William Katz: Urgent Agenda
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TUESDAY, SEPTEMBER 30, 2008
NOTE AT 10:51 P.M. ET: Please be sure to go here for the latest Obama groupie outrage. The use of children in political campaigns is always problematical. But this is way over the top. We don't do this in democracies. But, of course, who ever said that everyone in American politics likes democracy.
THE ANCIENT
Posted at 7:50 p.m. ET
The New York County (Manhattan) district attorney is Robert M. Morgenthau. He is 89. Yes, you read that correctly. He is also the son of Henry Morgenthau, FDR's secretary of the treasury. On money matters, Bob Morgenthau knows, and he remembers. Here, for the Wall Street Journal, he discusses a matter we've alluded to here - the secrecy, and the knowledge gaps, regarding our financial woes. This is short, and well worth reading:
A major factor in the current financial crisis is the lack of transparency in the activities of the principal players in the financial markets. This opaqueness is compounded by vast sums of money that lie outside the jurisdiction of U.S. regulators and other supervisory authorities.
The $700 billion in Treasury Secretary Henry Paulson's current proposed rescue plan pales in comparison to the volume of dollars that now escape the watchful eye, not only of U.S. regulators, but from the media and the general public as well.
We make no charges here, and we even drop no hints. But I still want to know how this huge financial crisis struck right in the middle of an American presidential campaign. Morgenthau is suggesting how hard it is to find out.
There is $1.9 trillion, almost all of it run out of the New York metropolitan area, that sits in the Cayman Islands, a secrecy jurisdiction. Another $1.5 trillion is lodged in four other secrecy jurisdictions.
Some of that money could be used to advance political causes, without our ever knowing it.
Most recently, two Bear Stearns hedge funds, based in the Cayman Islands, but run out of New York, collapsed without any warning to its investors. Because of the location of these financial institutions -- in a secrecy jurisdiction, outside the U.S. safety net of appropriate supervision -- their desperate financial condition went undetected until it was too late.
I find it fascinating that the political players are not calling for much of an increase in information. When John McCain called for a blue-ribbon commission to investigate what's happened, he was either ignored, or ridiculed. The ridicule came from Barack Obama.
We have to learn from our mistakes. Any significant infusion to the financial system must carry assurances that it will not add to the pool of money beyond the safety net and supervisory authority of the United States. Moreover, the trillions of dollars currently offshore and invested in funds that could impact the American economy must be brought under appropriate supervision.
If not supervision, then at least scrutiny. I want to know, for example, how much of this money is controlled by hostile powers.
If Congress and Treasury fail to bring under U.S. supervisory authority the financial institutions and transactions in secrecy jurisdictions, there will be no transparency with the inevitable consequences of the lack of transparency -- namely, a repeat of the unbridled greed and recklessness that we now face. Because of the monolithic character of world financial markets, a default crisis anywhere becomes a default crisis everywhere.
Whether you agree or disagree with Morgenthau's call for more regulation, his call for more information should not be controversial. I'm especially concerned about this issue should Obama be elected. There is a rim of secrecy around his life, even his political views. The name Obama and the word "openness" are not usually used in the same sentence, and they won't be.
Open the books, please.
September 30, 2008. Permalink 
UPDATE AT 7:14 P.M. ET: A new ABC News/Washington Post poll actually has some good news for McCain. Last week this poll had Obama up nine. Today it has him up four, a five-point drop. Now, it's only a poll. There's a margin of error and all the other stuff we warn about. This change has not been verified by other polls. So please be careful. But I hope it's true.
TRACKERS
Posted at 2:38 p.m. ET
All four trackers are now out. Three - Gallup, Rasmussen, Hotline, show Obama up six points. Battleground, which had been the holdout, and which had McCain up two yesterday, now has Obama up two.
This lead can be overcome, but it will take enormous effort, and great luck to do it. Initially, much will depend on Sarah Palin surprising us Thursday night and becoming Sarah again. I'm hopeful, but only guardedly so.
Then McCain must go on the attack, and raise the most profound questions about Obama. The press will hate him, but how big is the reporter vote?
September 30, 2008. Permalink
INFERIORITY UPDATE AT 2:16 P.M. ET: STOCKHOLM, Sweden (AP) - The man who announces the Nobel Prize in literature says the United States is too "insular" and ignorant to compete with Europe when it comes to great writing. In an exclusive interview with The Associated Press, Horace Engdahl said Tuesday that "Europe still is the center of the literary world."
COMMENT: Steinbeck, Hemingway, Saul Bellow, Edna Ferber - hacks all. I'm so glad the Europeans are pointing it out.
UPDATE AT 11:12 A.M. ET: The Hotline tracker, just out, has Obama up six. It had him up five yesterday. So, in both Rasmussen and Hotline, Obama gains a point.
UPDATE AT 10:12 A.M. ET: Rasmussen reports Obama up six. He was up five yesterday. Obama is now at 51 percent. Breaking the 50-percent mark is a major step. I suspect that what we're seeing is more a revulsion toward the party in power in the White House than any rational conclusion that Obama could actually solve any of our problems.
UPDATE AT 7:54 A.M. ET: Sept. 30 (Bloomberg) -- The cost of borrowing in dollars overnight jumped the most on record, the British Bankers' Association said. The London interbank offered rate, or Libor, rose 4.31 percentage points to 6.88 percent, an all-time high, the BBA said today. It was at 2.95 percent a week ago.
UPDATE AT 7:52 A.M. ET: Sept. 30 (Bloomberg) -- U.S. stock futures rose, signaling the Standard & Poor's 500 Index may rebound from yesterday's 8.8 percent plunge, after lawmakers said they intend to salvage a $700 billion bank-rescue package. JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs Group Inc. advanced more than 5 percent as Judd Gregg, the Senate Banking Committee's ranking Republican, and Barack Obama, the Democratic presidential candidate, said a deal would eventually pass. Christopher Dodd, chairman of the banking committee, said senators may deal with the bill tomorrow.
COMMENT: Barack Obama? What precisely has he done other than talk? Rarely have we seen such slickness, lacking in such substance.
ANTICIPATION
Posted at 7:38 a.m. ET
It's a strange time. With all that's happening, there is actually very little information of value out there. The MSM seems more interested in reporting the partisan combat in Congress than in examining exactly what has gone wrong economically. The reporting is plentiful, but thin, except in a few outlets like The Wall Street Journal. Most journalists unfortunately seem rather baffled, and that includes some financial reporters.
It reminds me of an old story about the financial adviser to presidents, Bernard Baruch. Baruch was once asked by a reporter if anyone actually understands the international monetary system. Baruch replied, and the quote is approximate: "There are only two people who understand the international monetary system. One is a junior clerk in the Bank of England, and the other is an assistant secretary in the Treasury Department in Washington. And unfortunately they disagree."
There's a good lesson there. We have to try to understand the problem before we try to solve it. It's up to the press to dig, to investigate, to knock down or confirm conspiracy theories, and to report to the public. I don't think we're getting too much understanding.
Consider a survey done for the Washington Post and ABC News. The answers are scattershot, unfocused:
Most Americans see the current financial situation as a "crisis," and there is overwhelming concern that the failure of the House of Representatives to pass the economic recovery package will deepen the problem, according to a new Washington Post-ABC News poll.
But the poll also revealed significant public concern with the bill Congress rejected yesterday, as few voters said the package did enough to protect "ordinary Americans," and nearly half said it did not go far enough to shore up the nation's economy.
The public attitude seems to be "on the one hand, on the other hand."
Overall, voters split about evenly on the failed bill -- 45 percent supported it, 47 percent opposed it. Among the reasons for the tepid public reception is that there is a roughly even divide about whether government efforts will prevent the financial situation from deteriorating further still.
Blame is spread all around, but the GOP takes the greatest hit.
Asked to assess responsibility for the legislation's failure, 44 percent said Republicans were the reason, 21 percent said the Democrats and 17 percent said both sides were responsible.
That perception may cost John McCain the election, and that is the tragedy, for he was one of the first to warn of the impending economic implosion. I don't recall Mr. Obama doing much of anything, which seems to be the story of his life.
Despite the negative assessment of the current financial situation, four in 10 remain optimistic about the state of the national economy over the next year and six in 10 are bullish about their family's financial situation. But pessimism about personal finances has climbed over the past two years, and now stands at more than double its level in December 2006.
What is needed in the presidency now is a giant, not a kid. We may get the kid.
September 30, 2008. Permalink
SADNESS
Posted at 6:49 a.m. ET
The New York Sun, one of the great experiments in modern journalism, ceases publication today after a six-and-a-half-year struggle for survival. A thoughtful, high-level, conservative paper in New York, it made an impression far out of proportion to its size. It has always faced economic difficulty, but trying to raise capital in the last month finally did the paper in.
The Sun will be missed. Those of our persuasion will now depend on The Wall Street Journal, under Rupert Murdoch's well-financed direction, to take on The New York Times directly, and teach it some needed lessons about journalism.
The death of a newspaper is always sad. The death of this particular one is a particular setback.
September 30, 2008. Permalink
MONDAY, SEPTEMBER 29, 2008
THE DAY
Posted at 10:28 p.m. ET
It's a remarkable thing, during a presidential campaign, when the candidates seem irrelevant. In the last week they have been overshadowed by the economic news. But no matter what happens with the economy, the American people will vote for a new president on November 4th. If the election were held today, the winner would be Barack Obama.
Just think of it: The next president may be a man who 1) has no record of public accomplishment; 2) is the darling of the far-left fringe of his party; 3) is a product of one of the most corrupt political machines in the country, yet promises reform and change; 4) expresses views during the campaign that are at marked variance with the views he's espoused for years; 5) seems to have a lower-than-average ability to tell the truth; 6) and has not come up with a single creative idea to move this nation forward.
Other than that, he's the best candidate we've ever had.
McCain is foundering. The debate Friday did him no good, and it was about his home issue of foreign policy. Although he may be playing a constructive role in the current talks over economic legislation, it's hard to know what that role is because it's played out behind closed doors. He seems to have no economic message.
The most important upcoming event of the campaign will be the Thursday vice-presidential debate. I love Sarah Palin, but, based on her recent showing in sit-down interviews, I have to be worried.
So, what to do?
First, McCain must recognize the emergency in his campaign. There are signs he does. Apparently, he's sent his best people, not the second string, to work with Sarah Palin before the debate. There are reports that he understands that we must see on Thursday the Sarah we saw at the convention, not the Sarah we saw being asked trick "gotcha" questions by those profound minds, Charlie Gibson and Katie Couric.
Sarah has to come out fighting. Go after both Democrats and Republicans over the financial crisis. Speak on behalf of the American family. And while you're at it, put Joe Biden - not the sharpest knife in Congress - on the defensive. Whatcha been doin' all these years, Joe? Tear apart Biden's abysmal record on foreign policy. The man never saw a success that he favored. In Joe Biden's world, the Cold War would still be on
And, by the way, almost as an afterthought, take on the media. Where were Charlie Gibson and Katie Couric while the financial system was collapsing? Why, given their salaries, they were probably making plenty of money on it. Maybe, Sarah could say, the media giants could devote as much time to the American economy as they do to sending reporters to Anchorage to get any available dirt on the governor of Alaska. It's time the McCain camp realized that 1) the media has made itself the enemy, and a branch of the Obama campaign and 2) the media is never very popular. Make the media part of the same establishment that watched the financial markets tank and never warned us. "I don't give a tinker's damn," Sarah could say, "what some overpaid media windbag thinks of me. I don't talk media. I talk people." The public will cheer.
And go after Barack Obama. Barack who? What qualifications does this man have to be president? We are in a national emergency, and the Democratic Party nominates a man who's never solved a problem greater than the choice of his tie.
And then John McCain must take up the same themes and go on the attack. McCain is best when he's McCain - fighting, animated, Gary Cooper in "High Noon." (Indeed, Cindy McCain bears a striking resemblance to Cooper's co-star, Grace Kelly.)
McCain and Palin should do a whistlestop across America. Invite citizens onto the train. And talk directly to the American people, over the heads of the press. Ronald Reagan was masterful at that, as was Harry Truman.
And they both won.
September 29, 2008. Permalink
UPDATE AT 6:25 P.M. ET: From The New York Times: It was the Black Monday of 2008. Stocks fell by nearly 9 percent on Monday — the worst single-day drop in two decades — after the government’s bailout plan, touted by its supporters as a balm for the current market stress, failed to pass the House of Representatives, setting off a fresh wave of anxious selling.
UPDATE AT 6:19 P.M. ET: The Gallup tracker has Obama up eight points, same as yesterday. So, of all four trackers, three were unchanged and one showed a one-point drop for Obama. Now McCain must fight back, go on the offensive, be the McCain we saw in the later primaries, when he got out from under the shadow of defeat and drove toward victory. And unleash Sarah. The McCain staff has allowed her to be lured into playing by the enemy's rules. Let her play by her own.
UPDATE AT 12:36 P.M. ET: The Hotline tracker, just published, is unchanged from yesterday, showing Obama with a five-point lead. We now await only the Gallup tracker. Of the three tracking polls published thus far today, two are unchanged and one shows a one-point loss for Obama. Obama's gain from the recent turmoil may have stabilized.
UPDATE AT 10:20 A.M. ET: From The New York Times: Stocks opened sharply lower on Monday, with the Dow Jones industrials down more than 300 points in the first half-hour of trading, even as federal lawmakers hammered out an agreement on the government bailout plan and Citigroup snatched up the core business of Wachovia, the ailing banking giant.
UPDATE AT 9:32 A.M. ET: The Rasmussen tracker, which had Obama up six yesterday, has just been published for today. It shows Obama up five points. That is still a large lead in the Rasmussen poll, which tends to have small swings, and which has shown a tight race for months. But a lead like this can be overcome.
UPDATE AT 8:29 A.M. ET: First tracker of the day is out. The Battleground poll, the only one that has been showing McCain ahead, has him up two points over Obama. Look, I don't understand it. It's the outlier. We have three other trackers due out in the coming hours.
WHOOPS
Posted at 6:04 a.m. ET
World markets are already reacting to the bailout package constructed in Congress. The envelope please:
(CBS/AP) Asian stock markets fell Monday amid investors' skepticism that the deal reached in Washington over a $700 billion bank bailout would quickly resolve the bad debt crisis.
Adding to concerns of further global financial contagion was news Sunday that Belgium, the Netherlands and Luxembourg pledged more than euro11 billion ($16 billion) to Dutch-Belgian bank and insurance giant Fortis NV to keep it from insolvency.
"There's an increasing realization that the cleanup and the mending of all that's gone wrong is going to take an extended period to work through, and we're going to see an extended recovery period," said Jamie Spiteri, senior dealer at Shaw Stockbroking in Sydney.
I still want to know how all these bankruptcies and collapses occurred over a period of a few weeks. Is there something we should know about the financial calendar? Do they do these things between vacations?
In London, trading on the FTSE exchage got off to a weak start, despite the announcment that the British government was to nationalize troubled mortgage lender Bradford & Bingley.
You mean other countries have mortgage problems, too? We're not the only bad people in the world? Please tell that to the Ivy League.
U.S. stock index futures also fell, suggesting Wall Street would open lower Monday morning. Dow Jones industrial average futures were down 0.9 percent at 11,044, while Standard & Poor's 500 index futures were down 1.2 percent at 1,200.
And we may elect as president a junior senator from Illinois whose knowledge of economics begins and ends with clipping coupons at Stop 'n Shop.
I think I'll open a bank under my mattress.
September 29, 2008. Permalink
KRISTOL BALL
Posted at 6:01 a.m. ET
John McCain will be getting a lot of advice this week, and he needs it. His campaign is in trouble. Bill Kristol has some cogent ideas for getting things out of the cellar. I'm particularly struck by his suggestions involving Sarah Palin, which strike me as right:
John McCain is on course to lose the presidential election to Barack Obama. Can he turn it around, and surge to victory?
He has a chance. But only if he overrules those of his aides who are trapped by conventional wisdom, huddled in a defensive crouch and overcome by ideological timidity.
Exactly right. The campaign has lost its imagination.
We face a real financial crisis. Usually the candidate of the incumbent’s party minimizes the severity of the nation’s problems. McCain should break the mold and acknowledge, even emphasize the crisis. He can explain that dealing with it requires candor and leadership of the sort he’s shown in his career. McCain can tell voters we’re almost certainly in a recession, and things will likely get worse before they get better.
McCain is strongest when he's bluntest. Kristol is correct.
With respect to his campaign, McCain needs to liberate his running mate from the former Bush aides brought in to handle her — aides who seem to have succeeded in importing to the Palin campaign the trademark defensive crouch of the Bush White House. McCain picked Sarah Palin in part because she’s a talented politician and communicator. He needs to free her to use her political talents and to communicate in her own voice.
I’m told McCain recently expressed unhappiness with his staff’s handling of Palin. On Sunday he dispatched his top aides Steve Schmidt and Rick Davis to join Palin in Philadelphia. They’re supposed to liberate Palin to go on the offensive as a combative conservative in the vice-presidential debate on Thursday.
That debate is important. McCain took a risk in choosing Palin. If she does poorly, it will reflect badly on his judgment. If she does well, it will be a shot in the arm for his campaign.
And then she can avoid sitting down with another vacant "anchorperson."
In the debate, Palin has to dispatch quickly any queries about herself, and confidently assert that of course she’s qualified to be vice president. She should spend her time making the case for McCain and, more important, the case against Obama. As one shrewd McCain supporter told me, “Every minute she spends not telling the American people something that makes them less well disposed to Obama is a minute wasted.”
Kristol says that Palin should emphasize Obama's liberalism, even though some in the GOP think that's an obsolete argument.
But the fact is the only Democrats to win the presidency in the past 40 years — Jimmy Carter and Bill Clinton — distanced themselves from liberal orthodoxy. Obama is, by contrast, a garden-variety liberal. He also has radical associates in his past.
The Obama camp has criticized McCain for not using the term "middle class" in last Friday's debate. Kristol has a response:
The McCain campaign might consider responding by calling attention to Chapter 14 of Obama’s eloquent memoir, “Dreams From My Father.” There Obama quotes from the brochure of Reverend Wright’s church — a passage entitled “A Disavowal of the Pursuit of Middleclassness.”
So when Biden goes on about the middle class on Thursday, Palin might ask Biden when Obama flip-flopped on Middleclassness.
That would be a great moment, and Palin needs a great moment now. There's still time to turn this around.
September 29, 2008. Permalink
"What you see is news. What you know is background. What you feel is opinion."
- Lester Markel, late Sunday editor
of The New York Times.
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