Well, I suspect that the economy is the place to start here, but I have no idea what to make of this past. Was the news that the stock market wound up calming itself? That there was a lot of panic that will wind up pushing everyone over the edge into recession? That some of the new data wasn't all that bad? The real story is somewhere in there, right?
I have no idea whether the UK riots mattered or not.
I do think that the Wisconsin recalls were significant; it's easy to overstate their importance, but that's not to say they weren't important at all.
What else...Libya, Syria, Egypt. The new mileage regulations on trucks. I suppose I should mention the 11th Circuit decision on ACA, although I'm not really sure it makes much of a difference (the case would have probably gone to the Supremes anyway, and they can do what they want regardless of how the cases so far have narrowed the scope of what appears to be at issue). Meanwhile, implementing ACA rolls on.
Rick Perry is in. Tim Pawlenty? Ask me after the Straw Poll later today; he's the one with a lot at stake. Nothing else much happened on the campaign trail.
That's what I have. What did I miss or get wrong? What do you think mattered this week?
The $10 of cuts to $1 of taxes question at the debate.
ReplyDeleteBecause more then 60% of Americans think we should increase taxes; Bruce Bartlett shows the polling here: http://capitalgainsandgames.com/blog/bruce-bartlett/2341/23-polls-say-people-support-higher-taxes-reduce-deficit
The fringe just became the main-stream right. And I can't imagine how they're going to walk this one back, but I think they have to walk it back.
Obama making nominations to the Fed seems important (if way late). If that represents a new administration focus on filling important vacant posts, it would be even better.
ReplyDeleteI don't think anything significant happened to the economy this week, unless you count the notion that the S&P downgrade turned out to be much ado about nothing. All the market gyrations will be forgotten very soon.
ReplyDeleteIs the Straw Poll getting more attention than in years past? I could be wrong, but I seem to remember before, the national media would treat it as a minor story after-the-fact, and the winner would get some positive publicity, but that's it... Now, the news networks were covering it live, throwing out percentages, and implications, like it were an actual primary. Does anyone else think it's being taken more seriously this year?
ReplyDeleteI think the media desperately wants a Republican frontrunner, and Romney's not polling well enough for them to give him that status.
ReplyDeleteAs for what Ames actually did: I think it strengthened Bachmann at the expense of Palin, and maybe some of the smaller candidates. And it kept Pawlenty alive at the expense of Romney and Huntsman. Since Huntsman would only have a chance if Romney seriously alienated his base, I guess all he can do now is hold some pretty speeches about foreign policy in the hope the eventual winner asks him to be his Secretary of State.
The Left got smashed in Wisconsin. That is the story. That is the only story.
ReplyDeleteThe Midwest is gone for the Left. Rural congressional districts are vaporizing. Governors' mansions are in conservative control, as are state legislatures.
This will be reflected in the 2012 presidential election. Obama is down 20 points to Independents in Pennsylvania. That would be PENNSYLVANIA. He is now in danger of dropping 40 states.
Heck, even East coast states are finding religion on austerity, not that I think about it.
But it is in Wisconsin that the political battle is being fought, where the Left and conservatives have been going at it hammer and tong. And the Left just lost... huge.
Tom Nawrocki: Eh, there's more to the economy than capital markets and bond ratings. I'd say the really important stuff in the economy happened in Europe, in particular the European Central Bank deciding to buy Italian and Spanish bonds.
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ReplyDeleteThose are certainly good news... for McCain!
Four things --
ReplyDelete1. Things quieted even more but steadied on the Newscorp front with a new designated successor (temporary or not to Rupert Murdoch not of the Murdoch clan). This may buffer the company from more challenges of a political nature for a while.
2. The ACA ruling made it easier, at least in terms of political optics, for the Supreme Court to strike it down. It also said something about a way it might be struck down (i.e. just the mandate which oddly would wreak more uncertainty in this area than we already have).
3. Wisconsin was the one place progressive hearts felt a shot at adrenalin. It was hard to take that what they felt was so obviously theirs to win didn't turn out that way. They needed a win here to buffer all the frustrations.
and,
4. The Iowa debate (with the Minn bloodletting and Romney staying strong), the naming of the membership to the super-committee in Congress (whose on says something about the prospects -- 2 Michiganders from the House, no Paul Ryan from the house, John Kerry, and Bush's former budget director were all interesting choices), and Rick Perry joining the race (will be interesting to watch how the Bush's deal with his campaign).
Did a quick exercise at Yahoo! Finance the other day, looking at whether the absolute volatility of last Mon-Thurs was historically large. Found that the lowest absolute change of those four days (4.4%) is exceeded by only two other four day periods in the past 61 years. One of those other periods ended the Wednesday after Black Monday in 1987; the other Thanksgiving week of 2008.
ReplyDeleteEpic volatility is probably a result of unusual disagreement between buyers and sellers; driven by a hard-to-price Black Swan event. 1987's was a little bit recession, and a lot the fear that the damn machines would take over. 2008 was the death of the global banking system. What is 2011's? Malfeasance from Sarkozy? UK riots?
I don't know for sure, but history suggests it must be something pretty bad, and my hunch is that, contra the chorus of "America Fuck Yeah!" in response to the S&P downgrade, probably AA+ has a lot to do with it.
Follows is not from a trained economist, so as always, YMMV. Disclaimers aside, I went to wikipedia and looked up "foreign direct investment", which first describes the concept and then quantifies it in the US. According to wikipedia, foreign direct investment in the US is about $300 B a year, and the cumulative impact of said investment is about $2 T in GDP, or 16%.
AA+ is not going to make that dry up overnight, of course. However, it must make us less attractive than the other 12 first world, large economies still holding AAA from all three ratings agencies, doesn't it? I mean, if you're an Indian investor, say, considering a wind farm in Erie, PA or London, ONT, and all other factors are the same, why would you lay down a bunch of money in the less-stable nation?
Again, not all foreign direct investment will flee, obviously. However, in a $10 T economy, $300 B is the difference between recession and robust growth, so any decline should be noticeable. And how can it not decline? Again, a real economist might point out that there are other offsets that are beneficial, and I am just not smart enough to see them, but by itself this foreign direct investment issue seems like a potentially deleterious, difficult-to-quantify result of AA+, potentially hazardous enough to explain this week's historically confused market.
Either way, though, it baffles me that so much of the media responded to AA+ with: "Yeah, S&P downgraded us because we have a completely hopeless crap political environment, and - true - we say basically the same thing when we talk amongst ourselves...but...fuck the S&P, and AMERICA FUCK YEAH!"
The hypersonic Falcon's first run mattered this week. I think the whole Frank Hull episode mattered. And it has lead me to this conclusion: sane Democrats should fight for an @jbplainblog #superbill this fall; and it should be prioritized over the jobs pivot.
ReplyDeleteAll the dread uncertainty surrounding the Affordable Care Act is coming from conservatives, suing for the "freedom" to work until you die.
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