Troopergate Finale

TROOPERGATE FINALE....I read most of the Branchflower report on Troopergate last night, but the MSM seemed to be doing a fine job of reporting the results all its own so I never got around to posting about it. The basic story, of course, revolves around Todd and Sarah Palin's crusade to get their ex-brother-in-law, Mike Wooten, fired from his job as a state trooper, and their efforts to get Alaska's Commissioner of Public Safety, Walt Monegan, to do the firing. Most of this story is pretty well known already. However, Time's Nathan Thornburgh points out the aspect of the report that struck me as the most remarkable:

The result is not a mortal wound to Palin....But the Branchflower report still makes for good reading, if only because it convincingly answers a question nobody had even thought to ask: Is the Palin administration shockingly amateurish? Yes, it is. Disturbingly so.

The 263 pages of the report show a co-ordinated application of pressure on Monegan so transparent and ham-handed that it was almost certain to end in public embarrassment for the governor.

....Monegan and his peers constantly warned these Palin disciples that the contact was inappropriate and probably unlawful. Still, the emails and calls continued — in at least one instance on recorded state trooper phone lines.

The state's head of personnel, Annette Kreitzer, called Monegan and had to be warned that personnel issues were confidential. The state's attorney general, Talis Colberg, called Monegan and had to be reminded that the call was putting both men in legal jeopardy, should Wooten decide to sue. The governor's chief of staff met with Monegan and had to be reminded by Monegan that, "This conversation is discoverable ... You don't want Wooten to own your house, do you?"

Monegan pointed out to a steady stream of people that (a) Wooten was protected by civil service and there was nothing more that could be done since he'd already gone through a formal disciplinary procedure, and (b) any conversation about Wooten was discoverable in court if Wooten ever got tired of being hounded and decided to file a civil suit. And yet the contacts kept coming and coming and coming — and coming and coming. And Branchflower documents them in painful detail. It's all quite remarkable.

In fact, here's the part that really puzzles me: what exactly did Todd and Sarah Palin hope to accomplish? Surely they knew perfectly well that Monegan was right: he couldn't have fired Wooten even if he wanted to. And they must also have known that even if Monegan were replaced, any replacement would quickly check into the situation and report back the same thing. Wooten had already been disciplined, and unless something new cropped up there was simply nothing that anyone could do to force him out of his job. In fact, the Palins' efforts probably made it nearly impossible even to reassign Wooten since it would so obviously have been politically motivated. It was a completely futile crusade they were on.

So what were they thinking? Or were they?

Banks

BANKS....Justin Fox on the "shadow banking system":

And another thing: If you borrow short and lend long, you're effectively a bank. It's becoming ever less clear to me what justification there is for nonbank borrow-short-lend-long-institutions other than regulatory arbitrage.

Brad DeLong responds:

Not just "effectively" a bank. You are a bank. Not until the twentieth century did we have organizations that borrowed short and invested long that did not call themselves "banks." The emergence of non-bank banks has always been the result of attempts at regulatory arbitrage.

So what's the answer? What should our 21st century definition of "bank" be for regulatory purposes? Any entity that invests other people's money in any way? That can't be right, can it? Or can it?

Dialing it Down

DIALING IT DOWN....OK, credit where it's due. After watching his campaign events turn into increasingly ugly free-for-alls, John McCain has apparently decided that enough's enough. Ana Marie Cox reports on his latest rally in Minnesota:

But then something weird happens: He acknowledges the "energy" people have been showing at rallies, and how glad he is that people are excited. But, he says, "I respect Sen. Obama and his accomplishments." People booed at the mention of his name. McCain, visibly angry, stopped them: "I want EVERYONE to be respectful, and lets make sure we are."

The very next questioner tried to push back on this request, noting that he needed to "tell the American the TRUTH about Barack Obama" — a not very subtle way, I think, to ask John McCain to NOT tell the truth about Barack Obama. McCain told her there's a "difference between record and rhetoric, and I plan to talk about his record, respectfully... I don't mean that has to reduce your ferocity, I just mean it has to be respectful."

And then later, again, someone dangled a great big piece of low-hanging fruit in front of McCain: "I'm scared to bring up my child in a world where Barack Obama is president."

McCain replies, "Well, I don't want him to be president, either. I wouldn't be running if I did. But," and he pauses for emphasis, "you don't have to be scared to have him be President of the United States." A round of boos.

And he snaps back: "Well, obviously I think I'd be better. "

Of course, this is kind of the best of both world: Crazy base-world gets to bring up Ayers and whatever else, really, and he gets to say, "Be respectful." But I think he means it.

UPDATE: Indeed, he just snatched the microphone out the hands of a woman who began her question with, "I'm scared of Barack Obama... he's an Arab terrorist..."

"No, no ma'am," he interrupted. "He's a decent family man with whom I happen to have some disagreements."

Good for him. Now I wonder if he can get the same message out to Sarah Palin?

Friday Cat Blogging - 10 October 2008

FRIDAY CATBLOGGING....I've still got a lot on my mind today, but I guess that's true for all of us, isn't it? So let's call it a week anyway and spend the rest of the day winding down and admiring our cats instead. They deserve it.

Today we have action shots. Sort of. On the left, what is Domino looking at? A bird? A plane? Superman? No: it was a bird after all. To be precise, a hummingbird flitting around the garden for her occasional amusement. On the right, you'll notice the extreme bushiness of Inkblot's tail. I'm not entirely sure what caused it, but circumstantial evidence suggests he took note of a neighborhood dog and came charging around the corner to run into the house. Thus the tail. He knows perfectly well that the back door is open, of course, but he'd rather have somebody open the front door for him instead.

We are currently suffering from a cat food liquidity crisis, and it's now time for resolute action to prevent it from turning into a cat food insolvency crisis and causing full blown feline panic. So I'm off to the store. Have a good weekend, everyone.

“William F. Buckley’s Son Says He Is Pro-Obama.”

"WILLIAM F. BUCKLEY'S SON SAYS HE IS PRO-OBAMA"....Christopher Buckley explains why he's not writing his endorsement of Barack Obama in his usual column at the back of National Review, the magazine his father founded:

My colleague, the superb and very dishy Kathleen Parker, recently wrote in National Review Online a column stating what John Cleese as Basil Fawlty would call “the bleeding obvious”: namely, that Sarah Palin is an embarrassment, and a dangerous one at that. She’s not exactly alone. New York Times columnist David Brooks, who began his career at NR, just called Governor Palin “a cancer on the Republican Party.”

As for Kathleen, she has to date received 12,000 (quite literally) foam-at-the-mouth hate-emails. One correspondent, if that’s quite the right word, suggested that Kathleen’s mother should have aborted her and tossed the fetus into a Dumpster. There’s Socratic dialogue for you. Dear Pup once said to me sighfully after a right-winger who fancied himself a WFB protégé had said something transcendently and provocatively cretinous, “You know, I’ve spent my entire life time separating the Right from the kooks.” Well, the dear man did his best. At any rate, I don’t have the kidney at the moment for 12,000 emails saying how good it is he’s no longer alive to see his Judas of a son endorse for the presidency a covert Muslim who pals around with the Weather Underground. So, you’re reading it here first.

The modern GOP is the party of Newt Gingrich, Tom DeLay, Karl Rove, George Bush, Dick Cheney, John McCain, and Sarah Palin. It's not just off the rails. It doesn't even know where the rails are anymore.

"Off With His Head!"

"OFF WITH HIS HEAD!"....Steve Benen describes the ugliness of the Republican Party's recent rallies and campaign events:

The McCain campaign has deliberately been whipping the angry, far-right Republican base into a frenzy. That includes increasing frequency of "Hussein" references, but it also includes looking the other way while campaign supporters exclaim "treason!," "terrorist!," and "kill him!" during official rallies.

On Wednesday, during a McCain harangue against Obama, one man could be heard yelling, "Off with his head!" On Thursday, Republicans erupted when an unhinged McCain supporter ranted about "socialists taking over our country." Instead of calming them down, McCain said the lunatic was "right."....Slate's John Dickerson described the participants' "bloodthirsty" tone.

The danger here is not mobs of violent Republicans marching through the streets. The danger is that John McCain is setting us up for a repeat of the 90s, an era that conservatives to this day have never been willing to come to grips with. If the looney-bin right decides to treat President Obama as not just an opposition leader, but as a virtual enemy of the state, as they did with Bill Clinton, it's going to be a very, very long eight years. Whatever grownups are left in conservative-land really need to step up to the plate soon before their movement goes even further off the rails than it already is.

Selling War

SELLING WAR....Want to learn more about Randy Scheunemann, John McCain's crazy top foreign policy advisor? The one responsible for marketing Ahmed Chalabi and the Iraq war to a gullible media? And tutoring Sarah Palin in neocon nutbaggery? Sure you do. Laura Rozen's got you covered here.

Trading Derivatives

TRADING DERIVATIVES....Megan McArdle on the banking crisis:

One of the smarter ideas I've heard for trying to prevent this sort of thing next time around is putting derivatives on exchanges. Most derivatives are traded over the counter, in part because US bankruptcy law encourages it: as I understand it, derivative counterparties don't have to get in line with the others, but can seize any collateral they can get their hands on.

Exchange trading enhances transparency, by making it clear what's out there and roughly who owns it. It also moves the clearing risk to the exchange; while exchanges do fail, they do so much less often than financial firms, and if intervention is needed, they provide a centralized locus for any private or public action.

I've been noodling over a list of regulatory changes that ought to be on the table for the next administration, and this is one of them. Credit default swaps, in particular, should be registered like any other security and traded on public exchanges. This wouldn't make them 100% safe (stock markets have bubbles and busts too, after all), but it would certainly make them a lot safer.

On the other hand, I'd like to hear an argument for even allowing CDOs to exist in the first place, whether they're publicly traded or not. It's one thing to chop up securities into different tranches that appeal to different classes of investors — that's just marketing — but with very rare exceptions the overall yield of such an instrument should be nearly the same as the yield of the underlying securities themselves. A little less, in fact, since you have to factor in additional administrative costs. But the fundamental idea behind modern CDOs is exactly the opposite: not merely that they're providing a bit of convenience or regulatory arbitrage, but that if you bundle up a bunch of securities and then chop them up in specific ways, they'll be magically worth much more than the underlying securities themselves. Much more. But this violates a basic law of economics. We'd prosecute for fraud anyone selling a perpetual motion machine, and I'm not sure why CDOs are really any different. Done properly, the market for CDOs ought to be small and sleepy, barely worth anyone's attention. If it gets non-sleepy, that means it's becoming fraudulent. So maybe it's just not worth having at all?

Needless to say, I have no idea how you'd go about banning a particular class of security. And I suppose it's possible that the underlying problem is with the rating agencies, not the CDO packagers — though real life being what it is, I suspect that's a distinction without a difference.

In any case, I'd like to hear the argument. Why should we allow the sale and marketing of CDOs at all?

Paying the Piper

PAYING THE PIPER....Matt Yglesias says, sure, people were using their homes as ATM machines during the housing bubble, but it's not as if our political leaders were raising any red flags about it at the time. In fact, just the opposite:

Meanwhile, the broad conservative movement spent a lot of time trying to shout down anyone who worried about rising inequality or stagnant wages by pointing out that the trends looked better if you only examined consumption. In other words, if you ignored the fact that people were maintaining consumption growth by piling on more debt, things looked great! And yet, now somehow things don’t look so great....

Obviously, the mere fact that conservative politicians, hacks, and operatives were egging this trend on didn’t force anyone to accumulate enormous debts. Plenty of people didn’t do so. But the underlying ill here is economic policies that sought to substitute an asset price bubble and innovative credit products for real, broadly-based prosperity.

This deserves a much longer treatment, which I'm not going to attempt right now either. But someone ought to. We usually argue about rising income inequality in moral terms, but there's a practical side to it too: when all the economic growth a country produces goes to a very small class of rich people, stupid things happen. The rich can't possibly consume enough to spend all this money, so they start casting around for something, anything, to do with all the cash they have sloshing around. And since, in an ever more unequal economy that nonetheless preaches ever rising living standards, the poor need payday loans to keep up and the stagnating middle class needs HELOCs, that's where their money goes. It still gets spent, eventually, on things like cars and food and new furniture, because that's what middle class people mostly spend their money on, but instead of being spent directly by people who are earning it, it gets funneled downward to them via increased debt and financial legerdemain that extracts more and more money upward from poor to rich with each cycle.

That's not sustainable. Median income growth produces not just growth, but stable growth for everyone, the rich included. Top end growth, almost by definition, produces unstable, unsustainable growth. Modern economies are driven by consumer spending, and if you want consumer spending to increase consistently you have to increase consumer income. All the financial wizardry in the world will never change that.

Social justice aside, that's why the single most important financial statistic for any modern economy is real median income growth. If you have it, you're in pretty good shape no matter what else is going on. If you don't, you're a banana republic. Guess which one we've become?

Joe Sixpack

JOE SIXPACK....David Brooks has a good column today:

Over the past few decades, the Republican Party has driven away people who live in cities, in highly educated regions and on the coasts. This expulsion has had many causes. But the big one is this: Republican political tacticians decided to mobilize their coalition with a form of social class warfare....What had been a disdain for liberal intellectuals slipped into a disdain for the educated class as a whole.

....[Sarah] Palin is smart, politically skilled, courageous and likable. Her convention and debate performances were impressive. But no American politician plays the class-warfare card as constantly as Palin. Nobody so relentlessly divides the world between the “normal Joe Sixpack American” and the coastal elite.

Sure, it would have been nice if Brooks had noticed this a little earlier. And it's not the hardest hitting column on the subject of culture war politics we've ever seen. Still, this stuff isn't easy to write about your own side. It's a pretty decent piece.

Yet More Troopergate

YET MORE TROOPERGATE....While we're waiting for the Alaska legislature's official report on Troopergate, the New York Times offers the results of its own investigation:

In all, the [public safety] commissioner and his aides were contacted about Trooper Wooten three dozen times over 19 months by the governor, her husband and seven administration officials, interviews and documents show.

.... On Jan. 4, 2007, a month into the Palin administration and his tenure as public safety commissioner, Mr. Monegan went to the governor’s Anchorage office to talk with Todd Palin, who had requested the meeting. Mr. Palin was seated at a conference table with three stacks of personnel files. That, Mr. Monegan recalled, was the first time he heard the name Mike Wooten.

“He conveyed to me,” Mr. Monegan said, “that he and Sarah did not think the investigation into Wooten had been done well enough and that they were not happy with the punishment. Todd was clearly frustrated.”

....Several evenings later, Mr. Monegan’s cellphone rang. “Walt, it’s Sarah,” the governor said before echoing much of what her husband had said. Trooper Wooten, he recalls being told, was “not the kind of person we should want as a trooper.” He told the governor, too, that there was no new evidence to pursue.

Soon after that, Mr. Palin and several aides began pressing the public safety agency to investigate another matter: whether Trooper Wooten was fraudulently collecting workers’ compensation for a back injury he said he had suffered while helping carry a body bag.

Mr. Palin’s evidence: He told Ms. Peterson, the commissioner’s assistant, that he had seen the trooper riding a snowmobile while on medical leave and that he had photographs to prove it.

The Palin family really had the bug, didn't they? Definitely not people you want to get on the wrong side of.

Financial Crisis Update

FINANCIAL CRISIS UPDATE....The latest on the financial crisis:

The U.S. is weighing two dramatic steps to repair ailing financial markets: guaranteeing billions of dollars in bank debt and temporarily insuring all U.S. bank deposits.

....Under the U.K.'s recently announced plan, which it is now pitching to the G-7 members, the British government would guarantee up to £250 billion ($432 billion) in bank debt maturing up to 36 months. The British concept to expand its proposal to other countries has a lot of support from Wall Street and is being pored over by U.S. officials, according to people familiar with the matter.

....The move to back all U.S. bank deposits, which is only in the discussion stage, would be aimed at preventing a further exodus of cash from financial institutions, including small and regional banks, some of which are buckling under the strain of nervous customers. In recent weeks, customers have pulled money out of some healthy community banks under the assumption that the government will only insure all the depositors of larger banks in the event of a failure.

Directly recapitalizing troubled banks is yet another idea under consideration, of course. Greg Mankiw comments:

That raises several questions. First, which firms? The government does not want to put taxpayer money into “zombie” firms that are in fact deeply insolvent but have not yet recognized it. Second, at what price should the government buy in? Third, isn’t this, kind of, like socialism? That is, do we really want the government to start playing a large, continuing role running Wall Street and allocating capital resources? I certainly don't.

Here is an idea that might deal with these problems: The government can stand ready to be a silent partner to future Warren Buffetts.

It could work as follows. Whenever any financial institution attracts new private capital in an arms-length transaction, it can access an equal amount of public capital. The taxpayer would get the same terms as the private investor. The only difference is that government’s shares would be nonvoting until the government sold the shares at a later date.

This plan would solve the three problems. The private sector rather than the government would weed out the zombie firms. The private sector rather than the government would set the price. And the private sector rather than the government would exercise corporate control.

Nouriel Roubini offers similar advice here, along with several other ideas.

Mindgames

MINDGAMES....John McCain and Sarah Palin (with the help of the entire cast of characters at Fox News and NRO) have been trying over the past few days to talk up Barack Obama's ties to former 60s radical Bill Ayers. But McCain didn't bring it up directly in Tuesday's debate, and apparently the Obama campaign has now decided to start taunting him over it. Today's taunts:

Barack Obama: "Well I am surprised that — you know, we've been seeing some pretty over the top attacks coming out of the McCain campaign over the last several days — that he wasn't willing to say it to my face."

Tom Vilsack: "If John McCain were so concerned about things like Mr. Ayers, why didn't he just simply turn to Barack Obama and directly confront him?"

Joe Biden: "In my neighborhood, when you've got something to say to a guy, you look him in the eye and you say it to him."

I guess the Obama folks figure there are three things that could happen. First, McCain does nothing and ends up looking like a coward. Second, their taunts get under McCain's skin so badly that he goes over the edge and does something really stupid. Third, McCain takes the bait and decides to bring up Ayers at the next debate.

The first two possibilities are obviously good for Obama. And the third? I guess they must be really sure they have a dynamite response ready in case McCain decides to unload next Wednesday. Either that or they're trying to fake McCain into thinking they have a dynamite response, thus scaring him into not bringing it up. Or else, by being so obvious about it, they're actually trying to sell McCain on the fakeout theory — and then when he falls into the trap and brings up Ayers, they're going to crush him. Or....um.....you get the idea. Basically, they're just playing mindgames with the old guy. I wonder if it'll work?

Pillow Talk

PILLOW TALK....Does the NSA intercept telephone calls between Americans? Of course not! That's against the law. Unless, of course, you happen to be an American in one of the NSA's "areas of intercept" when you call home. ABC News talks today to a couple of NSA whistleblowers who say that eavesdropping on Americans was commonplace:

"These were just really everyday, average, ordinary Americans who happened to be in the Middle East, in our area of intercept and happened to be making these phone calls on satellite phones," said Adrienne Kinne, a 31-year old US Army Reserves Arab linguist assigned to a special military program at the NSA's Back Hall at Fort Gordon from November 2001 to 2003.

...."We knew they were working for these aid organizations," Kinne told ABC News. "They were identified in our systems as 'belongs to the International Red Cross' and all these other organizations. And yet, instead of blocking these phone numbers we continued to collect on them," she told ABC News.

And there's this from a former Navy Arab linguist named David Murfee Faulk:

"Calling home to the United States, talking to their spouses, sometimes their girlfriends, sometimes one phone call following another," said Faulk.

....Faulk says he and others in his section of the NSA facility at Fort Gordon routinely shared salacious or tantalizing phone calls that had been intercepted, alerting office mates to certain time codes of "cuts" that were available on each operator's computer.

"Hey, check this out," Faulk says he would be told, "there's good phone sex or there's some pillow talk, pull up this call, it's really funny, go check it out. It would be some colonel making pillow talk and we would say, 'Wow, this was crazy'," Faulk told ABC News.

The official NSA response is to stay mum. Sen. Jay Rockefeller (D-WV) promises to investigate. Stay tuned.

Slicing and Dicing

SLICING AND DICING....The Washington Post editorializes today against John McCain's mortgage rescue plan, and among its bill of particulars it tosses in this:

At least as Mr. Holtz-Eakin described it, it lacks a clear mechanism for reassembling and extricating whole mortgages from the welter of securities "tranches" into which Wall Street slices and dices them.

As I understand things — and I might not — this is a serious problem with any plan to force noteholders to write down their losses and restructure their mortgages to help out distressed homeowners. The problem is that there's no banker to negotiate with. It's not just that mortgages today are bundled up and securitized, it's that the resulting securities are then chopped up and sold into various CDOs. These CDOs are hedged with hundreds of pages of legal covenants, and the end result is that you can't force the mortgages to be restructured unless all of the bondholders agree. And since every CDO has hundreds of bondholders, that's basically impossible.

Obviously this doesn't apply to all subprime mortgages, but I wonder how many it does apply to? And legally and administratively, what's the answer? I really haven't been able to find a coherent explanation of this stuff, but it seems like it's a pretty big deal. Anyone have any reading recommendations?

Sarah's Airplane

SARAH'S AIRPLANE....Alaska's First Dude has finally been forced to give testimony in the Troopergate scandal, and apparently getting ex-brother-in-law Mike Wooten fired from his job as a state trooper became a serious Ahab-like obsession with him:

Todd Palin talked with over a dozen state officials, many of them repeatedly, in his crusade to get a state trooper fired whom he considered to be a bad cop, a dishonest person and a threat to the Palin family, according to his sworn statement given Wednesday to a legislative investigator....Todd Palin's efforts started before his wife became governor and accelerated during the first 19 months of her administration.

...."I had hundreds of conversations and communications about Trooper Wooten over the last several years with my family, with friends, with colleagues, and with just about everyone I could — including government officials," Palin said.

Hundreds! But that's actually not the most interesting part of the story. Todd Palin continues to insist that his anti-Wooten jihad had nothing to do with Sarah Palin's eventual firing of public safety commissioner Walt Monegan, which he says was motivated by an entirely different kind of bad blood: her difficulty getting Monegan to provide her with a plane for official trips:

On the trooper airplane, "It seemed that whenever Sarah needed this plane, it was unavailable," Todd Palin said. "We were concerned that the Department of Public Safety was retaliating against Sarah for selling the Murkowski jet that Department of Public Safety officials enjoyed using." In 2007, the governor sold a jet her predecessor, Frank Murkowski, bought in a controversial defiance of the Legislature.

Please, please, can we hear more about this tussle over airplane use? Apparently Todd Palin thinks that's an entirely proper reason for firing Monegan, and I'm eager to hear Sarah's take on that. Please?

Sarah Palin's Foreign Policy Cred

SARAH PALIN'S FOREIGN POLICY CRED....Interested in learning about Sarah Palin's real foreign policy experience? David Corn has her official calendar for 2007-08 and spills the beans. Bottom line: she's spent an average of 37 minutes per month on foreign-ish activity during her tenure as governor. There were no meetings with Russian officials of any kind, but her schedule did include 30 minutes at a reception held by the Italian embassy, a meeting with foreign exchange students, and a speech at the Eighth Conference of Arctic Parliamentarians. Plus several miscellaneous meetings with Canadians. Exciting stuff!

McCain's Rescue Plan

McCAIN'S RESCUE PLAN....It's now clear that John McCain's $300 billion homeowner rescue plan really does envision paying mortgage lenders full face value for their subprime loans, even though they've all cratered badly during the housing bust. How do we know? Because his website originally said that mortgage lenders would be required to write down their loans, but that language was removed on Wednesday. It was "a simple mistake," the campaign said.

But here's what I don't get: why? This was plainly a middle class pander, and not one that McCain would have been obligated to follow through on. This kind of stuff changes at the detail level all the time. So why include such a blatant giveaway for Wall Street? Even if you have some technical reason for thinking it's a good idea, it doesn't make any political sense at all. What's going on?

The Rumble in the Corner

THE RUMBLE IN THE CORNER....As regular readers know, I'm a fan of NRO's The Corner, which I think of as sort of a direct pipeline into the conservative id. Lately, as an Obama victory has become more and more likely, the Cornerites have started going completely around the bend, venting their frustration in lunatic conspiracy theories and manic love notes that are increasingly untethered from the real world. This afternoon, after reading their latest bunch of posts about Obama being a secret Maoist, I thought maybe I should finally write something about it. In the end I was too lazy to do it, but luckily Hilzoy came through with a post that hits all the high points I was going to make anyway. Go check it out to get a sense of how the impending doom of an Obama victory is sending conservatives into cloudcuckooland.

But why are they going so stone batty? My theory is that Obama is driving them crazy the same way that Ali drove Foreman crazy in the Rumble in the Jungle. You remember that fight, don't you? Foreman was the heavy favorite, a brawler who had dropped Joe Frazier in two rounds and seemed likely to beat Ali to a pulp. But Ali won by playing mind games on Foreman. He sat on the ropes, took hit after hit, and then taunted Foreman in the clinches to hit him even harder. An enraged Foreman kept swinging wildly, but nothing worked. Ali took everything he could dish out, and the furnace-like heat finally did Foreman in. In the eighth round, drained and exhausted, he was knocked cold by an Ali combination that ended the fight.

The same thing is happening to McCain and his supporters. They're throwing everything they have at Obama, and he's just taking it. Nothing seems to have an effect, so they keep swinging ever more wildly. But that isn't working either, and it's driving them crazy. Who is this guy? Why won't he go down? It's enraging. They just can't believe they're losing to this punk. And so they become ever more unhinged, making up wilder and wilder stories and becoming more and more enraged when they can't get any traction with them. At this rate, their next stop is a padded cell at Arkham.

Personally, I wish Obama were doing more than playing rope-a-dope: it's going to win him an election, but it might not win him the war. Still, it is pretty likely to win him the election, and it's driving lots of conservatives crackers at the same time. We could do worse, I guess.

Another Finger in the Dike

ANOTHER FINGER IN THE DIKE....A couple of days ago we learned the startling news that AIG has already blown through $61 billion of its $85 billion bailout cash. What to do? Answer: give 'em more money:

The Federal Reserve Board said Wednesday that it would provide up to $37.8 billion to the embattled insurer the American International Group to help it deal with a rapidly dwindling supply of cash.

....A.I.G. said Wednesday that it would use the $37.8 billion from the Fed to improve the liquidity of its securities lending business, which is losing cash rapidly. By stopping that flow, A.I.G. said, it would be able to preserve more of the Fed loan and use that money more effectively to wind down the affairs of A.I.G.’s troubled structured finance division, known as the financial products unit.

"Financial products unit" = credit default swaps, just in case the terminology is a little opaque here. That one unit was basically responsible for bringing down the entire company.