Back to the Badger State

Even though I've been away from home for awhile, politics back in Wisconsin still feel like my "local politics." Because of that, and despite the fact that all the big papers and bloggers nationwide are focusing their attention on the Tea Party Express and the impending disaster it appears to be causing in New York and Delaware, I thought I'd focus on a smaller race, one off most peoples' radar screens.

My attention was focused on Chad Lee, the winner of the WI-2 GOP primary. With 99% of precincts reporting, he won 53% to 47%, taking 24,882 votes (vs. 22,378 for Peter Theron, who looked like he was barely campaigning).

Assuming all 47,260 GOP primary voters show up and vote for him in the general election, he'll have to bring out a LOT more of the base and convert some middle-of-the roaders. While I don't have any data on the district's historical voter turnout, the 2000 census put the population at 670,457, so even in a mid-term election, it's probably safe to assume at least 125,000 voters will show up on November 2nd.

He'll also have to get over the lack of name recognition, especially when compared to Tammy Baldwin, a widely known incumbent who's been in office since 1999 and took 70% of the vote in 2008 (when running against Theron). This may be difficult given he's still only raised $53,663 through Aug. 25th vs. Baldwin's $931,147 and has only $4,081 on hand to fight her $775,775 war chest.

The odds don't look too good for Mr. Lee right now. But you never know. After all, Paladino took the GOP gubernatorial nod in NY, O'Donnell came from nowhere to win the GOP Senate nomination in Delaware, and a former MTV Real World star is the GOP candidate for Dave Obey's well-worn seat in Congress. Strange things are happening this year. Maybe we shouldn't count out the underdogs going into the general elections.

Importing Our Way to Lower Growth: Five Thirty Eight on GDP

Nate Silver at the Five Thirty Eight blog must be getting bored by all the election statistics because now he's turning his attention to economic statistics. Obviously, economic data is waaaaaaay more interesting that polling data.

Using his data-crunching skills, he offers an intriguing analysis of the US second quarter GDP figure released the other week. Rather than seeing the weaker-than-expected figure as all bad, he breaks it down by category and shows that it really demonstrates the ability of one factor to skew the calculations.

As he writes (along with the authors of countless macroeconomics textbooks), GDP can be broken into four distinct categories:

1. Personal consumption expenditures, which account for 70.52 percent of G.D.P.
2. Gross domestic investment, which accounts for 12.61 percent of G.D.P.
3. Exports net of imports, which subtracts from G.D.P. because the United States imports more than it exports
4. Government spending, which accounts for 20.53 percent of total G.D.P.

Interestingly, he shows that consumers are increasing their spending (although not at a "barn-burning rate"), that government spending was responsible for over half of last quarter's growth, and that private domestic investment grew as well.

However, due to a significant increase in imports relative to exports, the net imports factor reduced 2Q GDP by 3.37%. "This is the largest decrease caused by the netting of exports and imports going back to the first quarter of 1980. In addition, a quarter-to-quarter increase in imports this large has not occurred since the first quarter of 1984, when imports increased 36.2 percent from the previous quarter. Obviously, this means it’s a fairly rare event...and shouldn't be counted on to have the same effect in the third quarter calculation."

Now doesn't that make you feel just a bit more bullish on the economy?

Salman Rushdie Weighs in on NYC Mosque

Renowned novelist Sir Salman Rushdie, no stranger to controversy, has finally offered his thoughts on the "Ground Zero Mosque" debate. The AP reports that while Rushdie "is not a great fan of organized worship [he] believes an Islamic center and mosque should be permitted two blocks from ground zero."


Having personally been a target of the extremist version of Islam that brought down the World Trade Center nine years ago, Rushdie's opinion displays a dedication to freedom and a faith in reason that we should all share.

Likewise, the UK's Daily Mail quotes Rushdie as opposing the burning of Korans. Ever the author, he said simply: "I'm not in favour of burning books."

If I may add my own thoughts to his, the same commitment to preserving the freedoms of religion and expression that are immortalized in our Constitution protects both those who would choose to build a mosque in New York and those who would choose to burn the Koran. However, while religious tolerance should prevent anyone from burning a holy book of any sort, be it a Bible, a Torah, or a Koran, neither prejudice nor grudge should prevent worshipers from being able to build a church, a synagogue, or indeed, a mosque in the location of their choosing. Of course, if local zoning were to prevent the construction of all of these in that location and did not discriminate by religion, that would be another story. However, that's certainly not the case here. I would be astonished if you could argue why a church or synagogue should not be built in the exact location in question. And if you cannot make that case, then the root of your argument, no matter how much it tries to be sensitive to the memories of New Yorkers, is still based on discrimination.

As for Donald Trump's recent offer to buy the property from investors for 25% more than they paid, on the condition that they wouldn't build their Islamic center and mosque within five blocks of Ground Zero, while I appreciate his reported motives, the logic is nonetheless faulty. If two blocks or five blocks are both off limits, who is to say that twenty blocks or fifty blocks shouldn't be off limits as well? While we're at it, why don't we "protect" the entire island of Manhattan, or all five boroughs of New York City? Why not New York state? Or why not disallow construction of new mosques anywhere in the nation? You simply can't begin to draw lines around this issue without blurring the lines of the Constitution.

I feel compelled to share Christopher Hitchens' reaction to the Ayatollah Khomeini's fatwah against Rushdie following the publication his novel, The Satanic Verses. Hitchens summarizes his initial thoughts on the matter in his recent memoirs, Hitch-22. "I felt at once that here was something that completely committed me. It was, if I can phrase it like this, a matter of everything I hated versus everything I loved. In the hate column: dictatorship, religion, stupidity, demagogy, censorship, bullying, and intimidation. In the love column: literature, irony, humor, the individual, and the defense of free expression."

As Americans, we should ask ourselves which of those traits we want to have characterize our nation and our lives. While I would personally argue for removing religion from the "hate" column, I think we should align ourselves with Mr. Hitchens and Mr. Rushdie, who though they may have been been born outside our shores, embody the values that the star spangled banner is meant to symbolize.

All You Want for Christmas is IPAD

Tech geeks around the world are abuzz over the possibility that Steve Jobs' Apple may break from tradition and release a next-gen iPad just before the holiday season. As a massive fan of the first version, I confess to having mixed feelings. On the one hand, I was hoping to be ahead of the tech curve for at least a year. On the other, I recognize the shortcomings in the current iPad and (while I won't be upgrading quite so soon) can't wait to see an iPad complete with more memory, FaceTime, and who knows what else.


For more, check out CrunchGear.com's take on it.

Dodd, Frank and Financial Reform: A Different Record

I recently finished reading Karl Rove's Courage and Consequence. Among other interesting revelations was the back story of the would-be-rescuers of our financial system, Congressman Barney Frank and Senator Chris Dodd.

One bill would have subjected Fannie Mae and Freddie Mac to the kinds of federal regulation that banks, credit unions, and savings and loans have to comply with. No Democrat supported it and, most importantly of all, Senator Chris Dodd threatened to filibuster if Banking Committee chairman Richard Shelby, Alabama's senior senator, attempted to bring it to the floor. Dodd got his way--and thus helped pave the way to the largest financial crisis since the Great Depression
....
the leading reform opponents--this tale's true villains--were Democratic congressman Barney Frank of Massachusetts and Connecticut senator Chris Dodd. Frank first dismissed our fiscal warnings, suggesting administration officials would "exaggerate a threat of safety and goodness [to] conjure up the possibility of serious financial losses to the Treasury, which I do not see" and called Fannie and Freddie "fundamentally sound financially." Later, Frank went so far as to argue that this "is an artificial issue created by the administration. . . . I don't think we are in any remote danger here." Even as Fannie and Freddie collapsed and helped drive the financial crisis of 2008, Frank labeled Bush's call for reform "inane." Dodd was less angry than Frank--though this could be said of virtually everyone on Capitol hill--but he was just as wrong in his diagnosis of the problem and his opposition to reform, saying in 2004 that these companies were "one of the great success stories of all time." As Fannie and Freddie spiraled downward, Dodd suggested Bush "immediately reconsider his ill-advised" call for reform. Dodd had received preferential treatment on his mortgages from one of the biggest bad actors in the lending business, Countrywide. Despite this--and proving there is nothing as brazen as a politician with a sweetheart mortgage deal and no conscience--Dodd went on after Fannie and Freddie were rescued with taxpayer dollars to attack the Bush administration for not recognizing that they were in trouble. "Why weren't we doing more . . . I have a lot of questions about where was the administration over the last eight years." Once the problem helped spark a crisis, Frank and Dodd voted in 2008 for the Bush administration's reform bill, which they had opposed in 2005. It was perhaps the most blatant case of hypocrisy I have witnessed in Washington, where hypocrisy is common currency
....
Among those Democrats who backed Dodd's filibuster and opposed reform was the freshman senator from Illinois, Barack Obama. He was the third-largest recipient of campaign gifts from Fannie and Freddie employees in 2004. Since winning the White House, he has pointed to the economic problems he "inherited," but he has never owned up to his role in creating them.

For more insights from the inside, I highly recommend picking up your own copy of Rove's book.

Back to the Future

Quote from Time magazine in September 1992... sound familiar?

"The US economy remains almost comatose. The slump already ranks as the longest period of sustained weakness since the Depression. The economy is staggering under many “structural” burdens, as opposed to familiar “cyclical” problems. The structural faults represent once-in-a-lifetime dislocations that will take years to work out. Among them: the job drought; the debt hangover; the banking collapse; the real estate depression; the health care cost explosion and the runaway federal deficit."

Something to Remember on the 2nd of November

A Congressman was seated next to a little girl on an airplane so he turned to her and said, "Do you want to talk? Flights go quicker if you strike up a conversation with your fellow passenger." The little girl, who had just started to read her book, replied to the total stranger, "What would you want to talk about?" "Oh, I don't know," said the congressman. "How about global warming, universal health care, or stimulus packages?" as he smiled smugly. "OK," she said. "Those could be interesting topics but let me ask you a question first. A horse, a cow, and a deer all eat the same stuff - grass. Yet a deer excretes little pellets, while a cow turns out a flat patty, but a horse produces clumps. Why do you suppose that is?" The legislator, visibly surprised by the little girl's intelligence, thinks about it and says, "Hmmm, I have no idea." To which the little girl replied, "Do you really feel qualified to discuss global warming, universal health care, or the economy, when you don't know $&#%?" and, then she went back to reading her book.

Gartman on Central Bankers

I've been going through some old articles and quotes I sent to myself over the course of the past year, intending to post them here. While I work my way through the others, here's a great comment from Dennis Gartman, editor of the Gartman Letter, from early June, when European central bankers were truly trapped between a rock and a hard place by the issue of a potential European sovereign default.

We see the position that the European monetary authorities find themselves in at present to be quite an impossible one, for if they take the actions that most would take,… i.e., to tighten monetary policy…. It will serve only to weaken the economy there and bring out more, rather than less selling of the currency. Or if they move to ease monetary policy, the effect would be even more severely bearish, for those who’d bought the EUR predicated upon a belief that the authorities were “Bundesbanker-esque” would have no choice but to abandon their thesis, sell the EUR and turn elsewhere for investment. Or if the authorities chose to do nothing, the market will attack them for their inactivity. They are damned if they do; damned if they don’t and damned if they’ve no idea what to do. We do not envy them their position, for they lose at every turn.

A Nod to the Well-Dressed

It's not every day I get to brag about how fashionable and stylish my friends are. After all, the banking crew are a pretty simple group when it comes to all things sartorial. All the more reason to salute Valerie Whitacre, appropriately singled out by the Vogue blog on London Fashion's Night Out. Hopefully they won't be too upset that I've borrowed their photo and put it here. Congrats Valerie!