there. This is an opportunity to open corporate boards to union representation just like in Europe.

    heh. The changes are a comin’!

  10. 11

    SeattleJew spews:

    Geov!

    This may be the best post yet on HA.

    There is a lot to think about here.Esp in re the economic advisers who are backing BHO vs JMcC.

  11. 12

    PAUL spews:

    I thought Geov. was enough of a commie to understand nationalization.

    FROM THEIR INCEPTION BOTH OF THESE PASS THROUGH MORTAGE MECHANISMs WERE ASSUMED TO BE CHARTERED BY THE GOVT.

    Defaulting on their role would collapse the dollar and create havoc in all directions. Remember English and French banks have failed because of bad Amrican paper.

    We now have a bigger FHA (sor of) which if well managed should work just fine.

    The credit of the Federal Treasury has worked miracles. Often costing little real cash dollars.

    There was no option except to nationalize.

    IT IS ONE OF THE BETTER DECISION BY THE SEC. OF THE TREASURY – NO NO NO OTHER WAY OUT OF THIS PIECE OF THE BURST HOUSING BUBBLE

    It is interesting how old lefties get so stuffy.

    Big oil next??

  12. 14

    spews:

    @13

    This election is like a chess game.

    Obama’s message = Change.

    McCain’s message = Experience.

    Obma’s move = Pick VP with Experience.

    McCain’s move = Pick Female VP with no experience. Co-opt change message.

    Now Obama blocked from criticizing her on experience, because of his own lack of experience.

    It’s Obama’s move. The gap has closed. The momentum is in McCain’s favor. Obama can’t coast to victory. But he has to be careful in how he proceeds from here. Seems like going after Palin just engenders sympathy for her.

    I think this is a rare case where the VP debates may be more crucial than the Presidential debates. This election may turn how she does when debating Biden, who I have no doubt will do well when going “off-script.” Not so sure about her.

    If she does poorly, the nation will realize there’s no way she should be a heartbeat away. In other words, Biden can do poorly. She can’t.

  13. 15

    busdrivermike spews:

    #13

    “Obama is cratering!”

    Yay! 4 more years of selling our tax base to the Chinese so Iraqi Arabs can have security while building a little nest egg.

    Sweet! More war!

    Wooohoooo! Cronyism, Rape of the Constitution, torture, and criminal conduct in the White House!

    Far out, Asshole! You win! You win!

  14. 16

    PAUL spews:

    It is the apex of bad spectacle of bad campaigning strategy to have Obama heckling this VP choice who is nice mommie and newbie.

    Mc Cain and Palin are setting the agenda – still – they sucked him in.

    What happened? Who the hell is running the show.

    On TV this am Biden rambled on for ten minutes about himself, the guy is a really elevated blowhard – she will cut him to ribbons while smiling and touching her breasts and then he will begin shouting at her … me me me – I I I I I …

    God oh god.

    God oh god.

  15. 17

    Roger Rabbit spews:

    @15 Obama doesn’t have to move. Independent women voters are moving from McCain to Obama because they don’t like Palin’s stance on abortion or her lousy record on women’s issues. And that will write finis to the Crank/Skank08 carnival act.

  16. 18

    Roger Rabbit spews:

    Yawn. None of this will affect me, except the Inflation part. Although I do feel like a damn fool for paying off my mortgage in full. Ah well, moral hazards are like potholes, you can’t avoid ‘em all, because you don’t always see them coming. But I digress! As I was saying, I have no mortgage, no job, not much American money; just my burrow, a couple of safe government pensions and social security, and my investments. Even if the whole financial world blows up around me, I can always eat grass! And this park is full of grass! And Stefan’s garden is only a hop or two up the hill, although I gotta admit the service in Stefan’s garden went downhill after he had the waitress arrested, tortured, and killed for insulting his ADHD kid. She’d be alive today if she’d been more sensitive to the disabled. All the ill effects of the economic catastrophe created by the stupid Republicans — depression, joblessness, market crashes, bank failures, etc. — will sail above my head like cumulus clouds on a breezy spring day. And if this causes a human die-off, hell, my species is ready to fill the niche! I’m ready and willing to make as many more rabbits as there’ll be space for after all you humans get raptured away on your SIVs and CDOs! So, I’m just gonna kick back, pop open a beer, and watch the human world implode. To tell ya the truth, it’s already taken too long — it’s like watching grass grown. Yawn.

  17. 19

    RonK, Seattle spews:

    In other news, McCain pulled ahead in today’s tracking polls.

    It’s not clear that the funny-money mortgage bubble would have done anything but pop nder a Kerry or Gore administration, and there’s no sign that the Bush deficit strategy made us any more vulnerable to its downside effects. (Chinese lending may even have given us qualified immunity from the worst-case scenario).

    Note: Franklyn Delano Raines – who led Clinton’s OMB in balancing the federal budget – captained FNMA into these troubled waters … and nobody on the ship of fools – red, blue or green – sounded the reality alarm.

  18. 20

    2cents spews:

    Eight more years!
    Eight more years!

    Just think of the possiblities for McSame. More tax cuts, more wars and more debt. Maybe President Palin will sell Alaska to the Chinese to pay off our debt.

  19. 21

    Right Wing Nasty Troll spews:

    Wonderful, some of you are admitting McCain will win. I do want more torture, and rape of the Constitution. Not to mention eating babies for breakfast!

  20. 24

    spews:

    @12 Wrong. This is not nationalization. Under true nationalization, taxpayers would reap the rewards as well as the risks of the future performance of FM/FM. Under this scheme, the risk is socialized, but any potential reward remains with private investors.

    I agree that there was little choice but to do this move — it’s been coming for a while for anyone following this summer’s troubles with FM/FM. But the fact that it was foreign creditors that forced it to happen is, so far as I’m aware, unprecedented in modern US history.

    @20 Yes and no. Clinton and fellow “free-trade” DLCers deserve plenty of blame — they pushed through or signed off on a lot of the changes that made all this possible. But the deficit spending and federal trade deficit have happened under Bush, as has the accelerating accumulation of debt owed to the Chinese central bank — to the point where they could no longer sit by and watch the American economy be managed so ineptly, given the damage it can do to the Chinese and the rest of the world. And that’s all on Bush.

  21. 26

    2cents spews:

    Sarah Palin’s daughter is actually her granddaughter. She belongs to an organization that wants to separate Alaska from the rest of the nation and she kills polar bears. John McCain’s not an American citizen and sold out his fellow POW’s to the Vietnamese.

    If you want to lie about a candidate Marvin be an equal opportunity liar.

    Everyone: My apologies for encouraging this troll.

  22. 29

    Proud To Be An Ass spews:

    @25: Nice post Geov. But garden variety lefties need to get beyond the cavilling about free trade. The real culprits are the smashing of unions, eliminating good wages, using the state to shift income upward to rentiers, and the rise to pre-eminence of financial capital.

    Read Jamie Galbraith’s “The Predator State” for more details.

  23. 32

    spews:

    @30 Agreed. But Clinton didn’t just help push through free trade – he also signed off on Gramm’s final deregulation of the banking structure, which made the market in secondary mortgages (as well as Enron, to whom Gramm was closely tied – his wife was on the board at the time) possible. And there’s only so much I can take on in one post… :-)

  24. 36

    spews:

    From Danny Westneat’s column…

    “In Denver, the Washington state Democratic delegation was treated to a series of breakfasts by Amgen, Eli Lilly and Merck. Company lobbyists roamed the room. Then Democrats wonder why it’s so hard to get national health reform.”

    You people and your lying and hypocrisy simply amaze me.

  25. 37

    Proud To Be An Ass spews:

    @33: Agreed. Next up, “Savage Mules” by Dennis Perrin. The Democrats drank the ‘free market’ kool-aid unhesitatingly.

  26. 38

    Marvin Stamn spews:

    36. YLB spews:
    LMAO!!! @ 35

      
    I hope you don’t think that was me that wrote that.
      
    If sockpuppetry is allowed, boy am I going to have fun here!!

  27. 42

    YLB spews:

    If sockpuppetry is allowed, boy am I going to have fun here!!

    >

    It’s not but go ahead. Then you’ll be banned and I won’t have scroll past your noise.

  28. 43

    Roger Rabbit spews:

    @41 There is no death tax in the U.S. or Washington State. There are, however, federal and state inheritance taxes, which tax estates (practically speaking, it’s a tax paid by heirs on money they didn’t work for or do anything to deserve). And, if Dino Rossi becomes governor, Washington state may also impose a bed tax on elderly nursing home patients of $200 a month (or more).

    I’m for abolishing the inheritance tax and basis step-up, and taxing inheritances as ordinary income of the heirs, the same was wages, and with the same exemptions and deducations that wage earners get.

  29. 45

    Roger Rabbit spews:

    39 & 40 – Personally, I think #39 is the real Marvin Stamn and #40 is the fake.

  30. 46

    Roger Rabbit spews:

    I suppose principle requires Goldy to get rid of the reasonable Marvin and keep the real one to protect the screen name intergity of this blog. I’d hate to see Goldy do it, but we can’t allow impersonations on this blog.

  31. 47

    delbert spews:

    Here’s the worst news of the year, Obama’s agenda gets a little too close to the surface:

    “If you’ve got a gun in your house, I’m not taking it,’’ Obama said. But the Illinois senator could still see skeptics in the crowd, particularly on the faces of several men at the back of the room.

    So he tried again. “Even if I want to take them away, I don’t have the votes in Congress,’’

    This is gonna bite him.

  32. 48

    Tommy Tompson spews:

    We will always be able to give thanks to the Republicans for watering down the requirements for being Vice President. And they blame liberals for everything. I hope they enjoy another 8 years of the same.

  33. 49

    SeattleJew spews:

    @37 dumbass Troll

    “In Denver, the Washington state Democratic delegation was treated to a series of breakfasts by Amgen, Eli Lilly and Merck. Company lobbyists roamed the room. Then Democrats wonder why it’s so hard to get national health reform.”

    You people and your lying and hypocrisy simply amaze me.

    Amgen and Lilly are major parts of the Washington Economy. Lilly was (Icos). This is not different than Boeing, Amazon, Microsoft, Starbucks, Dunn Lumber, Bayliner, Weyerhuaser, for the Apple industry entertaining the same folks (as I am sure they all did in St. Paul as well.)

    Of ocurse if Boeing were to move to Shangzhou and Microsoft to Mombai .. then there ould be no issue!

  34. 50

    Tlazolteotl spews:

    On top of that, the chief of WaMu was kicked to the curb today. Last ditch to keep the boat afloat.

  35. 51

    Steve spews:

    @46 “39 & 40 – Personally, I think #39 is the real Marvin Stamn and #40 is the fake.”

    There is no “real” Marvin. He’s a figment of his imagination.

  36. 52

    Marvin Stamn spews:

    52. Steve spews:
    There is no “real” Marvin. He’s a figment of his imagination.

      
    And yet you post about a figment of my imagination.
      
    I guess that is what happens when you get old and start losing intellectual acuity.
      
    You forgot to talk about your fantasies of goats. Don’t let us trolls down.

  37. 53

    spews:

    @50

    Pssst. You’re screaming at the wrong guy. I just quoted Westneat. Read more carefully next time.

    In other news, is anyone else as outraged as I am that Gregoire is going to speak at the memorial for that slain Skagit County Deputy? Some may say she’s partially to blame for the Deputy’s death for failing to get the mentally ill the help they need. I’m not saying she’s partially to blame for the Deputy’s death, but I can see how others might.

  38. 54

    Marvin Stamn spews:

    47. Roger Rabbit spews:
    I suppose principle requires Goldy to get rid of the reasonable Marvin and keep the real one to protect the screen name intergity of this blog. I’d hate to see Goldy do it, but we can’t allow impersonations on this blog.

      
    Even someone as partisan as you has to say the right thing every once in a while.

  39. 56

    Former Saab Owner aka SJ spews:

    @54 Troll

    Having actually had a tie to Trollhatten, I assumed I had sufficient experience int he behavior or trolls to interpret the message you left!

    Was I … wrong???

  40. 57

    proud leftist spews:

    Troll
    If you ever–ever–had a good thing to say about a liberal, you might possibly continue your charade. Mocking you, impersonating you, is impossible, because you try, poorly, to impersonate that which you are not. Troll, you are not valued here; I dare say, no one would give a rat’s ass if you disappeared. You never add content, just criticism of progressives. Troll, just in case I forgot to tell you today, any chance you might go fuck yourself?

  41. 58

    proud leftist spews:

    So, all you trolls out there, do you have any specific policy proposals to address Geov’s post? Do you think that cutting taxes would help? That seems to be your answer to everything. More privatization, would that work? Did that work with Freddie Mac and Fannie Mae? Please tell us how that worked, then. Time for change. And, McCain, who changes only his Depends, ain’t the answer.

  42. 59

    typical white person (rob) spews:

    Hi, libtards! I just stopped by to watch your little heads explode. I notice you are not posting poll numbers these days. Like USA Today/Gallup: McCain/Palin 54 Obambi (I had to sign up for the draft when in didn’t exist)/Hairplugs (I lied about my wife and kids being killed by a drunk driver) 44.

    Two puff pieces in the New York Times about Palin, One editorial in the Washington Post giving Palin Cudos for the largest infrastructor project in the US, the $40 Billion pipeline.

    Oh and Olberman and Matthews getting relieved of their Anchor duties at MSNBC. Read about it all in the New York Times.

    Let the fun begin libtards.

  43. 61

    spews:

    @58

    You say, “Troll, you are not valued here; I dare say, no one would give a rat’s ass if you disappeared.”

    Now let me quote Roger Rabbit from today on another thread …

    “If there were no wingnut traitor goatfuckers to talk to on this board, I wouldn’t have anything to do.

    So, please, don’t go away! Stick around so we can continue kicking you where it hurts.”

    IN YOUR FACE!

    PS, I like liberals. I have many liberal beliefs. But when people start telling me “liberals good, everyone else bad,” that’s when I have to disagree.

  44. 63

    gs spews:

    Get ir Done…….Go McCain and WOW Dis Palin is a Kick the F’n ass woman……

    Yee haw I am lovin this

    http://www.realclearpolitics.com has McCain in the lead for the first time in months.

    Obama, tear down those F’n Styrofoam columns and git a F’n clue

  45. 64

    Puddybud spews:

    Yes, the Keating 5, four Donkey trying to take over finances. Remember Robert Bennett the lawyer for the case, said John McCain didn’t do anything wrong and tried to have him removed? Leftist Moonbat! Common Cause said “it would only leave Democrats to take the fall”.

    Thanks for reminding us about this Geov.

  46. 65

    Puddybud spews:

    Real Clear Politics:

    RCP National Average 45.7 46.7 McCain +1.0

    USA Today/Gallup 09/05 – 09/07 LV 44 54 McCain +10
    Gallup Tracking 09/04 – 09/06 2765 RV 45 48 McCain +3
    Rasmussen Tracking 09/04 – 09/06 3000 LV 48 48 Tie

  47. 66

    YLB spews:

    That green background during McSame’s speech should send a pretty clear signal to voters:

    he’ll fuck up even worse than Bush. How can he not?

    The Chimpmeister primed the pump for him.

    If he does the same (and he will), he’ll be even worse.

  48. 68

    rhp6033 spews:

    Note: “rhp6034″ is still posting, apparantly trying to cause confusion by similarity with my screen name. It’s a dishonerable tactic, used mostly by liars and skulkers who want to either capitilize on hard-earned credibility of the original poster, or to devalue that credibility by posting nonsense.

  49. 69

    rhp6033 spews:

    And for those who say it’s “not clear” that Bush & Co. caused this collapse of the mortgage market, or that it could have been avoided by Gore or Kerry, or that Clinton started it all, THAT’S ANOTHER RIGHT-WING LIE.

    The Clinton administration DID puruse a policy of making housing more affordable for average Americans, with home ownership to be a reachable goal for every family. But it did so within fiscally responsible measure. I know, because I bought a home during the second term of the Clinton administration, and I well remember the hoops I had to jump through to prove I could pay back the loan.

    It’s a difficult task, a bit of a balancing act, to accomplish this goal without causing other financial/fiscal/economic problems. The Clinton administration managed to peform this task admirably. Too much regulation causes home ownership to decline, too much causes the home loan markets to overheat and the lack of fiscal responsiblity on the planning process causes a price-escalation bubble which must, eventually, collapse.

    To use an anaology I had posted here before, the Clinton administration applied some gas to get the car up to the top of the hill. Then it turned over the car to the Bush administration, which proceeded to put the pedal to the metal, until the whole car crashed at the bottom of the hill. As the driver is then drug out of the burning hulk, he starts screaming “It’s all HIS fault (pointing to the Democrat in the passenger seat). HE started it all!”

    The home-loan markets just showed what Henry Potter (from “It’s a Wonderful Life”) seemed to already know – that there’s a lot of ways for the rich to seperate average people from their money, and in the home markets you don’t have to be just the seller – you can be the lender, or better yet, the guy who makes a commission just by referring the buyer to the lender.

    It goes back to the basic neo-con philosophy that “unrestricted markets are always good, government is always bad”. The Bush administration, with the assistance of Phil Gram, managed to take the federal government completely out of the regulation of financial markets, including home loans which were at one level or another underwritten by the federal government! All the lessons learned in the 1930’s were tossed aside, only to doom us to repeat those lessons. The Republicans own this problem lock, stock, and barrel. They should be adults and own up to their responsibilities for the debacle.