This is not the first housing downturn to cross borders, but its reverberations have been amplified by the integration of financial markets. When faulty American mortgages end up on the books of European banks, the problems of the United States aggravate the world’s problems.

The glut of housing has brought new construction to a standstill, driving up unemployment and dimming the prospects for two of Europe’s stellar performers over the last decade.

“We’re waking up from the property dream and finding ourselves in a situation where prices are falling in Spain for the first time,” said Fernando Encinar, a founder of Idealista.com, a real estate Web site.

In Spain, more than four million homes were built in the last decade, more than in Germany, Britain and France combined. Average house prices tripled in parts of the country, as Spain’s torrid economy attracted immigrants and Northern Europeans snapped up holiday homes along the Costa del Sol.

Now, though, thousands of those houses stand empty. The I.M.F. estimates that property is overvalued by more than 15 percent. With mortgages drying up and prices swooning, speculators who once viewed Spanish property as a no-lose proposition are confronting hard reality.

In 2005, Julian Felipe Fernandez bought three small apartments, as an investment, in a huge development being built outside Madrid. He paid 100,000 euros as a deposit for the units, and now he is eager to sell them to avoid having to taking on a costly mortgage. But with the market stalled, Mr. Fernandez’s asking price is what he paid for them.

“Three years ago, it looked like I would be able to flip them for a nice profit before they were finished,” he said.

Mr. Obama, when he got his chance on the stage, once again sought to clarify and defend his comments, which he made in the closed-door fund-raiser in San Francisco a week ago. He said his words had been distorted and misconstrued.

Senator Barack Obama said at the forum on Sunday that, if elected, he would seek to cut poverty in half within 10 years, although he said circumstances could undermine his good intentions.

Both candidates made indirect appeals to Roman Catholic voters. Mrs. Clinton mentioned the pope’s impending visit and praised his commitment to health and poverty issues around the world. In response to a question about when life began, Mrs. Clinton replied, “I believe that the potential for life begins at conception.”

Mr. Obama highlighted his own ties to the Roman Catholic Church, saying that he had once attended a Catholic school in Indonesia and shared the experiences of a Catholic education with many Americans.

“There’s been this notion that he was, by various terms, my spiritual adviser or my spiritual mentor,” Mr. Obama said. “You know, he’s been my pastor.”

Mr. Obama said that because his father’s family was Muslim and he lived for more than four years in Indonesia as a child, he had great respect for Islam and believed that Muslims could join members of other faiths in solving the world’s problems.

Both candidates were asked whether they believed God was informing their approach to politics or somehow blessing their candidacies.

“Well,” Mrs. Clinton said, smiling and pausing, “I could be glib and say we’ll find out, but I — I don’t presume anything about God.”

Asked a similar question, Mr. Obama replied, “It takes a certain self-righteousness where we think we have a direct line to God.”

But Mr. Obama had to alternately assure viewers that he is not an alienated, race-obsessed African-American who speaks for the meaner streets and that he is not a Harvard-educated elitist who looks down at Main Street. And that gave Mrs. Clinton the advantage.

Mrs. Clinton even placed Mr. Obama in the same upper-crust echelon as Al Gore and John Kerry, noting that even though both former Democratic presidential candidates were men of faith, “large segments of the electorate concluded that they did not really understand or relate to or frankly respect their ways of life.”

It was a tour de force: Mrs. Clinton managed to take the shiv in chivalry and stick it to her opponent, all the while looking and sounding almost saintly.

Not good. A pretty significant blunder. Plays into the worst stereotype of him as an elitist who can't connect with the working classes. The guy who bowled 37.

And yet, most people (and most journalists) know what he was trying to say. Not that small-towners are gun nuts. Or religious nuts, not from a regular churchgoer. Obama was trying to say that these folks voted on social issues, distracting wedge issues, when their real problem was economic. As he said a moment earlier, their areas have been losing jobs for 25 years, and "they fell through the Clinton administration, and the Bush administration."

Well, when you're imprecise in politics, you pay a price. Obama has played that game with John McCain's "100 years" comment. So it's little surprise that Hillary Clinton and McCain went after him, hard.

National Review's Jim Geraghty: "Yeah, I hate it when someone who's frustrated, and worried about their employment, say, starting January 20, 2009, decides to cling to anti-trade sentiment. You know, when they say that the U.S. should threaten to opt out of NAFTA. You know, like the guy who goes in front of union members and denounces trade deals with South Korea, and NAFTA, and CAFTA, and the Colombia Free Trade Agreement."

Big Tent Democrat: "I predict Obama gets away with it. ESPECIALLY now that Hillary is involved. Hillary Hate in the media trumps McCain Love.  See Wright, Jeremiah, so far."

Marc Ambinder says Obama sometimes goes too far:

"No one in the race has more foreign policy experience than Barack Obama.

" 'And nobody has spoken out more fiercely on the issue of anti- Semitism than I have.'

"Some Obama campaign aides privately admit that their boss has a tendency to use superlatives when a comparative is called for. What's weird about Obama's peacock displays is that they're unnecessary. No one -- not even messianic Obamniacs -- believe that he has more foreign policy experience than John McCain, although many millions of voters may well come to believe that Obama's life experience in general gives him a better vantage point."

Immelman Holds Off Woods

Immelman Opens Cage Door With Final Round Collapse But Tiger Fails To Growl

At the forum, Mrs. Clinton said that Democrats Al Gore and John Kerry were men of faith but that did not carry them to the White House.

"We had two very good men and men of faith run for president in 2000 and 2004," she said. "But large segments of the electorate concluded that they did not really understand or relate to or frankly respect their ways of life."

Mr. Obama, who took the stage after Mrs. Clinton, quipped, "I think Al Gore won ... and has done terrific things since."

President Bush is poised to change course and announce as early as this week that he wants Congress to pass a bill to combat global warming, and will lay out principles for what that should include.  ...

The administration also is trying to head off what it sees as a regulatory disaster. Environmentalists say greenhouse gases can be regulated under existing rules under the Clean Air Act, the Endangered Species Act or the National Environmental Policy Act, and have filed lawsuits to try to force action. The Bush administration and others want to avoid a web of rules and regulations for businesses.

"The embedded regulatory trajectory that we're on is a train wreck," Mrs. Perino said. "For those who want reasonable and responsible action, it is worthwhile to have a constructive conversation as we work to keep the developing nations in this process in a way that will work to solve the problem without harming the economy."

Don't expect any public testimonies of faith from presidential candidate Sen. John McCain, who is not demonstrative about his religion but who embraces a Baptist faith that is based on salvation.  ...

"The most important thing is I'm a Christian," Mr. McCain told reporters in September on the campaign trail when asked about his religious affiliation.

Mr. McCain's official congressional record identifies him as an Episcopalian, and he was raised in the Episcopal Church, but the senator said he now considers himself a Baptist. He cut short any further inquiry by adding that he "won't have anything more to say about that."

Mr. McCain campaigned for support from the Republican Party's conservative base earlier this year, but received a tongue-lashing by James Dobson, the powerful founder of the conservative Focus on the Family.

"I'm praying that we will not get stuck with him," Mr. Dobson said.

In his most eloquent speeches, Barack Obama has spoken of America as a "magical place" comprised of hard working people who share the same core values despite racial, geographic, and economic divisions.

Last week, at a private fundraiser for wealthy donors outside of San Francisco, Obama struck a much different tone when ruminating on his failure to make headway among working class voters. Suddenly, typical small town Americans morphed into bitter souls, clutching their Bibles in one hand, their guns in the other, and with binoculars dangling from their necks to detect invading Mexicans.  ...

Many Beltway pundits shrugged off the importance of Obama's comments by noting that he was simply reiterating author Thomas Frank's thesis that working class voters vote Republican, against their own economic interests, because of cultural issues.

This just reinforces why Obama has a problem with those voters in the first place. He grew up in Hawaii and Indonesia and spent his adult life in either an academic or urban setting. His approach to understanding small town America is cerebral. It's natural that he would find it more difficult to connect with this part of the electorate.

Michigan has had its share of economic problems. That state issues something in the neighborhood of 700,000 firearm deer licenses every fall, more men (and some women) under arms than the combined forces of NATO.

What has failed Senator Obama is his social and moral imagination with respect to people in other walks of life, far removed from his own. We all have this failing to some degree. But given the Senator's self-evident social skills and his self-professed goal of unity or changing our politics, his comments in San Francisco were truly stunning -- and disappointing.

Talking about unity and change is one thing, but the contradiction in Senator Obama's program is that he fails to grasp the importance of traditional modes of living for folks outside the hot house of far-left Democratic politics.

I laughed in my friend’s face — “you expect me to believe that?” I cried. After all, if you wanted to invent the ideal candidate for a post-9/11 world, you couldn’t do much better than Obama: his parents’ brave interracial marriage, their tragically broken home, the early years experiencing religious and cultural diversity in Indonesia, then on to a fancy private prep school in Hawaii, Harvard Law, and, for good measure, a dollop of good old-fashioned Chicago machine/ward-heeler bare-knuckled politics. No wonder a first-term senator with no particular qualifications or accomplishments realized that he could run for president!

But my friend had even more surprises in store for me. It seems that at Harvard our Barry was widely regarded as a person of overweening arrogance and a gold-plated sense of entitlement; not only did the world owe him a living, it owed him just about everything.

But maybe Barry’s private remarks didn’t come off as helpful. (Have they tracked down the Bushitler operative who recorded his chat and leaked it to Arianna yet? Where’s Alberto Gonzales when we need him?) Maybe they really did sound arrogant, aloof, and condescending — quintessentially Harvard, as it were. Hey, give the guy a break: One of the hardest things about being a liberal Democrat is that, when you’re talking to the resentful yahoos whose votes you unfortunately need, you have to pretend to care about them. When you’re trying to sell Hope and Change, you need to give the rubes Hope that the Change is going to be Change they want. Even when you know there’s no Hope of that.  ...

So I guess now the cat’s out of the carpetbag. But you know what? It won’t matter. Hillary can show up in St. Patrick’s Cathedral with the New Testament in one hand and an Uzi in the other and it still won’t help her. We have the media — half of whom went to Harvard themselves — on our side. We have Hope and Change. We have Bush. We have the Obamamometer, on which our guy always scores a glorious, perfect 10.

This time, we can’t lose. Can we? 

What does this mean for Obama’s presidential prospects? He’s disdainful of small-town America — one might say, of bourgeois America. He’s usually good at disguising this. But in San Francisco the mask slipped. And it’s not so easy to get elected by a citizenry you patronize.

And what are the grounds for his supercilious disdain? If he were a war hero, if he had a career of remarkable civic achievement or public service — then he could perhaps be excused an unattractive but in a sense understandable hauteur. But what has Barack Obama accomplished that entitles him to look down on his fellow Americans?

Beneath the enormous charm and cool persona of Obama beats the heart of an arrogant man. With increasing frequency, the 46-year-old one-term senator from Illinois orates as though he resides at Olympian Heights. By his presumptuous demeanor, he suggests that he sees what no one else sees, and can do what no other person can do; he is America’s healing balm.

Even his efforts at damage control radiate arrogance. Speaking in Muncie, Indiana, after the story broke, Obama said “Lately, there has been a little, typical sort of political flare-up because I said something that everybody knows is true, which is that there are a whole bunch of folks in small towns in Pennsylvania, in towns right here in Indiana, in my home town in Illinois who are bitter.”

The flare-up, you see, happened because Obama is the Great Truth-Teller amidst the masses, many of whom can’t handle the truth. Once it dawned on Obama’s aides that expediency demanded an apology, the Senator offered a qualified mea culpa: “Obviously, if I worded things in a way that made people offended, I deeply regret that.”

So if Senator Obama worded things in a way that made people feel offended (rather than worded things in a way that is offensive), well, he regrets that.  ...

I suspect these comments will be quite damaging to Obama because they reinforce (in spite of his efforts to equivocate during this campaign) his conventional liberalism. In this case, though, it’s not simply a matter of him being liberal on economic or domestic issues; it demonstrates that he is a cultural liberal, which has been a particularly lethal charge in presidential elections. It is another brush stroke on the canvas of a man who burst onto the national scene less than four years ago and about whom we know very little. But with every passing week, it seems, we are learning more about the Man of Hope.

The results of the Anbar Awakening and the surge are plain to see. Since the Fifth Marine Regiment’s Third Battalion rotated into Fallujah in September 2007, not a single American has been wounded there, let alone killed.  ...  Fallujah’s most recent car bomb exploded last July.

“The al-Qaida leadership outside dumped huge amounts of money and people and arms into Anbar Province,” says Lieutenant Colonel Mike Silverman, who oversees an area just north of Ramadi. “They poured everything they had into this place. The battle against Americans in Anbar became their most important fight in the world. And they lost.”

Having failed to puncture General Petraeus’s story about great improvements on the ground in Iraq, liberals are now saying the cost of the Iraq war has somehow undermined the economy — even caused the current slowdown. What complete nonsense.

First point: The U.S. has spent roughly $750 billion for the five-year war. Sure, that’s a lot of money. But the total cost works out to 1 percent of the $63 trillion GDP over that time period. It’s miniscule.  ...

the anti-war forces might want to recall John F. Kennedy’s inaugural address, in which he called on Americans to “Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, in order to ensure the survival and the success of liberty.”

Do these folks actually think 1 percent of GDP is too large a price, too heavy a burden? I sure hope not.

The last time General David Petraeus and Ambassador Ryan Crocker reported to Congress on the state of the Iraq war, "benchmarks" were all the rage. Congress had established 18 criteria in early 2007 both to pressure the Iraqis and to keep score on their progress. And in September, Congress faulted the Iraqi government for failing to meet many of those measures.

Concocting a checklist of laws and actions that would lead to national reconciliation in Iraq was always a fool's errand and misunderstood the complexity of the situation. But having laid down this marker, Congress would want to hear an update, surely. Not so. The word "benchmarks" was scarcely heard last week when Petraeus and Crocker reappeared before Congress. Crocker testified that the Iraqis have actually met about two-thirds of the benchmarks, including four or five of the six key legislative benchmarks and all of the benchmarks measuring their contribution to their own security.

In reply, the congressmen who insisted on legislating these benchmarks now say benchmarks are a poor way to measure progress in Iraq.

So we have significant progress within the Iraqi government. We have significant grassroots political development. We have Sunni and Shia Arabs fighting together against both Sunni and Shia enemies that they now see as common foes. We have the central government distributing its funds both to Sunni and to Shia areas. Despite the supposed flaws in the de-Baathification reform law, excellent Sunni commanders who could theoretically have been purged remain in key positions in the Iraqi military and police forces. The only groups that remain outside of the political process are al Qaeda, the Baathist insurgents, and the Iranian-backed Special Groups. If this isn't dramatic progress toward reconciliation, what would such progress look like? One congressman last week had the gall to complain about Iraq's "intransigent political leaders." The more intransigent political class is here in Washington.

Since the seating of the Maliki government in May 2006, a constant criticism has been that it is eager to send money to Shia areas and send troops against Sunni fighters, but not the other way round. Well, the Sunni leadership in Anbar province has succeeded in drawing $100 million from the central government while Shia provincial governors in Karbala, Qadisiyah, and Babil complain that they're not getting what they need from Baghdad. Similarly, the Iraqi Security Forces are now fighting with Anbaris against common enemies, and an Iraqi army unit was just deployed from Anbar to Basra to fight against Shia militias. General Petraeus testified that about 20 percent of the Sons of Iraq are Shia, and Maliki has announced new plans to develop SOIs in Shia areas. So much for the notion that SOIs are a militia-in-waiting for the next Sunni takeover. Taking a step back, we can identify an even more important dynamic. In late 2006 and 2007, Shia, Kurds, and the majority of Sunni Arabs formed a political and military bloc to defeat al Qaeda and the Baathist insurgents and negotiate their differences peacefully. In early 2008, Shia, Kurds, and Sunni Arabs strengthened this political bloc while using it to strike against illegal, Iranian-supported Shia militias and terrorists. That is the most important and positive sign of reconciliation of all.

McCain is an authentic man. On subjects such as foreign policy, national security and political reform, his passion is palpable, his knowledge impressive. That's one of his appeals to political independents.

To retain this, while winning the enthusiasm of the conservative coalition, will be a challenge.

Asked Sunday to pinpoint the last time she fired a gun or attended church, Clinton "seemed frustrated," per Shailagh Murray and Perry Bacon Jr. of The Washington Post (and may have helped Obama change the subject -- will Clinton as woman-of-the-people fly?). "That is not a relevant question for this debate," Clinton said. "We can answer that some other time. I went to church on Easter, so . . . but that is not what this is about."