Monthly Archives: October 2008

The save Felix campaign

Tyler Cowen alerted the world to the threat to a precious resource of economic and financial intelligence — Felix Salmon’s blog for Portfolio. Felix, as any of his readers would expect, writes well about the pressures on magazine publishers.

I’ve known Felix for a number of years, and have followed his blogging since he started. Without speaking to him, I’m highly confident that Cowen, Brad DeLong and other Felix followers will not be disappointed. Even if someone doesn’t snap up the valuable Felix (he’d make a good addition to The Atlantic bloggers or he could single-handedly give credibility to The Huffington Post’s financial coverage, for example), I think blogging is so deeply into Felix’s blood that he will keep it up even if no one is paying him for it.

Strange thing outside

It’s getting wet outside. I think it’s called rain (although it ended almost as soon as it began).

What’s odd about that? Since July 1, we’ve had one-third of an inch of rain here. That compares to the normal average of just under two inches. The norm is low by the standards of everywhere else I’ve lived in the world. But one-third of an inch in a quarter of a year is astounding.

The annual average for Oakland is 22.9 inches. Chicago, where I grew up, gets 37.5 inches a year. The coldest and wettest time of my life was my two years in Oxford. You can check the annual rainfall there back to 1767. Astoundingly, 1979 — one of those cold, wet years — only had 751.9mm, which is a bit over 29 inches. The problem is that for months on end the rain mizzes down all day. Here in the Bay Area we go three-fourths of the year with no rain, but for three winter months we have some days when it really, truly chucks down. A very different experience.

House trained

A cataclysmic housing downturn might not be the best time to be starting a real estate site, but my wife has boldly plunged into the fray with Home Girl. She had previously been covering the Berkeley/Oakland housing market for Redfin, but the online realtor recently reoriented its blogging to focus on market statistics rather than building a stable of independent bloggers. Rather nicely, Redfin CEO Glenn Kelman points his reader to “the great Tracey Taylor” in his explanatory post.

So if you’re interested in East Bay housing, or just plain good writing, have a look at Home Girl.

Geeky addendum As Home Girl’s resident tech support, I had to figure out how to move the site from a test bed where Tracey was working on the beta version to its new, appropriate URL. The WordPress codex explains how to move a site, but I had dire expectations of having to delve into all sorts of files and stitch things together. Not so. I don’t know that I’ve ever done anything techie on a website that was as easy. All you need to do is type in the new URL twice in the WordPress admin back-end, then move all the files to the new server. Everything worked.

The GOP's accelerating decline

The other day I wrote about my expectation that the Republican party will — thankfully — take the completely wrong message from their defeat on November 4. The party won’t modernize; it will look wistfully back at a social conservative past that can never be recovered. Other observers seem to agree with my analysis. But I hadn’t expected such astonishing confirmation of a party intent on political obscurity as this “poll” of right-wing blogs (via Lawyers, Guns and Money). Here’s question four:

The Republican Party did poorly in the 2006 election and even if McCain wins is on track to do poorly again in this year’s Congressional races. If you had to choose between these two options, do you think that’s because they were…

A) Too conservative: 9% (7)
B) Not conservative enough: 91% (67)

Bonus encouragement

Michael Tomasky reports on his conversation with Frank Rich about the Republican party’s lack of diversity:

America is just getting more and more racially diverse. It’s about 68% white now (we’ll have an exact figure at the next census in 2010). But look at it this way. In eight years’ time, given the way we elect presidents via the electoral college, it won’t be possible – I mean won’t be possible – to get 270 electoral votes if you’re still this white a party. The big electoral-vote prizes are states that are increasingly racially diverse (and mark my words — under the right circumstances, even Texas may be a Democratic state in eight years). The older white states are small.

Annals of bad political databases

I’m a registered Democrat. I’ve given money to the Obama campaign. I live in Berkeley, for crying out loud.

So what arrived in my mail today? An envelope marked “emergency notice” for John McCain.

My friend, the last thing we Republicans can afford is to have our hands tied behind our backs due to the fact that their candidate broke his promise to the American people and refused to accept the presidential campaign spending limit — which means they will have no limit as to what they can raise and spend.

As The New York Times reports today, Obama is outspending McCain in television advertising four to one. I am pretty certain that they are using their databases far more intelligently. Roll on the landslide.

The most frightening eight words in the English language

Joe Klein is absolutely on song:

Pundits tend to be a lagging indicator. This is particularly true at the end of a political pendulum swing. We’ve been conditioned by thirty years of certain arguments working–and John McCain made most of them last night against Barack Obama: you’re going to raise our taxes, you’re going to spend more money, you want to negotiate with bad guys, you’re associated somehow–the associations have gotten more tenuous over time–with countercultural and unAmerican activities.

Again, these arguments have “worked” for a long time. The Democrats who got themselves elected President during most of my career were those most successful at playing defense: No, no, I’m not going to do any of those things! And so the first reaction of more than a few talking heads last night was that McCain had done better, maybe even won, because he had made those arguments more successfully than he had in the first two debates. I disagreed, even before the focus groups and snap polls rendered their verdict: I thought McCain was near-incomprehensible when talking about policy, locked in the coffin of conservative thinking and punditry. He spoke in Reagan-era shorthand. He thought that merely invoking the magic words “spread the wealth” and “class warfare” he could neutralize Obama.

But those words and phrases seem anachronistic, almost vestigial now. Indeed, they have become every bit as toxic as Democratic social activist proposals–government-regulated and subsidized health care, for example–used to be. We have had 30 years of class warfare, in which the wealthy strip-mined the middle class. The wealth has been “spread” upward. The era when Democrats could only elect Presidents from the south, who essentially promised to take the harsh edge off of conservatism, is over. Barack Obama is the most unapologetic advocate of government activism since Lyndon Johnson–which is not to say that his brand of activism will be the same as Johnson’s (we’ve learned a lot about the perils of bureacracy and the value of market incentives since then)–and he seems to be giving the public exactly what it wants this year. Who knows? Maybe even the word “liberal” can now be uttered in mixed company again.

Journalism is, naturally, about the past. We are much better at reporting things that have happened than in predicting the future. We never seem so foolish or obnoxious, especially on TV, as when we accede to the constant demand for crystal-balling. But the obvious danger inherent in journalism is that we tend to get trapped in the assumptions of the past. Too often this year, my colleagues–especially those who are older than me, but also my fellow baby boomers–have seemed a bit moldy in our questioning of politicians: What are you going to do about budget deficits? What are you going to do about entitlement programs?

These are valid questions, but less relevant in a financial crisis that will probably lead to a severe recession–and especially after 30 years of government neglect of its basic responsibilities. We need to spend money now to create jobs, to keep up with the rest of the world on alternative energy and high-tech infrastructure…Oh, and by the way, if government activism is now back on the table, we can begin to talk about the real answers to our entitlement problems: Medicare and medicaid can only be solved when they’re included in a comprehensive, regulated and managed universal health insurance system.

The point is, this is a very good year to be Senator Government. Ronald Reagan used to say that the most frightening nine words in the English language were “I’m from the government and I’m here to help.” That is no longer true. This year, the most frightening eight words are “I’m John McCain and I approved this message.”

Just like 1997

We can begin writing the ecstatic posts about what it will be like to have an Obama presidency, but it will be equally fascinating — and certainly very satisfying — to see the Republican party torn apart by its losses in November.

I think the GOP will go through something like the journey through the wilderness experienced by Britain’s Conservative party following Tony Blair’s election in 1997. Blair won after 18 years of Conservative rule (Mrs Thatcher followed by John Major). Labour supporters had been confident that Neil Kinnock would win in 1992, but they were cruelly disappointed (echoes of Kerry’s loss in 2004). Blair won an overwhelming majority in 1997, with the most Labour seats in party history. The Conservatives ended up with the fewest seats since 1906.

Now you’d think that after such a crushing defeat the Conservatives would undergo a root and branch reform of the party. But joy it was to be a Labour supporter in those years. The Conservatives decided that the party’s problem was that it wasn’t Thatcherite enough. They picked the 36-year old William Hague as Major’s successor, but however new an image Hague tried to convey, no one bothered to rethink the policies the electorate had rejected. When Labour had a second landslide win in 2001, the Conservatives continued to delude themselves, picking the nonentity Iain Duncan Smith as party leader. He didn’t last long. Duncan Smith was replaced by the genuinely scary Michael Howard. Labour won a third election in 2005, although with a reduced majority.

Only after a third consecutive election defeat did the Conservatives figure out that the problem wasn’t that they were insufficiently conservative, or that the party’s message wasn’t getting through. The party needed to rethink its core philosophy as thoroughly as Blair and Gordon Brown had rethought Labour in the first half of the ’90s. It’s conceivable that under David Cameron the Conservatives will return to power in 2010 (although I hope the plaudits for Gordon Brown’s leadership in the current financial crisis brings him and Labour back up in the polls).

So what might this mean for the Republican party after November 4? If the leaders of the party had any sense, they would find a way back to the center of American politics. I’m happily confident, however, that the “lesson” that will be taken from the failure in 2008 will be that John McCain was never a true believer on the right, that he failed to be aggressive enough against Obama, that more red meat was needed for success. As high as her unfavorables may be in the electorate, as much as her feebleness as a national candidate has been exposed, Sarah Palin has captured the hearts of the base. She’ll figure she’s in good shape for 2012. It’s conceivable that Mitt Romney will try a comeback for the next election. Certainly, economic issues will remain highly salient. But just like this time, Romney will run to the right to please the party.

An Obama administration will unquestionably face a very difficult economic environment. Perhaps the cycle will turn sufficiently in four years that he will be well poised for re-election. I can’t pretend to any crystal ball. But the demographics of the nation are moving strongly in favor of Obama and the Democrats. The last four years have exposed to most people the bankruptcy of the Republican right wing philosophy. We can count on the Republicans themselves not to understand the new reality until they lose at least two elections.

On November 5th

British elections are shorter, less money-driven and generally less dramatic than the Wagnerian opera of a US presidential election. But there is one aspect to a British general election that provides an electric theatrical moment. On the Friday morning after an election (British elections are held on Thursdays), the new prime minister and his/her family walk into their new home, 10 Downing Street.

The efficient moving vans have already hauled away the previous incumbent’s possessions and the transfer of power is immediate.

There are many reasons, not least the Constitution and the difference between a parliamentary and presidential system, why the US doesn’t have such a quick switch of administrations. But on November 5, 2008, the US is going to be facing an odd and potentially dangerous time. Economic challenges are going to be piling up on the docket, but there will be an uneasy interregnum with only a semblance of leadership. Robert Kuttner has an interesting reflection on the problem.

Assuming Obama wins, there will be a Democratic successor to Paulson and that Treasury will doubtless use the powers granted Paulson far more aggressively. But that will be after January 20. And at the rate that the financial system is collapsing, even three months is an eternity.

The two other key players in this morbid interregnum are Fed Chairman Ben Bernanke, whose tenure will continue into the Obama administration, and House Speaker Nancy Pelosi. Bernanke continues to expand the emergency powers of the Fed, now venturing into uncharted waters by having the central bank go into markets and buy unsecured short term commercial loans, a power not even granted Paulson by the recent legislation. It would be far better if Bernanke worked in concert with an overall strategy devised by the incoming administration.

Pelosi is on board for an emergency second stimulus package, to be enacted right after the election, this time in the range of $250 billion. At the rate the economy is cratering, she will get little of the usual resistance from Democratic blue-dogs and Republican foes of big government. Even “earmark” will become a good word again, since the whole country will be earmarked for help. But if the banking system goes down the drain, and housing foreclosures intensify, a fiscal stimulus will not be sufficient.

Obama, Bush, Bernanke, and Paulson would do well to avoid the mistakes of the Hoover-Roosevelt interregnum, a stand-off that made it even more arduous to climb out of the Great Depression once Roosevelt finally took office. As difficult as it may be, they need to negotiate a much bolder emergency program that Obama can carry out. And they should move right after Election Day, and begin the planning right now.

Bernanke, of course, will outlive the Bush administration so his role will undoubtedly be constructive. I suspect Paulson will be generally non-partisan in his desire to do the best for the country. But how much cooperation will there be from Bush? On past performance, my hopes aren’t high.