Dare I say it? Palin reminds me of Reagan in one critical respect: she thinks and acts like most Americans do or would like to, and she does it with a smile on her face. She’s the ultimate “one of us.”

Whereas Hillary Clinton is a nagging harpy, Barack Obama is a sexually-suspect creature from another planet, and Joe Biden is a dirty old man.

The thing about people who come in promising “change” from the left/progressive side, is that they always seem to be something totally different from what most Americans really want deep-down, which is simply to get their work done, take care of their kids, be left in peace, and feel good about themselves at the end of a long, hard day.

The fantasy that this country should become a technocratic paradise for eggheads with advanced degrees and no robust experience of ordinary life appeals primarily to young people. And they mostly grow out of it.

The “change” America wants isn’t a brave new world. It’s a return to an older world, with all the modern conveniences. Sarah Palin is not ready to be President of the United States (yet). But along with her attractive family, she certainly sets the pattern for an eventual renascence of a genial, confident and self-reliant Conservatism.

And the biggest surprise for some people will be that the Democrats don’t have a monopoly on youth. Or women.

-Francis Cianfrocca

If 80% of the people think their country is on the wrong track, then what do you do? Well sure: you propose a totally different track for them to follow. Adulation, and hopefully power, ensue.

Last night, from Barack Obama, we got a double-espresso shot of national vision. The comparison with the FDR and JFK moments in history was not only intentional. It was also broadly resonant.

John Kennedy sought the Presidency at a moment when our nation was susceptible to being told that America needed to be a more glamorous place. Beyond a commitment to technocratic management of the economy, better hair and more attractive women, what did this actually mean in substantive terms? Well, there was the pledge to reach the moon within ten years. Thus Obama’s pledge to “free us from Middle-east oil” in a like period of time.

What does it specifically mean to be free from Middle-east oil? Mr. Obama doesn’t actually say. You’ll have to wait ten years to find out.

The example of Franklin Roosevelt is far more interesting and instructive.

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Markets will be very, very quiet until next week as everyone finishes up his vacation. Inside the quiet backdrop, there was a lot of weekend chatter about the money markets, which continue to be essentially non-functional after more than a year. It’s impossible to imagine anything that will unfreeze interbank lending, especially in London. This is going to be a boot planted on the neck of the global economy, perhaps for another year or two.

Watch for signs of a major crackup involving Fannie Mae and Freddie Mac. The markets are going to wipe out the equity of both companies and force Treasury Secretary Paulson to show his hand. He has a handful of interesting choices, but one thing no one should expect is that there will be any impairment in the position of people who hold senior debt issued by Fannie or Freddie. The Chinese and the Russians (who between them are believed to own at least $1.1 trillion in agency paper) won’t like that, not one little bit.

So the only real question (apart from the fate of subordinated agency paper holders) is what Paulson will do about the equity of Fannie and Freddie. Or more precisely, how much of it will he expose US taxpayers to.

The problems in the US residential real estate market are finally showing outward signs of spilling over into commercial real estate. (I say “outward signs” because it’s now showing up in news reports, whereas warning lights have been flashing quietly for those with eyes to see for nearly a year and a half.)

The problem with commercial real estate isn’t that valuations are wrong, as in housing. Nor are cash flows impaired too far beyond what you’d expect in a recession. The problem is that the people who have been using leverage to buy securities backed by commercial real-estate cash flows have lost their access to leverage. And there’s no one willing to buy securities that a knowledgeable and risk-tolerant real-money buyer could probably get for far below their stable long-term value.

These are the times that try the souls of some men. And make other men billionaires.

Side note: I’m sometimes asked what the effect of the political convention will be on the markets this week. Many market participants would probably say “what convention?” And that’s your answer.

-Francis Cianfrocca

Does anyone ever read Jerry Flint? He’s an old-fashioned “car guy” who has been writing about the auto industry for nearly 50 years now, and he once wrote a column for Forbes about Detroit’s lack of leadership. And he said there are some guys you just know are solid, hard-core leaders. His example was Bob Lutz, who now is a vice chairman at GM.

Lutz is an example of a man you wouldn’t think to question if you were all sitting in a foxhole, and he jumped out and yelled “FOLLOW ME!” You and everyone else would just jump out and go.

And you’d know that about him from the first time you met him. Another guy I can think of like that is Jamie Dimon, who now runs JP Morgan Chase.

Can anyone imagine ever taking an order from Barack Obama? For that matter, can anyone even imagine Barack Obama giving a clear, confident order?

He’s the kind of guy who belongs in a classroom. He’s good at asking questions, which is an awfully valuable skill in teachers, pastors, and mentors. It’s also a skill that’s highly valued by people whose most memorable and proximate experiences have been in classrooms rather than in real life.

And now, with the Biden pick, Obama has failed to rise above his own limitations. Obama has picked another guy just like himself, a guy who gives the impression that what he wants most is for you to know how smart he is.

People can sense when a man has the confidence and the temperament for leadership. In times of stress, that’s who they will choose to follow.

And it’s not a matter of thinking it through, either. When the chips are down, real leadership is obvious.

-Francis Cianfrocca

Never make a joke that undermines the premises of what you’re trying to sell. That one’s not actually in the rule book (at least I’ve never seen it there), but you know it’s true if you’ve ever had to kick a cocky young sales guy under the table.

Knowing where one stands on challenging, controversial questions is above Obama’s pay grade. We know this because he told us so. Exactly what pay grade is higher than the one he wants us to hire him into?

The President makes $400,000/year, plus all the board memberships, book deals, speaking engagements and other easy money he can eat after he leaves the office. Who makes more money than that?

Not the Fed Chairman, who is the most powerful man in the global economy. He only makes about $180K. Higher salaries than the President’s go to a few thousand CEOs; a few hundred hedge-fund operators and bond traders; and a few dozen athletes, entertainers and movie actors. But those people don’t have a pay-grade. Their pay is strictly meritocratic.

So what Obama ended up inadvertently telling us, is that he thinks it’s not the President’s job to make the tough decisions. That’s a little too convenient for a guy with a long history of avoiding tough decisions.

-Francis Cianfrocca

You all know my biases about financial news-reporting: much of what you read and hear is either old news that is no longer actionable, or it mistakes cause for effect, or it’s just totally wrong, or all of the above.

The most fundamental market in the world, on top of which everything else rides, is the overnight repo market. The mainstream business press rarely reports anything about it. Maybe because it’s not glamorous like the stock market, or something.

But repo is the canary in the coal mine. It reliably predicted major short-term disruptions last summer, late last fall, and during the Bear Stearns flap.

And repo is getting ragged, weird, and illiquid again. Corporate bond issuance has become very slow. Central-bank demand for short-term agency paper is also unusually low.

Part of this is probably the late summer doldrums, with the B-players manning the trading desks while the A-players are on the beach. But the money markets have been so prescient during this whole crisis that I thought you all should be keeping a weather eye out for some kind of financial disruption in the next few weeks.

There’s plenty of talk that the disruption will involve Fannie Mae and Freddie Mac. Again. There are a lot of other rumors, but it’s still too early to talk about them in public.

-Francis Cianfrocca

So Barack Obama is running ads on the Olympic Games, promising to create five million new jobs by way of building an “alternative-energy” economy. This is also something Nancy Pelosi talks about a fair bit. And of course the newly-created jobs are to be of the Good, High-Paying™ variety, which is Democrat-speak for: Union.

What’s this all about? In a word: Redistribution.

Let me explain…

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This thought was prompted by an email thread which sought to understand the process and objectives by which Obama will be making his VP pick.

It’s astounding how little we know about Obama’s character as a leader. For all we know, he could be sitting in those meetings letting Eric Holder pull his strings. Or he could be deciding out of insecurity, and will intentionally pick a person of lesser quality than himself. Or, he could be acting like Zod, and will choose capriciously just to keep his people off-balance.

And just as bad, he could be a soft-spoken father-figure who says inspiring things and teaches you stuff, but never makes a tough decision.

I’ve known some entrepreneurs who could well be characterized as inspiring leaders of movements. They can be incredibly effective at getting enterprises off the ground, as Obama has with his campaign. But after a few months you don’t want to be in the same room with them, because they tend to have nasty character flaws that drive everyone crazy, and their day-to-day decision-making is erratic.

If only Obama had served a few years as a dogcatcher or something, somewhere. Then there’d be some data about how the guy runs things. Even Warren Harding had been a newspaper executive. We’re seriously considering electing a man President that has never managed anything in his life.

I’m sure if Obama were here, he’d be talking about how leadership and management are two different things. Yes, they are. The way that Obama understands it, leadership is all about looking good, sounding good, and making as few decisions as possible, otherwise someone might end up not liking you for good reasons.

But management is all about deciding on a strategy (which takes guts) and then getting a lot of not-disinterested people to agree to it and move it forward (which takes experience).

Bill Buckley said that he’d rather be governed by 2000 people chosen at random, than by the faculty of Harvard. He may get his wish. Barack Obama is pretty darned close to a random choice.

-Francis Cianfrocca

Today’s trading has the dollar stronger than $1.47 against the euro. It started the week in the neighborhood of $1.53. Oil is down around $111 and gold is below $800. I told you folks that this shift would be rapid, once it got started.

One of the things we do for you here at RedState is to cut through the noise and spin so you’ll know what’s really going on. If you were reading the headlines yesterday, you doubtless heard about a new government study showing that a great many business corporations don’t pay any income taxes.

Well, no [excrement], Sherlock. If you don’t make any money in a given year, or if you carry forward losses from prior years, or you have expenses that offset profits, you won’t have a tax liability in that year.

But Senator Byron Dorgan of North Dakota (who along with Sen. Carl Levin of Michigan requested the study from the GAO), made a point of saying that “it’s shameful that so many corporations make big profits and do nothing to support our country.”

Now that the actual GAO report has been published, we can go through it to see what it’s really all about. And I did so.

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ABC News, by way of the Associated Press, is reporting that “most” US corporations, and foreign corporations doing business in the US, paid no income taxes between 1998 and 2005.

What reportedly happened is that Senators Dorgan (D-ND) and Levin (D-MI) went to the Government Accountability Office (GAO) and asked them to find them a stick to hit business over the head with.

Supposedly, this report is going to be published today, but as I write, it hasn’t yet appeared on the GAO web site. Dorgan’s page at senate.gov has nothing to say about it.

So obviously we’ll want to revisit this when the actual report comes out, but in the meantime the news spin (which more than likely was the point of the exercise) is already out. And it’s worth responding to.

The short answer is: How stupid do you think we are, Senators Dorgan and Levin?

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A vast movement involving enormous amounts of capital is now underway. Investors around the world are buying dollars again. And they’re selling the oil, gold and other commodities that have been serving as a hedge against dollar weakness since the Federal Reserve started aggressively cutting interest rates eleven months ago.

As I write, the US dollar is trading above $1.50 to the euro. The dollar’s low point was below $1.59 earlier this year. This morning’s additional strength follows a very sharp gain on Friday. Crude oil is up slightly after a stunning drop on Friday, and gold is little changed.

What set off the stampede, and what happens next?

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To state the obvious, we’ve arrived at a moment where the American people are so dissatisfied with our public policy, that they think they want nothing more than for things to be different. But it’s important to ask just how much change we’re really willing to entertain.

Senator Obama has shrewdly played on this theme from the very beginning of his campaign. The essence of his appeal is contained in the fact that he is different, and therefore will presumably act differently.

To this end, his competitive strategy is all about convincing us that a President McCain would be the same as a third-term President Bush. Obama stands a fair chance of winning the election, especially if he can keep the focus squarely on this idea.

Two months ago, when Obama became the presumptive Democratic nominee, we generally thought of him as a doctrinaire left-wing liberal, bordering in fact on radical tendencies. This impression came from sustained positions that the man has taken all his life, and also from the people that he has chosen to associate with over the years.

But now we find that Obama has changed his mind on nearly everything we thought he stood for. The most recent flip-flops are in respect of drilling for oil in currently-forbidden areas, and on affirmative action. (He recently said that his own daughters, who were born to privilege, should not receive preference in college admission to white people who were born poor.)

And of course, at every single turn, the Protean One has told us that his position has not in fact changed, rather that he has been consistent all along.

What are we missing here? And far more to the point, what does Senator Obama actually intend to do as President of the United States?

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It’s gratifying to know that Barack Obama has been paying attention to us here at RedState. Just yesterday morning, I pointed out that oil drilling was the one issue on which Obama has never compromised his true principles.

Since becoming the presumptive Democratic nominee (and being made de facto President of the United States by the media), he’s flip-flopped on nearly every other subject. The only things he’s said consistently are that he thinks his picture should appear on our money, and that we shouldn’t increase our production of oil and gas.

But after he read my piece yesterday morning, he realized he had one more flip in him. As Brother Jeff points out below, Senator Obama now will be in favor of offshore drilling.

That also means that, when the bubble in crude oil prices pops and they fall back below $100/barrel, Obama will tell you that his statement today is the reason why.

-Francis Cianfrocca

Ok, this is pretty interesting. Senator Obama told us a few weeks ago that John McCain’s proposal for a summer-long Federal tax holiday on gasoline was nothing but empty political theater.

So now The One has given us a gesture with quite a bit more theater to it. He wants to give every adult American $500, right now. You can read his plan here.

So figure that’s about $100 billion, give or take. Not as big as this year’s fiscal stimulus which gave a momentary and already-fading bump to personal consumption expenditures. But in the same ballpark.

But this is no ordinary piece of political theater. Obama is telling us in so many words that it’s a “down-payment” on Obama’s long-run plans to restore tax fairness.

As it turns out, that means Obama intends to get the 100-or-so billion dollars not from where President Bush got the money for his fiscal stimulus (foreign central banks). Obama has a very different source in mind for the funds: Oil companies.

Let’s do the math.

Keep reading…

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I continue to be encouraged by the fact that energy policy is the one issue on which Senator Obama has refused to compromise his principles. At no point has he given any hint of flip-flopping in the direction of allowing more domestic oil and gas production.

The thing that makes this issue potentially good for Republicans if handled correctly, is this: most people instinctively understand that if you produce more oil and gas, you’ll have more of it. And the price will then come down. Sounds awfully simple, doesn’t it? And yet it hasn’t been made clear that it’s precisely this that all the Democrats are bitterly opposed to.

Democrats from Barack Obama to Nancy Pelosi have been blaming everything from financial speculators to underinflated tires (no, I’m not kidding) for the high price of motor fuel. But never once does it pass their lips to suggest that we can address the problem by simply producing more of the stuff.

It’s as if you had a fatal disease, and the cure is a little pill that you’re holding in your hand right now.

But your doctor says “don’t take that pill.” You ask him why not, and he says, “Well, that’s a very complicated question.”

You’d get another doctor, wouldn’t you?

-Francis Cianfrocca

First off: a heartfelt Happy Anniversary and best wishes for continued success to RedState’s good friend Rush Limbaugh.

The headline from yesterday’s advance estimate of second-quarter GDP was that the US economy grew at an annual rate of 1.9 percent in Q2. This was disappointing news because private forecasters had been expecting a number well above 2%. Additionally, growth in each of the past three years was revised downward. The economy is now known to have contracted in Q4 of 2007, rather than growing slightly as originally reported.

The various data series that go into the GDP estimates were significantly noisier than usual this quarter because of the fiscal stimulus program. But looking past that, the economy showed growth as a result of decreased imports, nonresidential structures and all levels of government spending. With one exception, everything else got worse.

The other bright spot in the economy was exports.

Keep reading…

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