Thoughts On Five Momentous Days

1. That the nation's legislative leaders came out of their meetings with Treasury Sec. Henry Paulson "stunned" about the magnitude of the crisis -- i.e, 3.4 trillion in money market wealth wiped away -- is, in and of itself stunning. Though some members of Congress warned about overleveraging Fannie and Freddie and some warned of tough times to come, none seems to have anticipated -- or gotten on top of -- the multiplicty of mini crises that led to the flood this week.  The distance between what Washngton assumed and what Wall Street did is huge, and an Acela train can't bridge it.  Congress stood by, powerless, jaw-dropped, as the capital markets shut down and the government ran the show this week. The impact of this week on what a President Obama and President McCain are able to do in office is completely unknown.

BTW: Did any presidential candidate, aside from Ron Paul, have any inkling of the Fed's emergency power?

2. John McCain stumbled badly early in the week, bumblng through several days of gaffes and appearing to confirm a reality that the Obama was portraying -- that he was out of touch. But starting Thursday, with his widely-mocked-by-elites call for firing Chris Cox and today, with his aggressive focus on Fannie and Freddie and Obama's connections to them, he seemed to recover his footing. Americans probably do want a culprit, and the Fannie/Freddie crony capitalism, while certainly not the whole or even a few chapters in the story, is as good as any.  What McCain will do over the weekend and into next week is begin to explain why his principles for the bailout are different from President Bush's. 

3. The Obama campaign was widely and appropriately rapped for a misleading and tendentious Spanish radio ad, Obama was criticized for overinflating his role in an earlier stimulus package and had a weird public response to the AIG bailout. By the end of the week, he was involved in a tit-for-tat over which candidate had more connections to Fannie and Freddie. On Friday, McCain found a culprit and Obama had a meeting. Obama still had the better week -- and, truth be told, when it comes to the economy, the thumb is so much on the Democratic side of the scale this election that he really didn't have to do anything to have a good week.

4. Sarah Palin continues to draw enormous crowds and continues to overshadow her running mate to some degree. The bloom is off the rose (the fur is off the moose?); we know the basic outline of her political footprint; Palin helped with the base and not so much with anyone else.