Today's Washington Post reports on the latest successful purchase of John McCain's services -- yielding a sweet real estate deal for an Arizona developer in the wake of his $100,000 campaign contribution. But that railer against the role of money in politics appears to have been bought many times before -- and American workers and taxpayers have paid the price.

The Washington Post reports that McCain pushed legislation that let an Arizona rancher trade remote grassland and ponderosa pine forest there for acres of valuable federally owned property that is ready for development, a land swap that now stands to directly benefit one of his top presidential campaign fundraisers. Specifically, Steven A. Betts, who raised $100,000 for McCain, got the job of developing rancher Fred Ruskin's land after McCain's legislation helped Ruskin pick it up at below market rates.

But this is at least the fifth transaction where a campaign contributor has benefited from McCain's power. Here are five others:

One oft-repeated phrase from Washington is that there is "no magic wand" that can lower oil prices. This has proven to be comedic gold for some. But for people who find themselves paying nearly $4 a gallon to fill up their tanks, the joke is not so funny. After all, with an "oilman" in the White House, it should come as no shock that the price of a barrel of the gooey stuff has risen 5-fold since January 2001 -- hitting a record $126 today.

I noticed that every time the Fed cut interest rates, the dollar dropped in value and the price of oil rose. As I posted, this dynamic is as sure of a bet as you can get in the real world. That's why traders are shorting the dollar and going long oil. And they're betting enough on that trade to drive up the price of oil consistently. As I discussed last night on New England Cable News (NECN), the European Union decided yesterday to keep its interest rate at 4% to fight inflation. Ours is a mere 2% so investors are selling dollars and buying Euros.

This brings us to how Washington can cut gas prices fast. All it has to do is to raise interest rates. This little move requires no Congressional approval and the oval office occupant doesn't have to sign a bill. If our Fed got serious about fighting the rampant inflation it has unleashed, it would raise the Fed funds rate, the dollar would strengthen, the price of oil would drop, and you would pay less at the pump. It's as simple as that.

Reuters reports that Citigroup (NYSE: C) is poised to announce today the sale of $400 billion worth of assets -- that's 18% of the total. We'll need to wait to find out which assets it plans to sell and how much of a loss (or profit) Citi will take when it sells them. But the New York Times reports the company's deciding based on industry growth trends, market positions, geographic growth rates, business plans and financial results.

I worked for a global bank during a credit contraction and part of my job was to figure out which assets to sell. From that experience, I know that Citi's challenge is to find assets that don't fit with Citi but are worth more to another owner. That's because often the assets that make the most sense to sell strategically are the ones that nobody else wants to own. And the ones that make the most sense to keep are the ones that could generate the biggest profit, if sold. Citi's challenge is to sell the $400 billion worth of assets that make strategic sense to sell and will fetch an attractive price. In today's market, that is a challenge.

So what Citi assets could be on the block? Reuters notes that Citi's U.S. student loan business may make sense to sell, after recent legislative changes and turmoil in the securitization market have made it less profitable. Citi may sell Primerica, a consumer sales network for life insurance and investments. And Citi should sell assets on its trading books, which have contributed to much of the $45 billion write-downs that Citi has taken so far.

Bloomberg News reports that Securities and Exchange Commission (SEC) Chair Christopher Cox made a speech about requiring investment banks to disclose their capital and liquidity. (I was interviewed this morning on Marketplace radio about it.) He thinks this requirement somehow would have prevented the meltdown of The Bear Stearns Companies (NYSE: BSC).

There is less here than meets the eye. Cox said, "One of the lessons learned from the Bear Stearns experience is that in a crisis of confidence, there is great need for reliable, current information about capital and liquidity." He said that data on capital and liquidity will be required this year "in terms that the market can readily understand and digest."

This is Washington and there is a power grab going on. In March, Treasury Secretary Hank Paulson announced a financial regulation overhaul plan which defanged the SEC. And the SEC is now trying to present itself as relevant so it can continue to exist. The SEC already gets real-time liquidity and capital information without giving it to the public.

Reuters reports that Wal-Mart Stores, Inc. (NYSE: WMT) posted better-than-expected revenue growth in the first quarter. As I suggested last month, this makes sense to me because Wal-Mart is the beneficiary of the recession diet.

The details suggest that Wal-Mart is becoming more popular than analysts expected thanks to its low prices and the squeezed consumer. Specifically, Wal-Mart sales rose 3.2% rise in April boosted by demand for basic items like groceries and medicine. Analysts, on average, were expecting same-store sales to rise 2.1%, according to Reuters Estimates; Wal-Mart had forecast a gain of 1% to 3%.

Why is this happening? People need food, shelter, medicine, and gasoline to drive back and forth from their jobs. And the price of all those items is rising. I estimate that the median family takes in $838 a week after tax. If that family fills up two tanks of gas a week -- that amounts to 40 gallons times $3.62 a gallon or $145 a week. That's 17% of the weekly budget compared to 15% a year ago when gasoline was $3.10 a gallon. Food prices have skyrocketed as well with rice prices tripling this year.

Bloomberg News reports that consumer borrowing -- as measured by credit card receivables -- grew much faster than expected in March. Specifically, the 9% growth to $2.56 trillion was twice the rate of increase that economists had expected (the actual increase was $15.3 billion vs. 34 economists who expected $6 billion). The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.

And as consumers are increasing their indebtedness, they are also having more trouble paying it back. Overdue payments at the six largest U.S. credit-card lenders reached the highest level since November 2004, according to data compiled by Bloomberg. It found an average of 4.11% of loans were at least 30 days late in February and March.

Bloomberg quotes Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York who says it all: "incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression. The days of extracting cash from one's home to spend on goods and services are long gone."

With consumer spending accounting for 70% of GDP growth, that's why I suggested selling into the sucker's rally that peaked last week.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

The Daily News reports that ratings for Walt Disney Company (NYSE: DIS) Hannah Montana program are down 24% since Mileygate broke last week. Last Sunday's new episode's ratings fell 24% from the previous fresh episode, which aired just under two months earlier. And ratings are down 33% since the first episode in January.

Disney thinks everything's fine with Miley. The Daily News quotes CEO Bob Iger as saying: "With a new season of shows coming up, a new record in July and a theatrical film next year, the 'Hannah Montana'/Miley Cyrus franchise is incredibly robust." But kid franchises such as "Hannah" that peak at very high levels are good for roughly 18 months, then start to fade.

Will this have any effect on the $1 billion business that is Miley Cyrus? It depends on whether she can find a new -- older -- audience and deliver what it wants as effectively as she did for the 10 to 14 set. If Mileygate helps her do that then her business will be fine.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Disney securities.

In a bow to the power of the weak U.S. dollar, AP reports that Toyota Motor Corp. (NYSE: TM) is raising prices on some of its lower-priced cars. A weak dollar relative to the Yen puts downward pressure on earnings for Toyota since sales in dollars get translated into fewer Yen -- the currency in which Toyota reports earnings.

So, Toyota is trying to raise prices on its more popular, higher gas mileage models in the U.S. figuring it will lose less market share because of the strong demand as consumers -- sickened by paying so much of their income for gasoline as it powers through $4 a gallon -- scramble for Toyota's more fuel-efficient vehicles.

AP reports that Toyota's price increases, which will start in the middle of May, include a hike of $200 on the 2008 Yaris sedan, which will cost $12,425. The 2009 Camry will go up $200 to $18,920. The hybrid Camry, introduced as a 2007 model in late 2006, will cost $300 more, at $25,650. For example, the price of the Lexus IS 350 entry sports sedan will rise $300 to $36,305. However, the pricing of the 2008 Lexus IS F high-performance sports sedan won't change.

Bloomberg News reports that someone at the Fed has finally developed a bit of common sense --that is if you believe that the Fed's job is to fight inflationary expectations. Amazingly enough, the president of one of the Fed banks failed to repeat the standard mantra that "core inflation" is under control.

Instead, according to Bloomberg, Federal Reserve Bank of Kansas City President Thomas Hoenig said "serious" inflation pressures may compel the Fed to raise interest rates. He said that the current account deficit is a problem thanks to the weak dollar. And he argued that the combination of slowing growth and inflation is "troublesome." He observed that rising global commodity prices and higher prices of imported goods from China and other markets are pushing up prices.

And here's the kicker. Hoenig said, "Some would dismiss these rising inflationary pressures as temporary. I believe they are more serious." Hoenig thinks that the economic slowdown will be short-lived and that the Fed will need to raise rates quickly. He noted, "As the economy recovers and credit conditions improve, however, it will be necessary for the Federal Reserve to remove the policy accommodation in a timely manner."

The New York Times quotes Harvard Business School (HBS) professor David Yoffie as saying "the right way to think about" Google Inc. (NASDAQ: GOOG) is as "the next Microsoft Corp. (NASDAQ: MSFT)." Setting aside for the moment, the arrogance that we need Yoffie to tell us how to think is the simple notion that he's wrong.

Here are three reasons why:

• Google is an innovator, Microsoft never has been. Microsoft got started by licensing an operating system for the PC. And it prospered by making it the dominant operating system and tying it to office software -- each component of which it copied or bought from an innovator. Google has won because it has developed an improved a search ad technology that gives advertisers a higher return on their investment;
• Google has succeeded because its product works better, Microsoft's not so much. Microsoft has lost market share in search advertising since it started to focus on it -- watching its share fall from 11% in 2005 to 5% today. The reason Microsoft has lost share is that its product simply does not work as well as Google's; and

The New York Times reports that Federal National Mortgage (NYSE: FNM) and Federal Home Loan Mortgage (NYSE: FRE) have a tiny sliver of capital to support a mountain of mortgages. To put it in perspective, their level of borrowing is almost twice that of the enormously over-leveraged investment banking and hedge fund industries. With the collapse of the housing market, Freddie and Fannie are in trouble. And when you get to the scale of these two, so is America.

As I posted last month, it could cost $1 trillion to bail out Fannie and Freddie. These hybrid organizations are a key cog in the mortgage industrial complex (MIC) that has gotten the world into its current capital crisis. Fannie and Freddie buy "conforming" mortgages from their originators and then package and sell the mortgages as securities. But these two have a mere $83 billion in capital to support $5 trillion worth of debt and other commitments.

This 60-to-1 ratio is almost twice the 32-to-1 ratio of the highly leverage investment banks and hedge funds. And like any company with hard-to-value assets, Fannie and Freddie have unrealized losses. In their case, those total $20 billion -- they've already taken $9 billion worth so far this year. By 2007 they had guaranteed or invested in $717 billion of subprime and Alt-A loans, up from almost none in 2000. And many of those are not worth that much.

After Microsoft Corp. (NASDAQ: MSFT) announced it was withdrawing its offer for Yahoo! (NASDAQ: YHOO) I thought that Yahoo stock would end today at $19 -- which is where it traded before the deal was announced. But Yahoo is currently trading over $24.

Here are three reasons that Yahoo may be trading $5 above where it was pre-Microsoft:

• Google Inc. (NASDAQ: GOOG) deal. Investors are ascribing some value to the possibility that Google will sell some of Yahoo's search advertising;
• Short covering. Investors who bet on the deal falling apart may be covering their short positions in Yahoo -- keeping a floor beneath its stock price;
• Still in play. Microsoft may buy up a control position in Yahoo at the current market price and return to negotiate a Yahoo takeover at a lower price.

What got Microsoft Corp. (NASDAQ: MSFT) started on its Yahoo! (NASDAQ: YHOO) takeover proposal was a fairly boneheaded idea that it could turn its money-losing online advertising unit -- known as the Online Services Business (OSB) which in the last nine months lost $775 million -- into a profitable contender to Google Inc. (NASDAQ: GOOG).

Now that Microsoft has withdrawn its offer, it's still stuck with OSB and it lacks a compelling strategy to make it profitable. But if Microsoft goes back and asks why it got into OSB in the first place it becomes pretty clear that this is not a good business for Microsoft to be in at all. It got into the business for the simple reason that it had Internet envy -- that is, it saw other companies get all the hype and profit from online advertising and it wanted its share. While that is a common reason for companies to get into new businesses, that doesn't make it a profitable one for shareholders.

Here's how badly Microsoft has done in online advertising. According to PC World, in November 2005 Microsoft ramped up its plan to provide Web-based services through the Windows Live and Office Live brands with the intent of bolstering its online ad revenue. Between August 2005 and December 2006 its share declined from 11% to 8%. By February 2008, its share had fallen even further to 5% of the online advertising market.

CNET News reports that Microsoft Corp. (NASDAQ: MSFT) has officially withdrawn its offer to acquire Yahoo! (NASDAQ: YHOO). Reportedly the two sides could not agree on price -- Microsoft was willing to go up to $33 a share but Yahoo! wanted $37 -- $5 billion more than Microsoft was prepared to spend.

Steve Ballmer also decided against a proxy fight for Yahoo! shareholder support -- suggesting that it would be a time consuming and costly process that would give Yahoo! more time to make itself a less desirable acquisition for Microsoft.

Is this really the end of it? I expect Yahoo!'s stock to tumble and Microsoft's to rise. Yahoo! stock was trading up to $29.70 in the after hours market as of 8pm last night. But I expect the stock to plummet to where it was before Microsoft made its offer -- $19 a share.

Reuters reports that German daily Die Welt quotes a customer letter saying that Boeing Co. (NYSE: BA) just announced the fourth delay in delivering its 787 Dreamliner. It was originally scheduled for this month but if Die Welt is right about the fourth delay -- which would affect deliveries scheduled for 2012 -- the 787 would now be 27 months behind schedule. But Boeing denies the report.

The good news as of now is that none of the 55 customers who ordered 787s -- creating a $151 billion backlog -- have canceled. Last month the CourierPost reported that the three initial delays would cost Boeing $4 billion cancellation fees. No word on how much this fourth delay will add to that cost -- if the report proves to be true.

But 2008 is turning out to be far worse year for aircraft orders than 2007 was. Both Boeing and Airbus have played down expectations for plane orders this year, after the record 2,754 orders between them last year. Most analysts are expecting about half that number this year.