Peace, Love and Better Understanding

As a follow up to my blog on this mythical period of deregulation, this piece from the Wall Street Journal further cements the case. If anything, this has been a period of more-intrusive regulation.

But we can't have facts get in the way of fairy-tale narratives, now can we?

-RC

Follow the Money

Interesting report here. It finds that 79% of campaign contributions come from outside the Congressional district of the candidate.

That seems wrong to me. While I don't believe political free speech should be infringed, something seems rotten in Denmark when outsiders are having that much influence.

Here's a constitutional solution to the problem. Congress sets the compensation for its members. Why not penalize their compensation for every dollar their campaign takes from outside their district?

-RC

Who Wrote This Script?

In the same news cycle, a skinhead, white separatist, neo-Nazi plot to kill Obama is foiled. And the emblem of R corruption in the Senate, Ted Stevens, is found guilty. Make that the senior senator from Alaska.

Doesn't matter that McCain crossed swords with Stevens over pork. Doesn't matter that Palin eventually came out against Stevens's Bridge to Nowhere. This is all conspiring to make the Rs look really, really bad.

Sow, then reap. Get it, yet?

-RC

Help Me Understand

Lawrence Summers, D economics guru, states something here that I've been perplexed about:

The rap is that the Credit Crisis was caused by Washington's "deregulatory" mood in recent years. And yet no one, including Dr. Summers, ever bothers to tell us what are some examples of the deregulatory pendulum swing. I guess Glass-Steagall is what they are referring to, but Sarbanes-Oxley was a massive RE-regulation. Are the financial regs more or less voluminous today than they were 20 or 30 years ago? I'd be shocked if they have actually been reduced.

I guess if they just keep repeating a "fact" over and over again, we are supposed to assume it's true.

-RC

Diabolical?

The things you hear on CNBC!

This morning, Sen. Judd Gregg (R-NH) said, among other things, that the thing to do now if for the Treasury to "go long" -- meaning sell long-term bonds. Rates are low and time is needed to get the economy out of the ditch.

And, he reasoned, the Bailout and plethora of financial interventions are bound to manifest in higher inflation (CPI) in the next few years. This will have the effect of making the long-term bonds cheaper still in the intermediate term.

In short, the Feds should go out and get some cheap money now that will become cheaper still when the chickens come home to roost.

Of course, the cheapest money of all would be to get serious about cutting federal expenditures, but somehow or other, that's off the table.

In the context of the current cesspool, Gregg may well be right from a technical perspective. I'd prefer to hear some sensible ideas to exit the cesspool. Silly me!

- RC

First Hundred Days of the Obama Administration

This is not prognostication per se, but rather extrapolation coupled with a dash of reading the tea leaves.

On January 20, 2009, Barack H. Obama will assume the Office of the President of the United States. While the nation and the world will be still roiling from a severe economic downturn, his speech will be watched closely and around the world. Regardless of one's views of Obama's policies, the moment will be electric, as a man of color will be our nation's first.

Obama's transition team will – between November and January – quickly realize that Obama's campaign promises simply cannot be implemented in the throes of recession. On the other hand, they will also realize that the iron is hot, even red hot, for Obama to announce some bold moves early on. Here's a sampling:

• Accelerated exit from Iraq. Wrong war, wrong time, wrong place and way too expensive.
• Increase the gas tax 50 cents a gallon. This will fund accelerated and unspecified public works projects and some alternative energy research.
• Transaction tax on all securities trades, designed to fund in part the Wall Street bailout. Wall Street should fund itself.
• Doubling of the estate tax.
• Double the personal exemption for federal income taxes. This is the best they can do to provide bottom-up tax cuts.
• Increase unemployment coverage from six months to one year.
• Refundable tax credit for medical expenditures for the uninsured, taking the idea from McCain.
• Cap all individual tax preferences at $100,000 per year. Obama will realize that he should not raise rates, yet this has the effect of moving toward his idea of tax equity.
• Doubling of food and medical aid for world's most needy, paid for by cutting military aid.

Not surprisingly, some of these ideas have a Free Liberal ring to them. He'll no doubt do some ill-advised things. Massive new regulations of Wall Street comes to mind. Some "fair trade" initiatives seem likely.

Thank God for massive deficits!

-RC

Not Losing Ugly

The end of our long national nightmare is almost over. Hopefully before 2012 we will find a way to push the start of the process to closer to the election.

That being said, the handwriting is pretty much on the wall for John McCain. He now has a choice. He can listen to the Bush holdovers in his campaign or he can fire them and go out with some personal dignity.

Let us hope he ends on a high note, for all of our sakes.

Hold onto Your Hats Part 3

With the Asian markets down ~10% today and European ones down 8-9% at the moment, today could be Black Friday. It's certainly been Black October.

My take is that the Bailout has slowed the Crash to a slow-rolling one, spread out over a matter of weeks vs. a one-day event. The market has now absorbed the financial panic more or less, and the government has basically backstopped a full-blown implosion of the credit markets. Now the market is looking at the fundamentals, and not liking what it's seeing. Recession seems likely, and so the market's need to re-rate the prospects of equities in the near term.

7000 on the Dow might be a fantastic buying opportunity.

All subject to change.

-RC

The FDR Solution...

...to the housing crisis:

Plow down excess housing stock. FDR did it with agriculture, why not housing? Less supply leads to higher prices.

Problem solved ;-)

-RC

Catastrophe Training Academy

Doing a bit of early morning research, I stumbled across this site.

Yes, you too can create catastrophes. Of course, it's not training for making catasrophes, but doing insurance adjustments after them.

One could argue that there is a real catastrophe training academy. It's called Congress!

-RC

Cause for Some Optimism

The chattering class all seem to agree: Obama/Biden will win, and the Ds will strengthen their hold on Congress. To the extent McCain/Palin had a shot, the financial panic has made that impossible, barring a miracle or a huge October Surprise.

In the last debate and since, Obama has the aura of a man in full control of his faculties. Fully on message. Respectful, yet forceful. Able to swat away the "consorts with terrorists" jab without appearing defensive. He even turned McCain's "I am not George Bush" defense into a weakness for McCain. Obama has, in short, tapped into the huge reservoir of disdain for Bush and the Rs, yet has inoculated himself against the charge of socialist plant, controlled by his Weather Underground svengali William Ayres.

Sarah Palin's been reduced to a ridiculous figure, referring to herself on SNL as a "Caribou Barbie." That's clever, but do we really want Barbie in the Oval Office?

So, things are grim for those of us who desire liberty, and find both the Rs and Ds irredeemably corrupt, correct?

Not so fast.

Assuming an Obama win, he will most likely inherit a recession and two wars. The markets have become so responsive and sophisticated (albeit bi-polar), Obama's maneuvering room will be highly restricted. Pursue even more deficit spending, and the markets will seek safer havens. Add more regulation, and corporations will shift resources off shore.

So, with the fiscal and monetary levers largely not available to him, he'll need to focus on things that do work, things like his bottom-up perspective. If he actually does cut taxes, he'll unburden the lower deciles proportionally more. He's advocating corporate tax cuts to incentivize (or reduce disincentives, technically) job creation.

Obama's spending and healthcare proposals will almost assuredly have to be scaled back.

Meanwhile, the Rs will have to do some serious soul searching. Penance as a minority party seems indicated after eight years of profound corruption.

Some freedomistas take a late-70s, head-for-the-hills posture. Could be that's prudent. Things have gotten awfully wobbly. Yet, at the moment, it seems more likely that we shall muddle through yet again.

-RC

Abortion Politics

Is it Libertarian or Free Liberal, or even Pro-Life, to build ones career (like run for City Council in Wassila) to stand up for the rights of the unborn without saying how you would enforce these rights? Or is this just slimey politics, building up your political career on a pile of unborn, although very tiny, corpses?

Hail Mary Pass for McCain

Obviously, going ugly is not going well for John McCain.

Talking about taxes might actually be helping him, although probably not enough.

What might help him (although it is likely too late) is to release a really radical tax plan. He could promise to implement the tax plan of Michael Graetz, who advocates a Competitveness Tax Plan (Michael was Bush I's Director of Tax Policy) which removes the responsibility for filing taxes from 100 million Americans. For the full picture, see his book, 100 Million Unneccessary Returns. Here are the details:

- a 10 to 15% Value Added Tax,

- cutting Corporate Income Taxes to 15%,

- leaving payroll taxes in place (avoiding a fight on this issue until another day),

- restricting the payment of personal income taxes to $50,000 for individuals and $100,000 for families, with a tax rate between 20 to 25%

- the payment of a prebate through either Smart Cards or a refundable credit at payroll of payroll taxes (including a greater payment than taxes owed) which would include both a payment to compensate low income earners for the cost of the VAT and an Earned Income Tax Credit.

To pass this, he could effectively throw down the gauntlet to voters to elect Republicans to Congress.

It might work. However there are three problems.

- The public will likely not elect Republicans to Congress in large numbers.

- This will be seen by voters as the last ditch effort that it would be.

- Fiscal conservatives (including many Free Liberal readers and writers) will resist a residual income tax - especially one which balances the budget.

Why am I giving John McCain free advice? Because I have my own variation on the Graetz plan.

I would increase the prebate/EITC to living wage levels of $500 per dependent per month (including spouses). This rate would decrease abortions, if not elimiate them. Certainly no one would be aborting for moneterary pressures. McCain (or Obama for that matter) could even sell such a tax benefit in this way and make it a right to life issue (although this would embarrass the fiscal conservatives in the right to life movement).

I would pay for this by ending the deductibility of wages and salaries for business income taxes and make sole proprietors file as businesses (which they would want to do to get the tax benefits). I would also transfer all non-retirement payroll taxes to the business income tax so the only withholding for most people would be their FICA retirement taxes

A portion of the retirement taxes would be channelled into a Personal Retirement Account holding stock in their employer and/or a Mutual Insurance Fund of all such employee-owned firms. Small businesses who are not Chapter S or Chapter C will also be able to pay into the Mutual Fund rather than the government. The mutual fund would also hold bonds transferred from the Social Security Trust Fund. Socialist Security would be transferred to Corporate Socialist Security. It would actually be cheaper than the dead hand of government, because for most people their companies would do the paperwork - likely with no additional added cost to administer than their current retirement plan. In fact, we would all save in broker fees as employee-ownership displaces the secondary securities market.

If McCain were really smart, he would propose my plan - although he won't, since the left would not go along with it or him (he is as much the issue as his proposals - and frankly a last minute attempt would not help the perception he is a little unstable) and the right would not go for the redistribution. The centrists may like it eventually. I have confidence they will, but not in 11 days. Like I said earlier this week, a new party is necessary for a plan such as mine. It violates the orthodoxy of both existing party's way too much for either to pass it.

Who's Tax Plan?

We talk about the Obama tax plan - however, no matter who gets elected, Charlie Rangel's tax plan will be passed, with an assist by Max Baucus and some bipartisan input from Chuck Grassley.

Barring a miracle, this plan will require only a simple majority in each houuse, with the possibility that 60 votes will be needed in the Senate (which the Democrats may have). If there is a McCain victory, then the plan will be slightly more bipartisan - either so McCain signs it or to override his veto. Regardless, the Bush tax cuts will at least expire and will likely be gutted earlier.

Following the McCain victory riff to its logical conclusion - in 2010 if McCain is in office the Democrats will pick up enough seats in both houses to effectively neuter him (or by then, Sarah Palin).

Either way, the Democratic Chair of the Ways and Means Committee (even if it is not Rangel but his Vice Chsir) will get their way on taxes.

Where Will the NeoCons Go?

First, the term "neocons" needs a bit of precision. By it, I mean those committed to an aggressive foreign policy, first and foremost. Bellicose attitudes toward jihadists and their enablers; Iran; Russia; and North Korea. For starters.

Second, embracers of the notion of National Greatness. And, third, ambiguous views of social policy.

Bill Kristol is a neocon. Near as I can tell, Chuck Hagel isn't. Probably most Rs aren't actually neocons.

My guess is we'll see the real neocons go back to the Ds should Obama win. They are power f-ers, and they seem compelled to ply their sick proclivities with those who wield power. They will seek influence over the powerful at all costs. They are Brutus, in short.

Old-style conservatives – today's Gerald Fords – will stay with the GOP. And the evangelicals will turn inward toward their Good Book. They will prepare themselves for the end of the Mayan calendar in 2012, a.k.a., the Rapture.

Libertarian-leaners will do what they do best: Carp. And over-prescribe long-term solutions and engage in "I told you so's" while Obama and Congress address a myriad of crises that are bound to pop up. Most of the "solutions" will hide the real costs of their "reforms." Once again, the next generation will pay for the foibles of today.

Free Liberals, of course, know that cycles are what they are. Equilibrium will be found, and technology will advance. Peace will come, although not until the Dark Night of our Collective Soul is acted out.

Or not.

-RC

Keynes in 2008

WaPo last Sunday ran an Outlook column by a Keynes biographer regarding the current crisis.

Keynesianism broke down because it could not explain why, even with lingering deficits, the economy would go into recession. However, if one factors in the effects of paying interest on the national debt and lags the economic effects by one fiscal year, the effect is discernable. When Republicans are in power, their fiscal policies require running a deficit in excess of net interest in order to get growth. Democrats, because of their fiscal policies can balance the budget and get growth of about 3% on average per year.

The reason the GOP needs to run deficits is that their tax policies reward savers. The only way to move this money back into the productive sector is to borrow it from them, lest it be use for speculation. The Democrats tax the excess savings of the wealthy, so they can afford to reduce the debt without decreasing consumption in the economy.

Here is the equation. Note that you must run it by regime (JFK, Johnson-Nixon-Ford, Reagan-Bush I, Clinton, Bush II):

Growth % in FY+1 = (Deficit/Surplus + Net Interest in FY)/GDP

Try running the numbers before you say it doesn't work.

Communication Disorder

Speaking is not teaching.

Hearing is not learning.

/KDR

Taxes as the Defining Issue

Issues may come and go, but the defining issue in any party is their tax plan. For the GOP, they can dawdle on abortion all they want, but what really brings 'em in is their insistence on cutting taxes on the wealthy. What defines the Democrats is their propensity to raise the same taxes and to punish anyone who touches Social Security. Abortion rights is almost a litmus issue for the Democrats, but not totally. Remember, Governor Casey was allowed on stage, only the delegates booed him off. They did not boo off his son years later.

To go outside the orthodoxy of either party on taxes one must found a new party. Transpartisanship is not enough - new partisanship is necessary. Democrats will never pass a consumption tax and the GOP will never add an income tax on top of a consumption tax. The only way around this resistence is clearly to form something new.

Carl Milsted and I share similar tax approaches to wage taxes and credits for poor families. I think that is the basis enough for a new movement that neither mainline party will touch.

After this election is over, there will be room for a new party, as the Republicans may not exist for long and the LP won't do what it takes to be the second party.

Joe the Plumber's Taxes

The candidates spent nine minutes tonight talking about Joe the Plumber's taxes. Joe is buying his business, which makes $250,000 per year and is wondering why Obama wants to tax him more heavily.

Obama muffed the answer, as have most Democrats when faced with the argument that small businesses will suffer if we raise taxes on the wealthy.

The fact of the matter is, that if Joe the Plumber hires someone, that employee pays the tax on those wages, not Joe. Joe will only pay at the higher rate for money that he himself earns and for the profits that are made on equipment markup and the wages of others. If he personally pockets a quarter million dollars after hiring others, he can afford the higher rate. If he wants his taxes to go lower, he can hire someone and his tax rate will go down.

The dirty little secret of higher taxes is that they cause business owners to expand BECAUSE wages paid are deductible. In that way, higher taxes actually lead to more jobs, since the only way a business owner can keep his wages constant when taxes go up is to do more business, often by hiring more workers. It certainly won't cause job loss.

Ghostwriting

Ghostwriting -- the practice of one person writing that which appears under another's byline -- is a fact of life in Washington, in politics, and in other areas of public life. It is now widely acknowledged that Jack Kennedy's Pulitzer-winning "Profiles in Courage" was in fact largely written by Ted Sorenson. I myself have ghostwritten for others and have even had someone else write under my own byline. Many others on FreeLiberal.com no doubt can say the same.

Much intellectual energy was devoted earlier this year to sussing out who wrote what when under Congressman Ron Paul's name, particularly back in the early 1990's. The Washington Post as recently as last month revisited the issue by publishing an investigative report on who helped ghostwrite Paul's 2008 bestseller "The Revolution: A Manifesto."

But that was then, and that was Ron Paul, the quintessential outsider. Now, it is apparently again impolitic to broach the issue of political ghostwriting, particularly when it comes to presumptive President Barack Obama.

Jack Cashill, a reporter for WorldNetDaily, has made the case that the chief ghostwriter for Obama's 1995 book "Dreams From My Father" was none other than Weather Underground co-founder Bill Ayers. Cashill builds his case by using the famous authorship software QSUM, Cashill's own textual analysis of "Dreams" and Ayers' "Fugitive Days," as well as other circumstantial evidence. (E.g., 1995 was also the year that Ayers placed Obama in charge of $50 million in grant money and launched Obama's political career in his living room.)

Is there a better candidate out there for Obama's ghostwriter? Who? Some would tell us Obama is above such political conventions as ghostwriting and his authorship should not be questioned. I don't buy it.

Obama Shorts

Or perhaps puts. Though I'm a Barr supporter, I recognize that the prospect of his winning is somewhere between low and nonexistent. But it's starting to look like an Obama landslide, and I guess that's my preference. The prospect of Strangelove McCain with the nuclear football at his beck and call is just too frightening for this hombre, my friends.

In this upside down world, we have (not much of) a choice between two flavors of violence. Peace in all things being my mantra, our elections always seem to offer a trajectory away from my preference. Both Obama and Strangelove want to "do," I want to "UNdo."

Still, all things considered, blessings should be counted. Obama is neither Hitler nor Stalin. Odds are low that our nation's store of wealth will be completely destroyed, plunging us all into Cambodian subsistence levels.

So, what are some opportunities that might arise from an Obama administration?

A few that come to mind are shorting or buying puts on ETFs of the healthcare, pharmaceuticals and energy sectors. Both are likely to be rationed in some form during the next four years.

Any feedback of this concept much appreciated.

-RC

Bailout Blues Part I

Question: If the government can improve the operation of the markets by a bit of cash injection when times are bad, shouldn't this work even better when markets are perfectly functioning?

A better question: Why should we even bother with markets at all if government is so good about managing investments?

If government can buy bad debt and turn it into good debt, maybe it can spin cow patties into roses. Why doesn't the government take all its funds and invest in businesses that work perfectly to erase poverty, drug addiction, and violence?

Is the Bush administration a total disgrace or the most brilliant leadership ever?

/KDR

KDR's Weekend Notes: The Bailout, International Drug Approval, Transpartisan Book, and 2 New Blogs

1. Mercatus Center's Russ Roberts taped comments on the bailout over at reason.tv. How can we get Russ on every major news show to say these words over and over?

2. Jim Turner and Lawry Chickering have a new book out about transpartisanship, "Voice of the People: The Transpartisan Imperative in American Life." Available at Amazon. I will be posting thoughts about the book in the coming days. I am interested to see if the "transpartisan" framework is substantially stronger than other conceptions of political organization, or if it can be used to create better political outcomes. A cursory read suggests that their offering is valuable, yet it asks more questions than it answers. I encourage readers to get the book so we can have a conversation about it.

3. George Mason professor Dan Klein has a YouTube video on denationalization of drug approval. The basic idea is: why increase the cost of pharmaceuticals through multiple, costly national processes? Don't the Europeans know what they are doing, or is the FDA the only agency that has any credibility? A better question: Is the FDA as good as its counterparts in Europe and Japan?

4. Michael Ostrolenk's new site is up at michaeldostrolenk.com. Michael is at the center of so many projects, the site should be a good place to plug into a lot of what is happening in medicine, national security, etc.

5. I cleaned up my kitchen table today and found a postcard from the Independent Institute. Their new blog is up at: http://www.independent.org/blog/. We can assume it will be excellent per everything else they do.

The True Cost of Being High

"People light up a joint, and they have no idea the amount of environmental damage associated with it," said Cicely Muldoon, deputy regional director of the Pacific West Region of the National Park Service.

The above quote is from an AP wire article by Tracie Cone. The article tells the story of banned chemicals being smuggled in from Mexico to facilitate the unhealthy growth of pot plants in our national forests.

The story reaches hyperbolic dimensions of freaked-outedness:

"If the people of California knew what was going on out there, they'd be up in arms about this," said Shane Krogen, [High Sierra Trail Crew's] executive director. "Helicopters full of dope are like body counts in the Vietnam War. What does it really mean?"

Whoa... that's heavy, dude. What *does* it really mean?

With all the Californication, we don't hear about the real cause of the pesticide use: the war on drugs.

If there was no war on drugs there would be no growing Mary Jane in the national forests. Just in private farms on private property, subject to EPA's imperial dictates. Safer, cleaner, more eco-friendly highs for all.

A more serious article would compare marijuana to alcohol, or hemp to cotton in terms of environmental impact. Tracie Cone's article is merely a vehicle of drug war propaganda.

/KDR

More Obama fascism

Following up on Gessing's post below, something from TownHall.com:

On Wednesday the 1st of October I received a call on my cell while in the car with my husband. It was a woman who identified herself as calling from the Obama Campaign. The phone # she called from was 903-798-6020 which lists as "Obama Volunteers of Texarkana" (Texas).

She asked if I was an Obama supporter to which I replied:

"No, I don't support him, your guy is a socialist who voted four times in the State Senate to let little babies die in hospital closets; I think you should find something better to do with your time." I hung up.

Thursday, October 2, I answered the front door to find the Secret Service.

And it continues from there...

"Martialling" Forces in the Name of Expediency

"May you live in interesting times."
--Chinese Proverb and Curse

The state of play in the Republic, circa 2008, is worrisome. The markets continue to gyrate, spooked by the prospect of a calamitous crash rivaling the big ones of the 20th century. Yet all eyes waited for yet-another Washington solution. No one was sure whether the latest panacea would be rushed forward this weekend, so the gamblers on Wall Street weren't sure whether to sell everything or buy, hoping that we'd found a bottom. Perhaps Happy Days would be here again, why not buy at the bottom?

The tug of fear and greed were more or less a tie, as the markets closed on Friday, down mildly on a percentage basis. (These days, a down 1.5% performance is mild.)

Goldman Sachs's Treasury Secretary Hank Paulsen announced late Friday afternoon that his Bailout will now be used to recapitalize financial institutions directly. My preliminary research indicates this is unprecedented.

What's most interesting to me is that this is all being done by a lame-duck administration. Without the discipline of facing re-election, I'd suggest the Bush Administration watch this short video from the Cato Institute. Perhaps they'd feel validated by this, but they should at least have a moment of pause, if not revulsion, for the profoundly dangerous precedents they are setting.

-RC

Who is Manipulating Oil and Gas Prices Now?

It seems like only yesterday that Congress and all manner of people who are ignorant of basic economics were bashing oil and gas companies for their supposed efforts to manipulate prices and keep them high. Now, with the global economy on the skids, crude prices are plummeting right along with the stock market and are likely to keep dropping.

So, the question must be asked: where are the speculators and manipulators? If Exxon has an iron lock grip on the prices it charges for its product, why aren't they keeping them high or at least stabilizing them? The simple fact in is that they don't control prices; they are "price takers."

Liberal Fascism Obama Style

I stand on record as not caring who wins the presidential election. Neither mainstream candidate has pledged to shrink our federal government and obey the Constitution. That said, having had Jonah Goldberg in town a few weeks ago to discuss his book and the broader concept of Liberal Fascism, I have become more aware of the reality that fascism is a leftist ideology.

Recently, some disturbing videos in support of Obama's cult of personality have come to light. Check this one out. It is reminiscent of an adolescent military march. This one is even more frightening as the kids in the video are younger and are clearly being indoctrinated into Obama worship by their parents.

Ultimately, the problem here is not really Obama per se but the cult of the Presidency. No longer are presidents considered mere officers in a Constitutional republic, but they are perceived as catalysts for self realization and our hopes and dreams. This is not a good thing.

Iceland: Adversity Creates Opportunity

This news story caught my eye. The nation of Iceland is on the brink of bankruptcy.

Freedom lovers in the US frequently point to the Founding Fathers as demi-Gods who created a near-Paradise on Earth. While there's much to admire about the Founders, they didn't get everything right.

But, Icelanders have the stronger claim on The Freedom Experiment. In 1000 AD, Iceland had no government, and all was well for hundreds of years.

Should modern Iceland use this opportunity to get back to their basics, it shall be a sure sign that the Age of Aquarius is indeed upon us!

Not holding my breath....

-RC

CNN has a problem

For anyone following CNN's Electoral and Poll maps, you know that CNN has a problem. Obama has pretty much sown up the Electoral College with leads in Ohio, Florida and Virginia. This is not good for them. One, if it is sown up, they don't have a story. Second, since they tilt left, they don't want to depress turnout for the leftist. Yet, if you look at both match, you can't help but get the impression that the Fat Lady is warming up.

Nasty Sarah on a Snipe Hunt

On Thursday last, Sarah Palin debated Joe Biden in a performance that worked for her, but did not do too much for the ticket. The next day, she goes on an attack tour linking Senator Obama with former radicals who live in his neighborhood.

Being young and conservative, she does not seem to realize that yesterdays radical is todays elderstatesman. Manyconsidered my former boss, Marion Barry to be a radical. Given my days in the DC Democracy movement, many consider me a radical.

Perhaps Sarah was a radical of a different sort. Remember, she went to Idaho for college, where more than a few people don't like folks that look like Obama. Perhaps she learned a few code words she is using new in a line of attack that could be called ugly, except that it is ungentlemanly to call a female politician ugly - so one must say nasty instead.

The other possibility is that the McCain camp invented this line of attack for her as a way to get back at her for throwing John McCain under the bus in her debate. When I was a tenderfoot on my first campout, my patrolmates gave me a paper bag and sent me into the woods after a little bird with the admonision to say "Here, snipe, snipe, snipe, snipe."

My guess is that this is what is now happening to Sarah Palin. Now, I was smart enough to know that I had been had. Let's see if she is, because if she isn't making a coded racial attack will not serve her well in 2012. It will likely end her career this year - unless the GOP is permanently writing off the African Americans.

Lucy in the Chocolate Factory

Today markets remind me of the hilarious scene from the old I Love Lucy show. Lucy and Ethel take jobs in a chocolate factory, wrapping chocolates. The conveyor belt malfunctions, and spins too quickly.

Now, think of Paulsen and Bernanke as Lucy and Ethel. The faster the economic woes come, the more they panic. They only add to the dysfunction.

So, watch for the Fed to enact an emergency cut of the Fed Funds rate today or soon.

Can you say: Pushing on a string? I knew you could.

-RC

Hold Onto Your Hats Part 2

Early morning indicators is that the markets are trading down, big. Asia and Europe have gone or are down 5%, give or take. Futures indicate US markets will be down big, too.

Rather than admit that the Paulsen Bailout is not having its desired effect, if THIS is the new trajectory for the coming months, Chutzpah Central (aka the Washington Establishment) will likely start to tell us that the Bailout wasn't big enough!

Then again, this just might be the inevitable perturbations of the brilliant triage operation. Not likely, but ya never know.

-RC

Reacting to the Bailout

Robert Capozzi suggests free liberals should have had a rational plan to ease out of this credit crunch. Maybe so, if we had some people in Congress and millions of dollars to promote our ideas. Given the speed of the crisis, and the fact that the groundwork was lain years ago, the traditional libertarian approach of griping and neener dancing is perhaps appropriate.

To this end, I have put together a mean-spirited photo essay mocking Wall Street millionaires asking for government largesse.

Enjoy.

And then we can get back to the less fun work of coming up with constructive near term solutions in those areas where we theoretically have time to act.

Railroaded?

With the Bailout from Hell, well, railroaded in as law, Free Liberals and free marketeers of all stripes might want to consider a post mortem of the event.

An equilibrium-disrupting disaster? Yes.

A case of the elites pummelling the popular will? Yes.

A shakedown operation? Yes.

A pathetic response from free marketeers? Frankly, yes.

Watch this interesting clip from the good people at Cato on their takes during this dark period of American history. While I agree with just about everything Cato's people said, there's a moment at the very end when a CNBC commenter calls Cato's approach, "The no-Methadone approach to kicking heroin."

Simply saying "no" to bad policy doesn't seem to work. While some ideas were floated in the fight to stop the Bailout, they seemed tinny and off-point.

Sometimes, you need to fight fire with fire. Most of the time, "first, do no harm" is wise counsel. But not always.

We can engage in the arena, or we can carp near the exits. In this particular game of chicken, our car went over the cliff.

-RC

Texas Governor Rick Perry: Libertarian Visionary or Jerk?

The libertarians over at the Reason Foundation recently named Texas Governor Rick Perry an "innovator in action" for his innovative approach to tolling and leveraging private money for a transportation called the Trans-Texas Corridor.

Lew Rockwell recently blogged on the topic, essentially calling Perry and Reason "fascists." What's a libertarian to think? Personally, I come down on the side of Perry and Reason. I don't see how leveraging private money to fund transportation projects is fascist. One would also think that a fellow like Rockwell would have concerns about the current transportation system which can only be called socialistic. Anyway, given its cutting edge nature, Perry and Reason are certainly controversial figures in Texas as this story discusses.

Insulting the troops

Does anyone else find this rhetorical flourish insulting:

PALIN: "Your plan is a white flag of surrender in Iraq and that is not what our troops need to hear today, that's for sure."

Bush uses this point, too. It seems to be an unresponded to point in the Republican playbook, and I guess it sells.

But, it presumes that the troops are not adults. If Official Washington were to ever actually admit that Iraq was a mistake, and policing a civil war is a mistake, let's get out, that the troops would be demoralized, perhaps collapsing into a collective fetal position.

To be on the side of the troops is to get them out of a deeply inappropriate situation.

-RC

Short Take on Joey B. v. Annie Oakley

Or Biden v. Palin. Substantively, both of course frighten me, for slightly different reasons.

But last night's debate was more about establishing the reality of both characters on stage. Joey B. is the smart-alecky kid from down the block who gets good grades, but hides it from his class. He acts like he hates going to church, but he secretly enjoys enjoys volunteering at the soup kitchen. And he tells the best jokes, charming everyone he encounters.

Annie Oakley speaks in a vernacular that has to be authentic, droppin' the "g" almost always, peppering her emphasis points with "gosh darn," "bless their hearts, they're doing what they need to do," "say it ain't so, Joe, there you go again pointing backwards again," "Now doggone it," etc. Of course, Annie used the term "counterinsurgency strategy" far more smoothly than the deeply conflicted preppie cowboy who currently resides at 1600 Pennsylvania Avenue.

And, while Obama and McCain are both surreal characters, we now know that Biden and Palin are – or at least appear to be – quite real. So, we again have yin and yang, a certain balance.

I'd say Annie won the contest over who is more down home. And her gaffes were minimal, so methinks that we'll be seeing her again even if the Ds triumph in November.

-RC

In the Arena, But Not of It

It is not the critic who counts, nor the man who points how the strong man stumbled or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena; whose face is marred by dust and sweat and blood; who strives valiantly...who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause; who, at best, knows the triumph of high achievement; and who, at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat. -Theodore Roosevelt

John "Strangelove" McCain says he's a Teddy Roosevelt Republican. I think he's right about that, in a lot of ways. From where I sit, that's not a mindset I want in the White House. Globetrotting bull in a china shop. Tinkerer with the private economy, meaning you and me.

The quote above that McCain often cites is a good one. There IS something "heroic" about being engaged in the challenge of the moment. Today's challenge is the Wall Street credit crisis. The elites say: Just Do It. The purist know nothings: Do Nothing, Let It Be. And, btw, this is to be expected, and then they recite a long list of obscure and not so obscure root causes to what's seems to be happening in the arena at the moment.

Is it possible that both camps are correct and incorrect? I say, "Quite possibly."

Is it plausible that Hank Paulsen -- a sophisticated financial sage, to be sure -- could in a week's time come up with just the antidote to triage the patient? Jeez, that seems highly unlikely. Assuming Paulsen is not just bailing out his buddies, someone SO engaged in the arena lacks the perspective to rise above the crisis, find the right course of action, and bring it to us from On High, etched on a tablet of Truth. Let's get real!

Many of those who oppose this -- the partisans and the Know Nothings -- are using this crisis to exorcise their favorite theory: "It's all the Fed's fault." "It's greedy capitalists fault." These are valid opinions, but these opinions seem well out of the arena. Some are even suggesting lowering the capital gains tax rate as a solution to the crisis. While lowering the capital gains rate has much merit, it's not obvious how it solves the current challenge, at least in the short term.

There may well be a technical solution to the short term challenge. Boring and obscure, but the accounting rules changed a few years back to reign in an abusive balance sheet practice: Mark to model. There's no market for these mortgage-backed securities, so we'll guess what they are worth, is the upshot. It was replaced by the more standard mark to market practice. A good idea...value an asset at what the market says it is.

Unfortunately, the market for mortgage-backed securities has dried up. If these financial firms mark to market, they mark to $0. Since many of these firm's capital base is overweighted in these toxic securities, this could trigger massive sell-offs as a means to keep capital ratios solvent. This leads to panic and even more widespread bankruptcies. The arena is not a pretty sight.

Perhaps an accounting change is all that's needed to let the financial system find its equilibrium so that we can all get back to our pursuit of happiness.

I'd like to see cooler heads REALLY prevail during this episode of Life, but we shall see.

-RC