Monday, September 29, 2008

So... What Now?

The news of the year--if not the millennium--broke Monday afternoon with the failure of a House of Representatives vote on the compromise bailout bill for Wall Street. The bill failed 205-228, with a mere 95 of the 228 "no" votes coming from the Democratic caucus, this after John McCain's campaign manager Steve Schmidt had appeared on Meet The Press and prematurely afforded Mr. McCain specific credit for marshaling the Republicans in the House to support the measure.

As he left Washington in snarling funk, Mr. McCain spoke neither to reporters nor the President. But shortly after adjourning from the scene of his limelight-grab-gone-horribly-wrong, McCain bizarrely tried to blame Senator Obama for a failure to lead his own caucus (despite the fact that fewer Democrats voted no), and simultaneously suggested that the assignment of blame is opportunistic and inappropriate in a time of such crisis. In an uncharacteristically blistering commentary, CNN pundit and long-time Republican operative David Gergen placed the blame for the bill's failure at the feet of John McCain and the House Republican caucus. Shortly thereafter on CNBC another former Nixon employee, Chris Matthews could be heard on television doing the same thing.

No matter: By the time the last vote was cast, the Dow Jones Industrial Average was already well on its way to having its worst single-day loss in history: a collapse of over 750 points. This was matched only by the blood-letting on the broader indices--which lost between six and ten percent of their value, each. In all it is estimated that over $1.2 Trillion in wealth disappeared from the planet on the day's events. It suffices to say that, if the general public didn't understand the importance of passing this once wildly unpopular legislation, the sudden evaporation of their 401K balances is certainly proving to be enlightening after the fact.

In a just universe, Senator McCain would find himself in the worst of both worlds at this moment, politically. Having undertaken the jarring and reckless-seeming "suspension" of his campaign to adjourn to Washington and assist in the passage of a bill nobody then wanted, he would now be perceived as largely responsible for the failure of that same bill to pass, at precisely the moment that everyone else in the country was waking up to its importance. But politics, as we all know, is not a just universe.

It remains to be seen just how many dots the persuadable voters in the middle can be trusted to connect, and to that extent the question of McCain's Orwellian efforts to blame the entire fiasco on his opponent could still carry some traction. After all, it was Pelosi and the House Democrats voting for the bill in large numbers while it was still almost universally distrusted on Main Street, and it was an obvious "lack of leadership" that caused the bill not to pass, albeit not on the part of the person Senator McCain is endeavoring to blame.

Meanwhile, a bill of some form will simply have to pass--sooner rather than later--if the global economy is to continue to function in anything like a recognizable incarnation for the next many, many years. Another day (or perhaps two more days) of the sorts of losses that were experienced in the equities markets in this one day, and the entire system could easily be thrown into a "self-exciting vibration" that continued to get worse without further outside stimulus, as margin traders and cash-poor institutional investors desperately tried to liquidate their remaining assets to cover their positions.

We have yet to see any polling data on the public's ability to keep up with these extraordinary circumstances, or on its ability to lay blame where it belongs--but an initial wave of dread that broke over this author when it seemed that Democrats would be cornered into voting for something nobody seemed to want has now, paradoxically, turned to electoral optimism--in light of the further meltdown of the Dow.

It is certainly true that Mr. Obama will have to navigate some troubled waters if he hopes to ascribe enough responsibility to his counterpart without seeming to be the very things he's been most effectively accused of. But it is even more obvious at this moment that Senator McCain is the one who finds himself teetering on the very precipice of oblivion, in light of the very specific chronology over which all of this drama has unfolded. After all, he can claim the benefit of having neither Paul Volcker nor Robert Rubin serving as advisors on his campaign, counseling him to keep a cool head and a close countenance on the matter until the full weight of the issue is known and obvious (as Senator Obama does).

Indeed now that the full weight of the issue is known and obvious, the election is quite possibly no longer even the biggest of Mr. Obama's challenges. As of Monday afternoon at 4:00PM, the real challenge for Obama might just well have officially switched to that of how on earth he will govern an insolvent country.

Dave O'Gorman
("The Key Grip")
Gainesville, Florida


Anonymous said...

Holy Cow! Have you seen the 538 website this morning? It is showing 329 electoral votes for Obama. Even FL is shaded blue. If I hadn't just lost all my retirement nest egg, I'd be able to sleep at night.

Dave O'Gorman said...

Personally I woke up this morning wondering why Speaker Pelosi and Majority Leader Reid don't put together a bill that is both popular with Main Street and unpopular with Republicans, and then pass that bill without them. It could be a reinstitution of Glass/Steagal, a move to have bankruptcy courts handle mortgage defaults, and a repeal of all of Bush's tax cuts for the wealthy -- to pay for the cost of the bailout. This is exactly what the other side would do, if it was theirs to do: keep making the bill more and more partisan until none of the other guys can vote for it, and then call them do-nothings.

Anonymous said...

I thought the bailout was dead yesterday and its fate would be sealed by a stock crash today. It didn't happen. I believe the world's economic Titans are emptying their coffers to keep the markets artificially high until the bill is passed. The bailout will pass. The top 1% have had a phone call with the "No" voters, each side will get a few more sweeteners and Gordon Brown will plead to the house on behalf of the world's poor(bluuurgh). The political cover will be sufficient and the Titans will have what they want for dealing with a system that is about to suffer cardiac arrest. It's going to be ugly.