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Nate Silver is the most reliable assessor of political polling in our country. His latest column seems to indicate that President Obama is in pretty good shape. Here are some highlights

This is probably about the last week, for instance, in which Mitt Romney can reasonably hope that President Obama’s numbers will deteriorate organically because of a convention bounce…

First, the polling by this time in the cycle has been reasonably good, especially when it comes to calling the winners and losers in the race. Of the 19 candidates who led in the polls at this stage since 1936, 18 won the popular vote (Thomas E. Dewey in 1948 is the exception), and 17 won the Electoral College (Al Gore lost it in 2000, along with Mr. Dewey).

There has not been any tendency, at least at this stage of the race, for the contest to break toward the challenging candidate.

Instead, it’s actually the incumbent-party candidate who has gained ground on average since 1936. On average, the incumbent candidate added 4.6 percentage points between the late September polls and his actual Election Day result, whereas the challenger gained 2.5 percentage points.

The last point seems the most salient. Political races often become self-fulfilling prophecies in the last few weeks. The stench that Romney is a loser grows and so contributions slow down.

But Mr. Romney’s grass-roots fund-raising is not nearly so robust as Mr. Obama’s. In order to match Mr. Obama dollar for dollar, as he intends to, Mr. Romney must therefore spend more time than the president at big donor events, at a time when challengers might traditionally spend more time on the road campaigning.

The conventional wisdom was that Romney would not need to raise as much money as Obama because he had the mighty Super-Pacs behind him. In a little noted article, the Wall Street Journal reported that Karl Rove and company are not have the influence they thought they would.

But signs are few that super PACs have had the major impact that both supporters and critics predicted. The flood of spending doesn’t appear to have significantly influenced voter opinion in key states in the presidential contest or in top congressional races.

On the presidential front, conservative outside groups backing Republican candidates say they already have played their most significant role, and that their influence will fade as the candidates themselves present their closing arguments to voters.

I believe this is because at a certain point there are diminishing returns to carpet bombing ads, especially for a product that people don’t want to buy like Mitt Romney. So now the remaining danger for the Democrats is overconfidence. If Obama can use what Nate Silver calls the “tendency of the contest to break towards the incumbent” and run a “throw the bums out” campaign (chart above) against a “do nothing congress” in the last month, then we really might have a choice election.

The conventional wisdom is that Republican Super Pac money will overwhelm Democrats in the last six weeks of the fall election. This week Bernstein Research put out some data that lead me to believe that the returns to scale on TV advertising may actually be diminishing.

We believe it is not implausible that at some point, consumers will get so annoyed at having seen a commercial over-and-over again that there could actually be a negative impact. The logic being, consumers would attach negative feelings toward the brand (e.g. presidential candidate), instead of positive ones.

Here is how Bernstein charts it.

Bernstein calculates that in the battleground states 95% of the viewing public will see between 75 and 100 ads for Romney per week. Although classic marketing theory suggests that seeing more than three spots per week on a product produces diminishing results, we have never seen such “ultra-high frequency” in advertising.

Only time will tell if we have hit a wall on political TV advertising and Karl Rove’s grand scheme for buying the election fails.

The apparent Obama post convention bump does not surprise me. Much of my life has been spent evaluating cultural projects as a producer or manager, from the early records of The Band, to Mean Streets or The Last Waltz, I was always pretty sure when the production made an emotional impact on the audience. Mitt Romney’s convention, with the exception of the Clint Eastwood/Samuel Beckett Moment, was as dull as dishwater. It felt like a Lions Club convention and all the faces of color seemed planted by a casting director for diversity on a reality show. In contrast the Democratic Convention had an air of authenticity that felt like the real America of 2012, not the fantasy America of Romney and Paul’s Back to the Fifties movement. The Republicans want to re-litigate issues like birth control, voting rights, and abortion that most of us thought were settled by 1964 when the voting rights act was passed or 1973 when Roe vs. Wade was settled by the Supreme Court.

So the Obama slogan of “Forward” worked. It would not only be back to the fifties socially with Romney/Ryan, but back to the freewheeling days pre 2008 crash on Wall Street. All it takes is a head of the SEC in the bag for Wall Street (like Chris Cox), for the Masters of the Universe to be unleashed again. John Paulson’s million dollar donations to Romney’s super pac will be a bargain. But I don’t think Paulson’s bet will pay off. Willard is a loser.

But more important than all of Republican convention failings was for the Democrats to give a series of really fine political speeches from Deval Patrick, Michelle Obama, Bill Clinton, Joe Biden and Barack Obama. Every one of them had passion, ideas, poetry and hope. For the Democrats the staging was perfect (at least showbiz support counts for something) as when Barack arrived on stage at the end of Bill Clinton’s speech. For the Republicans it was amateur hour in Dixie to allow Clint to ramble on unscripted for the first 13 minutes of your prime time final night. Once you’ve screwed up the opening (as any film, TV or stage director will tell you), it’s almost impossible to get the audience back emotionally. Mitt didn’t. And so he left Tampa soggy and with a negative bounce down even before the Democrats started.

The reason the Todd Aiken rape comments have resonated so strongly is that they bring a bit of clarity to a race that was in danger of being dominated by the ad budgets of Karl Rove and the Koch Brothers. What Aiken and his good buddy Paul Ryan(pictured above) really believe about a number of issues was being cloaked by the feel good marketing campaign gloss of Plutocracy, Inc, the Rove and Koch operation. As has been pointed out for years, the 1% could never have a chance of putting their handpicked Private Equity Master of the Universe in the White House if they just ran on their economic plan (lower taxes for billionaires, kill the EPA and other regulators, privatize Medicare and Social Security). What they need to win is to get the social conservatives to vote against their economic interests in favor of their moral agenda of banning abortion with no exceptions, along with their other anti-gay, anti-immigrant, anti-poor, anti-women plans.

Fortunately for the Democrats, Todd Aiken is on a mission from God to win the Missouri senate race and so exhortations from mere mortals like Mitt Romney have no effect on his calculation. But the Democrats should not be too confident. The Republican voter suppression operation is in full swing in key states and the Kochs, Rove and Adelson still have $100 million to spend on advertising in the last two months. More importantly, as USA Today pointed out, their is widespread voter apathy with over 90 million people saying they won’t bother to vote.

A nationwide USA TODAY/Suffolk University Poll of people who are eligible to vote but aren’t likely to do so finds that these stay-at-home Americans back Obama’s re-election over Republican Mitt Romney by more than 2-1. Two-thirds of them say they are registered to vote. Eight in 10 say the government plays an important role in their lives.

Readers of this blog will note that I have been arguing for years that Aldous Huxley’s Brave New World was the most visionary of the dystopian masterpieces. The reason 90 million people won’t vote is they are too caught up in the lives of the Kardashians to care about Obama and Romney.

 The two most important dystopian fables of the future were Orwell’s 1984 and Huxley’sBrave New World. It turned out Huxley was right. With right combination of anti-anxiety drugs (Soma to Huxley; Valium, Prozac,etc to us) and the right entertainment (Huxley’s “Feelies”; our 3D and Reality TV) you don’t need Big Brother to keep the proles in line.

Perhaps Aiken’s strenuous statement of what he and Paul Ryan really believe will stir a few butts off the couch and into the voting booth. We will continue to be over-medicated and over-entertained, but the realization that a moron like Todd Aiken, who can make up his own science while serving on the House Science and Technology Committee, is actually the voice of the modern Republican Party ought to be pretty shocking to a public that is still half asleep.

From all the press coverage over the weekend, you would think that Paul Ryan was at the top of the Republican ticket. For those of us who have been having an intellectual battle with Libertarians for the past few years, it seems like this election might really be a referendum on the Koch Brothers Anarcho-Capitalist philosophy. Certainly Ryan is their favorite politician and water carrier as the Times points out this morning.

Less well-known are Mr. Ryan’s close ties to the donors and activists who have channeled Tea Party anger into a $400 million political machine, financed by a network of conservative and libertarian donors that now rivals, and occasionally challenges, the Republican establishment behind Mr. Romney.

Mr. Ryan is one of a very few elected officials who have attended the Kochs’ biannual conferences, where wealthy donors sit in on seminars on runaway government spending and the myths of climate change.

But it would be a mistake to focus on just Ryan’s efforts to bring an Ayn Randian philosophy to government where the Vice President would lecture the welfare “looters and moochers” in the language of John Galt, “We have no demands to present you, no terms to bargain about, no compromise to reach. You have nothing to offer us. We do not need you.” Ryan’s view of America as the continuing unpaid policeman of the world is pure Neocon, as the Wall Street Journal points out with pride this morning in a piece called “Paul Ryan’s Neocon Manifesto”.

Also, that he believes in free trade, a strong defense, engagement with our allies—and expectations of them. Also, that he wants America to stay and win in Afghanistan. Furthermore, that he supports the “arduous task of building free societies,” even as he harbored early doubts the Arab Spring was the vehicle for building free societies.

It tells us also that Mr. Ryan has an astute understanding of the fundamental challenge of China. “The key question for American policy makers,” he said, “is whether we are competing with China for leadership of the international system or against them over the fundamental nature of that system.”

But as Ronald Reagan’s Budget Director David Stockman points out this morning, the Ryan-Romney continuation of Neocon vision is a one way trip to nowhere.

Mr. Ryan professes to be a defense hawk, though the true conservatives of modern times — Calvin Coolidge, Herbert C. Hoover, Robert A. Taft, Dwight D. Eisenhower, even Gerald R. Ford — would have had no use for the neoconconservative imperialism that the G.O.P. cobbled from policy salons run by Irving Kristol’s ex-Trotskyites three decades ago. These doctrines now saddle our bankrupt nation with a roughly $775 billion “defense” budget in a world where we have no advanced industrial state enemies and have been fired (appropriately) as the global policeman.

Indeed, adjusted for inflation, today’s national security budget is nearly double Eisenhower’s when he left office in 1961 (about $400 billion in today’s dollars) — a level Ike deemed sufficient to contain the very real Soviet nuclear threat in the era just after Sputnik. By contrast, the Romney-Ryan version of shrinking Big Government is to increase our already outlandish warfare-state budget and risk even more spending by saber-rattling at a benighted but irrelevant Iran.

Ryan may be put forth as the soul of midwestern Catholic probity, but even in this pose, questions are being raised.

Paul Ryan, Mitt Romney’s vice-presidential running mate, sold stock in US banks on the same day he attended a confidential meeting where top level officials disclosed the sector was heading for a deep crisis.

The congressman on Monday denied profiting from information gleaned from the meeting on 18 September 2008 when Federal Reserve chairman Ben Bernanke, then treasury secretary Hank Paulson and others outlined their fears for the banking sector. His office said he had no control over the trades.

Public records show that on the same day as the meeting, Ryan sold stock in troubled banks including Wachovia and Citigroup and bought shares in Goldman Sachs, Paulson’s old employer and a bank that had been disclosed to be stronger than many of its rivals.

If Ryan’s excuse that this was not insider trading was that the trades were executed by his representative, can he swear that he had no communication with that representative after the meeting with Bernanke and Paulson? Ryan has boasted that he is an active investor and trader. Why all of a sudden does he act like his assets are in a blind trust? He will need to answer these questions.

As I said at the top, I welcome the addition of Ryan to the ticket. Romney was a total mushburger on policy, hoping to coast to the Presidency on Obama animosity. He realized that strategy was not working and has now thrown his fate to the ideas and pocketbook of the Koch Brothers. The election will decide whether we live in a democracy or an oligarchy;in a 21st Century world or a 19th Century fantasy.

It seems to me that Mitt Romney is in a real Jam. As George Will so cogently put it, you have to assume that the cost of releasing the  earlier tax returns was greater than Mitt’s perceived cost of not releasing them. I think his greatest fear, that for instance, if the returns show him paying an effective tax rate of 4.5% in some year or he has a list of 50 off shore partnerships in the Caribbean and 20 tax shelters; these might be hard to explain to the 99%. It might be so hard to explain that his “firm delegate count” begins to soften and the convention turns into the Tet Offensive, where there is no where to hide. So maybe he ends up saying he will release five years in September after he is nominated. Could he get away with that?

I doubt it.

I think he is going to have to bite the bullet and get them out soon, knowing full well the game may be up.

Wow!

When a religious fundamentalist suffers a “crisis of faith” it is a mournful incident to witness. Such was the occasion when Alan Greenspan, former Chairman of the Federal Reserve appeared before Congress in the wake of the financial crisis of 2008. The man who had singlehandedly carried the faith of “the rational market” confessed that, “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in their firms.”

The revelations around the fraudulent LIBOR fix that are beginning to come forth have been greeted with half the outrage heaped on Bernard Madoff two years ago. Some would suggest that the reason Madoff seems to be the only corrupt financier behind bars is that he stole from the 1%, while the fixers at Barclays and the other banks that manipulated the $360 Trillion derivatives market got away with a mere dismissal and most of their bonuses intact. Eduardo Porter suggests the real reason for our non-chalance.

Perhaps the most surprising aspect of the Libor scandal is how familiar it seems. Sure, for some of the world’s leading banks to try to manipulate one of the most important interest rates in contemporary finance is clearly egregious. But is that worse than packaging billions of dollars worth of dubious mortgages into a bond and having it stamped with a Triple-A rating to sell to some dupe down the road while betting against it? Or how about forging documents on an industrial scale to foreclose fraudulently on countless homeowners?

What is so shocking is that most of what purports to be mainstream economic theory today is based on this notion of rational choice theory. The whole Potemkin Village of Libertarian Free Market theory is based on a concept that takes no account of the tendency of “rational actors” to cheat if they think they can get away with it. Porter again.

Company executives are paid to maximize profits, not to behave ethically. Evidence suggests that they behave as corruptly as they can, within whatever constraints are imposed by law and reputation. In 1977, the United States Congress passed the Foreign Corrupt Practices Act, to stop the rampant practice of bribing foreign officials. Business by American multinationals in the most corrupt countries dropped. But they didn’t stop bribing. And American companies have been lobbying against the law ever since.

Extrapolating from frauds that were uncovered during and after the dot-com bubble, the economists Luigi Zingales and Adair Morse of the University of Chicago and Alexander Dyck of the University of Toronto estimated conservatively that in any given year a fraud was being committed by 11 to 13 percent of the large companies in the country.

This is the basic flaw in the Republican argument that we need less regulation of the financial markets. As Simon Johnson wrote this morning, The Market Has Spoken and It is Rigged. This is the torch the Democrats must carry from now until the election. Mitt Romney is the poster child for Savage Capitalism. His election would signal the end of democracy and the beginning of Oligarchy.

When my flight from Los Angeles touched down in Aspen, Colorado I counted 80 private jets parked at the airport. I had come for the annual Aspen Ideas Festival and what follows is a critique written with some affection for the institution but with the full knowledge that I may never be invited to speak there.

Aspen aspires to be an American Davos–a meeting in the mountains of top government policy makers, important pundits, authors and academics; all interacting with the corporate elite. Thus the enormous private jet fleet. It seemed to this first time attendee that the whole program was built on three suppositions.

1. That the economics of globalization are as inevitable as water flowing downhill on Frying Pan River.
2. That technological innovation is the salvation of society.
3. That American politics are so polarized that nothing can be accomplished at a national level.

These assumptions lead to a kind of philosophy of inevitability. Leadership is reduced to management and so problems really can’t be solved, they can just be managed. The pundits, politicians and managers on the stages of Aspen are there to tell us they know how to manage through crisis. This leaves the audience feeling as if there are no choices left other than the personal choice between eating steak or fish, wearing khakis or Levis, buying a Gulfstream or a Bombardier corporate jet. The notion of the political choice of fundamentally changing our society seems to be in the realm of the Higgs Particle. Does such a choice really exist and if so, how would we know?

On the stage the pundit interviewers were obsequiously polite with the politicians. Gillian Tett of the Financial Times never bothered to ask Larry Summers if he regretted eliminating Glass-Steagel at the behest of Citibank’s Sandy Weill. Charlie Rose sat mute as Mitch Daniels poured forth Romney talking points about how government regulation inevitably inhibits growth and how Obamacare was a tax on all Americans. The Atlantic’s David Bradley never challenged Pervez Musharraf’s assertion that military Coups were necessary to save Pakistan’s fragile and corrupt democracy. Tom Friedman allowed Ehud Barak to ramble on for minutes on why Iran’s joining the nuclear club would be different than any other previous nuclear aspirant, despite convincing evidence to the contrary by Kenneth Waltz in this month’s Foreign Affairs. Read more…

I have to say this was a good day for the President. Not only was his health care plan declared constitutional, but also some signs of a true long lasting economic recovery are beginning to fall into place.

First to the Affordable Care Act. I think Roberts’ vote was the true mark of a great Chief Justice. He saw that his court was deeply in danger of becoming totally politicized and a tool of the Republican Party. I think he truly believe Congress has the power to tax and since Obama had made that as a back up argument to the Commerce Clause, he seized on it. Beyond that, I think it secures Obama’s place in history besides FDR (Social Security) and LBJ (Medicare).

Beyond healthcare I was struck by two articles in this morning’s paper. The first was on housing.

But roughly six years after the housing market began its longest and deepest slide since the Great Depression, a growing number of experts and people who actually put money into housing believe the end has come.The trend is clear in the data. The widely respected S.&P./Case-Shiller index reported earlier this week that sales prices for existing homes rose in April for the first time this year. Several other measures, including a seasonally adjusted version of the index, show that price increases began in February. The pace of housing construction has increased. And the National Association of Realtorssaid Wednesday that pending home sales climbed to the highest level since the end of a federal tax credit for first-time buyers in September 2010.

It may be anecdotal, but you certainly feel in LA that the market has turned around. This would be a critical part of a sustained recovery. Read more…

Adelson and Milken

As I wrote a couple of months ago, I suspect that the shadow figure of Mike Milken, the convicted felon banker of the late 80′s is working hard with his minions to get his former client Mitt Romney elected. Yesterday, the Boston Globe surfaced the story in the MSM.

Romney, meanwhile, once referred to the deal as emanating from “the glorious days of Drexel Burnham,” saying, “it was fun while it lasted,” in a little-noticed interview with American Banker magazine.

The “glorious” part, for Romney at least, was that he used junk-bond financing to turn a $10 million investment into a $175 million profit for himself, his partners, and his investors. It marked a turning point for Romney, according to Marc Wolpow, a former Drexel employee who was involved in the deal and later was hired by Romney to work at Bain Capital.

“Mitt, I think, spent his life balanced between fear and greed,” Wolpow said. “He knew that he had to make a lot of money to launch his political career. It’s very hard to make a lot of money without taking some kind of reputational risk along the way. It’s just hard to do. It doesn’t mean you have to do anything illegal or immoral, but you often have to take reputational risk to make money.”

But there is a far darker tale to be told of the influence of the former Junk Bond King on our current Presidential race. If I was to tell you that the current Republican Presidential nominee and the four largest contributors to Republican Super Pacs are all intimately tied to one convicted felon banker, would you not think it some sort of Oliver Stone conspiracy movie?

But it is true. Mike Milken is responsible for the billion dollar fortunes of Sheldon Adelson, Harold Simmons and Ken Griffin, the top three Super Pac donors. In addition both Rupert Murdoch and David Koch were clients of Milken and Koch serves as Chairmen of the Board of Milken’s Prostate Cancer charity.

I have no idea what Milken’s mission is other than his belief that banking and environmental regulations are “harmful to capital formation” and his steadfast support of Likud party politics in Israel. I know he has tried with both Clinton and Bush to get a pardon without success.

Is the fact that Milken was responsible for the fortunes of both the candidate and his main corporate sponsors mere coincidence or something more sinister?