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Friday, October 10, 2008
Dick Morris and  Eileen McGann :: Townhall.com Columnist
DOW = Gallup; McCain's Problem
by Dick Morris and Eileen McGann
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Will the Dems' health care Christmas Present to America be an improvement or detriment to our health care system?


For McCain to win this election (which he still can) the furor over the stock market will have to calm down so that popular attention can focus on Barack Obama. For all of the deluge of media that has engulfed the American people, they can only keep one subject on their mind. All media has only one focus at a time. And, if you are in the spotlight, you are almost certain to self-destruct.

Follow this election cycle. Between the summer of 2007 and the end of February of 2008, all focus was on Hillary Clinton's ups and downs. And Obama defeated her decisively. Then in March and April of 2008, Obama was in the focus and Rev Wright and the surrounding controversy propelled Hillary to victory. Then during the summer of 2008, all eyes were on Obama and he gained. In September, McCain was on the griddle. At first his selection of Sarah Palin let him move ahead. But then his "suspension" of his campaign and subsequent complicity in the bailout package cost him his lead and moved Obama to an advantage just short of double digits.

Now the attention should logically shift to Obama. He is way ahead and McCain is nowhere to be seen. Few give McCain any chance and the debate is over whether the race is over already. This is, of course, the ideal environment for a McCain surge. All attention would normally focus on the Democrat. But it isn't. Every American checks the market before they check the polls. The ongoing anxiety over the stock market is not only giving more and more people reason to hate the Republicans of Wall Street and their allies in Washington, but it is keeping us from focusing on Obama.

If ever the market stabilizes, Americans will be fascinated by the Ayers-Obama ties and the relationship between Farrakhan and the Democratic nominee. The increasing evidence that ACORN is committing voter fraud, registering people over and over again in anticipation of stuffing the ballot box on election day. As ACORN gets raided by the FBI, it will hurt Obama. He was general counsel to its Illinois affiliate and Obama channeled millions to the radical group when he got control over the money William Ayers got from the Annenberg Foundation.

All of these ties are damning for Obama and will reinforce the doubts that Rev. Wright first put in our minds. They will lead people to question Obama's values and his fitness for the presidency. A man whose spiritual advisor is Rev Wright, whose financial backer is Rezco, and whose first major employer was William Ayers might not be a good choice for president. But for these associations to loom large enough in our consciousness to impact our vote, the market has to settle down so we can hear the campaign over its din.

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About The Author
Dick Morris, a former political adviser to Sen. Trent Lott (R-Miss.) and President Bill Clinton, is the author of Condi vs. Hillary: The Next Great Presidential Race. To get all of Dick Morris’s and Eileen McGann’s columns for free by email, go to www.dickmorris.com
 
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Swaps and liquidity crisis
Much of the liquidity crisis is caused by the credit swaps. The demise of Lehman, and other organizations in the last few weeks has cause the interbank lending to freeze. No one knows for sure how much any one bank has to pay up in credit swaps for defaulted bonds.

The Iceland banks had a lot of credit swap exposure and that is the main reason they were taken over.

We have to have reform of the credit swap industry NOW. It has the ability to bankrupt many large international financial institutions and force the global economy into a global depression.

Most importantly, it can be used to manipulate our prices and institutions. The FED is forced into all kinds of abnormal policies that are necessary to insure some stability because the credit swap industry is totally unregulated.

McCain you can use this issue if you try.

Reform
We need reform in the credit swap market NOW. The CBOT is trying to create a market for swaps and that will make them transparent and subject to some regulation. However, that is hung up in government red tape.

Speculators can buy/sell unlimited amounts of default credit swaps with very little cash. That amounts to unlimited naked shorting of stocks as the stock price is abitraged against it's credit swap.

The Swaps are controlling the stock prices! We currently have offshore unlimited naked shorting of our stock market which circumvents margin requirement and the legal requirement against naked shorting.

McCain, WE NEED REFORM NOW. It is small wonder the stock market is in a panic. It can be manipulated by large hedge funds and hostile foreign governments with unlimited naked shorting via credit swaps.

Manipulation for political purposes is not a free or economically rational market. Tubing the market can be quite profitable for the manipulators but is they lose money it is just the cost of buying the election.
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