The Loyal Opposition

The last twenty four hours have seen a dramatic movement in the policies of the British conservative party, currently in the middle of its annual conference. Witnessing the dramatic collapse of the bailout plan in Washington, the party has abandoned its formerly critical position toward the government and ostentatiously adopted the role of loyal opposition. This is all the more surprising because in the last six months the Tories have been making real headway against the Labour government for the first time in well over a decade, in large part because of the gloomy economic situation.

Only twenty-four hours ago, the Shadow Chancellor of the Exchequer, George Osbourne, delivered a keynot speech centred around a fulsome critique of the Labour’s government’s massive increases in spending over the past ten years, citing them as a central reason why the country is ill-equipped to deal with the global financial crisis. But today, under explicit orders from the Tory leader, David Cameron, all harsh attacks on the government were removed from conference speeches. Even negative hoardings at the conference venue were discretely removed. And in London, senior Tories (not to mention Liberals) went quietly to 10 Downing Street to discuss and agree upon a number of key financial proposals with the Prime Minister, including a planned raising of the threshold of insured savings to £50,000 and potential hiccups in a government-negotiated deal for Lloyds to take over the troubled HBOS group. “We cannot allow what happened in America to happen here,” Cameron said in an emergency address to his party conference.

This is really quite remarkable, especially when placed in contrast with the partisan divisions in Washington. It is also impressive, at first glance, because falling into line behind the Prime Minister gives a huge political advantage to the Labour party (which till now had been trailing badly in the polls). It reinforces the argument made by Gordon Brown at the Labour party’s own conference about a week ago, that now is not the time for “a novice.” But it may well be that Cameron recognises that his party – the one most closely aligned with free market ideologies – that runs the greatest risk of splitting between a pro-banker and pro-market group if partisanship in Parliament grows too severely.

Why should it be that the Conservative response has been so different to the Republicans’ in Washington? After all, they share many of the same core values. I think there are four key reasons: the first, and perhaps most important, is the aforementioned example from the US. Just as the immense losses on the stock market have given a wake-up call to some Republicans who stood against the first bailout, the events on Capitol Hill have wakened the world to the danger of politics coming in the way of government action on this crisis. As I said above, the Conservatives know they have the most to lose if this pattern repeats itself in the UK.

Second, as the stereotype holds, Britain has a tradition of greater tolerance for market intervention, and there are fewer market ideologues to be found on this side of the pond. But I think too much can be made of these much-vaunted national differences, and this is probably one of the least important factors to be considered. More crucial is the fact that the United Kingdom still remains governed by a remarkably homogenous political and cultural elite, who come from extremely similar backgrounds and share backgrounds and lifestyles. This means that there is a natural consensus over certain political issues across all parties in the UK that is lacking in the US. It is notable that I saw no serious commentator or politician over here publicly echo the opposition to the Paulson plan, or imply that the failure of the first bailout bill might be a good thing. In this sense, the diversity of the United States makes problems harder to address, and the dominance of the public debate in the UK by a narrow elite once again produces stability (if not necessarily always wisdom).

Finally, and this is perhaps the most ironic thing, the measures proposed by the government over here have been piecemeal and far less sweeping than those proposed by the Bush administration. There was a great deal of in-fighting over the handling of the collapse of high street bank Northern Rock last year, but there have been few complaints over the nationalisation of Bradford and Bingley (anothing struggling commercial bank) this week. Not only has the government got its act in order this time round and kept its eye on the ball, but it is moving in both a considered and conservative manner. The degree of taxpayer exposure to the costs of bailing out the financial sector thus remains far smaller than it does in the US.

It may be that this is possible because the eye of the storm is in Manhattan, not London. The Bush administration probably feels it has no choice but to take steps that other nations simply could not. But it also reflects a very distinctive political mentality in the two ruling parties, and between the premiers particularly. Brown has always been a naturally cautious politician, and his instinct is to calculate each step, inching forward slowly. This has been his greatest weakness politically in the past 12 months, but it may still prove to be his most valuable asset as well. Meanwhile, as we all know too well, Bush has always been a “all in” kind of poker player. The Bush administration’s response has been badly calculated as much as it has been dramatic, because it asked too much: demanding all the power for the executive, all the benefits for Wall Street, and all the cost for the taxpayer, and hoping that people would accept such a terrible arrangement through fear.

In this way, the brand of right-wing politics the Bush administration has produced has once again been both more aggressive and more state-centred than anything European Social Democrats could dream of.Once again, it makes sense to see the Bush movement as one of plutocracy (where the organs of state are commandeered by an elite for the benefit of an elite) rather than genuine market conservatism.

This is all quite upside down. It should be the left wing party that’s bringing the state into the middle of things, shouldn’t it? Well, that makes it just another way in which the Bush administration will leave in its wake a political world turned upside down.

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Paying the piper

Of course, the last few months of a presidency are the worst time for an administration to get anything out of Congress, anyway. Even in promising situations, the conflict of interest between a president on his way out the door and congresspersons seeking re-election produces difficult tensions to resolve. It’s one of the reasons why so many presidents like to focus on foreign policy issues as the sands of time run out.

But this is no ordinary situation. President Bush had lost all credibility a long time ago, and the Republican party is bruised and battered after opting for a presidential nominee who is so visibly trying to distance himself from their record in office. Old-fashioned conservatives feel the Grand Old Party has lost its way, and after turning a surplus into a world-record deficit through an essentially liberal attempt to ‘remake’ the Middle East and elitist efforts to pile more money into their already stuffed pockets, the administration now wants to double it.

So: many politicians are against the move. But the real pressure here is coming from the people, as shown by the number of Democrats who also voted against the bailout bill when it was defeated this evening. In fact, both parties split down the middle on this issue. Only Massachusetts Democrats some Midwestern states and New Yorkers were solidly in favour of the bill. Reports of the sackfuls of congressional mail coming in from right across the country demanding that the bankers receive no money are hard to ignore for someone when your job is on the line in a month’s time, whatever your party.

It seems likely that some more concessions will see the bill pass in a few days time. The margin of defeat in the House was 228 to 205, so only 13 need to switch for it to pass. This is far from insurmountable. But the price the public demands is that the markets plunge a little further before senators and congressmen bend to the inevitable.

This popular tide against the bill is quite remarkable. There has not been such an unpredicted and powerful wave of populism like this a very long time. Nor is it in any way irrational. Anti-bailout voters recognise some very uncomfortable home truths. This bailout will very likely keep rich people in their jobs and outsource the management of nationalised financial products to the individuals whose greed was the cause of the crisis in the first place. The money will have a terrible inflationary effect, and effectively ruin any chances of producing major reform (for Democrats) or tax cuts (for Republicans) in the foreseeable future. And even if the golden parachutes are gone, who really believes that the bankers won’t still walk out of this with plenty of offshore assets? That’s what they’ve been trained to do.

But this does not mean that rejecting the bailout is the right answer, either. As unpleasant as it is giving money to morally bankrupt plutocrats, the alternative is a banking system which sees its few remaining institutions store all their reserves internally to avoid collapse and refuse to lend. (The consolidation produced through this crisis has already ensured there will be huge competition issues to be dealt with at a later date.) As the inter-bank rate climbs, so will the cost of capital for businesses around the world, big or small. Poor countries will see investment sucked away. Rich countries like America will see businesses go under right across the country, and lay-offs and suffering will follow. The depressing truth is that the only way to get out of this mess is to pay the piper.

But it may turn out to be a good thing that this first attempt at the bailout has failed. The punitive sanctions against Wall Street are still pretty measly in this current version, certainly compared to the liabilities the government is taking on. What we need to see is much meatier punishment, more draconian seizure of assets (at interest, and at prices that favour the buying power of the government at a time of crisis), and we need to see a matching bill on the table with meaningful reforms of the system to ensure this doesn’t happen again. That means far more severe methods for controlling performance-related pay, careful restrictions and regulations re-establishing the walls between commercial and investment banking, and new regulators with real power to police immoral trading. Only with the possibility of seeing a new kind of Wall Street emerge will anything good come out of this crisis. And the time to achieve that is now: for when the crisis is over, the opportunity for reform will have passed us by.

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The real competition this election

One of the few groups likely to regret the passing of George W. Bush from office are the world’s satirists. Until a few weeks ago, they could be found gently (and sorrowfully) ribbing each other over a beer in a shady bar on the lower east side, wondering what they would be able to do without the lame duck president's never-ending supply of malapropisms, idiocies, errors, faux-pas, and nauseating grins and winks.

In such a dangerous economic climate, though, neither party wishes to be blamed for putting another group of loyal American workers out of their jobs. So to help keep those employment figures up, Senator Obama brought forth Joe Biden to join his team, whilst McCain pulled in a young woman he found hanging around a local gas station holding a moose pelt and a telescopic-sighted assault rifle. Ladies and gentlemen, I give you the real competition of this election, the one that will culminate Thursday night in the debate we all want to see (after the quite civilized and reasonably well-informed 90 minutes of dullness we were all forced to sit through the other day): the battle of the gaffes.

As you’d expect from a candidate so young and inexperienced, with few major chances to foul up on the national stage, Governor Palin is severely lagging on the snafometer at the moment. Moreover, the self-destructive decision of the McCain team to restrict her access to journalistic gaffe-recorders means that good opportunities to make nonsensical remarks and expose one’s lack of knowledge are passing the Republicans by at a crucial moment in the campaign.

Still, Palin is not to be misunderestimated, and she has entered into the spirit of the campaign with gusto, making the most of the few chances she’s had so far to spew meaningless tripe. Witness her confused, wide-eyed stare when she read out some stuff on foreign affairs (that an adviser had presumably written on the autocue) in her acceptance speech at the Republican National Convention, or her perplexed reply to Charlie Gibson’s request for her views on the Bush Doctrine (Palinites will of course know this as the single most important development in United States foreign policy during the past decade): “You mean his worldview...?” she queried.

The clear chauvinist Gibson followed this hit below the belt up by asking her why she claimed that Alaska’s proximity to Russia gave her an insight into foreign affairs (presumably in a way that holding a passport or leaving the country at some point in your life does not). “They're our next door neighbors and you can actually see Russia from land here in Alaska, from an island in Alaska,” plucky Sarah replied. She shoots, she scores!

What’s remarkable about Palin’s commitment to replacing Bush's healthy gaffe quotient is the degree to which she’s been able to pluck nonsense from even the most sympathetic interviews. To Sean Hannity, she managed to come up with the following line of meaningless garbage: “Well, there is a danger in allowing some obsessive partisanship to get into the issue that we’re talking about today. And that’s something that John McCain, too, his track record, proving that he can work both sides of the aisle, he can surpass the partisanship that must be surpassed to deal with an issue like this.” Er... what?!

But despite her valiant efforts, there can be no denying that Palin is way behind her rival for the crown in terms of skill and experience at making horrendously foolish remarks. Senator Biden has had an epic career over decades, in which chances to babble inanely have been many and often. To make matters worse, the Obama camp seems to have decided to make the most of his skills by letting him completely off his leash. (Unlike the McCainites, it seems Obama did his research well here. After all, Biden’s reputation stretches back to his 1988 presidential campaign, when he famously went down in flames after plagiarising a speech by Neil Kinnock.)

What makes Biden such a mature and accomplished goof-master is his singular ability to shoot not only himself in the foot, but his entire ticket, campaign and party. Witness his remarkable praise for Senator Obama, as “the first mainstream African American who is articulate and bright and clean and a nice-looking guy.” (Al Sharpton would like everyone to know that he bathes regularly.) Or his recent comment that Hillary might have been a better VP pick than him. The genius of this remark is revealed in the economy of Biden's expression. A single statement undermines not only his own credibility but also his boss’s judgement!

But Biden has had a long period of campaigning to warm up to these levels. Who can forget his wonderful comment to an Indian American in Delaware, that “you cannot go to a 7-Eleven or a Dunkin’ Donuts unless you have a slight Indian accent.” (Not only racist, but mixed up, confusing the customer and the shopkeeper.) Or his efforts to persuade the wheelchair bound Senator Chuck Graham to stand up to receive applause from an audience. That’s more than good planning. That’s a solid blooper instinct built into his bones.

No wonder then that Biden's already well into his stride, telling viewers recently that after the stock market crash in 1929, FDR went on television to reassure the nation. (Er ... you mean President Hoover in 1929? Errrr... and ... television?) Clearly, he brings powerful things to the ticket. No wonder in a recent stump speech, Senator Obama introduced dear old Uncle Joe as “the next President – next VICE president: Joe Biden!”

Some might be tempted to conclude from this that the Democrats have everything in the bag, but there's all to play for yet. With a really convincing malapropism or absurdity on Thursday, Palin could easily shift things in her favour. How much more exciting can it get?

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Hubris and nemesis

As far as I can follow it, this mess originated in a climate of low inflation and easy access to credit that would seem to all appearances to be a good thing. However, banks sought to take advantage of these conditions to make money fast. Amongst other ways, they did so by giving out cheap mortgage deals to as many people as they could. The increased number of purchasers in the market increased demand for houses, which naturally drove up prices.

As the value of housing climbed, more and more people began to buy property not to live in but as an asset offering a return through reselling in the future. Indeed, the ‘real’ value of the assets arguably didn’t change much (since factors like population density, which would change the fundamental value of a house, did not seriously impact the US market; and the boom was accompanied by an accompanying boom in the construction industry, increasingly supply). So people were basically using mortgages as way of speculating on the market, and the banks in turn were speculating on the people who bought the mortgages.

This pattern resembles what happened before the 1929 crash, when people invested in stock not because they thought the companies were valuable but because the continuing upward motion of the market convinced them they were guaranteed a return when the shares were sold the next day. And it resembles the dot-com boom, when people invested in absurd, non-profit making enterprises not because they seriously thought a profit would materialise, but because they trusted that someone thinking along similar lines would pay more for the shares tomorrow than today.

Whilst the collapse of the sub-prime market was the catalyst for the popping of the bubble, the housing market as a whole – and indeed long period of global ebullience, which produced the conditions of easy money and low rates of inflation – was the real cause, which is why the housing crash has had such a large, market-wide impact on access to credit. It’s not just those who bought houses without means to pay the mortgage, therefore, who should take the blame. Theirs were individual failures in decision-making, but the real problem has been systemic risky borrowing against an unknown future.

What has made things many times worse is the way in which bankers leveraged their debts many times over to increase the reward from their investments. Instead of lending in proportion to the value of assets held in reserve, banks lent many times the amount of money they had capital to cover for, since this meant more profits could be made. Mortgage deals were repackage and sold on the market to increase the effects of speculative growth even more. And this has left the investment banks multiply exposed to the downside as the market corrected. And again, this is exactly what happened in the 1920s. (One of the reasons why the repeal of Glass-Steagall may turn out to be so important when the history of this period is written is the way that it allowed ‘Main Street’ type activities to be pushed through the investment banking process.)

If the government proposes to solve the current crisis by assuming the ‘toxic debt’ and freeing banks to continue in their lending to other markets, as appears to be the case, then it will necessarily assume the loss that comes from the correction between peak house prices and their ‘true’ value (I might guess at perhaps 30 percent of the peak price). That means a huge amount of this bail-out, probably several hundred billion dollars, is guaranteed to stay on the books whether the assets are sold off later or not. The Federal Deposit Insurance Corporation (FDIC) will also have to cover the cost of paying individuals out on failed banks, as well, which could also end up being a huge drain on Treasury coffers. As the deficit exceeds the trillion dollar mark for the first time in history, the national debt will go up accordingly. And that means the likelihood of printing dollars to pay for premiums grows ... and that means inflation.

This looks very bad indeed. Commodity prices have been climbing steeply in recent years in part due to the same easy supply of credit, but also due to ‘fundamentals’ (the growth in global population, uncertainty over new oil sources, and so on). As the market fears persist, the inter-bank lending rate will stay high, meaning the government will continue to need to keep interest rates way down if it wants to avoid recession. And now, the assumption of all this debt adds a third source of inflationary pressure to an already volatile mix.

In this sense, the real consequence of this period of collapse and consolidation may not be just in a new look for Wall Street, but a new period of inflation and tight credit. Of course, inflation means price disputes, industrial action, and instability, the worst things for polarising society.

The weird thing about all this, then, is the way these conditions came from a basically triumphalist mentality in the capitalist world. The lesson taken from the 1970s was that inflation was the beast that needed to be tamed, and the success in doing so set off these waves of speculation, leverage and over-investment. The lesson therefore looks like too low inflation may carry its own risks, that an ‘optimum’ rate of inflation may not exist, and that nothing good lasts forever.

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The debate changes nothing

The debate last night did little to change the basic dynamics of this election. Liberal bloggers are suggesting Obama may have benefited from the appearance of poise in comparison to a crotchety, teeth-clenching, patronising McCain. But I personally scored it marginally in McCain's favour, since he was clearer and more to the point, and I imagine his core messages on cutting spending and defending the surge must have played well to core Republicans. But there seems little immediate consensus on the winner, and there were certainly no moments to compare with Reagan's famous put down against Mondale, for instance. More evidence, in fact, that the Obama approach is naturally cautious, and he is trying to win by not taking dramatic risks. He may well be right.

What seems most interesting about these extended exposures, is that it seems much harder for candidates to maintain any facade for 90 minutes than they can with pre-prepared speeches or more direct reporter-candidate interviews. There seems to be something about them both standing on the stage that brings out an extra dimension. McCain appeared cranky last night because right now he is cranky. He's behind in the polls, his risky VP decision is proving so dangerous she's not being allowed out of her house, and his own party is screaming at itself over the bail-out. All the while, this young upstart whose only clear credentials come from opposing a war he considers a patriotic necessity might just beat him. Meanwhile, Obama appeared poised, because that's what he is. His strength and his weakness is the same thing - when it works well, he appears Lincoln-like; when it works badly, he's like that particularly interminable university professor who doesn't know when to shut up. His rambling mode of address presents a natural ambivalence - a sense of nuance that must count in his favour as a president, but doesn't necessarily work all that well as a candidate.

That said, the low blows that I rated highly in my tally last night don't seem to have sunk home. Obama is counting on the same thing as he did over the last-minute Hillary gas holiday: that the American people are a lot smarter about these things than most pundits give them credit for, and that they know what policies the two sides stand for.

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Republican fragmentation

The bailout negotiations continue to defy straightforward predictions. Meanwhile, their political significance for the election is if anything even more hard to read than it was thirty-six hours ago.

Once the initial ‘Pearl Harbor’ moment last week passed by, however, one thing did come clearly into relief. Political divisions have now emerged in the Republican party based on conflicting interest groups rather than just electoral tactics, and these will be extremely difficult to satisfy. Indeed, they offer the potential to break the party as well as the Paulson plan. To most Americans, surely this seems infuriating. The politicians who were primarily responsible for the crisis now seem unable to agree on a solution. If the bailout deal fails, this anger will grow. But if the bailout proposal is passed and still fails to revive the economy, this will become nothing less than fury.

House Republicans have emerged as the primary opponents of the Paulson plan, whilst Democrats, supposedly the party of ‘Main Street’, have signed up at the cost of only a few, relatively cosmetic concessions on executive pay and mortgage relief. There is some speculation that Republican resistance is being stoked by Senator McCain – taking a Ross Perot line on balancing the budget – but in the absence of any clear statement from him, it’s hard to tell. In one sense, this leaves McCain looking rather foolish, since his crusading trip to Washington was intended to ‘save the bailout’, and now it may be his people that are going to scupper it. But it may be his only option when the Democrats so clearly dominate the centre-ground.

In political terms, though, this is not just about the election coming up. It seems hard to imagine these divisions, exposed in such a painful manner, will go away soon. In most cases, they are driven by principle, not the short term politics of spectacle that underpins McCain’s decision-making right now. For at least fifteen years, probably longer, the basic tension between the two powerful wings of the Republican party, the ‘values right’ (Christian right and neoconservatives) and the fiscal conservatives, has bubbled within Republican politics. A Faustian pact for national power has persisted for so long because the Christian right has been mollified by judicial appointments and rhetoric, whilst the vast cost of Bush spending has been covered, in part at least, by a housing market bubble.

Now, all this is unravelling. There is no fundamental reason why economic conservatives and ideological right-wingers should necessarily be in the same party. Reagan cemented an alliance that has endured, but its problems were emerging even within his administration, as unfettered deregulation produced a financial scandal and Christian right-wingers grew frustrated by their failure to achieve significant political goals. During the 1990s, Clinton showed that, by focusing on ‘Eisenhower Republican’ spending concerns, business-friendly regulatory environments and inflation targeting, this fault-line within the Republican party could be played upon to great effect. Once again today, it’s back out in the open.

Where does this leave the election? Well, the Republicans are now in terrible shape. Whatever strategic alternative McCain takes, he risks alienating one or other wing of his party, whilst the Democrats are sitting pretty in the centre. It therefore seems unlikely that McCain will be able to ride the wave of populist anger to his advantage without also paying an equivalent price amongst other core Republican voters, whilst Democrats will vote Democrat either way. More generally, it points to the tremendous opportunity an Obama-elect has to manufacture a new liberal majority: just as long as he follows in Clinton’s centrist footsteps, focusing on prudent economic growth and controlling inflation and the deficit rather than ambitious spending goals and avoids his predecessor’s early mistakes, especially being sidetracked on small interest-group issues.

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Democrats trying to call McCain's bluff

Chris Dodd and Chuck Schumer press release:

"We are pleased to report we are making bipartisan progress on a rescue proposal for our financial markets. During these discussions, we have received significant cooperation and constructive feedback from the other side of the aisle -- with one notable exception. Apart from his unproductive criticisms made from afar, we have heard nothing from Senator McCain on these critical issues. Now is certainly not the time for him to inject presidential politics into these delicate discussions."

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The race for the microphone

The dramatic events of the past twenty-four hours have witnessed a fascinating, and complex, interplay between power and politics – with both sides in the election fight effectively accusing the other of playing partisan games with a moment of national emergency.

In the previous week, we had seen events turn markedly against Senator McCain and the Republicans in their campaign for high office. Whilst the apocalyptic language used by Chairman of the Federal Reserve Ben Bernanke and Treasury Secretary Henry Paulson last week seemed at first to have produced bipartisan support for their proposed emergency $700 billion bail-out plan, the incredible scale of the proposal, not to mention the explicit language in the proposal denying virtually all rights of management to the state (and offering no assets or equity as collateral), produced a huge wave of populist anger inside and outside congress, which this blog has been noting with a mixture of alarm and amusement.

The several point jump that the McCain camp received from its selection of Sarah Palin as Vice Presidential candidate had worn off within a week, and the Republicans were back to the same position they had been in for several months, a consistent trailing in the polls of a few percent. With the tanking of the economy, it looked like this could easily turn into a landslide. To dramatise the scale of the crisis to congress, Bernanke and Paulson were in effect forced to concede that markets – the Republican panacea – had failed: a concession which provided a fillip to populist instincts amongst the Democrats as much as it infuriated the East coast, business wing of the Republican party.

By yesterday morning, this was already producing a significant impact on key marginals: polls giving Obama a nine point margin over his rival for the presidency led to a shift of Florida and North Carolina from leaning toward McCain to toss-up races, and Wisconsin and Michigan from toss-ups to the Obama side. McCain was widely perceived to have missed the boat on the economic crisis, was unsympathetic in trotting out the default Treasury line that the fundamentals were sound, and labelled as part of the problem considering his historic involvement in the Savings and Loans scandal, his admitted ‘weakness’ on matters economic, his robust defence of deregulation and his widely reported five houses and thirteen cars (of which a couple were not American made, considered a great sin in the key state of Michigan).

All this required decisive action from the McCain camp to regain the initiative. Throughout this campaign we have seen a basically consistent trend. With all the fundamental factors – the economy, dislike of the incumbency, and so on – in the Democrats’ favour, McCain has been forced to lead events through dramatic, eye-catching decisions – Sarah Palin being the clearest example – whilst the Obama camp has largely sat back and taken it. At no point so far has there been a strong sense that the Democrats have been driving the election campaign to date, and yet there is so much in their favour that they have remained marginally in the lead. (Not far enough for there not to be some moans of frustration, though. If Obama can lose such a favourable election, it will be a disaster for the Democrats).

This dynamic continued yesterday. As far as it appears, in the morning Obama’s team contacted McCain’s team with a proposal to issue a joint statement on the clogged-up bail-out bill. Immediately, McCain seized the initiative, not only accepting the proposal but giving a swift television conference announcing his decision to suspend Friday’s presidential debate (or “suspend my campaign”, as he inaccurately put it) in order to return to Washington to push through a deal, and called off a planned interview on Letterman (to Letterman's great annoyance). An astute observer might have predicted this– after all, it is nothing more than a direct reproduction of McCain’s decision to call off half his convention in response to Hurricane Gustav, and befits a figure who, far more than Obama, has been a senior player in Congressional issues of this kind before and who has built his popularity this campaign on a Mr. Deeds-like image of going to Washington to sort out its problems. But Obama doesn’t appear to have. He was caught off guard, and in his scheduled conference in the evening – several hours after McCain’s announcement – was forced into lamely attempting to say that “it was my idea first” and that there was no need to call off the debate.

Of course this is politics. If it was really bipartisan, there would have been no need to race for the microphone. But the strategic wisdom of McCain’s decision immediately became clear. Obama was forced into choosing to retreat from the world of presidential statesmanship and ‘new politics’ which he had so carefully developed throughout the successful primary campaign against Hillary, or risk appearing to defer to his more senior senatorial rival. If McCain becomes associated with any deal that is made, and Obama is left out in the cold, this could be a game-changer in the election.

Obama’s decision to publicly demand that the scheduled debate go on is a tricky one. His case – that now more than ever we need to talk to the American people – is certainly true, especially if he starts to craft a genuinely populist message (something he has markedly failed to do so far, despite the fact that Americans are crying out for it). But in the short term, McCain will clearly just refuse to attend and Obama will be left sulking somewhere on his own when the action is elsewhere. This is a great example of how McCain’s more senior role in Congress – at a time when the presidency has deteriorated into insignificance – is playing in his favour.

Nevertheless, I’m not sure even this is going to be enough for McCain to get back again. If he is able to continue to drive events, then perhaps he might get an advantage. But as long as Obama is able to take some of the credit for a deal, then it may be averted. And if a deal happens and the economy continues to slide, which has to be considered a strong possibility, the Democrats are home and dry. Like the RNC call-off and the Palin selection, we may well look back on this as a supreme piece of electoral politics, but one that was destined to fail when the Republicans were in such bad shape.

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Is McCain going to tank?

Pollster.com has changed Wisconsin and Michigan from tossups to leaning Obama states, and North Carolina and Florida from leaning McCain to toss up.

The question arises: with the rapid demise of the Palin bounce and the dramatic rise of the economy to overtake all other issues in this election, is the Republican campaign finally going to tank? McCain's biggest blunders have been on his inability to empathise with people's fears over the economy, and Obama's biggest 'negative ads' have emphasised McCain's inordinate wealth. Obama's people are beginning to remember that righteous anger is not solely the preserve of the right wing in America, and that old-fashioned Populism can be as nationalistic as the next political movement. The strange consequence of a half century of Republicans waving the flag is that people have forgotten the long tradition of Americanism as hatred for the wealthy, the trusts, the monopolists, the bankers, and the plutocrats. Time for the Democrats to wake up: the party of Roosevelt is also the party of Jackson. Break the railroads! Free silver! Destroy the Bank of the United States!

Ok, so maybe some of the slogans need updating, but the point stands. The Republicans are in disarray over the Paulson plan, since it seems to concede that the market has failed the nation. A week or two ago I worried that Biden would come across as condescending in the Veep debate, but not I'm beginning to suspect that this will be outweighed by Palin coming across as just plain ignorant. Let's see in the next week or two if the Democrats are able to capitalize on this wave of hostility to Wall Street and turn this into the first decisive presidential election this millennium...

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History is sexy

That's right: you thought you were signing up for a life of dust and bookshelves, but Andrew Marr is here to inform you otherwise. Move over Paris Hilton: History is now officially sexy.

Ahem. Yeah, right.

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Disaster waiting to happen

The McCain camp continue to try and keep Palin away from reporters. And yet the two fragmentary sentences overheard at her recent foray into foreign affairs prove to be quite enough to make it clear what she knows about the topic.

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Would you like fava beans with that?

So, let's just recap:

- Presidential candidate opposed to the bulk of your party's core ideology
- Vice-presidential candidate who thinks being able to see Russia counts as foreign policy experience
- Complete absence of platform means you're forced to adopt the rivals' reform message wholesale
- Current president, of your party, takes power with no electoral mandate, produces greatest foreign policy controversy since Vietnam, turns national surplus into record national debt and presides over the sinking of New Orleans
- Several senior affiliates to your administration are charged with corruption and perjury
- Banking system collapses
- Fund-raising dwarfed by rival's
- Your own party leads systematic rebellion against your proposals for the largest bailout in history

Short of adopting "Vote Democrat" as their national platform, I'm not sure what else the Republicans can do to lose this election. If the United States doesn't pick the Democrats this time round, they might as well give up and go home. And if Obama's campaign doesn't start producing a coherent message of criticism soon, I'm going to eat my spleen.

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"I'll toss it up, you hit it out the park."

Sarah Palin's grillin' from Hannity reminds Jon Stewart of another very similar interview he'd seen recently...

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Top 5 Rants Against the Rich

In the joyous proletarian spirit of recent days (since the announcement of the bail-out), here's five good rants against the rich, as provided for our enjoyment by political commentators and bloggers of wit:

1. Christopher Hayes of The Nation circulates a curious spam message he recently received. It begins, "Dear American, I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude. I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you..."

2. "Are you a financial executive, partly responsible for the economic meltdown and personally poorer as a result? Well, Slate wants to know why you haven't killed yourself already! ... [W]hat will future generations see when they look back on the great meltdown of '08? Wall Streeters vaguely distraught, but thanks to largely intact personal bank accounts and cannily diversified stock portfolios, not much actual suicide-inducing penury. Still, looking on the bright side, it's early days: Further financial devastation may yet prompt some honorable self-destruction." Cityfile puts a unique gloss on Slate's article about the noticeable lack of penitence in lower Manhattan.

3. "With our economy in crisis, the US Government is scrambling to rescue our banks by purchasing their 'distressed assets'," write the authors of http://www.buymyshitpile.com/. "We figured that instead of protesting this plan, we'd give regular Americans the same opportunity to sell their bad assets to the government. Use the form to submit bad assets you'd like the government to take off your hands. And remember, when estimating the value of your 1997 limited edition Hanson single CD "MMMbop", it's not what you can sell these items for that matters, it's what you think they are worth. The fact that you think they are worth more than anyone will buy them for is what makes them bad assets."

4. "Lying two-faced rat fucker." Blue Herald succinctly describes John McCain's attempts to blame the crisis on Washington and central government.

5. The Wonkette suggests that Dubya do his part in raising the money for the bail-out: "Make him suck Saudi cock for as long as it takes him to earn $10 billion. Give him $6,000 from this sum and tell him to pack his bags, because he’s a-goin’ to the Gobi Desert, alone! (Laura can go live with Babs and Poppy at Kennefuckport until they all die, in the Flood.) As soon as George Bush is dropped off in the desert, take the $6,000 back, because did he think they’d fly him all the way to the Gobi Desert and not ask for gas money?"

There's a nice cartoon in Truthdig as well (click through to see it).

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Ouch - retract thy claws!

Andrew Sullivan's one man campaign against Palin continues with enthusiasm: with a list of twelve lies. I wonder if she can spell potato correctly?

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The electoral peopling of America

This is a fascinating cinematic representation of the changing pattern of electoral politics in US history. University of Richmond, VA has done a great job!

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The logic of crying wolf

Just goes to show that the eroded trust of the last eight years is a commodity that the Bush administration couldn't afford to dispense with...

From the New York Times:

While Congressional leaders in both chambers said they were confident that they could reach a quick deal, it was also clear that Mr. Paulson and Mr. Bernanke would face rough questioning and that initial support for the bailout had begun to fray. Some Democrats said they simply did not trust the president, and drew a parallel to Mr. Bush’s request for authority to wage war in Iraq.

...

Mr. Durbin [Dem-IL], in a speech on the Senate floor, angrily recalled that the administration had similarly requested swift approval of its plan to attack Iraq. “Just as we should have asked more questions about weapons of mass destruction six years ago before we found ourselves in this war,” Mr. Durbin said, “we need to ask questions today about where this is leading.”

You can fool all of the people ... etc. etc.

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Get McCain some therapy

Further to the Ohio thread, the Washington Post has gone to Scranton. Asks locals whether Biden's appeal in this region is enough to pull Obama through:

"... Not that Tom Bell isn't for Obama. Of John McCain, he says: "I think something is wrong with him. I'm telling you -- something is wrong with him. Instead of him running for office, everybody should chip in and get him some therapy."

I suppose perpetual campaigning for twenty five years can do that to you.

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A Post-Partisan World? Fat chance.

Meanwhile, Julian Zelizer has some wise words about what won't be discussed in the upcoming debates.

My only disagreement is on this whole 'post-partisanship' issue. Of course it's nonsensical rhetoric for Obama and McCain to talk of post-partisan politics, and of course it won't happen. People will always suffer from politics. When Gordon Brown came to power here in the UK, he promised to build a consensus through non-political appointments and work through bipartisanship and post-partisanship. That didn't go very well, either.

As Hamilton and Madison would tell you, partisanship is primarily a function of faction and with inequality of property you will always have factionalism. So the only way to truly have a post-partisan world is to engineer one of greater equality. Moreover, faction and politicking isn't necessarily a bad thing per se. It can be bad if it's of the swift boat variety, but it also brings different policy options into starker relief.

The alternative to partisanship is not a ministry of all the talents working together for the common good, but a united establishment class that becomes steadily more divorced from the real disputes over power in society.

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No bail-out without representation? Not quite so catchy, but...

Krugman seems to think he's getting his way. Does the slow realisation that this isn't going to be free money have something to say about the return of the markets to the ski-slope yesterday?

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Horrifying news: Obama refuses to stand in corner with fingers in ears singing la la la la

 

Incredible. Right, I have two questions here. First, do the McCain camp really think that we'll not be able to figure out that Chavez's bleeps are not actually that rude when they provide subtitles along the bottom (as far as I can tell the bleep supposedly translated at shit is actually 'desgraciado', which is more like 'wretch' or 'ingrate', lit. "disgraceful one").

Second, and more important, what are Hollywood's horror movie producers going to do with all their voice-over people working on speaking over this kind of nonsense?

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Bully for Buckeye

So Ohio's going to be a swing state and a bell-weather once again. I think they do it just to get the attention. Where's it going to go this time?

The Buckeye state has correctly selected the right president every time since 1960, and with twenty electoral seats up for grabs, it's almost certainly going do the same this time round. Pollster.com has McCain with a narrow margin of about two and a half percent at the moment (same at Real Clear Politics), Obama led for a while earlier in the year, though, so things could easily shift in the next month.

Indeed, with a couple more weeks of anti-corporate shenanigans, McCain's squeak-through could easily turn into a one or two percent defeat. Part of Obama's weakness was no doubt that during the primaries the state's Democrats noticeably preferred Hillary. But it's hard to see any registered Democrat not coming out to vote with these economic conditions persisting (which they will, if they don't get worse). The Cleveland/Youngstown industrial region will be safely red - unemployment has risen to around 7.5% - but what about the rest of this famously diverse state? Are the rural districts going to stick with McCain? Any Ohioans out there want to give their views...?

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So the soaking begins

Further to my recent post, Soak the Rich!, here's a link to an e-mail posted on Open Left, purportedly from a congressional insider who is "not voting for a blank check for $700 billion for those mother fuckers." Expect an interesting debate over the next few days about the conditions attached to the biggest bail-out in history.

Paul Krugman calls the deal Cash for Trash, and says that government should nationalize the banks rather than bail them out by buying without conditions products which have no value (created in order for bankers to make bigger profits). Presumably the response here is that you can't nationalise the entire banking system: that this isn't a case of an individual institution, Fannie Mae, collapsing, but confidence in the whole thing (and not just in the US but the world)? Bill Kristol, also in the New York Times, also worries, and looks favourably on the suggestion e-mailed to him that, "Any institution selling securities under this legislation to the Treasury Department shall not be allowed to compensate any officer or employee with a higher salary next year than that paid the president of the United States." Fine, let's do that if you like. But how does this produce a new found faith in the banking system and relaxed credit supply, exactly?

This is the point in Japan where the boss is expected to come on the TV and weep and beg forgiveness to the public. C'mon CEOs ... where are ya?

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And speaking of donkeys

Innovative solution to the oil price problem.

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Even Stevens

Ok, a first go at making sense of the polling data from Pollster.com. 208 to 202 in favour of Republicans for the clearest states, with 128 votes in marginal states.

If the currently figures go the same way in the election, McCain gets NV (5), MT (3), IN (11), OH (20), VA (13), WV (5), and NH (4), a total of 61 extra; whilst Obama gets CO (9), MN (10), WI (10), MI (17), and PA (21), 67 extra. Giving 269 to, ouch, 269...! How's that for a consistent four point lead in the national polls, Mr. O?

The amazing thing about this is that, after a half century of primarily ideological politics, the voting system in the US remains astonishingly regional. West coast and East coast and Midwest go blue; far West and South go red. (Although the precise regional coalitions have varied: in 1916, for instance you'd have seen the East and Midwest - and Oregon - go red and the South and West go blue.) Machines and constituency boundaries must tell their own story here.

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The Great Repression is upon us...

... At least according to a very worrying article from Niall Ferguson in the Financial Times, which brings home the truth that we are in uncharted waters here. It is a remarkable fact that none of the heads of the financial world (public or private) will have had adult experience of an economic crisis that can compare to this one. What will the political consequences of all this be?

The fact that recession has dampened inflation may produce short term relief for people, but what happens to inflation with the additional debt currently being incurred? If, as this article suggests, this ends up as 7 percent of GDP, this would be the equivalent of fighting another Cold War on top of its existing commitments. Plus, who knows how much the government will even be able to do? Its rate cuts to date have seemed panicky and have proven ineffective:

The widely read newsletter published by the Bridgewater hedge fund put it bluntly last week: “With interest rates heading toward 0 per cent, financial intermediaries broken and the deleveraging well under way, it appears that we are headed into a new domain in which the classic monetary tools won’t work.” This domain is likely to have a “1930s dynamic”.

Amazing the way that financialese can sound both bland and terrifying at the same time.

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Core texts: Guerrillas and Greenbacks

For the benefit of intermediate students taking my module option, "Guerrillas and Greenbacks: The United States and Latin America Since 1945", here is a list of some useful core texts that you'll be able to use for many of the different topics we cover. Unfortunately, no one of them is perfect, but still these are probably the best of the bunch:

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Core Texts: The Revolutionary Tradition in Latin America

Core texts for intermediate module, "The Revolutionary Tradition in Latin America." Each of these books gives a good overview of the long history of Latin America, which means you can use them to dip into for every week's work. Be aware, though, that we'll be using lots of different books in our weekly work since we cover such a different range of topics.

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Core Texts: Fall and Rise of American Anticommunism

A new term's about to begin. So for the benefit of students taking my period topic option, "The Fall and Rise of American Anticommunism", here's links to your core texts for this term. The first (Heale) is the main text; the second and third (Morgan and Powers) are also useful overviews of the entire topic coming from different political perspectives and will help you each week. The final one (Schrecker) deals more thoroughly with the McCarthy era:

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Soak the Rich!

Some of the people all the time, and a lot of the people in times of crisis, find themselves calling for the richest members of society to contribute a larger share to the general good. When people are struggling to meet their bills due to inflation, lay-offs, mortgage repayments and so on, it offends the sensibility to see the very rich leading champagne and Maserati lifestyles as if there was no tomorrow.

But does it make sense, or is it a case of hair shirts and "economic anthropomorphism" - trying to understand the behaviour of complex economic systems according to 'golden rules' and personal moral codes? Back in the "First Great Depression" (ho ho), FDR passed a Revenue Act in 1935, widely known as the 'soak the rich bill', which increased the top rate of tax (at the time for people earning over $50,000, which would be probably $350-500k in today's money). The interesting thing about this bill? Common historical consensus is that it didn't do much to increase the federal coffers, indeed supply-siders would probably argue that it hurt the economy ... and yet it was incredibly popular.

Right now, there seems to be an emerging trend of anti-rich thought that's similar. Here in the UK, Newsnight did a feature the other night where they asked people in the street if they had any sympathy for suffering financial traders in the current crisis. Surprisingly enough, the answer was a resounding no! Meanwhile, there's been calls from the left wing of the Labour party for several months now to finance measures to support pensioners' fuel bills through a windfall tax on the energy companies, whose profits have gone through the roof since the oil price rocketed. There certainly does seem to be something that's morally offensive about great wealth when poor people might die this winter for lack of heating.

A lot of pro-business writers argue that there's no point in soaking the rich, since it has only a marginal economic impact. So, even if you don't care about the rich and ony care about the poor, increasing the top rate of tax won't really help them. David Ranson in the Wall Street Journal, for instance, points to Hauser's Law, which shows that whatever the top rate for income in the US since 1950, the total tax take has remained roughly the same. Using similar arguments, The Weekly Standard calls Obama's measures to change the tax regime "economic illiteracy." However, here's an interesting article that calls into question the wisdom of looking only at the top rate headline figures (as well as disputing the WSJ graph), and says instead we should look at the effective tax rate, how much people really pay through all taxes, which does appear to have an effect on the total government take. In fact, Obama's tax plans are pretty well costed, it seems to me (admittedly no expert).

What does all this mean? It means we should think more clearly about the purpose of taxation. Is it to promote general economic growth (regardless of who is making the money), to promote "fairness" (that is, more equal income distributions), or to maximise the tax take of the Treasury? Ideally, perhaps, it'd be all three. But each may lie in tension with the other.

Back in the day, it was all a lot more straightforward. As always with good ol' FDR, there was only one priority: re-election. In these terms, the Revenue Act of 1935 was a stonking success; FDR's victory in 1936 was one of the largest in American history.

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Is the lipstick wearing off already?

Conventional wisdom is that VP picks don't tend to make a major difference in the outcome of presidential elections. It's just a way of the establishment teeing up rising stars for runs in eight years' time (or, in the case of Biden, trying to find the most establishment figure you can find). So whilst the news media get excited for a while, it tends to fall into the dustbin of the news cycle.

That is increasingly looking to be the case with Sarah Palin. (Biden has already gone quiet, of course.) Statistics from Real Clear Polling suggest that McCain took a significant bounce through the Palin effect - from losing 43% to 48% against Obama on the night of Palin's speech at the Republican National Convention, his ratings to rose 48% against Obama's 45% about a week later. Since then, the polls have tailed off slowly to give Obama about a two percent margin now. Apart from that, and a month or so of ties over March and April, Obama has been consistently leading since February. We must assume that Palin could deliver another bounce at the VP debates (especially if Biden ends up coming across as patronising), but this still won't end up that important on the final day. This consistent margin contrasts strongly with Kerry, who if I remember right was behind for pretty much most of the campaign. This, the fact that Obama's got the money to keep up the press onslaught (look how Hillary's disappeared since the primaries ended), and the worsening economic climate suggest that this election is the Democrats' to lose.

In the past, of course, VPs were often 'favourite sons'. Biden and Palin seem to be picks designed to shore up particular demographic segments, not states. Still, it'll be interesting to see if they do end up have any regional effect - in the key marginal states of NV, CO, NM, MI, OH, NH, and VA...

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Recommended Book: The Forsaken

For a long time, historians of communism in America tended to be confined to two types. The first was the historian who considered the American communist party to be a radical movement for liberation, made up of high-minded idealists willing to fight for civil rights, unions, and gender equality decades before the liberal world caught up with them. To these people, the anticommunist movement was a phenomenon of "hysteria", "paranoia", and "conspiracy".

The second type, prevalent particularly in the optimistic years of the early 1990s, believed exactly the opposite. The Communist Party USA (CPUSA) was a hierarchically-organized movement which took its orders from Moscow and was deeply implicated in espionage activities against the American government, whilst anticommunists, to quote one famous book title, were "not without honor."

Of course, the reality is that both visions have some truth to them. Tim Tzouliadis' new book reveals the importance of understanding the range and breadth of ways that Americans engaged with the Soviet experiment. Whilst many Americans formed their opinion of communism based on little more than what their newspapers told them, others had more direct experiences.

Thousands of Americans travelled to Soviet Russia during the 1930s, most of them idealists who wanted to see the great new socialist world being constructed, some of them hard-headed capitalists who just wanted to make money in what today we'd call an "emerging market." This book tells their story, of the people who experienced the Five Year Plans, the people who fled, and the people who stayed, and ended up in the Gulag.

An important addition to our library on this complex and contradictory relationship.

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A Sense of History

It has been seven years and nine days since we have passed through such an event, that we knew immediately that history was taking place.

Yesterday, the Chairman of the Federal Reserve, Ben Bernanke - amongst many other things, a published expert on the Great Depression - and Treasury Secretary Hank Paulson told senior congressional representatives that a panic had set in on Wall Street, and that we were perhaps days away from a total collapse of the banking system, a comment eerily reminiscent of the advice given Franklin D. Roosevelt when he took office. To address this, the administration has proposed assuming all the bad debt from the mortgage market that began this whole mess a year or two back in a rescue package that people are talking about stretching to $500bn to $1 trillion. (It appears that congress was sold on the need for action when its financial leaders were convinced that the money market instability was now hitting formerly-secure holdings of small investors, not just the financial elites. After Bernanke laid out the consequences of the crisis unfolding, Senator Chris Dodd reports, there was a long silence in the room.)

To get a sense of perspective, this is - by far - the largest single piece of financial expenditure in the history of the United States, and therefore the world. As of August 2008, the US government had spent approximately $550 billion for the entire cost of the war in Iraq.

What will be the outcome of this epoch-defining event? Will it, like the Great Depression, be looked back on as the beginning of a period of massive economic dislocation, and the end of an extended, forty year period of Republican power? Will we see shifts in global power and perhaps even military conflict? Of course, it's impossible to say. Perhaps everything will just right itself next week and people will talk of it in similar terms to the financial crisis at the end of the Reagan administration... One of the many ironies of history seems to be that the more we sense an event has global significance, the less clear what its consequences will actually be.

Things to look for in the upcoming period to get a sense of how bad it's going to get:

(1) Further market turmoil and even bank collapses as no-one seems to know what the implications of this bail-out will be. One hedge fund manager interviewed by the New York Times likened the action to “turning a football game into badminton.” If the markets continue to plunge in the next few months, then we're really in the stink.

(2) Serious damage to the dollar price. One financial expert for the Financial Times: “This is very bad news in the longer run as, at some point, it may constitute a downgrade of US debt and the ensuing dump of US assets could spark a huge run on the dollar. This is some way off and there is a lot of noise to get through but the US Treasury is playing with fire.”

(3) Withdrawal of American capital from emerging markets and foreign direct investment. This was the critical feature that turned the American banking crisis in the early 1930s into a global disaster, which then in turn rebounded on the American economy. Analogies like this still put us somewhere in the middle of 1930 with several years of getting worse to go.

(4) Linked to that, 'contagion' and collapse in other national markets. Russia is already undergoing its own major financial crisis, for instance.

Keep your eyes peeled, people!

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The Shorts and Curlies

The UK Financial Services Authority (FSA) has temporarily banned short selling in the hope of limiting the downside consequences of the current market instability following this astonishing week of Lehman's collapse, AIG's near collapse, and multiple massive mergers.

I'm no financial whizz, and I can see various arguments in favour of this measure. Keeping the stock exchange shut after 9/11, for instance, seemed to dampen the consequences of the disaster, I seem to recall.

But I basically think this is pretty dumb. You're not going to get out of this crisis by stopping people speculating when the basic problem is a lack of liquidity. All you'll do is further wind up trading activities. Market traders are not going to alter their assumptions about the fundamentals of various companies just because they're not allowed to sell, just as traders in consumer commodities cease to bring their products to market when governments step in and fix prices wrongly. This seems to be a case of treating with a brain tumour with morphine to take the pain away.

Speculators generally get blamed in these sort of events. Hardly surprising, since they do perform such a parasitic role for enormous (and ill-deserved) returns. They create nothing, and yet earn more in a year than most of us will in a lifetime. But you can't just blame speculators for the downside and ignore their role in the boom years. And you can't instruct them just to tell you what you want to hear.

In the midst of the Great Depression, a little-known congressional investigative committee was set up by Republican Representative Hamilton Fish of New York. It was charged with looking into the activities of communists in the United States. Amongst the many sins charged against the Soviets, a number of representatives of major business groups trading on the Chicago stock exchange came to complain that the Soviets were using a combination of short selling practices and the dumping of excess wheat on the market in order to bring about a crisis in the American agricultural sector and, eventually, a world revolution. Whilst the idea was an ingenious example of "exploiting the contradictions", the behaviour of the Soviet traders was in fact in line with normal business practice in every way and had only a marginal impact on prices. In a rare show of sense, the arguments were generally disregarded. But it's clear now that the debate was not what it appeared to be at the time: a panicky public was looking for someone to blame in the middle of a banking crisis they didn't understand.

Bottom line: don't shoot the messenger, even if they are the bottom feeders of our society. It's the system, stupid...

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Lipstick on a figment

Reports that McCain adviser Carly Fiorina (she of the $21m Hewlett Packard severance package) has said Palin is not fit to run a major corporation. This is an enormous snafu for the campaign, and it sounds like Fiorina's time is done there.

But actually, when you look at it, she isn't quite saying what the press is reporting. Actually, she was saying that none of the candidates was fit to run a major corporation. In this sense, the error is equivalent to Obama's recent 'lipstick on a pig' comment, in that the mistake was not in the content of the message, but in using a construction that allowed irresponsible journalists to misinterpret its meaning. Obama was referring to a leopard not changing its spots - McCain - but used a construction that allowed him to sound like he was referring to Sarah Palin, following her atrocious lipstick on a pitbull joke at the RNC. Similarly, Fiorina was referring to all the major candidates, but she said it in a way that made it appear to be a critique specifically of McCain's VP.

What is actually offensive about the comment is its meaning, not its partisan value. What Fiorina really said (and here's where it's completely different to lipstick-gate) is that someone capable of being president is not capable of running a major corporation. Presumably, it's necessary to have this astonishing level of self-regard in order to walk away with $42m when you're fired for halving the value of your company, but it is nonsense. Fiorina, you're right: running a business and running America are not the same. Running the most powerful nation in the world is much harder.

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An Intellectual Tradition?

Continuing fallout from Palin selection. The question remains whether her positives to the Republican base will outweigh her negatives to everyone else.

Thomas Frank in the Wall Street Journal points out that Palin's unsourced quotations in praise of small town life came from right-wing journalist, Westbrook Pegler. Pegler came to fame as a columnist for Scripps-Howard in the 1930s but was hired by William Randolph Hearst's syndicate in 1944. He won a Pulitzer for exposes of corruption on the waterfront, but was most noted for his persistent hostility to government power during the New Deal and McCarthy era. Bobby Kennedy's son has been quoted in the Huffington Post, saying, "Westbrook Pegler, an avowed racist who Sarah Palin approvingly quoted in her acceptance speech for the moral superiority of small town values, expressed his fervent hope about my father, Robert F. Kennedy, as he contemplated his own run for the presidency in 1965, that 'some white patriot of the Southern tier will spatter his spoonful of brains in public premises before the snow flies.' It might be worth asking Governor Palin for a tally of the other favorites from her reading list."

Of course, too much can be made from such referentials. Would that we could believe Palin even knew who Pegler was. Her speech was penned by National Review journalist and former Bush speechwriter, Matthew Scully.

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About

Alex Goodall is a lecturer in modern history at the University of York. You can contact him by e-mail at dralexgoodall@gmail.com

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