Fallows: A Turning Point
James Fallows thinks we saw a turning point last night:
When the details of this encounter fade, as they soon will, I think the debate as a whole will be seen as of a piece with Kennedy-Nixon in 1960, Reagan-Carter in 1980, and Clinton-Bush in 1992.
In each of those cases, a fresh, new candidate (although chronologically older in Reagan’s case) had been gathering momentum at a time of general dissatisfaction with the “four more years” option of sticking with the incumbent party. The question was whether the challenger could stand as an equal with the more experienced, tested, and familiar figure. In each of those cases, the challenger passed the test — not necessarily by “winning” the debate, either on logical points or in immediate audience or polling reactions, but by subtly reassuring doubters on the basic issue of whether he was a plausible occupant of the White House and commander in chief.
I’ll just say I think McCain is playing with a bit of fire when he lets his contempt for Barack Obama show through so clearly. Those of us who follow politics obsessively are now well-informed about this aspect of the campaign, but most people probably don’t see it under ordinary circumstances. And whatever partisans on either side may think, or the fashionable “they both suck” cynics may say, surveys indicate that McCain and Obama are both popular and the key swing constituency is composed of people who have warm feelings toward both guys. That means, to me, that a negative, slashing, attacking approach is a totally reasonable approach but you’ve got to have the good. Sneering about how so-and-so “doesn’t understand” when he seems to understand just fine, and most people are predisposed to like him is a potential disaster.
82 Responses to “Fallows: A Turning Point”
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September 27th, 2008 at 4:37 pm
I’m a proponent of the 1980 analogy, and thus think we’re right on schedule for a huge win. Obama was up 5 before the debate…. he should be at 7 or 8 by midweek, and after Sarah Palin debates Joe Biden he should crest easily into the double digits.
He’s got this, as the jpegs say.
September 27th, 2008 at 4:49 pm
John Kennedy didn’t campaign on a promise to shove a $1.5 TRILLION Bailout for the Rich up our butts.
Sigh.
In four months, you will watch President McCain being sworn in and bitch about what racist motherfuckers the blue collar workers are.
Just because they figured out that if they were going to be fucked on behalf of Rich Guys, they might as well vote Republican.
September 27th, 2008 at 4:49 pm
Kudos to Obama for keeping his cool. If I were in his shoes, at some point I would have shouted “Damn it, John, LOOK AT ME when I’m talking to you!!”
September 27th, 2008 at 4:58 pm
MattY’ (the intellectually honest but non-existent version of MattY) linked to this post and said: “Of course, what my non-prime counterpart forgot to mention is that the BHO we saw at the debates is not the real BHO but simply his reasonable, centrist mask designed to fool as many people as possible. MattY also forgot to note that we aren’t in the 60s anymore, and TV debates don’t matter as much as they used to considering the different channels of information available. And, if anyone actually gets off their butts and goes and asks BHO a real question on a Youtube video, it will become clear to millions of people that he’s not qualified.”
Go read it for yourself, over at yglesias.thinkprogress.universe19
September 27th, 2008 at 5:02 pm
Taking the political musings of Carter-ites like Fallows seriously is like taking the economic or military musings of George Bush seriously.
The Carter crew – Fallows, Chris Matthews, Rick Hertzberg, and the rest – have made careers out of always being wrong on politics. The fact that these are the folks who are the intellectual godfathers of Team Obama is one reason to think there are ways in which we’d be better off with a loss than a win this November.
September 27th, 2008 at 5:03 pm
“Sneering about how so-and-so “doesn’t understand” when he seems to understand just fine, and most people are predisposed to like him is a potential disaster.”
It’s only a disaster if Lorne Michaels decides it’s a disaster.
September 27th, 2008 at 5:03 pm
I do think the bailout package may prove to be an enormous boost for McCain. I think that things will begin to alter drastically in the campaign after it passes, since reports are that the final package are pretty much like Paulson wanted with a few bullsh*t add-on’s from Democrats about ‘oversight’ and whatnot (hello signing statements).
They can say whatever they want about how they came up with the best they could do (except, however, excluding those pesky economists who might have actually reasonably examined it).
But if ordinary people don’t remain convinced, as they seem to be now, that this is still Bush Jr. and the Republicans’ fault, it could become an enormous factor.
Whatever. Politicians given the opportunity to hand hundreds of billions of dollars directly to the super-rich aren’t going to say no, and Democratic leaders simply won’t give a sh*t whether or not it helps or hurts their ability to remove from office the Republicans who created this mess.
September 27th, 2008 at 5:04 pm
Now that you’ve got all the lame ad hominems out of your system, Petey, care to address the actual point?
September 27th, 2008 at 5:07 pm
Barack Obama not just catholic, not just young — he’s BLACK. I see that as a positive thing. You see that as a positive thing. A lot of people, like most of the people I grew up with, see that as a scary thing, and though they will never admit it explicitly, I fear it’s going to affect them in the voting booth. My impression, as painful as it is, is that McCain scored. “You don’t understand” = “You don’t deserve to be considered”. The “battle” McCain fought in the last part of the debate was a metaphor of all that remains to be destroyed of America’s race psychosis.
September 27th, 2008 at 5:08 pm
Nice try Petey, but it’s shaping up to be a blood bath. This was always the case, for those of us who pay attention to the fundamentals, and who realized that all Obama needed was a debate to meet the people.
September 27th, 2008 at 5:23 pm
Sneering about how so-and-so “doesn’t understand” when he seems to understand just fine, and most people are predisposed to like him is a potential disaster.
How is this different from “It’s not because John McCain doesn’t care. It’s because John McCain doesn’t get it”?
September 27th, 2008 at 5:24 pm
Take a moment out of your busy day to savor the rich, full-bodied irony of this particular comment.
September 27th, 2008 at 5:27 pm
Anyone who was watching CNN with the test audience that gave their reaction in real time should have noticed that, at the beginning, when Obama was acting stern and McCain warm and cuddly, McCain’s responses were significantly higher, but as McCain got smirkier and snider and as Obama got warmer and hopier, the reactions switched places.
September 27th, 2008 at 5:29 pm
I think Fallows is right, and I’m curious to see who will be the first prominent McCain supporter to jump ship, as a few are starting to do on Sarah Palin.
Who wants to make a play for credibility in the remaking of the republican party? George Will? Davis Brooks? Someone else?
September 27th, 2008 at 5:31 pm
How is this different from “It’s not because John McCain doesn’t care. It’s because John McCain doesn’t get it”?
Because McCain says things like “the fundamentals of our economy are strong.” As Matt said, when you make an attack like that you have to have the goods. The polls show the “McCain is out of touch on the economy” angle resonates.
September 27th, 2008 at 5:35 pm
“I’ll just say I think McCain is playing with a bit of fire when he lets his contempt for Barack Obama show through so clearly.”
Wake up people! If this tired old grumpy man is so visibly irritated with Obama that he can’t even look him in the eye, how do you think he’ll act when he has to deal with our adversaries? Oh yeah, he’ll just go to war with them! Or maybe let Sarah (”um…like, er……sorta….geez, such a maverick!”) flash her tits at them.
September 27th, 2008 at 5:36 pm
So McCain flew straight back to Washington to save the bailout & the nation?
September 27th, 2008 at 5:48 pm
The Carter crew – Fallows, Chris Matthews, Rick Hertzberg, and the rest – have made careers out of always being wrong on politics.
If only we’d nominated John Edwards. We wouldn’t be in the terrible position we are today.
September 27th, 2008 at 6:04 pm
Guys, these Edwards cheap shots are kind of dumb. Obviously, Petey doesn’t have the ability to figure out who is having an affair. And whatever silly things he may have said in the past (I’m unconvinced by this anti-Carter-crew line), I don’t recall one of them being that Elizabeth was the only woman getting hot mill worker action.
September 27th, 2008 at 6:14 pm
It’s not just that Edwards was a cheater, it’s that he is an obvious phony. Certain well-off democrats like Petey believed he had the right touch to appeal to the common people. Those of us who are actually relatively poor and live and work with other low income people have always known Edwards was a terrible candidate on a visceral level.
September 27th, 2008 at 6:18 pm
What kind of a name is Petey? Sounds like one would be good-natured and reasonable with such a moniker. Guess not.
McCain came off as The Angry Boss — not a great look for him. He also came across as the Entitled and Unpleasant Washington Insider. Also not his best accessory. The guy is an hot-headed asshole — Plenty of folks were treated to that incarnation last night. He’s a world-class jerk with a huge chip on his shoulder and he’s pissed at himself and at his campaign for having forced his unsteady hand in taking on the walking talking disaster known as Sarah Palin.
He seems unable to take responsibility for ANYTHING … Sound much like W? I certainly think so and I’ve def. had enough. Let the children’s hour be over, dear God.
September 27th, 2008 at 6:25 pm
Seriously, Petey? Seriously? Your resentment has curdled to this level?
September 27th, 2008 at 6:29 pm
Tomorrow’s tracking polls will be completely clear about who won the debate. If Obama continues to trend up, Obama won. If He begins trending down, Obama lost.
My guess is Obama won, but I couldn’t argue about it, we’ll just see tomorrow.
Pelosi and the democrats have already made clear, there will be no deal unless the Republicans, including McCain and the House Republicans commit publicly so the bailout will not be a liability for Obama.
September 27th, 2008 at 6:32 pm
This was the public viewing of a contempt for Obama that was evident from the 2006 ethics reform bill. The tone and tenor are more or less identical.
September 27th, 2008 at 6:50 pm
How is this different from “It’s not because John McCain doesn’t care. It’s because John McCain doesn’t get it”?
It wasn’t repeated 12 times.
September 27th, 2008 at 6:50 pm
Guys, these Edwards cheap shots are kind of dumb. Obviously, Petey doesn’t have the ability to figure out who is having an affair.
Petey doesn’t know that. I remember him going on about how Obama was dangerous because he was a young guy and he was going to get caught with his pants down. He knows everything! Except when he doesn’t.
September 27th, 2008 at 7:08 pm
Certain well-off democrats like Petey believed he had the right touch to appeal to the common people.
In fact, he did, and four years’ worth of general election polling proved it.
I remember him going on about how Obama was dangerous because he was a young guy and he was going to get caught with his pants down.
He said that?
September 27th, 2008 at 7:09 pm
John Kennedy didn’t campaign on a promise to shove a $1.5 TRILLION Bailout for the Rich up our butts.
Lehrer got McCain to announce his support for this (too) on air at the debate. Obama is covered.
Now, whether this sends votes to Barr or Nader is a different matter.
September 27th, 2008 at 7:33 pm
good question, Charlotte.
I thought petey was something to play with…
September 27th, 2008 at 7:41 pm
He said that?
Yeah, about the time he morphed into nobama, hillraiser mode. It would be over at the atlanic site. Dear God, I just realized I’ve been reading Matt and Petey for five years now.
September 27th, 2008 at 7:47 pm
Neil, I’m really not sure why you’re so eager to play defense for Petey here. He’s more than established in the past year that intellectual honestly is not something he’s too concerned with. He has been frequently mendacious and bitter and I could never trust his political commentary anymore as I would never know if he was just being an asshole or if I should be taking him seriously in this particular case.
As such, I think mocking him for his Edwards infatuation is quite appropriate. But regardless of what you think 4 years of general election polling indicated, there are no actual election results that indicate that Edwards has any kind of appeal outside of his home state. He is a two time failed primary contender and was on a failed presidential ticket. In that light, this ongoing bitching and moaning that Obama isn’t good at politics is getting a big ridiculous. The idea of a malpractice lawyer for the people always seemed a little fishy to me.
September 27th, 2008 at 7:51 pm
My name is Petey and I like to eat apples.
September 27th, 2008 at 7:57 pm
Why do people forget that Petey thought Isiah Thomas was executing some sort of brilliant master plan while running the Knicks?
September 27th, 2008 at 7:59 pm
I consider saying that someone doesn’t understand something to be different than saying that they “don’t get it”. The latter implies the possiblity that the person comprehends the issue but doesn’t come to the same conclusion as you do, while the former implies that the person simply doesn’t understand the basic premise. Granted this is a very small semantic difference (and one that could be interpreted differently than I do), but politicians and their speech writers are known to walk very tight lines.
September 27th, 2008 at 7:59 pm
Re Walker’s comment “Now, whether this sends votes to Barr or Nader is a different matter.”
————
I think the big danger is that Hillary supporters will take this as an excuse to stay home and not vote.
As i’ve said, you can fly to Europe and buy a lot of abortions for $31,000. Plus an Obama loss leaves Hillary lined up for 2012. (Obama won’t have any future if he loses this one –the worse environment for Republicans since Herbert Hoover . And if McCain is President, he’s going to get all the blame for the oncoming shitstorm. )
September 27th, 2008 at 8:10 pm
Both Don Williams and Petey, once again, demonstrate that they are both nearly moronic in their consistent ability to be wrong.
One of the interesting things about reading blog comments is musing upon the spectacle of people who are very sure of their political instincts and yet manage to assert things that are manifestly false. One expects this from right-wing partisans, but it’s instructive to see how those closer to one’s own beliefs can be very wrongheaded.
For example, after Palin’s nomination I noticed a small number of people claiming, with great certainty, that Palin’s nomination would backfire for McCain among conservative evangelicals because, no matter Palin’s beliefs, they would see a successful working woman as contrary to their beliefs. This has proven to be quite false; and the explanation for how these amateur pundits could be so wrong is that they simple don’t know any actual conservative evangelicals and are forming caricatures based upon their understanding of media portrayals of evangelicals.
Similarly, Don Williams has a notion of American populism that exists almost exclusively in his head. He somehow imagines that his populist voter will simultaneously be disgusted with a bailout of the ultra-rich and, as a result, flock to the Republican Party in disgust. This defies common sense and history, both.
Petey…well, what can one say about Petey? I’m not sure that there’s anything more to his political worldview besides a dim recollection of his own experiences and an intense awareness of his own resentments—both of which he projects upon everyone else. He’ll occasionally get things right similar to the way a stopped clock is right twice a day.
Both these fellows, helpful as guides for predictions which certainly won’t come true, have commentary styles which are noted for their biliousness. This isn’t an accident—anger is a powerful force for delusion. Just look to John McCain for an example.
The bailout will be controversial in the details of its implementation but its need will be accepted. It is necessary, in fact, whether or not it benefits the Wall Street wealthy. There is perhaps little sympathy for the traders who jumped to their deaths in the Crash of ‘29, but Americans well understand that it preceded the Depression, which affected everyone. They will be told that the bailout is necessary to avert a similar catastrophe, and they will believe it.
On the other hand, as we enter an inevitable recession and the implications of the bailout to the taxpayer is more evident, resentment against the politicians who are thought to be responsible will become intense. The larger portion will be placed upon the Republicans, but there will still be a significant amount of blame placed upon Democrats. Expect faith in both parties to plummet to depths never before seen in our lifetimes.
Obama will win this election, but he will govern during an extremely difficult period, both economically and politically. To be effective and politically popular, he must be seen as both an outsider and as an active solution to past ills. If he fails to achieve this perception, he will quickly become unpopular and will find a sullen, jittery Congress to be as much obstacle as partner.
September 27th, 2008 at 8:11 pm
Neil, I’m really not sure why you’re so eager to play defense for Petey here.
Well, I liked the 2005-2007 Petey pretty well. Our conversations have always been respectful and interesting.
there are no actual election results that indicate that Edwards has any kind of appeal outside of his home state.
Well, he did beat Hillary in Iowa with a fraction of her money and media attention.
And some of the polling data is hair-raising. Take a look at this June poll from Minnesota. Obama beats McCain by 5. While picking the popular GOP governor, Pawlenty, usually helps McCain win the state, Edwards-Obama beats McCain-Pawlenty by 7.
I was looking at all those SurveyUSA state polls with VP back in May and June. Doesn’t matter who your popular home-state governor or senator was — Strickland, Rendell, Hagel, Sebelius. As VP, Edwards was worth as much or more than your hometown hero, in your state. (The in your state part is key — these aren’t just name recognition effects, because people know popular governors and senators pretty well.)
I don’t usually defend Petey that much — he can take care of himself. But put in a cheap John Edwards diss and you’ll get me moving.
September 27th, 2008 at 8:20 pm
2 mistakes above – the surveyusa data was collected in May, not June. And I just ran back and looked at Hagel, who helps Obama more in Nebraska than Edwards. But the other polls are right. Obama-Rendell underperforms Obama-Edwards in PA, and Obama-Sebelius runs basically even with Obama-Edwards in Kansas. The Strickland and McCaskill data requires you to compare two separate polls, but if you’re okay with that it’s there.
September 27th, 2008 at 8:35 pm
RE Keith M Ellis’s comment “Similarly, Don Williams has a notion of American populism that exists almost exclusively in his head. He somehow imagines that his populist voter will simultaneously be disgusted with a bailout of the ultra-rich and, as a result, flock to the Republican Party in disgust. This defies common sense and history, both.”
——————-
1) The itch that Hillary Supporters have to tell Obama to take a flying fuck at a rolling donut does not exist in my head. It’s very damm clear in the polls — and this was before the Bailout got rolling.
From
http://www.baltimoresun.com/news/nation/politics/bal-dempoll0923,0,1022367.story?track=rss
“By Alan Fram | The Associated Press
9:15 AM EDT, September 23, 2008
WASHINGTON – Barack Obama’s support from backers of Hillary Clinton is stuck smack where it was in June, a poll showed today, a stunning lack of progress that is weakening him with members of the Democratic Party in the close presidential race.
An Associated Press-Yahoo News poll shows that among adults who backed his rival during their bitter primary campaign, 58 percent now support Obama. That is the same percentage who said so in June, when Clinton ended her bid and urged her backers to line up behind the Democratic senator from Illinois.
The poll shows that while Obama has gained ground among Clinton’s supporters — 69 percent view him favorably now, up 9 percentage points from June — this has yet to translate into more of their support.
In part, this is because their positive views of Republican presidential nominee John McCain have also improved during this period.
Those supporting McCain have also edged up from 21 percent to 28 percent, with the number of undecided staying constant, the survey showed.
Clinton backers’ reluctance to support Obama helps explain why he is having a tougher time solidifying partisan supporters than McCain. Overall, 74 percent of Democrats say they will vote for Obama, compared with 87 percent of Republicans behind the Arizona senator. About nine in 10 Clinton supporters are Democrats.
The problem that supporters of Clinton, the New York senator, have with Obama seems to flow from their measure of him as a candidate, not from issues. From establishing a timeline for a U.S. withdrawal from Iraq to abortion to canceling tax cuts on the rich, their views of the importance of issues are virtually identical to Democrats in general.
Yet they find Obama less likable, honest, experienced and inspiring than Democrats overall do, and have a better view of McCain. And while majorities of Clinton supporters say Obama shares their values and understands ordinary Americans, they’re less likely to say so than Democrats overall. “
September 27th, 2008 at 8:44 pm
Keith M Ellis also fails to realize that Democrats now control both Houses of Congress — and are now held responsible for what happens.
The Republicans are responsible for causing this mess –but only Obama and the Democratic Congress can dump the bill for this mess upon us. If you are the Majority, YOU are responsible. I know that concept is foreign to many.
Neither Bush, Paulson nor the Congress have shown any Convincing need for this bailout. The Republicans in the House , in fact, are telling the country that the hugely expensive bailout is not necessary.
Treasury Secretary Henry Paulson was Goldman Sachs CEO from 1998 -2006 and shares much of the responsibility for CAUSING this mess. As does Ben Bernanke, who was on the FED with Alan Greenspan when Greenspan was setting up this trainwreck. The idea that the word of Bush, Paulson or Bernanke is to be trusted or has credibility is ridiculous.
September 27th, 2008 at 8:49 pm
“Generic democrat” seems to be the most popular choice in the polls this cycle, and I submit Edwards is basically “generic democrat.” He’s widely recognized as a Democrat nationally because he was the VP candidate but most people don’t really know him. His performance in places where he was actually campaigning wasn’t particularly impressive. I think he beat Hillary in Iowa because (a) populism plays well there and (b) the Clintons do not because they are seen as dirty campaigners. I kinda liked the guy before you was exposed as a cad, but I’ve never bought into the idea that he’s Captain Electable.
September 27th, 2008 at 8:51 pm
mad6798j:
And then something totally unrelated came along and proved you were right for reasons having nothing to do with you.
Anyway, the infidelity thing should not have disqualified Edwards from decent society the way it has. The National Enquirer (the same rag that outed Edwards) just published the goods on Palin’s own extramarital dalliance, and nobody gave a shit. IOKIYAR, especially if Democrats help throw trash on the pile.
September 27th, 2008 at 8:51 pm
That should be “before he was exposed as a cad.” That was an odd, Yglesian typo.
September 27th, 2008 at 8:59 pm
The Republicans don’t have to convince Hillary supporters to Vote for McCain. They just have to convince 3 or 4 percent –in a few swing states –to stay home and not vote.
The Republicans don’t have to do it as Republicans — they can operate under a false flag as an independent group that’s outraged at how Obama betrayed the Democratic grassroots. It’s called a 527.
A Israel Lobby supporter named S Daniel Abraham destroyed Howard Dean’s 2004 Presidential campaign in Iowa with one — and Dean couldn’t even find out who was attacking him because the FEC forms only have to be filed every quarter. By the time the reports were filed, it was too late to respond.
This bailout will cost middle class households $31,000 each.
When covert Republican ads/mailings point this out to Hillary supporters who are still on the fence, it will blow the lid off a simmering cauldron of rage.
September 27th, 2008 at 9:00 pm
BTW, McCain’s had a bone up his ass over Obama for quite a while:
http://obama.senate.gov/letter/060206-sen_obama_and_sen_mccain_exchange_letters_on_ethics_reform/
Remember this?
September 27th, 2008 at 9:12 pm
Re my delusions, NINETEEN MONTHS AGO I warned Matthew and his readers that today’s shitstorm was going to hit. At the very moment when Democrats here were gloating over their 2006 victory, I TOLD them they were being set up for a fucking.
Here’s a post I put up on Matthew’s blog in Dec 2006:
————-
“Ah, Matthew. You don’t realize the evil genius of Karl Rove.
When the bill for 6 years of corruption, venality, and economic incompetence comes due, someone has to be the designated scapegoat. And if Nancy Pelosi doesn’t make sure that it’s the Republicans, then it’s going to be her.
The Republicans are handing the incoming giddy Democrats a big brown bag of cat manure called an “inverted yield curve.”
It’s the Fed’s job to now make sure that bag bursts.
The MOST reliable predictor of a recession is the yield curve. Normally, long term Treasuries sell at interest rates well above rates paid on short term bills. When the yield curve inverts — i.e. interest on short term bills rises above
that on long term bond — then a recession follows in 8-12 months. The likelihood of recession increases as the inversion gets steeper.
The latest yield curve model –developed by Fed researcher Jonathan Wright — indicates a probability of recession within 12 months to be around 47% –very high by historical standards.
An earlier model by Fed Researcher Estrella puts the probability at around 41%. If the Fed raises the federal funds rate yet again, recession will become a certainty.
Just in time for the 2008 campaign. ”
See http://www.matthewyglesias.com/archives/2006/12/the_sweet_sweet_fed/index.php#039025
September 27th, 2008 at 9:42 pm
Don, we’re both Obama supporters, but your hysteria over this bailout has become so ridiculous that I routinely just scroll past your posts now. They’re that annoying to read. I know you’re not trying to be a concern troll, but you really come off like that right now. Please stick to other topics. We all know exactly how you feel about that one.
September 27th, 2008 at 9:46 pm
Not all that impressive, Don. Was anyone seriously disagreeing that a 2008 recession was likely?
September 27th, 2008 at 10:01 pm
I think Americans are sick and tired of mean and cruel.
September 27th, 2008 at 10:03 pm
Shorter Adam: Shut up and drink the Kool-Aid
September 27th, 2008 at 10:09 pm
Seems a little silly of me to be on topic, but for what it is worth I think Fallows is right. This may seem ridiculous to those of us who have been following this particular presidential contest since 2006, but Obama is still in the process of introducing himself to the substantial minority of the electorate which is just now paying attention to this election. And so last night Obama did what he needed to do simply by coming across as empathetic on the economic issues and competent on foreign policy.
Incidentally, that means in some sense McCain’s performance last night was irrelevant (although he did himself no favors by being so surly). Again, Obama just needed to do his part well.
September 27th, 2008 at 10:15 pm
When you read that John McCain poison pen letter to Obama, do you start smelling dog food, old people, smell? Like the old, senile, asshole, who thinks he knows everything but he doesn’t is talking down to you? He doesn’t really know what the hell he is talking about, but he will tell you about “when you get to be my age, you know what’s going on”?
September 27th, 2008 at 10:15 pm
It’s not going to “cost Americans $31,000 each.” When you buy a stock or a piece of property, do you normally feel like you’ve tossed that money away? No — you’ve invested it. You now own something in exchange for your dollars. Paulson and Co. aren’t proposing burning the $700 billion — they’re going to buy assets, assets that quite plausibly are being radically undervalued because of the panic and lack of liquidity in the market. And even if those assets do turn out to be worth somewhat less than we buy them at, it’s not going to be anywhere near $700 billion less — worst-case scenario, perhaps we’ll end up losing $100 billion.
In exchange for taking the risk of losing $100 billion (but also taking the chance of making money, too, since the value of the assets may very well rise), we almost certainly end up averting a massive financial meltdown, a freezing up of the credit markets, a stock-market fall of 15-20% (wiping out much of the retirement money of people now in their 60s), and most important we avert a steep decline in GDP and a steep rise in unemployment. You honestly don’t think that’s a wise use of $100 billion in taxpayer money?
The only reason people were against this plan is because neither Paulson/Bernanke nor Congress explained the very real and immediate connection between what happens to banks and what happens to the businesses everybody else works for. In the long run, this plan, particularly with the Dodd/Franks amendments, will be seen as the right thing to have done, and those who opposed it will be seen as people who were willing to toss the U.S. economy onto the garbage pile in the interests of either ideological purity (in the case of the Republicans) or populist fervor (in the case of Don and his friends).
September 27th, 2008 at 10:39 pm
Re K Williams “Paulson and Co. aren’t proposing burning the $700 billion — they’re going to buy assets, assets that quite plausibly are being radically undervalued because of the panic and lack of liquidity in the market. And even if those assets do turn out to be worth somewhat less than we buy them at, it’s not going to be anywhere near $700 billion less — worst-case scenario, perhaps we’ll end up losing $100 billion. ”
————-
1) Wrong.
2) We went through this same bullshit back in 1988 with the Savings and Loan Crisis — with many of the same features of fraud , but without the amplifying effect of derivatives.
3) Fixing that goatfuck cost the taxpayers $160 Billion — $296 Billion in 2008 dollars. And the size of the mortgage pool back then was much smaller. See http://en.wikipedia.org/wiki/Savings_and_loan_crisis
4) I don’t understand why the hell people keep repeating Henry Paulson’s deceitful “$700 Billion” number. Paulson has ALREADY spent close to $700 Billion on AIG/Fannie/Freddie/Bear etc. He’s asking for an ADDITIONAL $700 Billion. Throw in the interest on $1.5 Trillion over 5 years and you’re looking at close to $2 Trillion.
5) No way around it — the taxpayers are going to take a DEEP bath.
We heard all this bullshit about “recovering assets” back in 1989 with the Resolution Trust. It let George H Bush play for time but it was bullshit. I knew someone who worked for the RTC at the time and I remember her horror stories.
September 27th, 2008 at 10:43 pm
The obvious objection to this is that banks do (and will) have a much better idea as to the value of these assets than the government does, so we’ll be (metaphorically) buying swampland in Florida while the banks hang onto the beachfront real estate. It’s only an investment if there’s reason to believe that the stuff has value.
That’s why the equity plans are a step in the right direction. At least the government will hold a long-term stake in the company, so if it sells its worst junk then the Fed could wind up ahead. The smarter plans link the equity to the long-term value of the stuff– so a bank only gives up equity when the government takes a loss.
September 27th, 2008 at 10:44 pm
Why are you convinced the taxpayer will lose money on this deal?
It seems very likely that the feds will make a profit once AIGs’ stock is resold for instance. Seems to me that Matt is right and this is a perfect opportunity to entrench the U.S. in Social Democracy.
September 27th, 2008 at 11:00 pm
It isn’t just House Republicans and assorted “populists” questioning the assumptions underlying the ‘rescue’ plan, which as of yet economists haven’t had a chance to examine to even guess whether or not could actually do what was promised.
September 27th, 2008 at 11:14 pm
How is this different from “It’s not because John McCain doesn’t care. It’s because John McCain doesn’t get it”?
Because it was nonverbal, and t.v. audiences seem to hold candidates accountable for their body language more than for their words.
September 27th, 2008 at 11:17 pm
How is this different from “It’s not because John McCain doesn’t care. It’s because John McCain doesn’t get it”?
The fundamentals of the economy are strong, I’ll offer anyone $50/hour to pick lettuce, and I don’t remember how many houses I own, my staff will get back to you on that.
September 28th, 2008 at 12:31 am
“Guys, these Edwards cheap shots are kind of dumb. Obviously, Petey doesn’t have the ability to figure out who is having an affair”
FWIW, I think the stonewall would likely have held had he been nominee. Obviously a difficulty, though.
But personally, I prefer the FDR’s, JFK’s, and Clintons of the world to the Carters and Obamas of the world.
I’d rather cope with passion than cope with rectitude.
—–
Lorne Michaels punted tonight.
He’s holding his fire at the moment.
September 28th, 2008 at 2:44 am
El Cid, I’m not sure that undermines the logic of the bailout at all, though it probably undermines some of what people are saying when they try to sell the bailout. The whole point is for Treasury to overpay for the stuff, to improve the balance sheets of the companies owning it. That’s why you want to get equity out of the institutions taking the bailout, because most if not all of that $700 billion is just going to vaporize.
Or we could let the whole banking system go under, I guess.
Petey, I didn’t see any holding fire on SNL. They ran their standard material on the candidates for the debate, true, but led with a Palin sketch — though that one kind of wrote itself, since the actual transcript of the Couric interview would have got just almost as many laughs. What were you expecting?
September 28th, 2008 at 2:46 am
But personally, I prefer the FDR’s, JFK’s, and Clintons
The inclusion of the latter two — the first of whose progressive accomplishments were non-exitstent, and the second of whose were marginal — instead of LBJ tells you all you need to know. Seeing Clintonism as the apex of populist leftism is beyond farcical.
September 28th, 2008 at 7:14 am
AlanC9: There’s an enormous difference between realizing an enormous intervention may be needed to stabilize our economy, and thinking that the current arguments for what appear to be the major plans do so, and do so in anything like an equitable manner. And, again, this is a lot of money — if it isn’t exactly what needs to be done, if as it looks they prioritize making Wall Street rich over actual economic stabilization and population redevelopment, we can’t just pony up this much again.
September 28th, 2008 at 8:14 am
Re: Obama will win this election, but he will govern during an extremely difficult period, both economically and politically.
But those difficulties may make possible reforms which would die in clouds of partisan obfuscation and rancor in more normal times.
Re: At the very moment when Democrats here were gloating over their 2006 victory, I TOLD them they were being set up for a fucking.
Every poll shows that the Democrats are going to increase their majorities in both the Senate and the House by significant numbers (poossibly as many as 58 Dem senators in the next Congress). The most recent polls show Obama pulling ahead of McCain, albeit not by much. This does not look like a “fucking”. It looks like victory. Now you may have a case if you want to argue that the GOP will use this mess long term to smear the Democrats come 2010 and 2012– time will tell. But there’s no evidence whatsoever that the GOP has found a way to use it against the Democrats this year. The public is well aware who is in the White House and has been since 2001. They know who to blame.
September 28th, 2008 at 8:51 am
@Scott Lemieux – He wasn’t talking about the apex of populist leftism, he was talking about infidelity.
September 28th, 2008 at 9:06 am
You go to the White House with the candidate you’ve got, not with the candidate you wish we had. Take a deep breath and repeat after me. Obama is the Democratic nominee. Barring the invention of time travel in the next six weeks, he will remain so. Most of those posting here would like to see the Democrats win, and worry that the Republicans might come up with some last minute cheat/lie/smear that will give us another four years of political purgatory in our very limited lifespans. Obama may not be perfect, may not be the candidate everyone wishes he was, but he’s at least pretty good, as his defeat of the presumptive nominee demonstrates. Until he gains power with as large a congressional majority as possible, nitpicking about picayune details of the bailout or his debate performance or anything else seems nothing but counterproductive. When he wins, guys, you can bitch away, at the same tiresome length, but until he wins its meaningless and demoralizing to people you at least claim to belong to the same party to, which only enables the malefactors who got our country into this mess. Not that I expect you to stop-after all, you’d have to find something new to cut and paste.
September 28th, 2008 at 10:13 am
Re Don Williams
The Republicans in the House , in fact, are telling the country that the hugely expensive bailout is not necessary.
Actually, the House Rethuglicans don’t really believe this. That’s why they are covering their collective asses by proposing an alternate plan which will be enacted about the time that the blogs’ favorite Bolshevik, Mr. Williams, sees the back own ear. Actually, the House Rethuglicans are irrelevant to the presidential campaign. What the Democrats have to do is to refuse to enact any plan unless and until Senator McCain publicly agrees to vote for it. If he votes aye, he can hardly attack Senator Obama on the issue.
September 28th, 2008 at 11:09 am
Re Vivisfugue’s comment “nitpicking about picayune details of the bailout ”
————
Screwing the common citizen with a $1.5 Trillion bill to bailout some of the richest, most contemptible people on the planet — 4 weeks before the election — is not a picayune detail. And the people advocating this screwing have avoided discussing “picayune details ” –aka Facts — like the plague.
September 28th, 2008 at 11:30 am
RE “Actually, the House Rethuglicans don’t really believe this”
———-
The Republicans don’t “believe” in anything –except their self-interest. Which makes Obama’s kumbaya bullshit so stupid — this crisis needs to be hung firmly around the neck of the REpublicans. Because the Republicans are already constructing the myth of the “Bush-Pelosi Bailout”.
Re SLC’s comment “Actually, the House Rethuglicans are irrelevant to the presidential campaign”
If the House Democrats pass this bill with the House Republicans voting Nay, then the Obama Administration will be fucked. Because it will be made into the “Democrat Bailout”.
After all, the Democrats control the Congress.
Republican second-guessing of the need for –and the design of –the Bailout will surge the day after it is passed.
September 28th, 2008 at 12:34 pm
Re Don Williams
Mr. Williams apparently didn’t read my entire comment. The important point here is that Senator McCain must be made to vote for the bailout. If he does, the House Rethuglicans are in no position to beat up on Senator Obama.
September 28th, 2008 at 9:09 pm
“The inclusion of the latter two — the first of whose progressive accomplishments were non-exitstent, and the second of whose were marginal — instead of LBJ tells you all you need to know.”
Frankly, I far prefer LBJ to JFK, and given that LBJ had numerous affairs pre-WH, his would have been the better name to cite.
Unfortunately, the Southeast Asia business has shredded LBJ’s reputation on the left, so I didn’t cite him. But I of course agree with Scott Lemiuex that LBJ actually was the great progressive administration of the post-FDR era, infidelities included.
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