“Yah I think the whole problem is the CFMA — that was crazy,” the Ukrainian supermodel said, reaching for the seasoned almonds.

It was Friday evening and we were watching the American economy collapse out the floor to ceiling windows of a fifth-floor SoHo loft she was thinking of buying.

She wasn’t going to need no mortgage, but she seemed to know her onions. Seven foot eight and burnished bronze, she’d arrived out of the lift in instalments, limbs unfolding like a Cubist triptych, talking about the failure of the two-party system. Part Canadian, her background clearly combined prudence with an appreciation of the nearness of mass catastrophe.

Twelve hours earlier I had been in the Anchorage airport bar trying to convince a bearded guy who wouldn’t take his hood off, that Obama was not a muslim.

“Well okay man!” he’d shouted, “here’s my address for the politicially correct squad! I just know what I know.”

Now we were back in the Big Rotten Apple. It was the first night of the Burlesque Festival, but all anyone could talk of was AIG, even supermodels.

God bless America.

God help it too, if this mess continues. With the first presidential debates days away, there’s suddenly a whole lot of new and urgent subject matter. Doubtless by now the journalistic team have written and torn up two entire sets of questions, as every day brings fresh news of what President Nixon used to call “the exact length and width of the shaft”.

“Lipstick on a pig? What was that all about?” “Bridge to nowhere?” What the f-ck … The multiple financial collapses, with insurance giant AIG the latest to call for help, and the drafting of a $700 billion rescue plan for the sector as a whole, have concentrated the mind wonderfully, especially as, since Democratic congressional leader Harry Reid says “no one knows what to do about it”.

For McCain, it’s been a nightmare, as anything that even vaguely reminds people that the place has been run Republicans for eight years is bad for business. The GOP’s standing hasn’t been helped by McCain’s wobbly set of remarks on the matter, going from calling the economy fundamentally sound, then reversing and saying it was a crisis, then saying that by fundamentals he meant the American worker — whose hands have apparently not dropped off or anything like that — then blaming the whole crisis on Barack Obama, for having had an advisor who once worked for Freddie Mac. Then he said they shouldn’t bail out AIG, then they should.

Sarah Palin threw her bit in by saying that Fannie Mae and Freddie Mac had been ‘a burden on the taxpayer for too long’ which suggests she thought they’d been tapxayer subsidised for years, when they hadn’t. But she got away with it because people remembered the recent bailout which was on Johnnie/ette Paye’s tab.

With all that sort of slipping and sliding around, Obama’s fault numbers couldn’t help but come up, and Realclearpolitics has him running at an average of 2.1% ahead now. He’s playing it statesmanlike, eschewing John McCain’s crackerjack populist “lets reform Wall Street!” act, which is taking old Walnuts dangerously close to sounding ridiculous to everyone.

Instead Obama’s said “blah blah blah too important for politics will not be issuing a statement on the proposed Federal plan until he’s studied the details etc etc” which is responsible and wise and prudent and ARRRGGGGGHHHHHHH!

It’s team Obama again — never saw a chance for division they didn’t want to pass up, never saw a vacuum they didn’t abhor. Obama’s holding off on a statement may be wise politically and, you know, wisdomly, but for God’s sake sitting at the heart of the McCain team is Phil Gramm, who was instrumental in the Commodity Futures Modernisation Act of 2000, which basically ensured that a whole lot of derivatives and credit default swaps would fall between the regulatory cracks, and which is consequently where all the spare money has crowded into in the last eight years.

Gramm tacked the CFMA onto a broader bill, and if he were later proved to be a known associate of Mohammed Atta, the whole thing would make more sense than any other explanation. Gramm’s influence on Walnuts McCain (he was moved from view after his comment about the recession being an imaginary one of “whiners”) was clear in McCain’s earlier statement about the strong economic fundamentals. Just as he relies on Joe “douchebag” Lieberman for foreign policy details, he doesn’t stagger far from the side of Phil. But his advisors must have yelled in his face until he came round to something recognising the fear and loathing gripping middle America.

But of course, Obama is limited in his ability to hack into Republican incompetence as regards CFMA and a whole lot of other stuff because the President who signed it into law was … drum roll … Bill Clinton! Yes after Bill rolled over and submitted to the whole neoliberal agenda, and with the 1994 Republican takeover of Congress, there’s so much that leads back to him, that anyone wanting to keep him in the circle would avoid any discussion of such matters absolutely.

Anyone who did want to.

“It’s amazing because I don’t meet anyone who would vote for John McCain,” said the supermodel. Free jazz played softly through the Danish speakers.

“That’s because the rest of the nation thinks New York is an island of Jewish Communist homosexual pornographers and … I kind of agree with them,” I said. Well, Woody Allen said, but I repeated.

“Thank you — I am glad someone said that,” she said clinking glasses with me. In the corner, her lithe boyfriend smoldered like a stick of incense, and not the good stuff.

Clinton has given Obama less than nothing in the last two months, partly because the Obama camp hasn’t come a courting. There would be a good argument now for throwing them overboard, and damning the last twenty five years of wanton deregulation from either side of the house, presenting Obama as a candidate of real change.

But this was the week they decided they wanted, needed Bill and Hillary back, to give them the ooomph that their own presidential candidate can’t provide, so they’re running dead on any past recriminations. Either that or force of habit.

The truth is that the dimensions of the current financial collapse are so great as to terrify anyone who believes this system should survive, and knows its vulnerabilities.

There is no guarantee that the $700 billion — say that again SEVEN HUNDRED BILLION, three thousand five hundred dollars from ever American adult — being proposed by the Bush administration, will actually fix the gaping hole in the global financial system.

But as my good friends Jim Hightower and Philip Frazer have noted in the The Hightower Lowdown (hightowerlowdown.com), the one thing it will do is promote a massive transfer of power from Congress to the Executive, and one that the Democrat-controlled Congress is willing to surrender up without provisions, suddenly putting Treasury — and its sinister, robotheadonastick man Paulson — in charge of getting everyone out of the mess they got them into in the first place.

And — well, let the supermodel tell it: “Isn’t dar a whole audo industry bail oud on der way?”

Indeed there is, another package of many billions for a dying industry. Furthermore, the AIG mess opens the gate to the whole world of instantly insured swaps, the largest field of which is, as our own John Quiggin notes in Crooked Timber, interest rate swaps, with a value of $300 trillion — or 0.3 quadrillion dollars, just to point out where we are.

Of course, this is all started with the savings and loan scandals of the late 80s, and shysters like Charles Keating and his congressional supporters like ohhhhhhhhhh John McCain.

If Obama can’t get five points clear on all this, shoot your dog.

“You can see for a long way,” said the supermodel on the loft terrace.

“That’s where the twin towers used to be,” I said pointing randomly.

“It’s amazing how nothingness is in fact prior to presence and detemines it.”

She thought for a minute and put her drink down on the Robert Ruaschenberesque coffee table.

“I really have to be somewhere else,” she said.