Another ho-hum day on Wall Street and the campaign front. There was some bad news: Putnam Investors announced it was closing a $12.3 billion money market fund, in order "to limit losses to investors"; and some good news: the stock market rebounded in a big way on Thursday, with the Dow Jones Industrial Average surging 410 points, almost wiping out its 440-point loss the day before.
Which might seem encouraging, except for the niggling little fact that the most popular explanation for this outbreak of optimism was a report that the Bush -- We're Gonna Give You Bigger Government Than You Ever Dreamed Of -- administration was considering "creating a mechanism to take bad assets off the balance sheets of financial companies." Even as I write these words, Bernanke and Paulson are reportedly briefing top congressional politicians on their plans for the bailout to end all bailouts.
Really. They mean it this time. They're going to kill the nasty credit crunch monster once and for all.
One imagines that the "Republican Study Committee," a group of 100 or so conservative lawmakers who released a letter today asking Bernanke and Paulson to "refrain from conducting any additional government-financed bailouts for large financial firms," will not be pleased at the news that the federal government is now promising to fix the balance sheets of everyone on Wall Street who is coming down with the subprime flu. Even those of us who rarely are in agreement with conservative Republicans confess, they might have a point when they complain about a climate "where companies are absolved, not punished, for excessive risk taking."
But internecine warfare among Republicans was the rule of the day, not the exception. We've already covered John McCain's attack on SEC chairman Christopher Cox. Well, guess what, Cox was none too pleased by the flank attack from his own fellow traveler.
History will judge the quality of our response to this economic crisis, but now is not the time for those of us in the trenches to be distracted by the ebb and flow of the current election campaign. And it is precisely the wrong moment for a change in leadership that inevitably would disrupt the work of the SEC at just the wrong time ...
As someone who has been in public life for over 20 years, I know as well as anyone that occasionally this sort of thing can come with the territory. The best response to political jabs like this is simply to put your head down and not lose a step doing the best job you can possibly do on behalf of those you serve. For my part, I plan to do just that. I leave the political campaigns to pursue their own course.
As for McCain's "course" -- the Huffington Post's Sam Stein reported today that "the McCain campaign circulated a draft statement on the Wall Street crisis that attacked the Bush administration for a slow and 'inconsistent' response, and charged that executives at several financial firms had made 'misleading and false' statements." But the language was cut from the statement released to the general public.
To recap: Conservative Republicans are mad at Bush, a Republican presidential candidate is mad at Bush's choice for SEC chairman because he's insufficiently tough on Wall Street, but not mad enough to lambaste Bush himself. And the Republican SEC chairman is mad at his party's nominee for president.
Somewhere, a Democratic witch doctor who preached "Confusion to the enemy!" this morning is cackling, satisfied with a day's work well done.
Oh, and in other news, my bank, Washington Mutual, seems to be exciting a lot of interest in its plans to cannibalize itself and sell off pieces to the highest bidder, because, reports Bloomberg, "Everybody wants the West Coast depository."
That would be me. Thank you, thank you very much.
And Morgan Stanley appears to be trying to get in bed with either a state-owned Chinese sovereign wealth fund or Wachovia or both. Kinky!
Let us now pause and consider that this was probably the calmest day of the week so far.
Oh yeah -- I would be remiss not to mention that there is some kind of awful panic in Russia going on that has led to the authorities closing down the stock market since Wednesday. Capitalism, she is a harsh mistress, eh, tovarisch? At last word, trading is set to begin again on Friday, and normally, How the World Works would consider such an episode worthy of in-depth commentary and analysis.
But Russian capitalism, while usually good for laughs, has got nothing on American capitalism in 2008. Maybe next week, comrades!