McCain is running out of time

In the second presidential debate, John McCain needed a knockout victory. At best he got a tie. With less than a month to go before the US presidential election, the Republican candidate is struggling both strategically and tactically in his effort to stem Barack Obama's momentum. Meanwhile, the globalisation of the financial crisis requires a globalised response and while Europe falters in crafting a unified approach, Iceland turns to Russia for support.

Before Tuesday's presidential debate in Nashville, Roger Simon, in Politico, posed the question: "Can John McCain possibly win this thing? Can he actually win in November? "The outlook is bleak: The polls are ugly, the Electoral College map is grim, the economy is getting worse, and McCain's choice of Sarah Palin may have energised the Republican base, but it has appalled and frightened many outside it. "Still, McCain's campaign has come back from the dead more than once. He survived his early support for immigration reform, he not only survived but has prospered from his support for the Iraq war surge, and he rebuilt a primary campaign that was in a state of near collapse to win the Republican nomination." Afterwards, Mr Simon concluded: "Watching John McCain and Barack Obama at their second presidential debate was like watching two fighters circling each other, throwing a jab here, landing a blow there, but neither one ever delivering a knockout punch. "The trouble for John McCain, however, is that he needed one. "So if you had to say somebody lost Tuesday night, it was McCain. Because he had to win and he did not. He is the one who has to change the current trajectory of the campaign, and he did not do that." In an editorial, the Los Angeles Times said: "John McCain boasts that he knows the difference between tactics and strategy, so he must recognise that the final weeks of his campaign against Barack Obama are plagued with difficulties in both realms. His strategic goal - to run as the more experienced, worldly and wiser candidate - is undermined by an electorate stubbornly unwilling to regard him as more presidential than his rival. And his tactical response, to challenge Obama with increasing ferocity, is only making matters worse." In Slate, John Dickerson wrote: "After their second debate, both Barack Obama and John McCain shook hands with the Nashville audience of 80 uncommitted voters. Both were well-received. But Obama stayed longer, and with McCain out of the room, the affection from the swing voters increased. He was mobbed, patted, beamed at, embraced. One woman wiggled up next to him. At one point, about 15 voters posed for a group picture like it was the last day of [summer] camp. The 'Nashville '08 Debate' T-shirts are in the mail. "These uncommitted voters wanted to be next to Barack Obama, and the adulation from the audience helps explain why he won the debate. In the post-debate polls on CNN and CBS, he was the clear winner, and he also won Fox's focus group. "Obama's likeability is good for him and bad for McCain, of course, but it also undercuts McCain's credibility. It exposes the picture McCain has been painting of Obama in the last few days as a caricature. Since McCain's slide in the polls, he has started personal attacks questioning Obama's character and values. 'Who is the real Barack Obama?' McCain asks on the stump and in his ads. Sarah Palin says Obama isn't from 'regular' America. He's out of the mainstream, aides regularly say. "That cartoon version of Obama didn't show up for the 90-minute debate Tuesday. If it had, those audience members would have been waving garlic as they fled from the room rather than sticking around so they could tell their neighbours about it." Politico reported: "McCain's decision to use Tuesday's debate to roll out a dramatic new housing plan - and to downplay an extended weekend of personal attacks on Obama - appeared to mark a recognition that, after two consecutive days of the Dow plummeting and financial haemorrhaging abroad, the market meltdown is not likely to move from the centre of the campaign. "After days of attempts to persuade voters that Obama's ties to '60s radical Bill Ayers are a crucial character issue, McCain didn't mention Ayers' name during the 90 minutes of Tuesday's forum. His top aides suggested afterward that, going forward, the candidate wouldn't focus on the former domestic terrorist nor invoke the name of Obama's controversial pastor, the Rev Jeremiah Wright." In The Washington Post, Steven Pearlstein wrote: "Against a backdrop of an unfolding meltdown in global financial markets and the near-certainty of a US recession, the two candidates for president used the occasion of a much-anticipated town hall meeting last night to repeat all the talking points they were making long before the recent bank failures, the free fall of stock prices and the federal government's expensive rescue efforts. "A televised national debate is hardly the ideal place to lay out a 10-point programme for containing the credit crisis or for rebuilding and redesigning the world's financial infrastructure. But neither did either candidate see it as an opportunity to lay out the broad principles he would follow in managing the current crisis or to sketch the outlines of a new form of capitalism that might replace the current model, which many Americans are coming to conclude provides too little in the way of fairness and economic security. "Asked by an internet questioner what sacrifices they were prepared to ask Americans to make to get us out of the economic mess, both Barack Obama and John McCain sidestepped the question, with McCain resorting to his familiar promises to cut back on pork-barrel spending and Obama pitching an easy-to-swallow plea for everyone to turn down the thermostat. "Rather than talking about sacrifices, the candidates got into their most spirited exchanges while trying to outdo each other in proving that he would be the most aggressive and committed in cutting taxes for most households."

A global crisis

In The Washington Post, Fred Bergsten and Arvind Subramanian wrote: "The financial crisis has gone global. Stock indexes have fallen and credit markets are seizing up around the world. In recent days, as most Americans focused on the political drama of the rescue package, a number of European banks have failed or been taken over. Several in Russia and Eastern Europe are teetering on the verge of insolvency. Many Latin American countries are newly vulnerable because foreign banks are big players there. Few nations can escape the financial contagion. "Also looming is an even more virulent form of contagion: decreased levels of economic activity because of contracting trade flows. Japan and several European countries are already in recession. If the United States and the entire European Union sink further, as looks increasingly possible, emerging markets and developing countries will face lower exports and less growth. Even China will experience a sharp slowdown because of its heavy reliance on overseas markets. Unemployment will soar almost everywhere. "Globalisation of the crisis requires a globalised response. While the consequences of financial crises are clearly international, the regulation of finance remains almost wholly national. And national efforts, including the US rescue plan and European governments' remedies for their nations' bank problems, will continue to be the first responses. "Yet an internationally coordinated strategy, ranging far beyond the heroic efforts of the world's leading central banks, is essential now that the US rescue plan is in place. When finance ministers convene in Washington this week for the annual International Monetary Fund meeting, they should adopt several initial components of such a strategy. Not doing so would be almost as serious as if Congress had adjourned without passing the rescue legislation." Reporting on Europe's response to the financial turmoil, The New York Times said: "At a time when the scale of events would seem to call for concerted action, critics say, the stock and credit market upheavals have elicited raw emotions and reflexive, unilateral actions. After a week of squabbling and rushed meetings, finance ministers agreed Tuesday to take a few modest steps to shore up markets. But they did little to dispel growing doubts that the European Union could grapple collectively with a common crisis. " 'This is unprecedented,' said Simon Tilford, chief economist of the Centre for European Reform, a research organisation in London. 'It has exposed the limits of European integration and coordination when presented with a crisis of this magnitude.' "Defenders of the European Union were quick to point out that its system, which lacks a central finance ministry comparable to the Treasury Department in the United States, was not designed for this kind of crisis. "And quietly, they point out that the Treasury Department did not prevent the United States from creating the mortgage mess; nor did Congress, speaking a single language on behalf of a single nation, have such an easy time finding consensus on a response. " 'Political will is always in short supply when there's no risk,' said Jan Techau, director of the Europe programme at the German Council on Foreign Relations, who said he was often sceptical of the European Union, but understanding of its present struggles. 'You can either say, see how long it took them, look at how impotent they are, or you can say, when push comes to shove, they can really act. You can look at it positively or negatively.' "The meeting of member countries' finance ministers on Tuesday illustrated the virtues and the flaws of the union. The ministers managed to more than double the minimum level of guarantees for bank deposits in member countries, to around $67,500, but that was less than half what some member states had asked for." The Moscow Times reported: "As Iceland teetered on the precipice of a complete financial meltdown Tuesday, the country's central bank reported that Russia was coming to its rescue with a loan of 4 billion euros ($5.4 billion). "The report turned out to be premature, as negotiations are in the early stages, but Moscow did receive an official request late Tuesday and is considering the loan, a gesture that may be motivated more by politics than economics. " 'We will consider it,' Finance Minister Alexei Kudrin said Tuesday, Interfax reported. 'Iceland has a reputation for strict budget discipline and has a high credit rating,' Kudrin said. 'We're looking favourably at the request.' "In a last-ditch effort Tuesday to save its banking sector, the government of the tiny country, with a population of just 310,000, nationalised its second-largest bank, Landsbanki, and loaned Kaupthing, its largest bank, 500 million euros ($680 million). The measures came after the country's currency, the krona, plunged by 30 per cent against the euro on Monday. The country's third-largest bank, Glitnir, was nationalised last week."