★ Sarah Palin scares me…This actually frightens me.

PalinAsPresident.com

★ This flow chart is surprisingly accurate. I think you could also apply this to her interview strategy.

★ I agree with John Gruber, It’s very hard to dispute this logic:

I’m not saying Secretary Paulson is Lex Luthor. I’m just saying $700 billion is exactly enough to build a death ray.

@badbanana

★ A statement by Jeffrey A. Miron, a lecturer in economics at Harvard, in opposition to the bailout. He thinks the bailout is a terrible idea and this is why.

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This “moral hazard” generates enormous distortions in an economy’s allocation of its financial resources.

★ According to Wikipedia:

John McCain cheated on his first wife in 1979. His first wife, Carol, had been severely crippled in a car accident while McCain was in Vietnam. Shortly after he returned from Vietnam he began having an affair with a woman half his age. A year later he divorced his crippled wife and married his mistress.

When pressed on the issue by reporters, John McCain said:

“…It is irrelevant what I did 20 to 30 years ago”

If cheating on his wife is ‘Irrelevant’ because it happened 28 years ago, then shouldn’t his service in the Vietnam war be considered irrelevant also?