But that hardly means the Obama campaign can count on them. When asked to rank their interest in the Nov. 4 election, just 49% said they were “very interested.” By comparison, 70% of voters of all age groups said they were “very interested,” according to a separate Journal/NBC News national poll taken a week ago.
Moreover, 54% of the new voters said they would definitely vote Nov. 4.
This seems to posit that these kids are just slackers who don’t really plan to vote. My experience with students like the kids camped out in Columbus, Ohio to be the first to vote this morning, is that they are more politically involved than the media paints them. My guess is that more than 54% of the eligible first time voters show up.
Hank Paulson has worked his whole life in a business culture and as he rose to the top of Goldman Sachs, when he said “jump”, his minions said “how high?”. His first mistake in the rescue package was putting out a three page “deal memo” that reflected the command and control culture from whence he came. And then he ran into a thing called democracy.
I think we need to face the fact that the anger on Main Street is a full scale revolt against Bush and Paulson’s notion that the taxpayer should bear the burden of the long term misjudgement and incompetence of the nation’s political and financial leaders.
As I have said before, there is ample capital in the world. What is missing is trust. When a bank like Wachovia gets sold, only to write down in one day $30 billion of assets it was carrying on its balance sheet the day before, you can see why no bank wants to lend to another bank. In the absence of a $700 billion rescue package, which I’m still not confident will pass, the Treasury and the Fed could do a few things that might get us through the confidence crisis.
Fannie and Freddie should aggressively go into the market buying mortgages, TODAY.
The FDIC should raise the guarantee on bank deposits to $250,000 per account, TODAY.
The Fed should suspend for six months the mark to market accounting rule on mortgage securities or create some other rule that would allow banks to keep frozen mortgage paper segregated on their balance sheets.
FDIC should force every bank to deliver an audited statement of all of their holdings including Credit Default Swaps withing 30 days. Transparency is the soul of confidence.
Ultimately there are many banks that are just plain insolvent and we need to know which ones they are. Once the “dead men walking” are disposed of, we can begin the task of rebuilding this country. But we cannot fool ourselves into thinking that solving the banking crisis will be the key. On the day of the next President’s Inauguration, my guess is that unemployment will be close to 8% and the rate of foreclosure and bankruptcy will have accelerated. Like Roosevelt, the new President will have to create a large “Rebuild America” plan in which the government helps seed both the Information Technology (IT) and Energy Technology (ET) projects that will form the base of America’s return to an economy of production and saving. The supply side economists who pushed the economy of consumption and borrowing since the election of Ronald Reagan, will still fight in the rear guards of AEI and the Heritage Foundation, but they will be irrelevant to the Next America.
House Republicans led the way and will get most of the blame. It has been interesting to watch them on their single-minded mission to destroy the Republican Party. Not long ago, they led an anti-immigration crusade that drove away Hispanic support. Then, too, they listened to the loudest and angriest voices in their party, oblivious to the complicated anxieties that lurk in most American minds.
Now they have once again confused talk radio with reality. If this economy slides, they will go down in history as the Smoot-Hawleys of the 21st century. With this vote, they’ve taken responsibility for this economy, and they will be held accountable. The short-term blows will fall on John McCain, the long-term stress on the existence of the G.O.P. as we know it.
I’ve spoken with several House Republicans over the past few days and most admirably believe in free-market principles. What’s sad is that they still think it’s 1984. They still think the biggest threat comes from socialism and Walter Mondale liberalism. They seem not to have noticed how global capital flows have transformed our political economy.
The house always wins, gamblers are warned, and the U.S. House made John McCain pay Monday for his politically risky, high-profile involvement in a financial rescue plan that came crashing down, mainly at the hands of his fellow Republicans.
The Republicans couldn’t find the votes so they are blaming it on a totally unremarkable speech that Nancy Pelosi gave this morning. The notion that they would crater the economy because their feelings were hurt, boggles the mind. So now it is back in the White House and Republican leadership court to do something. As Barney Frank says, he’s available to listen to their ideas.
It’s clear that ideology still trumps reality in the Republican Party. My guess is the market will end down 700 points.
Hedge Fund Redemptions-As I said last week, it’s been a bad year for hedge funds. Starting tomorrow, investors can apply for end of the year redemptions from the funds. If a lot of investors want out, this could force the sale of billions of illiquid securities at firesale prices. If some funds “close the gates”, i.e. stop redemptions, it could trigger a new round of panic.
Bank Failures-In the last 48 hours four large international banks have failed including Wachovia, Fortis (Netherlands), Bradford and Bingley (UK) and Hypo Real (Germany). The contagion is spreading and Brussels based Dexia is on life support. We are probably lucky there is a holiday celebrating the establishment of Communism in China today or else the Chinese banks might have been more aggressively pulling their funds out of troubled spots.
Wall Street had expected a 0.2% gain in spending. The flat reading was a disappointment. “This is worse than we had been expecting so we now look for zero GDP growth at best in [the third quarter],” said Ian Shepherdson, an analyst at High Frequency Economics
In the past I have used the term “Interregnum” metaphorically, to mean the period when one set of ruling principles (neoconservatism) has been debunked but a new set of principles is not agreed upon. Now however, I feel that the term interregnum may have more historical meaning. Bush stands up at the lectern in from of the White House, but nobody’s listening. As we saw in 1932, the expanding crisis of bank failures at the exact moment of a presidential power vacuum can have disastrous consequences.
Insiders say that Mr Obama’s apparent calm through an unusually turbulent election season is because he believes that his strength among first time voters in several key states has been underestimated, both by the media and by the Republican Party.
Mr Obama has come under fire from within Democratic ranks over his message and his tactics. Critics say he has failed to connect with the blue-collar workers seen as crucial to winning the election, and too reluctant to make direct attacks on Mr McCain.
David Axelrod, Obama’s chief strategist, said last week that Obama had “a lot of opportunity” in states which Mr Bush won four years ago.
But in private briefings in Washington, a member of Mr Obama’s inner circle of policy advisers went much further in spelling out why the campaign’s working assumptions far exceed the expectations of independent observers.
“Public polling companies and the media have underestimated the scale of new Democratic voters registration in these states,” the campaign official told a friend. “We’re much stronger on the ground in Virginia and North Carolina than people realise. If we get out the vote this may not be close at all.”
I’ve been saying this for a while and John Zogby hinted at it last week. Nice to see the MSM (even if English) begin to pick up on it.
Now that it appears a bailout deal has been struck, I feel a need to introduce a note of realism to the conversation. Last week in his Senate testimony, Fed Chairman Bernanke said the “bailout was necessary to avoid a recession”. This, I’m afraid, is imaginary thinking. We are in a recession right now and It’s going to get worse. My assumption is that this package will keep us out of a depression. But when the unemployment rate hits 7% and foreclosures keep climbing and people turn to Bernanke and Paulson with the words “but you said…”, there may be more anger floating around than politicians are used to.
They better be sure no to oversell this solution in Washington.