The Onion: Our long national nightmare . . .

Wednesday, November 05, 2008 | 09:30 PM

A pretty good Onion headline:  Nation Finally Shitty Enough To Make Social Progress:

Although polls going into the final weeks of October showed Sen. Obama in the lead, it remained unclear whether the failing economy, dilapidated housing market, crumbling national infrastructure, health care crisis, energy crisis, and five-year-long disastrous war in Iraq had made the nation crappy enough to rise above 300 years of racial prejudice and make lasting change.

"Today the American people have made their voices heard, and they have said, 'Things are finally as terrible as we're willing to tolerate," said Obama, addressing a crowd of unemployed, uninsured, and debt-ridden supporters. "To elect a black man, in this country, and at this time—these last eight years must have really broken you."

Added Obama, "It's a great day for our nation."

Heh heh . . . That is, unfortunately, only a sleight exaggeration as to the landscape.  Of course, for wit, prescience, and humor, nothing beats the Onion's 2001 pre-inauguration headline:

Bush: 'Our Long National Nightmare Of Peace And Prosperity Is Finally Over'

"My fellow Americans," Bush said, "at long last, we have reached the end of the dark period in American history that will come to be known as the Clinton Era, eight long years characterized by unprecedented economic expansion, a sharp decrease in crime, and sustained peace overseas. The time has come to put all of that behind us."

A classic: So witty, so foresighted . . .

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PERMALINK AND COMMENTS HERE

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Source:
Nation Finally Shitty Enough To Make Social Progress
NOVEMBER 5, 2008 | ISSUE 44•45
http://www.theonion.com/content/node/89486

Bush: 'Our Long National Nightmare Of Peace And Prosperity Is Finally Over'
JANUARY 17, 2001 | ISSUE 37•01
http://www.theonion.com/content/node/28784

Wednesday, November 05, 2008 | 09:30 PM | Permalink
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Back to Work

Wednesday, November 05, 2008 | 06:35 AM

Congratulations to President-elect Barack Obama on his decisive victory. And to John McCain -- a truly great American hero who delivered a gracious and patriotic speech.

Now that this historic election is over, we can return to the markets and the economy. We will closely watch and discuss Obama's appointments to key economic posts, starting with Treasury Secretary. 

And, we still have an economic crisis to deal with, a housing mess to unravel, and a possible second stimulus program coming up. Up next: Non-Farm Payrolls on Friday, and I expect it to be a disaster.

Plus, the continued redesign of the site is going to get tweaked. I've heard your issues, and we will address them-- perhaps even to solicit your ideas for design changes. The Cafe continues to attract some very high quality contributors also.

Time to get back to work.

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Permalink and comments here

Wednesday, November 05, 2008 | 06:35 AM | Permalink | Comments (0)
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Tall Paul

Tuesday, November 04, 2008 | 10:30 PM

Very interesting party this evening -- an even split between traditional NYC Democrats, and former Reagan/Bush/Nixon aides and advisors. Lots of GOP members, and a few Obama advisors.

I spent a good portion of the evening chatting with Richard Whalen, a longstanding Washingon D.C. insider, and a fascinating character to boot.

The highlight of the evening: I met, and got to speak with, former FOMC Chairman, and current Obama economic advisor, Paul Volcker.  (Paul Volcker!)

Even better, I got to tell him my favorite Bush joke (actually, a quote from Allan Mendelowitz):

“The Bush administration, which took office as social conservatives, is now leaving as conservative socialists.”

It really cracked him up!

Tall Paul. How frickin' cool is that . . . ?

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permalink and comments here

Tuesday, November 04, 2008 | 10:30 PM | Permalink | Comments (17) | TrackBack (0)
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Regulation after Bush

Tuesday, November 04, 2008 | 03:00 PM

What does the future hold for regulating Wall Street?

Regardless of who wins today's election, both Barack Obama and John McCain have staked out different positions on issues involving economic regulation – and each is very different than the outgoing president.

The Economists' Voice looks at what we might expect in the post-Bush era:

While  the  presidential  candidates  have  been  diverted  by  critical  issues  ranging  from  Barack  Obama’s  taste  in  lettuce  to  John  McCain’s condo,  it’s  hard  to  deny  that,  once  elected,  serious  questions  involving  economic  regulation—everything  from  housing  finance  to  alternative  energy  mandates—will  be  front  and  center.  And  here,  at  least,  the  divisions  are  clear:  Obama  would  use  a  heavy  hand  to  push  the  economy  back on  track,  while  McCain  would  do  his  best  to  put  the  free  back in  free  markets.

Or maybe  not.

Ever  since  the  New  Deal,  Democrats  have  largely  accepted  the  label  as  the  party  of  regulation—defenders  of  the  weak  from  the  vagaries  of  soulless  capitalism.  Republicans,  for  their  part, position  themselves  as  the  nemeses  of  the  social  engineers  and  do-gooders  who  would  sap the  economy  of  vigor.  But once in office, reality bites. Thus, with  more  than  a  little encouragement  from  Detroit,  Ike  committed  the  GOP  to  the  biggest  public  works  project  in history— the  Interstate  Highway  System.  Richard  Nixon  imposed  price  controls to contain inflation, while Ronald Reagan  protected  the  swooning  steel  industry  from foreign competitors and the first President Bush championed  market  intervention  in  the  name  of  cleaner  air  and  accommodations  for  the disabled. The second Bush hasn’t stood on principle  either,  lavishing seniors  with  heavily  subsidized  prescription  drugs  and  supporting  bailouts  for  both investment  bankers  and  the  giant  private  mortgage  insurers.

Democrats,  of  course,  have  been  no  better  at  sticking  to  their  script.  Carter  deregulated  airlines  and  trucking,  while  Clinton  deregulated  telecommunications  and  nuclear  enrichment  as  well  as  opening  the  door  to  cheap  Mexican  imports.

Thus, while Obama and McCain may both lull  true  believers  with  the  bromides  of  an  earlier generation,  a  subtler  mix  of  ideology  and  interest  group  muscle  is  bound  to  drive  the  regulatory  agenda  once  elected.  Consider  just  a  few  of  the  big  choices  ahead.

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Source:
"Regulation after Bush"
Robert Hahn and Peter Passell
The Economists' Voice: Vol. 5 : Iss. 4, Article 5.  (2008)
http://www.bepress.com/ev/vol5/iss4/art5

http://www.bepress.com/cgi/viewcontent.cgi?context=ev&article=1389&date=&mt=MTIyNTc5OTY1Nw==&access_ok_form=Continue

Tuesday, November 04, 2008 | 03:00 PM | Permalink | Comments (9) | TrackBack (0)
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Has the Market Fully Discounted the Bush Presidency ?

Tuesday, November 04, 2008 | 11:30 AM

What is it that the market is pricing in?

While partisans try to blame the crash on one or the other candidates, here's something I have yet to hear any of the TV pundits discuss: The George W. Bush presidency.

While partisans try to blame the crash on one or the other candidates, here's something I have yet to hear any of the TV pundits discuss: Blaming it on the presidency of George W. Bush.

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Currency Markets are the world's vote on US monetary policies

via TradingCharts.com

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S&P500 2001-08, weekly

Equities: Which Sell off do you hold the occupant of the White House Responsible for: The One that began prior to his arrival, or the one that began prior to his departure?

Chart courtesy of Fusion IQ, Bloomberg

I do not believe that the 2000-03 crash was a result the markets pricing in a Bush Presidency. However, one could certainly make the case that the past few years market action has been the result of his fiscal, tax, and spending policies.

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Oil Prices Respond to Energy and Military Policies

Two oil men in the White House, two wars, no conservation efforts, and no attempts to develop alternatives to Crude Oil:

via TradingCharts.com

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Gold, 2001-08 weekly

The Gold market is a store of value in uncertain times -- what is it saying about the Bush policies?

Chart courtesy of Fusion IQ, Bloomberg

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Bonds: 10 Year Treasury, 1980-2008

Chart courtesy of Fusion IQ, Bloomberg

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Longstanding downward trend in rates was in effect since the Volcker Fed broke inflation in 1980 -- recent Presidents (W, Clinton, Reagan) have all benefited from this trend

What are the markets really pricing in ? Might it be the W. presidency?

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Permalink and comments here

Previously:
Pricing in a Bush Presidency (July 08, 2008)
http://www.ritholtz.com/blog/2008/07/pricing-in-a-bush-presidency/

Tuesday, November 04, 2008 | 11:30 AM | Permalink | TrackBack (0)
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Campaign Finance Map: Monies Raised by Candidates

Tuesday, November 04, 2008 | 07:30 AM

Fascinating graph of the candidates money raising this campaign cycle. What is so astounding this election cycle is not that John McCain trails Barack Obama in fund raising, but that he also trails Hillary Clinton: Obama $659.7m, Clinton, $249m, McCain $238.1m.

I posted a bunch-o-election related graphs, polls, charts, tables, etc. over in digital media.

There is an interesting debate here amongst those who blame Bush for McCain's campaign woes: Was it the money raising, or was it Bush?  I suggest an alternative view: Both. The negative effect of W. hampered the McCain campaign's ability to raise funds.

Regardless, the GOP nominee trailing BOTH the Democrat's nominee, and the 2nd place Democratic candidate in money raising -- that's simply amazing to me.

John McCain:

via NYT

Map Graphs of all the candidates fund raising are here.

Tuesday, November 04, 2008 | 07:30 AM | Permalink | Comments (0) | TrackBack (0)
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Vote!

Tuesday, November 04, 2008 | 06:44 AM

I voted at 6:00am, on an old-fangled, lever based, circa 1950 machine.

The lines were quick,  and the little old ladies who were the poll watchers were simply adorable.

My contribution to the electoral process was that one of the old dears dropped her glasses, and the lens went skittering across the floor. I managed to pop it back into her frame.

Democracy saved.

Tuesday, November 04, 2008 | 06:44 AM | Permalink | Comments (23) | TrackBack (0)
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Prediction Markets Election Contest

Monday, November 03, 2008 | 06:30 PM

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Over at the NYT's economics blog, Economix, David Leonhardt is running a prediction market contest, looking at odds of various Intrade contests. Pick any 3 of the 20 questions to answer, and the winner gets showered with untold glory and fame.

The contest has an interesting twist: Its based upon the odds at Intrade. That makes the choices less obvious and the strategies for winning the contest more intriguing. David asked me to submit a "guest" contest post for the Economix blog, which I did.  You will find it below.

In addition to my post, David graciously invited all of you to participate, saying: "You have a lot of really smart readers. Let's see how well they can do in the contest." Challenge accepted. The contest runs til tomorrow morning at 6am. Go over to the prediction market contest and submit your best guesses.

My approach:

Let me begin with this (weasely) caveat: While I have spent many years studying markets, I am not remotely a political analyst. In fact, I dislike politics, and I especially detest how it has polluted economics.

That said, be aware that my preferences in 2000 were the exact opposite of what actually occurred. My choices were McCain, Bradley, Gore, Bush – and that was pretty much the order they lost in.

And by way of full disclosure, I am probably best described as a Liberal Republican – low taxes, balanced budget, strong defense, no unnecessary overseas involvement, and no government involvement in personal matters (birth control, abortion, gay marriage, etc.) Liberal Republicans are now mythical creatures that no longer exist. I do not recognize the abomination that now calls itself the GOP. I guess that makes me an Independent.

OK, let’s move on to the contest, where whatever mathematical skill I may have could be of some small assistance in this contest.

My first thought: Picking the frontrunners and favorites appears to be a surefire path to the middle of the pack. To “win” this requires identifying which of the long shots really aren’t such long shots after all. In the markets, this is called variant perception – what the crowd (and the money they bet) betting thinks is an unlikely outcome, but is actually a higher probability result than most realize. (The best parallel company example is deep value stocks).

If this were actual money, I would most likely pick two favorites, and a single long shot. Something like:

9. North Carolina: Obama wins (1.9)

3. Obama’s electoral votes 379 or fewer (1.3)

11. Pennsylvania McCain wins (7.1)

[Tiebreaker] Winner popular vote share: 51.5%

That is the fiscally prudent thing to do, but that’s no fun. And since its not real cash, why not go for it?

What might be the variant outcome that most people think is very unlikely? I come up with 3: 1) A McCain victory; 2) A surprisingly tight race; 3) An Obama blowout. A McCain victory is (in my terrible political judgment) highly unlikely. The next variant perception scenario is either a very tight race, or an Obama blowout.

Looking at the questions, there are only a few that fit into this scenario. They are: Q2. Greater than 65%; 3. Obama’s electoral votes (out of 538) 380 or electoral votes more; 7. Obama wins Georgia; 10. Ohio McCain wins; 11. Pennsylvania McCain wins; 12. Virginia McCain wins; 13. Democrat-Republican breakdown 271 or more;

I don’t see McCain winning Ohio, Pennsylvania, or Virginia; He does have a good shot in Florida, but its not a great payoff (2.7 pts). Same with Obama winning Indiana (2.4 pts) and Georgia is a long shot.

That leaves the Obama blowout option the best odds (low possibility) relative to the points (highest points) So the picks I would make are:

2. Greater than 65% turnout;

3. Obama’s electoral votes (out of 538) 380 or electoral votes more

13. Democrat-Republican breakdown 271 or more.

[Tiebreaker] Winner popular vote share: 53.5%

While I give this a less than 20% chance of occurring, it’s the highest payout.

In an election where one of candidates ran many Hail Mary’s, it is only fitting.

One last caveat, so my clients don’t have a heart attack: This sort of low probability, high payoff is the exact opposite of how we run money in the office. It is why we’ve stayed out of trouble most of this year . . .


Permalink and comments

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Source:
Prediction Markets and the Election: A Game
David Leonhardt
October 31, 2008, 6:42 pm
http://economix.blogs.nytimes.com/2008/10/31/prediction-markets-and-the-election-a-game/

Monday, November 03, 2008 | 06:30 PM | Permalink | Comments (0)
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Measuring the 'Internet Election'

Monday, November 03, 2008 | 04:30 PM

One of the things this election will be notable for is how well the Press is using digital media and interactive pages to dissect the issues and polls. I've gathered a slew of them and posted them in the Digital Media Tab.

Official website visits, YouTube, Facebook, Blogs, Polling: This election has had an enormous amount of internet generate content, much of which actually shed some light on the election campaign and issues.

Measuring the 'Internet Election'

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Source:
Web Data Offer New Slant on Traditional Horse Race
CHRISTOPHER RHOADS
WSJ, OCTOBER 18, 2008
http://online.wsj.com/article/SB122428213573345971.html

Monday, November 03, 2008 | 04:30 PM | Permalink | Comments (5) | TrackBack (0)
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Economics versus Politics

Sunday, November 02, 2008 | 03:45 PM

One of the things this election will be notable for is how well the Press used digital media and interactive internet to dissect the issues and polls. I've gathered a slew of them and posted them in the Digital Media Tab.

Here's a terrific example: Forget the polls for a moment, and consider instead what might be driving them.

The WSJ's Real Time Economics does just that, looking at a state-by-state polls compared to key economic indicators. These are changes in home prices, employment, and income:>

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comments can be made here 

Source:
State-by-State Polls Compared to Economic Indicators
Phil Izzo
WSJ, November 1, 2008, 1:47 pm
http://blogs.wsj.com/economics/2008/11/01/state-by-state-polls-compared-to-economic-indicators/

Sunday, November 02, 2008 | 03:45 PM | Permalink | Comments (0)
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