"Shut up," He explained.

Lanny Davis: Hey, we'll only have show trials for people with the temerity to fight back!

He reminds me of the little boy caught fighting by his mother, "It all started when Timmy hit me back!"

A Rogue Agency

Just sent:

The Honorable Rick Larsen

Sir;

I am very troubled about the statements by the House Speaker, the Honorable Nancy Pelosi, about whether or not the CIA mislead her during briefings about enhanced interrogation techniques. The issue is much deeper and more dangerous than any particular interrogation techniques by agents of the CIA, it is a claim that the CIA has slipped from the reigns of congressional oversight, that we have that most frightening of spectres: a rogue secret intelligence agency.

These claims must be investigated to clear either the CIA or Speaker Pelosi. Secret agencies are a regrettable necessity, so we allow them to operate only under the oversight of our elected representatives. I ask you to call for an investigation of these claims, and to join with other representatives in calling for this investigation.

I will watch in the next few months to see that the American people and their freedoms and safety are guarded.

More Bailout Thoughts

A few posts back, I said this about the impending government bailout of the financial industry:

So the government (via its new version of the RTC) becomes the mortgage holder for hundreds of thousands of Americans. Already the cry from Democrats is "People before profit."

Will the US be able to resolve the most clear out the very worst of these loans in an fiscally responsible manner?

If there is any possibility of making money on these loans, won't that cause an outcry on the Left?

Jonah Goldberg points out:

Democrats in Congress had great fun using Fannie and Freddie as public policy piggy banks, rewarding constituencies, funding pet projects, forcing the private sector to dance to their tune. What’s to stop them from renegotiating this week’s deal after the election and using Bank of America, Wells Fargo, JPMorgan Chase and the others as Fannie Mae 2.0?

Please don’t say that the terms of the deal are set and the government can’t revise them. If there’s one thing the last month has hammered home, it’s that nothing is written in stone. Besides, the banks may grow to like the security of partial nationalization and even lobby to Congress to stay on as less-than-fully-silent partners.

Heck, that way they wouldn’t have to pay back the loans.

I never thought of that.

Banks might tout the participation of the government as a way to sell their stock, "Hey, the government won't let us fail!"

Bailout Thoughts

So there is a lot of back-and-forth about whether the Paulson Bailout will cost the U.S. trillions of dollars; or whether it will in the end reap a windfall of trillions of dollars.

The question that I have for those that think this may actually make money is this:

Are you nuts?

(Note that I generally applaud buying up distressed assets a fire-sale prices, then making a killing once everybody starts to realize how stupidly they have acted. I am, after all, a heartless capitalist.)

Andy Kessler makes this point in his Wall Street Journal article:

In 1992, hedge-fund manager George Soros made $1 billion betting against the British pound. In 2007, John Paulson's Credit Opportunities fund correctly bet against subprime mortgages, clearing $15 billion for the year and $3.7 billion for him. Warren Buffett is now hoping to make big money on Goldman Sachs.

Chad Crowe

But these are small-time deals. My analysis suggests that Treasury Secretary Henry Paulson (a former investment banker, no less, not a trader) may pull off the mother of all trades, which could net a trillion dollars and maybe as much as $2.2 trillion -- yes, with a "t" -- for the United States Treasury...

Firms will haggle, but eventually cave -- they need the cash. I am figuring Mr. Paulson could wind up buying more than $2 trillion in notional value loans and home equity and CDOs for his $700 billion.

So the U.S. will be stuck with a portfolio in the trillions of dollars in bad loans and last-to-be-paid derivatives. Where is the trade in that?

Well, unlike Mr. Buffett or any hedge fund, the Treasury and the Federal Reserve get to cheat. It's not without risk, but the Feds, with lots of levers, can and will pump capital into the U.S. economy to get it moving again. Future heads of Treasury and the Federal Reserve will be growth advocates -- in effect, "talking their book." While normally this creates a threat of inflation and a run on the dollar, and we may see dollar exchange rates turn south near term, don't expect it to last.

First, with Goldman Sachs and Morgan Stanley now operating as low-leverage bank holding companies, a dollar injected into the economy will most likely turn into $10 in capital (instead of $30 when they were investment banks). This is a huge change. Plus, a stronger U.S. economy, with its financial players having clean balance sheets, will become a safe haven for capital.

So where is the downside?

L. Willaim Seidman and David C. Cooke list some of the lessons they learned from the Resolution Trust Corporation in the Savings & Loan bailout of the 1985:

Here are the most important lessons we learned from our experiences in the late '80s and early '90s:

- Acquired assets require active management. Assets tend to lose value while in government hands, as the government seldom can duplicate a private owner's interest in enhancing value. The RTC employed over 10,000 people in the first year of operation.

- Holding large inventories of assets will lead to depressed prices. No one wants to buy when the market has a large overhang of assets just waiting to be dumped when prices improve.

- To get the market started, assets have to be sold at very low prices. Such sales will attract buyers, with a resulting increase in prices. At the same time, selling at low prices could trigger accusations that the agency is "depressing the market."

- Every government sale or purchase creates winners and losers. This results in intense political and economic pressures to influence the actions of the agency. The RTC's independent governance and operations protected against fraud and political influence.

So the government (via its new version of the RTC) becomes the mortgage holder for hundreds of thousands of Americans. Already the cry from Democrats is "People before profit."

Will the US be able to resolve the most clear out the very worst of these loans in an fiscally responsible manner?

If there is any possibility of making money on these loans, won't that cause an outcry on the Left?

William Ayres

This is all very inside baseball. If you haven't been following the presidential campaign since 2006, it may seem as though it is an argument in progress. It is. Feel free to skip.

Just a few posts ago I was wondering about Barack Obama, "Who Does He Owe?"

It seems as though one of the people he owes is William Ayres. As pointed out by Hillary Clinton, Obama used the position that he had in Ayres operation as a bullet point on his resume.

This is the absolute sticking point for me. My family calls me McCarthyite and say that I'm attempting to smear Obama with guilt by association.

And yet.

"I don't regret setting bombs" and "I feel we didn't do enough", and, when asked if he would "do it all again" as saying "I don't want to discount the possibility."

"We weren't terrorists," Ayers told an interviewer for the Chicago Tribune in 2001. "The reason we weren't terrorists is because we did not commit random acts of terror against people. Terrorism was what was being practiced in the countryside of Vietnam by the United States."

Oh, God. Do we think that the Red Brigade were random? Bader-Meinhof Group? Were all the pain and horror and death in the end for nothing?

Calling me McCarthyite isn't the worst thing that has ever happened to me.

Who Does He Owe?

I have avoided posting about the Sarah Palin Veep situation. I, like almost everyone else, was caught near flatfooted. I had considered Palin, but had filed her in my mind in along with Bobby Jindal in a box marked: "Rising Stars, check back in 2 years." I have been revolted at the toxic waste dump of hate that has been spilled by her political opponents.

But the Obama campaign's featherweight response to Palin was telling in its ineptness. It's like that they felt that had to throw something out there, rather than let the announcement dominate the next six news cycles while they did opposition research. But the response was pathetic. Calling Palin a "former mayor," rather than a "sitting governor?" Getting trapped in comparing the top of the Democratic ticket with the bottom of the Republican ticket?

This ineptness in choosing Joe Biden, blowing the Palin announcement, and the daily gaff-o-matic tone of the Obama/Biden ticket has me puzzled. How did they get this far?

Joe Biden owes Barak Obama big time. Biden couldn't get more than 1% of the Iowa vote.

So who does Obama owe? Step back a minute and contemplate just how unlikely it is for Obama to be where he is. Here is a freshman senator defeating the Clinton Machine on his first national campaign. What's up with that?

No big conspiracy theory needed. I don't need to imagine a left-wing cabal. Just the usual big-money people.

First on the list is Oprah Winfrey. I have heard that Oprah Winfrey was a big factor in convincing him after she heard his speech at the 2004 Democratic Convention. (Of course she was measuring him against John "Reporting for Duty!" Kerry, so he looked positively presidential.) She was a fellow member of Wright's church. She opened her Rolodex to him, giving him entree to the necessary early big-money donors.

So yeah, he owes Oprah. If he gets elected, she gets to swank it and go to State dinners and lay a proprietary hand on his arm and say, "Yeah, I gave him his start." That's an easy payoff.

But beating the Clintons? One of the most feared political machines in modern politics? A machine that has members so loyal that they will pull free-lance black-bag operations at the National Archives? I mean, this real life, not National Treasure.

And this fresh young man from the sticks steps in and beats The Clinton Machine?

Yeah, right.

Quite frankly that's the most impressive item on his rather slim resume'.

But in politics, everybody owes somebody.

So who does Obama owe?