Wealth Redistribution for the Wealthy

This story about exec pay at the bailout banks is appalling.  Does the average citizen know that almost all of the limitations on exec pay were removed from the final version of the bailout bill?  No wonder they all came running with their hands out.  Here is the final list of restrictions:  

• exec pay can be whatever the institution deems necessary so long as it "doesn't encourage excessive risk to the institution"
• golden parachutes are prohibited
• banks are prohibited from claiming certain exec pay tax benefits

That's it.  Basically, the law says, "As long as you, Mr. Bank CEO, agree not to leave this year, you can pay yourself whatever you want with the money I, the Treasury, am about to hand you.  How much would you like?"

Even more absurd is the list of institutions that received bailout money.  Many of these banks were in no sort of trouble whatsoever: 

• JPMorganChase ($25B): bought WaMu.  Here's some criteria for handing out bailout money, Mr. Paulson: if the institution can afford to buy the biggest savings bank in America, it doesn't need a bailout.
• Wells Fargo ($25B): bought Wachovia.  See above, just a bit smaller bank.  Also, Wells notably was one of the few banks to not get involved in the subprime mortgage game, so they were left with one of the strongest balance sheets among the majors.  Smart guys...they figured out how to collect $25B in emergency funding for an emergency that didn't exist.
• Bank of America ($15B): bought Merrill Lynch.  This one's a doozy: BofA bought Merrill for $50B, but then collected not only the $15B, but also convinced Uncle Paul to throw in another $10B for Merrill.  A bank that had already been absorbed by another bank!  Which itself had already received bailout money!  The mind boggles.
• CapitalOne ($3.5B): not even a troubled bank.  I know this because I researched bank solvencies for my savings accounts.  I guess that's why they got so little.  Seems fair.
• Zions Bank ($1.4B): one of the healthiest banks in the nation (again, I know...I bank there).

I am left with three overarching question:

1. What in the hell was the criteria for handing out these bailouts?
2. What, if any, repercussions or obligations are there for the participating institutions?  We see above that the executives making the requests suffer none.
   
3. Will the US Treasury ever see any of this money again?

I didn't even mention AIG, which came back, after their first massive bailout, and asked for $40B more.  Did Uncle Paul tell them that they were going to have to behave this time?  No.  In fact, AIG complained that the restrictions on the previous handout were too oppressive, so our friends in Washington agreed to not only hand them an extra $40B, but also loosen the restrictions on the prior tranche of funding.  Here is the analogy for you parents out there:

"Son, here is five dollars for you to spend at the store.  You just can't spend it on candy."

"Thanks, dad."

(Ten minutes later) "Dad, I spent it on candy, but I want more candy.  And toys."

"OK, son, I understand.  Here's $50 to buy more candy and toys.  Is that enough?  Come back if you need more."

"Thanks, dad."

"Also, no homework for you tonight.  Just TV and videogames.  OK?"

"OK"

This is going to go down as the biggest rape of the American taxpayer in our nation's history.

Obama on the Most Pressing Issue of Them All: A College Football Playoff

I love that the President-elect keeps pushing this, mentioning it in his 60 Minutes interview last night.  Gordon Gee, the president of Ohio St., responded that he is happy to explain to the President-elect that while a playoff would be exciting for the fans, it is not the right thing for the student-athletes because it would take too much time away from the classroom.  This is, of course, utter nonsense.  He is suggesting, as do many of his fellow college presidents, that one extra game for four teams, and two extra games for two teams, on Christmas and New Years Eve weekends, would somehow diminish the academic tradition of their institutions (I zeroed out the extra game for all eight teams in the first round, because those games would replace the bowls that they would play in under the current system).  Meanwhile, these are the same people that recently approved an extra 12th game for all 119 teams during the regular season, when school is actually still in session.  How is that in the interest of the student-athlete?  Obama hit it on the head when he suggested in the interview that college football reduce the number of regular season games to accommodate a playoff.

It is frustrating when you can't figure out the other guy's motive and that is what is so intensely maddening about this situation.  A playoff would result in more money for all schools, even with a regular season reduced to 10 or 11 games, because all schools would share in the financial windfall of the playoff, similar to the way the NCAA basketball tournament works today.  It would also result in happier fans, happier alumni and students, happier players and coaches, and happier small-conference schools, all without jeopardizing any academic mission whatsoever.  Ironically, they already have a playoff system for all of the other divisions, which are made up of many schools with equal or better academic reputations.  The TV networks and sponsors would also love it.  And even the bowls could benefit...make the Final Four the top three bowls (three of the following four: Rose, Fiesta, Sugar, Orange...rotate one out each year?), with the championship rotating among them.  The conferences would benefit.  There are six major conferences.  Have the champion of each conference advance to the playoff and add two wild cards, selected by a committee, just like the basketball tournament.  This would make the conference races more meaningful and also allow for multiple teams from the same conference to get in if they are deserving.  At the same time, schools from smaller conferences would have a fair shot as well.

What is the real reason the university presidents are so adamantly opposed to a college football playoff?

The Knives Are Out

Politico is reporting that the infighting over Palin has begun.  The story was clearly placed by Palin's camp, but incredibly, still manages to make her look disloyal and vapid.  McCain insiders are particularly incensed that she goes off and makes her own policy declarations without clearing them with the boss.  This bit of inscrutable nonsense was from a radio interview with Glenn Beck this week:

"I say, you know, when is enough enough of taxpayer dollars being thrown into this bill out there?" she asked. "This next one of the Democrats being proposed should be very, very concerning to all Americans because to me it sends a message that $700 billion bailout, maybe that was just the tip of the iceberg. No, you know, we were told when we've got to be believing if we have enough elected officials who are going to be standing strong on fiscal conservative principles and free enterprise and we have to believe that there are enough of those elected officials to say, no, okay, that's enough." 

A McCain insider called this little ditty "a nice sentiment."

I know that Obama gets criticized for having a smooth tongue, but honestly, would America really prefer the opposite?  Sarah Palin makes W sound like Lincoln.  If she truly is the future of the Republican party as so many claim, then the Republicans are in even more trouble than I thought.

Meanwhile, McCain was in Colorado yesterday talking about how small businesses need "less government regulation."  Again, perhaps "a nice sentiment," but really, Senator, this is probably not the best time.

North Carolina Early Voting

There is some interesting data coming back from North Carolina regarding early voting and absentee ballots. I'll spare you the math: 9% of registered voters have already voted and these are comprised of 56% Democrats, 27% Republicans and 17% other (the polls have been open since October 13). This implies a 29% edge for Obama among 9% of all registered voters and a greater percentage of likely voters, if we assume that party members vote for their candidate and the others split their votes down the middle. There is still a week of early voting remaining, which means we can expect something like 20% of NC to vote early when all is said and done. This means that by the time the polls open on November 4, McCain will have to beat Obama by 7-8 points among election day voters just to tie Obama. That is quite a hole to dig out of.

Powell Endorses Obama

I just watched Gen. Colin Powell's endorsement of Barack Obama on Meet the Press. All I can say is, wow. Without reading from notes or a prompter, he delivered a pitch-perfect, even-handed but full-throated, emotionally moving seven-minute soliloquy about he supports Barack Obama to be the next president of the United States. He even deals with the Muslim Arab-bashing issue head-on in such a powerful way, I don't know how someone could watch this and not be simultaneously ashamed of some of the recent rhetoric and incredibly proud of this great nation. The fact that he is the first major public figure to do so publicly is hugely important, and will be the subject of many news stories over the next few days. Our country will be better off for it.

McCain Finally Has a Message! (and Momentum)

I take great pride in the fact that yesterday Nate Silver came to the same conclusion about last week's debate that I did two days ago. The results are in and McCain won the last debate decisively among conservatives. He has now closed the gap from 7.1% last Wednesday to 5% today. There is no other way to explain such a sudden shift in momentum toward McCain, as there was no other significant news. All four insta-polls went heavily to Obama, but those polls are either slanted toward Democrats (because there are more registered Democrats than Republicans) or focused on independent and undecided voters, who clearly preferred Obama's performance to McCain's. But it is the social and fiscal conservatives that are fired up now. Red state America loves Joe the Plumber, despite his failure to pay taxes, the fact that he's not a plumber, and his tax advantage under the Obama plan. The McCain campaign is now accusing Obama of unfairly "attacking" Joe the Plumber, even though he's done no such thing, and the conservatives are rallying to his cause. In fact, "share the wealth" is becoming this cycle's "cling to guns and religion"; Obama-as-socialist is scoring points for McCain. The "What's the Matter with Kansas" principle may still apply: even people of modest means abhor the idea of rich people sharing the wealth, and will enthusiastically vote for the guy who promises to cut taxes for the most fortunate 1%. Why? Because they want to be rich too someday, and believe they will be, and think it is fair for people that strike the jackpot to keep their winnings.

The second piece of red meat McCain threw out during the debate was a full-throated pro-life message. He even said that he thought a Supreme Court justice candidate that supported Roe v Wade probably wasn't qualified for the job. Again, the social conservatives love this kind of "straight talk" and I think they are throwing their weight more enthusiastically toward McCain. I was surprised to see in the NYT this morning that only 54% of American women are pro-choice, according to an August Pew Research Center poll. I always thought that number was significantly higher. 42% of women are pro-life and 16% say it should be banned "in all cases." (even a point higher than men!). This is clearly a winning issue for McCain among his base.

I disagree with Silver about one key point, however. I think McCain can win the election with a full-bore conservative base campaign. I don't think he will, but he can. What we are seeing now is similar to what we saw when Palin was nominated. Let's not forget that McCain was up by as many as 3-4 points after her nomination and the convention. I don't think this election will go that far in the other direction because of the economy and a generally higher comfort level with Obama than the country had previously, but it is certainly conceivable to see this falling into a popular vote dead heat.

McCain has a concrete, two-pronged message now with Joe the Plumber/wealth redistribution and abortion. This message offers the added advantage of synching better with his running mate than his prior messages have. I think we'll stop seeing the Bill Ayers/Rezko crap, as even the McCain campaign recognizes that America wants to know why McCain is running for president. Now we know: he wants to lower taxes for the wealthy and make sure Roe v Wade is overturned. We blue state "elites" may think this is a nutty platform to run on, but at least he stands for something now, which he didn't before. And it is clearly working.

The question is, how much? Interestingly, the state polls are still squarely in Obama's column and haven't moved much. And Powell's endorsement today may help a little. The independents and undecideds, which make up about 9% of the electorate, are still breaking pretty strongly to Obama and a good third of them probably won't even vote. But most experts think this will shift toward McCain as election days nears, with maybe 4-5% going to him, 1-2% going to Obama, and 2-3% not voting. That means McCain would gain about 3 points net. He probably still has a couple more points coming to him from the conservatives, which would get us basically to a dead heat.

But the states are what count, obviously. From where we stand today, I would guess that McCain closes the gap and takes Florida, North Carolina and Ohio. He has to; if he loses any one of those three, he will lose the election. But even if Obama gets swept in those three states, he will still likely hold onto Virginia, Colorado, Minnesota and New Mexico. And that puts him in great position. Obama already has 249 out of the 270 electors he needs locked up in solid blue states. So he only needs 21 more. Any of the following combos of Obama-leaning states would put him over the top:

• Colorado + Virginia
• Minnesota + Virginia
• Minnesota + Colorado + New Mexico

This is an incredibly strong position for Obama. He could lose all eight of the toss-up states and still win the election by winning just two of the four states that are leaning toward him. Add to this the clear advantage Obama has in his GOTV efforts, and we are looking at a very likely Obama victory, despite McCain's recent success. But it will probably not be the walk in the park some were hoping for and expecting. Election Day is going to be more fun than the Final Four and World Cup combined (and only slightly less important).

Debate #1: Instant Polling

Other polls are lining up with CNN's debate poll that has Obama winning 51-38%.  John King mentioned three key demos within the CNN poll:

• Men thought McCain won, 48-45%, I believe.  That is a terrible score for McCain.  Men typically vote Republican by large margins.
• Women had Obama winning 59-38%, or something near that.  A 20+% margin.  Women are 1) more likely to vote, 2) decide late, and 3) are a majority of the self-described Independents.  That is a good group to have in your corner, especially when you are ahead in the polls by 3-5% and only about 10% of the country hasn't made up their mind yet.
• Most surprisingly, people 50 years old and above went for Obama 48-40% (I think...my memory sucks). They vote in huge numbers and have traditionally been a strength for McCain.

So, why, when most of us thought the debate was pretty even or maybe a slight edge to Obama, does the American public seem to so decisively believe it was Obama that won?  I think it is because for a large number of those polled, this was the first time they've really seen McCain up close since 2000.  And he doesn't look or sound as impressive as he once did.  On the other hand, Obama, who a number of these people have also not seen a lot of (despite what we may think about him being overexposed, many people haven't paid attention until now) looked and sounded confident and presidential.  I bet many people figured he was just a callow, inexperienced young guy.  This debate may have changed some minds.

As usual, it is less about what they say and more about how they say it.  The meta-message I took away was McCain = angry, old man with solid foreign policy experience ("He doesn't get it.  He doesn't get it.").  Obama = reasonable, smart, respectful young man ("John is right..."), with not a lot of experience, but who certainly did his homework.  He shows poise beyond his years.  A tiny detail from the end of the debate that I thought was telling: when the two candidates shook hands, Obama looked McCain directly in the eye and said, "Good job, John."  McCain mumbled something inaudible and looked away without making any eye contact at all.

Eerie Similarity

Compare and contrast Gov. Sarah Palin with Miss Teen South Carolina 2007:

Gov. Palin
Miss Teen South Carolina 2007

The McCain Surge

What is up with Obama's diminishing lead in nationwide polls? The "McCain surge" has taken him from eight points down to three in the last two weeks. I'm inclined not to take summer polls too seriously since nobody but we geeks are really paying attention at this point, but it is still interesting. My hypothesis is that Obama is getting a whiplash reaction from the netroots and left wingers who are disappointed with some of his recent moves to the center. They are probably telling pollsters that they are so disappointed that they are going to vote for the "maverick" and "straight talker" McCain. And Obama has yet to see any benefits from the independents, who are probably less maniacal about following summer politics. On the other hand, Obama is still solid where it counts...Pennsylvania, Ohio, Michigan, Colorado and more.

My other theory is that the McCain campaign has adopted a new strategy for their candidate. The McCain surge has happened without the benefit of him doing anything noteworthy whatsoever. He even spent two days in Colombia, of all places. His events are usually kept to <100 people and TV coverage is kept to a minimum. And he is down to only three campaign days/week, according to some reports. I think the McCain campaign has decided that their candidate is so weak that their best hope is to hide him.

GM On The Brink

We may stop making cars in this country. Look at these numbers: GM has negative equity of $41B and lost $39B last year. The only reason the company isn't bankrupt is because the markets are trading on the assumption that GM's future cash flows will wipe out that $41B in a reasonable period of time. I'm not so sure. The stock is down 50% in the last two months, which would seem to indicate a dramatic loss in market confidence. Ford isn't much better. It is approaching penny stock territory at $4.95 and is off 40% in the same period.

GM is teetering, folks. What will happen if those 266,000 jobs go away? You think the good people of Michigan will vote Republican? Maybe, maybe not. You can be damn sure the Bush braintrust (and the wimpy Democratic Congress) will pump yet another $100B of our hard-earned tax dollars to prop up another failed business. And we'll be drilling for oil in the Rose Garden.

A Close Race?

There's been a lot of talk recently about how close of a race the US general election is between Barack Obama and John McCain. It isn't. In fact, a recent NBC/Wall Street Journal poll that revealed a 6-point lead for Obama was characterized as revealing a number of weaknesses for Obama that he would need to overcome to win in November. Buried later on in the WSJ article was the point that Obama has actually doubled his overall lead since the last poll and is walloping McCain among most key demographics. In any case, the popular vote is more or less meaningless, so it is more important to focus on the states. And what do the latest polls there say? Here is the latest swing state polling for the general election (recent poll averages from RCP):

• Ohio: Obama +4
• Pennsylvania: Obama +6
• Wisconsin: Obama +7
• Colorado: Obama +5
• Iowa: Obama +8
• Minnesota: Obama +9
• Oregon: Obama +9
• Washington: Obama +13
• 
  
• Virginia: tie
• 
  
• North Carolina: McCain +4
• Indiana: McCain +2
• Michigan: McCain +2
• New Hampshire: McCain +1
• Florida: McCain +8
• Missouri: McCain +6
• New Mexico: McCain +1
• Nevada: McCain +1

This may appear at first glance to be fairly even, but it isn't. First of all, Obama is way ahead of McCain in electoral college votes for states that are considered safe for both sides. So McCain will need to beat Obama soundly in the swing states in order to win. That is not happening. Secondly, virtually every trend line I saw on RCP revealed a pronounced shift toward Obama. Indeed, states like Oregon, Washington, Iowa and Minnesota are not even considered swing states anymore. And states that were formerly safe for McCain are now in play, like Virginia, North Carolina and Nevada. McCain's lead in battlegrounds like Michigan and Indiana is down to two points. Just about the only good news that McCain can take from the polling is in Florida and Missouri, where he still enjoys fairly large leads. But even there, he's in trouble. The latest poll in Florida has him leading by four points and that was taken in May. And McCain's lead in Missouri has shrunk in four successive polls, from +15 to the latest poll from June 3 that actually has Obama leading by one point. In fact, among the swing states where McCain is leading the poll of polls, the latest polls in all but three states have Obama winning. So, if you were to bet on the trend lines as they stand today, McCain stands to win only three of the 17 swing states.

A lot can change from now until Election Day, as the old cliche goes, but if you are in the Obama camp, you have to pretty darn happy with these numbers. At this early stage of the race, McCain is way, way behind.

It Depends On What Your Definition Of The Word "Endorse" Is

I don't think any of us can begin to comprehend how disappointed Clinton must feel right now, as someone who was so far and away the favorite for her party's nomination only four months ago in a year when the Democrats are virtually assured the presidency. And to come so close, it must be devastating. Perhaps she ought give Al Gore a call.

But her burn-the-house-down tactics throughout the campaign have been infuriating. And now there are reports that we are about to be subjected to the ol' Clinton semantic jujitsu once again. She is going to "suspend" her campaign, not "end" it. She is going to leave her name on the convention nomination list, just in case. Her email last night to reporters announced that she would congratulate and "support" Obama, not endorse him. She is not going to leverage Obama into offering her the VP position, but she is going to make sure that her 18M voters are "heard". An hour ago, the New York congressional delegation called a press conference to announce a group endorsement, but not of Obama. They announced that they are endorsing Clinton's decision to suspend her campaign.

It is enough to pull your hair out. What is happening here is plainly obvious: all of this legalistic wordsmithing and behind-the-scenes maneuvering is not an accident. She is keeping her options open. She still plans on winning this thing.

Speeches

Hillary Clinton said many months ago that speeches don't matter. "Just words," I think was the way she put it, in condemning Obama. Last night proved her wrong. Last night, three speeches were emblematic of the entire campaign:

For anyone that hasn't seen McCain's speech, I highly encourage a visit to YouTube. It was sad. This was McCain's last big moment before the Republican convention to counter the Democratic arguments against him. With no more than 200 attendees, the room took on the appearance of an Elks Club meeting at the Highway 40 Holiday Inn. Then words came out of McCain's mouth and it went downhill from there. To say the audience reaction was tepid is an understatement. He kept making arguments against Obama and then repeating the applause line, "That's not change we can believe in!" This line was accompanied by a giant grin (boy, are his teeth yellow...somebody get a dentist on the Straight Talk Express). At first, a few people took the cue and applauded, but after a while, they gave up. At one point, he unleashed this line to deafening silence, leaving him to stand there with a big expectant grin, like an old Catskills comedian, as crickets chirped outside. There is no other word to describe it...it was really, really sad. After the speech, the CNN crew was incredulous, with Jeffrey Toobin calling it "the worst speech I've heard in years." Anderson Cooper asked the panel if McCain "needed help." The entire studio was falling over themselves laughing and making fun of the senator. I'm not making this up.

Then it was Hillary's turn. Obama had just clinched the nomination, as was expected all day. She turned in one or two perfunctory lines about Mr. Obama and what a good campaign he has run, but made no mention of his historic victory. She then proceeded to unleash on him, sticking to her claim that she is best positioned to win the White House, that she won all the swing states, that she alone has the experience necessary to turn this country around, that she alone speaks for all the women in the country who never thought they'd see this day. Me, me, me. She then announced that she would not be making any decisions tonight, to a roar of approval from the crowd at Baruch College in Manhattan. She smiled broadly as the crowd cheered, "Denver, Denver, Denver!" She complained about Obama supporters that tried to push her out of the race. "Every vote counts!" she announced heroically. She then said her next step was going to be to listen to her 18M supporters. She asked them to write to her on her website and tell her what they think she should do. (What do you think they'll say?) She also told them that any "help" they could provide would be appreciated. It was a spectacular performance of complete narcissistic glee. Evita Peron couldn't hold a candle to her. After the speech, the CNN panel was nearly as amazed as they were after the McCain speech, but for obviously different reasons. They marveled at her complete lack of grace and her refusal to even throw Obama a single bone of congratulations. The Republican consultant on the panel had the line of the night: "About the only thing she forgot to do was to offer Obama the VP slot."

The panel uniformly agreed that she was going to continue the fight, probably at the behest of all those supporters who are sure to write in and ask her to keep up the good fight. The only dissenters on the panel were Carl Bernstein and James Carville, who both hinted that they had inside knowledge of the Clinton strategy. Apparently the Clinton camp believes that they should not give up any leverage until Obama accedes to their demands, whatever they may be. There are some reports that it is about the vice presidency. Others claim that campaign debts are far higher than have been previously revealed and may need to be paid off from Obama's coffers. Who knows, but I'll say one thing: I'd be surprised if Obama is going to allow Clinton to "leverage" him into offering much. What kind of a presidential nominee is going to offer someone a spot on the ticket with a gun to their head? She had a chance to recognize this historic moment in American history and instead crapped on it. Those are chips she can't play again. A Clinton supporter wrote into the show saying that Clinton will do the right thing in due course, but tonight is "her night." Really?

Finally, Obama spoke in front of 18,000 supporters in St. Paul and absolutely killed it. He went above and beyond in recognizing Clinton's achievements, her service to the country, and her inspiration to women. He praised McCain and then made his points against him. And he called on Americans to come together and lead again. The one thing he didn't do: he didn't make a single reference to the historic nature of his victory. In his view, this election should not be about race, although it is an obvious factor. But at least in his rhetoric, he is appealing to our better nature. The CNN peanut gallery lauded his performance. David Gergen said some great things about growing up in North Carolina and not really believing that this event had occurred in American history in his lifetime. He said, "America has come a long way and Obama hastened the moment." He then lamented that a wonderful, historic night in our nation's history had a wet towel thrown on it by an obviously bitter Hillary. He and others speculated that the Democratic establishment (as well as the Obama campaign) must be furious and a mass of her superdelegate support will melt away tomorrow. We'll see...I sure hope so.

So, there you have it: the Republican candidate, appearing like he is washed up before the battle is even joined, the Democratic runner-up, still plotting and scheming her way to more power and money, and the Democratic nominee, looking ahead to brighter days. The choice this November seems fairly obvious, and I believe more and more Americans will come to the same conclusion in the months ahead.