Maybe why McCain-leaning states are now bending toward Obama

In every battleground state where McCain had an edge, Obama is steadily moving ahead. Florida (with its big 27 Electoral Votes) and North Carolina may be the most dramatic reversals, but there are also Michigan -- from which McCain has decided to pull out -- Ohio and Nevada.

The economy surely is the biggest factor, but in at least two cases -- Florida and Nevada (i.e. Las Vegas, Reno) -- I think likely voters are reacting in particular to the battering that home values have taken in those states. While home prices are down 15-20% nationwide, they're down much more steeply in those two states, where residential real estate activity was hyperactive until a year ago. So millions of homeowners who have not gone into foreclosure or delinquincey are finding their biggest investment is worth less today than it was several years ago. If this trend continues -- as the experts say it will for at least a year -- many homeowners who were not part of the subprime crisis will see their biggest investment zeroed out.

As homeowners in Florida, Nevada and other hyperactive states watch this happen, they will react -- in fact, they are already reacting: The GOP lean-ers among them are migrating to Obama, hoping, in their financial straits, that he and the Democrats will do more for them than de-regulators McCain and the GOP.

People do indeed vote their pocketbook.

Why Wells Fargo resumed its hot pursuit of Wachovia

I wondered what propelled the Wells Fargo counter-deal to acquire Wachovia Corp., but this Washington Post story explains why. The tax law change described in the story apparently will cost the federal government more than it might have paid in providing a safety net for Citigroup in its earlier move to buy the Charlotte-based banking giant after Wells Fargo seemed to have dropped out of the bidding -- which the Wall Street Journal's story today says wasn't the case, after all.

A risky but necessary debate gambit for McCain

John MccCain is down to his final option, and it looks as if he'll play it: going after Barack Obama's character. Sarah Palin will not close the gap between McCain and his Democratic opponent. The Sarah Palin Show enthuses the disheartened GOP base, and is wonderful media theater, but it doesn't do much for McCain among the undecideds, who, as they shrink, are choosing Obama more often. McCain's millstone is the economic crisis, which will hang from his neck, and his party's, for the rest of the campaign.

But McCain might still win with an attack on Obama's Achilles' heel -- his character. His attack must be as daring as it is forceful. The place to launch it is the presidential debate Tuesday night. McCain should go through his usual campaign tropes for the first 75 minutes, winning a point here, losing a point there. Then, with maybe 15 minutes to go, he should simply abandon the debate format, and announce that it's time for the candidates -- he and Obama -- to put aside their campaign props and talk to the American people about who they are. That's what happened in the fateful election of 1860, when Lincoln ran against Northern Democrat Douglas, who had defeated him in the senatorial race two years earlier. This time Lincoln was "Honest Abe" and "the Railsplitter" -- nicknames which, for all their placard spin, spoke to character.

Let McCain arbitrarily begin the 75th moment of the debate talking about character, starting with himself. He can and should acknowledge, with mortifying examples, his streaks of tempestuousness and righteousness. Then he can talk about what he and his supporters see as the larger side of his character -- the courage, steadfastness and faith in God, country, comrades and family that sustained him for five and a half years in the Hanoi Hilton. He should also cite -- thankfully, not pridefully -- his willingness to conciliate, which made him a leader in America's rapprochement with Vietnam. Finally he can talk about his maverick spirit that has sometimes earned him enemies within his own party.

Finally he should turn to Obama, and invite him to do the same. If Obama demurs, or moderator Tom Brokaw says, "Let's move on to the next question," McCain should say, no, the American people need to see their presidential candidates put a mirror to their characters. The candidates have given scores, hundreds, of speeches, with pre-packaged sound bites. Just this one time -- with maybe a quarter of all Americans in front of their TV -- let them talk revealingly about their inner core, where campaign managers and speechwriters can't reach.

If Obama choose to do so, fine -- voters can decide who they want to trust running America in such a parlous period. Maybe the young and smart Democrat will, on the fly, provide the most important chapter to his hitherto selective biography. But if he still demurs, and Brokaw still tries to get to the next unimportant debate question, McCain should stop the proceedings in its tracks, and ask his opponent about Jeremiah Wright -- even though, months ago, McCain said any more criticism of the Obama-Wright connection was off-limits. How could it be, McCain should ask, that Obama could sit in the pew of Trinity United Church of Christ for 20 years and not have heard his pastor utter any of his racist rants, his denunciations of the middle class, his repudiation of Martin Luther King Jr.'s message of reconciliation? If Obama couldn't cope with Jeremiah Wright, how could he deal with Vladimir Putin or Mahmoud Ahmadinejad or Hugo Chavez?

There would be a big risk in McCain trying to derail Tuesday night's debate. If he allowed himself to become self-righteous -- as he has too many times during the campaign -- he could end up a big loser. But in this time of major economic crisis and when this country is engaged in three wars (against terror and in Iraq and Aghanistan), Americans might be ready to listen to their presidential candidates talk about the two men behind the political posters.

Postscript: Palin, on a campaign stop Saturday, said Obama, according to a Page One story in the New York Times, "sees America as imperfect enough to pal around with terrorists who targeted their own country." The Times piece was about William Ayers, a founder of the Weatherman group in the 1960s that plotted bombings against the Pentagon, U.S. Capitol and other major targets. Now Ayers is a professor of education at the University of Chicago. The Times piece said Ayers and Obama's "paths have crossed sproadically" since they met at a school reform meeting in 1995, "but the two men do not appear to have been close" since then. It looks as if it would be a stretch to use Ayers as a major reason to question Obama's character. The 20-year Obama-Rev. Wright relationship is a whole other story.

The economic fate that awaits Sarah Palin's future son-in-law

A high school dropout earns 25 percent less than a graduate ($30,202 vs. $40,112), U.S. Census Bureau numbers show. This is the economic fate that awaits 18-year-old Levi Johnston, who, in several months, will be the father of Bristol Palin's baby. Will Johnston decide to return to high school and get his diploma, so he can be an adequate breadwinner for his soon-to-be family of three? Will Sarah Palin, Bristol's mother, use some of her hockey mom's pit-bull tactics (with or without lipstick) to push Johnston in that direction?

The Sarah Palin Show, Courtesy of Gwen Ifill

First Hockey Mom Sarah Palin did indeed dominate the "debate" between her and her Democratic opponent Joe Biden. But only because moderator Gwen Ifill let Palin get away with deflecting questions and launching into rehearsed riffs about "greed" on Wall Street and what she'd do about the energy crisis.

Palin offered this revealing view on getting her message out:

"I like being able to answer these tough questions without the filter, even, of the mainstream media kind of telling viewers what they've just heard. I'd rather be able to just speak to the American people like we just did."

But Palin's pre-packaged messages are no improvement over any filtering by the mainstream media. We supposedly got the real deal from her Thursday night, according to these gasps of admiration from Hugh Hewitt and Michelle Malkin. But everything she said, except the "you betcha's," was carefully rehearsed earlier this week in preparation sessions at McCain's home in Sedona, Ariz.

Despite being given complete freedom to say her own thing during the 90-minute evening, Palin didn't quite get the the morning-after verdicts McCain's team was hoping for. A CNN poll had Biden winning 51 to 36.

Why is Wachovia's loan portfolio suddenly less toxic?

Less than a week ago, Wachovia Corp. was supposedly in such bad shape that it agreed to sell its banking division to Citigroup for $2.16 billion, with the federal government agreeing to financial support if Wachovia's portfolio of bad loans proved more toxic than estimated. Now Wells Fargo is buying all of Wachovia for $15.1 billion -- and with no federal safety net.

Could this new deal mean that the overall banking crisis is not as bad as it's portrayed?

The purchase price is above the $10 billion Wells Fargo offered last weekend before it backed out, reportedly because it was concerned about the particular health of one of Wachovia's mortgage portfolios. So what gives?

Today's news stories about Wells Fargo's change of mind offer no clues. Even the Wall Street Journal, which has been delivering sterling coverage of the financial crisis, was pro forma in its coverage.

Let's see how this interesting story unfolds.

LATER DEVELOPMENT: This WSJ piece provides some new information.

The bailout and the end of "Reaganism": That's not the whole story

I agree with much of what the Washington Post's very liberal op-ed columnist Harold Meyerson says in his take on the big picture to be drawn from the financial crisis.

This is the end of Reaganism -- to a degree. It's the end of ideologically driven economic theory -- a lot of which came from Arthur Laffer, Reagan's somewhat weird promoter of "supply-side" economics, and some of which came from disciples (acolytes?) of Milton Friedman and his (University of) "Chicago School."

Reagan was much more than his economic theory -- so it's wrong for Democrats (and columnist Meyerson) to use the current financial crisis to try to pull down his reputation and break it into pieces a la the Saddam Hussein statue in Baghdad's Firdous Square in 2003.

The financial markets do need more regulation. But regulation alone is a simplistic answer. Look at how Wachovia was saved from a bank run that very well could have triggered a national, and maybe international, catastrophe. The successful outcome -- Citibank buying most of Wachovia's assets -- was an impressive example of the federal government working with the private sector -- with no evidence of the public regulators being heavy handed. Indeed, the regulators, in this case, were quite savvy and prescient -- and fast moving enough to put together a plan in the early hours of Monday morning (Sept. 29) before the markets opened.

Unfortunately, the Wall Street bailout -- even though it was originally penned by Treasury Secretary Paulson, the former CEO of Goldman Sachs who, pre-financial crisis, sang the praises of deregulation -- is, in its evolving legislative form, way too regulatory. As so many critics, including myself, have said, it's an undesirable "bailout" when what Wall Street and the rest of America need are a "workout." (I latched onto that catch phrase before Republican free-market zealots in the House.)

Was does that mean?

It means that the government injects money into Wall Street, but with these conditions:

First, the Street's financial institutions consider holding on to "toxic" mortgage securities that they believe can become marketable as the real estate regains its health over the next five years.

Second, in the case of securities that are judged to be hopeless, the institutions that hold them will, with federal financial support of their balance sheets, dump them at a salvage price.

Third, the federal government's aid to troubled institutions will be guided by how honestly they seek to meet legitimate credit requests, both private and public.

None of these conditions implies imposition of heavy-handed regulation on Wall Street. We don't need bureaucratic stifling. As Reagan or Friedman -- or, for that matter, John Maynard Keynes, whom liberals revere -- would agree, wealth is created and enlarged by private enterprise. Government should be a vigilant participant in economic activity, but when it tries to play quarterback or coach -- like Paulson & Co. did -- look out.

Of course we can't achieve the desirable outcome without Congress doing more major work on the terribly drafted -- and named -- "bailout." But we can't rely on Capitol Hill's leaders alone. Presidential candidates Obama and McCain need to weigh in -- and not just with platitudinous rhetoric. I've repeatedly argued in this blog for them to do get down to the details. A new Washington Post editorial makes the case more effectively than I ever could.

A further thought: The workout ultimately will have to include not only Wall Street but all of us. We Americans, whichever side or end of Main Street we may live on, have often been spending beyond our means. We got second mortgages to live more largely. The cruise-ship industry has thrived so gaudily mostly, I bet, through major mad money found through second mortgages. We borrowed with gusto against our credit cards. Think about those TV commercials for credit cards -- conferring respectability on living on debt upon debt -- at sometimes 24% interest (which of course is never mentioned in the commercials).

The odds are that Congress will pass the bailout in its essentially bad form. But by early next year, I'm sure, we'll know we need to move ahead to a workout -- by and for all of America. Maybe we should get ready by reaching out our hands to each other, from sea to shining sea.