In a follow-up to yesterday's diatribe, we note Fed chief Ben Bernanke has taken a very bearish bull by the horns, finally, and today all but called for re-regulation of the American financial industry.

Sort of.

Well... the New York Times has him admitting the economy would “fall short of potential for a time” and urging regulators to "develop a broader approach to policing the financial industry."

Whew! ...Like he borrowed a rubber chicken from Rip Taylor and whapped the problem goood!

Not that it would matter that much. To take the farmyard metaphor a step farther: No matter how hard Bernanke wants the barn door slammed, the ponies have long-since bolted.

The Times notes: "Indeed, Mr. Bernanke opened his speech by describing the financial crisis as a 'gale force' and said the nation faced 'one of the most challenging economic and policy environments in memory.'

"Fed policymakers chose to hold interest rates steady at their last two meetings, although some members said they would have preferred to raise rates in an effort to combat inflation. But concern over the mortgage finance giants, Fannie Mae and Freddie Mac, has exacerbated the credit problems on Wall Street, in turn making it more difficult for the central bank to tighten rates."

For some comfort, Bloomberg has Bernanke saying the economic crisis would ease later this year and kinda, sorta, work the kinks out in 2009. That's particularly good news, since the story notes consumer prices shot up more in the past year than they did in the previous 17, with gas and food prices - and their interconnectedness - providing the rocketry.

The Fed chairman made his remarks at a conference Jackson Hole - somehow the new salt lick of the postmodern command class. Residents in this most scenic of Wyoming valleys include Dick Cheney and many of the genuine Rockefeller family.

If the words "Jackson Hole" kind of creep out and run an icy finger up your nape, you may remember that's where New York Times reporter Judith Miller unexpectedly encountered Cheney made-man Scooter Libby in 2003:

"In answer, I told the grand jury about my last encounter with Mr. Libby. It came in August 2003, shortly after I attended a conference on national security issues held in Aspen, Colo. After the conference, I traveled to Jackson Hole, Wyo. At a rodeo one afternoon, a man in jeans, a cowboy hat and sunglasses approached me. He asked me how the Aspen conference had gone. I had no idea who he was.

"Judy," he said. "It's Scooter Libby." "

Miller was tight with equites of the New Imperium, and flacked for the White House early and often to sell the vaporous idea that "Iraqi WMD" were locked, loaded and ready for Saddam's hankie drop. In another recollection, she recalled Libby alluding to the brown leaves of the Rockies, ready to fall, in a lyrically sinister letter about the burgeoning Valerie Plame investigation which would soon take him down.

Got a little off-track there... Must be a great place to have a snort and cook up some meanspirited horror.

Two of the most battered of the "gold-dust twin" home-funding companies today saw their share-value collapse amid reports of a government bailout.

Will greed-challenged standards and procedures in the housing industry, and the resulting mess, corrode confidence in any institution attached - however tangentially - to the government?

Since Uncle Sam never turns sugar daddy without strings attached, the anticipated federal salvation could wipe out investors in Fannie Mae and Freddie Mac. Some in the financial markets are calling for an end to Freddie and Fannie altogether, and maybe even Ginnie, too.

According to a Reuters story, shares plummeted more than 14 percent on Thursday. This makes five straight days the companies'  stock has fallen, losing half their value in a week and flattening at the lowest point in 20 years.

Reuters notes:

"Closely watched analyst Dick Bove of Ladenburg Thalmann said the government should recruit financial industry leaders to oversee dismantling of the two companies.

"The only rational action" to be taken relative to Fannie and Freddie 'is to get rid of them," Bove wrote in a research note."

There are no guarantees that the feds will step in and throw a lifeline to these GSEs - government sponsored enterprises. In fact, that cuff under the chin is written into their establishing charters. But it's not like they're needed such largesse before. Freddie Mac, the too-cutesy nickname for the Federal Home Loan Mortgage Corp., is the oldest of the bunch; it chugged along for decades since its 1938 inception without adjustable interest rates and screwy, up-squirting "financial instruments".

For the past 40 years, it's been a private corporation, but it's impossible to believe the closing-commission lampreys who helped puff up the current housing bubble would have been so cavalier if they harbored a shadow of a doubt the federal government would put the brakes on a full-out slide to oblivion.

Or... who knows? Maybe they're converted their dollars into Euros and Kruegeraands and are watching this meltdown from the hills above Ipanema beach.
 

By adopting a strategy of "soft sell" and attenuating what should be continued disavowal of Bush policy - a powerful stance that made him popular in the first place - is Barack Obama playing a smart game of moderated politics... or turning himself into this year's Ned Lamont?

Remember, this is a country where superficial perception counts as much as substantive proof. Accusations of flip-flopping - even though actually inaccurate- are enough to convict as wishy-washy fresh, transformational candidates whom voters are perpetuallly "getting to know."

And its an election very much in play. Obama has seen his lead slip seven points since last month, and today's Zogby figures show McCain ahead for the first time. Guess all the celebrity accusations and oil-derrick clowning works for a nation buffetted by the cyclone winds of economic downturn.

Even though some of this polling seems hell-bent on blunting Obama's momentum, the Democrat has his work cut out for him. And the worst thing he can do is panic and move his positions closer to that rugged, unmapped "middle ground" that proved such a minefield for one New England Democrat in 2006.

You remember Lamont: Two years ago he bumped Joe Lieberman out of the Connecticut Democratic primary by campaigning on a pronounced anti-war, anti-Bush platform. But in his race for Lieberman's Senate seat in the general election, Lamont began toning down his passions for change, hedging his proposed deadlines for ending the Iraq War.

Lieberman ended up retaining his Congressional post, running as an Independent after his own party spurned him for his emerging copperhead neoconservativism. Seems voters decided Lamont had turned himself into Lieberman Lite, and in a choice between the two, opted to stick with the candidate familiar to them - and known to be an effective Beltway pork producer for the home state. Since then, Lieberman has proved himself such a reliable GOP ally he's been touted as a possible running mate for John McCain - after running as a Democratic VP candidate in 2004! An embarrassment to anyone who ever considered him a progressive politico, Lieberman also is remaking himself as kind of an American "Curveball", telling CNN as late as last December that in Iraq "we're fighting the enemy that attacked us on 9/11."

That Obama really is running against two long terms of Bush Era misrule is as true today as it was early last year when the candidate stood on the steps of the Lincoln state house in Illinois and threw his hat in the Presidential ring. Voters responded to his call for change: Not a gentle tack in the wind, a subtle alteration more in appearance than substance, but a dramatic reversal, a 180-degree swerve from our lap to the abyss.

But lately, he's appeared to adulterate and even diminish the sharpness of his attacks. He’ll “listen” to proposals for offshore drilling. While clinically avoiding flip-flops on Iraq War policy, he’s become more pointedly precise about his previous wording on the topic - while seeming to muddle the exact nature and scope of his troop withdrawal timetables.

When Obama mentioned Sen. Joe Biden during his Veterans of Foreign Wars speech this week, the gesture indicated Biden may just be Obama’s vice presidential pick, and that point dominated most news reports. But the mention was contained in Obama’s announcement supporting $1 billion in aid to embattled Georgia. Since there was no mention of help for South Ossetia, left demolished and bleeding after Georgia’s surprise assault two weeks ago, we can be forgiven for assuming Obama’s approach to Caucasus intrigues will be as one-sided, agenda-heavy and aberrantly anti-Russian that of Bush and McCain.

Also, Obama has lined up a corps of advisors not generally known for advocating kid-glove foreign policy approaches, especially regarding the Mideast - Robert Malley, Dennis Ross and Merrill McPeak. Topping them off, of course, is Zbigniew Brzezinski, whose reputation as a calculating uber-hawk was only enhanced during the Carter Administration 30 years ago, when he masterminded Machivellian subterfuge like urging China to support Cambodia’s gore-drenched Pol Pot regime as a foil against Vietnamese expansionism. Brzezinski seems to hover in the shadows as a phantom brainiac – sometimes an admitted Obama consigliore, sometimes not.

These backroom permutations have shaded the Democrat’s run, and as early as the spring of 2007, the Washington Post’s Robert Kagan noted “realistic” – if not cynical – toughness in Obama’s foreign policy:

“Obama talks about "rogue nations," "hostile dictators," "muscular alliances" and maintaining "a strong nuclear deterrent." He talks about how we need to "seize" the "American moment." We must "begin the world anew." This is realism? This is a left-liberal foreign policy?”

And the candidate’s speech before the hawkish American Israeli Public Affairs Committee mirrored the fulminations of all other speakers at the perpetually demanding organization’s annual forum - drawing a line in the sand, putting Israel forever under the protection of the United States and its fearsome forces, and sending verbal shock and awe in the direction of Tehran.

What happened to the agent of hope and change? Where is the message that this country is immersed in a “dumb war” and is on the wrong course? This was strong medicine spooned out with tough love to a country sick of counterintuitive lies and shyster trickery by a Beltway elite that considers this country’s citizenry feeble-minded children, waiting dumbly for the next dose of palliative fairy tales.

By presenting himself as an alternative to business as usual, as antidote to the corrosions of the past eight years, Obama won the candidacy of his party. And all spin aside, that’s the real news of this election year: An African-American candidate with only four years experience in national office is (mostly) leading the race for the nation’s top spot. It’s a slim lead, but he’s still ahead - Zogby be damned. If anything, that astounding circumstance is testament to just how repellant GOP and neoconservative agendas have become.

Not all voters are stupid, and that’s especially true of those who’ve heeded Obama’s admonitions for change and hope. They realize that playing the political game in this country – and playing it successfully – means playing to the middle. Moderation sells at election time, even in a country as disgusted as this one with political status quo.

But in moving to the middle, and attempting to broaden his appeal among the electorate, Obama should be careful not to roll his campaign out of kilter… and become just another watered-down also-ran.

A disarming calm beneath bellicose condemnation of Russian “aggression” in Georgia may betray a stealthy delight that 20 years of Cold War glasnost has been put on ice, and a half-century regression to the geopolitics of brinksmanship awaits for completion only reinstalled backyard bomb shelters and Ike-era martini abuse.

Our Beltway Elite – regardless of party – issues with absolute uniformity dark, intoned monition about Russian schemes to reclaim its “evil empire” status. Our stenographic media follows suit, conveniently burying in its accounts of Caucasian depravity the fact that poor little Georgia started this latest dust-up, landing unexpected sucker punches on the disputed regions of South Ossetia and Abkhazia. Those attacks killed about a dozen Russian peacekeepers in Ossetia, and it was then Russia had the temerity – the very gall – to strike back.

Since the collapse of the Soviet Union and communist governments throughout Eastern Europe two decades ago, neoconservative think-tankers have struggled mightily to engender another Grand Crusade to justify our cumbersome, corrupt and astoundingly costly military-industrial complex. Without the reliable Iron Curtain threat, defense-industry insiders saw their postwar sugar-tit world threatened by the bane of war profiteers everywhere: Peace. That’s when the ever-resourceful Straussians kicked into high gear, scouring the world for this nation’s next perilous foe. That the Arab world would have some sand kicked in its face was no surprise. After all, Arabs reside atop the world’s biggest oil fields, and they are dead-set against our favorite “partner” in the region, Israel.

In 1990, the first Bush Administration, acting through ambassador April Glaspie, suckered Saddam Hussein into invading Kuwait. The resultant first Gulf War reduced Iraq to a fifth-rate power (if that) and allowed the U.S. military to try out some nifty post-Vietnam deathware. Although the televised birth of joystick warfare may have been the brief campaign’s most memorable vestige, its crucial legacy was establishment of America’s first permanent military bases in the Middle East. The subsequent overthrow of Saddam in 2003 would widen and deepen that presence, splitting Muslim states and eliminating any future danger of a united Arab front attacking Israel.

But coinciding with the disappearance of European and Russian communism, the first Gulf War also announced to the world that the U.S. was willing to act decisively – and militantly – to establish itself as the supreme arbiter of international justice, underlining a New World Order with the U.S. as earth’s sole remaining superpower.

In 1992, chronic Pentagon shadow warrior Paul Wolfowitz chiefly authored the very controversial "Defense Planning Guidance", a policy paper proposing, among other hair-raising items, that strategic “containment” as practiced in the Cold War was a spent idea, a relic of more genteel times. Its guidelines advocated that America’s military strength should be maintained beyond challenge, and should be used to preempt provocations from rogue states with weapons of mass destruction. And it stated that, if necessary, the U.S. should be prepared to act alone. Alliances, like scruples and quarter, evidently had become disposable.

Wolfowitz’s proposals called for nothing less than global U.S. hegemony, and when the paper was leaked, and the firestorm of controversy blew out the windows, it was hot-potato’d back to Defense Secretary Dick Cheney for some kinder, gentler rewrite. But as we’ve seen in neoconservative regimes past and present, their dark schemes are like B-2 bombers: Just because  they vanish from sight doesn’t mean they’re no longer aflight. Once 9/11 provided the “Pearl Harbor” excuse for radical action, the paper was the very foundation for the Bush II doctrine of preemptive attack on strategic malefactors, and ultimately mounted on a scaffold both Saddam and his unfortunate, blood-drenched country.

However, for big-money defense contractors, the drawbacks of the Muslim-focused War on Terror were obvious: Since no officially antagonistic nation in the Arab world was a nuclear danger, and none were capable of producing their own standard munitions, big-ticket weapons research projects would be unnecessary. Sure, the bombs-and-bullets “hardware” shops are happy with low-intensity battle fronts like Iraq and Afghanistan, but where are the gold mines offering conditions amenable for deep-pocket, wasteful “Star Wars” fiascos that drain away tax money like four-year-olds suck up chocolate malts?

Also, there’s that little “blowback” problem. The attacks seven years ago brought home spectacularly the hazards of occupying someone else’s holy land.

Nope… it’s best to keep your enemies at bay with the concomitant threat of mutually assured destruction. And you need H-bombs on the table for that kind of dice-throwing. China would be the obvious enemy, since it's still (officially, at least) communist. But the Middle Kingdom’s capital-friendly “naugahyde Marxism” has turned it into a creditor nation, and one that holds a lot of U.S. paper; our ultimate peace pact with China is tacit, and in the form of loan documents.

That leaves Russia, resurgent and nuclear-capable, as the perfect foil.

The Wolfowitz paper wasn’t produced in a vacuum. Its authors were aware that such self-endorsed ascension - taking America from world power to world ruler - would spark conflict and animosity abroad. That was part of the plan: The Cold War and its defense-industry bounties would not be pegged to the lifespan of any obnoxious regime or isolated hotspots. The set-up that so alarmed Dwight Eisenhower in his last Presidential speech would generate and regenerate itself for all time, and for all purposes. Once the new paradigm sanctioning pre-emptive attack became official policy with the Administration’s New Security Strategy in 2002, the gloves started coming off.

The Clinton Era saw some occasional abrasions between the U.S. and Russia. Bosnia was one, with the Russian Bear taking the side of their Slavic cousins while the Western press trumpeted filmy “atrocity” accusations at the Serbs. Late in the ’90s, NATO hot-war violence unleashed on Serbia over the embattled Kosovo region drew real - and valid - protests from the Kremlin. That reaction was muted, however, by Russia’s own dirty little war in Chechnya, an assault in mid-decade that saw ambivalent coverage in the West.

But those were more sanguine times. Russia was in the unsteady hands of Boris Yeltsin, whose decisions were marked by alcohol-soaked oblivion, and whose administration was corroded by breathtaking corruption. Under his rule, Russia’s vast natural resources, as well as its key industries and utilities, were literally – and crookedly – auctioned off to the highest bidders. This was the period when the mighty nation was in the pockets of an oily collection of mobsters and Western-fronted operators known as the Oligarchs.

Vladimir Putin’s assumption of leadership in 2000 saw a sharp change in affairs. The Oligarchs were put on the run, corruption in government was curtailed if not eliminated (is it ever?), and Russia regained control of its own destiny. How could it not draw the enmity of the neocons?

Suddenly, color-coded, anti-Russian “revolutions” began shaking up former Soviet republics lining Russia’s borders from the Baltic to the Chinese border; this "democratic" phenomena was underwritten by seed money and organization from shadowy types like George Soros, and neocon outposts like the National Endowment for Democracy. Some of these newly Jeffersonian micro-nations have been tempted with membership in NATO. The North Atlantic Treaty Organization is a Cold War vestige, a loose if well-armed collection of European states that served as a postwar big stick to drive off Soviet intrusions. The first George Bush promised Andrei Gorbachev 20 years ago that the defensive union would dissolve with Soviet communism; instead it was maintained as a trump card for the soft militancy of the European Union.

Sometimes, Western pressure has been more overt: Recent violence in the Caucasus has moved Poland to finally purchase missile interceptors from the U.S., an expensive defense system it had previously disdained as unnecessary. Why in the world would Poland need missiles? To keep the Czechs in check? We can be sure the gyros well be programmed in an easterly direction.

The Georgian conflict has brought threats that Russia will be jettisoned from the G-8 group of top industrial states. The U.S. departments of State and Defense huffily demand Russia withdraw its forces from the environs of an antagonistic, anti-Democratic “statelet” at its southern border – a nation the U.S. and other parties, notably Israel, have been arming and training for years… for purposes unclear. That Russia could scarcely consider these stratagems a big, warm friendly handshake is understandable.

The Bush Administration has gone out of its way to antagonize Russia, and the Western media has played along, accusing Putin of everything from crowning himself pseudo-“Czar” to jailing opposition politicians and assassinating opponents. When ex-KGB agent and fired Oligarch flunky Alexander Litvinenko died mysteriously from radioactive poisoning two years ago, the American and British news industries practically frothed at the mouth to pin the “murder” on Putin, ignoring the fact that Litvinenko’s reputation for fact-spinning – for instance, he blamed Putin for engineering the 2004 Beslan school massacre – had turned him into the Art Bell of Moscow émigrés.

Neoconservatives are suspiciously tight with the Oligarchs, and so are Western-based heavy industries, who in the ‘90s were negotiating sweetheart deals to tap Russia of its natural wealth like oil, natural gas and even timber resources. But, really, our ravenous power elite – fueled by the intellectual “vision” of the neocons – don’t need cross-cultural coziness and overseas investment as excuses to draw a line in the sand.

A big, arms-based industrial web needs big enemies to excuse big, wasteful government contracts and purchases. A resurgent Russia that pushes back when we shove is just what our toxic Washington brain-trust had in mind.