There was sharp disagreement among discontented Republicans this weekend about what John McCain should do to save his campaign.
McCain is trailing by double digits in a new Washington Post/ABC poll this morning. He is facing a final chance in Wednesday night's debate to raise eyebrows. What should he say?
Some Republicans think McCain should attack Barack Obama harder on William Ayers - and reintroduce Rev. Jeremiah Wright in the discussion. Some think McCain's only chance to win the election is to win on the economy. (McCain met this weekend with economic advisers to develop a new plan to introduce to voters. That plan no longer includes more tax cuts, Politico reports.)
The only seeming agreement from the backseat drivers: McCain has run a poor campaign. But he has faced an enormous challenge representing the party in office, and campaigns - which are most difficult to run from behind - don't operate on a template. Even the best strategists spend their days adjusting messages that don't work and dropping attacks that utterly fail, until they find something that can allow them to be geniuses.
Our question for you: What should McCain do next? As a Republican voter, what do you want him to emphasize in the next three weeks? As a Democrat, what mistake do you hope he makes? As an undecided, what might you hear from him that could turn your vote?
Tell us what you think here.
Your morning buzz:
John McCain makes his first general election appearance in North Carolina today with a speech in Wilmington this afternoon.
The New York Times introduces us to the man who started the "Obama is a Muslim" rumor.
The Obama ground game: muscle or myth? The New York Times explores in a Sunday story.
As a POW, McCain thought seriously of being president, the Washington Post reports.
The Wall Street Journal says the "solid South" is not so secure for the GOP right now.
Think campaigns are ugly now? Please, says Newsweek.
Monday, October 13, 2008
Morning Buzz: What should McCain do?
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51 comments:
The problem is not McCain's strategy, it's his ticket.
For one thing, very few sane people actually think Palin was the right choice for VP. At this point we should all be able to think rationally enough about the situation to at least acknowledge that she's a drag on the ticket and there were MUCH better options out there who were passed over.
For another, McCain himself is a poor alternative to Obama. McCain is bluntly-spoken, comes across as ill tempered, and sometimes seems "lost" in the issues and arguments. The Republicans needed a communicator and a legitiate maverick on the ticket -- what they got was a guy who's obviously been in lock-step with the party for the past 8 years and has failed to communicate much of anything.
So really, I don't think there's anything he CAN do at this point. It's the wrong ticket at the wrong time.
I want to hear McCain come down hard on corruption and cronyism in our system, whether it is in FEMA, Justice, or in our financial institutions.
McCain has a lot more credibility on this issue. He has stood up to his own party on this in the past, as has Palin. In contrast, Obama was willing to align himself with the crooked slum lord and political fixer, Tony Rezko, for years in order to further his political career.
Patriot,
You hit the nail on the head! I couldn't had said it better. Thanks for the most level headed comment written in a very long time!!
He should simply tell us why he should be president, not why Obama shouldn't be.
Quit talking about what Obama did/didn't do, and try telling us what he (McCain) could/did do.
And get rid of Palin (although that horse has already left the starting gate). She was an act of desperation and poor judgment. But don't take my word for it: look at the polls! It's clearly not just my opinion...
I'm a "Joe 6-Pack" Conservative who's voting Democrat in '08.
One thing I think he should bring out to gain some women voters would be to point out the hipocrisy of what Obama says and does in regards to Women getting equal pay for equal work. the average salaries for Obama's female senate staffers is over $9,000 a year LESS than his male staffers. In contrast - the average pay for MeCain's senate female staffers is almost $2000 a year MORE than that of his male staffers. McCain also has more female staffers in the higher pay brackets than Obama.
He also needs to remind people that Obama voted against providing care for babies born alive in botched abortions, but wants them to lie there and die.
And he needs to pin Obama down to say what bills he has been successful in passing, not just what he is "going to do."
I agree totally with Patriot.You could not have said it any better at all. I can't understand why anyone remotely sane would vote for McCain/Palin. I figure it's pure party vote or racism. There is ABSOLUTELY NOTHING McCain can do at this point.
Great comment by ERichards.
you guys are nuts if you think he'd get rid of Palin, she is by far the best thing he's done his entire campaign. Which is why Liberals would be calling for her head of course.
the amount of Deranged Palin hate is telling stuff, really been a trip watching it all in its various forms.
He should get rid of Palin. He should get a psychiatric exam from an independent psychiatrist so that we know he doesn't have any dementia. He should be totally honest about his and Obama's plans.
McCain should concede. He has no chance of winning and should put the Country First by throwing his support behind Obama/Biden. If he did this he would unite the country at a critical time, make history, and establish a legacy of service to the nation.
Never give up...but give the nation the promise of a change in the politics that are there now so we don't have to elect the other party to get that.
My entire extended family, myself included, have always voted Republican until now---McCain's lack of plans for any real "change", his horrible judgement picking Palin for VP along with the age issue and his negative demeaner have left many Republican voters with no other choice than to pick Obama. I don't think McCain even has a chance at this point and I am throughly energized and excited about Obama. In a nutshell, there is nothing McCain can say to gain popularity now--attacking Obama makes him desperate and it is a joke for him to advise Americans on the economic crisis--wake up, McCain--you are part of the reason we got into this mess.
All Obama needs to win in November is for McCain to keep doing what McCain's been doing. Any new ideas, John? No. Up to date on the modern global world? Not very apparent. And, next time you wish to pander to the disappointed Hillary supporters and indecided "hockey moms," pick someone who can name a few of the newspapers she claims to have read "over the years." In an age of unprecedented globalization is helps to run the largest economy on the planet someone who has actually travelled outside of our borders.
In McCain's defense, however (and this should come as a relief to Republicans), at least he can correctly pronounce the word "nuclear."
First, I must say that I am a democrat who has watched all of the debates on both the republican and democrat side of the fence. I always wanted to make sure that I was able to state both sides of an argument rather than being very partisan. I believe that John McCain has made several mistakes after getting the nomination.
1). Believed that all 18 million voters would turn against Sen. Obama after beating Hillary
2). Picked a running mate who was not verse in the events which voters are concerned with and cannot even state a position without a talking point
3). Tried to use fear as a tatic against someone the voters have heard from for the last 4 years
4). Moved too much away from his original positions in order to win
5). Only repeats talking points given to him. Put down the 3 x 5 cards.
6). Get rid of that phony Joker's smile. I was beginning to think it was a nervous twitch.
7). Move away from the "angry old man" theme
People DO NOT see him as being true to himself. If you view the video where he is trying to tell voters that Obama is not a Arab or a terrorist, you can truly see the pain in his face. He is selling his soul to try to win. I want to see the McCain who stood up against the Bush administration rather than the one who is now embracing him to win.
Quit with the "country first" theme as if no one else puts country first.
He needs to appear as somoeone who would unite us, not make it harder for the next president to lead us all.
For Sarah Palin, put her on news programs to let the american people see more of her than just her Tina Fey routine.. ooops... that is her :-)
Liberals are calling for Palin's head because she's the best thing McCain has done? No, they are HAPPY she's on the ticket because she's the best thing he's done for the Democratic ticket. She's possibly the most unqualified person ever to be on any major ticket.
The only inspiration she provides is to be hateful and cynical at a time when our country is falling apart. It was her speech at the convention that changed my vote instantly to Obama.
My church teaches me to love and help man fellow man whenever possible. This woman who professes to follow those same Christian principles then criticizes and makes light of community organizers? I'm not supporting this hypocricy any more.
Take a real hard look people. What's the real reason you don't want to vote for Obama? At least be honest about it.
I believe the anonymous comment regarding the 7 things that McCain has done wrong is the best and most succinct explanation. I too am a Democrat and would have been satisfied to have the McCain of 8 years ago being President.
After his loss to George W. in 2002 he made a concience effort to move closer to the Republican base in order to secure the nomination in 2008. I was hoping to see him move more towards the center after sewing up the nomination. Unfortunately, as we see by the continued attacks and the selection of Sarah Palin he continues to court the Republican base. To me that seems to indicate that he doesn't even think he has the Republican faithful secured much less the independants or "Reagan Democrats".
Patriot said it best! I couldn't agree more. I also agree with anon post who wants to hear more about McCain from McCain and less smearing of Obama. Putting down the other guy along with an unconrollable temperament is no way to run a campaign or a country. I cannot believe he chose Palin as a running mate; even her fellow conservatives are booing her!
I have never voted for a Democrat nominee in my 45 years of life. I am a registered Republican and have held local party office. This year I will cast my vote for Senator Obama because I am deeply worried about the erractic judgement of a man who makes snap decisions. Senator McCain has a history of poor judgement and the decision to place Palin a hearbeat away from being President is the worst isea anyone could conceive of. McCain sold his sould to the right wing of our party in an effort to win, but in doing so he lost those of us who are truly good Reagan Republicans.
I wish he would throw in the towell. Seems everything out of his mouth lately is either made up as he goes along or is just an outright lie. Surely no one with any common sense is taking him seriously.
Jiff
www.Privacy-Center.net
Republican party has the wrong man out there plain and simple and they are responsible for that. McCain has always been known for being hot tempered and erratic voting to be in politics at all.
Plus I want to know if he has any testing for the mental old age diseases. The man is not just old in years but he acts old and senile sometimes. Or its just his character. Either way its no one that needs to president of this country.
IMO I believe he misuses the term Maverick to make himself look better due to his history on the HIll.
I am 69 years old and there is no way I have the health, stamina, or time in one day to be a leader of anything. Takes me all day to get from one room to another and by the time I get there I forgot why I went anyway. Aging is no joke just no one told me that when I was younger but what the heck it would not have meant anything to me then.
As a Democrat that was leaning toward McCain, my status changed when he picked Palin. Best I can say about her is she has brought back the delightful Tina Fey to SNL.
I want to vote for McCain. The thought of Palin as VP or, even worse, as President makes it impossible to vote for him. I am a woman who is more interested in what someone stands for than what their gender is when I'm in the voting booth.
If he truly wanted to be a maverick he would have chosen longtime friend Lieberman. That would have been a much more dramatic departure and would have made a real statement about his willingness to think for himself and reach across the aisle for the good of the country.
I'm a life long Liberal Democrat, but I can not take the hypocrisy any longer and will be supporting McCain/Palin. I find it disgusting how liberals have treated the VP candidate, with many lies, smears, half-truths and unbelievable amount of Pure Hate. Liberals calling for the Death of Palin is just disgusting, and this isn't touching what they do at rallies against McCain as well. So, for the first time in 40 years of voting, I will be voting for the McCain/Palin ticket, if anything it will keep Obama(who is very inexperienced) out of office and balance out the Democrats in Congress. Divided Government isn't such a bad thing.
I am neither racist nor Republican, but I will not vote for Barack Obama.
In my opinion, a progressive Democrat is tantamount to a socialist. Socialism is not now, nor will it ever be, good for America.
Furthermore, Barack Obama has too many people in his midst that he's trying desperately to disown-- The Rev. Wright, Father Phlegler, Bill Ayers.
I'm waiting for the "Jodie Evans" shoe to drop-- Obama disowning one of his own donation "bundlers" who has already met with not only Hugo Chavez, but Mahmoud Ahmadinejad.
Do I think he will do so? No.
But that makes me neither racist nor Republican, thank you.
It makes me INFORMED.
In my opinion, I'm judging Obama on the content of his character. I challenge others to do the same.
Here is what is scary about an Obama - Reid - Pelosi Govt., the complete trampling of the First Amendment. this IBD editorial today is scary stuff, not just their plans but what they've done recently to silence critics
http://www.ibdeditorials.com/IBDArticles.aspx?id=308354689539729
I'm a democrat and I must agree its his ticket. I think the Sarah Palin pick was a gimmick to sway Hilary supporters. I would have taken him more serious if he would have picked someone like Condelezza Wright.
Hammer him on the issues...theres plenty there...Not consulting Petraeus about the war while saying the surge isnt working, increasing govt spending instead of working for better spending, Govt run Healthcare, Windfall Taxes, Denying religous organizations govt funding for relief efforts. The list goes on but
That should be enough. That should really be enough.
there is the media portrayl of Palin, then there is the reality that average voters saw. the "Speech" and the VP Debate which had more viewers than both the Pres. debates so far. The two images are vastly different, the more Live TV time she gets the better for her. The media needs taped stuff to edit and smear with.
I think McCain should show some real leadership and dump Palin off his ticket and put in someone who is ethically stronger and realistically more experienced. Insert a real Maverick rather than a carnival Pony!
With her being found guilty of "Abuse of Power" (an impeachable offense), Sarah Palin has already lost this election as well as her position in Alaska and she doesn't even know it yet!
I may have to vote Democrat if McCain continues his course!!!
Evidently most of the commenters must only watch the mainstream media. Why not watch some truly unbiased reporting once in a while, like Fox News? They have had several really great interviews with Sarah Palin, and it is very evident that she not only knows what's going on, but has the character and determination to get things done. With energy one of our biggest issues, she is probably the best expert in the political arena today that not only talks about energy independence, but has done something about it.
I find it amazing that people think Obama is the answer to all our problems! No one has yet pointed to one positive thing he has accomplished, other than get himself nominated for president.
He knows exactly what to say to cause the hearer to believe he is saying what they to hear. There is absolutely no substance to anything he says. Everything is about what he is going to do to solve our problems, but he never says HOW he is going to solve the problems. However, if you study his record, whatever solutions he comes up with will create a socialist America, not an America according to the Constitutional intent of our Founding Fathers.
If you think Obama's position as a community organizer, and his associations with ACORN, and the other shady characters he has been involved with is comparable to being the governor of one of our largest states, with the most energy resources, and bordered by two foreign nations, then there's not much chance that you will see the truth of the issues at stake, anyway.
As a Democrat and an American, I think the best thing to be done is stop the negativity and racial overtones of this very nasty campaign. What in the world does Jeremiah Wright or Bill Ayers have to do with Obama becoming President or not? Are the people of the United States THAT afraid of those two men? What about the 2 men in the highest office already? McCain is "associated" with them and they are DEFINITELY SCARY! And Palin? Oh my goodness! The woman is a blithering idiot. But I must admit, she is a great puppet. She must have photographic memory because she knows how to remember whatever the campaign leaders tell her but on her own???????? That is totally laughable. McCain had to go on Katie's show with her the day after her debaucle interview, and then HE came up with such clever witticisms as "gottcha journalism". What in the WORLD is that? The public has a right to know the answers to the questions that were asked.........we can't help it if you don't know the answers or are unwilling to voice them. But please.....stop hiding behind your weak ads, your weak answers and your weak campaign. Send Sarah back to Todd and the people of good ol' Wasilla, and send John on to the retirement village he belongs in.
McCain should announce his support for the "Genesis Plan", the financial recovery package devised by longtime Republican and financial blogger Karl Denninger. The problem with the credit market is TRUST - nobody knows how honest "the other guy's" balance sheet is. The markets won't return to normal function until there is total transparency. Will some banks fail? Yes, but they will fail anyway. The Genesis Plan flushes out "bad banks" because they're insolvent, not because they're not Hank Paulson's buddies (the REAL reason that Lehman Brothers was allowed to die).
And the best thing about the Genesis Plan? NO COST TO TAXPAYERS. The plan:
1. Force all off-balance sheet "assets" back onto the balance sheet, and force the valuation models and identification of individual assets out of Level 3 and into 10Qs and 10Ks. Enact this requirement beginning with the 3Q 2008 reporting period which begins next month. Total taxpayer cost: $0.00
2. Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets. This permanently defuses the derivatives time bomb. Give market participants 90 days to get this done; any that are not listed in 90 days are declared void; let the participants sue each other if they can't prove capital adequacy. Total taxpayer cost: $0.00
3. Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer leverage limits in 2004; prior to that date 12:1 was the limit. Every firm that has failed had double or more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of
the excess taken down monthly. Total taxpayer cost: $0.00
Once 1-3 are put in place then send in the OTS and OCC examiners and look at every financial institution in the United States. All who are insolvent and unable to raise private capital immediately are forced through
receivership where the debt is converted to equity and existing equity is wiped out.
The full plan is viewable here:
http://www.denninger.net/letters/genesis.pdf
The only way for Republicans to win is for McCain and Palin to surrender their nominations so that the GOP ticket features RON PAUL and MARK SANFORD.
How many times will Obama refer to "failed policies of the last eight years"? Get real.
Give me the agenda of the last eight years over his agenda for the next eight years any day of the week.
As an Obama supporter, I have alot of respect for McCain and I have always believed that the mistaken direction of his campaign so far is not true to who he really is. It seems as though his campaign leaders are in disagreement on how his campaign should go. I believe chosing Palin has done more harm than good. Yes, she has energized the HARD-CORE Conservatives. These people who support Palin and who are energized by her negative attacks would have never voted for Obama in a million years anyway. His choice of Palin fails in that she has failed to make a difference with the independent/undecided voters. Nobody at those rowdy McCain/Palin rallys were ever sitting on the fence about voting for Obama.
McCain's campaign died with the awful bailout bill. He HAD to know the bailout wouldn't work and yet he held hands with Bush, Paulson and Obama to help ram it through the Senate. Since it passed 75-24 he could have campaigned and voted against it and seen it pass anyway.
When the bailout bill passed the House, the Dow Jones was over 10800. Now it's at 8960. And it WILL head lower because the plan (which they're already thinking about expanding) will not work.
Economists and investment managers who got this right - Peter Schiff, Jim Rogers, Nouriel Roubini, Janet Tavakoli, Meredith Whitney, and over 200 US economics professors - said the bailout would bomb. But McCain's too arrogant to listen to anybody but himself.
I feel that McCain should compare himself to George Bush and promise that the Bush's and Chaney's relationship to oil corruption has no similiarities to his relationship to Palin and her connection to tap the Alaskian pipeline. Oil has a significant connection to corruption. Also, the Federal Reserve Banks control the format of the economy.He should introduce a plan to safeguard us from their control. He has the potential to make good choices. "Undecided Voter." Thanks
To the poster: October 13, 2008 11:01 AM
Anonymous said...
there is the media portrayl of Palin, then there is the reality that average voters saw.
And, we saw the real Sarah Palin. Go back and check the polls. I keep saying John McCain began to lose when Sarah Palin started talking without the talkingg points, but no one is listening. The interview with Charlie Gibson and then the follow-up with Katie Curic made everyone in the US see her for what she really is. Republicans answer one question. If she is so great with issues, why is she only doing FOX. Why not the other media outlets. Why not Meet the press, This Week or other nightly news shows. I think the other wheels will fall of the straight talk express if she speaks...
People at work now refer to the ramblings in meetings as "Palin Talk" not as a compliment, but a joke.
John McCain will be a loser because of his choice and that is a simple fact, and very few REPUBLICANs are willing to face it was the wrong choice.
McCain should suspend his campaign until the election crisis is over.
If Palin isn't qualified why do people beleive that Obama is qualified? This question is something that bothers me,he has no more experience that she and she is running for VP. Also, people speak about race as a issue, do people consider sex and age as a prejudice? Sure people are
prejudice when 95% of black voters
will vote for Obama.
To the 10:54am anonymous poster, either you are being sarcastic, delusional or you are really a conservative pretending to be a liberal. Either way your post is fictional and ludicrous at best. Whether you support him or not, No one has received more death threats or hate than Obama and its not even close.
To ericrichards at 11:08am, ARE YOU SERIOUS? You can honestly say with a straight face that FoxNews is unbiased? The same network that has been caught this year sending veiled threats to Obama's life? Also, you lost all credibility with me by calling Alaska one of the largest states, which it is not by population, its actually one of the smallest and poorest tax-base, and is bordered by two nations, this makes Palin qualified? Yeah, that's really funny.
People say Obama is unqualified b/c all he has been is a senator and community organizer, but they don't ever mention his educational background, which is unmatched in this election. But these same people forget that McCain has also been a senator, just with a strong military background.
Folks like Rev. Wright and Bill Ayers give us a look at who had an influence on Obama. Why did he associate with them? It is either because he agreed with them or he did not know what was right! That makes him unqualified to be the commander-in-chief.
His treatment of the women on his staff, treating them like their are lower class citizens, is also a stain on his character.
A few facts about me, for context:
- I come from a solidly Republican family: rural folks from Union County who hated Carter and Clinton.
- I have never voted for a Democrat at any level, local or national. I am not and will not become registered with their Party.
- I vote based on two things, issues and character, both in equal measure.
This year I came into the primaries prepared to vote for either side, based on the case they could make for their candidate. At first, I leaned more strongly toward McCain.
Three things changed my vote:
1) McCain's proposal of a "gas tax holiday" in June. This told me that he was neither informed nor serious about changing our energy crisis. Hillary also lost my potential vote for supporting this non-solution.
2) The nomination of Palin for VP. Again this told me that he was not as serious about making substantial changes, as he was about playing politics with Hillary voters.
3) His sudden reversal on key issues such as torture, abortion, Bush's tax policy, domestic wiretapping, and "agents of intolerance" aka his religious boosters. This has only gotten worse with his proposal to nationalize the mortgage industry and hand over ever-increasing billions to the wealthy.
At this point, Obama has my vote very securely. Several of my family members, who I would remind you are VERY pro-GOP, have told me they are also planning to vote for Obama this year because McCain is neither conservative nor genuine.
This is how Obama has taken the lead in our state. The GOP has failed its moderate constituents. Obama, for all our differences in philosophy, at least offers a positive direction and a vision of our future that I can feel good about.
To erichards and anyone else that mentions Palin's 'executive experience'; I believe W had executive experience as governor of Texas and look where that got us.
If Palin isn't qualified why do people beleive that Obama is qualified? This question is something that bothers me,he has no more experience that she and she is running for VP.
McCain's boosters need to understand that this talking point is not working.
It is stupifyingly clear that Palin lacks even Obama's modest experience in the governance of a state or a nation. Yes, she had 21 months of experience as governor of a tiny (smaller than Charlotte) state prior to her nomination. Yes, she had a few years as mayor of a town smaller than Weddington.
But that does not compare evenly with Obama's decade of experience as a legislator. Obama cut his teeth as a representative in Chicago, one of the largest and most complex cities in the nation. He has spent nearly a full term as Senator from the 5th-largest state in the nation. Prior to that he had top-grade experience in civic issues, Constitutional law, and even dabbled in the corporate world. During the same timeframe Palin was a sports reporter and a beauty queen.
The GOP talking-point has been focused on "executive experience", which of course can mean anything from the Oval Office to running a lemonade stand. Since Palin has "executive experience" running PTA meetings we are supposed to believe she and Obama are on even ground.
But anyone with ANY common sense whatsoever can see there is a huge gulf in experience between being a small-town mayor, versus Obama's expertise in civic governance, Constitutional issues, civil rights, and yes even foreign policy.
It's not working, folks -- the ruse is a little too transparent.
lana, I only have a college education. Can you explain your plan that plan in English?
"Socialism is not now, nor will it ever be, good for America."
So what do you think about McCain's plan to nationalize our mortgage and banking industries? His plan is no less "socialist" than anything Obama has offered.
In fact, if you take all factors into account McCain is planning to nationalize our economy more quickly than Putin did to Russia.
Any Republican who is deciding to vote for Obama, certainly never understood what being a Republican meant. Republicans believe in less government control, lower taxes, free market enterprise, Strong natioinal defense, the sanctity of human life from the moment of conception, traditional marriage between one man and one woman, etc.
Obama does not agree with ANY of these priciples, and his policies will void any attempt to preserve them.
Sarah Palin's interviews that were carried by Fox News showed her to be competent, intelligent, and articulate. The Gibson and Curic interviews were designed to demean her in every way possible; she knew that, and refused to play into their inane questioning. They they chopped up the tapes to make her seem to be even more incompetent, and played those sections over and over to convince those of you who are too lazy to really check her out, to say she is not capable of serving as V-P. She is MUCH more capable than Biden, and even more qualified than Obama.
Besides her executive experience as a mayor and governor, she and her husband also operated a small business, so they know the problems excessive government regulations put on small businesses.
"Republicans believe in less government control, lower taxes, free market enterprise"
And how exactly does this square with McCain's plan to nationalize our mortgage industry?
Anon 12:21 - Here's a "plain English" version of The Genesis Plan:
1. Force transparency (i.e. completeness and honesty) in corporate balance sheets. Present rules allow something called "Level 3 Assets" which can be hidden. When you hear the media talk about "toxic assets" or "toxic paper" this is what they're talking about. Genesis calls for companies to come clean. If a bank has a $500,000 mortgage on a home that's only worth $300,000, that's a $200,000 loss. Hiding it isn't going to make things better.
2. "OTC Derivatives" refers to MBS (Mortgage Backed Securities), CDS (Credit Default Swaps), CDO (Collateralized Debt Obligations) and any other exotic financial product related to the current crisis. These products are not presently traded on an exchange such as the NYSE, so there is little knowledge of who owns what and how much they paid for it. Also they're unregulated. For instance, CDS's are in reality insurance policies against financial institutions going bankrupt, but if they were CALLED "insurance" they'd be subject to regulation. Again, Genesis calls for transparency and openness. Get these things on an exchange so that they are no longer in what many economists call the "shadow banking system."
3. Leverage means buying something for a lot more money than you have in equity. If you buy a house for $400,000 and you put down only $10,000, you are levered 40:1. Very risky. The SEC repealed leverage limits in 2004 for five companies. Guess which ones? Right: Bear Stearns, Lehman Brothers, Goldman Sachs, Morgan Stanley, and Merrill Lynch. Oops. Bear and Lehman are gone, Merrill got bought out by BOA, and Goldman & Morgan had to convert to commercial banks (rather than remain investment banks) to survive. Genesis requires a DE-leveraging back to the pre-2004 level of 12:1, to take place over a 6-month timeframe.
OK, but even doing all that, the bad loans (such as Wachovia's "Pick-A-Payment") are still there, right? Right. In order to restore solvency to the industry holding those loans, the OCC (Office of the Comptroller of the Currency) and OTS (Office of Thrift Supervision) then evaluate each bank. If a bank is insolvent (a threat for bankruptcy), the regulators impose receivership. This means the bank's bonds are converted to capital that the bank can use to conduct business, the bondholders exchange their bonds for a new issuance of common stock, and the common stock holders lose their equity (which happens in a bankruptcy anyway: see Lehman Brothers).
At the homeowner level, Genesis borrows from University of Chicago economics professor Luigi Zingales: Congress should pass a law that makes a re-contracting option available to all homeowners living in a zip code where house prices dropped by more than 20% since the time they bought their property. The Case-Shiller index can identify these zip codes.
The re-contracting option will reduce the face value of the mortgage (and the corresponding interest payments) by the same percentage by which house prices have declined since the homeowner bought (or refinanced) his property.
In exchange, however, the mortgage holder will receive some of the equity value of the house at the time it is sold. Until then, the homeowners will behave as if they own 100% of it. It is only at the time of sale that 50% of the difference between the selling price and the new value of the mortgage will be paid back to the mortgage holder.
This is a win-win because the homeowner avoids bankruptcy or destruction of his credit rating by defaulting, and the lender also comes out better than they would if they foreclosed. The great benefit of this program is that provides relief to distressed homeowners at no cost to the Federal government and at the minimum possible cost for the mortgage holders. The other great benefit is that it will stop defaults on mortgages, eliminating the flood of houses on the market and thus reducing the downside pressure on real estate prices. By stabilizing the real estate market, this plan can help prevent further deterioration of financial institutions’ balance sheets.
And you notice what words were NOT used in ANY of this? TAXPAYERS. This plan CAN work and WILL work, and it WILL NOT COST THE TAXPAYERS A PENNY.
The full Genesis Plan is still available here:
http://www.denninger.net/letters/genesis.pdf
Professor Zingales' Plan is here:
http://faculty.chicagogsb.edu/luigi.zingales/research/PSpapers/plan_b.pdf
I hope this helps.
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