McCain: You know, that's a tough question and there's a lot of qualified Americans. But I think the first criteria, Tom, would have to be somebody who immediately Americans identify with, immediately say, we can trust that individual.

A supporter of Sen. Obama's is Warren Buffett. He has already weighed in and helped stabilize some of the difficulties in the markets and with companies and corporations, institutions today.

I like Meg Whitman, she knows what it's like to be out there in the marketplace. She knows how to create jobs. Meg Whitman was CEO of a company that started with 12 people and is now 1.3 million people in America make their living off eBay. Maybe somebody here has done a little business with them. But the point is it's going to have to be somebody who inspires trust and confidence. CNN transcript

Whitman is a figure that McCain has identified previously as one of the three "wisest people" on whom he would rely for advice in his administration.  At the Saddleback Civil Forum on the Presidency which both candidates attended 16 August Whitman premiered with General David Patraeus and Representative John Lewis (D-GA) as a "great American success" story. Indeed, Ebay pursued huge international expansion during Whitman's ten-year tenure as CEO. She profited handsomely by Goldman Sachs' IPO underwriting between 1996 and 2002. And, though dogged in her final year by vendor attrition and poorly gauged acquisitions, she retired with a fortune estimated $1.3B with interest, in a run for governor of California in 2010.

She left John Donahoe who replaced her in March with an unpleasant task. On Monday, he announced that the firm would cut 1,600 jobs, or 10% of its workforce, over this quarter. But management offset this loss by adding lender Bill Me Later to its PayPal operation for about $945M in cash and stock options and online classified ad aggregators, dba.dk and bibasen.dk for another $390M in cash.

Of course, Mr Buffett may yet decline McCain's invitation specifically. No wonder then that Mr Obama readily approved of the Oracle of Omaha and did not promote any of his economic advisors to replace Paulson or Bernanke for that matter. With the exception of Paul Volker, these experts either evoke the Clinton administration's credibility  --Rubin, Summers, Blinder, Reich, Levitt-- or no confidence at all in competencies.

His campaign Director of Economic Policy Jason Furman reacted hastily to criticism of Obama's tax relief for 95% of  households and home offices. He  praised the campaign's "overall business agenda".

While columnist Charles Babington, called "McCain's proposal" to obligate nearly half of the $700B Bailout tab to "rescue" distressed mortgages a highlight of Tuesday's presidential debate, Furman today criticized the one provision of the Bailout Bill aimed at loss mitigation for lenders and foreclosure prevention-- the HOPE for Homeowners Act. In a press release, he predicted that "McCain's proposal" would force Treasury to "massively overpay for mortgages [and] guarantee taxpayers lose money, and values don't recover."

But Democrats Sen. Dodd and Rep. Frank  packaged the act last March (1, 2, 3, 4), co-opted by Sen. Shelby in May, the finally enacted in H.R. 3221. The relevant Bailout Bill mark-up language is H.R. 3997, §124 HOPE for Homeowners amendment.

Volker is 81-years-old and unlikely to see a full term TARP, five years. The avuncular Buffett isn't much younger. But half the population will associate Volker with painful and prolonged target fed funds rates to reverse inflation during the Carter and Reagan administrations. Ironically, the FRB this morning lowered its official target rate 50bps, seeming to coordinate long-term currency inflation measures of G7 counterparts and assure risk-free participation rates in short-term capital gains. The decision shifts gearing from depository banks' capital requirements to the transaction costs of brokerage intermediaries in financing, or "recapitalizing," corporate "troubled assets."

In fact, the FRB has announced the Commercial Paper Funding Facility (CPFF) to provide liquidity to US issuers other than reserve banks and primary dealers. The first act of the Fed and Treasury's joint authority establishes a special purpose vehicle (SPV) to purchase three-month unsecured and asset-backed bonds directly from selected companies.

Buffett, not unlike Spif in the EU or Clorox in the US, is a label for preternatural benefits that is familiar to middle-class households. Less charitably, the business press understands his risk threshhold to benchmark the penultimate market value of any one firm's price to earnings. A Buffett investment is an exercise in a bottom feeding arbitrage. His operating principle is said to be intuitive: "You should get greedy when others are fearful and fearful when others are greedy."

For example, in March 2008 one of Buffett's trusts purchased a majority stake in Marmon Holdings Inc from Chicago's Pritzker family. Pritzker, Penny is the uncelebrated National Finance Chair of Barack Obama for President. Incidentally, her family was the uncelebrated beneficiary of the FDIC's seizure of Superior Bank, an S&L whose mortgage portfolio is still managed by the FDIC. Earlier last month, he purchased an international utility holding company, Constellation Energy Group Inc, for $4.7B. Constellation, in a move counter-intuitive to this week's Wachovia best  practices to preserve shareholder value, had rejected a higher offer led by Electricite de France SA. And in advance of Congress enacting the $700B Bailout Bill, Mr Buffet purchased  $5B in perpetual preferred stock, carrying 10% dividend earnings, and a warrant to buy 43M common shares of the newly organized Goldman Sachs bank holding company. Few would gainsay Buffett's lastest bottom call. Goldman is unlikely to repeat the performance of Salomon Bros. Inc  in 1991. Goldman alumni are well-placed in current and future administrations.

Last night Mr Obama narrowly added emphasis to his Buffett endorsement and the job description of Treasury secretary in his administration. That is what has been a little noticed feature of the FRB's mission, promoting employment stability.

Obama: Well, Warren would be a pretty good choice -- Warren Buffett, and I'm pleased to have his support. But there are other folks out there. The key is making sure that the next treasury secretary understands that it's not enough just to help those at the top. Prosperity is not just going to trickle down. We've got to help the middle class.

And we've -- you know, Sen. McCain and I have some fundamental disagreements on the economy, starting with Sen. McCain's statement earlier that he thought the fundamentals of the economy were sound. Part of the problem here is that for many of you, wages and incomes have flat-lined. For many of you, it is getting harder and harder to save, harder and harder to retire.

And that's why, for example, on tax policy, what I want to do is provide a middle class tax cut to 95 percent of working Americans, those who are working two jobs, people who are not spending enough time with their kids, because they are struggling to make ends meet.

Sen. McCain is right that we've got to stabilize housing prices. But underlying that is loss of jobs and loss of income. That's something that the next treasury secretary is going to have to work on. op cit.

It is not clear how Mr Buffett would apply his deep investment knowledge to volatility in the US labor market that federal agencies face in months to come. Mr Buffett is said to have saved Mr Gutfreund's job in 1987 by investing $700M in Salomon preferred stock. But Ms Chao recently primed members of the US Chamber of Commerce, a formidable industrial lobby,  for resistance to "the Europeanization of the American workforce." She warned that it "would have dire consequences for our country's ability to compete abroad and would disrupt the traditional labor relationships here at home." Federal policy she insisted must embrace the idea that workforce development is not a social welfare program.

Europe's labor policy revolves around a number of concepts that directly contradict the ideals that have made America the envy of the world. These policies include state mandated limits on the work week, limits on working hours, and mandated leave policies subsidized by the government and paid for with extremely high tax rates on everyone.

Mr Obama has frequently advocated for employers' cooperation with the US Fair Pay Restoration Act, an Increase of minimum wage to $9.50 by 2011, a "Making Work Pay" tax credit to offset the first $500 of FICA, and an amendment to the Family and Medical Leave Act and extending flexible work arrangements. In the "Blueprint for Working Women and Families" (pdf), distributed by a political action committee Women for Obama, he proposes to amend the act by re-setting eligibility to firms sized twenty-five employees or more and coverage under the act to paid elder care, PTA, crime victim protection, and adoption leave assistance -- provided by a $1.5B fund administered by the Department of Labor. Ms Chao is offended however by these needs and increasing US  federal incentives for telecommuting like those in the UK. She continued.

In America, employers and workers come together to make these types of decisions, either individually or through collective bargaining. In Europe, instead of allowing workers and their employers to negotiate the best package of benefits for themselves, the government decides for them. And the results have been disappointing -- slower growth, lower per capita income, higher unemployment and longer durations of unemployment. [...]

Rather than embrace a regulatory and labor-management regime from the Old World, our country should pursue standards in keeping with the values of the New World-- the unique American way forward. We need to work to protect the principles and ideas that have made our economy the envy of the world. That means keeping taxes low, and being wary of regulations that stifle job creation. That means advancing free and fair trade. That means lowering trade barriers to goods and services manufactured in America, which promotes export growth and job creation at home. Public policy should focus on advancing a new model of labor-management relations in which both sides work together, recognizing that the true competition isn't sitting across the bargaining table. Our regulatory system must focus on producing benefits, not simply needless costs, and actually solving problems, not creating more of them. And we can develop tax policies that reward risk-taking and keep our country competitive globally. [emphasis added]

The political stage is being set for the entry of Democrats' magical "Mortgage Czar".