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Interesting Times

by afew
Fri Sep 26th, 2008 at 02:10:28 AM EST

The financial meltdown is a great occasion for political grandstanding. Nicolas Sarkozy, in a major speech last night in Toulon, told the French they were "afraid". And he was there to save them. Not a single bank depositor would lose a single euro, he said magnanimously (thus introducing the fear that bank deposits were not guaranteed and that ordinary people should be scared of losing them). Laissez-faire was over, the market is always right was finished, capitalism needed to be moralized; he was going to refound it. (However, he was going to go on with his pro-market "reforms", that were now more necessary than ever). Meanwhile, amazing scenes in Washington DC:

Talks Implode During Day of Chaos; Fate of Bailout Plan Remains Unresolved - NYTimes.com

WASHINGTON — The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support.
“If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.
It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington.
By 10:30 p.m., after another round of talks, Congressional negotiators gave up for the night and said they would try again on Friday. Left uncertain was the fate of the bailout, which the White House says is urgently needed to fix broken financial and credit markets, as well as whether the first presidential debate would go forward as planned Friday night in Mississippi.

Fortunately for the fate of civilisation as we know it, the Grand Old Maverick is there. Fortunately? Well, who knows? A bunch of "conservative" Republicans (huh?) are against the Bush plan and maybe McCain will back them and save America. Or maybe just stay in Washington a while longer, too bad for the debate with Obama he was looking forward to, but higher things call.

More below the fold.

The Financial System Bailout: Deal or No Deal?

McCain Is "the Wild Card"
The question now is whether McCain will ultimately back the package, and if so, how strongly he'll work to build support among unhappy Republicans. One Republican aide argues that if McCain comes out strongly in favor of the deal and makes clear that it is necessary, he will provide Republicans with the political cover they need to explain their support for the bailout to their unhappy constituents. If he does this, he could help bring around enough votes to get the deal done. But if he doesn't support the deal, all bets are off. Winning Republican backing without McCain's support, says Clifton, will be tough.
"The wild card here is John McCain," adds a key Democratic staffer close to the negotiations. "The Republicans are very upset—they just hate this idea, they don't want to do it. But given the risks, they know they have to." The role McCain now wants to play in the process, the staffer says, introduces a whole "unknown element."
The open question, of course, is how politics will factor into McCain's use of whatever leverage he holds to push forward a deal. Democrats are leery of McCain appearing to sweep in at the last minute to help win an agreement; that, needless to say, could boost his standing against Obama. But given the public anger over the proposed deal, it's unclear how it would play if McCain were to insist on far more substantial changes in exchange for his backing.

Worried Democrats supporting the (modified) Bush plan; Republicans going hardline on it; will the Wild Card Wonder step in decisively or, or..?

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Interesting Times | 26 comments (26 topical, 0 editorial, 0 hidden)

Re: Interesting Times (4.00 / 4)

Nagourney/Bumiller in the NYT:

News Analysis - McCain Leaps Into a Thicket - News Analysis - NYTimes.com

Senator John McCain had intended to ride back into Washington on Thursday as a leader who had put aside presidential politics to help broker a solution to the financial crisis. Instead he found himself in the midst of a remarkable partisan showdown, lacking a clear public message for how to bring it to an end.
At the bipartisan White House meeting that Mr. McCain had called for a day earlier, he sat silently for more than 40 minutes, more observer than leader, and then offered only a vague sense of where he stood, said people in the meeting.
In subsequent television interviews, Mr. McCain suggested that he saw the bipartisan plan that came apart at the White House meeting as the proper basis for an eventual agreement, but he did not tip his hand as to whether he would give any support to the alternative put on the table by angry House Republicans, with whom he had met before going to the White House.
He said he was hopeful that a deal could be struck quickly and that he could then show up for his scheduled debate on Friday night against his Democratic rival in the presidential race, Senator Barack Obama. But there was no evidence that he was playing a major role in the frantic efforts on Capitol Hill to put a deal back together again.

EJ Dionne in the WaPo:

E. J. Dionne Jr. - The Photo McCain Wanted - washingtonpost.com

The simple truth is that Washington is petrified about this crisis and will pass something. There are dark fears floating through the city that foreign investors, particularly the Chinese, might begin to pull their billions out of our system.
Scarier than the bad mortgages are those unregulated credit default swaps that financier George Soros has been warning about. There are $45 trillion of those esoteric instruments sloshing around the global financial system. They were invented as a hedge against debt defaults, but even the financial smart guys don't fully understand their impact or how to price their real value.
Fear is a terrible motivator for careful legislating, but it's a heck of a way to bring about a lot of bipartisanship. McCain jumped into this game in the fourth quarter. Many of the players on the field, caked in mud and exhausted but determined as they approach the goal line, wonder why this new would-be quarterback has suddenly appeared in their midst.

When locusts move on, they leave nothing behind

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 26th, 2008 at 02:21:38 AM EST

Re: Interesting Times (4.00 / 7)

MCain has no fucking clue what's going on. He's Mr Republican-Government-by-Photo-Op - he has a vague sense that he should be involved, but he doesn't understand the issues or the threat.

He's the perfect foil to Palin - out of his depth, not allowed out for a test drive without supervision, and propped up by hollow glossy advertising, lies, and PR.

It's astonishing, but the US system has dredged up a ticket which is even more toxic and shamefully, barbarically clueless than Cheney-Bush.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Sep 26th, 2008 at 05:04:28 AM EST
[ Parent ]

Re: Interesting Times (4.00 / 2)

need to unpack my other PC, so I have all the graphics software. (it's somewhere in a room full of packed boxes)

turn out one of those lawn signs with "Just when you thought things couldn't get worse" McCain/Palin '08 on it

I'm tired of this backslapping, aint humanity great BS, we're a virus with shoes Bill Hicks

by ceebs (ceebs (at) eurotrib (dot) com) on Fri Sep 26th, 2008 at 05:29:28 AM EST
[ Parent ]

Heh (4.00 / 4)

Sarkozy made us regret Chirac, a prospect that was indeed chilling at the time. Now we are going to regret Bush?

"Trop fort, les Ricains!"

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (jeromeguillet@yahoo.fr) on Fri Sep 26th, 2008 at 05:41:19 AM EST
[ Parent ]

Re: Interesting Times (none / 1)

Not quite the right font, butif anyone has any idea what font is closest to Optima on a PC i'll redo it

I'm tired of this backslapping, aint humanity great BS, we're a virus with shoes Bill Hicks

by ceebs (ceebs (at) eurotrib (dot) com) on Fri Sep 26th, 2008 at 08:01:29 AM EST
[ Parent ]

Re: Interesting Times (4.00 / 3)

barbarically clueless than Cheney-Bush

Bush yes, but he was only ever a cipher. Cheney is as coolly analytical as Putin, but motivated by greed. I'm not sure what motivates Putin, but it's not greed.

Where Cheney went wrong was in thinking that military might is all you need.

Cheney rolled the dice, and he lost.

Modern conservatives engage in one of man's oldest exercises in moral philosophy: the search for a superior moral justification for selfishness.Galbraith

by ChrisCook (cojockathotmaildotcom) on Fri Sep 26th, 2008 at 07:28:30 AM EST
[ Parent ]

Re: Interesting Times (none / 1)

It's not only greed, but it does play a part.

"The womb that spawned that thing is fertile yet"

by Cyrille (cyrillev domain yahoo.fr) on Fri Sep 26th, 2008 at 08:34:45 AM EST
[ Parent ]

Paging Andrew Lloyd Webber (4.00 / 6)

In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to "blow it up" by withdrawing her party's support for the package over what Ms. Pelosi derided as a Republican betrayal.
"I didn't know you were Catholic," Ms. Pelosi said, a wry reference to Mr. Paulson's kneeling, according to someone who observed the exchange. She went on: "It's not me blowing this up, it's the Republicans."
Mr. Paulson sighed. "I know. I know."

The West won the world not by the superiority of its ideas or values or religion, but rather by its superiority in applying organized violence.

by marco (cowannar at gmail punkt com) on Fri Sep 26th, 2008 at 02:45:08 AM EST

Re: Paging Andrew Lloyd Webber (4.00 / 2)

!!!

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Fri Sep 26th, 2008 at 04:14:24 AM EST
[ Parent ]

Re: Paging Andrew Lloyd Webber (none / 0)

america is in its equivalent of the first english elizabethan period, all she needs is a shakespeare to mark it into history in letters of fire.

i wonder if anyone video'd the meeting yesterday, bet that footage is worth a pretty energy unit!

If'Madness is the absence of work'(Foucault), then Sanity is the presence of play..

by melo (melometa4(at)gmail.com) on Fri Sep 26th, 2008 at 11:02:09 AM EST
[ Parent ]

Re: Interesting Times (none / 0)

Sarkozy is such a joke. He's going to institute "market reforms" after all this? Good luck, pal!

He doesn't realize it yet but the French economic model (heretofore known as "balance") has just won. The third way prevails.

by paving on Fri Sep 26th, 2008 at 04:06:58 AM EST

The Thrifty Gallic Book (none / 0)

French hold out against credit crunch

You can't be me, I'm taken

by Sven Triloqvist on Fri Sep 26th, 2008 at 04:40:07 AM EST
[ Parent ]

Worth quoting (4.00 / 3)

In France, it is very difficult to spend money you do not have
If I had to use one word to describe France's financial system, the word I would choose would be "cautious".
French banks are immensely careful about whom they lend money to and, to limit risks, they spread their investments much more widely than those in the US or UK.
Only about a quarter of banking activity is related to investment banking and dealer-broker activity - the rest is all to do with retail banking.
This meant when the credit crunch bit, the French banks were hit a lot less hard than those in many other countries.
But it is not just about banking investments - this country as a whole simply takes far fewer risks.
(...)
"In the US and the UK, the economy has been driven by household spending, consumption has been driven by credit, and a lot less in France, so that's why when there were periods of expansion France grew a lot more slowly than the UK and the US but conversely when it's slowing down, it will slow down in a more moderate fashion than the UK or the US."
France's rate of growth is horribly sluggish - this year it looks set to hover around just 1%, meaning its likely to be way off target for meeting its promise to the EU to bring its budget deficit back under control by 2012.
(...)
"Expect two conditions - a down payment of 20% of the value of the house plus mortgage [repayments] which will not exceed 30% of income.
"You already have a pretty good safety net there and clearly no real estate financing similar to the sub-prime market that has existed in the US and which has hurt the financial system so much," Ms Lagarde says.
(...)
"I think we have let this world of fantasy and virtuality overcome reality... There have to be more principles, more discipline and a bit more reality," the minister says.

Apart from the [barf] quote about sluggish growth, you can see the beginnings of an acknowledgement that debt-fuelled 'growth' is not real.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (jeromeguillet@yahoo.fr) on Fri Sep 26th, 2008 at 04:44:35 AM EST
[ Parent ]

Re: Worth quoting (none / 1)

Add that mortgages are almost always fixed-rate; and that bank cards are mostly debit cards, not credit.

Of course, it makes for less froth on the surface aka "non-sluggish" GDP growth.

When locusts move on, they leave nothing behind

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 26th, 2008 at 05:15:06 AM EST
[ Parent ]

Re: Worth quoting (none / 1)

+1% is definetely more sluggish than -10%. You can't argue with that.

"The womb that spawned that thing is fertile yet"

by Cyrille (cyrillev domain yahoo.fr) on Fri Sep 26th, 2008 at 08:38:48 AM EST
[ Parent ]

Re: Interesting Times (4.00 / 2)

I wonder if the democrats are brave enough to be clever. The republican congressional revolt against the administration represents an opportunity for the dems to push through even more stringent provisions on the bailout - equity assumption, comp, homeowner relief, etc.

But as I say, the Dems would have to be brave enough to...

Oh, wait, never mind.

There's no such thing as original sin - Elvis Costello

by dvx (dvx.clt ät gmail dotcom) on Fri Sep 26th, 2008 at 04:36:37 AM EST

Re: Interesting Times (none / 1)

if the democrats are brave enough to be clever

How about them being clever enough to be brave?

<no, don't throw tomatoes!>

When locusts move on, they leave nothing behind

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 26th, 2008 at 08:40:38 AM EST
[ Parent ]

Re: Interesting Times (none / 1)

no, don't throw tomatoes!

probably for the best, I havnt been shopping so I only have tinned.

I'm tired of this backslapping, aint humanity great BS, we're a virus with shoes Bill Hicks

by ceebs (ceebs (at) eurotrib (dot) com) on Fri Sep 26th, 2008 at 08:44:30 AM EST
[ Parent ]

Speaking of reckless (4.00 / 4)

Among other things, Sarkozy promised that all French depositors would be guaranteed not to lose a cent.

Talk about reckless, dangerous words: first, people that did not worry about their bank accounts are now going to worry - that's how you get bank runs startes; and second, how will that work, other than the existing deposit insurance - which is capped?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (jeromeguillet@yahoo.fr) on Fri Sep 26th, 2008 at 04:40:09 AM EST

Re: Speaking of reckless (none / 0)

What's the cap in France, Jerome? And does that cap cover all of one's deposits with one bank?

Hey, Grandma Moses started late!

by LEP (rafifoon@yahoo.com) on Fri Sep 26th, 2008 at 05:12:15 AM EST
[ Parent ]

Re: Speaking of reckless (4.00 / 3)

From the Banque de France:

La garantie des dépôts		The deposit guarantee
Les dépôts couverts par le mécanisme de garantie des dépôts sont définis comme tout solde créditeur résultant de fonds laissés en compte ou de situations transitoires provenant d'opérations bancaires normales... Le montant maximum de la garantie offerte est fixé à 70 000 euros par déposant. Il s'applique à l'ensemble des dépôts d'un même déposant auprès du même établissement de crédit, quels que soient le nombre de dépôts ou leur localisation dans l'Espace économique européen dans la limite du plafond précité.		Deposits covered by the guarantee mechanism : deposits are defined as any credit balance resulting from funds left in transitional situations or from normal banking operations... The maximum amount of the guarantee shall be 70 000 euros per depositor. It applies to all deposits of one depositor with the same institution, regardless of the number of deposits and their location within the European Economic Area in the ceiling above.

I take that to mean €70K per bank a depositor may use.

When locusts move on, they leave nothing behind

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 26th, 2008 at 05:26:14 AM EST
[ Parent ]

Re: Speaking of reckless (none / 0)

Thanks. I just borrowed a good amount of money from a U.S. bank and bought euros which are now in my French bank. I pay the U.S. loan back with my income in the U.S. as it arrives. This lest me lock in the exchange rate in the event of a dollar crash and it costs me about 6-7% in interest in the U.S. Happily, or unhappily, as you wish, I have less than 70,000 euros in my French bank.

Hey, Grandma Moses started late!

by LEP (rafifoon@yahoo.com) on Fri Sep 26th, 2008 at 05:40:24 AM EST
[ Parent ]

Re: Speaking of reckless (none / 1)

Right, as I pointed out above: he spoke as if there were no existing guarantee, in other words, he was taking credit for it himself; and he introduced the notion of a threat to ordinary bank deposits. Irresponsible grandstanding.

When locusts move on, they leave nothing behind

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 26th, 2008 at 05:12:23 AM EST
[ Parent ]

Re: Speaking of reckless (4.00 / 2)

Having Sarkozy at the commands in these times is rather tragic. This con man sells his snake oil at a grand meeting because he is too afraid to appear at a press conference where he might be asked some proper questions (Palin, anyone ?). He is still clinging to his worn recipes, he transvestites reality, keeps running crazy budget deficits which will weigh inexorably heavier and heavier, to be repaid by decreasing future income, and all the while diverting resources from the public towards the private sector (advertising on TV).

And don't start me about Afghanistan, about religion, justice, etc, etc.

He really is our very own version of Bush.

by balbuz on Fri Sep 26th, 2008 at 06:35:09 AM EST
[ Parent ]

Le McCain (none / 1)

He really is our very own version of Bush.

So who will be our McCain that makes us regret Sarkozy?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (jeromeguillet@yahoo.fr) on Fri Sep 26th, 2008 at 08:47:19 AM EST
[ Parent ]

Re: Le McCain (none / 1)

Havent you got Son of Sarkozy, breaking into politics?

I'm tired of this backslapping, aint humanity great BS, we're a virus with shoes Bill Hicks

by ceebs (ceebs (at) eurotrib (dot) com) on Fri Sep 26th, 2008 at 08:52:40 AM EST
[ Parent ]

Interesting Times | 26 comments (26 topical, 0 editorial, 0 hidden)

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