Dumb and Dumber: Watching Republicans Self-Immolate

As of today John McCain is trailing Barack Obama in almost every measured poll, and his electoral count looks grim.  What’s more, Obama is raising considerably more money as McCain, which gives you a pretty good idea where the bets are from a corporate standpoint.  And so the smear campaign has begun in earnest.

Last week Governor Palin accused Senator Obama of consorting with domestic terrorists, a charge based on a New York Times article that reported that Obama had known a member of the Weathermen.  The problem with this is that the article also went on to state that their ties were very limited to several business meetings and an occasional chance interaction in the neighborhood in which they both lived.  Other media have similarly debunked this charge.

Now the Republicans are claiming that Obama is taking money from overseas, only that have not produced a single shred of evidence to support their request for an investigation by the Federal Election Commission.  Here’s the problem for the Republicans with both of these charges: they’re baseless.  When people repeatedly make baseless charges, we are reminded of the boy who cried wolf.  Just how many times can one get away with it without hurting his reputation?

In Governor Palin’s case, since she has very little going for her already, it’s a short trip to the bottom, from which she will not return.  She did herself a disservice by accepting this nomination and being McCain’s bulldog.  Had she not done so she could have probably slipped right into a U.S. Senate seat.  Now she’ll have a difficult time running for dog catcher.

For nameless GOP operatives filing lawsuits, it won’t be so bad for them as it will their entire party.  The mud must stick somewhere, and if it won’t stick to the target, and it won’t stick to a nameless flinger, it will stick to who they represent.

Republicans should be pretty frustrated with such tactics because as 1992 demonstrated it is perhaps better to lose one election and attempt to hold the moral highground, and then come back two years later and try again.  For John McCain it’s just sad.  I view the man as a hero from Vietnam, one who stood as a sometimes lone voice for veterans of that mess, and who has now authorized behavior that should be beneath him.

Charlotte, we felt your pain

Dear friends in Charlotte,

I recently read in the New York Times that right now many of your residents are suffering because of the near failure and impending purchase of Wachovia, one of the two major banks in town.  Apparently friends know friends who have been laid off, probably through no fault of their own, but through, as someone who works at the competitor said, a bad decision.

It sounds like times are tough because either of the new owners will probably move the headquarters out of Charlotte, the two contenders being Wells Fargo and Citibank.  And those of us who have lived in a town where such a large business has pulled out know that many other businesses close, and many others must shrink, and the economy must absorb all of that.

The reason I mention this is that I lived in San Francisco, the former home of Bank of America, former home of the Bank of America Building, where Nations Bank bought them and removed the headquarters to, guess where?  Charlotte.

We wish you a speedy recovery, particularly if Wells Fargo gets the gig.

Sincerely,

(some former) Californians

A Parental Moment: 3 Points!

People might think that Wilt Chamberlain or Michael Jordan were the best basketball players of all time, and maybe they were.  But here’s a little secret.  Any parent whose had just a little practice can sink one from the foul line.  All it requires is that you replace the basketball with a small bag containing a used diaper.  Parents don’t miss.  The consequences of doing so would be, well, messy.

What Caused This Crisis?

I am sure I’m not that different from many others when I ask the simple question, what happened?  How did the banks get into such a mess?  What didn’t they see, and what regulation failed?  Was the reserve ratio that the federal reserve demands too low?  Did debt move from regulated to unregulated, and if so, why would that have caused a failure of regulated banks?  How is it that the vast amount of debt went unrecorded until recently?  And what are we doing wrong now?

The New York Times offers a new insight into what had happened.  According to this article, a decision in 2004 by the SEC, headed by William Donaldson at the time, permitted banks to exceed the reserve ratio in their investment houses, and money seemingly flew freely between the two.  There was meant to be oversight of the banks’ health at the time, but that oversight never happened.

Why did the banks seek this change in 2004?  They did not believe they could compete against the large investment houses with so much money tied up in case of a credit crunch.  Put another way, we forgot some of the lessons of the 1920s.

And so it’s now obvious to all.  President Bush has not only presided over the worst financial debacle since the Great Depression, but he and his team failed to learn from the mistakes of that era, making him worse than President Hoover, in my book.

What do we need to do to fix the problems?  Some of it has already happened.  Banks have become very conservative, and perhaps are leaning too far: it’s very hard to tell when the country is teetering on a recession.  Some of that conservative nature needs to be codified by reversing the 2004 decision or requiring investment houses to meet the reserve ratio.  In order to figure out which we have to question whether or not we can let a large investment house fail.  If we cannot, then more regulation is appropriate.  One way to split the baby is to require regulation of total assets and debt above a certain number, say the $5 billion talked about in the article.