James Fallows rips John McCain for running a stuff-and-nonsense campaign for president. I've followed Fallows for a long time, and I think he's one of America's greatest journalists. I've never seen him give such spanking to a public official before. I definitely agree with him.

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Duk and I went out to Samkong shrine last night to pay respect to the gods as part of the Phuket Vegetarian Festival. As always, I drew special attention from local Thais manning the various stations where we knelt to pray and offer incense. A farrang following rituals at Buddhist temples or Chinese shrines is very conspicuous.

At the final station, the helper asked me where I was from. When he heard that I was an American, he spoke in halting English. "American banks," he said, making a falling-down gesture with his right arm. "Over."

"Yes," I replied. "American banks all over."

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While staying up far too late to watch news from the US a couple days ago, I ended up in an interesting discussion about politics with my sister Cathee. During our IM chat, I spun out my thoughts about the paradigm shift I think the financial crisis represents for the role of the US in the world:

i'm convinced that we're at a point where our country faces a completely new reality ... this financial crisis is the end of the hegemony the us had held over the world since the ussr crumbled ... really ...

the us has mostly sidelined the un, and it will remain irrelevant for the time being ... though as the us diminishes in importances in the world, other nations may refashion the un to work for a new world order, and it may revive at some point ...

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I don't usually go to sleep so late, but last night I found myself awake at 2am watching the news from the US. When Duk and I returned from the gym about 10pm, Bill Hemmer on Fox News Channel was bugging out with all of the news of the still-young day: renewed negotiations on Capitol Hill over the collapsed financial bailout bill, a skittish New York Stock Exchange and the drama leading up to the first presidential debate between senators Barack Obama and John McCain.

It felt like a defining moment in US history. My first instinct was to think of the possible negative definitions. The result of the mess in the financial system meant that the US would likely accelerate in a general downward spiral of overall influence in the world. Also, Senator McCain's crazy move to inject himself into the middle of the bailout negotiations seemed like it would only accelerate his decline the national polls.

The following morning I woke early to catch the big news at the closing of the  day in the US, the debate. I thought Obama looked good and that McCain seemed tough, annoyed and prone to repeating talking points rather than engaging either the issues or Obama. As it turns out,  that reaction was pretty typical.

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I can proudly say that I saw the deflation of the housing bubble in the US on the horizon in 2006. I don’t recall the exact month, but it was probably sometime during late summer. I was talking with a fellow bandmate at some big band dance date, and he told me that he planned to sell out of his steady service business and focus on real estate investment – basically flipping properties. With neophytes like my friend jumping into the real estate market, I knew the end of the bubble was near.

(Update 9/17/2008 at 12am: Looks like John Carney of Dealbreaker experienced a similar moment.) 

That prediction, however, was a lucky guess based on my experience of the mania surrounding the previous speculative bubble in the US, the dot-com craze of 1999-2000. I had no clue about the deep structural problems in the US financial system. Like many people in the US, I’m learning more and more as the crisis progresses. Unfortunately, I suspect that we’re all going to continue learning since most of the savvy, well-researched and thoroughly analyzed accounts of the crisis I have found during the past two days point to more bank failures, a steep recession and not just months but years of economic misery in the US.

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The first I heard of the financial crisis back home in the US was in the evening of Monday, Sept. 15. I heard a story on Fox News about the collapse of Lehman Brothers and the distressed acquisition of Merrill Lynch by Bank of America. By that time, the New Stock Exchange (NYSE) had been open for a couple of hours and had recovered about 100 points on the Dow Jones Industrial Average of the 300-point drop at the beginning of the trading session.

The magnitude of the meltdown didn't hit until the following morning when I got to the office and read the news feeds after the media had a full day to digest the news and gauge the severity of the reaction on Wall Street. Since I've been out of the country for the past two years, I haven't had a strong feeling for the depth of the financial crisis that has stemmed from the subprime mortgage crisis. But Paul Krugman's column in today's New York Times gave me an immediate sense of the crisis when he compared the Black Sunday failures of Lehman Brothers and Merrill Lynch to the bank failures of the Great Depression:

The new system was supposed to do a better job of spreading and reducing risk. But in the aftermath of the housing bust and the resulting mortgage crisis, it seems apparent that risk wasn’t so much reduced as hidden: all too many investors had no idea how exposed they were.

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