GOP Bushwackers

Americablog, rapping off the news from Politico:

We now find out that the Republican party cut ads, and sent them to TV stations around the country, opposing the bailout bill even BEFORE Pelosi spoke before the vote yesterday. The Republican National Committee, the official "party," was planning on the bill passing, and then was going to attack Democrats who voted FOR the bill.

* * * So in fact, the Republican party was playing games, playing politics, with our economy.

Then, what about that business over blaming Pelosi? Check this out:

GOP "Nilhilists" Sink Bailout Bill

We spent some time tracking down first-hand reports from anyone who could bear witness to what really happened on the floor of the House of Representatives yesterday when the bipartisan credit crisis bailout bill failed. Democrats delivered on their promise to hold their collective noses and deliver more than one-half of the total votes necessary; Republicans broke their promise to deliver the rest from their own members.

C-Span isn't permitted, by House rules, to show anything except blowhard congress-persons making wind for the camera. Most of the cable Tee-Vee political reporters, who have to travel with camera crews, customarily are kept off the House floor and had to hang around the cloakrooms. So, they could share only second- and third-hand spin stories.

But on Jim Lehrer's News Hour, the New York Times' John Shaw saw it with his own eyes:

Well, it was very interesting, because it's hard to know really how each party does their whipping operations, getting votes, but the Democratic side was much more active.

The speaker was right in the middle of it. There were swarms of people around her. They were feeding her notes. She was carefully monitoring the vote. She was sending emissaries over to the Republican side.

On the Republican side -- and, again, they may do it differently -- but the minority leader, John Boehner, was pretty much alone. It didn't seem like many people wanted to talk to him. Roy Blunt, the whip, was pretty much standing off by himself. His deputy, Mr. Cantor, was also pretty quiet.

So visually it looked like the Democrats were working harder. And at one point, Pelosi looked over and saw that not a lot of movement was going on that side. And she just said, in a very loud voice, "We're finished," which signaled that she was done trying to get more Democrats to vote for the package.

Boehner's peculiar quiescence inspired Rachel Maddow of MSNBC to ask a follow-up question -- "Who leads the Republican Party right now?" She came up with a surprising answer: the aforesaid "pretty quiet" Eric Cantor (R-Va), who is Assistant Minority Whip in charge of rounding up votes for the 'lonely' John Boehner.

Even conservative columnist David Brooks is disgusted by the Republicans' behavior:

House Republicans led the way and will get most of the blame. It has been interesting to watch them on their single-minded mission to destroy the Republican Party. Not long ago, they led an anti-immigration crusade that drove away Hispanic support. Then, too, they listened to the loudest and angriest voices in their party, oblivious to the complicated anxieties that lurk in most American minds.

Now they have once again confused talk radio with reality. If this economy slides, they will go down in history as the Smoot-Hawleys of the 21st century. With this vote, they’ve taken responsibility for this economy, and they will be held accountable. The short-term blows will fall on John McCain, the long-term stress on the existence of the Republican Party.

Brooks holds out hope that some cosmetic changes might make the bill more palatable to Republicans on a second go-around to pass the bill, probably on Thursday. Possibly so, but it seems to us it will be even more difficult to talk anyone who voted "no" yesterday into voting "yes" tomorrow.

How much more embarrassing, and difficult for constituents to swallow, would it be for a congressman -- say, like the hapless Jeff Miller -- to vote for the bailout bill after voting against it? Inescapably, such a vote would mean the congressman voted at least once this week against the national interest.

Words of One Syllable Dept.

Ideology Over Reality as Bailout Bill Fails

Early this afternoon, the bipartisan bailout bill, more properly known as the Emergency Economic Stabilization Act of 2008, went down to defeat. Unless it is brought up for another vote, we'll all soon have a chance to see what a worldwide depression is really like.

Remember, this is a bill no one likes. Not Bush, not Treasury Secretary Paulson, not the Republicans and not the Democrats. Main Street doesn't understand it. Every congressperson fears it -- or, rather, fears the political fallout. Yet, all signs are that it is necessary for the public good.

In a very real sense, what it all comes down to is a struggle between reality and ideology.

The reality is harsh. As Representative John A. Boehner (R-OH) said today, "there is too much at stake not to support" the bill:

He urged members to reflect on the damage that a defeat of the measure could mean “to your friends, your neighbors, your constituents” as they might watch their retirement savings “shrivel up to zero.”

Not just retirement accounts, we might add. With day-to-day business credit frozen, as vividly described last Friday on NPR radio, what's at risk are business payrolls, jobs, credit card loans, student loans, home loans, and every other form of lending, from overnight bank-to-bank lending to the cash advanced to fill your favorite ATM machine.

The ideology that opposes the bill is bankrupt. It is perfectly captured in all of its gory glory by the words of congressman Darrell Issa (R-CA). The New York Times reports this afternoon that "he was 'resolute' in his opposition to the measure because it would betray party principles and amount to 'a coffin on top of Ronald Reagan’s coffin.'”

Issa and the other 227 congressmen who voted against the bill may as well eat their ideology. It isn't good for anything else.

Dept. of Amplification

Economics professor Brad DeLong: "This Republican Party needs to be burned, razed to the ground, and the furrows sown with salt..."

Dept of Further Amplification

Roll Call on the motion to pass the Emergency Economic Stabilization Act of 2008

Republican Ayes - 65 .... Republican Nayes - 133
Democratic Ayes - 140 .... Democratic Nayes - 95

Jeff Miller Smack-Down

At about 10:35 am CDT today, Florida panhandle congressman Jeff Miller (R-Chucklehead) took to the floor of the House of Representatives for his assigned two minutes of debate on the Emergency Economic Stabilization Act of 2008 -- probably the most important economic legislation since the New Deal -- and stuck his foot in his mouth. Twice.

It was a deeply embarrassing moment for everyone in North Florida who has to call this guy "our congressman." Miller was elected to be a law-maker, but it seems he can't research or read proposed laws! Either that, or he reads pre-cooked, out-of-date staff memos with utterly no comprehension.

Miller used his two minutes of fame on the House floor to utter two falsities: (1) the fanciful theory that the cure to the banking and financial crisis is more tax cuts for wealthy corporations; and (2) his erroneous understanding that the bailout bill being debated today still contains the Bush administration's ridiculous blank check for $700 billion with no judicial oversight.

1. Tax Cuts for the Wealthy?

Miller's first point is laughable, of course. More tax cuts for wealthy corporations will increase liquidity of our frozen credit system? That makes as much sense as urging the poor to eat pastry. ("Que ne mangent-ils de la croûte de pâté?')

Miller is dead wrong on the facts, too, when he claims U.S. corporate tax rates are among the highest in the world. Check it out for yourself right here. For those who don't have the time to read and compare international tax rate charts, business-friendly Smart Money Magazine summarizes the reality (boldface added) --

You may have heard: U.S. corporations face one of the highest income tax rates in the world, though the mention of "rate" is often enough excised, so that what comes through is the assertion that corporations pay too much in taxes. This is simply untrue if your basis for comparison is the developed world. The truth is that while the 35% corporate income tax rate is high indeed, the creativity and global reach of U.S. corporations make them among the most lightly levied.

Between 2000 and 2005, U.S. corporate taxes amounted to 2.2% of the GDP. The average for the 30 mostly rich member countries of the Organization for Economic Cooperation and Development was 3.4%.

2. No Judicial Review?

As for Miller's second point, once again he shows how fundamentally stupid, lazy, and ineffectual he is. The man appears to be talking about Treasury Secretary Paulson's three-page proposal of nearly two weeks ago. That was plainly a non-starter, as Bill Moyers remarked the same week Paulson pitched it.

After Miller (thankfully) was forced to sit down by his own Republican floor manager, Rep. Barney Frank had to remind our congressman (see the video below) that Section 119 at page 58 of the bill being debated expressly provides for agency and judicial review.

The video below, which concludes with Barney Frank's smack-down of Jeff Miller, is all the proof you need that Jeff Miller should not be in Congress. He's an embarrassment to all of North Florida.

Jeff Miller Gets Tutored in
How to Read a Bill

Wall Street Wizardy Index

While we wait to see if Republican ideologues in Congress will succeed in plunging us into another Great Depression or the bipartisan bailout bill will set fire to a long run of hyper-inflation, we have a question for the gurus of economics. It may be a mere idle inquiry, but it bugs us.

Our question is inspired by a report from the respected Center on Economic Policy and Research. "The Reagan Question: Are you better off now than you were eight years ago?" economists John Schmitt and Jue Jin Rho ask.

This is from the executive summary, with the part that tickled our curiosity put in boldface print for your convenience:

The unemployment rate, the inflation rate, and the "Misery Index" (the sum of the first two) are all higher in 2008 than they were in 2000. Other indicators that capture employment opportunities, wage growth, growth in family incomes, poverty, health-insurance coverage, personal savings rates, the price of gasoline, and college tuition fees, as well as a range of macroeconomic indicators including GDP growth, the trade deficit, the federal debt, and the net foreign debt, are also all worse in 2008 (or the most recent period available) than they were in 2000.

The two indicators that are better in 2008 than they were in 2000 are the inflation-adjusted level of median family income, which is up only 0.4 percent in seven years, and the productivity of the average worker, which has increased faster in the 2000s than it did in the 1990s.

That's certainly good news about worker productivity, even if it doesn't appear to have staved off the current credit crisis. But that set us to wondering this: Is there an economic index measuring the cumulative productivity of corporate CEOs? Wall Street wizards? Government regulators?

Bipartisan Bailout Bill

Reuters News Service has an early, useful summary of key provisions of the bipartisan "Emergency Economic Stabilization Act of 2008" announced late this afternoon. These include --

• $700 billion in buying power would be doled out by Congress in stages. After the first $250 billion is authorized, the President could request another $100 billion. The final $350 billion could be cleared by a further act of Congress.
  
• The government will take a stake in companies that tap federal aid so that taxpayers can share in the profits if those companies get back on their feet. An exception applies to financial firms with less than $500 million in assets or if the government buys less than $100 million of soured investments.
• If a company receives aid but fails, the government will be one of the last investors to see a loss.
• A new congressional panel would have oversight power and the Treasury secretary would report regularly to lawmakers in two elements of a multi-level oversight apparatus.
• If the Treasury takes a stake in a company, the top five executives would be subject to limits on their compensation.
• Executives hired after a financial company offloads more than $300 million in assets will not eligible for "golden parachutes."
• Would permit the Federal Reserve to begin paying interest on bank reserves, giving it another tool for easing credit strains.
• Mandates a study on the impact of mark-to-market accounting standards, that critics blame for a downward spiral in the valuation of assets on corporate balance sheets.
• The federal government may stall foreclosure proceedings on home loans purchased under the plan.
• Alongside the plan to buy securities outright, the Treasury Department will conceive an alternative insurance program that would underwrite troubled loans and would be paid for by participating companies.
• If the government has taken losses five years into the program, the Treasury Department will draft a plan to tax the companies that took part to recoup taxpayer losses.

The full text of the bipartisan bailout bill announced this afternoon is available at:

http://financialservices.house.gov/

Worldwide interest is so intense that the servers are extremely busy right now, so be patient and try again later if you can't get through. Mirror sites are popping up by the minute. Here are some of them (to be supplemented as time permits):

Senate Banking Committee (pdf format, 109 pp.)

Washington Post

Huffington Post

Public Markup.org

New York Times [pdf]

Los Angeles Times [pdf]

C-Span [pdf]

For the official "section by section analysis" click here.


One note about last night's negotiations: In answer to a question from the press, Speaker Nancy Pelosi said at the end of the joint news conference late Sunday afternoon that "great resistance" to limiting CEO "golden parachute" pay was mounted by Republicans. A large faction of conservative GOP congressmen declared themselves strongly opposed to any law that would impose a penalty tax on any corporation that (1) sought cash from the Treasury Department under this rescue bill, and then (2) used some (or all) of it to fashion a golden parachute for their top executives.

What changed their minds? They backed off when Pelosi threatened to use the power of her office to ensure that there would be a roll-call vote, in effect guaranteeing that everyone in the world would know the names of the rabid free-market Republicans who wanted to invite Wall Street tycoons to suckle for free at the teat of the American taxpayer.

That kind of transparency terrified the Republicans, and so they backed off.

McCain's Next Gamble: A Shotgun Wedding

McCain camp prays for Palin wedding:

Inside John McCain’s campaign the expectation is growing that there will be a popularity boosting pre-election wedding in Alaska between Bristol Palin, 17, and Levi Johnston, 18, her schoolmate and father of her baby. “It would be fantastic,” said a McCain insider. “You would have every TV camera there. The entire country would be watching. It would shut down the race for a week.

The vulgarity of such a campaign gamble would be truly appalling. But it would solve three nasty problems for McCain:

1. How to keep Palin away from more damaging interviews ("she's working on the wedding");
   
2. What to do with the regiment of lawyers and "communication operatives" McCain sent to Alaska to cover-up all the embarrassing facts about Sarah Palin ("we're making out the invitations") ; and
   
3. What to name the kid ("Brummagem")
   

It also would answer, finally and completely, whether American voters are complete suckers who can't be trusted with the franchise.

Paul Newman (1925-2008)

Handsome, intelligent, talented, funny, generous, courageous and caring, Paul Newman was a uniquely wonderful human being.

Obituary here.
Filmography here.
Hole-in-the-Wall Foundation here.
Scott Newman Center here.

Body Language Debate

Most of the Tee-Vee hairdos, talking heads, and viewer polls we've seen give last night's debate to Obama, or generously call it a draw. But almost everyone is expressing mild surprise that McCain didn't lash out and physically clobber Obama over the head with a blunt instrument, so hostile did he appear on the Tee-Vee screen.

McCain, many are saying, looked angry and talked down to Obama. He was sarcastic and belittling toward Obama. He wouldn't look at him. He blinked a lot.

Far more than their words, it was the contrast in body language during last night's debate that was stark -- and not to McCain's advantage, as any number of commentators across the literary spectrum are noting.

Reporter Richard Adams in the Guardian:

Television is of course words and pictures, and physical interaction of the two men was a fascinating study all of its own. On that level Obama certainly did better than McCain: he looked directly at McCain as he spoke. McCain refused to look in Obama's direction - even as he was delivering his own attacks against the Democratic candidate, and so allowed his body language to undercut his spoken language, suggesting that he was uncomfortable or even embarrassed.
* * *
Obama, though, looked directly at McCain throughout. And that made his words all the more effective. McCain, meanwhile, just grinned at something off-stage.

But on a larger scale, McCain made a strategic error. He wanted to reiterate his theme that Obama is too young, too unready, to be president. But with Obama there on stage beside him, looking presidential behind his podium and measured in his manner, McCain's words just didn't ring true.

Television critic Alessandra Stanley in the NY Times:

Theirs was a generational collision, and at times it looked almost like a dramatic rendition of Freudian family tension: an older patriarch frustrated and even cranky when challenged by a would-be successor to the family business who thinks he can run it better.

Novelist Merrill Markoe at the Huffington Post:

McCain sometimes seemed so unable to conceal his rage that I thought I was watching a weird Bill Plymptom cartoon of McCain's face morphing in to a tea kettle, with a rattling lid and steam coming out his ears. Every time McCain mentioned "reaching across the aisle," I thought "To do what? Grab someone by their throat and shake them til their eyeballs pop out of their head?"

Eugene Robinson, WaPo political columnist:

Throughout the 90-minute debate, McCain seemed contemptuous of Obama. He wouldn’t look at him. * * * His body language was closed, defensive, tense. McCain certainly succeeded in proving that he can be aggressive, but the aggression came with a smirk and a sneer.

Pollster George Harris, in the Kansas City Star:

McCain appeared angry and dismissive of Obama and generally impressed as someone who would slap colleagues across the aisle if reaching over to them. He said several times in the debate that he hasn't won the Miss Congeniality contest in the Senate, and he proved why during the debate.

I suspect that women voters especially would be turned off by McCain's sarcastic tone because women do tend to be the conciliators in our society... . McCain wouldn't return the eye contact but rather glared or displayed a tight and angry expression.

I also suspect (but don't have the data to support) that older voters were also turned off by Senator McNasty.

Even Christian Broadcast Network reporter David Brody found it "very noticeable" that McCain avoided making eye contact with Obama:

He never made eye contact with him. Obama kept looking at McCain.

When the visual evidence of your eyes shows you a rash, impulsive gambler with a Napoleon Complex, it's difficult to believe him when he claims to want to "reach across aisle" and heal partisan divisions.

One final note that may not have been obvious to the average viewer but which has been noticed by a few others: something deliberate was going on with the technical production that must -- simply must -- have been demanded by the McCain campaign. As Kathyrine Seelye, wrapping up a live blog at the Times, notes:

As for the optics of the night, that was some fancy camera work: Mr. Obama is noticeably taller than Mr. McCain, and yet they appeared of equal height, both in simultaneous side-by-side shots and at their lecterns.

You might call this the Alan Ladd Affect. Hollywood history tells us that in order to sell the diminutive (5'4") Alan Ladd as a tough guy in gangster movies, Paramount Pictures resorted to the full range of visual tricks to disguise his height disadvantage, from elevator shoes to special camera angles.

Once again, life imitates art imitating life.

Debate On; Blood Drive Begins

Former McCain advisor Craig Shirley:

"In the end, he blinked and Obama did not. The 'steady hand in a storm' argument looks now to more favor Obama, not McCain."

Shirley added, "My guess is that plasma units are rushing to the McCain campaign as we speak to replace the blood flowing there from the fights among the staff."

Credit Crisis: What We Haven't Been Told

"The danger was that the system was fundamentally unstable. Almost overnight it could go from working well to collapsing. If any one of the Asian countries piling up dollars (and most were doing so) began to suspect that any other was about to unload them, all the countries would have an incentive to sell dollars as fast as possible, before they got stuck with worthless currency."

James Fallows, "Countdown to a Meltdown",
Atlantic Monthly, July 2005

Even Princeton economist Paul Krugman has expressed puzzlement over why the Bush administration went into panic mode over the economy so quickly and without much warning a week and a half ago. And where did the number of $700 billion come from?

After all, FED chairman Bernanke and Treasury Secretary Paulson spent most of this year and last reassuring everyone who asked that the economy was strong and the derivative mortgage meltdown was "contained." Suddenly, last week they changed their tune and demanded $700 billion with no strings attached, no oversight, and no clear explanation of how they planned to spend it.

What explanations they offered publicly have puzzled everyone. Vague statements about diminishing confidence in our financial institutions; true but insufficient descriptions about the burden on the books of banking institutions posed by unmarketable mortgage derivative assets; the threat of uncollectible CDOs; broad descriptions of concern that the credit markets are freezing up.

On one level, we are just as puzzled as you may be about the three largest mysteries hanging over the financial crisis:

• How did this crisis come upon us so suddenly?
  
• Why are FED chairman and Secretary of Treasury so spooked?
• Why won't Bernanke and Paulson come clean in public?
  

We hasten to add that we have no inside information. We weren't involved, and have not spoken to anyone who was, in those private meetings where Bernanke and Paulson scared the bejesus out of key administration and congressional leaders. And, of course, we didn't personally witness Secretary Paulson fall to his knees last night and beg Democrats to save the nation from Republicans.

So, what we are about to say is purely the product of what education we have, what we have read, and thinking about those three mysteries. Here is what we have come to believe the facts strongly suggest:

Bernanke and Paulson anticipate the U.S. economy is on the verge of a meltdown because one or all of China, Japan, the United Arab Emirates, and/or Russia have signaled they are pulling the plug on the U.S. dollar.

In all the credit crisis reporting, there has been almost no mention of this possibility. Conventional news sources cover the issue as if it were exclusively a domestic matter between the greedy crooks on Wall Street and the taxpayers from Main Street.

But what if we're right? What if the triggering factor is the imminent collapse of the American economy because foreign nations are no longer willing to fund our profligate ways?

This would explain the vagueness of the explanations offered in public, the seeming suddenness of the crisis, and why those in the know -- like Bernanke, Paulson, and a tight circle of others -- are scared witless. To publicly place the blame on foreign countries -- even if we're the ones who put ourselves in hostage to them -- is to invite the same kind of wrath against "the other" that Americans now feel about Wall Street brokers.

Judging by comments one hears from average Americans, most of us want to jail the Wall Street crooks. But you can't jail another country. You can only make war against it.

The most useful linkable sources we can point to as support for our theory are two little-noticed articles by James Fallows in the The Atlantic Monthly. The first appeared in the July, 2005 issue. The title was "Countdown to a Meltdown." The second article, in January of 2008, was titled: "The $1.4 Trillion Question."

"Meltdown ... $1.4 trillion." Do those words sound familiar?

Fallows long has been a highly respected American author and magazine editor. He's been living in China the past few years, after having had an even longer sojourn in Japan before that. From that distance, he has had a unique opportunity to objectively see how the U.S. economy fits into and relates to the larger world economy. That has led him for some time to become very worried over the prospect of a world-wide financial crisis -- one that easily could be the very thing that is terrifying Paulson and Bernanke.

Fallows' 2005 article was written as if it were penned in the year 2016 and the writer was looking back on this very time. It is scarily prescient, except that he thought the credit crisis would fall upon us in 2009, not 2008.

He begins with what was known when the article was written: Bush's massive tax cut plan for the wealthy. "Everything changed" on 9/11? No, it changed the day those tax cuts were enacted -- June 7, 2001.

[H]ere is what really mattered about that June day in 2001: from that point on the U.S. government had less money to work with than it had under the previous eight presidents. Through four decades and through administrations as diverse as Lyndon Johnson's and Ronald Reagan's, federal tax revenue had stayed within a fairly narrow band. The tax cuts of 2001 pushed it out of that safety zone, reducing it to its lowest level as a share of the economy in the modern era.

What followed were escalating U.S. trade deficits... a "plummeting" U.S. dollar ... hugely increasing U.S. budget deficits... and inappropriately low interest rates... a "jobless recovery"... and "the evaporation of personal savings."

Americans saved about eight percent of their disposable income through the 1950s and 1960s, slightly more in the 1970s and 1980s, slightly less and then a lot less in the 1990s. At the beginning of this century they were saving, on average, just about nothing.

The possible reasons for this failure to save — credit-card debt? a false sense of wealth thanks to the real-estate bubble? stagnant real earnings for much of the population?—mattered less than the results. The country needed money to run its government, and Americans themselves weren't about to provide it. This is where the final, secret element of the gun-cocking process came into play: the unspoken deal with China.

The terms of the deal are obvious in retrospect. Even at the time, economists discussed the arrangement endlessly in their journals. The oddity was that so few politicians picked up on what they said. The heart of the matter, as we now know, was this simple equation: each time Congress raised benefits, reduced taxes, or encouraged more borrowing by consumers, it shifted part of the U.S. manufacturing base to China.

In Fallows' own version of Looking Backward, Fallows then projected an "oil shock" followed by loss of confidence on the part of foreign countries in the value of the dollar. What he predicted is what we're seeing right now, before our eyes:

As the dollar headed down, assets denominated in dollars suddenly looked like losers. Most Americans had no choice but to stay in the dollar economy (their houses were priced in dollars, as were their savings and their paychecks), but those who had a choice unloaded their dollar holdings fast.

The people with choices were the very richest Americans, and foreigners of every sort. The two kinds of assets they least wanted to hold were shares in U.S.-based companies, since the plummeting dollar would wipe out any conceivable market gains, and dollar-based bonds, including U.S. Treasury debt.

Thus we had twin, reinforcing panics: a sudden decline in share prices plus a sudden sell off of bonds and Treasury holdings. The T-note sell off forced interest rates up, which forced stock prices further down, and the race to the bottom was on.

Fallows issued a second, even more explicit warning, in the January 2008 issue. As he explained:

Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China. Like so many imbalances in economics, this one can’t go on indefinitely, and therefore won’t. But the way it ends—suddenly versus gradually, for predictable reasons versus during a panic—will make an enormous difference to the U.S. and Chinese economies over the next few years, to say nothing of bystanders in Europe and elsewhere.
* * *
Neither government likes to draw attention to this arrangement, because it has been so convenient on both sides. For China, it has helped the regime guide development in the way it would like—and keep the domestic economy’s growth rate from crossing the thin line that separates “unbelievably fast” from “uncontrollably inflationary.” For America, it has meant cheaper iPods, lower interest rates, reduced mortgage payments, a lighter tax burden. But because of political tensions in both countries, and because of the huge and growing size of the imbalance, the arrangement now shows signs of cracking apart.

Remember, this was written nine months ago, when the Bush administration was assuring everyone that things were hunky-dory and, indeed, the only economic need on the horizon was to make permanent the Bush tax cuts for the wealthy -- just as John McCain urges now.

Were there any warning signs the Bush administration missed? In that January article, Fallows answers with a resounding "yes."

In the past six months, relative nobodies in China’s establishment were able to cause brief panics in the foreign-exchange markets merely by hinting that China might stop supplying so much money to the United States. In August, an economic researcher named He Fan, who works at the Chinese Academy of Social Sciences and did part of his doctoral research at Harvard, suggested in an op-ed piece in China Daily that if the U.S. dollar kept collapsing in value, China might move some of its holdings into stronger currencies. This was presented not as a threat but as a statement of the obvious, like saying that during a market panic, lots of people sell. The column quickly provoked alarmist stories in Europe and America suggesting that China was considering the “nuclear option”—unloading its dollars.

Again, speaking for ourselves, we don't know for a fact that China -- or Japan for that matter, or the Arab Emirates, or Russia or any other creditor nations holding dollar-denominated U.S. Treasury bills -- actually has threatened the "nuclear option." But, clearly, something quite sudden spooked the Treasury Secretary. And the scary scenarios James Fallows has been trying to warn us about are shockingly similar to the sort of thing we're witnessing now.

What does it all mean?

First, our own chickens are coming home to roost. Much as we might like to think otherwise, we can't blame only Wall Street or even China and the other creditor nations. We are responsible for our own past foolishness. The sooner we realize this, the quicker we can begin working on a real solution.

Second, the Bush administration isn't telling us the complete truth. Most likely, it's fearful of coming clean because this is a financial crisis that the Bush administration precipitated with its signature 2001 tax cuts that effectively wiped out the budget surpluses of the Clinton years.

Third, everyone in Washington knows the widespread sentiment of average Americans is to "string up those Wall Street criminals," as a woman told us yesterday at a local fitness center. She is so mad she actually said, "I'd be willing to go through a depression so long as I see those crooks in jail."

But Washington knows, too, that there is a very broad nativist streak in our populace. How much more ungovernable -- and dangerous -- might we become if we thought the credit crisis could be blamed on "the yellow race" or Arabs?

Fourth, if James Fallows was right in his predictions, then what Paulson and Bernanke are trying to do is calm our international creditors, not so much Wall Street. Like a home owner with a mortgage he can't pay who offers the bank part-payment in hopes of forestalling foreclosure, in just seven years the United States has become a nation with debts it can't pay. Paulson and Bernanke are asking for nearly $1 trillion to mollify our creditors in hopes they won't, in effect, 'foreclose' on the U.S. dollar.

Finally, if we're right, then what this means is whether or not Congress gives Bernanke and Paulson what they want, this is just the beginning of the credit crisis. It will take America as many, or more, years to get out of this mess as it takes for a bankrupt to re-establish good credit.

Thought for the Day

If 'this sucker goes down' it looks like John McCain will own the next Great Depression.

"This Sucker Could Go Down"

We haven't read of such panic in the White House since the bad old Watergate days when it was revealed that Nixon has tapes. From today's New York Times:

WASHINGTON — The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support.
* * *
It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington.
* * *

“We’re in a serious economic crisis,” Mr. Bush told reporters as the meeting began shortly before 4 p.m. in the Cabinet Room, adding, “My hope is we can reach an agreement very shortly.”

But once the doors closed, the smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.

Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand.

The talks broke up in angry recriminations, according to accounts provided by a participant and others who were briefed on the session, and were followed by dueling news conferences and interviews rife with partisan finger-pointing.

In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal.

“I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.”

Mr. Paulson sighed. “I know. I know.”

Our favorite quote? It's one for ages:

“If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.

There is more... a lot more, and it's shocking.

McCain the Knight-Errant

"Sir Knight of the Rueful Countenance, I can no longer bear to hear you run on at this rate! Why, this were enough to make any man believe that all of your bragging and bouncing of your knight-errantry... are mere flim-flam stories, and nothing but shams and lies."

-- Cervantes, Don Quixote, chap. XI ( Ormsby transl. 1885)

Everyone who has been following the financial crisis knows that senators like Chris Dodd (D-CT) and Richard Shelby (R-AL)* of the Senate Banking Committee, and their counterpart in the House Barney Frank (D-MA) have been working overtime improving the Bush administration's financial bailout bill. It's been apparent for some time that more substantive legislation than Treasury Secretary Paulson's 2 1/2-page plan will pass Congress within days.

But now John McCain is trying to act the knight-errant and grab the credit. This goes beyond lying. It is insulting to the American public and, quite likely, delusional if McCain supposes we can be fooled by this grandstanding.

In an Ohio television interview just this past Tuesday -- six days after Chris Dodd's counter-proposal was circulated on Capitol Hill and was published on the web -- McCain admitted he hadn't even read Paulson's proposal yet, much less the better bill by Dodd.

John McCain has jumped the shark.

---
Dept. of Amplification
9-25 pm

* ABC reports this afternoon that Senator Shelby "is expected to ultimately oppose the bailout" and is not participating in the bill negotiations or drafting."

Heard Around Town - Financial Panic Edition

Pensacola area people are talking. Here are some of the remarks we've overheard this week.

(Middle-aged wife to husband, while standing in line at the grocery store ): "Be sure to get lots of cash for the weekend. They always close banks on Friday."

(Shop owner): "Business dropped off a cliff in April. I would sell but I'm not sure there are any buyers out there."

(Woman friend, discussing the bailout bill): "To hell with that. They ought to make everyone who voted for Bush pay for it."

(Young lawyer acquaintance, on the phone): "I registered for a seminar in bankruptcy. It looks like that's where the business will be."

(Stranger at gas pump): "My grandmother went through the Depression. I wish I'd listened to her more closely."

(Escambia County process server): "It's terrible out there. So many people!"

(Woman): "It's going to be the Depression all over again. Bank failures, locusts, no potatoes."

McLobbyist McLie

Newsweek explodes another McCain campaign lie -- about McCain's campaign manager.

Deja Boo-Boo

"Hegel remarks somewhere that all great, world-historical facts and personages occur, as it were, twice. He has forgotten to add: the first time as tragedy, the second as farce."

-- Karl Marx, The Eighteenth Brumaire
of Louis Bonaparte, chapter 1 (1852)

* * *

President Eisenhower On Richard Nixon's Experience - 1960

* * *

Governor Sarah Palin on John McCain's Experience - 2008

McCain's Debate Delay Dodge

This is the best chronology we can put together on the fly, for now, about today's bizarre political developments:

1. Obama called McCain this morning to propose that they issue a joint statement on shared principles with regard to pending legislation to hand $700 billion (or maybe $1 trillion) over to Treasury Department Secretary Paulson so he can distribute it as he sees fit.
2. McCain apparently agrees to the joint statement idea. Staff members from the two campaigns begin meeting to hammer out the details.
   
3. McCain goes before Tee-Vee cameras to say he is suspending his campaign and calls on Barack Obama to agree to a postponement of Friday night's televised debate.
4. In mid-afternoon Obama holds a press conference, makes a short statement, and answers questions. Among other things, he points out that one of the two candidates will be elected President in just forty days and the people deserve to know, now when it counts, what each of the candidates has to say. He also points out that a president has to be able to handle more than one major thing at a time and there is no reason the candidates cannot handle both the credit crisis and the debate.
   

Real reporters as well as cable TV hair-dos are wondering if McCain is afraid of a public debate because he's "plunging" in the polls?

Duncan Black wants to know, seriously, "What's wrong with McCain's left eye?"

What we'd like to know is why did McCain unilaterally decide to go in front of the cameras to propose to Obama that the campaign debate be postponed if he already was in touch with Obama by telephone? Just who is playing politics with the financial crisis?

Dept. of Amplification

McCain the Knight-Errant

"Now John McCain is trying to act the knight-errant and grab the credit. This goes beyond lying. It is insulting to the American public... ."

Unearthing Another McCain Lie

We get emails. This morning a reader asked us to address the meme making the rounds of right-wing fringe elements to the effect that famed de-regulator John McCain co-sponsored regulatory reform legislation in 2005 which would have prevented the current credit crisis by reigning in Freddie Mac and Fannie Mae, sometimes lumped together as "government-sponsored entities" or GSEs.

Only the big, bad Democrats stopped him, or so it is claimed.

Is this true? the reader asks.

The short answer is "no." It is a deeply dishonest, cynical distortion of the facts.

Where Do Wingnuts Get These Crazy Ideas?

Who knows how such craziness gets started? We've seen suggestions that Rush Limbaugh, whose knowledge of economics begins and ends with the street price of oxycodone, dreamed it up. Others say it was college-dropout Sean Hannity of Fox News.

The McCain campaign effectively juiced this deceptive meme the other day when Kevin Hassett -- a McCain campaign advisor whose major claim to fame is that he's one of the two idiots who predicted "Dow 36,000" -- repeated it in one of those we'll- print- any-old-opinion articles at Bloomberg.com.

Hassett's article is complete fiction. It has about as much truth as the latest caterwauling that Rick Davis, McCain's head campaign manager, really wasn't in the pay of Freddie Mac. In fact, as we now know, Davis's firm was paid $15,000 per month by Freddie Mac until last month (!) "because of Mr. Davis’s close ties to Mr. McCain, the Republican presidential nominee, who by 2006 was widely expected to run again for the White House."

As Steve Bennen points out:

Davis lobbied against federal regulations of Fannie Mae and Freddie Mac through the Homeownership Alliance, and once that was done, Davis asked Freddie Mac to put his firm on retainer, for $15,000 a month, for very little work.

Hi, Mom!

Alas, to get to the truth about McCain and Freddie Mac reform, as is so often the case, requires a tedious examination of the facts. Wingnuts don't do facts. We have to.

In this case, to answer our reader's question what's required is a long archeological expedition through the archives of the Congressional Record. Unearthing facts is never an exciting task and never ever something the right-wing wants to bother you with.

Moreover, to understand the facts in this instance requires some knowledge about the arcane legislative process, mortgage financing, executive branch regulatory oversight, and the shenanigans of Wall Street investment houses as they invented the nightmares of new slice-and-dice mortgage derivative instruments and CDOs in the late 1990's and early 2000's.

At the risk of boring the one or two other intrepid readers who have read this far (Hi, mom!) , here is what we need to tell our morning correspondent who asked us to look into the matter.

S. 190 (2005)

This much is true: On January 26, 2005, Nebraska senator Chuck Hegel (a Republican senator who has refused to back McCain) introduced S. 190 at the start of the 109th Congress. S. 190 was an executive branch reorganization bill that had been kicking around previous congresses for several years. Because all bills die at the end of every two-year Congress if they're not enacted as laws, sponsors had to re-introduce it after every two-year congressional election.

S. 190 would have transferred a number of mortgage loan regulatory and oversight functions traditionally given to the U.S. Housing and Urban Development Department (H.U.D.) to a new agency to be called the "Federal Housing Enterprise Regulatory Agency." Nothing in the text of the bill itself would have prevented the current credit crisis, although, obviously, there was hope that the new agency might better police Freddie Mac and Fannie Mae loan activities.

Co-Sponsors

Co-sponsors of S.190 when it was introduced in January 2005 were Elizabeth Dole (R-N.C.) and then-senator John Sununu (R-N.H.). Not John McCain.

McCain did not become a listed co-sponsor until May 25, 2006 -- a year and a half later, or almost one full year after the bill's short life came to an end. (see screenshot below).

This was two months after McCain's announcement on the David Letterman show that he would be running for president.

As it had in earlier congressional sessions, the Republican majority in both the Senate and the House killed the bill outright within six months. It was never brought to a floor vote in either the House or the Senate. (Remember, this was after the 2004 elections when voters rewarded Bush and his fellow Republican congress-persons with a continuing majority in all three elective branches of government.)

Here's a screenshot from the non-partisan govtrack.gov describing the short life of the bill:

What's meant by the phrase "to be reported with an amendment in the nature of a substitute favorably"? Again, as govtrack.gov explains:

[A] substitute bill was drafted up, possibly by the highest committee members, that makes substantive changes to the original, and the bill has been replaced by this substitute. This substitute is actually drafted in the form of an amendment to the original that reads “strike all after the enacting clause and insert the following”, i.e. it’s an amendment that says start over with this. This is the substitute amendment.
* * *
As for the term favorably, this means that a majority of the members of a committee support the bill being reported.

So, in the instance of S. 190 in the 109th Congressional session it was the Republican majority committee that substituted another bill for Hegel's and reported a later version favorably. And it was the Republican-dominated House and Senate leadership that never got around to formally asking for a vote on the measure.

Johnny Come Lately

McCain, well behind the curve, was adding his name as a co-sponsor to Hegel's bill months and months after another bill had taken its place and even that substitute bill had been derailed by his own party.

Public records will never reveal this, but it's a good bet that lobbyists for Freddie Mac and Fannie Mae -- many of whom today are running John McCain's campaign under Rick Davis' leadership -- had a lot to do with killing the substitute bill once it was reported out of committee. Indeed, the man chosen by McCain to be his "transition team leader" should he win the White House, William Timmons Sr., has lobbied for Freddie Mac and Fanny Mae since the year 2000. Such people as Timmons and Davis are the most likely source for advising McCain to sign onto the bill when it no longer mattered.

It's one of the oldest deceptions in the legislative bag of tricks to pretend to sign on to a piece of legislation you know is dead in the water. Despicable lying? Yes. Bad legislating? Of course. But clever politics when you can pull the wool over the people's eyes.

But that's not the end of the story.

Regulatory Reform of the GSEs

Beginning with a series of House of Representative votes in mid 2007, Democratic leaders in the current 110th Congress eventually enacted the re-designated H.R. 3221 (over Republican party opposition from 163 of 202 House Republicans), now known as the Housing and Economic Recovery Act of 2008 (HERA). You can read a summary of the bill here [pdf] or the full text of the bill here.

On all recorded roll call votes in the Senate, John McCain was absent and not voting. So, too, was every other senatorial candidate for president, from both parties, except for Christopher Dodd (D-CT).

But a Democratic majority in the House passed the reform bill. And a bipartisan coalition of Democrats and Republicans passed it in the Senate.

Dept. of Amplification
10-3-08 om

In the wake of the vice presidential debate where Sarah Palin claimed that McCain "sounded a warning bell" in 2006 about Fannie Mae and Freddie Mac, New York Times fact-checkers agreed with our analysis: McCain was tardy in recognizing the issue, not a leader:

Ms. Palin was referring to Mr. McCain’s decision in 2006 to sign on as a co-sponsor of a Senate bill that would have overhauled regulations governing Fannie Mae and Freddie Mac. But the legislation was introduced more than 16 months earlier and the debate over the issue had been going on for some time. He also only added his name after an oversight agency issued a lengthy report condemning practices at Fannie Mae.

An Urgent Email

Dear American:

An urgent email addressed especially to your person by the Ministry of Treasury of the Republic of America is waiting in your inbox here. Please to be sure you read it as it will be to your great benefit and good fortune.

Bailout Bill's Sine Qua Non

After listening to the Paulson-Bernanke-Cox show at the Senate Banking Committee hearing this morning, Princeton economist Paul Krugman says on his daily blog that something very much like the N0. 1 condition listed by Robert Reich should be a sine qua non of any bailout bill:

[A]ny bank that wants to remove toxic assets from its balance sheet can do it at a stroke — just declare them worthless, and poof! they’re gone. But of course, that would reduce confidence and capital, not increase it — and that’s not what Hank and Ben are talking about. They’re talking about turning the assets over to Uncle Sam, and getting cold hard cash in return. And then the question is how much cash they get in return. It’s all about the price.

Now, if the price Treasury pays is very low — anything comparable to what financial institutions are able to sell the stuff for now — it’s going to do nothing for confidence and capital. If the price is high, confidence and capital will improve — but taxpayers may well take a big loss. * * *

But how can we help the financial situation without making that bet? By taking an equity stake. That way, if it turns out that the feds are pumping money in at above-fair prices, at least they get ownership, just as a private white knight would have.

In fact, Prof. Krugman says it twice:

[T]he plan only helps the financial situation if Treasury pays prices well above market — that is, if it is in effect injecting capital into financial firms, at taxpayers’ expense.

What possible justification can there be for doing this without acquiring an equity stake?

No equity stake, no deal.

There is precedent for this in Sweden's banking crisis of the early 1990's, as the International Tribune explains:

Financial deregulation in the 1980s fed a frenzy of real estate lending by Swedish banks, which spent too little time worrying whether the value of collateral might evaporate in tougher times. Property prices exploded.

The bubble deflated fast in 1991 and 1992. A vain effort to defend Sweden's currency, the krona, resulted in an incredible spike in overnight interest rates at one point to 500 percent. The Swedish economy contracted for two years straight after a long expansion, and unemployment, at 3 percent in 1990, quadrupled in three years.

After a series of bank failures led to ad hoc solutions, the moment of truth arrived in September 1992, when the government of Prime Minister Carl Bildt opted for a clear-the-decks solution.

With the full support of the opposition center-left, Bildt's conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation's 114 banks. Sweden formed an agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.

The big difference between the Swedish solution and the Bush-Bernanke proposal is that "Sweden did not just bail out its financial institutions by having the government take over the bad debts. It also clawed its way back by pugnaciously extracting equity from bank shareholders before the state started writing checks."

By the end of the crisis, the Swedish government had seized vast swaths of the banking sector, and the agency had mostly fulfilled its tough mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.
* * *
Looking back, Swedish official say the tough approach toward the banks paved the way for success. It eliminated "moral hazard," the problem of relieving investors of bad decisions. And, much as it might be a shock in the United States, the demise of shareholders also underpinned the political consensus that help restore stability to financial markets even before the bailout was truly under way.

To be sure, solving the banking crisis in Sweden took several years, during which the Swedish economy endured a recession, according to Bloomberg News. By now, however, it ought to be clear to all that a prolonged recession is the least we face under every scenario being seriously put forward in Washington.

The alternative of doing nothing is even worse. The proposal of the Bush administration, which involves a straight-forward give-away to Wall Street with no equity stake in anything, is likely to exacerbate the widening class divisions in contemporary U.S. society, just as Hooverism did nearly eighty years ago, with all that mankind's history teaches us this implies for the social order and domestic tranquility.

No equity stake, no bailout.

Cloudy Crystal Ball - 1929 Edition

From the Las Vegas Daily Optic, October 24, 1929 (subscription only):

The disaster today on Wall Street will have a most salutary effect. It will wipe out the petty gambler, who hoped to become suddenly rich by marginal trading. It should place Wall Street investments on a basis which will check the flood of money from the country banks to New York and restore the stable market for public bonds and other securities necessary for industrial development in the interior of the country.

Many a home is crushed by the collapse of the market today and the happiness of thousands will vanish with the realization of financial misfortune, but the general good is well served.

Palin's 'Road to Nowhere'

Sunlight on the Financial Crisis Legislation

You know, already, that Treasury Secretary Paulson's proposed Wall Street rescue bill is not quite three pages long. Basically, it gives him carte blanche to hand out over $700 billion of taxpayer money to whoever he may please, and further provides that his beneficence "may not be reviewed by any court of law or any administrative agency."

The leading alternative bill that seems to be emerging from congressional discussions is sponsored by Senator Christopher Dodd (D-CT), chairman of the Senate Banking Committee. The full text of what must be assumed to be an early draft of Dodd's bill is available in pdf format here.

Much more user-friendly versions of both bills can be found on PublicMarkup.org:

Click here for the Paulson/Bush administration bill.

Click here for the Senator Dodd bill.

There, you can read each bill section-by-section and, if you like, add your own thoughts or questions. The new web site, sponsored by the non-partisan Sunlight Foundation, also promises to post "amended and further drafts" as they become discoverable.

The Harper Fix

Has the financial crisis got you down? Feeling blue over all the red ink crossing the stock ticker tape?

Just give a listen on WUWF-FM radio every Friday afternoon to the congenitally optimistic Rick Harper, economist at the Haas Center for Business and Economic Development on the Pensacola campus of the University of West Florida. He's cheaper than anti-depressants.

The charming thing about Dr. Harper (he's not a real doctor -- just a Ph.D.) is that he always sees the bright side. If your house were to burn to the ground, he'd see value in the glowing embers-- charcoal is wonderful for barbecues, don't you know.

Early last Friday morning, he proclaimed:

Well, the FED and the Treasury and the Securities and Exchange Commission now have the tools that they need to handle the crisis. So, I don't think we're at any risk of turning into a massive bank failure scenario.

We felt better right away. However, after Treasury Secretary Paulson announced later that same day that he needed a $700 billion blank check to save western civilization, we needed another Harper fix.

McLying About McLying

Holy Pinocchio! When the right-of-center Politico.com accuses the McCain campaign of lying about lying, you know the campaign has a problem.

Buck Lee's Beach Fantasy

Amanda: In what way is she peculiar - may I ask?
Tom: She lives in a world of her own - a world of little glass ornaments. She plays old phonograph records - and that's about all.

-- Tennessee Williams, The Glass Managerie

Wednesday, the Santa Rosa Island Authority board will formally review a set of drawings by architect Carter Quina that, according to Jamie Page in today's News Journal, "show what potentially could be done to improve the most popular portion of the beach." Tellingly, there is no beach in Quina's beach drawings.

The SRIA presumably paid good money for these fantasies. Page tells us it plans to spend even more for grotesque art, as the genre is sometimes known:

Quina's initial drawings were created only to give the board a starting point for eventually putting out a request for proposals for conceptual drawings... .

Quina may have drawn the latest fantasy, but he has merely given two dimensional form to Buck Lee's wet dream. Lee is the SRIA's executive director who, against all evidence that meets the eye, has been insisting that huge parking ramps are needed throughout the commercial core of the beach.

Just like Amanda's crippled daughter in Tennessee Williams' The Glass Managerie, Buck Lee lives in a make-believe world of little "ornaments" that bear no relationship to the reality of current or future needs of Pensacola Beach. Also, as with Williams' pathetic, lame Laura, Buck Lee seems to busy himself mostly by replaying the same old music about walling off the beach with unsightly tall buildings, exactly as earlier studies proposed and the people rejected -- as we mentioned most recently here when we recalled:

That same incubus of cheap but destructive development ideas crawled out again a little more than a decade ago when the Island Authority contracted for an architect's plan to build a 3-story shopping mall right where Casino Beach sits today. Public outrage at the scheme to wall off Casino Beach from easy public view was so strong that even the Escambia County commissioners felt compelled to reject it. Indeed, they passed a resolution forbidding future commercial development of Casino Beach.

Residents who live on the beach struck a deal more than a decade ago when the Island Authority adopted building height restrictions throughout much of Pensacola Beach but none in the commercial core. The deal was: we won't object to anything you do with the commercial core if you stick to your word on zoning and height restrictions for residential neighborhoods.

What that means, as a practical matter, is that no beach residents' group is likely to take a stand against Lee's fantasies. It's up to the rest of the world -- Pensacola mainlanders, Escambia County taxpayers, out of town tourists, and Pensacola Beach business interests -- to weigh in with Santa Rosa Island Authority board members if they don't want to see the central core of the beach paved over and walled off.

Candidly, we would expect only email messages to board member Thomas Campanella and Tammy Bohanon to survive the political filters. But you can try to reach the rest of the board here, too.

No to a Blank Check Bailout

There is no doubt that a huge, trillion-dollar bailout is coming and it will be funded by American taxpayers. There is no choice, we are being told, if we are to avoid another Great Depression.

Most free market conservatives, faced with the bitingly bitter fruit of their 25-year campaign to deregulate investment banks, stock brokerage houses, hedge funds and other financial corporations -- and to neuter antitrust laws, SEC securities protection and basic consumer protection -- have abandoned their ideological posts and are running for the hills.

A few --like Treasury Secretary Henry Paulson himself, actually -- have sneaked across the lines and are now sleeping with the enemy. Or, as Kevin Phillips put it more elegantly this weekend:

[W]hat we're seeing with the actions of the Federal Reserve Board is the people who are the arsonists, the people who pumped it all up, who blew up the bubble are now racing to show up in firemen's hats and say, "We're gonna solve it. We're gonna take care of all this. Oh, and by the way, we're gonna keep pumping in the gasoline that we pumped in before that made a good flame."

In private talks over the weekend, Treasury Secretary Henry Paulson scared the hell out of everyone on Capitol Hill. One reason for the panic that hasn't gotten much ink, we suspect, is that he confided to them that it's not just U.S. financial corporations holding toxic mortgage-based exotic investments who are demanding to be made whole. Chinese, Japanese, European, and even South American financial institutions all bought the same "shitpile", as Duncan Black long has characterized it, from U.S. investment banks. Their governments are hot as hell about it and, you can be sure, they are threatening to rid themselves of all those American dollars they've accumulated as our own nation ran up its unsustainable debt under George W. Bush maladministration.

Behind Paulsen's "three page plan" to become the American Dictator of Finance is more than an attempt to save Wall Street. He's hoping to save the American greenback from falling below the Zimbabwean dollar.

We accept the reality that we are facing a financial crisis every bit as serious as the Great Depression. Even so, as editor Avi Zenilman reports in Politico today --

Many of the same economists and opinion-makers who’d provided a bipartisan sheen of consensus to Treasury Secretary Henry Paulson’s previous moves have quickly begun casting doubts on the wisdom of a policy that would allow Treasury to purchase without oversight hundreds of billions of dollars of difficult-to-price assets from financial institutions.

One of those economists is Robert Reich, former Secretary of Labor. He authored, also today, a list of five conditions which should be attached to any bailout authority Congress may give the Treasury Secretary Paulson:

1. The government (i.e. taxpayers) gets an equity stake in every Wall Street financial company proportional to the amount of bad debt that company shoves onto the public. So when and if Wall Street shares rise, taxpayers are rewarded for accepting so much risk.

2. Wall Street executives and directors of Wall Street firms relinquish their current stock options and this year's other forms of compensation, and agree to future compensation linked to a rolling five-year average of firm profitability. Why should taxpayers feather their already amply-feathered nests?

3. All Wall Street executives immediately cease making campaign contributions to any candidate for public office in this election cycle or next, all Wall Street PACs be closed, and Wall Street lobbyists curtail their activities unless specifically asked for information by policymakers. Why should taxpayers finance Wall Street's outsized political power - especially when that power is being exercised to get favorable terms from taxpayers?

4. Wall Street firms agree to comply with new regulations over disclosure, capital requirements, conflicts of interest, and market manipulation. The regulations will emerge in ninety days from a bi-partisan working group, to be convened immediately. After all, inadequate regulation and lack of oversight got us into this mess.

5. Wall Street agrees to give bankruptcy judges the authority to modify the terms of primary mortgages, so homeowners have a fighting chance to keep their homes. Why should distressed homeowners lose their homes when Wall Streeters receive taxpayer money that helps them keep their fancy ones?

To that, we would add at least two more conditions: meaningful oversight and standards for action. In a democracy no one person, however well intentioned, should be handed unlimited discretion and power to pay nearly a trillion dollars to whoever he likes for whatever reasons he fancies.

The Financial Crisis and Yankee Stadium

"When it came to paying for the new pleasure dome costing $1.3 billion, the millionaires on the field and King Midas in the skybox came up with some razzle-dazzle plays to finance their wealth machine. Tax-free bonds, requiring ordinary citizens to subsidize the construction... . Meanwhile, there will be more luxury suites and party rooms where the fat cats gather, safely removed from the sweaty masses."

-- Bill Moyers Journal, Sept. 19

Today marks the last day for Yankee Stadium, The House That Ruth Built. Bill Moyers was inspired Friday afternoon to use that event as a subtle parable for the financial crisis that is now consuming -- and dramatically changing forever -- our nation.

It's a parable worth keeping in mind as we learn more about the emerging Bush Administration's plan to fork over $700 billion to one unelected person, the Secretary of Treasury, to pass along to whichever of his Wall Street buddies he cares to, without prior review by any administrative agency, court, Congress, or even the president.

Moyers begins with a (partial) list of Wall Street CEOs of failed financial corporations and the truck loads of money they dragged out the door as they left the mess behind them. Do yourself a favor and stick with the video as it morphs into why the 'new' Yankee Stadium holds lessons we all should learn.


A full transcript of this program segment is here.

A Simple Plan

New York Times, Saturday, Sept. 20:

The Bush administration on Saturday formally proposed to Congress what could become the largest financial bailout in United States history, requesting unfettered authority for the Treasury Department to buy up to $700 billion in mortgage-related assets
* * *
The proposal, not quite three pages long, was stunning for its stark simplicity. It would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt.

Duncan Black has a few random thoughts about this... take your pick:

• 'At least they are honest crooks': "They could've released a complicated plan which appeared to have controls and oversight but which would be hard to decipher from the language. Instead they made it plain for all to see that what they want is to be able to take money from you and give it to Wall Street firms."
• 'You're joking, right?': "Any member of Congress who looks at the plan to give Hank unchecked power to transfer $700 billion from the Treasury to his friends' companies and has any reaction other than 'You've got to be fucking kidding me' does not deserve to hold office."
• 'Unfettered Authority': "That never ends badly."
  

Weekend Poll: Whither Economic Conservativism?

Answer us this: What does an "economic conservative" in America believe these days?

WHAT DOES AN ECONOMIC CONSERVATIVE BELIEVE?
	Capitalism means someone other than Wall Street foots the bill.
	Socialism means someone other than Wall Street owns the means of production.
	Higher salaries motivate rich people but make hourly workers lazy.
	Universal health care is good for politicians, CEOs, and brokers, but bad for you.
	Drill, baby, drill everywhere but where I live.
	Social Security is a good thing as long as Wall Street can have yours.
	Who cares? Vote Republican.
	All of the above.
Free polls from Pollhost.com

My Friends, My Health Care Plan

In all the worrying this week over how we average Americans can dig down deep to bail out the rich CEOs on Wall Street, we almost forgot about health care reform. Not to worry! John McCain has the answer.

Here's what he wrote in the current issue of Contingencies magazine:

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation. [emphasis added]

Sounds like a plan, all right. We can hardly wait to hear more at next week's presidential debate.

Judicial End Run

Bill Post, who has become the authority on the history of Pensacola Beach lease taxation issues, has a new Viewpoint article in the Independent Sun. The weekly newspaper titles it "Ignoring 1987 Ruling."

Among other things, Mr. Post has unearthed a nugget of legislative history about the key Florida statute (Florida Statute chapter 196) that no court, so far as we can recall, has ever mentioned:

The current legislative statute's intent was clearly explained in the June 3, 1980 written state senate staff Analysis that said the leaseholds will no longer be "assessed and taxed as real property" as if leaseholders were owners, but "shall be taxed only as intangible personal property." Please again take note of the word "only."

As Post observes, this expression of legislative history rather directly undermines an argument Escambia County property appraiser Chris Jones has been trumpeting through the legal system: that the legislature was "silent" about taxation of leaseholds insofar as the alternate theory of "equitable ownership" is concerned. It is not an act of silence when a legislature says this is the "only" tax intended.

If one were able to summon faith that Florida's courts, as presently constituted, truly judge cases based on proven facts and law rather than, say, politics or power, Post's historical nugget might loom large. On the other hand, to borrow Finley Peter Dunne's famous epigram, there are some courts that "follow the election returns." In which case, of course, the facts become as inconsequential as legal precedent.

We're still waiting to see which kind of court is judging the Pensacola Beach residential leasehold tax dispute.

Friday Fun

Uncle Sam and you have just saved Wall Street from itself. It's great fun watching the heads of the laissez-faire, greed is good crowd explode on CNBC. Every capitalist principle they've clung to has been exposed as a myth.

Florida Court's Weird "Change of Mind"

In what is surely one of the weirdest events in state court history, today the Florida Supreme Court reversed its own county bond financing ruling of a year ago. The result will have long-lasting repercussions; not only for local government bond financing without voter approval but also, we suspect, for public perceptions about the rule of law under Florida's court system.

First Court Ruling

On September 6, 2007 -- a little more than a year ago -- the full seven-member state supreme court unanimously ruled that Escambia County was "without authority" to issue road-widening finance bonds for Perdido Key without first obtaining approval by popular referendum "as required by article VII, section 12 of the Florida Constitution."

The full text of that opinion has been scrubbed from the Florida Supreme Court web site. But it can still be found, for now, on the web site of the Miami Herald.

The opinion was written by Justice Kenneth Bell of Pensacola. All six other supreme court justices concurred in the decision.

As Justice Bell wrote for the court at the time --

The language of article VII, section 12 is plain and unambiguous. * * * [A]rticle VII, section 12 of the Florida Constitution provides as follows:

Counties, school districts, municipalities, special districts and local governmental bodies with taxing powers may issue bonds, certificates of indebtedness or any form of tax anticipation certificates, payable from ad valorem taxation and maturing more than twelve months after issuance only:

(a) to finance or refinance capital projects authorized by law and only when approved by vote of the electors who are owners of freeholds therein not wholly exempt from taxation; or

(b) to refund outstanding bonds and interest and redemption premium thereon at a lower net average interest cost rate.

Thus, article VII, section 12 plainly authorizes localities to issue long-term bonds "payable from ad valorem taxation" for the purpose of financing capital improvements only when "approved by vote of the electors."

The 2007 ruling was widely seen as a victory for citizens' right to vote before being saddled with taxes or destructive developments they may not desire. Local governmental units around the state, however, were upset. Many of them are seeking to jump-start big-ticket municipal projects. They expected to be free to hand the bill to taxpayers without letting them vote on it.

Locally, one such project put in jeopardy was the planned Pensacola Maritime Park. Although many community leaders favor it, the project also has substantial public opposition.

New Court Ruling

Today, however, Justice Charles Wells wrote a new opinion for the state supreme court in the same Perdido Key road case. This time, the court approved the bond action, although voters still have not approved it. The full text is here.

One year later! This could be a Guinness World Record for slow-motion change of mind.

The Tallahassee Democrat reports:

Now the court says financing schemes that use future property tax increases to pay off bonds are OK, changing utterly what a unanimous court said a year ago. It means local governments will have much greater latitude in approving millions of dollars of bonds for public projects without having to get voter approval.

Weirder and Weirder

But wait! There's more. In yet another odd twist, it turns out one of the supreme court justices signing onto the new opinion has been retired from the court for over a year!

Former Justice Raoul Cantero is listed in the new opinion as one of four judges who concurs in the result of the new, 2008, opinion. But Cantero retired September 4, 2007, -- over a year ago. That was just two days after the court published its first decision in the case and 16 days before September 20, when the first decision was finalized and released for publication.

Moreover, he has since joined the Miami law firm of White & Case. That firm's web site describes White & Case as representing --

public and privately held commercial businesses and financial institutions, as well as governments and state-owned entities, involved in sophisticated corporate and financial transactions and complex dispute resolution proceedings.

Do you suppose there might be, at a minimum, the appearance of a conflict of interest here? Only the firm's client list could tell us for sure.

Missing in Action

In yet another odd twist, Justice Bell, author of the original opinion, recused himself from participating in the reverse decision. No reason has been disclosed.

Justice Bell is only 52 years old. He has served on the court for not quite five years. Yet, earlier this year Bell announced he intends to retire in October and resume practicing law in Pensacola.

We doubt Justice Bell plans to hang out his own shingle as a solo practitioner. But finding a Pensacola corporate law firm that doesn't have ties to some interested party in this lawsuit will be quite a bit harder than scrubbing his old supreme court opinions from the web.

Justice Lewis wrote a dissent in which it is said a second judge, Chief Justice Peggy Quince, concurred. But Quince also is listed in today's court release as having concurred in part with the majority and dissented in part.

We can find no written opinion by Quince, as yet, explaining what the heck is up with that. Normally, a judge who concurs in part and dissents in part issues a separate opinion explaining which parts were which.

Understanding the Result

Tallahassee lawyer David Theriaque, representing the Escambia County citizen who lost the appeal today after winning it a year ago, told the Tallahassee paper, "I'm having a hard time understanding what they did."

That's because you're a lawyer, David. This is a decision only a politician can understand.

DEPT. OF CORRECTIONS

A commentator correctly points out that Justice Cantero retired in 2008, not 2007, although still well before the recent re-ruling was announced. The original Miami Herald article about his retirement in 2007 which misled us has been either scrubbed or redated by the newspaper.

Sound Investment Advice

This morning, short term U.S. Treasury bills have been selling at a negative rate of return. That is to say, if you want to put your money in what once was known as the safest investment vehicle in the world, you'll have to pay more to buy a Treasury bill than you'll ever get back in interest.

Buy a short-term U.S. bond and you're guaranteed a loss on your money!

Writes Princeton economics professor Paul Krugman:

This didn’t even happen in the Great Depression. Professionally, I’m fascinated. As a citizen, I’m terrified.

True, it is unprecedented. But one must remember that the alternative safe place for your money -- a mattress -- doesn't come free, either. That's why we strongly recommend using an old mattress, one that you already have on hand.

If you'd like to thank us for this investment advice, just write your thank-you note on the back of a $100 bill and mail it in.

Obama Responds to Wall Street Crisis

We don't care for political ads, as a rule. However, if you have to have them this strikes us as the most positive and informative message we have seen from any politician anywhere running for anything.

Barack Obama today released a two minute ad in which Senator Obama speaks "directly to the nation on his view of the state of the economy and what he would do to fix it if he is elected president." The ad is airing nationally and in battleground states around the country.

Full Text

In the past few weeks, Wall Street's been rocked as banks closed and markets tumble. But for many of you -- the people I've met in town halls, backyards and diners across America -- our troubled economy isn't news. 600,000 Americans have lost their jobs since January. Paychecks are flat and home values are falling. It's hard to pay for gas and groceries and if you put it on a credit card they've probably raised your rates. You're paying more than ever for health insurance that covers less and less.

This isn't just a string of bad luck. The truth is that while you've been living up to your responsibilities Washington has not. That's why we need change. Real change. This is no ordinary time and it shouldn't be an ordinary election. But much of this campaign has been consumed by petty attacks and distractions that have nothing to do with you or how we get America back on track.

Here's what I believe we need to do. Reform our tax system to give a $1,000 tax break to the middle class instead of showering more on oil companies and corporations that outsource our jobs. End the "anything goes" culture on Wall Street with real regulation that protects your investments and pensions.

Fast track a plan for energy 'made-in-America' that will free us from our dependence on mid-east oil in 10 years and put millions of Americans to work. Crack down on lobbyists -- once and for all -- so their back-room deal-making no longer drowns out the voices of the middle class and undermines our common interests as Americans. And yes, bring a responsible end to this war in Iraq so we stop spending billions each month rebuilding their country when we should be rebuilding ours.

Doing these things won't be easy. But we're Americans. We've met tough challenges before. And we can again.

I'm Barack Obama. I hope you'll read my economic plan. I approved this message because bitter, partisan fights and outworn ideas of the left and the right won't solve the problems we face today. But a new spirit of unity and shared responsibility will.

Jeff Miller: "Drill, Baby, Drill" on Pensacola Beach

Northwest Florida's ineffectual congressman, Jeff Miller (R-Chucklhead), in effect voted last night to authorize oil and gas drilling rigs off Pensacola Beach. The House of Representatives bill he voted against would have continued the protection against drilling rigs in the near-shore of Pensacola Beach and other eastern Gulf sugar-white sandy beaches.

Miller voted "No."

As Bryan Dumka from Miller's hometown Cinco Bayou implies, undoubtedly the House bill was politically inspired. Republicans -- including Miller -- have embraced "drill, baby, dill" as their mantra. Democrats, including Nancy Pelosi, are afraid that voters are so stupid they can be suckered into thinking that expanded drilling might be a solution to the current price of gasoline or America's dependency on foreign oil.

Plainly, it is not.

Bryan gives Pelosi a hard time about her support for the compromise drilling bill. We have, too. Everyone needs to remember, however, that it's Republicans like Miller who falsely urged "both parties to drop the partisan bickering" over energy policy and work out a compromise. When offered the chance, Republican House members cynically refused.

Not a single Republican voted for the bill which would open the rest of the nation's coastlines to drilling, even though they're the ones who have been calling for it all along.

At a minimum, it's time for the Pensacola News Journal to acknowledge that Jeff Miller has been lying all along when he claimed to be protecting our beaches from close-in drilling rigs.

edit 9-18

If You Like the Credit Crisis...

If you like the mortgage mess and the credit crisis it has brought on, then you'll really enjoy John McCain's likely pick for Secretary of Treasury -- former Texas senator (and close McCain friend) Phil Gramm. Throughout his career Gramm has "worked to weaken or remove regulations that allowed the government to keep an eye on big business."

He's known as "John McCain's brain on economic matters." He drafted the "economic plan" McCain is running on. He also drafted the two laws that brought us the Enron collapse and the current banking crisis:

Gramm orchestrated the Gramm-Leach-Bliley Act in 1999 which “destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies.” He also pushed the Commodity Futures Modernization Act in 2000, which made legal “the mortgage swaps distancing the originator of the loan from the ultimate collector.” The Nation writes that “those two acts effectively ended significant regulation of the financial community.

As Princeton economist Paul Krugman says, "we could manage to have another Great Depression if we work at it hard enough. I think Phil Gramm might be just the guy to do it."

Caring Conservatism

Turns out, Duncan Black was right: "We're all communists now." It cost more than twice what was estimated yesterday, but now Uncle Sam effectively owns American International Group, Inc. (AGI).

When is the first shareholders' meeting?

A.I.G. in a Nutshell

Some CNBC hair-do is talking about A.I.G. right now. "I don't see what the problem is. It has plenty of assets. It's just a liquidity problem."

Right. Only $90 billion in liquidity is needed.

"It's just that some accountant says so," he adds, acerbically.

Not quite. A.I.G. signed contracts that require it to maintain a certain amount of liquidity. It filed formal undertakings with state regulators that its insurance subsidiaries would do so. It sold bonds that guaranteed it would do so. It is required by federal and state laws to do so.

If A.I.G. doesn't abide by its contracts, assurance, guarantees, promises, and laws, then the other guy gets to foreclose. Right? Every homeowner and credit card owner in America knows this.

But Wall Street thinks they are exempt from all of that. And if they all whine loudly enough, the taxpayers will pick up the bill.

Obama in Golden

>

'Consoling' on Wall Street

CNN (unintentionally) captures two guys necking behind their on-screen Wall Street reporter and says they were "consoling" each other. CNN needs a dictionary.

Console: verb (used with object). To alleviate or lessen the grief, sorrow, or disappointment of; give solace or comfort.

McCain and Women's Rights

We have been deeply puzzled by John McCain's sudden media stardom as a supposed leading advocate for women's equality. It's all due, of course, to his pick of Sarah Palin as a running mate and nonsense over lipstick and pigs.

The facts are that over the past two and a half decades, John McCain always has been a reliable vote in the Senate against equal pay legislation for women. The latest example is McCain's opposition to the Lilly Ledbetter Amendment.

The Ledbetter Amendment would have reversed the pernicious misreading of Title VII by a thin, conservative majority of the Supreme Court:

Lilly Ledbetter worked at a Goodyear Tire & Rubber Co. plant in Gadsen, Alabama, for 19 years. By the time Lilly retired as a supervisor, she was making $6,500 less than the lowest-paid male supervisor. When she made a claim for pay discrimination, the Supreme Court dismissed her case, telling her she should have filed her complaint within six months of the discrimination—even though she didn’t know she was being discriminated against at that point.

Ledbetter didn't "know" she was being paid less than men for equal work because the employer hid its pay scale and threatened to fire employees who disclosed their pay to each other. Since 1973, every federal court in the land recognized that in such circumstances the six month statute of limitations for Equal Pay violations was tolled, or suspended, until the female victim learned of the discrimination. Bush's conservative appointments to the Supreme Court overturned that precedent last yrar.

The "Ledbetter Amendment" would have corrected the court's misreading of the law. John McCain openly opposed the amendment. As the Associated Press and USA Today reported back in April, " Republican Sen. John McCain, campaigning through poverty-stricken cities and towns, said Wednesday he opposes a Senate bill that seeks equal pay for women because it would lead to more lawsuits."

McCain is no advocate of women's equality in the work place. Barack Obama's campaign has the facts exactly right -- complete with footnotes! -- in this latest ad:

McCain Jilted by Journalist Lover

Richard Cohen, NYT:

I am one of the journalists accused over the years of being in the tank for McCain. Guilty. Those doing the accusing usually attributed my feelings to McCain being accessible. This is the journalist-as-puppy school of thought: Give us a treat, and we will leap into a politician's lap.

Not so. What impressed me most about McCain was the effect he had on his audiences, particularly young people. When he talked about service to a cause greater than oneself, he struck a chord.
* * *
McCain has soiled all that. His opportunistic and irresponsible choice of Sarah Palin as his political heir -- the person in whose hands he would leave the country -- is a form of personal treason, a betrayal of all he once stood for. Palin, no matter what her other attributes, is shockingly unprepared to become president. McCain knows that. He means to win, which is all right; he means to win at all costs, which is not.
* * *
McCain lied about his lying and maybe thinks that if he wins the election, he can -- as he did in South Carolina -- renounce who he was and what he did and resume his old persona. It won't work.

More about the serial liar...

Investment Advice in Hard Times

What to do with your money when no one trusts the U.S. financial system? Diversify, diversify, diversify. Use lots of different mattresses.

Reform Begins Right Behind You, John McCain

On the same day Lehman Brothers declared bankruptcy and A.I.G. Insurance looked very much like a goner, all because of Wall Street's shenanigans with toxic derivatives, John McCain appeared before a modest crowd in Jacksonville, Florida. He "struggled Monday for a consistent economic message in the face of the weekend's Wall Street meltdown," the Washington Post's daily campaign diary reports.

In what sounds very much like a confession, McCain promised to "clean up Wall Street" and vowed "we will never put America in this position again."

Who do you suppose that "we" is? Before you answer, look who had McCain's back:

Sitting behind McCain was former Gov. Jeb Bush, who was hired a year ago by Lehman Brothers as a financial consultant. As governor, Bush served on the three-member State Board of Administration that agreed to let the state's retirement fund buy a series of questionable mortgage-backed bonds from Lehman Brothers. The subsequent steep drop in value prompted a $9 billion run on the fund last December by local governments who had invested their money in the SBA managed fund.

If this is the "straight talk express" we'd like to get off, now, please.

Dept. of Amplification

Jeb Bush Shagged Florida
12-10-07

Ike Retrospective on Pensacola Beach

Hurricane Ike came not much closer than 250 miles from Pensacola Beach. Even so, it did appreciable damage and caused the deaths of two men.

Check out the impressive "high water mark" photos of Barrier Island Girl, our own answer to Dorothea Lange.

A five foot water surge with pounding waves eroded an estimated 70,000 cubic yards of beach sand. That's a mere fraction compared with Hurricane Ivan in 2004, but it isn't yet known if a calmer Gulf will bring it back. Jacksonville coastal engineer Al Browder told the PNJ "if the sand remains in less than 13 feet of water, it likely will come back to shore."

"As long the sand isn't pulled past the primary sandbar, it can return to the shore," Browder said. "That's the island's natural process. But it takes time for the beach to recover."

Tragically, one man drowned and another died after being rescued from the rip currents left in Ike's wake. Both apparently got in trouble when they tried to rescue other swimmers.

Two men died after incidents near Fort Pickens gate on Sunday after being pulled from turbulent rip currents in the Gulf. At least 15 others were rescued across Pensacola Beach on a day that saw yellow flags and 2- to 3-foot waves.

The first death occurred after a man caught in a rip current was pulled from the water about 4:30 p.m., said head life guard Dave Greenwood.

The 40-year-old man appeared to be fine after the rescue and was walking and responding normally, said Bob West, director of Public Safety for Santa Rosa Island Authority.

The drowning victim was a "Brother Gomez," part of a local Jehovah's Witness group who came to the beach after Sunday services. Gomez entered the water to aid others who were yelling for help. "Escambia County Fire Rescue personnel on Waverunners found the 53-year-old man in the water after about 20 minutes of searching... ."

Both victims were swimming at Fort Pickens Gate, which the Island Authority has left without lifeguards since the end of the summer season.

Subsidiary Shenanigans

When mega-insurance companies want a rate increase, they invariably pretend that their wholly-owned subsidiaries are entirely independent companies and state regulators shouldn't be allowed to look at the parent corporation's books. On the other hand, when the parent is desperate for money to stop its stock price from free-falling, guess where it finds it? You guessd it!

It only looks like A.I.G. is borrowing from itself. In fact, what it is doing -- just days after the 9-11 anniversary and two tropical storms whose destruction reached almost as far north as the city -- is reducing the cash reserves New York's state insurance regulators originally considered would be necessary in the event of a natural or man-made disaster.

Insurance company going broke under the regulatory rules? Simple solution: change the rules! Only the insurance company's customers will be at risk.

Shadow Banking and You

Friends and relatives have been calling and emailing us today to ask if their personal bank accounts are safe. The short answer is -- probably. It depends on the totals and how you have structured the ownership of each account.

We noted this once before and linked to the FDIC on-line calculator, right here.

From the point of view of individual consumers who have personal or business bank accounts, it's the availability of FDIC insurance and regulatory oversight that are two of the more important distinctions between commercial banks and what has come to be known as the "shadow banking system" of investment banks like Bears Sterns and Lehman Brothers. From a consumer viewpoint, insurance and regulatory oversight limit the consequences of this latest Wall Street crisis. From the viewpoint of Wall Street's shadow banks, it was the absence of regulation that contributed to their undoing.

Floyd Norris at the New York Times has a useful summary emphasizing this point:

Those who were complaining, only months ago, that excessive regulation was making American markets uncompetitive, had it exactly wrong. It was a lack of regulation of the shadow financial system and its players that allowed this to happen. The regulators might not have gotten it right if they had tried to put limits on leverage, or assure that it was clear what risks were being taken, in the world of derivatives and securitizations. But deciding not to even try, and assuming that risks traded secretly would somehow end up in the hands of those most able to bear them, reflected ideology, not analysis.

The failure of shadow banks, it needs to be said, can ultimately shake commercial banks, too, and even lead to their demise. Indeed, that is why many were alarmed last week when it became known, as reported in Insurance Daily, that Berkshire Hathaway "stopped selling private bank deposit insurance above the amount guaranteed by the U. S. government."

Does Warren Buffett foresee the current financial crisis spilling over into what some misleadingly call the "real economy?" Only he knows for sure. But it's worth recalling that in his 2002 Letter to Shareholders of Berkshire Hathaway, Buffett presciently predicted the current crisis in the "shadow banking" system. He also observed at the time that "real economy" companies and banks are linked to shadow banks "in ways that could cause them to contemporaneously run into a problem because of a single event."

One hopes Mr. Buffett is wrong. But it would be foolish to bet against the richest man in the world.

"Too Big to Fail" Fails

"The implications of one of the 'too big to fail' institutions being allowed to fail is incredibly difficult to grasp, but suffice to say that a huge number of firms and securities are going to get affected."

-- Bloomberg News, Sept. 15

On CNBC overnight, European financial wizards actually were wondering, "how much money does the FED have left?" As much as half the Federal Reserve's $700 billion financial cushion was eaten up saving Wall Street from its own excesses, they say, before today's news that Merrill Lynch is disappearing, Lehman Brothers is filing for the biggest bankruptcy in U.S. history, mega-insurance company A.I.G. is begging the FED for a $40 billion loan, and the FED has announced that for the first time ever it will take just about any ol' common stock as loan collateral from shaky financial institutions.

Of the five largest investment banks on Wall Street at the start of the year, two are left. Commercial bank consolidations have been going on for some time. Insurance company mergers, too. Given the Bush administration's negligent enforcement of anti-monopoly laws, it's not too fanciful to imagine that soon we'll wind up with one gigantic Financial Corporation, Inc. financed by the taxpayers for the profit of a few owners.

"We're all communists now," says Duncan Black. Funny, but not quite true.

Not yet, anyway. What the Bush administration is doing isn't socializing the economy. It's doling out our money in welfare payments to Wall Street gamblers who lost big, stupid bets; it's accelerating the anti-competitive merger of financial institutions; and it's wrecking the already anemic dollar.

It will take a generation or longer to clean up the economic mess left by the Bush administration. Which reminds us of a bit of darkly funnny dialogue in the latest Coen brothers movie, Burn After Reading, a film one reviewer accurately describes as "a crazy-quilt comic thriller that takes on our growing national stupidity in the form of a sex farce."

"What have we learned?" a befuddled CIA desk man asks his equally befuddled boss near the end of a long chain of improbable disasters.

"What we have learned is not to do it again," the boss replies.

What makes that funny is the certainty you feel that they will do it again.

Small-time Small Town

"The universe of the mayor of Wasilla is sharply circumscribed even by the standards of small towns, which limited Palin's exposure to issues such as health care, social services, the environment and education."-- WaPo, Sunday Sept. 14

We grew up in a tiny town very much like Wasilla. The mayor was a deadbeat and an outrageous liar. The town constable was a drunk. The city clerk was, sadly, a chronically abused wife who could not type or alphabetize files. The school principal was a religious nut who wouldn't even let the school nurse clean the blood off his own child when she fell, face-forward, ten feet from a swing to the rocky playground below.

Voters, and those those the voters elected, returned every one of them to office, year after year.

The notion that running such a place qualifies anyone for national office is absurd.

Waiting for Smoke

Paul Krugman:

Remember, if it’s black smoke, they haven’t chosen a Pope come up with a deal for Lehman; if it’s white smoke, they have.

Four Fraudulent Sentences

The Miami Herald today takes a look at how Florida became the nation's No. 1 venue for mortgage fraud -- and one of only three states in the country that offer "No Help for Mortgage Fraud Victims." It's part of a larger series of articles the Herald has been running called "Borrowers Betrayed."

As forty-seven other states do even now, Florida "once offered a program to reimburse people scammed by rogue mortgage brokers -- the money coming from licensing fees." But by the early 1990's fraudulent practices by "rogue" mortgage brokers who were licensed to do business by the state had become so common that the fund was running low.

A legislative task force dominated by real estate experts recommended reforms that would have preserved the self-sustaining fund and kept it financially healthy. Even the mortgage industry supported those reforms.

However, then-state Finance Director Randall Holland and then-Pensacola state senator W.D. Childers added "four sentences" to a bill "that effectively killed the Mortgage Brokerage Guaranty Fund."

It's quite clear Holland and Childers gutted protections for consumers purely for ideological reasons. They simply did not believe it is "a function of government" to protect people from the very con men the state government was licensing to do business.

Holland now lives in Las Vegas and claims he is making his living "as a professional poker player." Childers, of course, is still in jail after being convicted on corruption charges.

We sense there's a lesson in all of this, somewhere.

Ike Blows Astros to Milwaukee

Chicago Sun-Times via Bleed Cubbie Blue:

Minute Maid Park in Houston avoided serious damage and has been deemed playable, but not even Astros officials suggest any longer that games should be played amid the hardships area residents are enduring in the aftermath of Ike.

"We’d hate to play our game in Houston if there’s still lots of suffering in the city,’’ McLane told the Houston Chronicle. "We could get out and play somewhere else. We don’t want to play a game if folks are stressing with their homes. The safety of our fans is most important."

Astro fans can buy their tickets here.

Assessing Ike Damage

Bryan at Why Now? has the early assessment of damage from Hurricane Ike in the Galveston-Houston area.

Hurricane Ike Live TV

Ike Just Before Landfall

Houston Chronicle:

By 10 p.m. this [Friday] evening, the massive Ike loomed about 55 miles southeast of Galveston with maximum Category 2 winds of 110 mph. It's moving west and northwest at 12 mph. Weather forecasters predict Ike may grow into a weak Category 3 hurricane by the time it makes landfall between 2 a.m. and 4 a.m. Saturday.

Ike's massive size is expected to bring a storm surge of at least 25 feet at landfall.

NHC Advisory, 11 pm:

MAXIMUM SUSTAINED WINDS ARE NEAR 110 MPH... 175 KM/HR... WITH HIGHER GUSTS. IKE IS A STRONG CATEGORY TWO HURRICANE ON THE SAFFIR-SIMPSON SCALE AND COULD REACH THE TEXAS COAST AS A CATEGORY THREE... MAJOR HURRICANE... JUST BEFORE LANDFALL.

NHC Discussion, 11 pm:

SHORT TERM EXTRAPOLATION WOULD PLACE THE CENTER OF IKE ALONG GALVESTON ISLAND AND/OR THE UPPER-TEXAS COAST SHORTLY BEFORE SUNRISE SATURDAY MORNING. AFTER LANDFALL... IKE IS EXPECTED TO CONTINUE MOVING AROUND THE WESTERN PERIPHERY OF A SUBTROPICAL RIDGE SITUATED EAST-WEST ALONG THE NORTHERN GULF COAST AND TURN NORTHWARD IN ABOUT 12-18 HOURS...AND THEN RECURVE RAPIDLY TO THE NORTHEAST BY 24 HOURS AHEAD OF A FAST APPROACHING FRONTAL SYSTEM. BY 36-48 HOURS...
* * *
IKE STILL HAS ABOUT A 6-HOUR WINDOW OF OPPORTUNITY TO STRENGTHEN INTO A 100-KT MAJOR HURRICANE. EQUALLY IMPORTANT...HOWEVER... IS THE EFFECT THAT STRONGER WINDS ALOFT WILL HAVE ON HIGH RISE BUILDINGS. WIND DATA FROM LAND-BASED DOPPLER RADARS AND AIRCRAFT DROPSONDES INDICATE THAT WINDS NEAR CATEGORY 4 STRENGTH... 115 KT OR 130 MPH ... EXIST JUST A FEW HUNDRED FEET ABOVE THE SURFACE. THERE COULD BE A REPEAT OF DAMAGE TO WINDOWS IN HIGH RISE STRUCTURES SIMILAR TO WHAT OCCURRED DURING HURRICANE ALICIA IN 1983.

New Orleans Times-Picayune:

Storm surge from Hurricane Ike is causing widespread flooding in communities outside levees in the New Orleans area, however earlier reports of a levee breach in Plaquemines Parish were false.

Elsewhere in the state, surge from Ike has breached or overtopped levees in Terrebonne and St. Mary Parish.

Corpus Christie Caller:

The U.S. Coast Guard is searching for a 19-year-old male who was swept off the south Packery Channel jetty by high waves associated with Hurricane Ike Friday.
* * *
Witnesses and police said the missing man and a friend were walking along the jetty when the man was swept over by a wave. Long and Leal attempted to help the man’s friend get back onto the jetty when a large wave crashed into the trio. Both had visible cuts and bruises. Corpus Christi Fire Department carried the two injured men about a quarter of a mile where ambulances were waiting.

Pensacola News Journal:

Pensacola Beach officials said today water driven by Hurricane Ike are receding, but cautioned that strong surf presents a danger for swimmers.

Public Safety Director Bob West said water is no longer breaching the island at the entrance of Fort Pickens or along portions of the island east of Park East -- two of the hardest-hit areas on Thursday.

John McCain is a Liar

"The corporate media won't say it and the Obama campaign isn't saying it enough, so we're saying it loud and clear: John McCain is a liar."

-- Alternet, Sept. 12, 2008

John McCain has been brazenly lying to the American public during this election campaign. Repeatedly, as Isaac Fitzgerald and Tanya Ganeva have documented.

As we have observed before, presidential elections have consequences for our democracy. So, too, does the scurrilous way John McCain has been campaigning by trying to lie his way into the White House.

If the press won't call him on it, then every citizen who values our democratic form of government must. As John Hopkins ethics professor Hillary Bok ('Hilzoy') says:

I blame John McCain.
* * *
If you choose to sacrifice your principles for the sake of personal ambition, you can absolutely be blamed. I'm doing it right now.

We should, too.

Live TV from Houston

Try Houston's ABC affiliate--

KTRK-TV (ch. 13)

The experimental web site called Maroonspoon also is streaming four Houston TV stations -- simultaneously.

Ike Storm Story: Keystone Kop Rescue

Yesterday on Pensacola Beach a county deputy sheriff sitting on an ATV tried to warn young, fit, surfers near the Gulf Pier out of the water, made dangerous by Hurricane Ike. In all fairness, the deputy's heart was in the right place. But his head? Well....

Not surprisingly, the surfers wound up rescuing the deputy. Unfortunately for the deputy, two beach goers were armed with video cameras -- that latest Can't-Do-Without-It beach toy. Here's the whole story from two different perspectives:

iVert3 - Kop to the Rescue

Sharpshooter1220 - Surfers to the Rescue of the Kop

Hurricane Ike Threatens "Certain Death"

Hurricane Ike likely will make landfall late tonight or early tomorrow morning. "Certain death" faces anyone who remains at home in Galveston, Texas, a local NHC advisory said in Houston this morning.

The advisory paints a truly appalling picture of the devastation expected from Ike:

PERSONS NOT HEEDING EVACUATION ORDERS IN SINGLE FAMILY ONE OR TWO STORY HOMES MAY FACE CERTAIN DEATH. MANY RESIDENCES OF AVERAGE CONSTRUCTION DIRECTLY ON THE COAST WILL BE DESTROYED. WIDESPREAD AND DEVASTATING PERSONAL PROPERTY DAMAGE IS LIKELY ELSEWHERE. VEHICLES LEFT BEHIND WILL LIKELY BE SWEPT AWAY. NUMEROUS ROADS WILL BE SWAMPED... SOME MAY BE WASHED AWAY BY THE WATER. ENTIRE FLOOD PRONE COASTAL COMMUNITIES WILL BE CUTOFF. WATER LEVELS MAY EXCEED 9 FEET FOR MORE THAN A MILE INLAND. COASTAL RESIDENTS IN MULTI-STORY FACILITIES RISK BEING CUTOFF. CONDITIONS WILL BE WORSENED BY BATTERING WAVES CLOSER TO THE COAST. SUCH WAVES WILL EXACERBATE PROPERTY DAMAGE... WITH MASSIVE DESTRUCTION OF HOMES... INCLUDING THOSE OF BLOCK CONSTRUCTION. DAMAGE FROM BEACH EROSION COULD TAKE YEARS TO REPAIR.

Although Galveston itself is under a mandatory evacuation, authorities in Houston have announced only a voluntary evacuation for parts of Houston:

Harris County executive Ed Emmett told the Houston Chronicle that people who live on high ground should remain at home.

"Unless you are in danger of water coming into your house, and I mean storm surge, not rainfall, you need to stay put," he said.

In other words, "Hunker down, Houston."

Houston-based blogger SciGuy reports:

[I]t appears as if Houston remains on target to take a direct hit by Hurricane Ike. The official forecast has changed little other than increasing landfall intensity from 110 mph to 115 mph, at landfall.

At whatever strength Ike comes ashore, it's going to be a nasty, nasty storm for coastal dwellers in southeast Texas and southwestern Louisiana.

Here on Pensacola Beach, nearly 500 hundred miles east of Houston, the outermost band in Hurricane Ike's enormous windfield appeared to be passing overhead early this morning.

Winds and surf will be roiled for much of the day, although technically not approaching tropical storm conditions, much less anything like what the Houston-Galveston area will be seeing a few hours from now. Local street flooding has begun to recede somewhat from yesterday's high tide watermarks.

Dems Cave on Drilling But Exempt Florida

So, once again we see the national Democratic Party "reluctantly" caving in to terrible ideas from White House and congressional Republicans, purely out of fear that "the political climate rendered it impossible to try to retain the [near-shore oil] drilling ban this year." By "political climate," they mean you, dear Americans, who insist "something" must be done about gas prices even if that 'something' is very stupid.

The one saving grace is that House majority leader Nancy Pelosi (D-CA), who announced the change in Democratic party position even though she is a long-time vigorous opponent of expanding offshore drilling, apparently intends to see that the Florida panhandle remains protected:

The emerging deal on a compromise energy bill would forbid drilling within at least 125 miles of the Gulf coast of Florida.

It also would preserve the ban on drilling on the east side of what is called the ``military mission line,’’ which runs south from Pensacola. That line marks an area where aircraft training takes place and drilling is discouraged.

The military mission line pushes back drilling as much as 230 miles from much of Florida’s Gulf Coast. The net result is a big no-drill-zone extending at least 125 miles from the Florida Panhandle and is much broader elsewhere.

That would be good news for the people and businesses of the Florida Panhandle, but bad news for panhandle congressman Jeff Miller (R-Chumukla), who has been doing everything he can to put oil rigs just off Pensacola Beach. Still, one can't get one's hopes up too much.

Having betrayed the nation and its own party principles by repeatedly enabling Gorge's Bush's efforts to fund the Iraq War of Choice, endorsing torture, and eroding our Constitutional freedoms, it's hard to trust Democrats -- especially when they know expanded drilling won't do a thing for gas prices at the pump.

We'll be pleased to see Pensacola Beach exempted from drilling if the Pelosi compromise comes to pass. But it is transparent that the congressional Democratic leadership changed positions not out of a principled conviction that they weren't right in the first place to oppose off-shore drilling, but out of abject political fear that you, the voters, aren't smart enough to realize it.

With an opposition party like this, to whom principles are only a sometime thing, how long can the Democratic Party be trusted to continue protecting even Pensacola Beach?

Navy: 'Houston, You Have Two Problems'

UPDATED BELOW One problem facing Houston is Hurricane Ike, predicted to become a Category 3 or 4 storm by landfall near coastal Houston.

Authorities in the Houston area and along the Southeast Texas Gulf Coast ordered hundreds of thousands of people to evacuate Thursday as Hurricane Ike lumbered toward the coast and threatened to grow even stronger.
* * *
"It's a big storm. I cannot overemphasize the danger that is facing us," Gov. Rick Perry said at a news conference. "It's going to do some substantial damage. It's going to knock out power. It's going to cause massive flooding."

The other problem is an idiot named Drayton McLane. He's one of the 400 richest men in America and happens to be the owner of the Houston Astros baseball team. McLane apparently is insisting that the Chicago Cubs fly into Houston late tonight -- while everyone with any sense is leaving the city -- in order to play tomorrow night's scheduled game in the Minute Maid Dome, or whatever corporate name that monstrosity may be advertising this week.

Chicago Tribune sports writer Phil Rogers has it right:

Huh? Isn't this just a little absurd?

While the lateness of the season dictates this series has to be played, there's no way it should remain in Houston, no matter how loudly McLane argues that his team deserves home-field advantage as it tries to stay alive in the wild-card race.

There are 15 major-league parks that will sit empty this weekend, including Wrigley Field.

The series should be moved to a neutral site—say, Busch Stadium in St. Louis or Turner Field in Atlanta—if McLane and Selig aren't agreeable to the Cubs getting three extra home games in the middle of the playoff race.

As Rogers also points out -- no surprise, here -- for McLane it's all about money. Saving human lives doesn't impress him:

The Astros expect three sellouts, bringing in revenue to help underwrite their $90 million payroll, and will be forced to refund money if the games aren't played.

"Greed trumps safety," as Cubbie fan Bob Warja says. If MLB commissioner Bud Selig doesn't, at long last, stand up to this imperious baseball club owner and order a storm-safe solution, he ought to be stripped naked and tethered to the center field flagpole in Houston for the entire three game series.

UPDATE
9-11 pm

Bleeding Cubbie Blue authoritatively reports that Friday's game in Houston was postponed late today.

Quietwater Flooding on Pensacola Beach

The videos are, you might say, flooding in now. Although Hurricane Ike is almost two hundred and fifty miles southwest of Pensacola Beach, the storm's large wind field is, as predicted, causing spotty flooding problems from unusually high tide waters in the Pensacola area.

Lucky for you, the News Journal has sent Sean Dugas into the eye tail end of the storm, where things look, at worst, like a mild rain has fallen but Sean is safe:

Ike Satellite View

Pensacola Beach "Ike" Flooding

Filmed by Jacecan (someone please call the school truant officer):

In addition, the usual suspects are closed due to rising water, from the 17th Street railroad underpass in Pensacola, to Coral Strip Pkwy in Gulf Breeze, to Highway 98 from Ft. Walton to Destin. Almost everywhere land is within five feet of the high tide line, flooding water can be seen.

The PNJ has another short video of flooding on a part of Panferio.

9-11 Question

Northwest blogger Bryan Dumka at Why Now? asks "Why?"

Coastal Ike Warning for Panhandle Florida

Although Hurricane Ike is headed for a landfall in Texas, NOAA has issued weather warnings for coastal Escambia, Santa Rosa, and Okaloosa counties in the Florida panhandle and along the Alabama coast.

Wind warning:
AS HURRICANE IKE CHURNS WESTERLY THROUGH THE CENTRAL GULF THE OUTER FRINGES OF ITS WIND FIELD WILL HAVE AN IMPACT ON THE COASTAL SECTIONS TODAY. EASTERLY WINDS ARE EXPECTED TO INCREASE LATER THIS MORNING... ATTAINING SPEEDS OF 20 TO 30 MILES AN HOUR WITH GUSTS AS HIGH AS 40 MPH OVER THE COASTAL SECTIONS. WINDS ARE EXPECTED TO REMAIN UP OVERNIGHT... DIMINISHING DURING THE DAY FRIDAY.

Coastal Flood Warning:
AS IKE MOVES ACROSS THE GULF... LARGE SWELLS WILL PROPAGATE NORTHWARD AND IMPACT THE GULF COASTAL BEACHES OF ALABAMA AND THE WESTERN FLORIDA PANHANDLE THROUGH FRIDAY. EASTERLY WINDS WILL INCREASE LATER TONIGHT AND BECOME SOUTHEAST ON THURSDAY. THE COMBINATION OF THE LARGE SWELLS AND STRONG WINDS TAKING ON A MORE ONSHORE DIRECTION WILL RESULT IN TIDES SEVERAL FEET ABOVE PREDICTED LEVELS AND THE POTENTIAL OF COASTAL FLOODING.
***
TOTAL TIDE HEIGHT OF 2 TO 4 FEET WILL CAUSE STORM WATER RUN UP FROM FORT MORGAN TO ORANGE BEACH. OVER THE WESTERN FLORIDA PANHANDLE... THESE TIDAL HEIGHTS WILL BRING WATER ACROSS PARTS OF PENSACOLA BEACH AND FORT PICKENS. IN OKALOOSA COUNTY... OKALOOSA ISLAND AND HOLIDAY ISLE WILL ALSO BE SUBJECT TO FLOODING.

Parts of Dauphin Island and the long Highway 90 bridge over Mobile Bay also are expected to experience flooding.

Love Among the Ruiners

WaPo, the New York Times, the AP, and most especially the Denver Post, which was onto the story a month ago, this afternoon are full of the news that the Inspector General of the U.S. Department of Interior has issued three comprehensive reports detailing how oil company executives and top-level employees of the agency supposedly regulating them -- Mineral Management Services (MMS) -- screwed each other, literally, while screwing the public.

Pensacola area residents will recognize MMS as the agency that recommended granting near-shore oil and gas drilling leases off Pensacola Beach to Chevron and other major oil companies several years ago. Only Congress now stands in the way of those leases becoming operative.

"Wide Ranging Ethics Scandal Emerges at Interior Dept." reads the headline at the New York Times. "Gov't Officials Probed About Illicit Sex, Gifts," headlines the right-of-center Washington Post. "Drill, Baby, Drill" mocks Duncan Black at Eschaton. "Sex, Drugs, Energy Deals Probed at Denver Interior Office," adds the Denver Post.

Even the most lurid headlines cannot come close to matching the seamy, grotesque, self-dealing, and criminal misbehavior detailed over nearly 100 pages in Inspector General Earl Devaney's three full reports, available here ... here... and here. [pdf files]. As a cover letter from the Inspector General puts it --

The single-most serious problem our investigations revealed is a pervasive culture of exclusivity, exempt from the rules that govern all other employees of the Federal Government.

So, too, apparently does Chevron Oil Company share in that opinion that it's above the law. The Inspector General's reports repeatedly state that Chevron refused to cooperate with any aspect of the investigation.

Charlie Savage at the Times has a helpful overview of the latest scandal in the Bush administration:

[T]he Interior Department agency that collects oil and gas royalties has been caught up in a wide-ranging ethics scandal — including allegations of financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct.

In three reports delivered to Congress on Wednesday, the department’s inspector general, Earl E. Devaney, found wrongdoing by a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually and is one of the government’s largest sources of revenue other than taxes.

“A culture of ethical failure” besets the agency, Mr. Devaney wrote in a cover memo.

The reports portray a dysfunctional organization that has been riddled with conflicts of interest, unprofessional behavior and a free-for-all atmosphere for much of the Bush administration’s watch.

* * *

[T]he report alleges that eight royalty-program officials accepted gifts from energy companies whose value exceeded limits set by ethics rules — including golf, ski and paintball outings; meals and drinks; and tickets to a Toby Keith concert, a Houston Texans football game and a Colorado Rockies baseball game.

The investigation also concluded that several of the officials “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.”

The investigation separately found that the program’s manager mixed official and personal business, and took money from a technical services firm in exchange for urging oil companies to hire the firm. In sometimes lurid detail, the report accuses him of having intimate relations with two subordinates, one of whom regularly sold him cocaine.

One MMS official already has pleaded guilty to felony charges and is scheduled for sentencing in November. Devaney's report also recommends criminal charges be brought against another MMS official who left to join a start-up company he favored while still employed by the Interior Department. Several others may be fired and banned from similar positions for life.

But does this sound familiar?

[T]wo of the highest-ranking officials who were targets of the investigations will apparently escape sanction. Both retired during the investigation, rendering them safe from any administrative punishment, and the Justice Department has declined to prosecute them on the charges suggested by the inspector general. [emphasis added]

Shades of Abu Grahib, Gitmo, Cheney, and George W. Bush. It is a hallmark of this administration that the higher the executive, the more likely he is to escape any accountability.

And now Northwest Florida's only congressman, Jeff Miller, wants to remove the congressional ban on drilling and give the go-ahead to drill off Pensacola Beach to this agency and Chevron Oil Co.?

It's no secret who Miller is planning to screw. Look in the mirror.

PNJ Design Changes

Jim Hopkins' Gannett Blog, which follows the fortunes and travails of one of the smaller but equally oppressive media giants stalking the planet, has an article taking note of the new front page design the Pensacola News Journal is using for its "single copy" kiosk machines. As in days of old, the front page you see on the street is substantially different from the home subscriber edition.

Hopkins explains:

In today's design debut, the top half of the front page -- which is what would-be readers see in a newspaper vending-machine's "window" -- looks more like a features front. Three "stories" there are really summaries of articles on inside pages.

In other words, it looks a lot like the on-line mess the PNJ recently adopted -- busy, busy, busy, but clumsy to use. The thinking is that with this design, attention-deficient young people will be more likely to buy the paper on the street.

One hopes so. Something surely is needed if the traditional press is to survive.

However, we remain skeptical that mere design changes can do much to hike News Journal readership. Most of the young people we know not only do not read newspapers, they don't even think about reading newspapers. It just isn't on their mental radar. It's doubtful they even look at a newspaper kiosk after they stumble over one. The dead tree press is as alien to most young people as short wave radio, rabbit ears, and vinyl records. (We actually overheard a 20-something asking the other day, "What's an LP?")

We happened to be up early enough the other morning to see our newspaper delivery "boy" (he looks like he's about three hundred years old) driving down the street. Out of perhaps 20 front doors, he delivered a newspaper to exactly two homes. Even if he missed a couple of subscribers (a 50% success rate is good for this guy) that's fairly shocking.

Now, we don't pretend to any special knowledge about journalism or how to commercially promote it. But it seems to us that daily newspaper reading is a consuetude learned at an early age in the home, in school, and at work. Once learned, it becomes a habit for life.

Therefore, parents, teachers, coaches, and other mentors of the young are key. To be successful, apart from superficial design changes, newspapers need to embark on a more comprehensive, long-range strategy to inculcate daily newspaper reading in the young, once again, by working with (and through) their role models.

Partner with the schools (and pre-schools), teachers, and librarians, as Apple Computers did, even if it means distributing free papers in the classroom or on the library shelves. Integrate daily newspaper reading in the "reading is fundamental" program that has the attention of so many young parents these days. Newspapers are written at a fourth or fifth grade reading level, right? So, go get 'em!

The public perception that reading newspapers is a passive activity for the reader needs to be changed, too. In this, newspaper journalism has been its own worst enemy. Except for a few cranks and nursing home residents who regularly scratch out letters to the editor or post semi-insane comments on-line, the pages of newspapers today are written by self-proclaimed "professional journalists." Most of them, don'cha know, have an academic degree with a major in journalism to prove it.

What nonsense. The multi-decades long effort to 'professionalize' what used to be known as the journalism trade has a lot to do with the current crisis newspapers face. If the daily newspaper is to survive, it needs to abjure the conceit that only professional journalists can write it.

Enlist coaches and their young players in reporting sports news. Canvass schools for student clubs -- from Chess to Home Ec and Drama Club to the Zoology geeks -- to find ways of integrating their members in the production of news. Not just their own news, but the news the rest of the population wants to know, too.

If it were up to us, we'd encourage young people not only to write for the newspaper, but to talk about it, too, in Twitter and cell phone text messages, for example. Some newspapers these days produce on-site news and feature studio programming -- say, two- or five-minute spots tied to the daily newspaper's content-- and offer it for free to local electronic media like radio and television stations. Where they go wrong is they use it as a perq for only the "professional" editors and star reporters, if any are left. To be truly interactive, production of audio clips and tapes and round-robin text messages ought to include the very young people who are contributing to the daily paper's content.

Transforming the daily newspaper into something more meaningful for the young, as well as something that resembles an interactive experience, could cost more jobs among the "professional" journalism set. But it just might save the daily newspaper itself.

Ike in the A.M.

Ike is again a Category 3 hurricane, restrengthening now that it is back over open water. NHC reports, "Hurricane force winds extend outward up to 35 miles... from the center... and tropical storm force winds extend outward up to 175 miles. "

NHC forecaster "Avila" says in the morning discussion that Ike will "continue on a general West-Northwest track for the next tree days." He means, of course, three days. There are no trees in open water. We can hope Avila reads charts better than he spell-checks.

He concludes:

MOST OF THE GUIDANCE SUGGESTS THAT THE NORTHWARD TURN WILL OCCUR AFTER THE CYCLONE IS ALREADY INLAND.

I HAVE HIGH CONFIDENCE IN THE 24 TO 48 HOUR FORECAST TRACK SINCE GUIDANCE IS TIGHTLY CLUSTERED. THEREAFTER...THE CONFIDENCE IS NOT SO HIGH BECAUSE THE MODELS ARE MORE SPREAD OUT... BUT THEY ALL BRING THE HURRICANE ASHORE ALONG THE TEXAS COAST IN ABOUT THREE DAYS... AND SO DOES THE OFFICIAL FORECAST.

Houston, you have a problem.

Ike Enters Gulf, Still Aims for Texas

Hurricane Ike has entered the Gulf of Mexico after devastating much of Cuba. The latest storm path projections appear aimed at Houston. The Houston Chronicle reports:

Forecasters said Ike, which has already killed at least 80 people in the Caribbean, could strengthen into a massive Category 3 storm before slamming into Texas or Mexico this weekend.

In the late afternoon discussion, National Hurricane Center forecasters say --

THERE HAS BEEN A SIGNIFICANT NARROWING IN THE SPREAD OF THE
LATEST MODEL RUNS... WITH THE GFS... GFDL... AND NOGAPS ALL SHOWING LESS RIDGING TO THE NORTH OF IKE LATE IN THE PERIOD AND SHIFTING THEIR TRACKS NORTHWARD TO BE IN BETTER AGREEMENT WITH THE UKMET AND ECMWF RUNS.

Translation: There's a good possibility, now, that Houston or points east of there may be hit by the hurricane's eye, rather than closer to the Mexican border.

IKE IS NOW EXPECTED TO RECURVE AROUND THE PERIPHERY OF THE SUBTROPICAL RIDGE NEAR THE END OF THE FORECAST PERIOD. THE OFFICIAL FORECAST IS ADJUSTED NORTHWARD ON DAYS FOUR AND FIVE... BUT ALL OF THE BETTER DYNAMICAL MODELS ARE EVEN FARTHER TO THE RIGHT.

Withe the long-range models wavering East and West and East again, as they have been, Ike still bears watching by everyone along the Gulf Coast.

Tex-Mex Landfall for Ike Predicted

It's still very early in the forecasting cycle for Hurricane Ike, but by midday Tuesday the various computer models are coming into close agreement, as FortBendNow.com in Texas reports:

Hurricane Ike is forecast to strengthen significantly as it enters the Gulf, but computer forecasting models no longer show the storm hitting shore near Galveston.

The four of the six major forecasting models used by the National Hurricane Center now show Ike coming ashore early Saturday at or south of Corpus Christi. Two show the storm hitting the northern Mexico coast.

Here's what the Navy meteorologists have to say:

The Tex-Mex border near Harlingen is a fast-growing area with many densely-populated colonias along the Mexican side of the border. If Hurricane Ike strikes near there, it could result in much hardship and loss of life.

"Walking with the Wind"

The other day we mentioned that Congressman John Lewis was the featured speaker at the opening of Barack Obama'a Northwest Florida campaign office. That day, he shared with the crowd an amusing childhood memory about his aunt's "shotgun house" that seems particularly apt in this hurricane season.

Luckily, someone with the screen name of Dr.Barnes1 has preserved it for posterity on Youtube. (After some equally fascinating preliminaries, a rough transcript appears below the video):

Well, one Saturday afternoon about this time of day a few of my bothers and sisters and first cousins were out playing in Aunt Sheneva's dirt yard, and an unbelievable storm came up. The wind started blowing. The thunder started rolling. The lightning started flashing. And the rain started beating on the tin roof of this old shotgun house.

My aunt became terrified. She started crying. She thought the little old house was going to blow away. She got all of us little children in and we all started crying because we thought the house was going to blow away.

If one corner of this little house appeared to be lifting from its foundation, she has us walk over to that side to try to hold the house down with our bodies. If the other corner appeared to be lifting, she has us walk to that side. We were literally walking with the wind. But we never left the house.

I say to you, as volunteers, as staffers, as supporters of Barack Obama, you must never, ever leave the house. Just hold the house together. Let us stay in one house. It doesn't matter whether we're black or white or Hispanic or Asian American or Native American, we all live in the same house. We're one family, so stay together. Work for Barack Obama!

Sarah Palin's Per Diem

When an "an utter neophyte" like Sarah Palin is picked as a vice presidential candidate, many challenges confront the voters, or at least voters of the kind who care enough to think through their choice. Many of those challenges in Palin's case arise from the fact that the neophyte has had so little experience beyond being mayor of a tiny town.

For example, if she hasn't been put, much, in temptation's way how can we know if Sarah Palin is honest? She hasn't had the chance to steal big-time. But is there any reason to think she might, if elected?

Turns out there is. When in the small time, Sarah Palin was stealing small. According to the Washington Post:

Alaska Gov. Sarah Palin has billed taxpayers for 312 nights spent in her own home during her first 19 months in office, charging a "per diem" allowance intended to cover meals and incidental expenses while traveling on state business. The governor also has charged the state for travel expenses to take her children on official out-of-town missions.

Asked Monday about the official policy on charging for children's travel expenses, the Alaska state finance director, Kim Garnero, told the Washington Post: "We cover the expenses of anyone who's conducting state business. I can't imagine kids could be doing that."

Fudging on your per diem isn't a crime, exactly. But it is a window into the soul.

Ike to Strengthen, Head West

Ike is now a Category 1 Hurricane, but it's expected to restrengthen after it leaves Cuba late today and enters the Gulf of Mexico. All computer projection models (below) currently are calling for a landfall along the far western coast of the Gulf.

You might say the yellow goes for Texas.

The National Hurricane Center discussion says early this morning:

Ike has a large area of tropical storm force winds but the inner core or eye is very small but well defined... .the maximum flight level winds measured so far were only 69 knots..... Once over the Gulf of Mexico in about 24 hours... Ike will have plenty of opportunity to strengthen since the environment is conducive... and the hurricane will likely move over several areas of high heat content. The official forecast makes Ike a category 3 hurricane... .
* * *
The center should cross western cuba later today. Unfortunately... Ike is expected to move very near to where Hurricane Gustav crossed Cuba a week or so ago. ... Ike is expected to turn more to the northwest during the next 2 days or so as the ridge weakens due to the passage of a short wave. Thereafter... the ridge is forecast to restrengthen and should force Ike on a more westward track. In fact... unanimously...guidance shifted southward and once again the official forecast was adjusted to the left ...

As always, NHC reminds us, "one should not focus on 4 and 5 day forecast points since these can be subject to substantial errors."

Pensacola Motto

In the persistent wake of the disturbing Pensacola "Quality of Life" survey, today Reginald Dogan rushes to the city's defense with a great slogan:

At least it's not Detroit.

New Rule for Big Bail Outs

We're all in favor of Uncle Sam taking back Fannie Mae and Freddie Mac and their $5.2 trillion worth of mortgages. Uncle Sam never should have privatized them, anyway.

As award-winning business journalist Robert Kuttner explains over at Huffington Post, both corporations "began life as a government invention... and it worked beautifully until it was privatized." They should have stayed the way they were born.

Who screwed things up? Those geniuses on Wall Street who are always caterwauling about privatizing public functions, the superiority of the free enterprise system, and why they should be free of government regulation.

Now, Tuesday's WaPo is reporting that the bailout of Fannie Mae and Freddie Mac "threatens the financial health of several dozen of the banks that bought shares in the two companies... ." More whining from the overpaid captains of American capitalism:

Executives at some of those banks say they felt encouraged to invest in the companies because a federal agency, the Office of the Comptroller of the Currency, had classified shares in Fannie Mae and Freddie Mac as extremely low-risk investments.

So, are the taxpayers now expected to bailout the banks that got hurt? If so, what about all the others who gambled by buying Fannie Mae or Freddie Mac stock and lost? The brokerage houses... the insurance companies... the day traders... individual investors?

At least the Treasury Department had the grace to fire the CEOs at Freddie Mac and Fannie Mae for their bad judgment and book-cooking. We should embrace that as precedent for all future corporate bailouts using taxpayer funds.

Here's the new rule:

"You can't even ask for a handout unless, first, you fire all the executive bozos who drove you to disaster -- and get a full refund of the grotesque salaries and perks you paid them while they were doing it. Then, give us a call."

Drill, Drill, Drill

The Hill reports this afternoon that congressional Republicans are so insistent on granting oil drilling rights to the near-shore of Pensacola Beach, the Alaska National Wildlife Refuge (ANWR), and other coastal areas that they are threatening to block the reauthorization bill for the Department of Defense if they don't get their way.

Tarballs on Pensacola Beach. Can this possibly be the "right" direction for America voters want to endorse? Can anyone believe it will "cure" what ails the "quality of life" worries in Pensacola?

Enid Sisskin had a Viewpoint article in the PNJ about a week ago. As one of the few people in Northwest Florida who has studied the issue in all of its nasty details for more than a decade, she knows what she's talking about:

The cruelest part of the current "drill here, drill now" campaign is its dishonesty. Those pushing to open up every last inch of our coasts, including the Gulf Coast, to offshore drilling are giving false hope to people suffering because of high gas prices.

We are told that if we are only willing to risk our clean water, fisheries and economy — gas prices will fall. Unfortunately, this is a politically motivated hoax; even the Department of Energy admits that drilling in currently closed areas will have little, if any, effect on gas prices now or into the future.

In fact, DOE estimates that 80 percent of acreage with recoverable petroleum is already available for leasing, and oil companies are only drilling on 25 percent of the leases they already own.

In fact, the past eight years proved that opening more acreage to drilling does not reduce gas prices — 26 million acres were opened and the number of drilling permits issued annually doubled. In the past two years alone, 8 million acres were opened but did nothing to decrease gas prices.

However, even if the oil companies were allowed to drill in the closed areas, areas so special that up until now both Republican and Democratic administrations have continued to protect them, anything found would end up on the world market and, in comparison to current world oil use, would do little or nothing to decrease prices.

This would be little more than a gift to oil companies whose profits surpassed $44 billion in the past three months.

Why not drill? What have we got to lose?

Drilling, even with the newest technologies is still a dirty, risky business. Oil companies are allowed to legally dump tons of pollutants into the water in the form of drilling "muds," cuttings and produced waters. The Environmental Protection Agency has no idea what long-term effects these pollutants will have.

Tourism, one of this area's economic engines, depends on the perception of an area — and this area is perceived as clean, from our sugar-white beaches to our emerald-green water.

Then there are spills. There have been 148 spills of greater than 50 barrels (2,100 gallons) in the past 10 years, 13 of them greater than 1,000 barrels.

Based on historical spill events, residual water quality effects could last as long as two years after the spill. And if a spill were to reach our beaches, oil would persist in beach sands and could be released during storms and high tides. During hot, sunny days, tar balls buried near the surface could liquefy and seep into the sand surface.

Another fable, one that has been repeated almost as often as that of drilling off our shores will lower gas prices, is the one about hurricanes neither damaging offshore rigs nor spilling petroleum.

According to the Coast Guard and the federal Minerals Management Service, hurricanes Katrina and Rita damaged or destroyed 113 rigs and structures (one of which washed up on Dauphin Island) and 146 hurricane-related oil/condensate/chemical spills were reported, six of at least 1,000 barrels. There are still some seeps from damaged rigs, which the MMS estimates will continue until 2010.

If the problem is simply domestic supply, and increasing U.S. supply is the solution, then why is the United States sending record amounts of petroleum to more than 100 other countries? According to the DOE, every day we export 1.6 million barrels of petroleum.

Surely, before we risk drilling off our beaches, we should demand that at the very least that oil produced here, stays here.

For now, there are faster, cheaper, better solutions to high energy costs. The DOE, EPA and NASCAR all agree that keeping your car in good repair with your tires properly inflated will save you the equivalent of 12 cents per gallon — right now.

With car-pooling, synchronized traffic lights, higher CAFÉ standards and better public transportation we would save even more.

Instead of multibillion-dollar subsidies to the oil companies, give some of that money to citizens to pay for increased energy efficiency. And we need to invest in renewable energy sources, as even oilman T. Boone Pickens admits.

Other countries, including those sitting on most of the world's oil, are investing in solar and wind energy as well as some truly remarkable new technologies.

As we at Gulf Coast Environmental Defense been saying for years, "Rigs aren't worth the Risk." And as far as gasoline prices go, there's no reason to think otherwise now. To get information and take action, go to www.dontrigflorida.org.

Ike Clobbers Cuba; Keys Evac Lifted

UPDATED BELOW

Ike is a Category 2 hurricane at the moment, located about 165 nautical miles southeast of Key West, and moving at 14 mph. Naval Meteorologists report it has 12 ft. seas. The Navy's long-range 5-day forecast path now points directly at Galveston, Texas.

Florida Keys papers report this afternoon that --

The mandatory resident evacuation order for Hurricane Ike, set to expire at noon today, will not be extended * * *

The current track of Hurricane Ike takes the core of the storm well south and west of the Keys and sustained hurricane force winds should miss the island chain, meteorologists at the National Weather Service Key West office said.

A hurricane watch and a tropical storm warning continues for the entire Florida Keys, from Ocean Reef through the Dry Tortugas.

The National Hurricane Center's 2pm advisory reads in part:

THE CENTER OF HURRICANE IKE IS EXPECTED TO MOVE ALONG OR JUST SOUTH OF THE SOUTHERN COAST OF CENTRAL CUBA TODAY... MOVE OVER WESTERN CUBA TUESDAY...AND EMERGE INTO THE SOUTHEASTERN GULF OF MEXICO BY TUESDAY NIGHT.

MUCH UNCERTAINTY REMAINS REGARDING THE STRENGTH OF THE MID-LEVEL RIDGE WHICH BUILDS IN THE WAKE OF THE EXITING SHORTWAVE. ACCORDINGLY... IT IS STILL MUCH TOO SOON TO KNOW WHAT PORTIONS OF THE GULF COAST COULD BE IMPACTED BY IKE.

UPDATE
9-8 pm

NHC 4 pm [CDT] discussion: Ike has weakened over Cuba but likely will strengthen again. Due to a weakening of the low pressure ridge over the Midwest and another anticipated to strengthen in the Southwest, computer forecast models now are in"reasonably good agreement" that eventually Ike will be steered more westerly than previously expected.

Time Out for a Weather Media Joke

We'd like to dedicate this Onion video snag, below, to the intrepid Jim Williams of Hurricane City. Jim is truly a world class asset. On occasion he grows justly impatient with, and even owly about, those who at times seem to care more about their own ass than anyone else's. Happy birthday, Jim! Enjoy --


Hurricane Bound For Texas Slowed By Large Land Mass To The South

Hurricane Ike's Pasta Problem

Ike is pounding Cuba and Cuba is counter-attacking by weakening Ike to Cat-2 status. Meanwhile, the National Hurricane Center says early this morning "there has been no significant change to the forecast track."

That announcement, however, comes with a great big asterisk: there is no change in the forecast because the forecaster chose not to make one.

This offers the opportunity to remind everyone that the popular NHC 5-day forecast cone track (shown above), and the computer spaghetti tracking models on which it is based (shown below), are heavily dependent on human interpretations and just plain guessing. With computers, of course, it's always "garbage in, garbage out." With hurricane forecasting by humans, it also can be "spaghetti tracks out -- and then ignored."

That's what has happened this morning. NHC forecaster "Franklin" notes that --

Ike's trajectory is expected to bend gradually to the right as the storm nears a weakness in the subtropical ridge over the next couple of days... and the guidance models are tightly clustered through 72 hours.

Then he candidly discloses that three spaghetti models -- the GFS, GFDL, and HWRF -- "show a bend to the right at the end of the forecast period." Other models do not.

What to do in constructing the 5-day graphic forecast cone above? Confesses Franklin:

Even though the GFDL has performed very well with Ike so far... I've chosen not to adjust the track eastward given that the large-scale fields in the GFS have no support from the other models.

Data in, choices must be made. Some data is accepted, some is ignored -- like three of the spaghetti models shown here:

Franklin may be proved a genius or a fool, but at least he's honest. He ends with this warning: "It is still too soon to know what portion of the Gulf Coast will ultimately be affected by Ike."

Pensacola Quality of Life

That distressing "quality of life" survey we mentioned the other day gets the Full Monty in Sunday's Pensacola News Journal. There's even a lengthy pdf file you can download that summarizes the survey results, including the apparent wording of the questions themselves.

Reporter Rebekah Allen asks on the front page, "Is Paradise Lost?" She goes through a few shallow circles of hell in search of an answer, quizzing politicians, retired military men, and bartenders, among others. No teachers, though.

The editorial board, sounding a little like a candidate for president, proclaims "It's Time for A Change." Then it offers a somewhat weird laundry list of suggestions that ranges from the sublime (city-county consolidation and mandatory recycling) to the mundane ("move the sand and gravel off the port") to the downright harsh (retirees "need to be a percentage of our makeup, not a majority.") No suggestions for improving public education, however.

Carlton Proctor takes up the cudgels to argue for a "franchise fee" to fund the Chamber of Commerce in its economic development efforts. He doesn't mention the schools, either.

Even Mark O'Brien got in on today's act, peering backwards into his own private hell to reminisce about the hostile reaction he received from a certain city pooh-bah thirty years ago when a much younger O'Brien suggested in print that putting a sewer plant in the middle of downtown wasn't a very good idea. "Guess what?" Mark asks rhetorically. The pooh-bah is still "a mover and shaker."

Of course, Mark doesn't mention that particular idiot by name. That would be too un-Pensacola. But you can be sure it wasn't a teacher.

The odd thing in all of this hoopla-la, if you get our drift, is that more than two thirds of all respondents to the survey found the quality of Pensacola public schools is "poor." Fifty-seven percent expect the quality of schools to deteriorate over the next five years. Fully one-half of those surveyed say it's likely they'll move away in the next five years because of "poor educational opportunities" for themselves or their children. Yet, no one at the newspaper seems to think that's important enough to address with suggested solutions.

Education is the cornerstone of success, as some school, somewhere, proclaims as the theme of its graduation ceremony every year. It's a cliche, but it's true. Without good schools no city in the world -- certainly none that we know of -- has successfully attracted job-creating industries, large numbers of young adults, or the kind of leaders Quint Studer, the News Journal, the Chamber of Commerce, and others who are wringing their hands over the "quality of life" survey say they want.

Pensacola public schools are for the most part miserable institutions. If the city movers and shakers really want change, that's the place to start.

Obama Opens NW Florida Office

The Northwest Florida campaign office of Democratic presidential candidate Barack Obama was opened officially in Pensacola yesterday afternoon. As many as 1,000 locals stopped by over the two and a half hour opening ceremonies.

Some inspected the spacious two-story headquarters at 321 DeVilliers Street. Others grazed the sidewalk tables to collect campaign buttons and posters. Still others met with Obama campaign officials to volunteer for the local voter registration drive.

Congressman John Lewis (D-Ga.) addressed an enthusiastic crowd of about 400 who crowded into the windowless hall of a nearby jazz club, which was turned meeting room for the occasion.
As Louis Cooper reports in the PNJ, Rep. Lewis is a civil rights icon who was "an architect of the historic 1963 March on Washington and a veteran of the 'Bloody Sunday' clashes in Selma, Ala. in 1965."

Lewis spoke primarily about the importance of registering voters before the coming election and working hard for Barack Obama over the next 59 days.

Ike "Still Too Early" To Forecast Landfall

Late Sunday afternoon, the word from NHC was that while the computer forecast models (above) are trending westward and many of them now foresee Ike missing that northeast turn toward the Florida panhandle, "it is much too early to anticipate which areas along the Gulf Coast could be impacted by this system."

Navy meteorologists are similarly cautious. "Errors for track" they note, "have averaged near 250 nautical miles on day 4 and 350 nautical miles on day 5."

Sunday Morning Spagehetti

Hurricane Ike forecast models, 6 am:

NHC consensus 5-day forecast cone:

Ike Predictions from the U.S. Navy

UPDATED BELOW
U.S. Navy meteorologists currently are forecasting Hurricane Ike will make landfall in eastern Cuba tomorrow, then begin a day-long trek across that island nation's length. The Florida Keys are under a mandatory evacuation; tourists are leaving today, residents tomorrow.
UPDATE
9-6 pm

NHC 4 pm (CDT):

Ike is again a Category 4 storm. All models now agree it will move into the Gulf of Mexico after passing or transversing Cuba. Once that happens --

A SHORTWAVE TROUGH MOVING OVER THE EASTERN UNITED STATES IS EXPECTED TO CREATE A WEAKNESS TO THE NORTH OF IKE RESULTING A TURN TOWARD THE WEST-NORTHWEST OR NORTHWEST WITH A DECREASE IN FORWARD SPEED. THIS SHORTWAVE TROUGH IS THE CRITICAL PLAYER IN IKE'S EVENTUAL TRACK AT THE EXTENDED RANGES. DYNAMICAL MODELS ARE STILL SPLIT INTO TWO CAMPS... WITH THE GFDL MODEL SHOWING IKE TURNING NORTHWARD INTO THE WEAKNESS... WHILE THE REST OF THE MODELS SHOW THE SHORTWAVE BYPASSING IKE TO THE NORTH AND KEEP THE CYCLONE MOVING WEST- NORTHWESTWARD.

IT IS STILL MUCH TOO SOON TO COMMIT TO EITHER ONE OF THESE EXTENDED RANGE SOLUTIONS.

Ike's Project Path Toward the Gulf

NHC public advisory, 8am:

IKE IS EXPECTED TO PASS NEAR OR OVER THE TURKS AND CAICOS ISLANDS AND THE SOUTHEASTERN BAHAMAS LATER TODAY OR EARLY SUNDAY...AND NEAR THE CENTRAL BAHAMAS AND THE NORTHERN COAST OF EASTERN CUBA ON SUNDAY NIGHT AND EARLY MONDAY.
* * *
IKE IS A CATEGORY THREE HURRICANE... HURRICANE FORCE WINDS EXTEND OUTWARD UP TO 45 MILES... FROM THE CENTER... AND TROPICAL STORM FORCE WINDS EXTEND OUTWARD UP TO 125 MILES... STORM SURGE FLOODING OF 9 TO 12 FEET ABOVE NORMAL TIDE LEVELS... ALONG WITH LARGE AND DANGEROUS BATTERING WAVES... CAN BE
EXPECTED IN THE WARNING AREA NEAR AND TO THE NORTH TO THE OF THE CENTER OF IKE.

NHC Discussion:

THERE IS MUCH UNCERTAINTY IN THE MODELS AS TO HOW CLOSE IKE WILL APPROACH THE NORTHERN COAST OF CUBA. IN FACT... THE TWO HURRICANE MODELS ACTUALLY BRING THE CYCLONE OVER THE ISLAND IN 36 HOURS. WITHOUT QUESTION... THE PARTICULAR TRACK THAT THE GFDL AND HWRF ARE SUGGESTING COULD HAVE A SIGNIFICANT IMPACT ON IKE'S INTENSITY. THE OFFICIAL FORECAST IS WEIGHED HEAVILY ON THE MODEL CONSENSUS AND IS ADJUSTED JUST TO THE LEFT OF THE PREVIOUS ADVISORY TO COMPENSATE FOR THE WESTWARD-SHIFTING MODEL TREND.

The U.S. Navy has its own storm path projection, and it isn't good for the central Gulf Coast:

Charlie Reese Retires

Syndicated columnist (and, as shockingly few locals knew, Pensacola High School alum) Charlie Reese has retired. J. Earle Bowden has a personal anecdote and a tribute in today's PNJ:

Charley, ever honest about life and its consequences, has closed a long career with a farewell column that appearing in Wednesday's News Journal.

Sadly, he lamented: "I'm not sure there is even a Charley Reese without the column," but he'd rather quit before editors and readers know he should.

***

As a beginner he quickly honed his sentences, writing crime stories from the shoe leather grind of the police beat, political coverage that answered hard questions; and finally, digging through Tallahassee records, investigating Robert Lee Fulton Sikes, popular Florida First District congressman whose name turned up on many business corporations. Newspapers then lacked judicial protection against public officials; Sikes blasted the News Journal and squeezed a terse editorial page apology.

* * *

Now he leaves a hole on this page; readers will miss his memorable, provocative opinions that hit 'em right between the eyes.

Reese was always an enigma to us. He was a fervent Vietnam war hawk in the '60s, but rabidly anti-war in the years following. He often espoused libertarian opinions but disavowed the libertarian movement. He worshiped the Confederacy but came to oppose bigotry of every kind. He voted for Nixon in 1968 and Bush in 2000 but now considers Nixon a criminal and Bush "a blunderer of the first order." He voted for John Kerry in 2004 and supports Barack Obama today.

There were only two constants to Reese that we could see. One was his basal distrust of the high and mighty. The other was his independence of mind. Charlie Reese wrote what Charlie Reese thought. He didn't merely riff off whatever other columnists or the TV hair-dos were saying.

And, as Bowden says, he was provocative. For decades he has been a fixture on the editorial pages of many newspapers throughout middle America, to the cheers of some and the outraged howls of others. We should know; we've been at one time or another in each of those camps.

The one certainty we have about Charlie Reese is that everyone is the poorer for losing his unique contributions to the public discourse.

A Leader Just Like Us

Judith Warner wrote this week in the Times:

One of the worst poisons of the American political climate right now, the thing that time and again in recent years has led us to disaster, is the need people feel for leaders they can “relate” to. This need isn’t limited to women; it brought us after all, two terms of George W. Bush.

Jon Stewart's Daily Show makes the same point, hilariously:

Ike Spaghetti Models Slip Farther West

Compare this to Jim Williams' invaluable archive of earlier Ike spaghetti models.

Family Matters

We realize we aren't supposed to drag family matters into the presidential campaign unless it's to the everlasting credit of a Republican candidate, so let's all hail John McCain's son, Andrew, for having the perspicacity to quit Silver State Bank's board of directors for "personal reasons" just nine weeks before it collapsed.

Today

FDIC Press Release, Sept. 6, 2008: "Silver State Bank, Henderson, Nevada, was closed today by the Nevada Financial Institutions Division, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver."

Two Months Ago

Las Vegas Sun, July 27, 2008: Andrew McCain resigned from the Silver State Bancorp of Henderson and Silver State Bank boards for "personal reasons," the Las Vegas Review-Journal reported Sunday... .

Hurricane Ike Rattling Floridians

UPDATED BELOW In its late afternoon update, the National Hurricane Center isn't as candid as foreign news sources, which outright say Hurricane Ike is headed "through the Florida Keys island chain as a ferociously destructive Category 4 hurricane into the Gulf of Mexico." But the meaning behind the NHC's latest discussion is plain enough:

ALL MODELS SUGGEST SOME SORT OF WEAKNESS IN THE RIDGE NEAR FLORIDA IN A FEW DAYS BETWEEN A RIDGE OVER THE WESTERN ATLANTIC AND THE GULF OF MEXICO. THIS WEAKNESS MAY ALLOW A WEST-NORTHWEST OR NORTHWEST TURN OF THE HURRICANE.

Wall Street gamblers know what that means, too. Bloomberg's wire service has the doleful news:

Catastrophe bonds, used by investors to bet against natural disasters, fell for the first time since March as Hurricane Gustav lashed Louisiana, Tropical Storm Hanna headed for the Carolinas and another storm, Ike, approached Florida.

Translation: Don't bet now against a destructive storm hitting Florida.

To be sure, as NHC keeps telling us, "four- and five-day track forecasts can have significant errors." Forecasts beyond three days are highly uncertain. Anything can happen. Yadda, yadda, yadda.

Anything can happen. Locals we're running into today are thinking that very same thing as they look over the plywood panels at Lowe's and pick up packing boxes large enough to hold all those family photos.

UPDATE
9-5 pm

Bryan at Why Now? in nearby Chumuckla riffs off Dr. Jeff Masters to point out we could "set a record" for six destructive strikes in a row.

McCain's Speech by the Numbers

In his 50-minute acceptance speech at the Republican convention last night, 25-year veteran U.S. Senator John McCain talked about himself almost to the exclusion of any other topic. And on nothing -- absolutely nothing -- did he offer specifics.

David Corn and My DD did the counting:

Number of sentences about McCain's experience as a POW in Vietnam: 43
Number of sentences about his 25 years in the House and Senate: 8
Climate Change:0
Health Care/Insurance (okay, one sentence): 1
Torture: 0
Abortion: 0
Police Work/Crime/Illegal Drugs: 0
Same-Sex issues (marriage, benefits, etc.): 0
The War in Afghanistan: 0
Pakistan (or the Taliban): 0
Counterinsurgency doctrine: 0
[drumroll, please...] Osama bin Laden: 0
NATO: 0

On the economy, Jonathan Cohn writes in the New Republic that McCain merely noted "people's economic struggles." But what did he actually propose to do? "Nothing terribly useful."

Ike Uncertainty

While the entire East Coast watches Hannah, here in Pensacola we're keeping a wary eye on Hurricane Ike.

The NHC says at 11 am Friday that 'regardless' of some modest wind sheer affecting Ike at the moment, "all signs are that Ike will be a dangerous hurricane for days to come." The uncertainty is over its future path, as the National Hurricane Center shouts:

THE MODELS THAT DRIVE THE SYSTEM FARTHER SOUTH...SUCH AS THE ECMWF/HWRF/GFDL MODELS... SUGGEST THE RIDGE WILL REMAIN INTACT ENOUGH TO EVENTUALLY SEND IKE TOWARD CUBA OR THE SOUTHEASTERN GULF OF MEXICO. THE UKMET/GFDN/NOGAPS... ON THE OTHER HAND... SUGGEST THE HURRICANE WILL MOVE MORE THE WEST AND HAS A BETTER CHANCE OF BEING AFFECTED BY A WEAKNESS IN THE RIDGE AROUND 80W. SINCE THE HURRICANE IS MOVING WELL SOUTH OF THE LATTER CLUSTER OF MODELS ALREADY...THE OFFICIAL FORECAST LEANS MORE TOWARD THE SOUTHERN GUIDANCE AND SHIFTED SOUTHWEST OF THE PREVIOUS FORECAST.

Below are the latest spaghetti models. Four of six carry Ike into the Gulf by mid-week, next:

Below, you can see how NHC makes sense of those models with a (non-) census forecast cone:

As always, NHC adds, "Five-day track forecasts can have significant errors."

Independent Minds Answer...

... Michael Stewart is gone, alas.

From the Independent News (Aug. 28, 2008):

My name is Michael Stewart and I was an investigative reporter with the Pensacola News Journal.

News Journal Executive Editor Dick Schneider and Publisher Kevin Doyle fired me today.

To my many colleagues at the News Journal, I wish you the best.

I have also met many people I admire and respect in Escambia and Santa Rosa counties during my years at the News Journal and wish you the best of luck as well.

I just wanted to set the record straight on what happened before the spin machine kicks in gear.

I was fired for applying for another job and telling the truth about it.

For those of you who do not know me, some of the stories I’ve broken in the recent past include the ones on County Commissioner George Touart, Front Porch Community Liaison Thelma Manley and Santa Rosa County Tax Collector Robert McClure’s late payment on property taxes.

Anyway, here’s what happened:

I had applied for a job out of town and got a call last Friday asking I come in for an interview at 8 a.m. Wednesday.

I would have to leave Tuesday to make it to the interview in time.

I knew this would be a problem because Tuesday night was primary election night — a busy time at the News Journal.

I asked the agency I was interviewing with if they could postpone the interview but they said that was not possible.

My only concern was the impact this would have on the News Journal election night.

Management at the News Journal was aware my father, who lives in northern Alabama, has been in the hospital.

One solution would have been to simply call in to work Tuesday and tell my supervisors my father’s condition had worsened and I needed to leave immediately. No one would have been wiser and the issue would have dropped there.

I thought about it but felt it would not have been right.

I wanted to give them as much lead time to prepare for my absence as possible. I knew it wasn’t in my best interest to tell them but felt it was the honorable thing to do.

Anyway, on Friday, right after I got the phone call, I approached management and told them the truth — that I was sorry about the inconvenience but I would be out of town for an interview.

Schneider threatened to fire me if I went.

I went.

When I returned to work today, he made good on his threat.

Their official version is that they fired me because I left them in the lurch on election night.
Not so. I offered to work the morning cop shift Tuesday. I could have made it to my interview on time and the morning cop reporter could have covered the election that night.

Still concerned and not wanting the job to fall to someone else, I stayed late Monday night and pre-wrote my two election stories. I correctly guessed who would prevail in both races and wrote the stories accordingly — including quotes.

All the reporter who picked up the races had to do was get a quick quote from the victor — I left cell phone numbers for all candidates — and fill in the vote totals.

The job fell to reporter Carlton Proctor (bless you Carlton) and I suspect it took him all of 10 minutes to polish off the two stories.

So, the News Journal was not inconvenienced at all. Schneider and Doyle were mad I applied for another position.

When he wasn’t busy threatening me, Schneider questioned my loyalty to the News Journal but could not guarantee I would not be laid off anyway given the cutbacks at the paper.

The job is a good opportunity for me. (I am one of three finalists for the position and won’t get word from the company until late September.)

Schneider, Doyle and everyone else at the paper in upper management got where they are today by moving up the ladder by applying for jobs at new locations with more responsibility.

I’ve worked hard at the News Journal to be a good reporter and have always had a strong work ethic.

A few of my accomplishments include:

* 2008 Florida Society of Newspaper Editors third-place winner for investigative reporting .

* 2007 Gannett Publisher’s Ring nominee, the company’s highest award for individual contributions.

* One of principal writers for Pensacola News Journal insurance tab, which took second place in the Best of Gannett 2006.

* Gannett 2005 runner-up for best beat-series coverage.

* Northwest Florida Daily News “Journalist of the Year” for 2002.

* Graduated Magna Cum Laude from Augustana College.

* Graduated Summa Cum Laude from Pensacola Junior College.

* All American rating for the college publication, “The Corsair,” during my tenure as co-editor in chief.

Anyway, if there are any employers out there looking for a hard-working, honest employee, I am in the job market. As for the rest, my best advice to everyone else is, lie when it is in your best interest.

Best wishes.
Michael

We'll give Michael the benefit of doubt. His exemplary past service warrants it.

He can't mean it when he says "lie when it''s in your best interest." He probably means, "You may be better off lying to Gannett executives. They can't handle the truth."

Inquiring Minds Want to Know....

... where's the star -- indeed, the only -- investigative reporter for the Pensacola News Journal?