Lighter note

A video library of Gov. Palin's greatest hits that feature a witch doctor blessing her to visions of Putin rearing his head over the US airspace. The potential for this kind of stuff from the wrinkle/wink team is astounding considering that the wrinkle and the wink were anointed as a team just a couple of months ago...

Will the real McCain please stand up?

About a year back, McCain said that homeowners were responsible for their own futures and they were primarily to blame for bad investment decisions taken during the purchase of their homes. Yesterday, McCain proposed a $300 billion bailout for homeowners and a sketchy plan for buying up distressed mortgages. So, he is now for government backed spending before he was against it?

A couple of weeks back McCain said that the fundamentals of the economy were strong. That same day in the afternoon he said that the economy is on the brink of a collapse. He flip flopped from being a believer in the strength of our economy before he came against it in the same day! All of his life, McCain has been a deregulator and believer in the fundamentally flawed assumption that the free markets know best. Now he is an ardent supporter of tightly regulated markets. Which one does he really believe in? I think there is a clear credibility problem.

While he is busy abandoning the 'free markets know best' principle by the wayside as it starts to become an inappropriate calling card, he is planning on reviving the same failed principles to our health care. He plans on forking out $2500 to individual Americans per year hoping that this is going to cover the rising individual healthcare costs. Added to the healthcare proposal are plans on deregulating the entire health care industry. Now that we have failed utterly with the deregulation of the financial services industry, let us try and apply the same failed deregulation policies to our health. Will the real McCain please stand up?

Watching the debates yesterday, I noticed a wheezing, breathless, cantankerous old man barely managing to latch onto questions and mounting vapid combative responses at the debate yesterday. Maybe this is the real McCain.

Oh, I forgot to add. It was clear that Obama won the debate.

Quick reaction to the debates

Knee jerk reaction to the second debate between would be Presidents:
McCain refers to Barack Obama as 'That one'. It is borderline racist! As far as I know, 'that' refers to inanimate objects/things. Andrew Sullivan has it here. As is his style, McCain seemed to come off as condescending and uppity (multiple times).

Image ripped from here.

Pitiful Pitbull

Keith Olberman’s on-screen kinetic energy is a bit too much for me to handle, but his convincing rebuttal yesterday of Gov. Sarah 'pitbull' Palin’s insinuation that Sen. Obama is pallin’ around with terrorists (it does not get more desperate that that) is worth the ten minutes.

How we got here.

Link that explains how we got into this financial mess.

Meanwhile, we might see an emergency rate cut. Desperate measures, but pumping more money into the system may be a recipe towards postponing disaster.

Mavericky behavior alert!

The Federal Reserve Board announced today the creation of the Commercial Paper Funding Facility (CPFF), to help provide money to large corporations and companies. Fed officials didn't say how much commercial paper, which hundreds of companies use to finance payrolls and meet other cash needs, it plans to purchase. The program will continue to run till April 30, 2009.

A bottomless cash withdrawal mechanism, I betcha'.

The Federal Reserve said yesterday that it would start to pay interest on bank deposits for the first time and double its auctions of cash to banks to as much as $900 billion by year-end.

These two moves are over and above the $700,000,000,000.00 bailout.

Say it ain't so, but 1 million Joe six-pack Americans lost homes over the last two years and another million will lose their homes over the next 12 months. I am yet to see a single coordinated initiative on their behalf.

Meanwhile, life goes on as usual for the million dollar bonus CEO's as is evident from this report:

Less than a week after the federal government offered an $85 billion bailout to insurance giant AIG, the company held a week-long retreat for its executives at the luxury St. Regis Resort in Monarch Beach, Calif., running up a tab of $440,000. The executives spent $200,000 for rooms, $150,000 for meals and $23,000 for the spa.

Flawed on many levels

Below are four news snippets that have hidden issues associated with the $700,000,000,000.00 bailout in the papers today: The first smacks of 'inbred nepotism', the second an instance of 'the fox guarding the henhouse', the third reeks of 'siphoning public cash to the CEOs' whilst the fourth talks about 'a clear conflict of interest'.

• The Treasury Department said that it would soon post help-wanted ads on its Web site for asset managers to run the bailout program and that because of the urgency, the hiring may be “through other than full and open competition.”
• Former Goldman Sachs employee, Neel Kashkari has been appointed the bailout czar and will lead the bailout. By the way, a useful way to pronounce this Indian last name is ‘Cash Carry’ per Michelle. Fitting indeed.
• Under a proposal being discussed with the Treasury Department, the Fed could buy vast amounts of the unsecured short-term debt that companies rely on to finance their day-to-day activities. The move would put more taxpayer dollars at risk. Buying commercial paper could open the Fed to difficult conflicts of interest, because it would be juggling the goals of protecting its investment portfolio with its traditional goals of promoting stable prices and low unemployment.
• Administration officials plan to outsource almost the entire bailout effort, which will largely rely on “reverse auctions” in which the government accepts bids from financial institutions that want to sell their troubled assets. The Treasury is accepting bids only from experienced investment managers, almost all of which are likely to be either sellers or buyers of mortgage-backed securities.

Is it any wonder that the economy is in shambles? Meanwhile, the presidential candidates seem to be busy launching personal attacks at each other. Nero fiddles while... The bailout looks more and more like a big 'up yours' neon sign out of D.C.

Photos of Kwang-Young Chun's mulberry paper on small polystyrene form sculptures at the Robert Miller Gallery (exhibition on from Sept 4 - Oct 11)

John McCain and Keating Five: A documentary

From here: The Keating Five were five United States Senators accused of corruption in 1989, igniting a major political scandal as part of the larger Savings and Loan crisis of the late 1980s and early 1990s. The five senators, Alan Cranston (D-CA), Dennis DeConcini (D-AZ), John Glenn (D-OH), John McCain (R-AZ), and Donald W. Riegle (D-MI), were accused of improperly intervening in 1987 on behalf of Charles H. Keating, Jr., chairman of the Lincoln Savings and Loan Association, which was the target of a regulatory investigation by the Federal Home Loan Bank Board (FHLBB). The FHLBB subsequently backed off taking action against Lincoln.

Painting Post

'Moksha II', Oil on canvas, 88" X 84", 2008

Continuing the series of paintings started here, I completed this last night. This took about three weeks to complete. I used a deep cadmium red hue and it seemed to contrast and overlay well over the un-stretched, non-gessoed canvas. I liked it.

Priceless! VP debate on SNL

Link here. Really worth a watch.

In a very telling comment yesterday, Palin called Afghanistan, our neighboring country.

“They are also building schools for the Afghan children so that there is hope and opportunity in our neighboring country of Afghanistan,” she told several hundred supporters at a fundraising event in San Francisco.

Fox guarding the henhouse alert...

From here:

Ed Forst, a former Goldman Sachs executive was hired by Paulson to head the bailout transition team. He started work last week and is charged with helping establish the new Office of Financial Stability. Treasury Secretary Henry Paulson is hiring as many as 10 asset-management companies to join the lawyers and bankers he is recruiting to kickstart the government's new $700 billion bank-rescue program.

AFL-CIO Treasurer Richard Trumka on Obama

My mother was a factory worker.

Feeding on the remains..

Well, now that the $700,000,000,000.00 bailout has passed, the vultures on Wall Street can move in... Here is a precursor to what we will see. In short, a feeding frenzy.

From here.

The U.S. Treasury hired State Street Bank and Trust Co. and Barclays PLC to manage its mortgage-backed securities purchase program announced last month. The Treasury hired the firms on two-year contracts that can be extended for up to three more years, the department said today in Washington. Barclays and State Street will receive fees of 3 basis points for the first $5 billion in assets under management, or a potential total of $1.5 million. They get 2 basis points on the next $5 billion, and 1 basis point on assets above $10 billion.

For Main Street homeowners facing foreclosures who saw little relief in the bill, here is a way out of the toxic mess:

Fannie Mae said it will set aside the loan of a woman who shot herself as sheriff's deputies tried to evict her from her foreclosed home. Fannie Mae foreclosed on the Akron, Ohio, home of Addie Polk, 90, after acquiring the mortgage in 2007. Addie Polk, 90, of Akron, Ohio, became a symbol of the nation's home mortgage crisis when she was hospitalized after shooting herself at least twice in the upper body day before yesterday afternoon.

Cow patty with marshmallows and pork lard - Part deux

Michelle Malkin is liveblogging the latest attempt to pass the cow patty with marshmallows bailout bill (the Senate seems to have added lots of pork lard to the stinking concoction).

Rep. Jeb Hensarling talking about the bailout in the floor of the House today:

“I fear that the legislation before us still remains more of a bailout than a work out. I fear it undermines the ethic of personal responsibility. I fear that it rewards bad behavior and punishes good. But my greatest fear is that it changes the role of the federal government in our free market economy, which despite its current problems, remains the envy of the world. How can we have capitalism on the way up and socialism on the way down? If we lose our ability to fail will we not in turn lose our ability to succeed? If Congress bails out some firms and sectors, how can it say no to others?

We must be very careful as we address this financial crisis to ensure that any short-term gain does not come at the cost of even greater long-term pain – that being the slippery slope to socialism. The thought of my children growing up in America with less freedom and less opportunity is a long-term pain I cannot bear. Therefore, I will again vote ‘no’ on this legislation. And as I told my colleagues before the last vote, when I cast my ‘no’ vote, I will cast it with some doubt.

"You can breed the pigs and buy the corn and get on; You can raise the corn and buy the pigs and get on; If you buy the corn and buy the pigs to feed, you haven't got a chance; But if you breed the pigs and raise the corn you'll make money." - Louis Bromfield

On yesterday's debate - II

After reading my previous post on the debate last night, a reader wrote this in... I could not have said it better...

Since when is it the American standard for our top leaders to be like us? Shouldn’t they be exceptional? Why can’t we demand people who can answer the questions they’re asked articulately, people who live by the rules they impose on others and lead by example? Why do we want someone who could have a cup of coffee with us at a soccer game?

I just find it entirely frightening that Palin could be president, and doesn’t know anything about the country, our issues, international relations, or even thinking on her feet. And I remain resentful of the notion that because I voted for Clinton in the primaries, I’d vote for Palin now, regardless of an entirely opposite worldview.

So – I feel pretty strongly about her, if you couldn’t tell. I thought Biden did well, but definitely had to pull some punches or he’d be seen as patronizing. I would have liked for him to have torn her apart, but that would’ve been politically disastrous.

On yesterday's debate

If yesterday's debate was a contest on who could appear folksier, homely and cutesy then Gov. Sarah Palin hit the ball out of the park. Of course, that is not what debates that help us choose leaders for our nation are about - or is it? With nowhere to go but upwards, she did not have a meltdown that most predicted. In fact, she came off as very articulate, very clear and lucid on every answer - except that her responses were not really answers to the questions posed. She managed to go off tangent to just about any and every question asked of her on policy, healthcare, Iraq and domestic affairs. She also relied on this strange circular logic where on the one hand she said that Sen. McCain will enforce strict governmental oversight while in a retort right after said that government is the problem and needs to get out of the way… One cannot have it both ways!
When did expectations sink so low that when reactions the next day are 'Thank god she did not embarrass us' became the standard to judge vice presidential candidates?

Sen. Biden on the other hand was fairly calm and collected with his answers. His answers were more direct and to the point and he managed to produce pertinent answers to questions asked of him. In particular, I was shocked by the following factoid ‘we have spent more money -- we spend more money in three weeks on combat in Iraq than we spent on the entirety of the last seven years that we have been in Afghanistan building that country’. I have not fact checked this, but if true is simply an astounding example of misguided leadership. Of course, expectations that his answers would be long winded, empty and airy were not fulfilled. Here again we breathed a sigh of relief and said, ‘Thank god, he did not shame the campaign with his gaffes’. Of course, he was definitely, very definitely more Presidential of the two and handily won the debate.

In our fervent prayers that candidates scrape by and not embarrass themselves, we are lowering the bar for ourselves in general and for the country at large.

In keeping with her style, Palinesque moments that had a 'Kouric interview' feel to them abounded - some of them here:

• “Nuclear weaponry, of course, would be the be all, end all of just too many people in too many parts of our planet” – magnetic poetry alert.
• “The reason we don't read about Afghanistan anymore in the paper, it's succeeded.” – the last I checked there was a growing Taliban insurgency in Afghanistan slowing winding its way into Pakistan.
• “As we discuss ANWR there, at least we can agree to disagree on that one. I will keep pushing him on ANWR” – I have no idea what she meant here…

Full transcript here.

On today's Vice-Presidential debates

Gov. Sarah 'pitbull' Palin will debate Sen. Joe 'gaffe' Biden tonight. Ms. Palin is someone who took the national stage at the Republican National Committee a month back and derided individuals involved in community organizing and community service. She is someone who makes sure women are made to pay for rape kits after they file a rape report. The list goes on – there is no need to repeat it here… Of course, with the loquacious Joe Biden’s ‘let me ramble on’ demeanor juxtaposed alongside Sarah’s ‘short on substance’ rants (of late especially), it promises to be an interesting evening.

At this point, short of Ms. Palin actually passing out or throwing up on the podium, her handlers have lowered expectations so much that all she has to do is remain mum through the whole debate and she will be declared winner…

This was her recent response when asked about the newspapers she reads: “Um... all of 'em... any of 'em that... um.. have been in front of me over all these years... um...”
Biden is not too far behind. Just last week Biden told us that Franklin D. Roosevelt had appeared on TV to explain the market crash of 1929. The problem with that statement was that Herbert Hoover was president at that time and television did not start appearing in American homes until years after.

I forgot to mention, among her moderate list of accomplishments, pathological lying is under-reported but does stand out prominently. Her list of lies keep growing (see Andrew Sullivan’s list of 15 absolute lies told by her here). I am almost inclined to say, let the best person win, but in this case, I am sure that Palin’esque politics might not be the best for us at this stage. As someone was joking the other day, while her boss Mr. McCain might suffer from incontinence, she seems to suffer from a different malady - incompetence...

Bailouts and excise taxes for wooden arrows designed for children

From a three page 'give all ye have to King Henry' bill to a 451 page bailout behemoth (pdf) - the bailout proposal has come a long way and is being voted in the Senate tonight. I am actually tired of laying out its defects (I laid it out here, here and here). As reported by dealbreaker first, the section on excise tax for certain wooden arrows designed for use by children in the bill makes no sense. No, I am not kidding. If you go to page 300 and 301 of the bailout bill you will find it. Indications are that this is going to pass - warts and all.

Bailout angst on Wall Street continues - pictures

Stepping outside for lunch, one is greeted nowadays by signs that seem to exude a labor union type dispute in a factory setting. It was funny to see Main Street collide with robotic pin striped suits strutting around Wall Street...

An intrepid man and woman team from dirtymoney.com managed to climb up a couple of flagpoles behind the iconic bull in Lower Manhattan and plant an American flag with the words FORECLOSED? emblazoned on it. They seem to have climbed the narrow poles using makeshift harnesses and cords. Impressive and dangerous, I must say. The scene below them was fairly chaotic with at least a hundred police officers and emergency workers looking to find some way to coax them down the poles.

It was an interesting scene - a busload of fairly clueless Oriental tourists somehow descended from nowhere and added to the general pandemonium.

Finally, the guy gets off the pole after about a half hour. He was greeted by the waiting arms of the officers who were fairly helpless in dissuading him earlier...

He was promptly read his rights and handcuffed and whisked away. His lady compatriot had scaled down earlier and faced a similar fate.

Meanwhile at a building overlooking the Stock Exchange, an enterprising group of young women decided to don these masks and placards around their necks with the words 'Greed Kills'.

I thought the most interesting part of the afternoon was this old individual casually resting against a trash can with his flute enjoying his dulcet production while the girls were protesting with their death masks above him. He seemed to be out of the whole system - in his own world..

Two links

For the policy wonks, here is a Brookings institution guide on fixing the financial quagmire that talks about longer term fix's to the economy and ideas for a better regulatory framework. Both of which are absent from the current bailout plan that the Senate hope to vote on this evening...

The report gives examples of how the following high level recommendations that actually could create a better regulatory system to prevent such a quagmire from occurring in the future.

First, financial instruments and institutions should be more transparent. Second, financial institutions should be less leveraged and more liquid. Third, financial institutions should be supervised more effectively, with greater regard for systemic risks.

Wow, this is the second time I seen the word quagmire being used to describe a set of catastrophic global events that have happened over the last six years. The first being Iraq...

Crude, How Wall Street is screwing America: A cogent explanation of how we came to $4/gallon oil and the eminent contributions of Mr. Clinton and the current POTUS. Of how actual regulation was whittled away slowly but surely to create a feeding orgy for commodities traders on Wall Street and of how the word ‘stay-cation’ became suddenly popular.

In stark opposition to the oil crisis of the 1970s that left Washington in a state of panic and Americans lined up at the gas pumps, the seeds of the current condition may well have been planted not in the Middle East by the OPEC nations, but right here at home, by the very lawmakers now scrambling to undo what they set in motion.

oil is going down. Has India and China dramatically cut back? Nothing has changed and, in fact, the supply-demand factor has probably gotten worse because of Russia's aggression [and] the severe weather, but oil is sinking, sinking, sinking. How can that possibly be?"

Preventing another Bremer disbanding in Iraq

Even if McCain credits the violence reduction in Iraq to the ‘surge’ (supposedly his creation where we bolster American forces on the ground in Iraq with additional forces until stability was reached), it is clear that the current lull in violence in Iraq was due to a combination of forces at play. The surge was one of them. The other forces at play were the creation of a volunteer army called the Sunni Awakening and a truce agreement by Moqtada al-Sadr. These disparate forces fortuitously came together at about the same time helping restore a relative calm which has prevailed for the last 8 – 10 months. McCain uses this to his political advantage, but that is another story.

Of course, the Sunni Awakening involved the United States paying $300 per month per person to about 100,000 Sunni volunteers (many of whom are former insurgents themselves who fought and killed American forces) to take up arms against the Al Queda.

Today, October 1st, the program to pay, train, coordinate and manage the armed Sunni volunteers will shift from our hands to the Shiite controlled Iraqi authorities – to the hands of the interim government of Iraq.

The following statement by the government of Iraq is cause for extreme alarm (from here):

Baghdad has said 20 percent of them would be absorbed into the country's security forces and that most of the remainder would be considered for civilian jobs.

It may not a wise decision to lay off about 80,000 volunteers telling them that they would be ‘considered’ for future civilian positions. One of the main reasons for the civil war quagmire that we were in can be easily traced back to a flawed decision in 2003 by the interim administrator for Iraq. Paul Bremer’s decided on a whim that it is in Iraq’s best interests to disband an entire standing Iraqi army, it’s civilian Baath party based government and the police force and start from scratch. Elements of the civilian and military population (armed to the teeth) left over from that fateful Bremer purge were absorbed into a still fomenting insurgency helping fan its flames higher and wider. The rest was history variously described as quagmire and chaos.

My fear is that this strange decision by the Iraqi government to absorb just about 20% of the existing armed volunteers of the Sunni Awakening will lead to a repeat of the results seen from the fateful 'Bremer disbanding' – a legion of armed young men out on the streets with little to do, no work to keep them busy and devoid of any real responsibilities.
Guess where they will turn to next. More violence…

Like they say, an idle mind is a devils…

Jodie Carey, Untitled Wall Hanging, Bone, feathers and calico, 108" X 74", 2008. On view at the Daneyal Mahmood Gallery in Chelsea (4 Sept - 11 Oct, 08')

Market Reaction

Dow is up by almost 400 (10,738.28 at 3pm today). We need to take time and plan the bailout better. The world has not ended as was predicted by the scholars and pundits at the Fed / Treasury.. Maybe I am missing something or am very very stupid.

From Dealbook:

The Center for Responsive Politics, a Washington nonprofit group that studies money and politics, reports that on average, lawmakers who voted in favor of the bailout bill have received 51 percent more in campaign contributions from sources in the finance, insurance and real estate industries — or FIRE industries, for short — over their congressional careers than those who opposed the emergency legislation..

Quick Comment

Taxes will go up. Interest rates will go up. Inflation will go up. Prices of consumer goods will go up. Total US debt will go up. Budget deficit will go up. Dollar will go down.

Why should 300 million people be stuck with the bailout of a few people on Wall Street? I still do not understand how they came up with the $700,000,000,000.00 number other than Mr. Paulson telling us that it needs to be ‘sufficiently large’, we still have not heard a logical price or model for valuation of distressed assets from bruised Wall Street firms, we still do not have a proper regulatory system in place nor regulation to prevent such a thing from happening in the future, curbs on executive compensation are next to nothing currently and Mr. Paulson still remains King Henry.

The bailout done right is needed very much and will be useful for all of US. Ramming a half digested piece of you know what down the throats of the taxpayers is not.

The latest New Yorker cover is memorable.

"They're our next-door neighbors and you can actually see Russia from land here in Alaska, from an island in Alaska." - 'POTUS is only a heartbeat away' contender...

Meanwhile, the ‘no-contraceptive’ agenda continues…

Report on a new ‘conscience clause’ recently added by the U.S. Department of Health and Human Services that can legally help your pharmacy clerk from not filling out the pill, intra uterine devices or emergency contraception prescriptions just because of the clerk’s religious beliefs. The interesting aspect is that now health care agencies, physicians and clinics can legally refuse to offer even referrals citing personal, moral or religious beliefs.

The administration has proposed a new set of regulations that it says will protect doctors, nurses and health care workers who object to abortion from having to participate in providing care they find objectionable.

If workers or organizations declare that the pill, intrauterine device (IUD) or emergency contraception are contrary to their beliefs, they can deliberately withhold both services and information from patients.

Easy access to contraception helps prevent an estimated 1.3 million unplanned pregnancies and 630,000 abortions each year. The rule would directly affect the 37.3 million Americans living in poverty who can’t afford the cost of contraception, especially those who live in small communities where federally funded hospitals or clinics could refuse to support comprehensive family planning.

Huge cow patty with a marshmallow in the middle fails

Looks like the debate will go on in earnest. I heard a little while back that the bailout failed to clear the House. My view is that unless the bill contains clear provisions for the taxpayer to get some money back, unless there are clear provisions for a sane re-purchase price of distressed assets from banks eager to unload their toxicity and unless there are clear rules to limit CEO pay, we will be in limboland for some time. Just my view, but a lot of these lawmakers are going home to get re-elected in a couple of months and it will be the little taxpayer that they will be meeting there. And judging from reactions online and off, the taxpayer does not like what they see - a clear bailout with little to no regulation or oversight...

“A huge cow patty with a marshmallow in the middle of it.” – Rep. Paul Broun’s (R-Ga.) description of the bailout plan. (From Politico)

I guess this is the cue for Mr. McCain to again dramatically suspend his campaign and then - dramatically do nothing...

On Wall Street today: Zeitgeist

King Henry's powers

Mr. Henry Paulson, the Treasury Secretary had originally submitted a bailout plan to the Congress that was all of three pages long and asked Congress to give him explicit authority to do what he seems fit with an arbitrary of amount of $700,000,000,000.00. Specific wording in the three page plan that amounted to hubris included the following:

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.

Congress said that Mr. Paulson overreached and asked for too much and spent about a week crafting legislation that aims to curtail Mr. Paulson’s powers.

Well, here is what we have after the exercise. From here.

• Mr. Paulson can choose to buy from any financial institution that does business in the United States, or from pension funds, with wide discretion over what he will buy and how much he will pay.
• Under some conditions, Mr. Paulson can choose to bail out foreign central banks.
• Under the bill, Mr. Paulson is to buy the securities at prices he deems appropriate. Mr. Paulson may set prices through auctions but is not required to do so.
• Mr. Paulson is directed to “make such purchases at the lowest price” that is “consistent with the purposes of this act.”
• Mr. Paulson does not need the approval of the Fed chairman or the oversight board to buy financial assets not linked to mortgages.

Here is the kicker:

• Mr. Paulson is to be one of the five members of the board watching over his own actions...

That sure is a fine recasting of King Henry's powers...

Lament

The full draft of the bailout bill here. I still do not think this is the right track. The Congress grants full authority for the first $250,000,000,000.00 of a total approved bailout amount of $700,000,000,000.00 to Mr. Paulson rightaway while giving him the authority to appropriate the remaining $450,000,000,000.00 as soon as he deems fit unless both the Senate and the House decide that further appropriations might not be a good idea. The chances of that happening is next to none... This still seems like a bailout of Wall Street fat cats (sorry, could not resist the useless cliche') - regardless of what Mr. Obama and Mr. McCain tries to say to the contrary...

Joseph E. Stiglitz of the Nation said it better than a lot of us...

There are four fundamental problems with our financial system, and the Paulson proposal addresses only one. The first is that the financial institutions have all these toxic products--which they created--and since no one trusts anyone about their value, no one is willing to lend to anyone else. The Paulson approach solves this by passing the risk to us, the taxpayer--and for no return.

The second problem is that there is a big and increasing hole in bank balance sheets--banks lent money to people beyond their ability to repay--and no financial alchemy will fix that. If, as Paulson claims, banks get paid fairly for their lousy mortgages and the complex products in which they are embedded, the hole in their balance sheet will remain. What is needed is a transparent equity injection, not the non-transparent ruse that the administration is proposing.

The third problem is that our economy has been supercharged by a housing bubble which has now burst. The best experts believe that prices still have a way to fall before the return to normal, and that means there will be more foreclosures. No amount of talking up the market is going to change that. The hidden agenda here may be taking large amounts of real estate off the market--and letting it deteriorate at taxpayers' expense.

The fourth problem is a lack of trust, a credibility gap. Regrettably, the way the entire financial crisis has been handled has only made that gap larger.

I want to do more than merely arrive. My whole being is predicated on getting as far inside as I possibly can, for knowledge depends on navigating forbidden waters. As soon as you announce to yourself (or others) that you are "inside", you automatically become "outside", an observer, a person discussing the surroundings.

- Robin Magowan, Improbable Journeys, Evanston: Northwestern University Press, 2002

The debates

McCain keeps making specious claims and Obama keeps defending them.. This way the McCain camp can deny Obama victory and Obama cannot really claim victory - since he is in a position of defence... Plus, not once did McCain look at Obama in the eye - that was very very strange...

McCain looked down at his notes, smiled nervously and fidgeted - unsure most of the time. I did not see the confidence that was supposedly a mark of this man.

This quote I found on Andrew Sullivan cemented a lurking feeling I had watching the debate...

He was scolding him as if he were a school master, but it is far from clear in any of the exchanges that he knew more. Obama was not forceful enough, but he was so much more focused than he was earlier in the year. McCain came off, in my view, as a snide, bitter old man. His comments betrayed the sentiment of, “How dare you even think that you can compete with me.” This is what Clinton thought, and it destroyed her.

Tongue in cheek...

From a statement read at an event marking the release of Best American Poetry 2008, held last night at The New School, in New York City.

As you know, the glut of illiquid, insolvent, and troubled poems is clogging the literary arteries of the West. These debt-ridden poems threaten to infect other areas of the literary sector and ultimately to topple our culture industry.

Cultural leaders have come together to announce a massive poetry buyout: leveraged and unsecured poems, poetry derivatives, delinquent poems, and subprime poems will be removed from circulation in the biggest poetry bailout since the Victorian era. We believe the plan is a comprehensive approach to relieving the stresses on our literary institutions and markets.

Let there be no mistake: the fundamentals of our poetry are sound. The problem is not poetry but poems. The crisis has been precipitated by the escalation of poetry debt—poems that circulate in the market at an economic loss due to their difficulty, incompetence, or irrelevance.

Illiquid poetry assets are choking off the flow of imagination that is so vital to our literature. When the literary system works as it should, poetry and poetry assets flow to and from readers and writers to create a productive part of the cultural field. As toxic poetry assets block the system, the poisoning of literary markets has the potential to damage our cultural institutions irreparably.

Read on here...

Compensation watch

Just about everyone heard about the largest bank failure in US history - Washington Mutual was seized and sold to Chase for small change last night. As is the norm with these things, the ugly head of excessive executive compensation showed up again.

The New York Times reports on the following:

Mr. Alan H. Fishman, CEO of Washington Mutual who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus.

The guy worked for less than three weeks at Washington Mutual… Morally and ethically, something is not right.

Head of Skate

McCain was for debating before being against it after which he now seems to be for it.

In addition to inventing the Blackberry, McCain also is said to be involved in time travel.

History redux

There was yet another exhortation this morning to pass the bailout. We should not rush to pass the bailout like we rushed into a war five years ago… As usual, Jon Stewart deconstructs.

Palintology

Conservative political commentator Kathleen Parker examines Palin in a National Review article and it looks like even conservative women are starting to balk at the prospects...

No one hates saying that more than I do. Like so many women, I’ve been pulling for Palin, wishing her the best, hoping she will perform brilliantly. I’ve also noticed that I watch her interviews with the held breath of an anxious parent, my finger poised over the mute button in case it gets too painful. Unfortunately, it often does. My cringe reflex is exhausted. Palin filibusters. She repeats words, filling space with deadwood. Cut the verbiage and there’s not much content there.

If BS were currency, Palin could bail out Wall Street herself.

Photos - power lines

As China plans its first space walk, they seem to have approved short selling too..

May you live in interesting times..

Space news: The three taikonauts — the Chinese term for astronauts — plan to run tests in space and launch a small satellite monitoring station. They are carrying traditional Chinese medicine on board, in case of sickness, and their diet includes shredded pork sautéed with garlic and grilled beef with spicy sauce.

While on earth: China's action contrasts with regulators in the U.S., Europe and Australia that have banned short selling in the past week to shore up financial shares battered by the global credit squeeze.

Meanwhile here, we seem to be finally having a debate on the bailout - or so it seems...

Thus spake Sarahthustra - II

Continuing the series started here:

Vice Presidential candidate Palin on the benefits of the bailout package on CBS yesterday: "Ultimately, what the bailout does is help those who are concerned about the health care reform that is needed to help shore up the economy– Oh, it’s got to be about job creation too. So health care reform and reducing taxes and reining in spending has got to accompany tax reductions."

Health care reform and the financial bailout!! As hard as I try, I do not see the connection by any stretch of imagination... Deer / Headlights...

On negotiations with the Russians and foreign policy at the same interview: We-- we do-- it's very important when you consider even national security issues with Russia as Putin rears his head and comes into the air space of the United States of America, where-- where do they go? It's Alaska. It's just right over the border. It is-- from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to-- to our state.

What is good for the goose is good for the...

New Yorker's Andy Borowitz has an interesting take on why he is "too big to fail" and makes his case for a bailout.

This is the first time I have ever asked for a bailout from the Federal Reserve. I know what you’re thinking. Why do I deserve your largesse, and I do mean largesse, since I’m asking for five million big ones? The answer is simple. Like many of our nation’s financial institutions, I am simply too big to fail.

Folkert de Jong's sculptural tableau. The Shooting...At Watou; 1st July 2006 on display at the James Cohan Gallery (between Sept 6 - Oct 4th 2008)

Archive trotting

While the reasons behind the current mortgage crisis are myriad, easy down payments, easy access to cheap capital, low interest rates and watered down closing documents were among the leading ones… Here are a couple of speeches which may have been well intentioned...

Remarks by the President at the Conference on Increasing Minority Homeownership at The George Washington University. Tuesday, Oct. 15, 2002 (Full speech here)

To open up the doors of homeownership there are some barriers, and I want to talk about four that need to be overcome. First, down payments. A lot of folks can't make a down payment. They may be qualified. They may desire to buy a home, but they don't have the money to make a down payment. I think if you were to talk to a lot of families that are desirous to have a home, they would tell you that the down payment is the hurdle that they can't cross. And one way to address that is to have the federal government participate. And so we've called upon Congress to set up what's called the American Dream Down Payment Fund, which will provide financial grants to local governments to help first-time home buyers who qualify to make the down payment on their home. If a down payment is a problem, there's a way we can address that. And when Congress funds the program, this should help 200,000 new families over the next five years become first-time home buyers.
.....

I'm also going to encourage the lending industry to develop a mortgage market so that this script, these vouchers, can regularly be used as a source of payment to provide more capital to lenders, who can then help more families move from rental housing into houses of their own. …

Remarks by the President on Homeownership at the Department of Housing and Urban Development Washington, D.C. June 18, 2002 (full speech here)

Probably the single barrier to first-time homeownership is high down payments. People take a look at the down payment, they say that's too high, I'm not buying. They may have the desire to buy, but they don't have the wherewithal to handle the down payment. We can deal with that. And so I've asked Congress to fully fund an American Dream down payment fund which will help a low-income family to qualify to buy, to buy. We believe when this fund is fully funded and properly administered, which it will be under the Bush administration, that over 40,000 families a year -- 40,000 families a year -- will be able to realize the dream we want them to be able to realize, and that's owning their own home. (Applause.)
.....

The third problem is the fact that the rules are too complex. People get discouraged by the fine print on the contracts. They take a look and say, well, I'm not so sure I want to sign this. There's too many words. (Laughter.) There's too many pitfalls. So one of the things that the Secretary is going to do is he's going to simplify the closing documents and all the documents that have to deal with homeownership.

Thanks to Michelle for the link.

Bartolomeo Veneto, 'Portrait of a Man', 1510, Oil on panel

Why the bailout just may not work

The more I read and think about the $700,000,000,000.00 bailout, the less it seems to make sense.

• The $700,000,000,000.00 bailout has a low probability of saving Wall Street banks because the size of the problem is much larger than the subject of this bailout : sub-prime mortgages (defaults from Alt-A's, option ARM's and second mortgage's have not even started).
• The bailout will cause the dollar to drop. In fact the slide has already started. The only way we could raise $700,000,000,000.00 will be to issue debt in the form of Treasury bills. The bills will need to demonstrate higher yields to attract the dollars sitting in China and the Emirates. As Washington starts to print more dollars to repay the high yield Treasury payments, the value of the dollar will fall leading to inflation amidst the glut of dollars. At some point foreign investors will stop buying U.S. Treasuries entirely, potentially throwing our country into a debt crisis)
• At home, the falling dollar will fuel inflation resulting in increases in the prices of everything we import (primarily gas and consumer products). In addition, a weak dollar naturally causes interest rates to shoot up, including those adjustable mortgages...

There are two other factors one needs to consider here:

• Total debt: If Congress signs off on the $700-billion rescue plan, the debt ceiling will have to be raised to $11.3 trillion. That is 70% of our GDP.
• Budget deficit: If Treasury spends the entire $700-billion next year, as some economists expect, it would drive next year's budget deficit, now projected to be around $500 billion, to $1 trillion or more.

Complied from here, here and here.

No way, No how, No bailout…

In other interesting news, the Protect Palin Plan is working just fine while the Free Palin! movement got a taste of what might be in store... It really does not taste too good...

How the $700,000,000,000.00 bailout will ensure that Goldman Sachs employees keep getting their bonuses come December this year...

Desperate measures...

The campaign keeps getting weirder by the minute... Now McCain wants to postpone the debate... Hmmm. In this case it is clear that he was for the debates before being against it...

It might have been a difficult Friday evening for McCain especially if he had to answer questions like the ‘were you for deregulation before you were against it’ flip flop.. (among the many others)...

Conflicted but uplifting...

NPR broadcast this segment of ‘This I Believe' a couple of mornings back as I was driving to work. A Penn State professor talks about his daughter, three-year-old Genevieve Rogers who was born with trisomy 21 (Down syndrome).

I now believe Genevieve is here for everyone. I believe Genevieve is taking over the world, one heart at a time — beginning with mine. I believe that what was once our perceived damnation has now become our unexpected salvation.

Genevieve recently turned 3 and is doing very well for herself. She runs and climbs on everything and loves to wrestle with her two older sisters and her younger brother. She doesn't have a lot of spoken words yet, although her first full sentence turned out to be, "What's up with that?"

She does have over 100 signs that allow her to ask for strawberries, pizza or ice cream, or tell us when she wants to sleep, or play on her computer. She goes to a regular preschool three days a week and seems to know more people around town than I do. I laugh every day because of Genevieve.

On my right wrist, I wear a simple silver chain with three little beads on it. I used to say the three beads signified the third chromosome that results in trisomy 21, Down syndrome. Now when I look at those beads, they simply remind me that I don't ever know as much as I think I do, but I'm always capable of more than I think I am.

Conjecture

• Wonder why Warren Buffet suddenly started to decide on investing $10.0 billion in Goldman Sachs today?
• Did Secretary Hank Paulson decide on unrolling the $700 billion bailout the moment his alma mater Goldman Sachs started to get into trouble? The bailout was announced the day Goldman shares sank almost $30 last Wednesday...
• Why did Goldman Sachs suddenly change its position from a investment bank to a 'commercial bank' last Sunday? Looks like it was in real trouble...

Of course, now Bloomberg news is now reporting this:
Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.

Maybe just an inconsequential conspiracy theory, but the bailout really starts to stink - in investment banks they have a word for this situation: 'conflict of interest'...

Boondoggle dissection

A draft version of the bill authorizing Secretary Paulson to use $700,000,000,000.00 as he pretty much pleases is posted here. A quick, non-economist, layman's readthrough does not seem augur well for the following reasons:

1. How did we arrive at the $700,000,000,000.00 number? Very Unclear.
2. The planned Oversight Board is very very weak and staffed by insiders.
3. To call the section on Executive Compensation 'opaque' would amount to flattery.
4. No clarity on the price that the people would pay to acquire toxic assets.

1. It is customary in planning and budgetary practices to breakdown large dollar numbers into smaller chunks which help demystify and clarify the individual components and constituents which ultimately add upto create the total amount. This is typically done either in the main text or appendices: The only reference to $700 billion I could find was the following sentence:

The authority of the Secretary to purchase troubled assets under this Act shall be limited to $700,000,000,000 outstanding at any one time, by aggregating the purchase prices of all troubled assets held and any expenditures.

No breakup, nothing... Hopefully, a breakup of how the 700 number is clarified in the final version of the bill.

2. Everyone has been clamoring for a strong oversight board - if not to make sure that Secretary Paulson does not go on a trip to Las Vegas with the booty, at least to make sure that the billions are not used in partisan, Street friendly ways. Well, from the looks of it, the oversight board is weak and not independent at all. Judging from the fact that most of the players who indirectly wrote / co-wrote this are on the oversight board - cat guarding the henhouse...

The Emergency Oversight Board shall be comprised of the following:
- Chairman of the Board of Governors of the Federal Reserve System
- The Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation
- Chairperson of the Securities and Exchange Commission
- Two members who are not government employees, having appropriate financial expertise

The first three individuals mentioned were government employees tasked with making sure that we did not fall into this mess in the first place and they failed. Now we put them on an oversight board to bail out companies responsible for bringing the economy to its knees...

Hopefully, we see a little more independent oversight teeth added to the final version.

3. The other item deemed important was the need to put checks and balances on executive compensation such that all entities seeking to sell assets through the bailout under the Act meet some kind of punitive standards. One of the ideas advanced was to limit compensation for the CEOs of such entities to be lower than the United States President... Well, the bill is as vague as it can get in this subject...

The Secretary shall require that all entities seeking to sell assets through a program established under this Act meet appropriate standards for executive compensation and shareholder disclosure in order to be eligible, which standards shall include
- limits on compensation to exclude incentives for executives to take risks that the Secretary deems to be inappropriate or excessive;
- a claw-back provision for incentive compensation paid to a senior executive based on earnings, gains, or other criteria that are later proven to be inaccurate and
- such limitations on the entity paying severance compensation to its senior executives as are determined to be appropriate in the public interest in light of the assistance being given to the entity.

Pretty much means - the CEOs keep on making what they currently get - the bill will couch it in a language so broad and unclear, you CEOs need not have to worry one bit...

Hopefully, we will see clearer punitive measures added to the final version.

4. As far as the prices that they plan on purchasing the assets at – the bill is very, very vague – Are they planning on purchasing the assets at market price (par) or substantially above market price (both of which has its own advantages and disadvantages in a macro economic aspect)…

This definitely needs a lot of work and is not something that the lawmakers should rush and sign…

Lipstick on the bailout, still a bailout

Mr Hank Paulson is performing the job he knows best – peddle snake oil to the unsuspecting masses… Come to think of it, this was what he learned and honed as an investment banker at Goldman Sachs - sell your way into a deal using fancy shmancy words...

Memorable quotes from Secretary Paulson trying to sell the $700,000,000,000.00 bail out plan to lawmakers today.

"this is not an expenditure, it’s an investment”

“if you impose any kind of punitive conditions, this program won’t work and we’ll all lose"

"this is all about the American taxpayer, that's all we care about”

The last statement is hilarious. Maybe the guy thinks the rest of us are complete idiots... The Lede is liveblogging the session...

A discussion draft of the bill here. (via Dealbook)

Wish list

Heard that they are having hearings on bailouts and free handouts over in DC. While the lawmakers are at it, can they throw in a couple of trillions for the following wish list?

• Nationalized healthcare for all residents with options for foreigners to avail of healthcare benefits for a nominal fee.
• Free food and clothing for all US residents with drop box provided at street corners to discard leftover clothing and food.
• Free checking accounts with a guaranteed minimum of $100 at all times for all residents.
• Nationalize the airways with maximum ticket prices not to exceed $100 (with plans for extension of the $100 ceiling to international routes).
• Guaranteed free education, housing, healthcare and any other benefits one can think of for residents under 15 and guaranteed social security benefits for all residents above the age of 15.
• Citizenship for just about anybody who steps foot into the country (even if the individual is in transit). Of course, immediate retroactive citizenships for just about any illegal alien at this point in time is indisputable.
• Authorize and bear costs of building custom designed homes to house just about anybody who feels like they are not satisfied with the one they have already.
• All mortgage down payments capped at 1% of the total value of the house with the remaining payments paid monthly by the home-owners future grandchildren.
• Mandatory one month ‘all expenses paid for’ vacation at a location of the individual’s choice for all US residents above the age of 30.

Some more ideas are in the works, but as soon as they get started with the list above, we could add more…

Olivier Blanckart, 'MoMA Don't Preach', 2008, adhesive tapes, cardboard, kraft paper, trampoline, ink jet print, Life sized. From a recent visit to P.P.O.W Gallery (exhibition runs from Sept 4 to Oct 4, 08')

On that note

Adapted from here: "If you had a stack of $1000 bills in your hand only four inches high you would be a millionaire. 700 billion dollars would be a stack of $1000-dollar bills 44 miles high"

On the $700,000,000,000.00 ‘Honk for Hank’ campaign

I am sure the following is old news:

Hank Paulson, the US treasury secretary on Saturday raised the price tag on its emergency plan to revive the U.S. financial system, asking Congress for authority to spend up to $700 billion to relieve crippled financial institutions of their mortgage-based assets, a sum that would exceed the cost of the Iraq war so far.

What is NOT making the mainstream news rounds is the following plans hatched by Wall Street to benefit from the largesse:

- Blackstone Group, may be interested in pursuing an asset-management assignment from the government.
- Pimco, which manages about $830 billion in assets, would like to be an asset manager for the government.
- BlackRock, a big New York asset management firm, was also involved in negotiations with the government
- Bank of New York Mellon and JPMorgan Chase were also campaigning for a spot.
- While an earlier plan said that only US headquartered firms could sell assets to the government under the program, a later version said sellers could include any financial institution (foreign banks).

So, lets get this right - first these firms use high risk financial instruments to bleed people out of their homes, make their money while the bubble is still strong, then, as the bubble pops, they plan to get the government to take over these risky holdings for pennies on the dollar and as the government guarantees these toxic instruments other Wall Street firms come up and catwalk their way to be money and fund managers for these instruments charging the government additional monies. Reminds me of carrion birds feeding on leftover carcasses after the lions have fed themselves.

At this point, when just about everyone is clear that Wall Street firms and its leaders were overpaid, under scrutinized and overvalued, why would anyone with a sane mind give them even more - especially in the management of these assets that the taxpayer is planning on buying and on top of that - have them charge the taxpayer to manage the assets?

Is this not the time for the government to create a public agency or a corporation that is empowered to drive a hard bargain and acquire these toxic assets for the lowest possible price to protect taxpayers against potential future losses, manage these assets until the taxpayer sees a return on the $700,000,000,000.00 investment and then ultimately sell these assets when they become profitable on the open market thus giving back some of the valuable taxpayer money back where it belongs : TO THE TAXPAYER!? Why should the people who are financing this largesse be NOT allowed to have a share of this ownership?

Any plan is suspect when the leaders of the party who propose the plan itself may not have anything positive to say about it. I am yet to read a single piece of economic analysis that talks about the benefits of this $700,000,000,000.00 socialist rescue effort other than the fact that it will bail out big Wall Street firms (oh, and add to that foreign banks too - after intense lobbying this weekend, they managed to get themselves on the gravy train).

Even William Kristol, a regular commentator on the Fox News Channel and staunch conservative who is normally a champion right wing intellectual mouthpiece cannot muster a single word in support of this plan: He even endorses a novel idea in the realm of executive compensation structures:

It would enable the Treasury, without Congressionally approved guidelines as to pricing or procedure, to purchase hundreds of billions of dollars of financial assets, and hire private firms to manage and sell them, presumably at their discretion There are no provisions for — or even promises of — disclosure, accountability or transparency. 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. - This would punish overpaid Wall Streeters and, more important, limit participation in the bailout to institutions really in trouble.

Michelle Malkin, another right wing conservative blogger had the following to say:

And this is a Republican White House presiding over the Mother of All Bailouts. Every step along the way since stimuluspalooza began last summer, we’ve heard that every bailout step was just a one-off. Each step was supposed to calm the markets. Each new government intervention and allocation of taxpayer dollars was supposed to achieve “stability.” Each new package of goodies rewarding irresponsible behavior and bad financial decisions was supposed to prevent new ones. None did. And now, here we are. This is your Bush legacy — not Pelosi’s, not Reid’s, not Obama’s: A ginormous bailout of every last, failing, panicked financial institution’s illiquid assets that may reach into the trillions — TRILLIONS – when all is said and done.

Paul Krugman, a Princeton economics professor calls it 'cash for trash'. He is right.

If the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place. That’s what happened in the savings and loan crisis: the feds took over ownership of the bad banks, not just their bad assets.

It is especially frightening when Mr. Paulson is demanding what amounts to absolute unfettered authority over the overseeing, administration and the means to manage this $700,000,000,000.00 payout: He demands immunity from review “by any court of law or any administrative agency”. When public officers ask for enormous powers of this kind and ask for blanket protection from any screw-up – one should instinctively be cautious.

This was the same man who said the following with respect to the sub-prime mortgage crisis a couple of years back: “I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained”

Nobody is clamoring for killing the bailout – it will fry the financial world at this late juncture, all one asks for is accountability to the people, ownership by the people and regulation for the people.

Aaron Johnson, 'Star Crossed', Acrylic polymer and pigment on polyester flag, 93 x 128 inches. Photo from a recent visit to Aaron Johnson's show at the Stefan Stux Gallery (runs from 4 Sept - 18 Oct, 08). Reverse-painted acrylic polymer peel paintings on polyester American flags.

The wings of Time are black and white,
Pied with morning and with night.
Mountain tall and ocean deep
Trembling balance duly keep.
In changing moon, in tidal wave,
Glows the feud of Want and Have.
Gauge of more and less through space
Electric star and pencil plays.
The lonely Earth amid the balls
That hurry through the eternal halls,
A makeweight flying to the void,
Supplemental asteroid,
Or compensatory spark,
Shoots across the neutral Dark.

Man's the elm, and Wealth the vine;
Stanch and strong the tendrils twine:
Though the frail ringlets thee deceive,
None from its stock that vine can reave.
Fear not, then, thou child infirm,
There's no god dare wrong a worm.
Laurel crowns cleave to deserts,
And power to him who power exerts;
Hast not thy share? On winged feet,
Lo! it rushes thee to meet;
And all that Nature made thy own,
Floating in air or pent in stone,
Will rive the hills and swim the sea,
And, like thy shadow, follow thee.

---- Ralph Waldo Emerson 'Compensation' from Essays: First Series (1841)

Cloudspotting

Lying as a strategy

Dishonesty seems to be the only option remaining. Now both Obama and McCain are employing the low down tactics... Meanwhile, in Alaskan pork chronicles they got a road to nowhere instead of the bridge.

Thus spake Sarahthustra - I

Reading quotes from the candidate for the next Vice-President of the United States, one is struck by a mixture of confusion or awe - depending on which side of the aisle one leans. Maybe they are extremely profound on a level that I am unaware of or maybe they are so absurdly stupid that the words seem to mock the intellect - either way, these are worth some parsing - dare if you can...

Views on energy: Oil and coal? Of course, it’s a fungible commodity and they don’t flag, you know, the molecules, where it’s going and where it’s not. But in the sense of the Congress today, they know that there are very, very hungry domestic markets that need that oil first,” Palin said. “So, I believe that what Congress is going to do, also, is not to allow the export bans to such a degree that it’s Americans that get stuck to holding the bag without the energy source that is produced here, pumped here. It’s got to flow into our domestic markets first...

Reaction on being asked to be a candidate for the Vice President of the United States: I answered him yes because I have the confidence in that readiness and knowing that you can't blink, you have to be wired in a way of being so committed to the mission, the mission that we're on, reform of this country and victory in the war, you can't blink. So I didn't blink then even when asked to run as his running mate.