US Economy

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FiveThirtyEight.com: Electoral Projections Done Right: Swing District Congressmen Doomed Bailout.

[via Nate Silver at fivethirtyeight.com]

This was predictable, I suppose, but it’s remarkable to see how strong a relationship there is between today’s failed vote on the bailout and the competitive nature of different House races.

Among 38 incumbent congressmen in races rated as “toss-up” or “lean” by Swing State Project, just 8 voted for the bailout as opposed to 30 against: a batting average of .211.

By comparison, the vote among congressmen who don’t have as much to worry about was essentially even: 197 for, 198 against.

They also added this tidbit from a reader comment. This is the one that cinches it for me.

UPDATE: A helpful reader named Matt Glassman passed along the fact that, among 26 congressmen NOT running for re-election (almost all of whom are Republicans), 23 voted in favor of the bill, as opposed to 2 against and one abstaining.

And so we see how polling and an election year and a huge financial emergency all come together to crash against the rocks of reality.

What we are left with then, is an electorate fairly split about a bailout package…that most who know how the system works would like to see implemented…and those that have no idea about oppose on general principles. The fact that it wasn’t passed today led to this….

The day started with silence — the iconic opening bell of the New York Stock Exchange failed to sound — and things just got worse from there, ending in the single biggest one-day point loss in history. The Dow Jones industrial average lost 777.68 to close at 10,365.45. The previous biggest point drop came on Sept. 17, 2001, the first day the market reopened after the 9/11 terrorist attacks. A jittery stock market spent all morning in negative territory as investors worried about the $700 [billion bailout].

[full story]

This is becauase most of these people know what’s going to happen when banks don’t have any money to lend. We are now seeing the disease spread, and this kind of stuff *REALLY* affects people who hope to retire….soon.

It’s not that bad for people like me who are 30+ years from retirement. Those, however, currently in the 2-5 year window (read: 40+ million Baby Boomers) don’t have that option. They get to decide…soon…what to do.

My simple prediction? They will sell out and the stock market will continue to stagnate. It has been hugely propped up by this retirement money, and now that people are going to actually pull it out of the market, put it someplace *much* safer (like a bank…ha!) and use it to live, the amount of capital in the stock market is going to tumble….which adversely affects the price of everything else.

I’ve been predicting this general trend for a while now, based mainly on the demographic shift we are seeing as a country. The whole “U.S. Economic Collapse” thing has been predicted by history, which dictates that large empires running expensive un-ending wars halfway around the world tend to collapse….every, single, time.

The fact that it is our democracy itself (in the form of election-year politics) which is freezing our government when it needs to act is the icing on the crap-cake we will all soon be swallowing. The irony would be delicious…if it wasn’t for the fact that it smells, tastes, and nourishes….like shit.

UPDATE: In what can only be called par for the course…the McCain Campaign accepted credit for passage of the measure.

“Sen. McCain knew time was short and he came back, he listened and he helped put together the framework of getting everybody to the table, which was necessary to produce a package to avoid a financial catastrophe for this country.”

On Monday morning, McCain campaign communications director Jill Hazelbaker said on Fox News that the deal would not have happened “without Sen. McCain.”

“Sen. McCain interrupted his campaign, suspended his campaign activity to come back to Washington to get Republicans around a table,” Hazelbaker said. “Without Sen. McCain, House Republicans would not have appointed a negotiator, which would not have moved this bill forward.

“It’s really Sen. McCain who got all parties around a table to hammer out a deal that hopefully is in the best interests of the American taxpayer.”

[full b.s.]

BTW, in addition to the alternate breakdown that started this post (i.e. Politicians facing re-election or Not) one can alsobreak down the vote by party lines. Democrats 140-95 (~60% Yea) and Republics 65-133 (~33% Yea).

So that claim of “suspend[ing] his campaign activity to come back to Washington to get Republicans around a table” was not only total b.s., it was a total failure of leadership.

UPDATE2: The next step…

Democratic and Republican leaders alike pledged to try again, though the Democrats said GOP lawmakers needed to provide more votes. Bush huddled with his economic advisers about a next step. The House was to reconvene on Thursday instead of adjourning for the year as planned.

[full article]

Umm, Thursday?!? They do realize the DJIA is going to be at about 9,000 by then, right? [hmmm…second thought…I’ll say 9,500.]

By then I think the Panic of the People will have set in and the Bailout will get about 90% support and everyone will claim credit…including your and/or your employer’s bank. 😉

There’s an ooooold saying about the tipping points in life.

This ones comes from deep in the desert, back in some of the first communities our species ever built.

The wiki says the story goes like this.

The idiom the straw that broke the camel’s back is from an Arab proverb about how a camel wearing shoes is loaded beyond its capacity to move^{[citation needed]}. This is a reference to any process by which cataclysmic failure (a broken back) is achieved by a seemingly inconsequential addition (a single straw). This also gives rise to the phrase “the last/final straw”, used when something is deemed to be the last in a line of unacceptable occurrences. A variation of this idiom is “the straw that broke the donkey‘s back”.

One of the earliest published usages of this phrase was in Charles Dickens‘s Dombey and Son where he says “As the last straw breaks the laden camel’s back”, meaning that there is a limit to everyone’s endurance, or everyone has his breaking point. Dickens was writing in the nineteenth century and he may have received his inspiration from an earlier proverb, recorded by Thomas Fuller in his Gnomologia as ‘Tis the last feather that breaks the horse’s back.’

So it goes from the Desert to Dickens and back to Dicks in the Desert (of Wall Street). Or something.

Why I’m bringing this up is that, uh, I’m one of those straws, maybe even the proverbial one.

You see, in order to provide for my little media endeavor, and take some time to write and enjoy life, I’ve taken the step of cashing out a 401K I’d been bulding for the last few years. Silly, I know, but when one needs capital and one has been saving for that reason, it was an easy call.

The fact that I got my check on the exact same day that the shit hit the fan makes me wonder about the weight of my piece of straw.

We’ve been told that the camel was mighty and healthy and beyond danger. That It could withstand war and famine and plague and pestilence and keep walking through the desert undisturbed. That it could go faster, even, if we just whipped it harder.

Now we know better.

Just like they did thousands of years ago, halfway around the world.