Thread: Mc Cain bets Presidency on blocking Bailout

McCain Bets Presidency On Blocking Bailout Deal
Henry Blodget | Sep 26, 08 8:19 AM

John McCain roared into Washington yesterday and reportedly broke up an agreement on the bailout deal. In doing so, he went against not only Democrats but the Republican president, the panicked Republican Treasury Secretary and Fed Chairman, and Republican Congressional leaders. Instead, he sided with a small band of outraged Republicans grousing about violation of free-market principles.

So was this idiotic McCain self-destruction, as most people are suggesting? Or was it a brilliant populist move?

We think the latter.

Americans hate the Hanke-Panke plan, which they accurately view as a bailout of the financial-services companies and executives that helped get us into this mess. The plan is now a lot better than it was originally--mainly because the government will now take equity in the banks it saves--but this message hasn't gotten out there yet.

Some Americans are so angry, in fact, that for now they'd rather see "this sucker go down"--as Bush put it yesterday, referring to the U.S. economy--than support a financial-services bailout. By aligning himself with a small band of Republicans who are refusing to go along with the Hanke-Panke plan, McCain not only appears to be standing up for this outrage but is reinforcing his desired image as a maverick.

Given the ongoing crisis in the credit markets, a bailout plan will likely be struck today or Monday--whether McCain plays ball or not. Assuming this happens, McCain will:

Take credit for brokering a compromise (assuming the final deal is palatable to Americans)
Crow that he was the candidate who tried to stand up against the bailout of Wall Street fat-cats
Note every five minutes in the next six weeks that the enormous sop to Wall Street hasn't saved anything (if the bailout works, it won't work until long after the election is over)
Blast President Bush, who everyone hates anyway, thus reinforcing his "change" message
Say he's the only guy with the balls and experience necessary to deal with this crisis.
And on the off chance that a deal doesn't go through in the next couple of days, McCain can just rail about the outrage of the Democrats' desire to bail out Wall Street at the expense of Main Street and say he's the only one standing up for the little guy.

In our opinion, this was a brilliant political play (and we're voting for Obama). If only it were likely to lead to a better bailout plan.

(What's a better bailout plan? One that injected equity into the banks--or, better yet, converted debt to equity--thus penalizing banks for their stupidity, not taxpayers, and actually accomplishing the desired recapitalization. The agreement on principles the Congress announced yesterday was closer to this, so McCain's bet is indeed a risky one).

http://www.clusterstock.com/2008/9/mcca ... ilout-deal






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Henry Blodget can almost be responsible for the entire dot-com bubble. As a securities analyst, he was perhaps the most popular pundit on the companies that would make money even when there were no assets except a few employees and a server or two. Blodget was one of the pumpers behind stocks, after preferred clients already bought in at cheap prices and then sold at higher prices after Blodget pronounced the continual upside for these companies to the public.
Found this in Wikipedia:

In 2002, then New York State Attorney General Eliot Spitzer, published Merrill Lynch e-mails in which Blodget allegedly gave assessments about stocks, which conflicted with what was publicly published.[5] In 2003, he was charged with civil securities fraud by the U.S. Securities and Exchange Commission.[6] He settled without admitting or denying the allegations and was subsequently banned from the securities industry for life. He paid a $2 million fine and $2 million disgorgement but kept millions more he earned in fees while promoting investments in stocks which failed.[7]