Standoff Continues as Chaos Reigns

America awakes Friday with no more hope that a bailout deal can get done than there was three days ago. Any way you look at it, we've got John McCain and a small group of House Republicans to thank for this mess. Just as it looked like a deal was done early Thursday afternoon, here come House GOP lawmakers, essentially declaring war on a president from their own party. Even worse, John McCain, who dramatically suspended his campaign to come to Washington like a knight in shining armor, sat at a White House meeting he called for and said nothing for most of it.

So just what's going on here? A skeptic who follows politics might argue as follows. McCain and House Republicans saw a mutually beneficial opportunity to inject themselves in the bailout process. McCain, for whatever reasons, didn't want to participate in tonight's scheduled debate with Barack Obama. His friends in the House would seemingly rather watch the nation slide into depression rather than intervene in the "free market".

So they collaborate. They decide they don't like the bailout, then scramble to come up with an alternate plan that involves insuring bad debt rather than buying it outright. They even accused Treasury Secretary Paulson (what, another Republican?) of not giving them the information needed to draft their plan.

McCain seemed to glom onto this insurance approach. He certainly played his hand close to the vest for the better part of Thursday. The White House meeting reportedly descended into shouts and recriminations. McCain sat largely silent. Why? He needs the constituents conservative House Republicans represent. However, as happens sometimes, another event intervenes, one that could change the stakes.

Washington Mutual got itself seized by the FDIC Thursday night. WAMU isn't a small player. It's the largest savings and loan in America. Virtually all its assets were sold to JP Morgan Chase. Will this put pressure on Washington politicians to get off their ideologies and get something done?

You tell me.

McCain's Gambit Leads to Standoff

So here's John McCain, down in the latest polls, desperately trying to look like a leader. What does he do? He dramatically suspends his campaign, and says he wants to postpone Friday's debate. I'm sure his boys Rick Davis and Steve Schmidt told him the move would back Barack Obama into a corner. Go along, and McCain looks presidential, a man putting the nation's fiscal woes above his own personal gain. Refuse, and Obama looks like just another selfish, self absorbed politician.

Unfortunately, it didn't work out quite the way they diagrammed it on paper. Obama responded by saying, in essence, that anyone wanting to be president should be able to chew gum and walk at the same time. His people then released a timeline to yesterday's events that showed it was Obama who contacted McCain first, not about pushing the debate back, but about a bi-partisan show of unity in addressing the serious financial mess the country faces. Just after the two of them spoke yesterday afternoon, McCain went on television with his ploy.

Now, it looks like there's a standoff. McCain backed away just a bit, saying he'd debate if the bailout package was passed by Friday night. Yet for John McCain to act as though his presence is somehow crucial to getting a bailout through the Senate is beyond arrogance. As his colleague Sen. Bernie Sanders told me last night, John McCain hasn't been around all that much of late.

Barack Obama is right. Now is the time for the candidates to debate the economy. All that had to happen was a change in the theme. Foreign policy, the original focus of tomorrow's debate, can wait. John McCain knows this. Could there be another reason why he's holding out for postponement?

Could it be he's just not ready?

Can One Man Stabilize Markets?

Tuesday wasn't a great day for last week's financial heroes Henry Paulson and Ben Bernanke. They were grilled all day by skeptical members of Congress about their $700 billion dollar bailout of the financial markets. It seems their stubborn desire to get a bill passed free of conditions like caps on CEO salaries, congressional oversight, and such hit a wall. Senate Banking Committee Chair Chris Dodd concluded, ominously, that major changes to the plan must be implemented to get it moved.

Paulson and Bernanke should have seen this coming. Their miscalculation was believing the average American saw some benefit to helping people who are perceived as conductors on the express train to American financial ruin. They can tell Congress it's all about the taxpayer, but taxpayers themselves aren't feeling it. Things are so bad Bush himself is thinking about giving a speech to the nation prior to floor debate in the House. Like the plan itself, there's no guarantee a few words from the Decider-in Chief will make things any clearer.

American taxpayers want sensible answers to basic questions. Why shouldn't the salaries of CEOs whose companies are being bailed out be limited? How much help will there be for distressed homeowners facing foreclosure? Where exactly is this $700 billion dollars going to come from? And, most importantly, what happens if the bailout doesn't work? Right now even the most savvy economists don't see a Plan B.

The stock market is apparently buoyed early Wednesday by the news that billionaire investor Warren Buffet will put $5 billion dollars into Goldman Sachs. This is supposed to renew investor confidence that the independent investment bank model still has a chance. Maybe, in the short term, it will. However, a knight in shining armor may not be enough to solve this thing in the long term. The Treasury Secretary and Fed Chair wanted what they call a quick and clean bailout bill passed this week.

Maybe not.

Is the Surge really Working?

John McCain has made a big deal out of the notion that he supported the troop surge in Iraq, and that the surge has led to a drop in violence there. He's right about the first part, but is he right about the second? For sure the US troops are doing a fine job there, but there's another factor driving the drop in violence McCain won't talk about. It's the emergence of the Awakening Councils, citizen patrols paid by the US to fight the insurgency.

Talk to Iraqis on the ground, as some American reporters have, and they'll tell you it's the Awakening Councils that have played a key role in lowering violence. The US military says the same thing. There were those who, a the beginning of the relationship between the Councils and the US, had problems with the fact that some Council members were former insurgents. In other words, people who were shooting at Americans were now being paid by Americans. Still, the Councils are 99,000 strong. That's many more than the surge, giving at least some credence to the notion they should receive some credit for the reduction in violence.

However, there are some clouds on the horizon. There have been recent incidents that indicate the Councils are starting to become a problem. There are turf battles, allegations of intimidation, and sometimes, violence. On top of that, a transition is coming. Starting October 1st, 54,000 Awakening members in and around Baghdad will join the payroll of the Shiite led government of Iraq. The patrols are predominately Sunnis. How this transition is made will speak volumes about whether the violence in the country remains low.

The US military is trying to help mediate the transition, but it's a tricky process. There are issues of pay, authority, and lack of trust between Sunnis and Shiites that goes back generations. All this goes on while John McCain keeps trying to hammer Barack Obama about opposition to a surge that itself isn't responsible for the reduction in violence. And even with the violence down, almost no one is reporting that the Iraqi death toll since the start of the war now tops 1 million.

And all the while John McCain refuses to tell America what victory in Iraq means. What does it mean to you?