What are they thinking?

This is going to be short post in anticipation of the big debate tonight between McCain and Obama. After dropping into the middle of the big bail out negotiations yesterday, you have to wonder what everyone is thinking? First, with all McCain's antics, he accomplished little to advance the discussion, and some will say he blew up the deal. I for one don't think they really had a deal, since the House Republicans simply aren't buying the "bail-out" as proposed by Treasury even with tweaks from the Democrats. But what are the House Republicans thinking? They oppose the deal based on the principles that in a market economy a bail out shouldn't be required, or if so then do it in a way that leverages the market. Sounds good until to look at the details. Their proposal consists of some kind of mortgage insurance for the "bad loans." This is a non starter. Anyone who knows anything about mortgage insurance knows you would only put this on at the time of loan origination using rigorous underwriting standards. Putting insurance on bad loans makes no more sense than insuring a house after it has burned down. What are they thinking?

Meanwhile McCain has now agreed to show up at the debate. After grandstanding about not showing up until a deal was cut, he now caved. Perhaps he should have listened to his running mate, Sarah Palin, when she was interviewed by Charlie Gibson: "You know Charlie, you can't blink." But guess what, that's just what he did. So what was he thinking? While all this was going on, she had an appalling interview with Katie Couric on CBS. The political right mouthpieces immediately took issue with Katie's questioning; however, if you haven't seen it you need to watch. Remember Miss South Carolina's answer to the question about "education and such,like that, and such as...?" I shudder at the thought that she could be the vice-president, much less the president if McCain has another relapse with his cancer. What the heck was he thinking when he picked her?

Then there was the exactly two minute address by the current president, Bush, to the nation this morning about the financial crisis and the bail out deal. The only thing more pitiful was Sarah Palin's interview. Rather than updating the public in a meaningful way, he simply mumbled his way through a prepared very very short statement that gave less information than his press secretary. What the hell is he thinking?

The only good news today is the outcome of the failed Washington Mutual Saving and Loan which was taken over by JP Morgan/Chase. Normally the largest bank failure in history would crash the market, but here we see the FDIC doing something positive. By orchestrating this deal, they protected the shareholders and employees, and the new reorganization will expand the reach of a well managed bank into new markets. The rightful people left holding the bag were the stockholders, including a private equity fund who made a play to profit from this distressed institution, and the executives who grossly mismanaged this bank. Meanwhile the markets reacted well by closing in positive territory for the day. So what are the investors thinking?

Tune in tonight and find out what McCain and Obama are thinking. I hope someone is putting America First!