February 29th, 2008
The Murdoch (formerly Dow Jones) Industrials were down over 300 today as two weeks of horrible financial news finally crushed a somewhat stubborn stock market.
This is funny. And accurate — re “Collateralized Mortgage Obligations” based purely on pools of subprime mortgages.
(Note, however, that “Collateralized Debt Obligations” are based on diversified pools of bonds, loans and miscellaneous debt instruments. The many CDOs I worked on this decade were structured to hold no more than 4% or so of mortgage bonds, and often, especially lately, to prohibit subprime mortgage bonds. Thus, the problems with CDOs are not as simple or as corrupt as the problems sketched so well in the link above.)
That is: the credit crunch crippling the economy and trashing markets worldwide is much broader and deeper a problem than that of non-performing and/or illiquid mortgage bonds.
The past two weeks have been the worst for the credit markets since August, as new sectors of the system tightened up. More and more it seems to me there is no market cure. And the regulators at the US federal level seem handcuffed by the laissez faire doctrines on which they were raised.
Captain and crew of the S.S. Free Market going down with the ship.
Fed Chairman Ben Bernanke “testified” before the House and Senate on Weds and Thurs. Deer in the headlights. Not his fault. The rock and hard place are recession and inflation (commodities going crazy, oil hitting $103 today, all the food stuffs near record highs).
The Fed has only one basic tool and can’t treat both contraction and inflation at the same time. Has to choose. Clearly now — after dicking around August thru December — has chosen to try to stimulate “growth.” Inflation left to fester likely will, unless the commodities turn and drop, as Bernanke said he expected they soon would (under global contraction pressure).
(But there may be problems with Bernanke’s hopes that inflation will subside:
– The commodity boom is due in good part to the explosion of activity in Asia and Latin America. Thus less likely to subside simply because of a slowing US economy.
– The continuing collapse of the dollar (all time low against the Euro this week) — caused in good part by the Fed’s easing on interest rates (which makes things like US treasury bonds less attractive to foreign investors) — makes anything produced under a foreign currency more expensive here. Price inflation then an effect of the Fed’s attempts to stimulate “growth.”
– The sudden turn in oil, in particular — which was in the $80s only a few weeks ago and by most pundits due to continue heading south — may be geopolitical: Israel has been on record since last summer that April 2008 is the line in the sand on Iran. Some people still expect air attacks then. A reason to stockpile oil (and/or secure pricing thru future contracts) now. Despite economic slowdown.
If the commodities do not soon cool off, we will indeed have stagflation: simultaneous contraction and inflation, which usually don’t concur since one usually cures the other.
And the Fed will soon have shot all its bullets.
Thus Bernanke looking caught in the headlights yesterday and Weds. That look was just one reason the markets tanked today.)
For months, since July, the essence of the credit crunch had been confidence. Complicated by illiquidity.
Now insolvency raises its head, as the credit crisis broadens and writedowns (balance sheet losses based on depressed market values of the wounded s-f bonds) mount.
Today a blue ribbon panel estimated that the total toll of the subprime mortgage bond mess alone may be $400 billion …
Two weeks ago UBS (big swiss bank) estimated $203 billion in losses would accrue should the bond insurers fail to be recapitalized …
(Measure the preceding two items against the approximate total of writedowns/losses so far taken in the structured finance universe: about $160 billion.)
And yesterday the second biggest US insurer AIG wrote down a staggering $11 billion for its last quarter, helping trigger today’s pell mell crash.
Also: For two weeks the municipal bond markets have been crushed and frozen — a terrible blow to economic life because the interest rates municipalities pay here get reset very short-term (weekly, monthly), at auctions where the bonds are turned over, and these auctions have been boycotted this month by the increasingly credit-challenged banks.
Thus the gov’tal entities that issue “municipal bonds” are suddenly experiencing the very same kind of “ticker shock” that homeowners who took out adjustable rate mortgages have been hit with the past two years as their mortgage payments adjusted up to match higher interest rates. Eg, the Port Authority of NY and NJ, widely reported, went from low single digits to near 20% on some large debt last week.
Terrible — but it draws attention. And seems to have helped spur the New York regulators to work out bond insurer crisis.
The municipal bond crisis was precipiated by the bond insurer problem, you see.
And (good news?) it seems to me the bond insurer problem has been solved — even though the news yesterday and today was screaming that the recapitalization plan for hte second largest insurer, Ambac (ABK), was falling thru.
It seems clear to me that it’s not falling thru — that the spanked rating agencies are simply going thru all the proper motions, and that now (midweek) that they’ve told the banks etc what they have to do to tweak the recap plan, the banks etc will spend the weekend doing that, and come out on Monday or so with a revised plan that satisfies the rating agency “comments”. And Ambac will be recapitalized.
Meanwhile the largest insurer, MBIA (MBI) has been funded and seems okay for now. And Wilbur Ross and Warren Buffet are each throwing billions at the muni biz, thru other healthier insurers, looking to scoop up a low-risk profitable business. (IN the end Ambac and MBI may fade, but the municipal bond world will be fine. it’s clear the regulators will not allow it to be otherwise.)
The bond insurers are in trouble because they began to insure the AAA-rated tranches of CDOs and similar in the 90s and thus got hit with a ton of claims this past year as the subprime etc mess sprang forth.
And the biggest banks worldwide are recapitalizing them because otherwise that $203 billion in s-f bonds that UBS estimated two weeks ago will have to be written down if the bond insurers get downgraded on the very same banks’ balance sheets. Thus the choice for the banks was: fork up approx $5 billion in cash credits now (to recapitalize the insurers) or write down $203 billion (sooner than) later.
So: I think both the municipal bond problem and the threat of that particular $203 billion in writedowns — I think both of these should fade next week. Once that $203 billion is clearly okay, the banks might begin showing up at the muni bond rate auctions again … THEN AGAIN: the markets today traded as if I’m wrong, as if the Ambac deal was dead. It’s not, I’m pretty sure.
(In the old days the rating agencies helped to craft a CDO deal, for example. Otherwise you’d have the bank put it together, then send it to the agency, and the agency would say, No no no, there’s a million things wrong here. So it was just efficiency — not collusion — that led the banks to involve the agency in the structureing of the deal early on. But now since the subprime blow up the agencies have been spanked with conflict-of-interest charges and the like.
So here, with this Ambac recap plan, we had something of a formal folly: the banks LAST weekend structured the plan, with NO rating agency input. Then on Monday formally sent the plan to the rating agencies. Who in midweek made their comments as to its insufficiencies. And today we were told that the banks are back to the drawing board — just one more reason the markets crashed today.
But in reality it’s just the normal process of agency input being incorporated — or so I believe. And I’m sure both the regulators and the banks (worried about that $203 billion) are going to do whatever’s needed to settle Ambac down.
When everyone is insolvent, no one is insolvent. Ie, the game is over. The market ceases. The music stops.
The answer may be radically anti laissez faire: price controls on the many classes of wounded structured finance bonds that are the heart of the problem.
It would be a radical admission that the system has failed to the point where there is no market cure for trillions of dollars worth of wounded (illiquid and perhaps non-performing) assets that are the blood of the global financial system.
Price controls mean: Regulators assign paper minimum values to the wounded classes of bonds, so the parade of nearly nonsensical yet crushing paper loss “writedowns” ends, and so the wounded bonds are allowed to live out their lives in peace, probably producing more interest and principal than the writedowns (influenced by harshly reduced “market values”) imply.
OR:Ã‚Â The Price Control move could be achieved simply by repealing a recently instituted accounting rule that required institutions to mark these largely illiquid “bonds” to a largely non-existent market.
The nonsense news cycles (eg yesterday’s AIG announcement) would stop. The banks would begin lending (swapping credits) again. The fiscal and monetary cures would begin to work on the housing and other economic problems.
I suggested this in August because it was clear then how wide and deep the crisis would be. Back then I suggested 90 days. Now: two years (which would allow most of these bonds to wind up and be paid off, as they will).
(Re the last parenthetical above: Even though a CDO, for example, typically may be written to mature in 20 or 30 years, in reality the parties to the deal (the bank and the portfolio manager and the buyer of the bonds) typically go in thinking of winding the deal up within two to four years. It’s rare to want to continue longer because the economic environment is likely to change enough within a few years to render the reason for entering the deal moot. CDOs are problem solvers, and after a few years or so the problems will either be gone or need an updated solution …)
(It was clear to me in August how deep and painful the “subprime mess” would be because I happened to have worked at the heart of structured finance — the wall street firm credited with inventing modern securitization in the 80s — drafting CDOs and other s-f bonds, and a fair amount of bond insurance agreements and policies, most of this decade.)
Nota bene: The Fed in a small quiet way made the Price Control move last fall (September if memory serves) when it enlarged the list of types of assets it would accept as collateral in the “repurchase agreements” by which it controls interbank lending rates.
That is: the Fed said it would start accepting assets theretofore banned — certain structured finance bonds and the like — which at the time were illiquid (no secondary market trading) and thus had “market values” of more or less zero.
Yet the Fed began “buying” them near face value from the wounded banks etc holding them, giving the banks cash credits in return. Then, days or weeks later, the Fed sold the same wounded bonds back to the same banks — thus completing the round trip that is a “repurchase agreement”.
Net effect: a way to give strapped banks cash credits in exchange for worthless (by mkt value) bonds. A way to help the banks limp thru a liquidity crisis caused by the crisis of confidence in s-f bonds triggered by the blow up of the mortgage bonds.
How different is the pretense behind this sudden willingness of the Fed to swap worthless (by market value) s-f bonds in its repo agreements from the pretense of assigning minimum markable values to wounded bond classes in a broad price control program?
What else to do when the Market has no clothes?
“All right — Everybody! Out of the pool!“
February 28th, 2008
So it seems. A new all-time high today, well over $102 per barrel.
Many pundits seem mystified, given the signs of economic contraction worldwide.
The sinking of the dollar — an all time low against this week against the Euro, which now brings just over $1.50 — has something to do with it, certainly. If one charts the price of oil in Euros, or oil against gold, one sees that the weak dollar is a big part of the oil price spike.
What with the primaries and increasingly dire economic stats stateside, people seem to be forgetting the mideast. I wonder if people who take the Israeli-American threats against Iran seriously (Aprils has long been marked on certain calendars)Ã‚Â are not stocking up on oil futures contracts.
February 27th, 2008
Happy to find this morning that William F. Buckley, CIA agent and then publicist during the time of its most reprehensible and unpatriotic behavior, colleague and friend of E. Howard Hunt, apologist for the takeover of the republic and dedicated servant of wealth, is dead.
February 22nd, 2008
This Times story says more than 10% of US homeowners now owe more on mortgages than their homes can be sold for.
The story then notes various proposals being floated in D.C. to help. These must be mind-blowing for people raised on the Free Market PR that the globalizing corps have fed us since the 80s. It seems to be so for the beltway people themselves, all anxious to tell the reporter “This isn’t a bailout!”
Eg the banks calling for the fed gov’t to take hundreds of billions of loans and/or homes off their hands and then refinance them so the borrowers can stay in their homes. In essence resurrecting the Home Owner’s Loan Corporation that FDR’s new dealers created in the early 30s.
More broadly the credit market news this week shows things continue to get worse. No market cure in sight. Bring on the bailouts.
February 21st, 2008
I was surprised to hear Bush mention in passing while touring Africa that the U.S. recognized Kosovo’s claim to independence.
In normal times one would assume such an utterance was the result of much discussion and represented the consensus of the US foreign policy establishment. Perhaps even that the Kosovar claim was made only after getting a green light from Washington.
But given what Bush-Cheney have done to international relations and to regard for Washington, and given Bush’s record of casual incompetence, perhaps normal assumptions are risky.
Then again, here today, as the US embassy in Belgrade burns on TV, General Wesley Clarke (who led NATO in Kosovo in the 90s and ran for president as a Dem four years ago) is on the tube endorsing the Kosovar claim with some passion.
So perhaps Bush’s comment does reflect the considered US view.
We still have uniformed bodies on the ground there — Americans being the leaders of the 16,000 NATO force. I remember Gates (secy of defense) worrying about it a few months ago. Worrying about the possibility of escalating obligations there.
If Serb nationalist forces start shooting the peacekeepers, who of the western powers will send in the cavalry? The US seems no longer to have the horses — or is Kosovo our best Iraq exit strategy?
It will be interesting to see how Putin responds [see first comment posted below], and if China (fellow SCO member) sticks with Russia as the UN debate develops. Curious to see how the Bushwhacked NATO alliance will react to the likely unrest.
When, last month, Nicholas Burns abruptly announced he would resign from his perch atop the State Department, I wondered why. He was intensely involved in Yugoslavia in the 90s. Perhaps things returning to a boil in Kosovo had something to do with his move. ?? Perhaps — despite his sympathies — he thought simple recognition ill advised, and didn’t want to be detailed by Rice-Bush to attend to the mess that will now ensue?
I spent a fair amount of time in Bosnia and Croatia 1993-96, during the wars triggered by their secessions from Yugoslavia. Hard to think much has changed since in the mind of the Serb nationalists, for whom Kosovo is more sacred ground than anything west in Bosnia and Croatia.
The US/European backing of Kosovo launched protests in Banja Luka, a sick little city in northwestern Bosnia that practiced “normalized ethnic cleansing” throughout the Bosnian war then became the capital of the silly “Serb Republic” within Bosnia that fell out of the ill advised (but perhaps necessary) Dayton accord. Reuters reports:
In Banja Luka, capital of the Bosnian Serb Republic, protesters demanding Serb independence from Bosnia threw stones at U.S., French and German consulates. They chanted “Kill, Kill Shiptars”, a pejorative name for Albanians.
I confess that the Serb nationalist mind sickens me. As, for that matter, does the Likud mind. The two have much in common: militarism, racism, antique claims on real estate and, fundamentally, religious chauvanism.
This philosophical kinship found practical application during the early 90s, when it was an open secret that Israel was covertly arming the Serb nationalists in their war upon Bosnians (roughly 43% of whom were muslim) and Croatia (seat of the local nazi puppet regime during the early 40s). A wire story from 1/12/95 painted the picture:
“We don’t take sides in the conflict”, insists the [Israeli] Foreign Ministry spokesman, adding: “Because of anti-Semitic sentiments in (Croat president) Franjo Tudjman’s book and the Hizballah-Iran help to the Muslims, you may draw the conclusion where our sympathies lie.”
Today the US lacks not only horses but moral authority in this sphere, given, in particular, the blank check Bush-Cheney gave the Likud (contra Palestinians) as one of their first orders of business in 2001. I suspect Washington’s recognition of the new supposed state will prove largely empty, and that Kosovo will burn and be allowed to burn like Darfur.
Or perhaps we’ll see Russia and China take the lead, as the western powers recede?
February 20th, 2008
From the Associated Press this past October:
Former Soviet leader Mikhail Gorbachev toured New Orleans on Friday as an emissary of the global environmental movement, but his first view of the devastated Lower 9th Ward inspired a momentary return to his socialist past.
“If things haven’t changed by our next visit, we may have to announce a revolution,” he said thorugh a translator, as he walked the lifeless streets with wellwishers and staff members of Green Cross International, a non-governmental organization which he chairs.
Gorbachev promised to return in five years to measure the city’s recovery from Hurricane Katrina, which has so far been tanhgled by bureaucratic delays.
February 18th, 2008
Prime Minister Brown — former chancellor of the exchequer — gets behind the idea of nationalizing Northern Rock, the bank that fell to the crisis triggered by failing U.S. mortgage bonds.
US Federal Reserve Bank chairman Ben Bernanke was rather doomstruck when speaking before the House this past week. While the largest mortgage company, Countrywide, reported that mortgagte defaults and foreclosures continued to accelerate in January.
If trends continue, we may soon see runs on American banks. (As we saw with Northern Rock last year.)
The American mind has been so brainwashed with Reaganism these past decades that nationalizing a bad bank seems scarcely conceivable on the Tube. Dumb and Dumber.
February 16th, 2008
1. Bond Insurer Problem
UBS (big swiss bank) issued yesterday a profile of the likely damage should the top bond insurers (MBI, ABK and FGIC) get either downgraded from AAA status or get split into pieces (to segregate and thus protect their municipal bond clients from the diseased structured finance bonds they also insure).
The likely toll: another $203 billion in losses at banks, insurance companies, pension funds, etc worldwide.
The same day FGIC — downgraded now by all three major rating agencies — announced that it would indeed pursue a split.
So far the losses on structured finance bonds explicitly written down by banks etc (mostly CDOs and mortgage bonds, it seems) have totalled about $150 billion.
2. The Wider Universe
The vulnerabilities, however, across the universe of these “derivative” bonds are measured by the trillion.
The bulk of these trillions are “swap agreements” in which parties agree with each other to do certain things in the future upon the occurrence of specified trigger events.
(Asset-backed securities like mortgage bonds and credit card bonds, more complex things like CDOs, and swap agreements — all these fall under the general heading “structured finance” and exploded into the trillions when personal computers gave so-called bankers (“spreadsheeters”) new tools to play and wreak havoc with.)
The most common type of swap agreement, I guess, are interest rate swaps, where one party agrees to compensate the other if interest rates change dramatically, in exchange for a small regular premium payment thru the course of the agreement.
(Typically a CDO, for one example, has two swap agreements re interest embedded in it — an interest rate agreement and an interest cap agreement — to help the parties to the CDO control their interest rate risks across the life of the deal.)
3. Credit Default Swaps in Particular
A riskier pool of swap agreements, and huge — $45 trillion currently in outstanding contracts according to today’s shocked, shocked NY Times story — are credit default swaps, where “Credit Events” (eg, failure to timely pay interest on bonds, rating agency downgrades, etc) of a particular corporate entity are the triggers of the deal.
In these credit default swaps, one party (again) pays to the other a small premium each quarter thru the life of the deal, to buy “protection” against future Credit Events. And then receives compensation from the “protection seller” should a CE occur. The Times story linked above provides a good overview of the worries here.
Note however that the market for CDS has not frozen up across the last year — in contrast to that for CDOs and mortgage bonds and other asset-backed securities. Perhaps there’s a good reason. One hopes, at least …
For one: After the CDS embarassment re auto parts maker Delphi’s bonds (see the Times article), people turned away from “physical delivery” (of troubled bonds of the subject corporate entity) to cash payments as the preferred way to settle a CDS. So that’s one problem that one hopes shall not arise.
In the end the economic effect of a CDS is indeed that of an insurance policy. (One party pays a regular small premium. The other assumes risk for future bad events.) With the major institutions so heavily invested in these swaps, buying and selling protection across the universe of corporate entities, one hopes that in the event of a big 1930s-type breakdown — when the universe may suddenly be hit with tsunamis of Credit Events — that when the dust/cash settles the net debits for major institutions are manageable.
But who knows. If there are banks, insurance companies, etc out there that have used CDS to place large speculative one-way bets, they could sink overnight.
I remember, while drafting CDOs earlier this decade, chatting with a lawyer about what would happen if one of the major swap counterparties — eg, Lehman Brothers Special Financing, Inc. (I don’t mean to imply there’s anything particularly wrong here) — should default or (much less) weaken to the point of being downgraded by the rating agencies — either of which could trigger sudden wind-ups and/or defaults on the zillion swap agreements to which it is a party.
This would be another global tsunami. And if it happened at several large counterparties at the same time …
The answer, perhaps: When everyone is insolvent, no one is insolvent.
(Note that the obligations of LBSF in its zillion swaps are guaranteed by the parent company atop the Lehman empire: Lehman Brothers Holdings Inc. So the meltdown of LBSF as a swap counterparty would only occur it seems if LBHI failed to provide backstop.)
(Again — I’m not implying anything especially wrong with Lehman. I just happen to know something about their swap operations.)
February 15th, 2008
Here’s a quick look at the Nat’l Assoc of Realtors’ report for the last quarter of 2007.
February 12th, 2008
I watched Sen. Chris Dodd argue long and hard last night on CPAN against granting the communications corporations immunity re their central part in the wholesale electronic spying that came to light in 2006.
He spoke against the grant for 20 hours. In vain. The Senate version of the bill passed today, with 68 of 100 voting Yea.
Clinton and Obama said Nay. Biden and Reid too. And of course Feingold.
McCain voted Yea. I wonder what he might have done if not running for top GOPher.
Jay Rockefeller, a good fellow, head of the Senate intelligence committe. voted yes. Disappointing.
Dodd read into the record testimony of an AT&T engineer about the construction of an NSA room filled with equipment that scans and analyzes in real time every single phone call, email, fax …
Thus, the administration’s claim, when the NSA activity began to come to light, that only calls/emails involving terror suspects were accessed, was a big lie.
Liability for participating in this widespread warrantless criminal behavior apparently is what led the telecoms, once the secret was out, to demand immunity of Bush-Cheney. Who then demanded it of Congress, upon pain of a veto of the omnibus FISA bill.
The House version so far has refused immunity. But NY Times says people now seem to expect the House to largely fold.
Immunity doesn’t make the past crime legal. It prevents civil actions against the telecoms for routine collusion with the NSA in what was then routine criminal behavior. (The recent post-facto “Protect America Act” at least superficially — sans constitutional adjudication — by most lights now deems the behavior legal.) NY Times says 40 lawsuits against the telecoms are currently in process.
I once spent nine months studying the notion of constitutional privacy — a notion that relies both on substantive and procedural law. Olmstead v United States, 1928 was a landmark, the first time the Court faced electronic wiretapping. The spies carried the day — but the dissenting opinion of my hero Louis Brandeis (about half way down the linked page), eventually prevailed.
If beguiled, also read Brandeis’s dissent in Gilbert v Minnesota, 1920.
Then think about how far we’ve fallen, and the prospects of ever climbing out of this pit.
February 12th, 2008
Warren Buffet spent half an hour on the phone with CNBC on TV this morning, talking about an offer he made last week to the top three “monoline” bond insurers (MBI, ABK, FGIC) to reinsure their municipal bond business — but not their far riskier and depresssed structured finance (CDOs and the like) business.
The insurer stocks are up on the comments at the moment, but for no good reason. Buffet’s refusal to capitalize them means they’re dead meat, and probably sooner than later.
And once they fall (or merely lose their AAA ratings), a body of structured finance bonds they insure, larger than the body of failed subprime mortgage bonds, will sweep banks and insurance companies worldwide up in another, deeper round of losses, approaching systemic insolvency.
This threat was clear early last fall.Ã‚Â I wrote about it here. Others wrote elsewhere. Instead of acting to crush the threat, the Fed and the Treasury tweaked the perimeter of the problem with eccentric experiments.Ã‚Â Too little and too late.
The price Buffet’s asking from the bond insurers for this reinsurance is all the income (cumulative incoming premiums on ongoing basis) on their munipal bond business plus another 50%.Ã‚Â Thus, the insurers would pass thru to Buffet all their income on their muni business and pay him another 50% for the privilege.
Buffet justified this 150% take by noting that his new bond insurance company, formed late last year, is already receiving 200% from individual muni bond issuers to reinsure their bonds. So his offer to do it wholesale — to reinsure the entire $800 billion of munis that these three monolines currently insure — for 150% is, from one angle, cheap.
Nevertheless, by stripping the insurers of their reliable, secure muni income, and doing nothing to fix their bleeding s-f business — which almost certainly will bankrupt them unless somebody gives them a ton of support, which Buffet has now publicly declined to do — the plan is no better, for the insurers, than a vulturous bankruptcy wind up.
It IS better for the muni bondholders currently insured by the distressed monos, in that they would know they’ve got the Buffet backstop regardless of what happens to the monos.
But there seems no reason for the bond insurers or their shareholders to celebrate here. They are indeed being picked by a (gentlemanly salt of the earth) vulture.
None of the insurers have accepted this lousy offer.Ã‚Â One suspects Buffet has now gone public with it in a spectacular way (the half hour call on tv) because he wants the world to know he’s waiting outside the door when the bond insurers get drawn into bankruptcy or similar regulatory regimes.Ã‚Â At that point regulators one way or another will cut the municipal bond business from the carcasse.
In any case, only huge capital infusions into the bond insurers will save the stressed s-fÃ‚Â bonds they’ve insured from downgrades.Ã‚Â But now that Buffet has so publicly said no, it’s unlikely the other candidates (eg Wilbur Ross) will step up.
Hard then to see how the fell tide of downgraded AAA-rated s-f bonds does not bring us to the bring of financial meltdown.
February 10th, 2008
An update on InfraGard, a domestic intel network consisting of executives and workers at infrastructure companies/facilities, managed by the FBI and (according to the AlterNet story) pre-licensed to shoot to kill under martial law.
February 9th, 2008
I’ve been playing with the EC possibilities at this handy site. (Start with the “2008 Swing States” view, then click or doubleclick to toggle between red and blue.)
If the Dems sweep the northeast except New Hampshire, take Ohio and the other rust belt states other than GOP constant Indiana, and take the left coast top to bottom, they can win — leaving the entire south to the GOP, including peoriac Missouri, and even Nevada, New Mexico and Colorado (the prime western swing states).
In other words, if the Donkeys get: Washington, Oregon, California and Hawaii. Minnesota, Iowa, Wisconsin, Michigan, Illinois, Ohio and Pennsylvania. Maryland, D.C., Delaware, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, Vermont and Maine. This yields 275 to 263. (270 wins.)
So I guess it’s a practical possibility for Obama to win. I do think the Donkeys will do very well in the northeast and midwest.
All this forgetting for a moment the voting machine corruption.
Iowa (7 votes) swinging to GOP in the scheme above would give the presidency to McCain by two votes. But since 1992 it went GOP only in 2004, faced with John Kerry. Thus seems a decent Dem bet this year.
And New Hampshire (4 votes) since 1992 went GOP only in 2000. So maybe we should throw that to the Donkeys this year regardless of candidate (although this IS where Hillary made her surprising comeback in January).
Re the western swingers: In 1992, with Clinton getting only 43% of the popular vote (Ross Perot took a big chunk) but a rather huge 370 EC votes, Colorado (9), New Mexico (5) and Nevada (5) went Democratic. In 1996, the GOP picked Colorado off the list, although Clinton increased his EC to 379. In 2000 Gore took only New Mexico. And in 2004 Kerry lost all three (although I seem to recall there was a lot hanky panky in New Mexico).
So, since 1992 these three have swung from All Dem to All GOP in perfect stepwise fashion.
But Bill Richardson will be pushing in New Mexico. And Colorado is suffering terribly at the moment from the real estate recession. So maybe we are safe to assume half of the western swingers — say Colorado’s 9 votes — go to the Dems.
This revised scheme — giving New Hampshire and Colorado to Dems — yields 288 to 250.
George Will suggested today that McCain’s best VP would be the Minnesota governor. Ten EC votes there. Would still yield 278 to 260.
February 9th, 2008
Noticed this in passing, re Mossad involvement in 9/11. Worth chewing.
February 7th, 2008
Well, contrary to my thought he would try to stick it out til Huckabee’s streak ends with Mississippi in early March, Knucklehead’s leaving.
A pundit suggested it’s not so much that Romney’s decided he can’t beat McCain, but that he can’t beat the Donkeys in November.
His speech re foreign policy is straight out of Rebuilding America’s Defenses (the PNAC manifesto that Bush’s advisors published in Sept 2000).
The venue is the CPAC conference. So he’s doing his best to present his (questionable) so-called conservative credentials.
Ah, there he goes — explicitly comparing himself to Reagan in 1976. So we’ll be hearing from him four years hence.
February 6th, 2008
Addressing her people in NY last night, Hillary opened by stating that she would not be “Swift-Boated” by the GOPhers. Seems to my ears that again she is obliquely saying that there’s no Vince Foster problem. ??
Looks like Obama can’t lose a caucus. I imagine they’re being swamped by enthusiastic young folk.
This tightness among the Dems is not great. It means things will get testier. I hope they can keep a lid on it.
Pat Buchanan (my vote for most interesting pundit so far) on MSNBC this morning tried to give an assessment of Obama’s chances in the fall election — ie in the electoral college — and was abruptly cut off by the MC, Joe Scarborough, who shouted (as is his wont) “We’ll talk about the general [election] when we get to the general!”
I wonder if it’s a Rule, from the General Electric (top ten defense contractor and owner of NBC) board room. No talking about Obama’s chances in the electoral college. Until it’s too late.
Huckabee may win Mississippi in March. After that … Hard to see he has a future. Where do his people go? Seems more likely to Romney. Which means the latter has to plod on until at least March 11 (the Miss. primary). I imagine he will, especially if the so-called conservative flacks keep hitting McCain, as seems likely.
February 5th, 2008
Well, both Huck and Mitt have now addressed their faithful, with the eastern states in, each promising to carry the struggle on.
Huckabee’s performance is stronger than expected in the south and esp in Missouri. He’s a charming fellow.Ã‚Â Too bad he’s got all those strange ideas in his head.
And now Georgia! Atlanta goes for Huck. Christ …
Romney seems to have suffered with Huck’s advance. His hopes now seem to reside entirely in California.
Hard to read McCain’s strength along the atlantic coast — is it a good or bad thing (for the GOP)Ã‚Â in the general election?Ã‚Â Ã‚Â Chris Large Mouth Matthews was saying it’s bad — because the GOP tends to lose those states. But maybe that means McCain is most competitive where the GOP needs it most.Ã‚Â ??
Pundits suggesting that Huckabee may be able to demand the VP spot from McCain. Dangerous, given McCain’s age and health, and the zealots in the evangelical camp, one of whom might take it upon himself to put Huck in the big chair.
February 4th, 2008
In Florida — which means watching television.
On the Sunday talk shows and then Letterman last night Hillary went out of her way to declare herself fully “vetted” thanks to 16 years of assault from GOP flacks. No skeletons in the closet to clatter to the floor in the fall. Whereas Obama remains largely unprobed.
I haven’t heard her emphasize this aspect of her experience before. It seems to me she must be consciously implying, among other things, that there’s no Vince Foster problem.
Whether one can believe is another question. I continue to think she’ll get plastered with Vince by the GOP if nominated. How well will she hold up? I think of the beating Kerry took on the relatively minor Swift Boat flack.
Obama’s surge is impressive. It’s clear that there won’t be a Donkey at least until Ohio and Pennsylvania have voted.
I’m curious now as to why Edwards seemed to have put himself in Obama’s corner during the fall. It seems to me Edwards has more in common with Hillary on his core issues, and that Obama is, despite certain appearances, a pro-business candidate. His vision is to somehow bring the poor into the corporate fold. Futuristic or otherworldly, flying in the face of more than three centuries of experience with how free-wheeling industrialism works. His embrace of Reagan seems sincere and betrays a lack of historical understanding. Is he too a child of 80s television?
I have yet to hear a single pundit mention the electoral college when assessing Obama’s prospects. Instead they point, eg, to a recent poll showing that Obama has a slight edge over Hillary when placed against McCain. (Which itself seems odd; I think McCain draws nearly all the old Nixon/Reagan democrats and splits the true Independents with Obama. Seems more of each group might go to Hillary.)
However that may be: Show me the electoral college map that gives Obama the win in November.
His victory would seem to require the overthrow of the pattern — basis of the Southern Strategy — that has obtained since Truman’s hair’s breadth victory in 1948.
That is: only four Dems have been elected president since. Three were from the deep south:Ã‚Â LBJ, Texas. Carter, Georgia. Clinton, Arkansas. And the only yankee (JFK) had the most prominent southern politician of the day (LBJ) as his running mate.
Is the south going to put a black man in the White House? When it refused Gore, who lost home state Tenn in 2000?
Possibly. But it would mean turning the world on its head.
Which suggests that the Obama movement is in part a measure of how bad things are. I suppose this is what Ted Kennedy is sensing — that the destruction wrought by Bush-Cheney has presented an opportunity for creation that rarely comes along. Yet Obama I sense, despite “change,” accepts, if not embraces, the world reshaped by Reaganism, which Kennedy has been battling for 20 years.
McCain’s recent rhetoric re taxes and war has to be discounted a bit (as he plays to the GOP house). It’s distasteful. But he remains the best GOPher out there. I was sure six months ago the Clubhouse would refuse to nominate him. But it seems the party leaders are coming around.
And he continues to remain silent in stump speeches about campaign finance reform, which would undermine the Clubhouse.
Romney is down but not out. Polls seem to say he can still win California, which would keep him in the game. Then when Huckabee drops out, Romney gains.
THUS my original fear post Iowa — that Romney is the next president — has not gone away. The two Dems have serious problems that the media so far have entirely ignored. And Romney is not yet dead thanks to Reaganland.
Meanwhile it’s clear we’re into recession. The employment numbers are horrible and today the main measure of service-sector economic performance came in at 41 (anything under 50 meaning recession). And 30% under estimates. Murdoch (formerly Dow Jones) Industrials thus down 300 plus.
The inauguration of the new president a year hence … FDR in 1932 all over again?