Wednesday, October 8, 2008

Are We Ready to Elect the Perfect Moron?

I registered voters today with the League of Women Voters, which has been one of the joys of my civic life for decades. We attend classes that explain all the relevant rules governing voting and do our best to get as many people registered as possible before election day. I cannot begin to tell you how pleasurable it is to meet so many people who can't wait to tell me, "Don't worry! I'm already registered," or "Thank you so much for coming out to our work site! We've got quite a few people waiting to either register for the first time, check on their registration, or update their addresses." What a great day! (And you are invited to join and add your voice to the League's efforts this year! We have many men who are pleased to be members too.) Immediately upon arrival at home I was met with this eye opener (emphasis marks and some editing are mine - Ed.):

So, it comes to this: Are we a nation of complete and utter imbeciles? It's been the better part of a century since H.L. Mencken predicted this danger with these words:
"The Presidency tends, year by year, to go to such men. As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal. On some great and glorious day the plain folks of the land will reach their hearts' desire at last, and the White House will be adorned by a downright moron."
I'd be the last to question the moronicity of George W. Bush, but Sarah Palin is substantially dumber, bizarrely crazier, and dangerously and arrogantly less aware of her own shortcomings. At the moment, polls that are conducted in ways that tend to favor McCain and Palin (including polling disproportionate numbers of Republicans, not polling cell phone users, not polling newly registered voters, etc.) are forecasting a decisive victory for Obama and Biden. That gap is likely to expand of its own dumb momentum, as people prefer to vote for the winners. But there are two things that could change it. The first possibility is that something could happen or be made to happen to SCARE everybody. It could be terrorism or war or economic collapse or martial law or assassinations. Americans are not actually morons when they're not scared. But when they are scared, they make lemmings look like heroes. So, in this moment of clarity prior to the possible BIG SCARY THING that could happen during the next few weeks, I would like to urge all Americans to vote early, vote absentee, and/or swear on whatever we hold dear not to alter our votes because we've been caused to pee in our pants. The second possibility is that we will all try to elect the candidates who are less like Bush and Cheney, but that our votes will be blocked, suppressed, erased, stolen, miscounted, and lost. The elimination of thousands of names from voting rolls is in process all over the country. The propagation of false rumors regarding voter eligibility, voter rights, and the date of the election (it's November 4th, Tuesday!) is underway. Completely unverifiable electronic voting machines are in place and ready to miscount your votes. This is a much bigger issue than a single election, and any irregularities must be challenged even if we think the official outcome turns out to be accurate. To get involved in this now go to The BradBlog and Velvet Revolution To join in a massive protest to reclaim our democratic republic immediately upon and in the event of a fraudulent election, sign the pledge right now at: No More Stolen Elections! Don't be an idiot!
Nouriel Roubini was interviewed today on Tech Ticker: Risk of a Systemic Financial Crisis and a Severe Recession is Rising, and it's worth your time to click on through and listen for a while. He makes a persuasive case that we should:
Replace Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke. "We need a clean slate to restore confidence," he says, suggesting market participants have lost faith in current regulators. Start a $300 billion government works program focused on repairing and expanding our infrastructure. Yes, a new New Deal. Create a blanket guarantee for all bank deposits. Even with the FDIC raising its insurance limit to $250,000, there's still $2 trillion of uninsured assets in American banks and that money is moving overseas to places like Ireland, which have granted blanket guarantees. Revise the $700 billion bailout plan (or TARP) so that it just doesn't buy toxic mortgage securities but directly helps recapitalize the banks.
He also wrote an economic analysis (for Dummies) of everything that has happened in the worldwide markets up through today for our edification (and the needed "heads-up!"):
Last February – well before the collapse of Bear Stearns - I wrote a paper “The Risk of a Systemic Financial Meltdown: The 12 Steps to Financial Disaster” where I outlined how the U.S financial crisis would become more severe and virulent and eventually lead to a systemic financial meltdown and a severe recession. It is now worthwhile revisiting these 12 steps of the financial meltdown as the events of the last few weeks and months have confirmed – literally step by step - the 12 steps that I then argued would lead us to the current economic and financial near-meltdown. I thus provide click here a summary version of this paper where each of the 12 steps of this financial meltdown is reported in summary as written in the original paper.
And as an asterisk to the troubles that await us before the election (that are threatening the survival of our democratic republic amid a global slowdown/depression) we have the following forecast (emphasis marks and some editing are mine):
It is as if the approval of the $700bn Troubled Asset Relief Program (TARP) was a complete non-event for the markets. Money and credit markets around the world effectively seized up in the aftermath of Lehman’s default, which in hindsight proved to be a truly systemic event. In order to stop contagion from spreading to the non-financial corporate sector, on October 7, the Federal Reserve announced the establishment of a new special purpose vehicle (SPV) whose aim is to buy investment grade commercial paper directly from eligible companies (list tbd.) Yields on the shortest CP maturities declined and T-Bill yields increased but the stress in interbank and credit markets continued to build throughout the day. . . . . . More worrisome is Lehman’s settlement on Friday, October 10. Its defaulted bonds are currently trading at 10 cents on the dollar, meaning that payouts on an estimated $400bn gross amount insured could reach $360bn. The outlook for WaMu bondholders recovery value is similarly bleak (ISDA auction taking place on October 23.) Meanwhile, the Credit crisis is killing the carry trade. Currency and stock markets around the world are taking their last breaths for this cycle, with some already having fallen into cardiac arrest (trading halts) or needing life support (government liquidity injections). Currencies plunged versus the dollar and more so against the yen - the carry trade's two most popular funding currencies - as investors and banks deleverage. High yield alone no longer protects countries from currency depreciation - fundamentals such as indebtedness matter too (finally). Even the Indonesian rupiah and Brazilian real weakened despite recent policy rate increases to a whopping 9.50% and 13.75% respectively. EUR/USD dropped to $1.34 and the USD touched 100 yen on October 6, the day DJIA fell below 10000. Other developed markets suffered similar percentage losses, but emerging markets took the biggest hit: the MSCI Emerging Markets Index slumped 11%, the biggest intraday loss since 1987. According to S&P, the world's stock markets have lost $10.5 trillion this year as of end-September. VIX shot up to an all-time high level of 58 on October 6 and remains above 50, new territory for the volatility indicator. Worse, even this record high VIX may not mark the bottom for stocks. The IMF’s latest growth forecast, to be released today, suggests a significant economic downturn and risk of recession. While most of the G7 has already experienced a quarter of negative growth, big emerging economies are likely to feel the heat from this global credit crisis, tip the global economy into recession (3% global growth). The U.S. economy is set for a full-blown recession in the next few quarters since policy actions so far have failed to prop up demand and put a floor on home prices. Pending correction in the housing market, worsening job losses, falling personal incomes and tighter credit lending standards will cause private consumption (71% of GDP) to contract, thus exacerbating the ongoing decline in retail sales and manufacturing activity. Capex plans and exports have also begun taking a hit from the credit crunch, sluggish corporate earnings and global slowdown. Given risks to the dollar and fiscal deficit, the economy is now extremely vulnerable to a more severe and prolonged U-shaped downturn. The blanket deposit guarantees adopted in several European countries have indeed created an uneven playing field. Nonetheless, EU finance ministers on October 6 find no common agreement to tackle the common banking crisis. Daniel Gros and Stefano Micossi warn that behind the banking crisis, the likelihood of a serious economic downturn – exacerbated by fixed exchange rates as shown by Denmark’s untimely rate hike- looms ever larger. . . . . . On the top of the mutually reinforcing vicious circle of recession, asset price declines and financial stress the economy is now facing the burdens of a serious global credit crisis. The government hasn’t hesitated to rescue the financial system injecting liquidity into the main banks and purchasing mortgage securities through Special Liquidity Scheme (SLS). Despite the candidates promises ahead of next week’s election, a fiscal deficit is in sights. . . . Thanks to asset deflation and the slump in commodity prices (WTI oil fell to $87/barrel Monday) due to the global growth slowdown, most central bankers are shifting focus from inflation to deflation and/or recession. With the G7 in recession, the myth of decoupling seems by now forgotten and the global credit crisis seems well set to be accompanied by a global recession. The Brazilian real has lost 22% in the past month against the dollar, the worst performance among the 16 most-actively traded currencies. India’s recent strong growth will take a hit during 2008-09 as high interest rates and global liquidity crunch reduce consumer spending and capex while the selloff by foreign investors sell-off, decline in stock market and rupee, and ballooning fiscal and current account deficits make the economy increasingly vulnerable. China’s Q3 data, to be released next week will likely show the first single digit growth rate in five years and the fifth consecutive quarterly decline. A recession in the U.S. and EU, which absorb 40% of China’s exports could push its growth to 8% in 2009. While some of the decline in industrial production and manufacturing may reflect Olympic slowdowns, China’s imports of several commodities have slowed. It remains to be seen whether China’s nascent private consumption can pick up some of the slack, particularly as housing price growth is slowing. China’s government has already cut interest rates and further fiscal responses or asset market interventions are likely as it tries to maintain employment growth. The global slowdown and accompanying fall in the price of oil, gas and other commodities is exacerbating Russia’s already slowing growth trajectory. Some of its plentiful fx reserves have been spent to support the rouble (which weakened 4.8% against the dollar in September) and its benchmark equity index fell almost 2/3 this year to its lowest level since 2005. The government has pledged nearly $170 Bln to the banking system aimed at restoring confidence. Despite the macro effects of the crisis and asset price correction, Russia’s fiscal surplus, large FX and gold reserves may cushion its trajectory unless the oil price plummets further.
Steady on. Suzan

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