Year: 2009

Howard Dean’s 50 State Strategy is Dead

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I agree with Chris Bowers’ assessment.

They are looking at more centralized control (under Howard Dean’s 50 state strategy, the money was sent to the state committees to hire organizers), and more focus on swing states.

Not surprising. The first thing that a new president does is take control of the party apparatus and direct it toward his reelection.

That being said, it appears that with the new strategy, Ted Stevens would be returning to the Senate, having handily defeated Begich, as would Norm Coleman.

Economics Update

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Most of the news today seems to involve currency and other nations, with the dollar rising against all major currencies, particularly the British Pound, which fell to its lowest level since 1985.

Considering the fact that the U.K. jobless rate and budget deficit has grown significantly, this should be no surprise.

On the other side of Europe, Russia is pulling back from Ruble support, engaging in what is called a “dirty” float, because they are burning through their currency reserves.

Meanwhile, S&P cut Portugal’s debt rating 1 step, from AA- to A+.

If you want to know the effect of this, you need only look at Greece, where the the rates that they have to pay on their bonds jumped following a similar downgrade. The spread over similar German debt went from 55 basis points (0.55%) to 325.1 basis points (3.251%).

In US real estate, the NAR index of builder confidence fell to 8, below the prediction of 9, with 50 being neutral. (!)

In energy, Oil is up.

Pay Per View Review

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It was movie night, and Sharon* chose the 2008 remake of Get Smart.

Steve Carell … Maxwell Smart / Agent 86
Anne Hathaway … Agent 99
Dwayne Johnson … Agent 23
Alan Arkin … The Chief
Terence Stamp … Siegfried
Terry Crews … Agent 91
David Koechner … Larabee
James Caan … The President
Bill Murray … Agent 13
Patrick Warburton … Hymie
Masi Oka … Bruce
Nate Torrence … Lloyd
Ken Davitian … Shtarker
David S. Lee … Ladislas Krstic
Dalip Singh … Dalip

Of all the returns to this series, I think that this was the best, and that includes the 1970s “The Nude Bomb”, which was really pretty lame.

The character is definitely not the late Don Adams’, but Steve Carell of Smart as an overeager crackerjack analyst who has a knack for screwing up generally works.

I think that the weakest of the performances were by Alan Arkin as the Chief, and Terence Stamp as Sigfried.

Arkin’s Chief is a hot-head, as opposed to the reserved, and aggrieved Chief of the late Ed Platt, and I think that had he been played closer to the original, it would have worked better.

Stamp, who makes a marvelous heavy, was simply wrong as Sigfried. He was too evil. The original Sigfried, played by Bernie Kopell, who had a cameo, was more of a sort of mirror image of Adams’ Smart.

I also miss the German accent.

For both of these, I blame the script writer more than anything else.

Anne Hathaway, as 99, did a very good job capturing the extreme competence of the character, as well as the playful sexiness of Barbera Feldon, from the original series.

Dwayne Johnson, aka “The Rock”, was surprisingly good, but more details would be spoilers.

It does touch on all the bits from the original, the cone of silence, “Missed it that by that much”, “Would you believe….”, “In KAOS, we don’t…”, he drives both the sunbeam and the Karmann Ghia, the shoe phone, “The old $$$$ trick”.

The core of the movie, as it was in the series, is the relationship between Max and 99.

There is real comic chemistry there, though the development of the romantic aspects of the relationship were too compressed.

This is not a surprise, as the development of the relationship in the original went from toleration, to amusement, to affection, to love over about 4 seasons, and 110 minutes is just not enough time.

Recommended

*Love of my life, light of the cosmos, she who must be obeyed, my wife.

Effectively Insolvent

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That is what Nouriel Roubini is saying about the whole US banking system:

“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

Note that he has the training to calculate this stuff, all I have is my gut.

My gut says that his prediction is optimistic, and as bearish as he has been, he has actually underestimated the scope of this problem by a bit so far.

By way of perspective, the US economy in 2007 was about $13-¾ trillion. This is a big number, though less than the roughly 8-½ trillion that the Treasury and the Fed have “lent” out in the past year or so.

Submitted to Marketplace

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They allows people to submit short (>400 word) commentaries for broadcast, so I sent them the following missive.

It’s highly unlikely that they would publish it, I have no professional background in the field, and I’m just not that good a writer, but what the hell.

Amputating the Financial Industry

It is clear that the economy is sick, and it is also clear that the two things that are most directly responsible for this are the finance industry, and real estate.

For real estate and construction, we have a classic bubble, where prices outstripped values, and the only real solution is for time and no small amount of inflation to put borrowers back above water.

The finance industry is a different matter. Between the Treasury Department and the Federal reserve, trillions have been spent to recapitalize this industry without a real thaw in credit.

If the economy is a body, it is clear that there is a serious illness in the financial industry, and the question is whether this is simply a bad infection, illiquidity, or whether this is gangrene, insolvency.

I would argue for the latter, and with advanced gangrene the only option is to amputate.

So, how can you amputate, when the finance industry is essential to the functioning of the rest of the economy?

The answer is that it’s not essential. Reasonable access to credit that is essential.

The question is not how to preserve Wall Street, it is how to make sure that businesses on Main Street can continue to operate.

The numbers to do this are actually relatively small, GM and Chrysler got $18 billion to continue to operate, which is a drop in the bucket compared to the more than 8½* trillion that has been allocated to the finance industry.

Even just using the $350 billion remaining in the TARP to set up a lending facility for small and medium businesses would go a long way.

In fact, it would go much farther than throwing more money at the Wall Street.

You could recruit a workforce quickly from the hundreds of thousands of rank and file financial professionals who have been laid off in 2008.†

This would have the effect of providing the grease to ease the wheels of the economy, without enormous expense of supporting what are walking dead zombie institutions.

Obviously, you would not want this as a permanent solution, but our economy is more like an octopus than a person, and so lost limbs regenerate over time, so if one were to add a small surcharge, which would render this facility irrelevant and unnecessary once a new finance industry, springs from real market needs.

Footnotes:
* Economic rescue could cost $8.5 trillion
† Layoffs in U.S. up 59% from 2007

Thoughts?

Economics Update

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The US dollar posted big gains today, driven in part by the inauguration, but more so by bank of Canada slashing its benchmark rate by 50 basis points (½%), to an all time low of 1%, and the Bank of England making noises that sound suspiciously like cranking up the printing press.

In real estate, the National Multi Housing Council’s Market Tightness Index fell to 11 in the 4th quarter, down from 23 in the 3rd quarter, so there is downward pressure on rental properties too.

Oil was up, but this was the last day for trading on this contracts for February delivery, which, coupled with the markets being closed for yesterday’s MLK holiday, puts a lot of noise into the number.

So Predictable

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It’s been about a day, and Hamas launches mortar shells at Israel, and they miss, with the shells landing somewhere in Gaza.

Not surprisingly, it appears that the war has boosted Likud in the polls, with, “right-wing and religious parties are projected to control a 10-seat majority over a coalition of center, left, and Arab parties in the 120-seat parliament,” which means no unity government.

The other big political winner in the war is Labor, which went from 4th or 5th place to a solid 3 in polls

The election is still 3 weeks away, but Benyamin “Dick Cheney without the Charm” Netanyahu looks to be lock as next PM.