Monday, September 29, 2008

Bailout redux

This is a situation with no "good" answers, and if I had a vote in Congress today, I would have looked at the bailout bill and been strongly tempted to vote "Present." In any case, there's a few things worth mentioning.

First, one relatively unremarked problem with the bailout is that Paulson et al wanted to Congress to do something that it had no authority to do. By that I don't mean that if it cleared both chambers of Congress and signed by the President, that it wouldn't have the force of law. But this particular bill was not just extremely unpopular, it also does things that the both the political class and the people in general are psychologically unprepared to understand.

Remember, the people who need to be deterred from the moral hazard aren't them, the suspenders-wearing malefactors of Wall Street, they're us. That means Congress and the American people in general have to make some effort to figure out what's going on hold ourselves accountable for what happens instead of trying to pretend that Sec Paulson and Fed Chairman Bernanke are some kind of Svengalis that are going to make it all better.

Part of this process is separating the desire for retribution against irresponsible lenders and undercapitalized borrowers versus acting prudently to preserve the health of the economy as a whole. Another part of this process is actually taking a look at the precise nature of the financial crisis and figuring out what to do about it. One problem with the Paulson plan is that it's intended to work as a bank shot. By clearing out the bad paper that financial institutions hold, these financial institutions will be stronger and more transparent and acceptable as counterparties. But even if that happens, it may not solve the bigger problem. The capital on the sidelines has to give it to the banks in one form or another, and the banks have to lend it out in the larger economy. Neither of which is guaranteed to happen. Overall, it could work, but certainly doesn't have to.

There's something else that needs to be addressed. How much does Sec Paulson intend to pay for the "distressed assets?" I hope intends to buy them cheap but I fear that he's more interested in getting money back into the banks than value for the taxpayer. I see why he thinks that but it's still short-sighted. Besides the current credit crisis we still have to deal with inflation and currency devaluation. And underlying those is the threat of debt repudiation. I have a hard time believing that the Democratic establishment is going to allow Sec Paulson to buy bad paper from Citibank without big payoffs for ACORN, midnight basketball, whatever's on the to-do list this week. When you combine the amount Sec Paulson is going to overpay to the counterparties to sell plus the additional money to buy off the political class, we're building a bigger hole of debt to climb out of.

Update: What he said.

It Went Down, Down, Down.....

......and the flames went higher.

The latest iteration of the bailout bill failed just a moment ago, and financial markets are in turmoil.

Our political class is deservedly blamed for many things, and many castigate them in this case for failing to act in the face of an urgent situation. But at least as far as this bailout goes, their hands are relatively clean. One word we haven't heard very much of is citizenship. But in an oblique way, it's actually relevant here.

Congress, and by extention the American people, have been asked to do something that they definitively do not want to do. They (or we) may end up doing it if they have to. But, the various machinations of the credit markets have to be internalized at a broader level of society, so we can establish the credibility of personal relationships that we all evaluate to make our way around the world. And simply put, that hasn't happened yet. In another week or so, it might. And at that point, a bill like today's proposed bailout might pass, and more importantly, ought to pass.

Friday, September 26, 2008

New Banks

One thing we haven't heard very much of is the idea of chartering new banks, but I think we should.
"Let's say you have ten banks and two of them are insolvent. But you
don't yet know which two. So the credit market is messed up for all
ten because at some sufficiently high level of risk credit just shuts down."
Tyler Cowen
We can and probably should work to figure who is the bad credit risk, but we know that it's not the new guy who just came into the room.

My Premises

This and this summarize the lay of the land, as I see it. Like the rest of the world, I don't have a magic bullet to fix this issue any more than anyone else, but we should know where we stand.

Thursday, September 25, 2008

One Day At A Time

There was supposedly a mortgage securities bailout deal nearly in place today before the House Republicans threw a wrench in the gears. I'm glad the GOP is slowing this train down, but for now I'm even less enthused with the House Republicans' alternative deal than the original Paulson plan.

The Rep Reps want to insure the questionable-quality mortgage backed securities in lieu of buying them, but I like my idea better. Part of the problem is that these MBS's are too opaque to easiliy manage them in the first place. So to insure them adds yet another layer of obfuscation, and btw does anybody have any idea for how much premium the gov't is supposed to be charging for this insurance? No, these MBS's are working like cholesterol in the bloodstream of our major financial institutions, so to fix the problem we need to get rid of it by putting it on the government's books instead. On that score Secretary Paulson is correct.

My biggest quibble with the Paulson plan is that it overpays for the MBS's. In fact, if we can build a legitimate mechanism for determining market value, I'd give Secretary Paulson a check for $700Bn today and let him buy whatever he wants (with some minimal oversight), as long as he never pays higher than market value for whatever he buys. Why would the owners of these MBS's sell them to the Treasury under these conditions? Because we're the government and we're not going to give them a choice. We tell the banks, "If you're not in good shape and you have bad MBS's, you have to clear them out. If you don't want to sell them to us, find someone else to buy them."

When this plan is implemented, anyone loaning money to a bank knows that the bank has the resources to repay them independtly of whatever they might own in MBS's. Then the banks can get access to capital, and loan money out to whoever they deem is creditworthy.

Full of Sound and Fury

I appreciate Ross' point here, but I don't buy it. This is not a conventional issue-defined election, is definitively not about nothing. He may characterize the differences as tactical, but as he allows there is good reason to think that in terms of temperment, each man will govern as he campaigns. We see the effect of this already with the bailout. It seems likely that if McCain doesn't deliver Republican votes in the Senate the bill will fail.

Flying Under Radar

I know we've got the credit crisis and all the rest of it, but it's still suprising to me that this has gone as far as it has with little or no public comment.

Riding Out the Day's Events

Today was a near pitch-perfect illustration of the flaws of our major Presidential candidates.

Barack Obama has had various positions of authority, but as near as I can see he's never been held accountable for accomplishing anything, or even staked his personal reputation on the attempt. Today is no exception. By now, he's been the de facto leader of the Democratic Party for almost six months and his voice carries all the power of Marcel Marceau. John McCain has an innate feel for the exercise of leadership, but poor judgment for its end. Ie, he knows how to overcome inertia and rationalization for a common purpose, but he doesn't know what the common purpose is.

Today, John McCain suspended his campaign and is going to Washington to participate in the bailout debate. This has been characterized by many as a stunt, and that's certainly a legitimate pov. But I can almost guarantee that it's not a stunt in McCain's mind, but a real statement of priorities. For the sake of the economy, this might be good or bad. It's easy for me to envision the scenario where McCain builds a legislative consensus where there otherwise wouldn't be one. But the resulting bill might be your typical Congressional hodgepodge we'd have been better off without.

Fwiw, the lay of the land is changing so quickly, I don't know what we want to happen. I still expect some sort of intervention to happen, but it looks a lot less urgent now than it did a few days ago, which is a very good thing in my book.

If I had my druthers, here's the framework I'd use. Come up with criteria for a reasonable dividing line between "healthy" banks who we think can survive without an intervention. Figure out what the current market liquidation price of the various sorts of bad paper is, and have the Treasury bid at a small to medium-sized premium to that price, ie, well below the hold-to-maturity price Sec. Paulson has been talking about. Then, use the regulatory power of the government to force the "unhealthy" banks to clear out all their bad paper, either to the government or to somebody else. For many of them, this will not give them enough capital to continue operations. For those, we handle like an ordinary bank failure, ie, inject enough capital into it for a healthy bank to take over. Finally streamline the process of chartering new banks with new capital, perhaps allowing them to operate in a looser regulatory environment for a while. That should be okay, we know they're not carrying bad paper.

This approach would solve the moral hazard problem and be the best for the taxpayer. It avoids demagoguery and blame games. On the downside we're left hoping we're using enough club to get the job done. On that score, today at least, I think we just have to take our chances. From what I've seen, there is no magic bullet where we're guaranteed to get out of the mess if we give the Treasury X number of dollars worth of spending authority.

Like anyone else, my view on this might be completely different tomorrow.

Tuesday, September 23, 2008

McCain Gets Closer

As I noted in the last post, McCain's various statements about the credit crisis or the economy in general are less than inspiring. However, he's getting closer to where he needs to be with today's statement.

The problem is complex, and the legislation to fix it surely will be as well. So first, let's state some principles we can use to guide us instead of barking barely coherent complaints against various bogeymen, some innocent and some guilty.

I would have stated the guiding principles a little differently. Whether we characterize what eventually gets done as a bailout or not, there will eventually be some kind of intervention, because there is a very substantial likelihood that we would have a second Great Depression without one. But the money is so huge, and the amount of government control over the economy is so extraordinary, that we have to emphasize that the intervention is something we have to do, not something we want to do. And, this is something we only intend to do once, with provisions for sunsetting and reselling debt back into the private market when the opportunity arises.

But truth be told, what's in the statement isn't too bad for now. Everything going forward has to emphasize two things. First, let's do X, Y, and Z and we'll avoid the 1932-scenario. Second, after the crisis is past, we'll remain vigilant against government mission creep. We're not going to maintain intrusive government power past the point where it's needed.

Monday, September 22, 2008

The Moral Hazard

By now, we've all heard about the Fed/Treasury Resolution Trust Corp. reprise. Among other things, various parties are tut-tutting over the "moral hazard," ie, the idea that having an external party bail our protagonists out of trouble greatly increases the probability they will get into trouble in the first place. In this case, this is usually meant to mean that the lenders and investors are leaning against the gov't bailout, thereby propping up institutions which should have either failed or taken a more conservative business plan some time ago.

That is not something to dismiss out of hand. But on balance it's difficult to say this outweighs the possibility that our banking system was an hour or three away from collapse, a story which nobody has really tried to refute. About the creditors and the equityholders, they might catch a break from the government, but then again they might not. It'll depend on the details, and those might not be in their favor.

However, now that it's clear that some kind of bailout will occur, there is a significant risk of moral hazard that we should be aware of, and take measures against. We should be more afraid of recklessness from the political class than the financial class. Various politicians and bureaucrats will have control over assets, de facto and de jure, on a scale they had only dreamed of beforehand. This might be necessary to resolve an emergency liquidity crisis, so it's important for us to insist that the government intervention be taken for that end, and nothing else. That certainly won't happen by force of bureaucratic intertia, so it will require vigilance from those of us not in government. The flip side is, once we agree that this intervention is something we doing because we have to, not because we want to, the consequences are probably not so bad.

Sunday, September 21, 2008

The Candidate We Have

If you were to ask 10 well-informed conservatives who they would rather have as President if they had to choose between John McCain and Chris Cox, I think Mr. Cox would get at least nine votes. Of course, John McCain does not strike anyone as being particularly adept economic policy expert, so it was doubly unfortunate that Mr. McCain chose to take out his frustrations on Mr. Cox last Thursday. This is just one symptom of the larger condition of this campaign diagnonsed by Peggy Noonan, where for many of us, we support Mr. McCain but don't necessarily believe in him.

Donald Rumsfeld famously told a soldier that we go to war "with the Army we have, not the one we want." There's a tendency to apply the same train of thought toward elections, and in this case it would be a substantial mistake. Among other things, the "chain of command" in this case runs in the opposite direction, where the voters are sovereign. But even beyond that, for the credibility of the GOP base and the health of the economy as a whole, we can't afford to pretend this particular emperor is well-dressed when he's really naked.

Tuesday, September 16, 2008

Too Big to Fail

Just six days ago, I wrote that John McCain was late giving up manufactured outrage over lipstick and needed to pivot toward a real message on the economy. Unfortunately I suspect that window is shut now. First of all, with all that's happened this week, he appears to be late to the party. Second, what he has said isn't exactly worthy of the brilliancy prize (more on that later).

It's been said of several big teetering financial institutions, Long Term Capital, Fannie and Freddie, Bear Stearns, Lehman Bros. (oops sorry guys), and most recently AIG that they are "too big to fail." This has been repeated enough to be a cliche without necessarily figuring why. Financial institutions have to be able to deal with each other with the understanding that in the vast majority of the time (more often than with other generic businesses), the other party will be able to live up to their obligations. Too big to fail means that a financial institution is so entrenched in its obligations to other firms that if it fails then its counterparties likely will as well. By the time the cascade of failures is finished, there won't be enough solvent institutions remaining to lubricate the wheels of a healthy economy.

The point being, most of the economy lives outside the financial sector, and the crisis inside it needs to be viewed from that point of view. The economy as a whole needs institutions that can store capital on others' behalf, and extend various kinds of credit. Even if the events of this week are resolved well enough, we're still not out of the woods. Just because there's players out there with money who can extend credit, does not at all imply that they will. In the big picture, the crucial factor is growth. In the end, it is growth which generates the credibility that money lent out will eventually be paid back. As it stands right now, things aren't so bad. Growth has been ok, and credit is available for creditworthy parties, even if the liquidity of the secondary debt market has dried up. It's what happens when things turn for the worse from now that we should be afraid of.

Except for the Bush tax cuts, John McCain's record in the Senate is actually pretty good. The problem is, he seems to view the mechanics of the economy as morality play. He's not alone in that of course, but for him it fuels the perception that his life experience is in substantial ways lacking in the ability to engage peoples concerns now. In any case, it's seems to me that the weakness in the Republican ticket is on the top, not the bottom.

Keep Them Dogies Rollin'

New York judge Gideon Tucker once said "Nobody's life, liberty or property are safe while the Legislature is in session." Bearing that in mind, it's useful to remember that for the big ticket issues, it's almost always better to roll the Democrats instead of negotiating with them. That's not a matter of being macho or mulish resistance to compromise. It's just that conservatives can never get half a loaf when both sides emerge from the proverbial smoke-filled room. And wrt the energy "compromise" floating around Capitol Hill, that's the way National Review sees it. To be honest I haven't checked all this out too carefully but I'm inclined to agree with them.

In the smoke-filled room column we have the Medicare Prescription Drug Bill, Leave No Child Behind, the infamous 1990 Budget deal (ie, the repudiation of "Read my lips."), and who could forget last year's Comprehensive Immigration bill. In the other column we have the nomination fights over Roberts and Alito, the 1996 Welfare Reform, any of the recent major tax cut bills, and the Iraq War vote for that matter.

The trick is to sharpen the difference between the parties toward maximum clarity for the public at large. In this case is not too difficult. The GOP, if they're smart, ought to be in favor of "all of the above" wrt energy production. As it stands there are lots of statutory barriers to energy production in America, there's no point in adding to them. Anything we can get out of the Democrats now, let's take. Anything we can't get, we'll try for later.

Saturday, September 13, 2008

The Last Pivot

For the moment, the Presidential race has found its equilibrium. McCain has a small lead, and the Obama campaign appears lost. As things stand, both sides look ready to fight the trench warfare at the end of Presidential elections: sound bites, debates, ritual denunciations, the ground war, etc. McCain has a small advantage here, but it's too vulnerable to try to protect. One mistake in a debate, poor organization in Ohio, and it all goes away.

It doesn't have to be that way. McCain has had a good six weeks. I'm reminded of a thought of Judge Sonia Klonsky in Laws of Our Fathers by Scott Turow, where she thinks (and I paraphrase), "This is the only cross-examination in my entire career on the bench that is actually going to change the verdict of the case." Everything that's gone right for the McCain campaign, the Saddleback Forum, the "celebrity" ad, the Palin selection, it all sets the stage for what happens next.

Now, while McCain has everybody's attention, he needs to execute the Michigan pivot. Ie, he tells the voters "Vote for me and the 1932-scenario is out of play. Vote for the other guy and it's a very real possibility." It's important to maintain as high a signal-to-noise ration as possible, and avoid electioneering theatrics. Fortunately, there are several very specific, very tangible data points available to make that clear. Michigan has been in a one-state recession for the last six years. The Democratic-controlled House of Representatives turned off the lights in lieu of debating energy production. The housing GSEs, whose management has largely been a gravy train for Democratic insiders, have failed and now require a government bailout.

One thing McCain can do is promise to drill, or more importantly, "all of the above". The second thing he can do is cut spending and talk up the dollar. The biggest problem with credit now is not risk of default. The lending bubble has largely been written down. Instead, it's about currency risk. Anybody loaning money to an American on any terms is going to be paid back in dollars and therefore taking a risk that the dollar will depreciate. Fortunately for McCain he has credibility on spending. He just needs to apply it in the right place.

If McCain can do this, I don't see this as a close election. This is where the voters are and Obama can't follow him. Obama has had his chance of running on a message and blew it, the voters are ignoring him at this point. I see a McCain win of 5-8 points and with a drama-free Election Day (and drama-free for the three weeks leading up to it as well). Will McCain actually make this pivot? It's anybody's guess.

Wednesday, September 10, 2008

Teaching a Pig to Sing

The world is abuzz with speculation about whether "lipstick on a pig" was a deliberately ungracious insult of Gov Palin from Sen Obama, or an unfortunate choice of words. For the Republicans, this is good news and bad news.

The good news is that Sen Obama clearly has no message, he's out of his comfort zone and is flailing. From what we've seen so far, he's gaffe-prone and surprisingly ineloquent when forced to speak unprepared.

The bad news is that playing gotcha games is not good turf for the Republicans and they should make some effort to get out of there as soon as possible. In a very particular way the Republicans have unwound a significant part of the legacy of President Bush in the last ten days or so. They have the nation's attention and people are listening to what they have to say. It's been so long since the party has gotten a decent hearing that it's imperative to leverage this wisely. Ultimately our message to the voters has nothing to do with complaints about Sen Obama insulting them so let's not waste our time teaching trying to teach this particular pig to sing.

Instead, the economy is a very ripe issue for the Republicans, and if the McCain people play their cards right, the Presidential race could be functionally over by the beginning of October. The Republicans already own the oil issue. As it happens they stand to benefit from some good timing as well. The Congressional ban on offshore drilling sunsets at the end of the month. The debate over renewing it, inside and outside the halls of Congress, will work to the Republicans' benefit. The trick for the Congressional GOP is to establish the energy analog of the Brezhnev Doctrine. With respect to energy production, they are in favor of "all of the above" The Democrats will acquiesce to some forms of energy production and not others. The GOP should take whatever the Democrats acquiesce to, and agitate for the rest. They must resist the temptation to think that because they have some deal with the Democrats, the leftover forms of energy production are "off the table." The country will be better off for whatever energy production the Democrats allow, and the Democrats will look bad no matter what they do.

Plus, just Monday the government announced the takeover of GSE's Fannie Mae and Freddie Mac, both of which happen to have been woefully mismanaged by Democratic pooh-bahs sucking very generously on the public teat. McCain-Palin can't unilaterally promise to prop the housing market and end the mortgage crisis, but they can demonstrate that they are dialed in to the the real problems facing America.

Tuesday, September 09, 2008

Identity Politics for Republicans, Pt II

Here's one more post on Gov Palin, then I suspect we'll be leaving the world of all-Sarah, all the time (me and the Presidential race both).

First let's recap the impact of The Speech a little bit. I had a wrong read initially, largely because I had already gotten to the place where everybody else was going. I already knew she was hot and poised, so I didn't need to see any more of that. I am probably one of the very few viewers who thought her speech was too nice toward Obama. In any case, the first impression for most of the world was that she is a woman who is composed and aggressive at the same time, a very appealing combination.

Since the announcement of her place on the ticket, Gov Palin has been hit with two separate waves of antagonism. The first was various negative insinuations and rumors about her family. The second was about her "inexperience." Both have boomeranged against their instigators to the benefit of the McCain-Palin ticket.

We've already written about the first a little bit, so let's hit on the second for a moment. Some people claim that she attracts support because she is an ordinary person that her constituents can relate to. I see the point but I find that explanation unsatisfactory because even though she is very normal in some ways she is also completely extraordinary. It's not just that she has five children. She also hunts, she fishes, she won the state championship in basketball, she finished runner-up in the state beauty pageant, she ran a small business, she got elected mayor and governor. Sarah Palin is the reason compasses point North. People identify not just with her ordinariness, but more importantly with her extraordinariness, as a crucial expression of their sovereignty. Ie, if the media, the Democrats and various bien-pensants of The Establishment will treat her the way they have, the rest of us have no hope.

Unfortunately for Gov Palin's detractors, in America the people still get a vote that counts, and they can and will use it to pull rank. We'll always have experts of various stripes, and it's a mistake to disparage the idea of expertise in general. Nonetheless, even if it's the experts who know how to sail the ship of state, we still pick the destination.

Thursday, September 04, 2008


After McCain's speech, I like him more but my expectations of him are less (when he gets to the Oval Office, and I think he will). I wrote before that the self-justification of the McCain candidacy is that he survived the Hanoi Hilton and you didn't, and I stand by that.

Obviously that is a substantial achievement that speaks impressively to steadfastness in character, but it isn't enough. Even though McCain has largely been doing what I suggested in the post I mentioned before I am not particularly optimistic about the upcoming McCain Administration. We've got very substantial problems in America that require real expertise to get through. More expertise than any one person has of course but in McCain's case I fear his tendency to view the world through his "public service" lens will keep him from getting the best out of others too.

Notwithstanding that, McCain vs. Obama is an easy call and at the moment most of the intelligent people who are sitting this one out are motivated by the need to indulge their own spite, which is their prerogative of course. I suspect when push comes to shove Palin is the real game-changer anyway. We need a broader base of political renewal than the Establishment has on offer. And now we have a chance of getting it.

What He Said, Pt IV

Larry Kudlow is an affable guy in a sometimes jerkish business. Sometimes he confuses his wishes with reality but today's article is pitch-perfect. The Republicans cannot afford to be too giddy, or even look that way, when the 1932-scenario is very much in play.

If I were John McCain, I'd do some kind of back-of-the-envelope calculation to price out Obama's middle-class tax cut in terms of the price of oil, let's say it's worth $25/bbl for the median tax cut beneficiary. Then I'd point out that the price of oil has dropped $40/bbl since President Bush and the Republicans have put exploration and drilling on the political agenda. Combine that with the emphasis that the government doesn't control the price of oil, it only hopes to contain it.

I'm Glad I'm Not in Politics

And that no one actually reads this blog because I wasn't as a big a fan of The Speech as everyone else. From what I've seen, so far Giuliani has been by far the best speaker of either convention. Even in his pauses and awkward lines made it clear that it was his speech.

Palin's jabs at the Democrats were cute but a little contrived. I'm not convinced that she actually believed them. And the whole business of she likes small towns and special needs children was overplayed. For me, we could look at her or listen to her for 10 seconds and get that already.

This might be down to my own personal preferences. For me the gold standard for attacking the opponents in a convention speech was Zell Miller at Madison Square Garden in 2004, and last night was not that. According to PalinFacts, Death once had a near-Sarah-Palin experience, and I was looking forward to seeing that side of her. We already knew she had the PTA mom angle down cold.

But then, the whole world seems to love The Speech. I'll have to consider this again in a few days and see if the seems the same then as it does now.

Wednesday, September 03, 2008

Letting Sleeping Dogs Lie

The political fortunes of the GOP turn a sharp turn for the worse yesterday. Bristol Palin's pregnancy and all the punditry and side stories that have come out with it are dominating the air to the exclusion of everything else. There's polls out now that show Obama with an 8 or 9 point lead, something we haven't seen in a while. We can pooh-pooh this if we want but I think we're seeing significant changes in the race right before our eyes.

I misread the impact of this largely because to me the Palin family looks closer to something out of Norman Rockwell than something out of Jerry Springer. But then I read Steve Sailer's take on this and I think he is exactly right. The Republicans have kicked the sleeping dog and now we'll just have to see who he bites. There is a significant danger because not only is there a fear of redneck female fertility there is actually a means to do something about it. Ie, vote for Sen Obama and erase Gov Palin's family from the national stage.

Notwithstanding any of that, Gov Palin was still the right pick and the McCain candidacy is miles better off now than before he chose Palin.

1. The oil narrative is looking very good for the Republicans now if they know how to argue it.

2. The overall dynamic of the race has changed in several good ways. First of all, the GOP has finally moved beyond Bush, and everybody likes it. At this point, the race is a referendum on McCain instead of a referendum on Obama. There's been times in the past few days where I wondering if the Democrats were running a candidate in this race. They'll have to swim upstream against the media of course, but the fact that the Republicans have interesting things to say is going to make all the difference.

3. People who don't want their families to end up on the Jerry Springer show will figure out that the haterade about Gov Palin and her family is really aimed at them. The GOP hopes they figure it out sooner rather than later.

Monday, September 01, 2008

Sarah Palin Facts

Move over, Chuck Norris. It serves you right for supporting that awful Huckster. (HT: Steve Sailer)

What He Said, Pt III

God How I Love Sully

But not in that way of course.

The most weaselly partisan contemporary commentator in public events has for the last couple of days been confronted with an intractable dilemma: write about something other than Gov Palin in which case nobody could possibly care, or write about Gov Palin, in which case he's writing about Gov Palin.

For those of you who've got lives, Sully's been retailing the story that Gov Palin's daughter Bristol is the real mother of Trig, the Down Syndrome baby. As it happens Bristol really is pregnant now, so we know:

1. It's just about impossible that she was pregnant then.
2. The standards of evidence in Sully-land (or the Left in general for that matter) are gutter-level.

He's obviously throwing whatever he can against the wall in the vain hope that something will stick.

But even without this, he was still stuck. Even if some people still read his blog, nobody actually takes his train of thought seriously, because he's never really writing on the level. The key to the spinmeister's craft is understanding the limits to it. You can frame a plausible story on a set of facts and if it sticks, a consensus might adopt it to be the frame of reference about those facts in the future. You can't frame a story whose premises are easily shown to be false. They make up their own mind about the underlying circumstances and form a (bad) frame of reference around you.

What He Said, Pt II,0,7373723.story

You can't be have a winning team in the NFL with bad offensive line play. The Bears line wasn't too bad as of a year or two ago, but they had a bunch of decent to good players, (Fred Miller, Ruben Brown, Roberto Garza, John Tait, even Olin Kreutz a little bit) who all got old at the same time.

One small quibble. The trade with the Jets was fine. The end of the second round is a plenty good enough spot to get quality offensive lineman, and if they'd picked one there they might have one instead of Dan Bazuin who's not on the team any more.