Bailout, or we all sink.

“‘Today’s the decision day. I wish it weren’t the case,’ said Rep. Barney Frank (D-Mass.).” Despite the apparent attempt by divider-not-a-uniter John McCain to kill a compromise he hadn’t even read last week, the Dubya White House and Congress hold their respective noses and come to agreement on Paulson’s $700 billion bailout plan, with debate in the House starting today. “The proposed legislation would authorize Treasury Secretary Henry M. Paulson Jr. to initiate what is likely to become the biggest government bailout in U.S. history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates. The plan would give Paulson broad latitude to purchase any assets from any firms at any price and to assemble a team of individuals and institutions to manage them.“

As I said here, I’m not all that happy about the nation having to subsume the risk, and ride to the rescue of, the many banks and Wall Street types that profited massively from these obviously suspect mortgage deals. But, what else is there to do? As with so much else occurring over the past eight years, it befalls us now to clean up the mess left by the free market fundies of late. I just hope we learn something from the economic consequences of this latest binge of free-market fraudulence, before they grow too dire. To wit, whatever the corporate-funded right tells you about self-regulating markets, we need, and will continue to need, real refs on the field.

Update: Uh oh. The bailout compromise dies in the House, prompting the Dow Jones to swiftly tank 700 points. “The measure needs 218 votes for passage. Democrats voted 141 to 94 in favor of the plan, while Republicans voted 65 to 133 against. That left the measure with 206 votes for and 227 against.“

As the TIME article linked above noted before the vote, “the candidate with the most riding on Monday’s vote is McCain, who backed the concerns of conservatives in the House over the initial agreement…[I]f a majority of the House Republicans don’t vote for the measure, McCain could lose political face. ‘If McCain cannot persuade them, it is hard to portray him as a leader,’ said Clyde Wilcox, a political science professor at Georgetown University.” So, that’s the silver lining, I guess. But the bad news now, alas, is considerably worse.

Suspension of Disbelief.

“I am confident that before the markets open on Monday we can achieve consensus on legislation that will stabilize our financial markets, protect taxpayers and homeowners, and earn the confidence of the American people. All we must do to achieve this is temporarily set politics aside, and I am committed to doing so.” Uh, but I thought the fundamentals of our economy were strong! Apparently now cognizant of our recent economic travails, John McCain announces he’s temporarily suspending his campaign to focus on the Wall Street bailout, and has asked for Friday’s foreign policy debate to be delayed.

If we learned anything from the Palin debacle, it’s that the mythical maverick isn’t above pulling a ridiculous and transparent stunt when he’s starting to sweat the polls. Well, here we go again. Update: Sez Obama, the debate is on. Damn right.

We are all “Socialists” now.

“Let’s be clear about why we’re facing a crisis that could pull down the global financial system. The irresponsibility of individuals who bought houses they couldn’t quite afford pales in comparison with the irresponsibility of the financial wizards who built on those shaky mortgages a towering edifice of irrational faith. Someone in the government should have looked at all those trillions of dollars’ worth of mortgage-backed securities and collateralized debt obligations and credit default swaps and demanded that Wall Street prove that all, or even most, of this purported money was real. But we’re in the eighth year of the Bush administration; adult supervision left the building long ago.” — Eugene Robinson.

Boy, nothing like panic and near-catastrophe in the banking and financial sectors to turn all the stark raving free-market fundies redder than Eugene Debs on May Day, eh? In any event, once again we’re on the verge of learning the hard way that Wall Street does a really lousy job of regulating itself, and that, when push comes to shove, it’s the “don’t-tread-on-me” entrepreneurial capitalists among us who are the first to beg for Big Guvmint to come in and bail them out — at above-market prices. “The only emergency is on Wall Street, and that is entirely of Wall Street’s making. It was the banks that made the loans, the banks that bought the paper, the banks that dumbly believed the models that said that housing prices wouldn’t collapse…How touching to see executives from the likes of Lehman Brothers, not normally an institution associated with widows and orphans, squawk about cutthroat tactics.” And I don’t seem to remember the economic Big Boys, or their mostly-GOP minions in Congress, show such concern about the vagaries of risk when the plight of ordinary folks was being discussed, vis a vis the egregious bankruptcy bill of 2005.

Of course, we can’t just let many of our major financial institutions implode without consequence, and — even though delegating the Dubya administration any more “emergency powers” at this point seems like a colossally bad idea — it seems a given that something will have to be done to sort out all this out, and it will no doubt end up costing taxpayers and aggrieved homeowners a bundle. I just hope, when the dust settles, we remember this time how this all came about, and not just let the idiotic free-market fundies blather on about tax-and-spend liberals killing the entrepreneurial spirit every time some sort of regulatory apparatus is discussed in Washington. We know how that movie ends.

Let’s go to the record.

“There is no secret about any of this. The figures below are all from the annual Economic Report of the President, and the analysis is primitive. Nevertheless, what these numbers show almost beyond doubt is that Democrats are better at virtually every economic task that is important to Republicans.” Not that it’s likely to permate the foul miasma of intellectual dishonesty and outright dumbness that today’s GOP uses to breathe, but Slate‘s Michael Kinsley has recently aired some rather telling stats about the respective parties’ records of economic stewardship of late. “There is nothing here about how clean the air is or how many children are growing up in poverty. The only point is that if you find the Republican mantra of lower taxes and smaller government appealing, and if you care only about how fast the economy is growing, not how that growth is shared, you should vote Democratic. Of course, if you do care about things like economic inequality and children’s health, you should vote Democratic as well.”

Shattered Glass.

“The Glass-Steagall Act is the Depression-era law that separated commercial and investment banking. It was functionally repealed in 1998, when Travelers (the parent company of Salomon Smith Barney) acquired Citicorp. And it was officially repealed in 1999. But recent events on Wall Street — the failure or sale of three of the five largest independent investment banks — have effectively turned back the clock to the 1920s, when investment banks and commercial banks cohabited under the same corporate umbrella.” As Wall Street takes a dive in the wake of several bank failures and near-failures — but, don’t worry, the fundamentals of the economy are strong and everything — Newsweek‘s Daniel Gross briefly discusses the end of the Glass-Steagal era, and what it means for the American economy.

Ten from the Road.

“This is the week that should have effectively ended John McCain’s efforts to become the next president of the United States…During this past week: McCain called the most important entitlement program in the U.S. a disgrace, his top economic adviser called the American people whiners, McCain released an economic plan that no one thought was serious, he flip flopped on Iraq, joked about the deaths of Iranian citizens, and denied making comments that he clearly made — TWICE.” I may have been slacking of late, but others have been keeping up the good fight. By way of Supercres, HuffPo columnist Max Bergmann lists ten campaign-derailing gaffes by John McCain, from last week alone. (So that’s not counting Czechoslovakia, McCain’s switch on Afghanistan, or the unfortunate “ape rape” revelations.) I must say, he really is an astoundingly bad candidate.

Friends in Low Places.

“I need to know if Stayman is a career or a political appointee…I think we can do something about it, but I’m trying to figure out what is the best way to go about it. I don’t want a firing scandal on our hands.” An e-mail trail published by the Washington Post illustrates how Casino Jack Abramoff used the Dubya White House to remove his enemies, in this case a State Department aide advocating labor reforms in the Northern Marianas. (“ Abramoff’s clients wanted to keep paying immigrants less than the federal minimum wage to work in textile factories.“)

Straw Man Economics.

“So you’ve managed to create AAA and BBB securities out of a pile of stinky, risky mortgage loans. Boss, you are a genius.” By way of Web Goddess, the Subprime mortgage fiasco, explained with profane stick figures.

The Petrol Pander.

“I don’t think it’s brilliant economics; unfortunately, it may be good politics. The smart people say ‘It’s stupid,’ and the people who aren’t as schooled say ‘At least it will do something for me,’…I don’t know that anyone connects the dots: that there have been a series of politically expedient decisions…that have added up to an economic picture that is not at all rosy and in fact fairly disastrous.” In an A-1 story this morning, the WP joins the recent general calumny against the Clinton-McCain gas tax cut (which Clinton is now campaigning heavily on in IN and NC — Obama is now pushing back on TV.) “‘You are just going to push up the price of gas by almost the size of the tax cut,’ said Eric Toder, a senior fellow at the Urban-Brookings Tax Policy Center in Washington.” Indeed, it’s apparently such a dumb idea that even diehard Clinton cheerleader Paul Krugman is forced to concede thus. Of course, the reality of the situation hasn’t stopped Bill Clinton from entering full-Pander Bear mode on the issue.

Update: Clinton doubles down, and introduces legislation promoting McCain’s lousy idea in the Senate. Responded Obama: “It’s a Shell game, literally.”

Stop them before they debate again.

You don’t need The Weathermen to know which way the wind blows: This thing is over, and has been for weeks and weeks now. But, ABC held a debate tonight in Philadelphia anyway, and, man, it was a tough slog. [Transcript.] Moderators Charlie Gibson and George Stephanopoulos endlessly trafficked in inanities. (The Weather Underground? Really?) Sen. Clinton found no level she couldn’t passive-aggressively sink beneath: Cringeworthy throughout, she name-dropped Farrakhan and channeled 9iu11iani whenever possible (see, for example, her answers on Jeremiah Wright and Bill Ayers, and she got in Ahmadinejad’s recent remarks as well.) And Sen. Obama seemed tired, a bit rusty, and, after 45 shallow minutes of idiotic gotcha, (justifiably) ticked. (But I thought he still came through in the clutch anyway.)

The only news made tonight? ABC is rather terrible at this whole debate thing. Tonight was basically a fiasco. From Stephanopoulos questioning Obama on flag pins to the tut-tutting about affirmative action to George getting questions from Sean Hannity to Gibson trying to wrest a “no new taxes” pledge from the candidates, virtually every minute tonight was occupied with trite Republican nonsense. Oh, and Gibson’s dim remark at the Manchester debate that two-professor families make $200,000 a year was not a fluke. Apparently, the guy knows less about the economy than John McCain. Tonight he informed us that there “are a heck of a lot of people” making between $97,000 and $200,000 these days. If by “heck of a lot” you mean 14% of the US, well, ok. But some might consider 1 in 7 a rather small minority of the total population, and thus argue that our tax policy should keep the other, more-likely-to-be-struggling 6 out of 7 in mind. Sheesh…less than a week and our friends in the pundit world have already abandoned their newfound blue-collar bitterness.

At any rate, no news or game-changers to speak of. Sen. Obama is still our nominee, Sen. Clinton is still grappling with that fact. If you didn’t watch this tonight, you chose wisely. Update: Having run ABC’s gauntlet of idiocy, Obama brushes his shoulders off, puts distractions on notice, and says no to more debates.