Impeach Pelosi. I lost faith in the House Speaker shortly after she took office. Now she has gone to far. Quote of the day: Losses to shares on the broader Dow Jones Wilshire 5000 index amounted, on paper, to $1.2 trillion. The bailout she failed to sell totaled $700 B. She has always been in over head, unable to conceptualize anything, develop an opinion other than the party line or lead. My greatest concern (one of the few) about Obama is his allegiance and indebtedness to her.

From WSJ:
The Dow Jones Industrial Average sustained its biggest point drop in history and its biggest closing decline since the day the markets re-opened after the Sept. 11, 2001, terrorist attacks. The Dow, which had opened sharply lower on fears of more possible bank failures, finished the day down 7%, with a 777.68 point drop to 10365.45. Losses to shares on the broader Dow Jones Wilshire 5000 index amounted, on paper, to $1.2 trillion — eclipsing the size of the proposed bailout package. The Nasdaq Stock Market finished down 9.1%….

Congressional Republicans cited a speech by Ms. Pelosi on the House floor that blamed the economic crisis on years of Republican economic policies, including deregulation. “For too long this government, eight years, has followed a right-wing ideology of anything goes, no supervision, no discipline, no regulation,” Rep. Pelosi said. “It has created not jobs, not capital; it has created chaos.”

Congressional leaders believe they have drafted an acceptable bill to save the U.S. from the Great Depression II. Some of my initial pessimism about the bill has wanted now that I’ve read more about it. Like everyone, I wonder whether we’re throwing good money after bad. Here’s a copy of the draft, which will be voted on this week. Makes you wonder why we can’t publish all legislation for public commentary before it goes for a congressional vote. This would be most meaningful for Chicago. Oh imagine our budget surpluses if someone would fetter Daley’s vendor relationships and spending sprees. I’ve been saying for years that technology can bring back the days of a direct democracy…then again, now that I see how near-sighted the American people can be, I don’t know if that’s preferable.
I was ecstatic when Bush selected Paulson to head the Treasury less than two years ago. He left the most successful I-Bank (check the history books if you’re reading this years from now and don’t remember what an I-Bank was) to serve. Now he’s running the biggest one ever. Unfortunately, he’s made it clear he has no intention of staying beyond the Bush presidency. I fault him for that and have less confidence in his plan since I don’t know who will carry out the structure he designed. I hoped some congressman bothered to read the entire 110-page bill to confirm that they’re not giving away all management of the country to the executive branch. You saw what happened the last time the current administration was at the center of crises: that was the first $700 B check we taxpayers wrote. At least this latest debacle shouldn’t cost 4,000 lives (unless we start counting the increasing crime rates caused by the weakened economy).
In addition to bringing liquidity, this “break the glass” plan, as the Treasury and Fed Reserve officials have dubbed it, is supposed to develop a market for – and therefore value of – the CDO’s. Much has been written, and so I have wondered, about the affects of the SarBox mark-to-market rules which have created this cycle of continual asset write-downs. Why didn’t the government pass regulations to either temporarily suspend this rule or develop some global assumptions (i.e. 70% subprime default rate) which companies could use to value these securities since no market exists (hence price doesn’t equal value). By the way, I’ve read (though can’t represent the accuracy of the sources) that RMBS are pricing in subprime default rates between 70% and 100%.
This brings me to another complaint about U.S.’s society: why doesn’t the media ever talk numbers!?* It drives me nuts that they believe (probably accurately) that Americans don’t understand or appreciate the numbers but I want to know: what the prices of these securities are telling us about the expectations on foreclosures and loan recoveries; how big is the market for each CDO, etc. Then each can decide for themselves if the Plan is worth the potential cost. While were at it, someone should study the effects of corporate tax rates and the George Bush tax cuts on the economy, corporate profits and tax revenues. U.S businesses have enjoyed incredible profit growth over the past four years. Much of it was financial related. I wonder how that will look after this debacle is over.

*FD: this complaint was initially developed by Rich Karlgaard, the great Forbes publisher, in his column a few months ago.

McCain vs. Obama?

McCain 2000 was my favorite main-party candidate of all time — he understands that money is the root of all evil (having been financed by the wrong RE developers in the run up to the S&L crisis of the early 1990’s, per Bob Woodward). This time around he hasn’t impressed me as much – too much pandering to the conservative base. Obama was my Senate choice (in the primary, obviously; there wasn’t a choice in Illinois’s general election) and I have long loved the idea of a president who understands and has experienced the toils of the common man (I don’t consider Bill Clinton human).

My feeling when they locked up their nominations (i.e. before financial Armageddon) both parties picked their best candidate . After watching the first debate, I would say that it was tough for me to find a clear winner. However, I’m fairly confident that the VP debate will solidify Obama’s success (call it a reaffirmation of my prediction after the Iowa caucus). McCain’s pick shows poor judgement and is a huge risk given his age.

What a wild week it has been: Zambrano’s no hitter last Sunday, followed by the failure of yet another big-4 I Bank, Lehman Bros, the $80B U.S. Fed recapitalization of A.I.G. and now even larger, more comprehensive action. Paulson’s first intervention was for JP Morgan to buy Bear Stearns. Let’s hope this ends soon. While I have the utmost confidence in Paulson (frmr Goldman Sachs CEO), periods of panic are oftentimes met with overreaction. I’m hearing too many calls for the end of capitalism and don’t know which outcome poses more danger. Further, I continue to lose confidence for McCain (he called for the resignation of Henry Cox, SEC Chair, since he needed a scapegoat). He neither understands the cause of our current crisis nor can control his emotions during times of stress. I have to believe his advanced age (72 yrs) doesn’t help. Obama has acted more presidential over the past week. I’ll bet the polls reflect that this week.