What's Next
As of the time I'm writing this (around 11:30 p.m. EST), it looks like negotiations on the bailout bill have broken down, at least for tonight. It appears that John McCain's decision to parachute in at the last moment has destabilized the situation and, at least temporarily, scuttled the agreement in principle that had existed earlier today. On top of that, there is breaking news that Washington Mutual was seized by the FDIC (and then immediately sold to JPMorgan), making it the largest bank failure in U.S. history (by far). Unless something dramatic happens between now and tomorrow morning, I'd expect the market to open dramatically lower. And more importantly look for the TED spread to balloon to record levels.
And that's probably a good thing. It may serve to open some people's eyes.
Earlier today, well before the contentious meeting at the White House, I wrote this:
And that's probably a good thing. It may serve to open some people's eyes.
Earlier today, well before the contentious meeting at the White House, I wrote this:
[H]ere's the most likely McCain play. He'll swoop in, read through the compromise proposal that's been reached and declare that it's unacceptable in its present form. He'll then demand that something either be added or removed (or both) and use his leverage (his threat to vote no) to get the bill changed. Then he'll vote for the amended bill and take full credit for having made this crucially important change (whatever it is). His surrogates will claim that the whole episode shows McCain's heroic leadership, the way he takes charge of a situation.I still think this is still the most likely scenario. Right now the major holdouts are the House Republicans who have come up with their own half-baked alternative proposal (really just a set a talking points). Look for McCain to attempt to broker some sort of compromise whereby the existing proposal is modified in some minor way to appease House Republicans and bring a few more of them on board. Then he'll jet down to Mississippi for the debate.
Or not. We'll see. This whole thing is nuts.
posted by A.L. at 11:44 PM
7 Comments:
http://www.nytimes.com/2008/09/26/us/politics/26campaign.html?_r=1&hp&oref=slogin=us
The White House meeting seems to have disolved in chaos.
Apparently, McCain sat silently through the meeting & only at the he or Boehner tried to push an alternative deal.
If McCain's mission was to present himself as the deal-maker, he has handled it very ineptly. Looking at the some of the early media stories, the Republicans are seen as the ones being obstructive ... they want a package that has less regulation.
Chris Dodd is being widely quoted as saying that the Rpublicans had "a rescue plan for John McCain" not the economy.
From a campaign point of view, Obama is at no disadvantage, or rather McCain has not gained any advantage. But be ready for his media supporters to try to spin things his way!
Obama is going to head for the debate ... will McCain turn up?
Hmmmmm.......the key question is how committed are House Republicans to letting the economy tank for their free market principles? You seem to think they will cave after one day of stock market carnage. Will one day of financial carnage be enough to reverse the calls to congressional offices opposing the deal? I think that is another key consideration. There is a grassroots backlash against spending taxpayer money on a bailout. Republicans see the chance to demagogue a bailout as their last gasp, the last twitching of a body in its death throes. If they cave, they will have nothing left to run on.
Tomorrow is going to be one hell of a day. I wish I could just skip work and watch cnn all day.
By the way, AL, you have been the most perceptive observer around these last few days.
Wow, Kos is over there actually cheering on the House Republicans. How weird is that?
Then he says something like "This is not the Iraq War where they could hide behind secret intelligence. Where's the evidence?"
Well Kos, the evidence is about to show up at about 9 am eastern standard time in the form of weapons of mass economic destruction. How much pain will it take to turn him around do you reckon?
I mean sweet jesus, the bailout got practically everything Krugman wanted. I thought that would be enough to get smart folks on board. But these times are breeding irrationality. Doesn't Kos see that once the Dow drops below 10,000 the anti-bailout position is not gonna look quite as good as it does now? Try to see a move ahead people.
Despite McCain's 40-min silence in the WH meeting, I'm afraid AL's scenario may yet play out. If McCain can get the Republican holdouts to sign on to a barely modified bill just before he jets to Mississippi, then he'll have some real leverage for the debate.
But what if the markets don't tank today? What sort of wrench would that throw into the politics? Because it's my sense that it will take a pretty decent market fall today to persuade the GOP house rank and file that they need to take intervention seriously.
My sense is that at this point they are thinking only of their own political survival and they see this issue as an effective way to distance themselves from Bush.
I saw this reported about the WH meeting:
"Towards the end, McCain finally spoke up, mentioning a counter-proposal that had been offered by some conservative House Republicans, which would suspend the capital gains tax for two years and provide tax incentives to encourage firms that buy up bad debt. McCain did not discuss specifics of the plan, though, and was non-committal about supporting it."
That strikes me as a reversal of his prior posturing to be a born-again regulator and reveals his true colors. The key phrase is "and was non-committal about supporting it." So much for the great leader arriving to make things happen. So much for Country First.
In a prior post I speculated that McCain's angst is around how to pose publicly as favoring regulation while privately assuring right wingers that he does not. His dilemma is ideological and he will do everything possible not to take a position or cast a vote. One way he alienates the kooky low-IQ Palin base, the other way he's dead with Independents. There is no way to finesse that ... he's going down as hard as WaMu.
So we have angry extremist House Republicans willing to bring on economic Armageddon to achieve an ideological Rapture. Sounds like when they shut down the government in 1994, and that's exactly how Dems should play it. It's a lose-lose for House Republicans. If the bailout happens their laissez faire era comes to an end (and their anger shows they know it). If it does not happen, they caused the destruction of the American (maybe world) economy. They both caused the mess and are blocking its resolution. Is that what is meant by Country First?
So far the market has more faith in a deal than I do... looked like it was heading off the cliff (Dow down 150) until Bush spoke this morning. My 1000 pt drop is looking less likely thank goodness.
I'm beginning to be torn over whether the Dems should just do this themselves. Couple of days ago, I was adamant about not giving cynical Repubs such a big stick to beat them with (public opinion being so against a "Wall Street bail out"). Now I am not so sure. It will take more of a market downturn than what's happening (so far) this morning to change my mind, but I am starting to waver.
Save the economy and take a political hit, or let it burn and not get (as) nailed. That choice of course assumes that we could foresee the effect of any implemented bail out plan, which we can't - at least not with a sufficient degree of clarity. What a freakin mess. And to have a faction (if not most) of one party -- and their pres. nominee -- not acting in good faith, just makes it enraging.
And more enraging that (like offshore drilling) the public doesn't see past the surface of this, and therefore it is so difficult to communicate to the public the awfulness and hypocrisy of what the Republicans are really up to here.
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