The McCain campaign is perplexed, bothered, and bewildered of late. Despite Barack Obama’s past associations with radical bombers, nauseating racial bigots, and anti-semitic Palestinians, the media doesn’t seem to want to expose the extent of those relationships nor ask tough questions as to how the views of these extremists might have shaped or impacted his own.

We can – and in many cases we should – chalk this up to a shameless bias on the part of the media toward Barack Obama and the Democrats. But something much simpler is at work, something that makes any attack on Obama by McCain using his radical associations as a backdrop to question his judgement an exercise in futility.

The voters don’t care.

America did not invent the fine old custom of tar and feathering crooked, lying, corrupt charlatans and riding them out of town on a rail (the English have been doing it for 800 years). But the mood of the American voter is so outraged at the financial crisis we are in that if I were a Congressman campaigning at home, I’d steer clear of pillow and asphalt factories for a while.

The fact is, the economy is of such overriding concern, all else in the campaign pales in comparison. The voter simply doesn’t want to hear about Ayers, Wright, Rezko or any other problematic Obama friendship. Nor, I suspect, are they keen to relive the Keating 5 fiasco or read about any other manufactured McCain association by the press.

This piece this morning by Peter Yost of the AP is a stretch – a laughably ridiculous attempt to equate John McCain’s tangential relationship to a group that later assisted in training El Salvadoran death squads with Obama’s close, personal, association with William Ayers. Yost is sticking out his tongue and saying “neener, neener, neener,” hoping that the reader will nod their head and say “By Jiminy! McCain hung around with terrorists too!”

The problem is, Yost destroys his own case in the body of the piece:

The U.S. Council for World Freedom was part of an international organization linked to former Nazi collaborators and ultra-right-wing death squads in Central America. The group was dedicated to stamping out communism around the globe.

The council’s founder, retired Army Maj. Gen. John Singlaub, said McCain became associated with the organization in the early 1980s as McCain was launching his political career in Arizona. Singlaub said McCain was a supporter but not an active member in the group.

“McCain was a new guy on the block learning the ropes,” Singlaub told The Associated Press in an interview. “I think I met him in the Washington area when he was just a new congressman. We had McCain on the board to make him feel like he wasn’t left out. It looks good to have names on a letterhead who are well-known and appreciated.

“I don’t recall talking to McCain at all on the work of the group,” Singlaub said.

McCain says he resigned from the group in 1984 and asked to have his name removed from the letterhead in 1986. Singlaub also had this to say about McCain’s “involvement:”

“I don’t ever remember hearing about his resigning, but I really wasn’t worried about that part of our activities, a housekeeping thing,” said Singlaub. “If he didn’t want to be on the board that’s OK. It wasn’t as if he had been active participant and we were going to miss his help. He had no active interest. He certainly supported us.”

Compare McCain’s “involvement” with these nuts to Obama’s working relationship with Ayers, their friendship going back 20 years, and Obama’s clear desire to implement the radical educational agenda of Ayers when he was president of the Annenberg project. There is absolutely no symmetry here – none. And yet Yost, being a good little AP hack, tries to create some out of whole cloth.

But this is a digression from the reality of what is going on in America – the America not visited much by candidates and certainly not commented on by anyone in the mainstream media.

The America of ordinary, hard working people is fearful. And why shouldn’t they be? If they’re like me – barely able to grasp what the hell is going on in the financial markets – they nevertheless know that it is unprecedented and that some very smart people are extremely worried. When 60% of us believe we are headed for a 1930’s style depression, catcalls from candidates about who their friends might be simply doesn’t resonate. People have much bigger worries on their minds.

Admittedly, there are precious few of these “wise men” who are warning of a worldwide depression. A severe downturn, yes. Perhaps even an altering of the international financial system that would not be favorable to the United States. But soup lines and massive deflation are not currently foreseeable – not as long as the Fed is able to pump hundreds of billions of dollars at will into the banking system in order to keep it afloat until some semblance of confidence and order return to the markets.

How long can that go on? From Richard Fernandez’s site, Ambrose Evans-Pritchard writing in the Telegraph:

During the past week, we have tipped over the edge, into the middle of the abyss. Systemic collapse is in full train. The Netherlands has just rushed through a second, more sweeping nationalisation of Fortis. Ireland and Greece have had to rescue all their banks. Iceland is facing an Argentine denouement. The US commercial paper market is closed. It shrank $95bn last week, and has lost $208bn in three weeks. The interbank lending market has seized up. There are almost no bids. It is a ghost market. Healthy companies cannot roll over debt. Some will have to sack staff today to stave off default. As the unflappable Warren Buffett puts it, the credit freeze is “sucking blood” out of the economy. “In my adult lifetime, I don’t think I’ve ever seen people as fearful,” he said. We are fast approaching the point of no return. The only way out of this calamitous descent is “shock and awe” on a global scale, and even that may not be enough.

In the first full trading day following the bailout, stocks lost 370 points. Yes, there are alarmists out there (Paul Krugman, please go on a nice, long vacation. I hear Bellvue has some padded rooms with wonderful views.). But when Warren Buffet gets nervous, the American people who are fearful don’t appear quite so stupid and naive, now do they?

The bottom line is that attacks on character are being ignored at the moment by the voter. All they want to hear is what each candidate will do to protect them from this financial storm that is sinking so many huge and seemingly indestructible companies. The thinking goes, “If Lehman Brothers can go under, am I next?” In a free country, people have a very proprietary sense of their own money and how safe it is.

They don’t have to be told things could get a lot worse. They sense it, as a deer might sense a wolf nearby. It can’t smell the wolf but it senses danger nevertheless. Voters may not entirely understand the ins and outs of international finance, but they sense their money, their livelihoods are in peril.Hence, all other issues of the campaign – the wars in Iraq and Afghanistan, Iran, education, abortion, gun rights – the whole mish mash of topics that have been fought over and discussed in this campaign now take a seat at the back of the bus as the voter wants his questions answered on the economy.

Hugh Hewitt seems optimistic that if McCain can keep hammering Obama on Ayers while showing the voters how disasterous an Obama presidency would be for the economy, he might still pull it out:

As more details emerge on the Obama-Ayers connection (here’s a short story  from 1997 on Ayers that features both Obamas and which suggests that Michelle Obama organized the program that featured both Ayers and her husband), the Obama talking heads are hysterical with outrage, which is a clear signal to Team McCain to keep digging and swinging on the subject of Obama’s judgement. Just who, after all, does he intend to staff the 3,000 executive branch jobs with?  Who will be at Defense and Justice and Treasury and State?. 

The message also has to be targeted at the reality that the dizzying declines in the markets cannot be arrested and reversed with tax hikes and unemployment benefit extensions.  Even as people shudder at the rapid decline in their savings and retirement accounts, they have to be trusted to know that anti-growth polices of the sort being pushed by Obama will simply drive business, jobs and growth overseas.  A tax hike agenda of the sort pushed by Obama right now is economic suicide, and John McCain has to forcefully say so.

If raising taxes and extending unemployment is what it is going to take to keep voter’s money safe, they would be willing to vote for the devil himself. Obama might not have good ideas on what to do about the crisis. But that isn’t the point. It comes down to who the voters believe. And the sad fact is John McCain, as a member of the party in power in the White House, has about as much credibility on the economy as my pet cat Snowball.  

I wish it were otherwise. The more we find out about Obama’s relationship with Ayers the more I am troubled. Even more troubling has been a systematic campaign by Obama and his handlers to minimize and even lie about this relationship at every turn. Despite yeoman work done by David Freddoso and Stanley Kurtz of The National Review on how Obama helped Ayers try and implement some frighteningly radical educational ideas on the unsuspecting parents and schoolchildren of Chicago, it appears that it will all go for naught. The voter sees the effort by the McCain campaign to attack Obama on his radical associations as “just playing politics.”

And that is something they don’t want to see. They are hopping mad and scared. That’s a combination that Obama is having little trouble exploiting to his own advantage.

It appears this first Sunday in October that John McCain and the Republicans are in deep trouble; that the Democrats, riding a wave of disgust and revulsion among voters over what they have been told is a financial crisis wholely the fault of the last 8 years of incompetence and mis-management, appear poised to take anywhere from 6-8 senate seats and more than 20 House seats away from the GOP. Meanwhile, John McCain slips further behind in key states and a pall of gloom has descended over the GOP professional class.

The political pros I am in contact with are extremely pessimistic about McCain’s chances at this point and are alarmed at the prospect that the Democrats could slaughter the GOP in the Senate. These are no-nonsense people who have been in the business of for many years. They are familiar with the ups and downs of a campaign and are not wont to panic at the first downturn in their candidate’s numbers.

To understand their concern, we must look at history. For a candidate to be down 8 points nationally 4 weeks before the election means he would have to make up 2 percentage points a week from now until November 4 in order to overcome that deficit. (Note: As a candidate’s national numbers rise, there is a corresponding rise in state numbers although, as we shall see shortly, that isn’t always necessarily enough to win.) That doesn’t sound like a lot to overcome until you begin to consider that the number of undecided voters this late in the campaign is limited. Hence, as undecideds begin to break, the candidate who is trailing must win a very large percentage of them in order to catch up.

The fact is, there are few examples of a candidate being as far behind this late in the campaign who are able to overcome and win in the end. Humphrey was 11 points down a month before the election and then began a blistering attack on Nixon that was almost enough to overtake him. Gerald Ford was 10 points down to Jimmy Carter and made a valiant charge that came up short.

Notice anything about those examples? The candidate who was behind made it close but was never able to overcome the entire deficit. I fully expect McCain to come back somewhat in the national polls – especially now that it appears he will attack Obama with everything but the kitchen sink – but history is telling us it won’t be enough.

The problem McCain has is that he must play defense in too many states while his opportunities for flipping some blue states are few and getting fewer. Pennsylvania is a good example. Just a few short weeks ago, McCain appeared to be on the rise in the Keystone state, with some polls showing him within the margin of error. But the last 2 weeks have been disasterous. McCain now trails by 15 and 12 points in the two most recent polls and it appears that PA is now beyond reach.

One of my correspondents said that organized labor is pouring massive amounts of money and people into Michigan – resources McCain cannot possibly match – which is why he has pulled his own advertising in the state. The RNC will continue to run ads and it is possible that Palin will be dispatched to show the flag every once and a while. But Michigan also appears at this point to be a poor target for the McCain camp and they will concentrate more resources in Wisconsin and perhaps Minnesota.

As for defense, it is pretty depressing. Obama has surged ahead in Virginia, Colorado, and New Mexico while drawing virtually even in North Carolina (!) and Nevada. Florida and Ohio look especially bad considering that if McCain can’t win either of those two states, we are probably looking at a 375+ electoral vote landslide.

Iowa is another red state where McCain appears to be headed for defeat. Missouri is very close. West Virginia may be in play. The upshot is that Obama has the money, the resources, the 527’s, the unions, and an extremely angry base hungry for Republican blood. John McCain is being buried by the economic crisis and an inability to convince the electorate that Obama’s inexperience, naivete, and radical associations should disqualify him from the presidency.

There are two more debates where Obama may slip up. That’s just about all McCain has at this point I think. There is also the possibility that some outside force might intrude on the campaign; a foreign crisis of some kind would shift the race from one that is largely about the economy to one that would highlight national security. But I think that a much more remote possibility than Obama saying something stupid that would remind people what a rookie he truly is.

There is a real chance that McCain’s attack on Obama’s radical associations will backfire and he will fall further behind. If that happens, election day will see a triumphant Democratic party with the presidency, a veto-proof senate, and much larger margin in the House.

In short, conservatives worst nightmare would be upon us; an ultra liberal president who can do anything he wants. And judging by what we know of Obama, he will attempt to remake America in the image of a European social democracy.

A brave new world, indeed.

My jaw hit the floor when I heard Biden say this:

Here’s what the president said when we said no. He insisted on elections on the West Bank, when I said, and others said, and Barack Obama said, “Big mistake. Hamas will win. You’ll legitimize them.” What happened? Hamas won. When we kicked—along with France, we kicked Hezbollah out of Lebanon, I said and Barack said, “Move NATO forces in there. Fill the vacuum, because if you don’t know—if you don’t, Hezbollah will control it.”
Now what’s happened? Hezbollah is a legitimate part of the government in the country immediately to the north of Israel.

Wha? Who? Kicked Hezb’allah out of where? Urged we send who into what? This is really an incredible gaffe – far more serious than anything Sarah Palin has ever said anywhere.

Let’s allow a “Foreign Policy Insider” quoted at The Corner, to try and untangle this web of lies, misstatements, and downright loony contentions:

Well, Hezbollah’s been there since the early 1980’s of course, blossoming throughout the 1990’s to become now over a third of the population of Lebanon with 2 cabinet members, a host of parliamentarians, and schools, clinics, and basically an entirely separate governance infrastructure in all of southern Lebanon and elsewhere. I suppose the throwing out of Hezbollah was the dismal and failed Israeli campaign of 2006 which dislodged nothing? Or was it Israeli’s occupation of Southern Lebanon from 1982 – 1999? Don’t remember an Obama position on NATO replacing Israeli occupation then. As for NATO going in after the 2006 debacle, well, I’m the one who rounded up 8,000 French and Italians and a few thousand other Euros to go into Southern Lebanon along with an assortment of others in August 2006 and while working that issue for about 40 straight days I don’t remember a peep from Biden or Obama about NATO - which wouldn’t be budged despite our intense pressure in Mons. So, we went straight to Rome and Paris. Que sera, sera.

In any case, he was all bluff and bluster and too bad she didn’t have time during debate prep to get his very mixed record on foreign policy stuff, he’s as good as he is bad at foreign policy and that is just a comment on his mastery, not on his policy positions…which have been more bad than good.

Allow me to add a few things. First, Hezb’allah may have only two cabinet ministers but they control the entire opposition bloc of 11 ministers in the 30 seat government. They currently control 62 of the 128 member Lebanese Parliament. Now for the meat of Biden’s claims.

Of course, no one “threw Hezb’allah out of Lebanon.” They have been there all along as the expert above notes. The Lebanese people threw the Syrians out of Lebanon, with no help from liberal Democrats like Biden and Obama, but with a great big behind the scenes lift from France and the US. It was we who put the bug in King Abdullah’s ear to lobby the Syrians to get while the going was good as the French worked directly on Baby Assad. The combination worked wonderfully and the Syrians left in a hurry – after a couple of million Lebanese took to the streets in a breathtaking show of defiance to tyranny and love of freedom.

Joe Biden – or any rational human being on this planet anyway – never recommended that NATO be dispatched to “fill the vacuum.” It is a lie. If it had been proposed. Colin Powell would have been laughed out of the room – something we should do to Biden at this point because he compounded his gaffe by evidently believing that not having NATO as a buffer between Israel and Hezb’allah – an absolute impossibility mind you – led to the ascension of Hezb’allah in Lebanon as a political power.

Where has Biden been for the last 20 years – at least since the Taif Accords were signed in 1989 which gave Hezb’allah a free hand in the southern part of the country and then pressuring the Lebanese government to formally designate them as “the resistance” to Israel? Hezb’allah’s rise is directly related to Iran’s funding of their proxy to the tune of around $250 million a year.

It is unbelievable to me that no one – not one single story in the press that I’ve read about the debate last night (I haven’t read them all so there may be some analysis I’ve missed) – has seen fit to mention this monumental gaffe, this horible misstatement of history, misreading of the situation in Lebanon, and the out and out lie that he and Obama recommended NATO troops move in after Syria was kicked out. This gaffe should be the headline that comes out of the debate; “Chairman of Senate Foreign Relations Committee is a Buffoon.” Instead, it slides by and Palin is called out for mispronouncing the name of our commanding general in Afghanistan.

Unbelievable.

UPDATE

Michael Totten – who has been to Lebanon several times and knows the people and politics as well as any journalist in America – writes in Commentary this morning:

What on Earth is he talking about? The United States and France may have kicked Hezbollah out of Lebanon in an alternate universe, but nothing even remotely like that ever happened in this one.
Nobody – nobody – has ever kicked Hezbollah out of Lebanon. Not the United States. Not France. Not Israel. And not the Lebanese. Nobody.
Joe Biden has literally no idea what he’s talking about.
It’s too bad debate moderator Gwen Ifill didn’t catch him and ask a follow up question: When did the United States and France kick Hezbollah out of Lebanon?
The answer? Never. And did Biden and Senator Barack Obama really say NATO troops should be sent into Lebanon? When did they say that? Why would they say that? They certainly didn’t say it because NATO needed to prevent Hezbollah from returning-since Hezbollah never went anywhere.
I tried to chalk this one up as just the latest of Biden’s colorful gaffes. Did he mean to say “we kicked Syria out of Lebanon?” But that wouldn’t make any more sense. First of all, the Lebanese kicked Syria out of Lebanon. Not the United States, and not France. But he clearly meant to say Hezbollah, not Syria, because he correctly notes just a few sentences later that Hezbollah is part of Lebanon’s government. He wasn’t talking about Syria. He was talking about Hezbollah all the way through, at the beginning, in the middle, and at the end of his outlandish assertion.

Taking a second look at it, Michael may be right – that Biden is so clueless he actually meant Hezb’allah and not Syria. This coupled with his rather strange answer on Pakistan’s stability, that it is somehow within the power of the US president to affect what is happening on the ground in Pakistan beyond doing what the Bush Administration has been doing since 2001, calls into question the depth of Biden’s knowledge about any foreign policy issue.

Hat Tip: Ed Lasky

This blog post originally appeared in The American Thinker

No, she’s not smoother than Joe Biden. She was not the better debater (she lost badly on points). She doesn’t have the depth of knowledge, the experience, the ease with “Washington speak” that Biden demonstrated – especially in foreign policy.

But Sarah Palin has something Joe Biden and every other politician in America would give their right eye to possess – the innate ability to look a camera straight in the lens and make a connection with the hearts of ordinary Americans.

Palin proved the one thing she had to prove; she belongs on The Big Stage. She might not be the brightest star in the firmament intellectually. But when she spoke, there was authority and confidence behind the words that belied every nasty thing written and spoken about her over the last few weeks. In fact, her performance made the McCain campaign handlers look like idiots. What the hell have they been doing hiding this woman for all this time? Are they nuts? I’m not the only one who underestimated this woman. The McCain people have as well. And at least I have an excuse – I’m ignorant. They’re supposed to know her, know her strengths and weaknesses.

There was a point with about 20 minutes to go in the debate where something happened that I never thought remotely possible; she took over the stage and dominated it with her personality. I believe they were talking about education and as the words poured out in that Midwestern twang, her eyes twinkled and that 100,000 watt smile lit up the hall, she turned on the charm and sincerity, and the stage suddenly shrank while Biden appeared a mere appendage to the broadcast.

She was totally at ease, referring some of her remarks to the moderator Gwen Ifill (who I thought bent over backwards to be fair – no doubt a consequence of her becoming a target after it was revealed she was writing a book partially about the Obama campaign) and nodding and looking at Biden on occasion. She did it effortlessly and without art or artifice. Biden sensed what was happening but couldn’t do anything. She was in charge, period. It was at that point, that I thought she might not be ready to be president from day one but that someday, she will be on a similar stage as a nominee for president of the Republican party.

The left is screaming tonight, trying to make believe that nothing has changed, that Palin is still a dunce, still out of her league. I would suggest they rerun the last hour and half and watch with a little more of an objective mind. She stood toe to toe with Biden (sometimes – other times she avoided direct combat) and bloodied him but good a couple of times. A boxing analogy would be the heavyweight champion boxing a middleweight. The lighter fighter might be getting pounded here and there but when getting in close, scores repeatedly with good body punches.

And, of course, the crowd is always with the underdog. Despite Biden’s competent performance, Palin will probably be narrowly declared the winner in tomorrow’s polls. Even her bitterest foes must acknowledge her ability to connect with ordinary people. That is a gift that any liberal only dreams of being able to do. For the left, it is not about connecting to average Americans. It is about average Americans acknowledging the liberal’s superior intellect and judgement and letting them run our lives. Unfortunately, in such times as these, that appears to be what the people are about to do.

I must confess that before the debate I was prepared for Mrs. Stumblebum – a female Gerald Ford tripping over her words and embarrassing herself on foreign policy questions. What I got was a composed, collected candidate who may have been deficient in the depth of her answers but nevertheless demonstrated a basic knowledge and familiarity with the issues. The nuances of instability in Pakistan might escape her (something an American president can do little about at this point anyway). But she had absolutely no trouble identifying why Ahmadinejad is an enemy of anyone who loves civilization and why it is of paramount importance that he not get his hands on nuclear weapons.

So I was wrong about her as far as how badly she would do. Not the first time I’ve been wrong on this blog and it won’t be the last. The question of the hour is does this change the race in any way? Will it kick start the McCain campaign and start a much needed comeback?

My sense is that it has stopped the bleeding but that the way back for McCain will not be through anything that Sarah Palin can do. She may have stopped the exodus of independents and women from the McCain camp but as far as winning any of them back I am just not convinced that a Vice Presidential candidate – no matter how well she performs in a debate or how she connects with ordinary voters – is up to that challenge.

For McCain to get back in the race, he must do it himself. Many Republicans are urging McCain to throw the kitchen sink at Obama – Ayers, Wright, Rezko, the Chicago Machine – the whole shebang of radicals, shady characters, and questionable associations. Obama can easily brush that kind of attack aside as an act of desperation by McCain. What he can’t brush aside is his record, or rather his lack thereof. McCain needs to go hard after Obama on the question of experience. It’s his best shot and he can bloody him at the remaining debates if he consistently hits that note. McCain must show that electing Obama is a risk. And in these uncertain times, that’s one thing the United States cannot afford.

I used to think that the United States was basically indestructible, that our constitution, the uncommon common sense of our people, a bountiful land, and a respect for our history and traditions could see us through any crisis.

Does that still hold true?

I believe these truths are immutable. But there is one very important additional truth that, when removed from the equation, causes the entire edifice to come crashing down in rack and ruin, a testament to the folly and failure of our politics and politicians.

I am talking about faith: Faith in government, faith in our leaders, faith in our institutions, and most of all, faith in ourselves and our talent for self government – the ability for us to decide what is best for our country and our families.

It is the faith of our fathers, and their fathers before them, and their fathers and grandfathers who bequeathed us a nation based on this simple, uncomplicated faith. Without it, there is no trust. And faith, like trust, once lost is a hard commodity to regain

I recall on 9/11, there was a time that it was unclear the extent of the attack, especially after the Pentagon was hit. I am not over dramatizing when I say that I believe everyone in America wondered who was next? What else could happen? The absolute worst scenarios went through my mind as I’m sure it did for most of you. And I remember thinking for just a second or two, “Is this the end of America?” But I immediately dismissed such a preposterous notion. America was a rock, a force of nature. You couldn’t destroy it. Knock a few buildings down, sure. But the almost childlike belief in our ability to overcome anything and emerge triumphant was a powerful tonic that worked its magic on the American psyche and gave us the will to pull together for the good of all.

In that crisis, we had faith to spare. Forgotten was the recent election and its gut rending divisiveness as we came together as one people in the face of tragedy and crisis. It was inspiring. It was elevating.

It was an illusion.

In truth, our unity after 9/11 was a mirage, a temporary respite from the culture wars, the political wars, the ideological wars – the war for the soul of America. The natural equilibrium of political combat to the death reasserted itself within a matter of weeks and any sense of togetherness we felt was extinguished in a flood of partisan poison. And you can draw a straight line from the post 9/11 falling out to our current crisis where what ails us as a nation has only been exacerbated by war and crisis.

I blame Bush. And the Democrats. And the liberals. And the conservatives. And I blame us for enabling the catastrophe, where it becomes easy to lose faith, trust, and even hope – hope that there was a way through this morass of hate and distrust so that we could emerge on a far distant shore, free of the infection that has sickened the body politic of America to the point that now, we teeter on the edge of a precipice, looking down into the blackness of an unknowable, unknowing future.

The internet is at fault. So is talk radio. So is the liberal/conservative/lazy media. So is the consolidation of information sources. So am I.

Am I taking the easy out? A typical Moran “a pox on both your houses” screed? Examine your consciences and you tell me where it’s all Bush’s fault or all the Democrats fault. Or where conservatives or liberals are blameless. Or even where one party or another is “more” at fault – as if you can place catastrophe on a scale and weigh it out, carefully loading one side or the other with rancor, bitterness, lies, exaggerations, political gamesmanship, and cynicism thus hoping to determine the “real” culprit of our current predicament.

That kind of stupidity is silly and self defeating. And it only reveals that those who try it are part of the problem, not the solution.

We are not in an economic crisis. We are in a crisis of faith. We have lost what has been handed down to us, generation after generation going all the way back to the founding, passing on the secret of America’s uniqueness, its “exceptionalism,” as if it were a holy relic of the Catholic church lovingly preserved and cared for by parishioners for all time.

We – all of us – have failed to do the things necessary to maintain this faith. We have been careless and stupid in choosing our leaders. We have been lax in holding them accountable. We have not paid attention to what they were doing – here or abroad – and we have failed to demand that the government lift the veil of secrecy on too many enterprises. We have failed to hold ourselves accountable for our actions. We have failed to take responsibility for our own mistakes. We have abandoned self reliance, family and community values, respect for our political opponents, and the American idea that neighbor helping neighbor is far preferable to asking government to do it for us.

High ideals and standards to live up to, yes. And our forefathers were not always successful themselves in adhering to principle and acting for the greater good. But the difference between them and us is that they had faith that the wisdom and basic common decency of the American people would emerge and carry us through times of crisis relatively unscathed and still one nation. They counted on a rough unity of the people – that we all had basically the same idea of what America was and where it should be going. How to get there was the basis of our political battles – and believe me, they were as rough and tumble as any of the political donnybrooks we have had in recent memory.

It is not our politics that divides us. Nor does ideology tear us apart. These are but symptoms of the disease that afflicts us. Our problem is that we have lost faith in the idea that we can dream common dreams – American dreams – and give ourselves a common point of reference where we all agree what, at bottom, America is and where it should be going.

With this loss of faith has come an overpowering fear that prevents us from trusting others and ourselves. With no trust in one another – in our intentions or good will – we lose faith in our ability to solve our problems together and we get what we saw yesterday on Capitol Hill; a complete and utter failure of our leadership to deal with the crisis at hand, preferring to score cheap political points at the expense of the other rather than work together to avoid a probable calamity.

There was a point in the Cuban Missile Crisis (as dramatized in the movie Thirteen Days, based on Robert Kennedy’s book of the same name) where the Commander in Chief of the Strategic Air Command, General Curtis LeMay looks at President Kennedy and says, “You’re in a helluva fix, Mr. President.” Kennedy turned to the World War II hero and said, “In case you haven’t noticed, you’re in it with me.”

Each side is pointing at the other and, in effect, telling them they are in one helluva fix and then explaining why one side or the other is the real culprit at fault in this mess and it is up to them to deal with the crisis. Not enough Republicans supported the bailout or Pelosi was too partisan, or the Democrats wanted to embarrass McCain or the Republicans just don’t care and wish to see a catastrophe just as long as the free market triumphs.

None of it is true. The real issue is trust and the impossibility of achieving it because we have all lost faith in each other and ourselves. And the scary part is, no one in America knows how to fix what’s broken and bring us back to sanity.

Note: Please excuse the slow loading website. My hosting company is working on it. 

I see where a few of my friends on the right are calling for the McCain campaign to “unleash” Palin and just let her be herself. This is delusional bordering on willful self deception. With Palin, what you see is what you get. There is no hidden genius. There is no glib, down to earth Will Rogers-like cornpone philosopher just waiting to be freed from the McCain campaign’s efforts to prep her for the media.

The Sarah Palin we have seen in interviews – minus the deliberate cutting and pasting done by the CBS partisans – is the Palin we got: Unsure of herself, light on facts, and clearly (at the present) over her head on the national political stage.

The good news is that all of this can be overcome with a little experience. It’s no accident that Presidential candidate Barack Obama held press “avails” on average once every 8 days during the first 9 months of his campaign. Even after that he made himself available to the press only twice a week. (Every other candidate had daily avails – sometimes twice a day). One might recall the famous Obama avail held in early March where, for the first time, Chicago reporters covering the Rezko mess got to ask the messiah some questions. His response? “C’mon guys. I’ve answered like 8 questions already.”

Never again were the Trib and Sun Times reporters covering the Obama scandals allowed to ask any questions off the cuff. Only Obama “beat” reporters from those publications who were following the campaign were granted access to the candidate. (Obama sat down with editorial staffs of both papers a few weeks later – after massive preparation, of course – and managed to evade the tough questions about Rezko and his real estate dealings with the convicted felon.)

The stumbling, bumbling manner in which Obama answered those questions at the March avail revealed a candidate not ready for high office – which is the obvious reason Obama was protected and hidden by his campaign from the press during those first months.

Palin did not have the luxury of being protected from the press for months as Obama clearly was. No doubt a year from now – if she is elected – her performance in these kinds of interviews as well as press conferences will be adequate if not spectacular. She is not stupid nor does she lack quick wits. Her problem is unfamiliarity and a lack of depth when it comes to knowledge – ignorance if you will – of national issues and her performance reveals that fact painfully.

Of course, the left has jumped all over her with their tried and true personal attack, calling Palin ignorant” and “stupid.” If I had a dollar every time a liberal called a Republican candidate “stupid” I would be wealthy beyond the dreams of avarice. Eisenhower (dumb, incoherent), Goldwater (crazy and stupid), Ford (dumb jock and a stumblebum), Reagan (dumb actor), Quayle (can’t spell potato), Jack Kemp (dumb jock), George Bush (dumb playboy). The harsh truth is, the personal attack works when you have the press and other media (think Saturday Night Live riffing off liberal talking points for Ford, Reagan, Quayle, Kemp, and Bush 43), buttressing and playing to that exact same argument. It is a potent combination and only the basic good sense of the American voter has saved the GOP from being shut out entirely over the last 50 years.

Lost in all of this (and the Obama campaign is breathing a sigh of relief for that) is the continuing adventures of the gaffe master himself Joe Biden. The large number of ignorant, incorrect, stupid, incredibly wrong statements by Biden over the last fortnight have been obscured by Palin’s problems. So expect the debate between the two – one ignorant of national issues the other unable to not say the first thing that comes into his head even if it is spectacularly wrong – to be a gaffe fest that will have both campaigns scrambling in the days following to correct the record or trying to undo the damage done by these two.

Biden’s gaffes reveal a shallow, unkempt mind – disorganized, arrogant, and stubbornly resistant to facts. If Palin is “stupid,” what does that make Biden? And, if liberals were honest with themselves (an admittedly forlorn hope), how much more “qualified” is Biden for the presidency than Palin given the extraordinary lack of depth of his character and intellect?

All this begs the question; is Palin qualified to be President if necessary? Right now, if she were forced to take over the top of the ticket I would have to say no. A year from now? I believe she will be as ready as anyone. A year at the center of power would give her all the experience and knowledge anyone would need to become president.

No one believes McCain chose her because she was qualified to become president “from day one.” Few are. She was a political choice as all Vice Presidential selections are. But this idea that there is a hidden Sarah Palin just waiting to be “unleashed” is kooky. She isn’t going to suddenly start speaking in complete sentences or stop repeating herself, or give anything save a thumbnail’s sketch of understanding when it comes to the issues. Perhaps she will be more relaxed during the debate and do a slightly better job of projecting herself. But that’s the best Palin supporters can hope for – for now.

Expectations for Palin are once again lower than dirt for the debate which means if she shows up, stays awake, gives us some charming one liners, and doesn’t make too many egregious mistakes, she wins hands down. I think Biden will not be able to help himself and will, when he is unaware the camera is on him, smile that condescending smile he is known for and set off the women of America on a tirade against him. He is far too arrogant and has too much belief in his own superiority not to treat Palin as he would some dumb hick from Wasilla. That’ll play great with most women in America, trust me Joe.

With Palin, it’s what you see is what you get. Imagining her as something she isn’t is only deluding yourself.

On thing I really hate about politics is what it does to me sometimes. The bilious nature of the attacks by both candidates, the exaggeration and deliberate ginning up of outrage by partisans, and in this race, the relative weakness of both candidates in the midst of war and economic crisis turns me even more pessimistic than usual.

I fear for the United States not because either candidate would destroy it but because both candidates appear to me incapable of doing the things necessary to save it.

Save it from becoming a second rate power adrift in a world that has been salivating at the chance to take us down. And I’m not only talking of al-Qaeda here. Since the end of the cold war, it has become apparent that most of the big economies in the world have been working to create a counterweight to the United States or even surpass the US in economic influence. The European Union – socialist policies and all – has nevertheless been able to grow enough that it now rivals us in GDP.

In some respects, you have to see the situation from the European’s point of view. They are at the mercy of the US economy in many ways. Globalization has internationalized markets for everything from credit derivatives to tractors. And standing atop the heap has been the United States with the dollar generally recognized as the currency of choice while trading on Wall Street and the commodity markets sets the price for all kinds of financial instruments.

As big as the EU has become, the input they have into this system has not been commensurate with what they feel they are owed. Hence, while there probably isn’t much rejoicing going on about the crisis on Wall Street, I suspect there is a sense of satisfaction that we are getting our comeuppance and being brought down a little closer to their level.

This schadenfreude was also present in the immediate aftermath of 9/11. I have sought unsuccessfully to make a dent in the dominant narrative after 9/11 that the “world was with us” following those attacks. John Rosenthal writing in the Wall Street Journal on October 17, 2004 demolishes that myth by showing how the famous Le Monde editorial “We are All Americans,” written by the left wing publisher Jean-Marie Colombani of that newspaper was not a paean to solidarity but rather an anti-American screed that blamed US government policies for the attacks.

Mr. Rosenthal:

Since attention was first called to it in the Times, the title of Mr. Colombani’s post-9/11 editorial has been widely cited in the rest of the American media and on the Internet. Its content, however, has been largely ignored. (The only exceptions of which I am aware are an op-ed I published in Newsday on Sept. 27, 2002, and several articles published by Fouad Ajami the following year.) Thus are legends born. For the solidarity ostentatiously displayed in the title of Mr. Colombani’s editorial is in fact massively belied by the details of the text itself.

By the fifth paragraph, Mr. Colombani is offering his general reflections on the geo-political conditions he supposes provoked the attacks:

The reality is surely that of a world without a counterbalance, physically destabilized and thus dangerous in the absence of a multipolar equilibrium. And America, in the solitude of its power, of its hyperpower, . . . has ceased to draw the peoples of the globe to it; or, more exactly, in certain parts of the globe, it seems no longer to attract anything but hatred. . . . And perhaps even we ourselves in Europe, from the Gulf War to the use of F16s against Palestinians by the Israeli Army, have underestimated the hatred which, from the outskirts of Jakarta to those of Durban, by way of the rejoicing crowds of Nablus and of Cairo, is focused on the United States.

The last sentence is grammatically no more coherent in the French original than in English. But it amounted to the first, albeit awkward, suggestion in the French press that America had perhaps merely got what it had coming. In the following paragraph, Mr. Colombani went on to add that perhaps too “the reality” was that America had been “trapped by its own cynicism,” noting that Osama bin Laden himself had, after all, been “trained by the CIA”—a never substantiated charge that has, of course, in the meanwhile become chapter and verse for the blame-America-firsters. “Couldn’t it be, then,” Mr. Colombani concluded, “that America gave birth to this devil?”

Then there was the famous incident in Great Britain when the BBC show Question Time was aired in the days following 9/11 and the American Ambassador was brought to tears by an audience who booed him when he tried to defend the US against their attacks. There too, the Ward Churchill/Jeremiah Wright suggestions that our “chickens came home to roost” on 9/11 was the dominant feeling – and not just in the audience. William Shawcross found similar feelings among ordinary Brits wherever he went that week.

Obviously, Mr. Bush, taking office just 9 months earlier, had not been given a lot of time to become hated so something else must have been at work. Gee…do you think that maybe a very large segment of the world was not “with us” following 9/11 after all and, in fact, celebrated this hit against our pride and prestige?

Not if you listen to Democrats. The point being, that this financial crisis is one more indication that there are those who do not wish us well – even among our friends – and that there will now be a concerted efforts by our rivals to kick us while we’re down. In my opinion, neither John McCain or Barack Obama is capable of dealing with this situation. Obama could very well end up grovelling and apologizing to most of the planet while McCain ends up bombing the crap out of Iran and isolating us further.

On the domestic front, does anyone seriously believe either candidate can “reach across the aisle” and heal the gaping wounds that we inflict upon each other? The Democrats will be angry and frustrated if Obama loses to the point that they will be as obstructionist as the Republicans were during the Clinton years – perhaps even more so given their unhinged base that will demand everything from War Crimes Trials to a whole slew of investigations into Bush era crimes, real and imagined. A President McCain would have his hand cut off if he tried anything approaching bi-partisan consensus building.

And President Obama? What reason would he have to “reach across the aisle” when he would have such solid majorities in both houses of Congress? The man has never – repeat never – reached across the aisle for anything in his short, unproductive senate career. Why should he change when he will hold all the legislative cards?

Meanwhile, defense spending will almost certainly have to be cut by either man thanks to eye-popping budget deficits down the road that could approach half a trillion dollars a year. We will probably have to say goodbye to missile defense, the new generation fighter (or at least a dramatic slowdown in production), and say hello to a Rumsfeldian force reduction and the decommissioning of any number of carrier battle groups. In short, our ability to project our power will be diminished and our military will be generally weaker all around.

Put this all together and you have the US under siege abroad and disunited and weak at home. An economy in the toilet for the foreseeable future no matter who wins with tighter credit, less investment, and fewer jobs being created. And a continuation of partisan gridlock in government.

Can anyone honestly say either man is up to the job ahead? What I have just outlined is not just my native pessimism coming to the fore but rather some cold, hard, projections from leading economists. Can they be wrong? I suppose so. The future is never set in stone and I guess there’s a chance that increasing or lowering taxes, increasing or cutting spending, apologizing to the world for our “sins” and meekly accepting a lead role for the UN might avoid a downturn in our fortunes here and abroad.

But I’m doubting it. The forces of history that are driving the Chinese miracle, the Islamic fundamentalist revolution, the ascension of Europe to a position of near equality with us, the leftward lurch in Latin America and other massive changes in our world wait for no country. You either deal with the changing world or you watch as the panorama slides by, waking up a decade later wondering “What happened?” Right now, these forces of history are working against the United States. Can we adapt and make the right decisions that will keep us strong, safe, and pre-eminent in so many things?

If you are honest with yourself, you will agree that neither John McCain or Barack Obama have the ideas, the courage, or the foresight to bring us through to the other side of this epoch safely and still the dominant military and economic power on the planet.

Actually, the following are questions either I fantasize you asking – hence, giving me a chance to be snarky, silly, and humorous. Or they are questions you should be asking but you aren’t because you’re not as smart, incisive, wise, and experienced as I am.

1. Who won the debate last night?

A simple question so I will give a totally ridiculous, complex, opaque answer; yes, he won.

He said all the right things, didn’t make any mistakes, stayed away from the personal attacks, looked presidential, and never once stuttered or fell asleep.

2. Why didn’t McCain attack Obama and tie the financial crisis to the Dems like all the conservative bloggers are doing?

Never argue with the voter – even when they’re dead wrong. The narrative of this crisis has been “Bush and the GOP have been asleep for 8 years” since the beginning. Voters don’t want to hear the rest – the part about Democratic liberals enabling Fannie Mae and Freddie Mac to make loans to people who even the Mafia might turn down. Or the 1970’s era good liberal government program, The Community Reinvestment Act, which guaranteed that any housing bubble would take those least able to meet their mortgages with it when it burst.

To say that the crisis came about only because of lax regulation and Bushie incompetence is one of the weirdest narratives ever pushed by Democrats. But, thanks to a lazy press that hates complex stories, this is the narrative which has taken hold and that voters believe. Hence, McCain wouldn’t be correcting Obama if he tried to make the case that Democrats were equally at fault. He would have been arguing with what the voters know.

This is an arguement the candidate loses 100% of the time.

3. Did McCain score any points at all?

Yes. By appearing onstage and alive, he quashed rumors that he was already dead and was actually a right wing neocon zombie. McCain also proved that his brain – contrary to what Democrats have been alleging – is not mush and that he has control of all his mental faculties.

I bet the audience was surprised that he didn’t fall asleep, didn’t drool, and could speak in complete sentences since this is the elevating meme being advanced by the left; that McCain is a senile, decriept, irrascible old codger who walks around with a nuke in one hand and a cross in the other.

A clear McCain triumph there.

4. Why didn’t McCain accuse Obama of being a Muslim? Or not an American citizen? Or a secret al-Qaeda “Manchurian Candidate?”

No time. I thought he could have slipped in the “Manchurian Candidate” charge – especially when Obama was so obviously lost in talking about Iran. But frankly, the moderator, Mr. Lehrer, was not very fair and failed to ask Obama if he had taken a loyalty oath to the United States or if he carried around an embossed, notarized, signed copy of his birth certificate.

Not that we’d believe him if he produced such a document. Face it – the guy just doesn’t look American what with those big ears, bushy eyebrows, and evil smile.

When is the press going to get curious about these things?

5. Did Obama make any big gaffes?

Some would say him being in the race at all is gaffe but let’s stick to the particulars of last night, shall we? Obama did not make any big gaffes. How do I know? The press sez so, that’s why. And when it comes to Obama, the press wouldn’t minimize his mistakes or promote the idea he won the debate, now would they?

6. Why didn’t the TV networks show the streaker who ran across the stage right in the middle of the debate?

Obviously, Nike requires streakers to wear their shoes if they wish to appear on TV. Since the streaker was wearing Puma’s, the networks were forbidden to show her or mention the fact that she had a “Palin in 2012” tattoo on the inside of her left thigh.

Come to think of it, judging by this revealing video of Palin in the swimsuit competition at the Miss Alaska pageant a few years ago, the streaker looked a little like Palin herself. But it couldn’t have been, could it? I mean, she’s not that good looking, is she?

Maybe we should ask the Pakistani President .

6. Who was right and who was wrong about Iraq?

Um…could you repeat the question?

7. Did Obama prove he can handle the presidency?

Of course not. I mean, if the president did nothing except try and get citizens angry at their government and organize to pressure lawmakers to do something for them, Obama would be the most prepared man in history to assume the office. Or if a president only had to mark himself “Present” every day. Or if a president only had to run for president, Obama might make the greatest president in history.

But everyone knows a president has to, above all, look good in a tux and folks, that skinny scarecrow of a candidate just won’t cut the proper figure as president when wearing evening attire.

That may be the biggest disqualification of all.

8. Can’t you be serious about the debate? This is the most monumental election in world history, the biggest contest since Samson faced off against the entire Philistine army with nothing but Harry Reid’s jawbone to fight them with. Can’t you for once see how important this election is?

Sorry, don’t buy the fact that if we elect McCain the US will fall into a fascist dictatorship or if we elect Obama, socialism will come to our shores.

Whoever wins, we will lurch a little to the left. And at the end of 4 years, the good ole US of A will still be here, still a free country.

So get used to it. One side or the other is going to lose this election. Trying to paint horns and a tail on your opponent will only reveal you to be a partisan hack.l

Kathleen Parker writing in the National Review has taken a brave but stupid stand in favor of asking Sarah Palin to withdraw from the race.

Her reasoning:

Palin’s recent interviews with Charles Gibson, Sean Hannity, and now Katie Couric have all revealed an attractive, earnest, confident candidate. Who Is Clearly Out Of Her League.

No one hates saying that more than I do. Like so many women, I’ve been pulling for Palin, wishing her the best, hoping she will perform brilliantly. I’ve also noticed that I watch her interviews with the held breath of an anxious parent, my finger poised over the mute button in case it gets too painful. Unfortunately, it often does. My cringe reflex is exhausted.

Palin filibusters. She repeats words, filling space with deadwood. Cut the verbiage and there’s not much content there. Here’s but one example of many from her interview with Hannity: “Well, there is a danger in allowing some obsessive partisanship to get into the issue that we’re talking about today. And that’s something that John McCain, too, his track record, proving that he can work both sides of the aisle, he can surpass the partisanship that must be surpassed to deal with an issue like this.”

I’m not exactly sure what Parker’s point is here. Is it that Palin doesn’t talk like a Washington policy wonk? Is it that her knowledge of the issues is deficient? What is it?

Forget that Palin is no more or less qualified for high office than Barack Obama (in some important ways, more qualified). Neither of them is inherently unqualified to serve. That’s because there are no qualifications except that the candidate be a native born American citizen and at least 35 years old. The Founders left the qualifications list extremely vague for a very good reason; they hoped and expected ordinary Americans to have a chance at the top job.

Granted we live in a complex world with huge problems. But presidents are not economic or foreign policy experts. Or military, trade, or education experts. At bottom, the greatest assets any president have are their innate common sense and their ability to communicate with the people. Beyond that, their judgement is informed by their life experience not what they read in some book somewhere. And anyone who has read presidential autobiographies knows how overwhelmed they all have felt when first taking over.

Yes, Virginia. There is always a learning curve for a new president and vice president. And while Palin may seem like a fish out of water at times, it may be because we are so used to seeing our politicians able to smoothly avoid all questions and give the answers to questions they prefer. It is the gift of Washington-speak that Palin hasn’t quite mastered yet and it shows. (Give her time and she’ll be as evasive as any politician in Washington.)

Besides this, if Palin were to withdraw, McCain may as well pack it in and go back to Arizona. No sense in staying in a race you are going to lose hugely.

So Parker’s suggestion is not only wrongheaded but ridiculously naive. It took some guts to give voice to those thoughts but frankly, she should have kept them to herself.

“May you be cursed to live in interesting times.”
(Not an old Chinese Proverb)

Negotiations to bail out Wall Street, dead beat homeowners, school loan scofflaws credit card scammers, ACORN, and others who have lined up outside the doors of Democratic lawmakers with their hands out wanting a piece of that $700 billion in free money appear to be stalled at the moment. Apparently, House Republicans are balking at the prospect of a large chunk of our free market economy being taken over by the government and are exploring alternatives.

If such action is necessary to keep us from sliding into a depression with a financial implosion this country may never fully recover from, then I am one of those conservatives who would reluctantly sign on to the Paulson plan – even with its goodies for left wing special interest groups and bailouts unrelated to the credit crunch on Wall Street.

But the more I read about this plan, the more I’m convinced that something akin to the 1982 tax cut bill is being acted out on Capitol Hill with everyone and their cockeyed uncle getting in line for a piece of the bailout pie. It is the time honored practice of log rolling – legislators loading up a bill with unnecessary and unrelated provisions supported by this powerful member or that one, done so that support for the overall measure can be gained. The smell of free money is loose in the land and the sharks are in a feeding frenzy.

Even with all of that, I’d be willing to embrace the bill – if there is no viable alternative. At the moment, there doesn’t appear to be one. Holding up the bailout are conservative Republicans in the House who, even if they come up with something, will never get Pelosi and Reid to go along with it. In that sense, their efforts are a waste of time. The Bush Administration has caved on just about all of the Democrat’s demands to make this a “comprehensive” (read “Christmas Tree”) bailout bill. And the liberals are not about to give up the goodies they have fought for to help their various constituencies. Hence, the best the free market conservatives can hope for is to make a statement for the historical record that somebody stood up for liberty when the rest embraced dependency.

Overly dramatic? Not by much. No, we are not “nationalizing” Wall Street nor is America going to become a socialist country overnight. But to say nothing fundamental is going to change in America as a result of this massive intrusion by the federal government in the financial markets is equally wrong. We will come to rue this day, of this I am sure.

Here is a smattering of responses to three questions from “free market” economists that Reason’s blog Hit and Run asked: How bad is the current market situation?; how bad are the current proposed bailout plans?; and what’s the one thing we should be doing that we’re not?

How bad is the market? Bryan Caplan is an associate professor of economics at George Mason University:

To be honest, I’m not too sure. While we’re blaming banks and investors for their “herd behavior,” we should remember that politicians and the media often run with the herd, too. When the dust settles, I suspect we’ll realize that conditions weren’t as bad as people assumed—or at least they weren’t until we tried to fix them.

Same question to Robert E. Wright, clinical associate professor of economics at New York University:

The current situation is potentially dire. The comparison with 1932-33 is sobering: An unpopular Republican president is in office, the financial system is a mess, and an important election looms, yet many fear what the articulate Democratic candidate might do if elected. We won’t have to wait until March to find out this time around. But given how fast the world moves these days, late January will seem an eternity away. The payments system broke down last time (March 1933), necessitating a bank “holiday,” a moving speech (“the only thing we have to fear is fear itself”), and creation of the FDIC (Federal Deposit Insurance Corporation). Breakdown of the payments system today would stagger the economy

Next question. How bad are the current bailout plans? This from Jeffrey A. Miron, senior lecturer and director of undergraduate studies in the Department of Economics at Harvard:

The bailout is a terrible idea. It transfers a huge amount of wealth to people who do not deserve it. It will generate enormous incentives for creative bookkeeping as the investment houses and banks try to rid themselves of any assets they do not want. The bailout fails to eliminate the crucial policies that contributed to and caused the current situation, such as the Community Reinvestment Act, the creation of Fannie Mae and Freddie Mac, and so on. Last but hardly least, the bailout sets a terrible precedent: If you take huge risks and become too big to fail, the government will bail you out.

Finally, what should we be doing? This from Fredric Sautet, senior research fellow at the Mercatus Center at George Mason University:

Getting out of the mess is not going to be easy. Once the perverse incentives are in the system, it’s hard to go back. Bailing out is very bad and in the long run is worse than bankruptcy. It is not a coincidence that Paulson is the former CEO of Goldman Sachs and is now bailing out his friends. The problem is that bankers should be punished for their careless, stupid investments (JP Morgan, for instance, has $8.1 trillion in credit derivatives on its books), but since it was largely driven by the government’s loose monetary policy and regulation, bankers are not the only ones responsible. Clearly letting the banks fail in the short run would have bad consequences for many households in the U.S. (and elsewhere). The problem is that the government does not have the incentives to intervene just for a short time. Once the banks are nationalized, it may take a while before the government leaves the place. Ultimately, this situation calls for radical policy solutions: The return to the gold standard and the abolition of central banks.

What is truly frightening to me is that no one really knows how bad things are now. Nor does anyone have a clue whether this bailout plan will work or make things worse. And to top it off, there is a growing belief among some economists that we are in a world of hurt and the probability of not a slowdown but an actual contraction of the economy looms large.

Yves Smith of the blog Naked Capitalism (writing in the same Reason Magazine article) points to a 2007 study done by Harvard University’s Kenneth Rogoff and the University of Maryland’s Carmen Reinhart who analyzed similar market conditions that led to contractions in other countries. This is long but worth reading in its entirety:

This credit crisis has already led to the biggest 12-month fall in household wealth in U.S. history, including during the Great Depression. It has not yet had a commensurate impact on economic growth because our foreign creditors provided what economist Brad Setser called “the quiet bailout,” lending to us to the tune of roughly $1,000 per man, woman, and child. But it would be a mistake to expect this largesse to continue, at least at such favorable interest rates.

As Harvard University’s Kenneth Rogoff and the University of Maryland’s Carmen Reinhart found in their analysis of financial crises, every country that experienced a housing/bank crisis of the magnitude of the one we are in has suffered a marked fall in GDP. As they noted in their paper “Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison”:

At this juncture, the book is still open on the how the current dislocations in the United States will play out. The precedent found in the aftermath of other episodes suggests that the strains can be quite severe, depending especially on the initial degree of trauma to the financial system (and to some extent, the policy response). The average drop in (real per capita) output growth is over 2 percent, and it typically takes two years to return to trend. For the five most catastrophic cases (which include episodes in Finland, Japan, Norway, Spain and Sweden), the drop in annual output growth from peak to trough is over 5 percent, and growth remained well below pre-crisis trend even after three years.

Note that their study shows the U.S. to be on a trajectory considerably worse than the average of the five worst cases, suggesting our fall in growth will be at least as severe. And no public official in the U.S. is willing to tell the public that no matter how this crisis plays out, we will suffer a fall in our standard of living.

Contraction, deflation, high unemployment, the disappearance of entire industries, a budgetary nightmare of unimaginable deficits in the out years that will top half a trillion dollars – this is what we have to look forward to even if this bailout plan goes forward – at least according to some economists.

Is this a glimpse of the future? Or just a worst case scenario? No one knows. And this is why the markets are so unsettled – panicky if you will. Uncertainty will eat away at our economy until not just Wall Street but Main Street as well feels the effects of the crisis.

Thankfully, we are not likely to have the bank failures, the soup lines, the massive dislocations that occurred during the Great Depression 80 years ago. FDIC and a social safety net along with (hopefully) no Dust Bowl will bring us to a hard, but manageable landing. But any recession (or contraction) will not be measured in months. It will be years before the toxicity of all this debt is wrung from the economy. It appears to me from reading what economists of all stripes are saying, that we are in for a period of slow or non-existent growth that could last 3 to 5 years (some say longer).

None of this refers to our current problem; the bailout and what to do about it. My desire – my longing – for alternatives to this plan will apparently not be realized. And while it is not a universal belief that catastrophe will occur if we do nothing, enough people who are a helluva lot smarter than me (and not all of them in government or supporting Bush) seem to think the chasm is open beneath our feet already and we are hanging on to the edge of a very steep cliff.

Incredibly, some Republicans are screaming for us to let go:

According to one GOP lawmaker, some House Republicans are saying privately that they’d rather “let the markets crash” than sign on to a massive bailout.

“For the sake of the altar of the free market system, do you accept a Great Depression?” the member asked.

If it were just some Wall Street fat cats who would lose their shirt, I wouldn’t lose any sleep over killing the bailout. But since there is no realistic chance for any other emergency measure to pass – not with Bush’s shameless caving in to the Democrats and the Senate Republicans meekly going along not to mention the Democrat’s desire to pander to their left wing interest groups like ACORN - I am forced to the conclusion that without this bailout, havoc would ensue and we might very well have a serious contraction of the economy with the result being the end of the US as a economic powerhouse for the foreseeable future.

The Germans already see it:

Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it must now accept more market regulation and a loss of its financial superpower status.

In some of the harshest criticism of the United States since the crisis threw Wall Street banks into financial disarray this month, German Finance Minister Peer Steinbrueck said the turmoil would leave “deep marks” on both sides of the Atlantic, but called it primarily an American problem.

“The world will never be as it was before the crisis,” Steinbrueck told the Bundestag lower house of parliament.

“The United States will lose its superpower status in the world financial system. The world financial system will become more multi-polar,” he said.

Once again, I must confess ignorance as to whether Steinbrueck is blowing smoke out of his ass and engaging in a little wishful thinking or whether this is a consensus belief among other European powers. If the former, I hope he chokes on his sauerbraten. If the latter, we better get used to the idea that the kinds of huge capital infusions from overseas that have been one of the driving forces of American entrepreneurship may dry up and curtail business formation and expansion.

Whatever they are going to do, I hope they do it quickly. With Washington Mutual being seized by the government and many of its assets sold to J.P. Morgan while the credit crisis for ordinary folks hits home – the result of a wait and see attitude on the part of banks large and small on this bailout plan – you would hope that the powers that be on Capitol Hill might put aside the campaign for a moment to do something, you know, for the country.

But with John McCain’s political stunt apparently yielding zero results at the negotiating table while Democrats falsely accuse him of gumming up the works (after demanding he make his position on the bailout known), it doesn’t appear there are any grown ups in Washington who want to bite the bullet and do what is right for the country. There is suspicion that many of the liberal ornaments on this Christmas Tree were put in for the unexpressed purpose of presenting the Republican Congress with a plan they could not possibly support:

One of the sticking points, as Senator Lindsey Graham explained later, wasn’t a lack of begging but a poison pill that would push 20% of all profits from the bailout into the Housing Trust Fund — a boondoggle that Democrats in Congress has used to fund political-action groups like ACORN and the National Council of La Raza

So before we hear much about GOP obstructionists, perhaps we should look at the question of why Democrats would make that a deal breaker in their negotiations if not to play politics with the nation’s economic future?

Obama? MIA, of course. Not a peep from the messiah on the biggest issue to hit Capitol Hill in a generation. So much for leadership, eh?

If there is no plausible alternative, pass the damn Paulson plan and let’s hope for the best. That’s all we’ve got at the moment. Otherwise, the consequences of doing nothing may make us all wish we were somewhere else come Monday.