I guess I shouldn’t have been surprised to see Senator McCain “suspend” his presidential campaign yesterday. After all, he’s a Maverick! But I didn’t expect him to show up in the Senate again–where he hasn’t cast a vote in over five months.
From all accounts I’ve heard, Congressional leaders are making notable progress on a bailout compromise, apart from McCain airdropping himself in for a photo op. If this plays out as I expect, it will be pretty obvious that McCain was a non-factor in getting the legislation hammered out.
One of McCain’s supposed advantages in this race is that, due to his age experience, he is perceived to be better at handling a crisis. To me this maneuver is just more evidence that the opposite is true. Obama has retained a calm, even-keeled presence throughout this financial crisis. In contrast, McCain has been downright erratic.
I want the commander-in-chief with a steady hand on the wheel.

The fiancial meltdown has dominated the news recently. Here are some related takes from around the Internet:

• Bill Moyers interviews Kevin Phillips. Among other things, Phillips identifies seven “sharks” plaguing the economy:
  

  [T]he first is financialization because we’re so dependent on this industry that’s sort of half lost its marbles. The second is that you have this huge buildup of debt, absolutely unprecedented anywhere in the world. The third is you’ve now got home prices collapsing. The fourth is you’ve got global commodity inflation building up.
  The fifth is you’ve got flawed and deceptive government economics statistics. The sixth is that you’ve got what they call peak oil where the world is, to some extent, running out of oil. So it’s not just commodity inflation, it’s a shortage of oil. And then the last thing is the collapsing dollar. Now, whenever you get this sort of package in one decade, you got a big one. And when Greenspan says it’s a once a century, I think it’s another variation but on a par with the Thirties.

• Donald MacKenzie in an informative piece, “What’s in a Number?”, discusses the importance of Libor and how it is calculated
• The Big Picture has “13 Questions for Paulson & Bernanke” during their Congressional testimony
• Calculated Risk similarly has “Paulson Plan: Questions for Congress to Ask“
• Mish, who opposes the Paulson bailout plan, summarizes his objections in “Open Letter To Congress On The $700 Billion Paulson Bailout Plan“
• macroblog answers “What’s a swap line?”
• I see Senator McCain is continuing his comedy tour. Recall that last week he first insisted that the fundamentals of our economy are strong, then proceeded to contradict himself for a couple days.

  Now McCain is criticizing Obama for not showing enough “leadership” during the crisis:

  “Sen. Obama has declined to put forth a plan of his own. At a time of crisis when leadership is leaded, Sen. Obama has simply not provided it,” McCain said. “The truth is we don’t have time to wait for Sen. Obama’s input for our nation to act.”

  The absurdity of this attack, coming from a man who can’t even offer a coherent set of talking points, is self-evident.
  Of course we want to know how a presidential candidate would respond to such a crisis and the principles he would follow. But it necessary Obama rush out a “plan”? After all, such a plan is moot, because he would not assume office for months, and whatever emergency plan we take will have long since adopted. More importantly, why shouldn’t people be taking a few days to deliberate over a solution to this mess? Emergency legislation that gets rammed through Congress inevitably has problems, as we’re seeing with Paulson’s plan. In this case, we’re dealing with hundreds of billions of dollars. We don’t need to create an even larger mess by hurriedly adopting a bad plan. It’s perfectly acceptable (even desirable) to weigh options for a few days.

• Billmon: “Things Become More Serious.”
• Funny: Buy My Shitpile.

A glimpse behind the walls on Capitol Hill:

It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.
. . .
“When you listened to him describe it you gulped,” said Senator Charles E. Schumer, Democrat of New York.

I’m surprised they were so surprised. I’m no financial expert; heck, I don’t even subscribe to the Wall Street Journal. All I do is read news headlines and commentary on blogs. And yet even I could see that, in a highly leveraged system, we can’t absorb record foreclosures and companies writing off billions of dollars without serious consequences.
Perhaps these legislators are surprised because, until now, they have exclusively been getting their financial analysis from Treasury Secretary Henry Paulson’s talking points:

“Our banking system is a safe and a sound one,” Paulson insisted on CNN’s “Late Edition.” He had earlier told CBS, the list of troubled banks would grow.
But “this is a very manageable situation … our regulators are focused on it.” Five U.S. banks have failed this year, compared with an annual average of about 250 during the U.S. savings-and-loan industry crisis in the 1980s, Paulson said..
He said about 99 percent of the 8,500 U.S. banks, holding about 99 percent of bank assets, fell into the highest category of capitalization, a measure of financial health.

Perhaps if the only person you listened to told you that banking is “safe and a sound” and that 99% of banks are healthy, then it might come as a surprise to discover that the world was suddenly on the verge of financial Armageddon.
But if that were the case, you should have second thoughts when then came to you asking for $700 billion to “fix” things, with time of the essence. And regardless of what else is in the proposed legislation, anything containing this should raise a red flag:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Friday I listened to the first half of comedian Rush Limbaugh’s show. It was as if the guy were broadcasting from another planet. Here we were on the heels of the Treasury announcing the biggest proposed bailout in history, along with an unprecedented restriction on short selling. And yet this self-styled “conservative,” who regularly pontificates on keeping government out of the marketplace, only made passing reference to the situation. He spend more time ranting about some inconsequential comment Michelle Obama made than he did discussing a $700 billion intervention.
It boggles the mind that many of his listeners apparently consider him to be a serious issues analyst.

Senate Majority Leader Harry Reid stepped into the no-spin zone yesterday when addressing the financial crisis:

Senate Majority Leader Harry Reid, asked today what new regulatory actions Congress can take, said, bluntly, “No one knows what to do. We are in new territory here. This is a different game. We’re not here playing soccer, basketball or football, this is a new game and we’re going to have to figure out how to do it.”
A Reid spokesman said neither Treasury Secretary Paulson nor Fed Chairman Ben Bernanke offered up any suggestions for new regulatory legislation when they met with Reid in the Capitol building Tuesday night, either.

In other words, Washington doesn’t have an answer for the financial crisis. The treasury and fed are working 24/7 manning the pumps simply to keep the ship from sinking. Whether or not they will succeed in averting a catastrophe remains to be seen.
Meanwhile, it’s refreshing to hear an elected official talk about the situation without calling for an empty generic “solution” to the problem (e.g., more regulation, deregulation, whatever). Despite their rhetoric, I doubt either presidential candidate has a good answer for what’s currently happening. Senator McCain doesn’t even appear to understand what the problem is. Perhaps that’s the reason Obama is getting a mini bump in the latest polls.

I’ve noted that Senator McCain’s campaign strategy appears to be to ignore discussing the economy. Of course on days like yesterday, when the financial services meltdown dominated the headlines, that’s not practical. In that case, Plan B is apparently denial (via TPM Election Central):

Text:

“You know that there’s been tremendous turmoil in our financial markets and Wall St. And it is — people are frightened by these events. Our economy, I think still — the fundamentals of our economy are strong. But these are very, very difficult times.”

An enterprising reporter might ask the senator specifically what he considers to be “strong” in our economic environment. Housing prices down 20%? Residential and commercial construction at a standstill? Eight straight months of job losses? Auto manufactures asking for $10s of billions in government loans? Wall Street firms going bankrupt? The only good economic news we had this summer was export manufacturing, but even that appears to be diminishing as the US dollar rebounds and our trading partners slip into recession.
Inquiring voters may wonder who to believe: Senator McCain or their lying eyes? The GOP game plan is to content that things are basically OK, presumably because a contrary admission would be an indictment of President Bush’s economic policies. So we have Republicans such as comedian Rush Limbaugh, who just last week claimed that the economy is better now than it ever was during the Clinton administration. That’s major-league denial.
McCain does concede we have economic issues, but he pretends as if the problem can simply be solved with a few Wall Street regulations:

“I promise you we will never put America in this position again,” McCain said. “This is a failure. We’ve got take every action to build an environment of robust energy supplies, lower inflation, control health care costs, access to international markets, low taxes and reduce burden of government to allow people to move forward toward a future of prosperity. The McCain Palin administration will replace the outdated patchwork quilt of regulatory oversight and bring transparency and accountability to Wall Street, we will bring transparency and accountability and we will reform the regulatory bodies of government.”

Again, an enterprising reporter might ask McCain which of the Bush energy, health care, or tax policies he considers to be a failure.
As for a regulatory fix for our economy, I’m unclear what regulation will successfully and painlessly deflating the biggest housing bubble in American history. Or that will wipe out the burden of debt, food inflation, health care, and high energy costs that is weighing down consumers. That would be remarkable regulatory oversight and transparency.
In 1992 James Carville famously quipped, “It’s the economy, stupid.” The same is true today. Senator McCain is offering Senator Obama a huge opening by dancing around the problem, if not pretending it simply doesn’t exist. Will Obama capitalize on this error and ride an economic agenda to victory?