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By Tuesday evening, everyone will know that Democrats have blown an opportunity to win a special election for Nevada's massive 2nd District, basically the whole state outside the Las Vegas area. If you read the PPP data released early this morning, you already know it. Garden variety GOP corporate shill Mark Amodei leads Blue Dog Kate Marshall 50-37%, with Marshall's Democratic support dropping from 86% to 74% in the last three weeks.
The seat is empty because the Republican governor appointed the last elected congressman, Dean Heller, to the Senate seat vacated when longtime Republican Party leader John Ensign got caught up as the main protagonist in an appalling sex and bribery scandal. In 2008 the 2nd CD was the only Nevada district McCain won-- although just barely; it was a 49%-49% tie, with McCain edging Obama by a handful of votes. At the time, Heller won reelection with a very weak 52% showing.
Heller did a lot better last year: 63% of the vote, primarily because disappointed Democrats and left-leaning independents just did not turn out to vote.
From our trusted friend at Down With Tyranny we get some insight into Obama's diminishing poll numbers:
I doubt Obama ever needed much persuading, but his first - and now his second - chief of staff (first, Rahm Emanuel; now, William Daley) insisted that he govern as a center-right compassionate conservative.
Emanuel is famous for having predicted he could screw over the aspirations of the Democratic coalition because they had nowhere else to go. He was probably shocked when they showed where else they had to go last November: nowhere, all right-- they didn't vote. And it looks like their disdain for Obama and his center-right governing philosophy will cost Democrats the 9th District tomorrow as tens of thousands of progressives sit it out again.
Saturday the NY Times pointed out that Democrats are increasingly worried that the Emanuel/Daley strategy is failing and that their hope that the Republicans will nominate a presidential candidate so extreme and so unpalatable (someone like Bob Turner?) that Democrats will just hold their collective nose and reelect Obama. It isn't working out that way. Even worse than Obama losing, "Some in the party fear that Mr. Obama’s troubles could reverberate down the ballot into Congressional, state and local races," a big turnaround from when "Democrats had entertained hopes of reversing losses from last year’s midterm elections."
Instead of going for a populist, New Deal approach, conservatives in the Democratic Party are doubling down in their anti-working family, pro-Big Business, Republican-light stance. As I pointed out earlier, Nevada party bosses actually shoved a Blue Dog down the rank-and-file's throats and will lose the special election in NV-2 tomorrow.
Obama has entrusted his reelection efforts to Jim Messina (AKA- Rahm Emanuel Jr.), a Machiavellian clown with only the most superficial political skills and no dedication whatsoever to core progressive values. He told the Times the criticism was largely a “Washington conversation." Is it a "Washington conversation" in NV-2 or NY-9?
“In my district, the enthusiasm for him has mostly evaporated,” said Representative Peter A. DeFazio, Democrat of Oregon. “There is tremendous discontent with his direction.”
The president’s economic address last week offered a measure of solace to discouraged Democrats by employing an assertive and scrappy style that many supporters complain has been absent for the last year as he has struggled to rise above Washington gridlock. Several Democrats suggested that he watch a tape of the jobs speech over and over and use it as a guide until the election.
But a survey of two dozen Democratic officials found a palpable sense of concern that transcended a single week of ups and downs. The conversations signaled a change in mood from only a few months ago, when Democrats widely believed that Mr. Obama’s path to re-election, while challenging, was secure.
“The frustrations are real,” said Representative Elijah E. Cummings of Maryland, who was the state chairman of Mr. Obama’s campaign four years ago. “I think we know that there is a Barack Obama that’s deep in there, but he’s got to synchronize it with passion and principles.”
There is little cause for immediate optimism, with polls showing Mr. Obama at one of the lowest points of his presidency.
His own economic advisers concede that the unemployment rate, currently 9.1 percent, is unlikely to drop substantially over the next year, creating a daunting obstacle to re-election.
Liberals have grown frustrated by some of his actions, like the decision this month to drop tougher air-quality standards.
And polling suggests that the president’s yearlong effort to reclaim the political center has so far yielded little in the way of additional support from the moderates and independents who tend to decide presidential elections.
“The alarms have already gone off in the Democratic grass roots,” said Robert Zimmerman, a member of the Democratic National Committee from New York, who hopes the president’s jobs plan can be a turning point. “If the Obama administration hasn’t heard them, they should check the wiring of their alarm system.”Pete DeFazio scoffs at the idea: “I have one heck of a lot of Democrats saying, ‘I voted for him before, don’t know if I can do it again.’”
Can you stand one more comment on the European euro meltdown?
No? Sorry.
September 11, 2011
An Impeccable Disaster
PAUL KRUGMAN
On Thursday Jean-Claude Trichet, the president of the European Central Bank or E.C.B. — Europe’s equivalent to Ben Bernanke — lost his sang-froid. In response to a question about whether the E.C.B. is becoming a “bad bank” thanks to its purchases of troubled nations’ debt, Mr. Trichet, his voice rising, insisted that his institution has performed “impeccably, impeccably!” as a guardian of price stability.
Indeed it has. And that’s why the euro is now at risk of collapse.
Financial turmoil in Europe is no longer a problem of small, peripheral economies like Greece. What’s under way right now is a full-scale market run on the much larger economies of Spain and Italy. At this point countries in crisis account for about a third of the euro area’s G.D.P., so the common European currency itself is under existential threat.
And all indications are that European leaders are unwilling even to acknowledge the nature of that threat, let alone deal with it effectively.
I’ve complained a lot about the “fiscalization” of economic discourse here in America, the way in which a premature focus on budget deficits turned Washington’s attention away from the ongoing jobs disaster. But we’re not unique in that respect, and in fact the Europeans have been much, much worse.
Listen to many European leaders — especially, but by no means only, the Germans — and you’d think that their continent’s troubles are a simple morality tale of debt and punishment: Governments borrowed too much, now they’re paying the price, and fiscal austerity is the only answer.
Yet this story applies, if at all, to Greece and nobody else. Spain in particular had a budget surplus and low debt before the 2008 financial crisis; its fiscal record, one might say, was impeccable. And while it was hit hard by the collapse of its housing boom, it’s still a relatively low-debt country, and it’s hard to make the case that the underlying fiscal condition of Spain’s government is worse than that of, say, Britain’s government.
So why is Spain — along with Italy, which has higher debt but smaller deficits — in so much trouble? The answer is that these countries are facing something very much like a bank run, except that the run is on their governments rather than, or more accurately as well as, their financial institutions.
Here’s how such a run works: Investors, for whatever reason, fear that a country will default on its debt. This makes them unwilling to buy the country’s bonds, or at least not unless offered a very high interest rate. And the fact that the country must roll its debt over at high interest rates worsens its fiscal prospects, making default more likely, so that the crisis of confidence becomes a self-fulfilling prophecy. And as it does, it becomes a banking crisis as well, since a country’s banks are normally heavily invested in government debt.
Now, a country with its own currency, like Britain, can short-circuit this process: if necessary, the Bank of England can step in to buy government debt with newly created money. This might lead to inflation (although even that is doubtful when the economy is depressed), but inflation poses a much smaller threat to investors than outright default. Spain and Italy, however, have adopted the euro and no longer have their own currencies. As a result, the threat of a self-fulfilling crisis is very real — and interest rates on Spanish and Italian debt are more than twice the rate on British debt.
Which brings us back to the impeccable E.C.B.
What Mr. Trichet and his colleagues should be doing right now is buying up Spanish and Italian debt — that is, doing what these countries would be doing for themselves if they still had their own currencies. In fact, the E.C.B. started doing just that a few weeks ago, and produced a temporary respite for those nations. But the E.C.B. immediately found itself under severe pressure from the moralizers, who hate the idea of letting countries off the hook for their alleged fiscal sins. And the perception that the moralizers will block any further rescue actions has set off a renewed market panic.
Adding to the problem is the E.C.B.’s obsession with maintaining its “impeccable” record on price stability: at a time when Europe desperately needs a strong recovery, and modest inflation would actually be helpful, the bank has instead been tightening money, trying to head off inflation risks that exist only in its imagination.
And now it’s all coming to a head. We’re not talking about a crisis that will unfold over a year or two; this thing could come apart in a matter of days. And if it does, the whole world will suffer.
So will the E.C.B. do what needs to be done — lend freely and cut rates? Or will European leaders remain too focused on punishing debtors to save themselves?
The whole world is watching.
From our buddy at Lawyers, Guns and Money we have this fine final commentary on all things economic from our land and the land of our fathers (that may make us burn our ships and retreat back into the forest) and these fin de siecle comments:
Their Galtian Overlords
September 12, 2011
On the monetary side are even worse than ours.
In a bit of black comedy, on the other side of the page, Ross Douthat argues that the Obama administration did not pivot quickly enough to austerity. Really.
In its way, you have to admire this bit of hackwork:
Finally, instead of pivoting from the Recovery Act to deficits and entitlement reform, the Democratic majority spent all of its post-stimulus political capital trying to push both a costly new health care entitlement and a cap-and-trade bill through Congress. Both policies were advertised, intermittently, as deficit reduction, but neither came close to addressing the real long-term drivers of the nation’s debt.So, on the one hand, the ACA is “costly.” On the other hand, he doesn’t actually dispute that it would control health care costs, but apparently it is “costly” because it wouldn’t, in itself, reduce the long-term structural deficit problems it would be crazy to focus on in the midst of horrible unemployment. Hacktacular!
Comments:
Matt says:
What’s really irritating me about the ECB situation is that they KNOW that their policies don’t make any sense, but they’re still refusing to actually do what’s needed to fix things. At this point, one starts to doubt the “rank incompetence” theory and starts to believe the “willful sabotage” version.
Malaclypse says:
Because some men aren’t looking for anything logical, like money. They can’t be bought, bullied, reasoned or negotiated with. Some men just want to watch the world burn.
Libertarians think that they want to watch the world burn, because they think they, and the world, will emerge better off. That is one of many incorrect beliefs libertarians hold.
Murc says:
My god, I would LOVE for a few years of seventies-style inflation about now. A half-decade at four or so percent would take a lovely chunk out of my student loans, and then I could think about buying a house.
Njorl says:
Having failed to conquer Europe, the Germans intend to take it through foreclosure proceedings.
Uncle Kvetch says:
At this point, one starts to doubt the “rank incompetence” theory and starts to believe the “willful sabotage” version.
Precisely, because “incompetence” is in the eye of the beholder. The rich are still getting richer, both here and over there. Depending on what the central bankers perceive as their goal, that fact can be considered proof of great competence.
Walt says:
I think this is definitely incompetence. Bailing out Greece would definitely be the “rich getting richer” option, since the money would all go to the rich creditors and the banks. If things go as bad as they could, each European country may have to nationalize its own banks to avoid economic collapse.
c u n d gulag says:
I think the NY Times hired Bobo’s Mini-me because they still had an ‘insipid’ quota to fill.
And that’s pretty hard to believe, if you’re read their Op-ed pages over the last few years – Frank Rich (now gone), Krugman and Kristoff, excepted. And MoDo, when she was writing about W or the Catholic Church.
God, how I miss their Op-ed pages of the 70′s and 80′s!
Uncle Kvetch says:I think the NY Times hired Bobo’s Mini-me because they still had an ‘insipid’ quota to fill.
Yeah…it doesn’t even rise to hacktacular, because the -tacular part is distinctly lacking. It’s just hack.
You can tell his heart isn’t it whenever he has to write about something other than his disapproval of what other people do with their naughty bits.
DrDick says:
We, and I mean the human race, are ruled by grotesquely wealthy and insatiably greedy idiots.
Holden Pattern says:
I’ve been seeing this quote a lot recently: “Do you not know, my son, with how little wisdom the world is governed?”
I think we’re long past the point at which it is necessary or useful to distinguish among incompetence, indifference, arrogance, avarice, and outright malice in our ruling classes and their courtesans.
