Because of the time difference between the United States and Europe, the Middle East and Asia, newspapers across the globe east of America (including The National in its print edition) reported on Friday morning, erroneously, that the $700 billion rescue package of the American financial market had been approved in late-night bipartisan talks at the White House. As television viewers woke up in Europe and Asia this morning, they found out that the talks had collapsed after both Democrats and Republicans balked at the prospect of the such massive US government intervention in the capitalist marketplace. Each side blamed the other for the failure, and stock markets plunged in Europe and Asia at the prospect of more American uncertainty. The New York Times had an excellent description of what allegedly took place behind the closed doors of the White House, claiming that the US Secretary of Treasury Henry Paulson had at one point kneeled in front of the House Speaker Nancy Pelosi and pleaded for Democratic support of the bailout plan. "I didn't know you were Catholic," quipped the House majority leader. "The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support," reported the Times. "'If money isn't loosened up, this sucker could go down,' President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room. "It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington." Lynn Sweet writing on the Chicago Sun-Times blog said: "There's lots of blame for why the bailout legislation is not sprinting through the House and Senate chambers. "The Democrats ? especially in the House ? don't want to pass a bailout without a lot of GOP votes because of the mind-blowing cost, the worry it may not work and voters will retaliate against congressional Democrats in November. "House GOP conservatives don't want to be pressured into quick action because they hate this kind of drastic government intervention, even if it's necessary. [Sen John] McCain needs to deliver these guys," concluded Sweet.
The bailout of troubled American banks continued on Thursday with the seizure of failing Washington Mutual by federal regulators who at the same time brokered its sale to JP Morgan for $1.9 billion plus its $31 billion in losses. "'This financial version of deal or no deal is not conducive to restoring badly-needed confidence,' said Martin Slaney, head of derivatives at GFT. 'The on-going discord is massively unsettling and the fact that we now have Washington Mutual added to the list of casualties is escalating the cynicism. If a deal hasn't been signed and sealed over the weekend, expect massive market turmoil. Monday will be a bloodbath,'" reported The Guardian. Meanwhile, at the annual United Nations General Assembly meeting in New York world leaders have been lining up to gloat at the failure of US capitalism, reported The Times of London. "Miguel D'Escoto Brockmann, the former Sandinista revolutionary in Nicaragua who is now serving as president of the UN 192-nation General Assembly, broke with protocol in his opening speech to denounce the 'unbridled greed and irresponsibility of the powerful.' "'More than half the world's people languish in hunger and poverty while more and more money is spent on weapons, war, luxuries and totally superfluous and unnecessary things,' he said. "Cristina Kirchner, Argentina's Pernonist president, said the world could no longer talk of the 'Tequila Effect' or 'Caipirinha Effect' emanating from developing nations such as Mexico or Brazil. 'Now we should talk about the Jazz Effect coming from the centre of the world's leading economy,' she said."
Uncertainty continues to swirl around whether or not the first presidential candidate debate, which was scheduled to be held tonight in Mississippi, will actually take place. The Republican presidential candidate Sen John McCain's announcement that he was suspending his campaign on Wednesday and rushing to Washington to help formulate the financial market rescue plan, left many wondering if he would make it to the debate tonight. The Washington Post said that Democrats were blaming McCain for the uncertainty and for trying to score political points by suddenly suspending his campaign. "Democrats immediately blamed McCain for disrupting the effort at compromise, saying his decision to suspend his campaign and return to Washington shifted the klieg lights of the White House contest to the tense and delicate congressional negotiations," reported the Post. "'What this looked like to me was a rescue plan for John McCain for two hours,' said an angry Sen. Christopher J. Dodd (D-Conn.), who had all but declared the deal done earlier in the day. 'To be distracted for two to three hours for political theater doesn't help.' "In interviews after the meeting, Obama pointed a finger at his rival for the faltering talks, saying on CNN that 'when you start injecting presidential politics into delicate negotiations, you can actually inject more problems, rather than less.' "His spokesman Bill Burton was more blunt, accusing McCain of turning 'a national crisis into an occasion to promote his campaign. It's become just another political stunt, aimed more at shoring up the senator's political fortunes than the nation's economy.' "In response, senior McCain adviser Steve Schmidt accused Obama of playing politics, saying the negotiations had been far from resolved and challenging the Democratic nominee to 'publish the list of members of Congress who were going to vote for this. Because in reality, there is not a list of a majority of Democrats and Republicans who are willing to vote for it.'" In a humorous aside, television talk show host David Letterman railed against McCain on Thursday night for cancelling an appearance, reported Verne Gay, the TV critic of Newsday. "'And now I'm just feeling like an ugly date. That's what I feel like. I feel like an ugly date. I feel used. I feel cheap. I feel sullied,'" said Letterman.
The Times reported on Friday that Pakistani and US military forces exchanged gunfire Thursday on the Afghan-Pakistani border after a US helicopter ventured 1 kilometer into Pakistani territory. But analysts told Reuters that they did not think this would seriously affect US-Pakistani relations as both sides need each other too much. "'Don't expect Pakistan and the US to go to war, that is not likely to happen,' said political analyst, Hasan Askari Rizvi. "'Pakistan needs the United States for economic reasons and the US needs Pakistan for conducting its war against terrorism in Afghanistan. Both recognize the need, but both are also trying to maximize their gain by building pressure on the other.'" In another manifestation of the new Cold War being waged by Russia vis-a-vis the US, the Kremlin announced on Friday that it was extending a $1 billion line of credit to the visiting Venezuelan President Hugo Chavez to buy Russian weapons, reported the International Herald Tribune. "The move is the latest gesture of military friendship between Russia and Venezuela, two countries that have increasingly positioned themselves as mavericks vis-a-vis the West. The Kremlin says its economic and political stability have allowed it to broaden the scope of its military and economic cooperation beyond what it calls its traditional sphere of influence. "Moscow is also frustrated with what it considers aggressive military posturing from the West, particularly the United States. Washington's plans to deploy elements of a missile defense system in Poland and the Czech Republic, as well as its support of NATO membership for Georgia and Ukraine, have set Russia on edge. "In turn, Russia has sought to expand its military footprint in recent years, inching closer and closer to American shores." Finally, in an exclusive story The Guardian's Jonathan Steele reports that Israel allegedly asked President Bush for permission earlier this year to attack Iranian nuclear facilities, and that Mr Bush said "no". "Israel gave serious thought this spring to launching a military strike on Iran's nuclear sites but was told by President George W Bush that he would not support it and did not expect to revise that view for the rest of his presidency, senior European diplomatic sources have told the Guardian," wrote Steele. "Bush's decision to refuse to offer any support for a strike on Iran appeared to be based on two factors, the sources said. One was US concern over Iran's likely retaliation, which would probably include a wave of attacks on US military and other personnel in Iraq and Afghanistan, as well as on shipping in the Persian Gulf. "The other was US anxiety that Israel would not succeed in disabling Iran's nuclear facilities in a single assault even with the use of dozens of aircraft. It could not mount a series of attacks over several days without risking full-scale war. So the benefits would not outweigh the costs."
ralsamh@thenational.ae