When you read something like this, it’s 2004 all over again (”Ignorance and bloodlust have a long tradition in the United States, especially in the red states”). Salon:

something is being perpetrated upon you and your country that is so obscene that it simply cannot be happening. I sat outside a 7-Eleven and had a sacramental Dove chocolate bar. Jeez: Here we are again. A man and a woman whose values we loathe and despise — lying, rageful and incompetent, so dangerous to children and old people, to innocent people in every part of the world — are being worshiped, exalted by the media, in a position to take a swing at all that is loveliest about this earth and what’s left of our precious freedoms. When I got home from church, I drank a bunch of water to metabolize the Dove bar and called my Jesuit friend, who I know hates these people, too. I asked, “Don’t you think God finds these smug egomaniacs morally repellent? Recoils from their smugness as from hot flame?” And he said, “Absolutely. They are everything He or She hates in a Christian.” I have been in a better mood ever since, and have decided not to even say this woman’s name anymore, because she fills me with such existential doubt, such a sense of impending doom and disbelief, that only the Germans could possibly have words for it. Nor am I going to say the word “lipstick” again until after the election, as it would only be used against me. Or “polar bear,” because that one image makes me sadder…

HT: BOTW

Amir Taheri reported the other day that Senator Obama was conducting a little foreign policy of his own on his trip to Iraq. NY Post:

In Monday’s Post, I discussed how Barack Obama, during his July trip, had asked Iraqi leaders not to finalize an agreement vital to the future of US forces in Iraq — and how the effect of such a delay would be to postpone the departure of the US from Iraq beyond the time Obama himself calls for.

The Obama campaign has objected. While its statement says my article was “filled with distortions,” the rebuttal actually centers on a technical point: the differences between two Iraqi-US accords under negotiation — the Status of Forces Agreement (SOFA, to set rules governing US military personnel in Iraq) and the Strategic Framework Agreement (SFA, to settle the legal basis for the US military presence in Iraq in the months and years ahead). The Obama camp says I confused the two…If there is any confusion, it’s in Obama’s position — for the two agreements are interlinked: You can’t have any US military presence under one agreement without having settled the other accord…

My account of Obama’s message to the Iraqis was based on a series of conversations with Iraqi officials, as well as reports and analyses in the Iraqi media (including the official newspaper, Al Sabah) on the senator’s trip to Baghdad. It is also confirmed by Iraqi Foreign Minister Hoshyar Zebari. In a long interview with the pan-Arab daily Asharq al-Awsat, Zebari says: “Obama asked me why, in view of the closeness of a change of administration, we were hurrying the signing of this special agreement, and why we did not wait until the coming of the new administation next year and agree on some issues and matters.” Again, note that Zebari mentions a single set of agreements, encompassing both SFA and SOFA.

Zebari continues: “I told Obama that, as an Iraqi, I believe that even if there is a Democratic administration in the White House it had better continue the present policy instead of wasting a lot of time thinking what to do.” In other words, Obama was trying to derail current US policy, while Zebari was urging him not to “waste time.”

It would seem that the real disagreement is not between Mr. Taheri and Senator Obama, but between Iraqi Foreign Minister Hoshyar Zebari and the Illinois Senator. The Obama campaign says: “Barack Obama has never urged a delay in negotiations,” while Mr. Zebari says something that seems to be the opposite. If the Foreign Minister of Iraq is to be believed, Senator Obama’s private diplomacy was far more than simply “inappropriate.”

When the New York commercial and investment banks couldn’t arrive at a deal, and they and the government let Lehman Brothers go into Chapter 11, we understood the decision and agreed with it. Companies have to try to make prudent decisions, and the government shouldn’t be in the business of bailing out every large bank under the TBTF rubric. But then the shorts (how many of them, if any, are actual adversaries of the US in the oil-exporting and and other surplus countries?) went after AIG, and then Morgan and Goldman.

It is hard to overstate the absurdity of this situation. We know both investment banking institutions fairly well, and indeed worked at one of them a long time ago. Their capital ratios are sound, their managements are excellent; yet Morgan Stanley in particular is in the crosshairs of people who would destroy it to make a buck — and maybe of some whose motives are more nefarious. We have little doubt that if either one of these large institutions were allowed to fail, that we would have America’s second Great Depression as a result of the other failures that would multiply from the ripple effect of that failure. But it wouldn’t have to be an institution the size of a Morgan or a Goldman to have such an impact. Indeed, the last time that bank failures cascaded from a modest beginning was in 1930, in the case of a relatively small New York bank with the grand name of Bank of the United States. We should take a moment to remember what happened there and try to take a lesson for today.

We knew a man who was present as a child at one of the precipitating events of the Great Depression, the failure of New York’s Bank of the United States in December 1930. His grandfather, who lost his savings in that bank, took him to witness the scene as depositors thronged to bank doors that were locked during normal business hours. The panic from bank failures in New York and elsewhere spread around the country — there was no deposit insurance — driving banks to maximize liquidity, sell assets, foreclose loans, and create the Mother of All Credit Crunches, which became known as the Great Depression. Here’s how the NYT described the scene in its December 12, 1930 city edition:

Perhaps you have been taught that the stock market crash of 1929 caused the Great Depression. That is not exactly the case. The crash both reflected and amplified the recession that the US economy was entering in 1929; however, it was the problems of the banking system and of monetary policy that cascaded recession into depression. We will quote from Friedman and Schwartz’s Monetary History of the United States (from pp. 309-313):

The stock market crash…left no mark on currency held by the public. Its direct financial effect was confined to the stock market and did not arouse any distrust of banks by their depositors.

The stock market crash coincided with a stepping up of the rate of economic decline. During the two months from the cyclical peak in August 1929 to the crash, production, wholesale prices, and personal income fell at annual rates of 20%, 7.5%, and 5%, respectively. In the next twelve months, all three series fell at appreciably higher rates…Even if the contraction had come to an end in late 1930 or early 1931, as it might have done in the absence of the monetary collapse that was to ensue, it would have ranked as one of the more severe contractions on record….

In October 1930, the monetary character of the contraction changed dramatically…A crop of bank failures, particularly in Indiana, Illinois, Iowa, Arkansas, and North Carolina, led to widespread attempts to convert demand and time deposits into currency…A contagion of fear spread among depositors…such contagion knows no geographical limits. The failure of 256 banks with $180 million in deposits in November 1930 was followed by the failure of 352 with over $370 million of deposits in December…the most dramatic being the failure on December 11 of the Bank of the United States with over $200 million of deposits.

That failure was of especial importance. The Bank of the United States was the largest commercial bank, as measured by volume of deposits, ever to have failed up to that time in US history. Moreover, though an ordinary commercial bank, its name had led many at home and abroad to regard it as somehow an official bank, hence its failure constituted more of a blow to confidence than would have been administered by the fall of a bank with a less distinctive name.

In addition it was a member of the Federal Reserve System. The withdrawal of support by the Clearing House banks from the concerted measures sponsored by the Federal Reserve Bank of New York to save the bank — measures of a kind the banking community had often taken in similar circumstances in the past — was a serious blow to the System’s prestige…

Friedman implies that the reason that the Clearing House banks failed to bail out the Bank of the United States, despite often intervening in other, similar cases, is that the BoUS’s customer base and board were Jewish. This contention seems to be supported by statements from the NY State Banking Commissioner of that time, Joseph A. Broderick (p. 310). Let’s take a look at how the New York Times reported the attendees of the meeting the day before the Clearing House pulled the plug on the Bank of the United States:

We have no way of knowing if Milton Friedman’s contention is true or not, though it appears likely to us that, unlike Herbert H. Lehman, the “small, able” Mr. Isidor J. Kresel was probably not a member of Our Crowd. TIME Magazine summed up the banking community’s view of the Bank of the United States in its December 22, 1930 issue on that fateful meeting:

Another late arrival was lanky Owen D. Young who came about 11 p.m. in full dress, accompanied by Thomas William Lamont of J. P. Morgan & Co. Looking taller than usual in his full dress, Mr. Young paused to peer down at and converse with small, able Isidor Kresel, counsel for Bank of United States…Conservative Manhattan bankers last week were angry at Bernard K. Marcus, dark-haired, heavily-built president of Bank of United States. His aim was perhaps much too high. Only last year he stated: “Often we’ve put two or three days work into one. We have gone ahead two or three times as fast as we would have had we been working only one day at a time.” To bankers, a day’s work is a day’s work, to be done well, thoroughly.

The tall and lanky in full dress versus the small, able, dark-haired, overreaching, and heavily-built. We get the picture. Thanks, TIME. We see once again that great events can turn on small episodes of human weakness, prejudice and folly. And who knew at the time that a crowd gathered at a bank on a cold December day would become anything other than the “local” event that the head of the NY Clearing House opined that it would be?

We should not believe that we can’t make mistakes of similar magnitude or wrongheadedness again. The stagflation of the 1970’s was caused by foolish economics policies of three presidents in a row — Nixon, Ford, and Carter — that weren’t reversed for a decade until Ronald Reagan and Paul Volcker had the wisdom and courage to take the harsh steps required to kill inflation.

Today we face new and dangerous challenges that are in part a result of the staggering size of unregulated international commitments of financial institutions. How we got here is not the point for today; rather, the important thing is how we respond. There are many who say that the government should stay out of the way and let imprudent institutions pass from our midst. In general, we agree with that, but there comes a point where such orthodoxy can produce grave results. It is, in our view, a proper duty of government to do what it can to prevent the loss of public confidence in large financial institutions with complex and international commitments that are leveraged 10 or 15:1. Probably Lehman Brothers wasn’t this generation’s Bank of the United States. But a similar challenge seems quite likely to occur in the current environment.

Has Treasury Secretary Hank Paulson just done the deal of the century? He bought 80% of AIG for $85 billion. At its peak a few years ago, when Hank Greenberg was in charge, AIG was worth almost $300 billion. 80% of that would be a cool $240 billion, or the amount of the entire government deficit in a good year. (For all his issues and problems, Mr. Greenberg would no doubt be anxious to offer advice to Paulson on maximizing the value in the company whose current board and management stiffed him after he ran it for forty years.)

Moreover, buying assets in panics and at fire sale prices is one of American finance’s most cherished traditions. Leon Black’s Apollo Group made its first billions from buying the Derexel junk bonds housed at defunct institutions like Executive Life. That worked out rather splendidly for them. Of course AIG has many troubled assets so it is too early to know exactly this is all going to work out.

However, it is worth noting that Democrats in Congress are calling for a new version of the Resolution Trust Corporation to be set up to buy the bad debts of various institutions. The way that worked out last time is that taxpayers footed the bill (”Read My Hips“) and a number of those in the private sector who repurchased the assets of the defunct institutions often made out like bandits. So the trick for Mr. Paulson may be to get the government not to sell AIG too soon, and give up the profits that the government has so often too willingly parted with in the past.

The Market had quite a downtick yesterday. CNBC’s Jim Cramer attributes at least a small part of the mess to the lack ot the uptick rule:

To me, this was all pretty obvious. I was a short-seller, and I know that when a stock gets hit, people fret about the company regardless of whether the company is in good shape or not. There was a time that AIG had an immense amount of capital and it bought its stock back hand over fist in the $60s, and so it was somewhat able to defend itself from short-sellers. Even then, though, there were strict limits to when and how much companies could buy of their stocks. There are no such limits as to when short-sellers can operate.

So, without an ability to slow the short-sellers down by forcing them to wait for buyers to come in and pay up, and with no ability to demand that short-sellers or their brokers borrow stock first to short directly or to sell puts to the customers, shorts were able to take AIG down from the $20s to $4 in a week’s time.

To be sure, there were plenty of problems with AIG…What matters, though, is how easily hedge funds were able to take this company down through endless selling. The academics at the SEC had no idea how important their rules were when they put in the bottom on July 15, and they had no idea how catastrophic it would be when they pulled them…

I don’t know a soul in the business, save short-sellers, who have participated in these raids who doesn’t agree with this dynamic. Yet Cox has steadfastly refused to go back and reinstitute the rules and bring the playing field back to where it was before I retired in 2000 — to a time when I remember how difficult it would be to create these forest fires given the breaks. The speed is and was too great to put out the fires, so Lehman went and then AIG looks like it is going.

When we last visited the issue of the uptick rule in July and called for re-instituting it, we thought that it had been reinstated only a few days later, but it turns out that that was only in very special and limited circumstances. It turns out that the SEC was actually thinking of getting around to doing something in late September, as the WSJ reported today:

Securities and Exchange Commission Chairman Christopher Cox assured Wall Street chiefs amid a series of weekend meetings over the fate of Lehman Brothers Holdings Inc. that the SEC would institute protections soon, this person said. The SEC is expected to move up the timeline for finalizing two rules to as soon as this week, from late September.

The rules, which require the approval of the five-member SEC, would stiffen requirements on options market makers involved in short sales and make it illegal for a trader to mislead his broker about locating stock to short and then failing to deliver it within three business days, this person said. Wall Street firms earlier this summer successfully lobbied the SEC to restrict certain types of short sales for 19 financial companies.

The idea behind the new rules is to rein in traders who borrow stock to short and then are late or never return it. Market participants say that can have a cascading effect on a company’s stock…

Great sense of timing, fellas. (By the way, we happen to agree with the notion that the bankruptcy of AIG would be “as close to an extinction-level event” as we have seen since the Great Depression.)

We scanned a couple of the NYT’s columnists to see what clever and amusing attacks on Sarah Palin they might dream up. We were a bit disappointed. Frank Rich, for example, says that since John McCain is “too weak” to be President, a “McCain victory on Election Day will usher in a Palin presidency, with McCain serving as a transitional front man”:

A week ago the question was: Is Sarah Palin qualified to be a heartbeat away from the presidency? The question today: What kind of president would Sarah Palin be? It’s an urgent matter, because if we’ve learned anything from the G.O.P. convention and its aftermath, it’s that the 2008 edition of John McCain is too weak to serve as America’s chief executive…

No longer able to remember his principles any better than he can distinguish between Sunnis and Shia, McCain stands revealed as a guy who can be easily rolled by anyone who sells him a plan for “victory,” whether in Iraq or in Michigan. A McCain victory on Election Day will usher in a Palin presidency, with McCain serving as a transitional front man, an even weaker Bush to her Cheney. The ambitious Palin and the ruthless forces she represents know it, too…

This was made clear in the most chilling passage of Palin’s acceptance speech. Aligning herself with “a young farmer and a haberdasher from Missouri” who “followed an unlikely path to the vice presidency,” she read a quote from an unidentified writer who, she claimed, had praised Truman: “We grow good people in our small towns, with honesty and sincerity and dignity.” Then Palin added a snide observation of her own: Such small-town Americans, she said, “run our factories” and “fight our wars” and are “always proud” of their country.

It is a bit unclear why this passage was “chilling,” in Rich’s opinion, except that the fellow who praised Truman was a right-wing newspaperman we never had heard of. Pretty weak material. As for Maureen Dowd, she claims, based on the Charlie Gibson interview, that Sarah Palin is the new George W. Bush:

An Arctic blast of action has swept into the 2008 race, making thinking passé. We don’t really need to hurt our brains studying the world…our new Napoleon in bunny boots (not the Pamela Anderson kind, but the knock-offs of the U.S. Army Extreme Cold Weather Vapor Barrier Boots) is ready to face down the Russkies and start a land war over Georgia…

The really scary part of the Palin interview was how much she seemed like W. in 2000, and not just the way she pronounced nu-cue-lar. She had the same flimsy but tenacious adeptness at saying nothing, the same generalities and platitudes, the same restrained resentment at being pressed to be specific, as though specific is the province of silly eggheads, not people who clear brush at the ranch or shoot moose on the tundra…

She tried to finesse her previous church comments about Iraq, asking worshipers to pray “that there is a plan, and that plan is God’s plan.” Earnestly repeating after her tutors, she said she had meant to echo Abraham Lincoln, that in war we must pray that we are on God’s side rather than that he is on ours. But her original comments sounded more W. than Abe…

Poor Ms. Dowd. She seems to have been duped on the Georgia issue by ABC’s bad editing of Palin, and on the Iraq issue by the journalistic malpractice of the AP. Not that these things would have mattered.

The entire MSM seem to have lost their bearings for the moment. The NYT reported on page one today, “Once Elected, Palin Hired Friends and Lashed Foes,” as if that’s a page one story in politics. Meanwhile, the WaPo countered with a page one barnburner of its own, “As Mayor of Wasilla, Palin Cut Own Duties, Left Trail of Bad Blood.” SNL had a not very funny Palin-Clinton joint appearance. And Senator Obama, who is back to talking about McCain, sounded flat. These folks need to regroup, get back to basics, and forget about Palin if they want their side to win in seven weeks.

We wrote about John Boyd’s OODA loop — observation, orientation, decision, action — back in 2004. The idea of getting inside an opponent’s OODA loop is to mount an attack or series of attacks so that the attack is shorter than the opponent’s ability to make a decision and respond effectively. Michael Barone has a piece on it today in an attempt to understand what has gone wrong in the Obama campaign of late:

John McCain was trained as a fighter pilot. In his selection of Sarah Palin, and in his convention and campaigning since, he has shown that he learned an important lesson from his fighter pilot days: He has gotten inside Barack Obama’s OODA loop…Observe, Orient, Decide, Act….

Obama chief strategist David Axelrod admitted of the Palin pick: “I can honestly say we weren’t prepared for that. I mean, her name wasn’t on anybody’s list.” But it was known that McCain’s VP adviser had traveled to Alaska, and anyone clicking on youtube.com could see Palin’s impressive performance in political debates. The McCain campaign shrewdly kept the information that she was on the short list and that she was the choice to a half-dozen people, who didn’t tell even their spouses. The Obama team failed to Observe.

Then they failed to Orient. Palin, as her convention and subsequent appearances have shown, powerfully reinforces two McCain themes: She is a maverick who has taken on the leaders of her own party (as Obama never has in Chicago), and she has a record on energy of favoring drilling and exploiting American resources. Instead of undermining these themes, they dismissed the choice as an attempt to appeal to female Hillary Clinton supporters or to religious conservatives.

Then team Obama and its many backers in the media failed to Decide correctly, so when they Acted they got it wrong. Their attacks on Palin tended to ricochet and hit Obama. Is she inexperienced? Well, what has Obama ever run (besides his now floundering campaign)? Being a small-town mayor, as Palin said, is like being a community organizer, “except that you have actual responsibilities.”…

Perhaps the Obama campaign strategists expected their many friends in the mainstream media to do their work for them. Certainly they tried. But their efforts have misfired, and the grenades they lobbed at Palin have ricocheted back and blown up in their faces. Voters are on to their game.

The smart move for Senator Obama would have been to ignore Governor Palin and let her celebrity die down. Continue slogging and after a while, the magic would fade. This is a Vice Presidential candidate after all. But Senator Obama couldn’t do so. Instead, he overreacted. He went directly after Palin himself. Worse still, he made the lipstick comment, and didn’t apologize and move on quickly — which made some people connect dots that went back to calling the reporter “sweetie,” flipping Senator Clinton the bird, and, indeed, to Obama’s own peculiar upbringing and relationship with his mother.

Whether Senator Obama’s campaign’s current poor performance is explicable by tactical misjudgments or whether something deeper is the problem is unknown at this point. But we are reminded about how little we actually know about this man who wants to be President.

The “McCain can’t send an email” ad from the Obama campaign is very odd. A campaign spokesman said: “It’s extraordinary that someone who wants to be our president and our commander in chief doesn’t know how to send an e-mail.” So they apparently believe what they’re saying.

Of course McCain supporters point out that, as the Boston Globe reported, “McCain’s severe war injuries prevent him from…typing on a keyboard.” Back in 2000, he was called the “most cybersavvy,” of candidates, an “inveterate devotee of email,” who was “the Chairman of the Senate Telecommunications Subcommittee and regarded as the U.S. Senate’s savviest technologist.”

So who is the ad aimed at? Is it aimed at young people, the ones that typically don’t vote but are said to be ready to do so this time? Are these the same young people who don’t know how to use “the Google” to check the veracity of the Obama ad? Glenn Reynolds called the ad “another unforced error from the Obama campaign.” Perhaps so.

Governor Palin addressed a church audience in June. Among the topics were soldiers going to Iraq. She asked the congregation to “pray…that our national leaders are sending them on a task that is from God” (via Huffington Post and Hot Air):

Pray for our military men and women who are striving to do what is right. Also, for this country, that our leaders, our national leaders, are sending them out on a task that is from God. That’s what we have to make sure that we’re praying for, that there is a plan and that that plan is God’s plan. So bless them with your prayers, your prayers of protection over our soldiers…

Here’s how Gene Johnson of the AP misreported Palin’s address to the congregation and made a clearly false assertion in a news story:

Alaska Gov. Sarah Palin told ministry students at her former church that the United States sent troops to fight in the Iraq war on a “task that is from God.”

Here’s how ABC took the journalistic malpractice of the AP one step further, taking for granted that the quote was accurate, in an interview of Governor Palin:

GIBSON: You said recently, in your old church, “Our national leaders are sending U.S. soldiers on a task that is from God.” Are we fighting a holy war?

PALIN: You know, I don’t know if that was my exact quote.

GIBSON: Exact words.

What to say? In a world where journalism still took its declared standards seriously, Gene Johnson of the AP should be reprimanded or fired for the obvious and gross distortion of Palin’s words. As for ABC, they should get off their duffs and use primary sources when available (and we’re giving ABC the benefit of the doubt that it was simply lazy in this case). Leaving aside the journalistic malpractice in this case, Governor Palin’s response was noteworthy and impressive:

the reference there is a repeat of Abraham Lincoln’s words when he said — first, he suggested never presume to know what God’s will is, and I would never presume to know God’s will or to speak God’s words. But what Abraham Lincoln had said, and that’s a repeat in my comments, was let us not pray that God is on our side in a war or any other time, but let us pray that we are on God’s side. That’s what that comment was all about, Charlie.

We haven’t watched this on TV, so we can’t judge how the incident looked, but in print, Governor Palin clearly came out on top.

It was just a month ago that Russian tycoons were buying houses for $750 million on the French Riviera. Things are suddenly looking a little different. FT:

Vladimir Putin admitted on Thursday that foreign capital inflows could fall by up to 45 per cent this year, but rejected suggestions that turmoil in Russia’s financial markets was caused by the conflict in Georgia.

The Russian premier said the country was simply suffering from the same credit crisis affecting the rest of the world, but he acknowledged that foreign inflows might fall this year from $80bn (€57bn, £46bn) in 2007 to $45bn or $50bn.

Mr Putin blamed Russia’s outflow of capital on “speculative” moves by western institutions withdrawing funds because of the “mortgage crisis” in the US and Europe…speaking to western journalists in the holiday resort of Sochi, he denied there was a liquidity crisis and rejected the view that the turmoil had “anything to do” with the Georgian conflict.

The stock market has fallen almost 50 per cent since May, and fell a further 2.7 per cent on Thursday. Alexei Kudrin, finance minister, said on Thursday that Russia was now considering using money from its $32bn national wealth fund and from pension reserves to support financial markets.

Using a SWF to shore up markets is throwing good money after bad. Could it be that the liquidations of all the sharpies who had been going long oil is the main event, or is it Georgia, or both together? A stock market that falls 50% in a few months bodes ill for a country that economically has been a one-trick pony.

ABC reports that Democratic VP in waiting Senator Joe Biden said that Senator Hillary Clinton “might have been a better pick” than him:

“Hillary Clinton is as qualified or more qualified than I am to be vice president of the United States of America. Let’s get that straight. She’s a truly close personal friend, she is qualified to be president of the United States of America, she’s easily qualified to be vice president of the United States of America and quite frankly it might have been a better pick than me.”

Senator Biden has often chattered meaninglessly about any number of things. Perhaps this is just another example. On the other hand, maybe Senator Biden is signaling something seriously under consideration by the Obama campaign. After all, many Democrats are currently fretting about the Obama campaign — and the betting websites show an increase in the probability that Biden will actually withdraw

Nedra Pickler of the AP was not amused by recent jokes about stinking fish and lipsticked pigs from the Democratic candidate for President of the United States:

“You can put lipstick on a pig,” he said to an outbreak of laughter, shouts and raucous applause from his audience, clearly drawing a connection to Palin’s joke. “It’s still a pig. You can wrap an old fish in a piece of paper called change. It’s still going to stink after eight years.”

McCain’s campaign immediately organized a telephone conference call in response and called on Obama to apologize for calling Palin a pig. Obama’s campaign said he wasn’t referring to Palin; he had been talking about McCain immediately before the lipstick comment.

Obama followed up by saying Palin is an interesting story, drawing boos at the mention of her name that he tried to cut off.

“Look, she’s new, she hasn’t been on the scene, she’s got five kids. And my hat goes off to anybody whose looking after five. I’ve got two and they tire Michelle and me out,” he said.

Senator Obama today attacked the press for creating this “made-up controversy,” though it seems obvious from the campaign’s talking points of the day, as well as from crowd reaction, that the Illinois Democrat knew exactly what he was doing. (Consider this: it is an even worse reflection on him if he didn’t know what he was saying.)

Several months ago, Senator Obama famously flipped Hillary the bird and looked like a punk to many outside his adoring flock. Now he is apparently engaging in more teenage tomfoolery. It is way too early to make any definitive judgments, but remarks like that, and apparently snide digs about how five kids would be such a burden for a Vice President, make the candidate look today as if he’s lost his bearings for the moment. We can’t help but wonder what his internal polling is telling him.

Russia, which is pretty much an economic one-trick pony, said it will team up with OPEC. This would appear to imply that Russia intends to assist in keeping prices high, and raises once again the question of just how much oil played a part in Russia’s recent invasion of Georgia. Meanwhile, in another move that should have been bullish for oil, OPEC said it will trim production a bit. WSJ:

Russia upped the ante in its faceoff with the West by proposing “extensive cooperation” with the OPEC oil cartel, an idea that would stir concerns among big oil-consuming countries like the U.S. The Russian proposal came just hours before the group’s 13 ministers decided to scale back production by around 520,000 barrels a day, or less than 1% of world oil supply, over the next 40 days in the face of falling prices and slowing demand growth…

The Organization of Petroleum Exporting Countries supplies around 40% of the world’s oil, while Russian output makes up another 11%…concerns already run high in the U.S. and Europe that Moscow is trying to increase its chokehold over Europe’s energy needs. Moscow supplies Europe with most of its natural gas and much of its crude oil and gasoline.

OPEC’s first formal gathering in six months was otherwise fraught with politics and posturing as factions tussled over whether to cut output even as oil still hovered above $100 a barrel. Some voices within the group argued that OPEC should exhibit restraint and lower its production. The decision to cut output over the next month means that Saudi Arabia will likely scale back its production to where it was earlier this year, before Riyadh began ramping up in a bid to drive down record prices.

Oddly enough, oil responded to all this by falling another 1.4% today; Brent crude closed under $100 for the first time since March. Whether this is due to the continuing liquidation of futures positions ($39 billion in the last few months) or other factors, such as an expectation of the cartel members’ cheating on quotas when prices decline, remains to be seen.

This AP story indicates that the Obama campaign is spending a lot of time running against that mayor from a small town so far away:

Obama puts heat on Palin — Listening to Barack Obama, it can seem like Republican vice presidential nominee Sarah Palin is the main person standing between him and the White House instead of John McCain. Obama is putting as much heat on Palin as he is on the man at the top of the GOP ticket…

“Mother, governor, moose shooter. That’s cool…When John McCain gets up there with Sarah Palin and says, `We’re for change,’…what are they talking about?…It was just like a month ago they were all saying, `Oh, it’s experience, experience, experience.’ Then they chose Palin and they started talking about change, change, change…

A bunch of heat started generating because people were thinking, `Why are we building a bridge to nowhere?’…So a deal was cut where Alaska still got the money. They just didn’t build a bridge with it, and now she’s out there acting like she was fighting this thing the whole time…I mean, you can’t just make stuff up. You can’t just re-create yourself. You can’t just reinvent yourself. The American people aren’t stupid. What they are looking for is someone who has consistently been calling for change.”

Perhaps this is a smart strategy for the Senator Obama, but running against the GOP’s VP candidate has many problems: lowering his status, accentuating the parallelism between Palin’s and Obama’s experience, and — for goodness sakes, look at the unpresidential language the candidate is using in doing so. (Camille Paglia has also noticed Senator Obama’s poor language choices of late.)

The Obama campaign should have learned from the Clinton campaign that running against a phenomenon cannot be about pointing to the clay feet of the deity. Amusing ridicule, done at the appropriate moment, is far more effective.

The Democratic presidential campaign was and is totally unprepared for Sarah Palin. Listen to Air America for ten minutes if you don’t believe us. This comment, apparently about Governor Palin, by Senator Obama says that the campaign appears to be, at least at the moment, somewhat unhinged: “You Can Put Lipstick on a Pig, It’s Still a Pig…You can wrap an old fish in a piece of paper called change. It’s still gonna stink.”

My, my. Stinking fish and lipsticked pigs. One wonders what Sigmund Freud would have thought about the meaning of such statements from the Democratic candidate for President.

David Axelrod of the Obama campaign was interviewed on Fox News Sunday:

David Axelrod: “One of the first things that Senator Obama did when he came to the U.S. Senate was push for the most far-reaching ethics reforms that we’ve seen since Watergate. That didn’t please people on either side of the aisle…people like Dick Lugar, the very respected Republican senator from Indiana, spoke out and said, These are just partisan attacks. I’ve worked with Barack Obama.’ They worked together on arms control…”

Chris Wallace: “because you guys always talk about ethics legislation and the nuclear non-proliferation deal with Dick Lugar, I went back and looked — both of those measures passed by unanimous consent. They were so accepted by the Senate that there was not even a vote.”

What is most notable about the exchange is that, this late in a campaign, Axelrod would think he could get away with this on a national news program. (HT: Powerline)

The Democratic candidate spoke at a fundraiser. NYT:

“You don’t have to be 72 to have experience…It’s the end of an era and the beginning of a new one. This 21st century man has an aura of hope wrapped around him.”

“Aura of hope”? Is it possible that the candidate actually believes his own press clippings?

The AP notes that the Large Hadron Collider will get fired up this week. Lawsuits have been filed to stop the project, due to a fear that the LHC could produce a black hole from the head-on collision of protons at about the speed of light and perhaps destroy the universe:

The first beams of protons will be fired around the 17-mile tunnel to test the controlling strength of the world’s largest superconducting magnets. It will still be about a month before beams traveling in opposite directions are brought together in collisions that some skeptics fear could create micro “black holes” and endanger the planet.

The project has attracted researchers of 80 nationalities, some 1,200 of them from the United States, which contributed $531 million of the project’s price tag of nearly $4 billion. “This only happens once a generation,” said Katie Yurkewicz, spokeswoman for the U.S. contingent at the CERN project. “People are certainly very excited.”

The collider at Fermilab outside Chicago could beat CERN to some discoveries, but the Geneva equipment, generating seven times more energy than Fermilab, will give it big advantages. The CERN collider is designed to push the proton beam close to the speed of light, whizzing 11,000 times a second around the tunnel 150 to 500 feet under the bucolic countryside on the French-Swiss border.

Once the beam is successfully fired counterclockwise, a clockwise test will follow. Then the scientists will aim the beams at each other so that protons collide, shattering into fragments and releasing energy under the gaze of detectors filling cathedral-sized caverns at points along the tunnel.

CERN dismisses the risk of micro black holes, subatomic versions of collapsed stars whose gravity is so strong they can suck in planets and other stars. But the skeptics have filed suit in U.S. District Court in Hawaii and in the European Court of Human Rights to stop the project. They unsuccessfully mounted a similar action in 1999 to block the Relativistic Heavy Ion Collider at the Brookhaven National Laboratory in New York state.

For a short tutorial on the LHC, please watch the video in this post.

Senator Obama now says he considered joining the military. UK Telegraph:

Mr Obama was asked by George Stephanopoulos of ABC’s “This Week” programme whether he’d ever thought about military service and replied: “You know, I actually did. I had to sign up for Selective Service when I graduated from high school. And I was growing up in Hawaii. And I have friends whose parents were in the military. There are a lot of Army, military bases there. And I actually always thought of the military as an ennobling and, you know, honourable option. But keep in mind that I graduated in 1979. The Vietnam War had come to an end. We weren’t engaged in an active military conflict at that point. And so, it’s not an option that I ever decided to pursue.”…The aspiration was not mentioned in either of his two volumes of memoirs.

Feel free to believe this if you like. (Apparently, it was a rather infelicitous interview all around.)

The US pays about a billion dollars annually to the United Nations. In return, the US gets, among other things, a lecture on importing third-world living standards. Guardian:

People should have one meat-free day a week if they want to make a personal and effective sacrifice that would help tackle climate change…Dr Rajendra Pachauri, chair of the United Nations Intergovernmental Panel on Climate Change, which last year earned a joint share of the Nobel Peace Prize, said that people should then go on to reduce their meat consumption even further…

The average person in the UK eats 50g of protein from meat a day, equivalent to a chicken breast and a lamb chop — a relatively low level for rich nations but 25-50 per cent more than World Heath Organisation guidelines…

‘In terms of immediacy of action and the feasibility of bringing about reductions in a short period of time, it clearly is the most attractive opportunity,’ said Pachauri. ‘Give up meat for one day [a week] initially, and decrease it from there,’ said the Indian economist, who is a vegetarian…he also stressed other changes in lifestyle would help to combat climate change. ‘That’s what I want to emphasise: we really have to bring about reductions in every sector of the economy.’…

(This story seems to appear in one form or another every year.) The article also notes that “vegetarian diets that included lots of milk, butter and cheese would probably not noticeably reduce emissions because dairy cows are a major source of methane, a potent greenhouse gas released through flatulence.” The UN would appear to have something in common with dairy cows.

In April we discussed the IMF report that showed many commodities and world economies in a boom phase, and said that a correction is overdue. It would appear that the correction has arrived. Metals, agricultural products, and oil and natural gas have turned sharply downwards in recent times from their heady days of just a few months ago, as illustrated on the chart above. Of greatest interest, perhaps, is that the duration of the boom part of the cycle was 2-4x longer than usual this time around; that means it is possible, maybe even likely, that the deflationary part of this cycle could get very protracted and nasty indeed. (For example, who would have thought, a year ago, that the US Government would be bailing out its GSEs Fannie Mae and Freddie Mac a mere 12 months later?)

We have speculated that growth in the boomingest of boom countries, such as China, could be particularly hard hit. China’s stock market, which is more likely to see Shanghai 2000 than the Shanghai 6000 of just a few months ago, isn’t telling us anything different. It is in this downward part of the cycle that the chickens come home to roost — the nepotism and corruption, the cooked books and bad loans that were ignored by everyone during a period of hyper-growth suddenly seem to matter a lot more. We find the counter-theories to show the BRICs as exceptions in a slowdown — high infrastructure spending and trade among developing countries — unpersuasive. We could be wrong of course, since prediction can be a fool’s game and no one really knows what will happen. We were a couple of months early in calling a top in the oil market after all; perhaps we’re early in this case. But it’s hard to deny that there are signs that this century’s version of the roaring twenties is in big trouble.