Blogs

Obama, Sure. But Will McCain Hit Your Xbox Too?

| Wed Oct. 15, 2008 7:12 PM EDT

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As Jonathan Stein pointed out earlier, the Obama campaign is leaving no constituent behind. The campaign has purchased ad space in a slew of online Xbox 360 games, including Madden NFL 09 and Burnout Paradise, in 10 battleground states.

If the Obama ads nudge swing-state gamers to participate in early voting, will McCain then follow Obama's online lead?

Click here for one blogger's rendition of what McCain's Xbox ads might look like. Once he gets over that pesky case of technophobia, anyway.


Nichole Wong

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Law and Order on the Trail

| Wed Oct. 15, 2008 7:02 PM EDT

Tonight's debate on domestic policy will give the presidential candidates an opportunity to address a major domestic issue that hasn't received much attention from either campaign: Our country's skyrocketing incarceration rate and the sentencing policies, particularly for nonviolent offenders, that have contributed to it.

We've heard surprisingly little on this issue, considering Obama's legislative work on death penalty reform and Biden's nearly three decades of tough-on-crime cred (he created the job of "drug czar" during the Reagan administration and wrote the legislation imposing mandatory minimum sentences for possession of crack cocaine, a law he finally moved to overturn earlier this year). McCain's website indicates he supports more enforcement and stricter sentencing, but the details are vague.

The economy will likely trump all other domestic policy items tonight, but that's no excuse to ignore criminal justice in light of the quasi-recession. Cash-strapped states started rethinking their incarceration policies even before credit dried up. Now that they can't even get the money they need for regular municipal operations, maybe it's time to rethink them again.

Bursting the Bubble

| Wed Oct. 15, 2008 5:52 PM EDT

BURSTING THE BUBBLE....Responding to Mark Thoma's post about asset bubbles and how to deal with them, Matt Yglesias says:

Part of the weirdness of the housing bubble was that even if you believed there was a bubble, there was relatively little you could do about it. You can't "short" housing in any easy way. And doing something like selling your house, and moving your family into a rental with the expectation of buying back into the market after the bubble pops involves huge transaction and search costs. Looking for a new place to live is a pain-in-the-ass and moving is both annoying and expensive. It's much easier for a person who thinks real estate prices will rise to become a speculative buyer than it is for someone who thinks real estate prices will fall to become a speculative seller. It seems to me that that mismatch was one of the driving forces behind the real estate bubble.

Actually, I think this is only narrowly correct. It's true that there were very few people like Mark Kleiman who were willing to sell their houses at the peak and move into apartments for a while in hopes of making money. Ironically, though, the same derivative market that turned the housing bubble into a global financial meltdown also provided investors with plenty of opportunites to make money by betting that the housing bubble wouldn't last. John Paulson famously did it by shorting CDO tranches and buying mispriced credit-default swaps. Andrew Lahde made a mint via leveraged shorting of ABX indices and other mortgage-related structured credits. Helen Thomas reports that Hayman Capital, Corriente Advisors, and Passport Capital also profited from betting against the housing market. Ordinary mortals could have done it by shorting stocks of home builders or perhaps by shorting REITs.

There were ways to do it. There just weren't enough people around smart enough to see the bubble for what it was and with the backbone to bet a lot of money that they were right about it.

Anecdotal Evidence

| Wed Oct. 15, 2008 5:04 PM EDT

ANECDOTAL EVIDENCE....Just got back from lunch with a conservative friend of mine that I hadn't seen for a couple of months. My guess is that he's never voted for a Democratic president in his life. Today, though, he dropped off his absentee ballot with the box marked for Barack Obama.

The final straw? Sarah Palin. "Can you imagine her actually becoming president?" he asked. I'll bet he's not the only one wondering.

Free the Debates!

| Wed Oct. 15, 2008 4:48 PM EDT

What do Arianna Huffington, the founders of Craigslist and Wikipedia, Kos, the big wigs of MoveOn.org, the co-founder of RedState.org, and a number of internet pioneers all have in common? They are all part of something call the Open Debate Coalition, a group of folks left, right, and center who want to see the presidential debates and the commission that organizes them fundamentally reformed.

The Open Debate Coalition has three primary objectives: (1) Make raw footage of the debates part of the public domain, so that journalists, bloggers, and citizens can access it without concerns about a major network slamming them with a copyright suit. (2) Allow citizens to vote for questions in advance using the internet, so that town halls aren't conducted at the whim of a moderator. And (3) reform or replace the Commission on Presidential Debates, a group which declines to make information on its funders public and has not released the debate rules to which both presidential campaigns have reportedly agreed.

This is not a commission that holds itself to iron-clad ethics rules. Anheuser-Busch has sponsored the presidential debates in every cycle since 1996 — as a result, its hometown, St. Louis, has hosted at least one debate in all but one of the last five presidential elections. Reports the Center for Public Integrity, "For its $550,000 contribution in 2000, the beer company was permitted to distribute pamphlets against taxes on beer at the event."

While seeking sunlight is never easy, the Open Debate Coalition would be excused for thinking they have an ace up their sleeve: the support of presidential contenders Barack Obama and John McCain. Both candidates have written letters (here's Obama's; here's McCain's) expressing support for the coalition's ideals.

So far, no luck. But the members of the coalition aren't giving up — they see a future where debates bear no resemblance to the ones we have today, which, should anyone need reminding, are essentially identical to the ones held between presidential candidates 25 years ago. "2008 will likely be the last year that the Commission on Presidential Debates will exist as we know it," Adam Green, Director of Strategic Campaigns for MoveOn.org Political Action, told me. "In the future, voters will demand interactions with the candidates that are democratic, transparent, and accountable to the public."

Or, as Andrew Rasiej, founder of Personal Democracy Forum, told the Washington Post: "Hopefully, comparing the 2012 debates to those of 2008 will be like comparing a 5th generation iPhone to a bullhorn."

Devo Returns to Akron to Help the Democrats

| Wed Oct. 15, 2008 3:26 PM EDT

mojo-photo-devo.jpgNew wave innovators and silly hat proponents Devo are coming together to play their first show in their hometown of Akron, Ohio in 30 years, and it's a fundraiser for the Democratic Party.

Over the years, the band has performed several times in Cleveland and at Blossom Music Center, but, by Devo member Mark Mothersbaugh's recollection, the band's show on Friday at the Civic Theatre will bring the band full circle as the theater was the setting of their final Akron concert in 1978. The show, called Duty Now for the Future — the title of Devo's sophomore album — will be a benefit for the Summit County Democratic Party. … "Ohio is in our blood," said Mothersbaugh, "you can take the boys out of Ohio but you can't take Ohio out of the boys.''
The band, which also includes Mothersbaugh's brother, Bob; brothers Gerald and Bob Casale and Josh Freese, is not touring, but Mothersbaugh said the election was too important to stand by and do nothing to inspire folks to get to the polls.
"I think our fans are like us in that they are pro-information and anti-stupidity,'' he said laughing heartily.

Devo members, in addition to being anti-stupidity and wearing those funny hats, have also been active proponents of the Church of the SubGenius, which in this day and age is probably considered a terrorist group, so it's probably best if Obama himself doesn't show up. But apparently the Black Keys and Chrissie Hynde might. Go, Ohio! Are there any direct flights to Akron from here?

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Obama Is a Terrorist and I'll Vote For Him

| Wed Oct. 15, 2008 3:18 PM EDT

I discussed ways McCain might get back in the race below, but if this report is to be believed, it's a lost cause. These were the reactions a Republican consultant got from blue collar types in the upper Midwest after showing them the nastiest possible anti-Obama ads:

54 year-old white male, voted Kerry '04, Bush '00, Dole '96, hunter, NASCAR fan...hard for Obama said: "I'm gonna hate him the minute I vote for him. He's gonna be a bad president. But I won't ever vote for another god-damn Republican. I want the government to take over all of Wall Street and bankers and the car companies and Wal-Mart run this county like we used to when Reagan was President."
The next was a woman, late 50s, Democrat but strongly pro-life. Loved B. and H. Clinton, loved Bush in 2000. "Well, I don't know much about this terrorist group Barack used to be in with that Weather guy but I'm sick of paying for health insurance at work and that's why I'm supporting Barack."

The consultant, who gave this account to Ben Smith over at Politico, called it "the two most unreal moments of my professional life of watching focus groups."

Obama Advertising in Variety of Video Games

| Wed Oct. 15, 2008 2:30 PM EDT

Back when Obama bought an entire channel on the Dish Network, I wondered if his campaign has too much money on its hands. I think it's safe to say the answer is yes.

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Asset Bubbles

| Wed Oct. 15, 2008 1:59 PM EDT

ASSET BUBBLES....Should the Fed (and other central banks) try to prick asset bubbles before they get out of hand? In theory, sure, but as Mark Thoma points out, the problem is that we're not very good at recognizing bubbles in the first place: "If we didn't identify one of the largest bubbles in memory, and for the most part people didn't, I'm not confident we will be able to come to any kind of consensus about 'ordinary' sized bubbles before it's too late. And if that's the case, waiting until we are certain we are observing a bubble will delay policy beyond the point where it can be helpful."

So what to do? Mark suggests a simple solution: the Fed already reacts to ordinary inflation, which is calculated as a complex weighted average of the prices of various goods and services. When these prices rise faster than long-run fundamentals dictate — creating micro-bubbles, if you will — the Fed reacts by raising interest rates. But the Fed's definition of inflation is incomplete:

There is one set of prices, however, that theory says ought to be part of the rate-setting decision, but they are missing. And interestingly, and perhaps only coincidentally, the one set of prices that are not monitored and responded to just happen to be the place where bubbles erupt — asset prices. But if we include these prices in the Fed's policy rule so that whenever asset prices rise the Fed responds by increasing the target interest rate, and if we weight the asset prices properly so that some prices, e.g. housing prices, receive more weight (house prices are notoriously sticky, so theory says they ought to receive a lot of weight), then perhaps it's much less likely that a little bubble turns into a big bubble. Asset price inflation will be stopped by increases in the federal funds rate (and if it isn't stopped by interest rate hikes, then other measures can be implemented). With this approach, you don't have to debate whether a particular price run is a bubble or not; if it is creating asset price inflation, then there will be an automatic response of the federal funds rate to temper the increase. To me, not having to know if it is a bubble or not is an attractive feature.

This might just be an example of the recency effect on my part, but it sure seems as if the last couple of decades have produced more than the usual number of asset bubbles. What's more, they've become steadily more dangerous. On a proportionate scale, the U.S. subprime bubble wasn't actually any bigger than either the Japanese or Swedish real estate bubbles of the late 80s/early 90s, but a combination of derivative speculation and the absolute size of America compared to either Sweden or Japan magnified it into a global disaster that previous bubblemeisters could hardly dream of.

So yes: it's time to pull our heads out of the sand and start giving asset inflation some weight in Fed anti-inflation policy. It doesn't have to dominate Fed policy, it merely needs to be a factor in it. Remember: the point isn't to eliminate asset bubbles, only to try to tame them a bit. I imagine Ben Bernanke has other things on his mind at the moment, but this seems like something worth a serious rethink once the current crisis calms down a bit.

What Would an Obama Administration Mean For Rock 'n' Roll?

| Wed Oct. 15, 2008 1:56 PM EDT

mojo-photo-obamanirvana.jpgI know, I know: don't jinx it. But seriously, have you seen the latest polls? With a 14-point lead, I think a little creative visualization is allowed. So, a Democratic president takes over from an unpopular Bush-led administration after an Iraq war doesn't quite turn out as hoped, as the economy goes spiraling into the pooper. Sound familiar? An eerily similar set of circumstances was at play 16 years ago, and at the same time, an edgy, independent new genre of punk-inflected rock came to dominate American culture and redefine the notion of "alternative" music. Grunge was both idiosyncratically local and an inevitable product of its time, an expression of anguish and frustration at the world: the failing economy, monolithic pop culture, an out-of-touch government. Granted, Nirvana's Nevermind hit #1 on the Billboard album charts in January, 1992, just as candidate Bill Clinton was fighting off the now-almost-quaint-seeming Gennifer Flowers scandal, and clearly, the Northwest grunge scene had been bubbling under for a few years before that. But right now, rock, as such, seems primed for a revival: charts are dominated by hip-hop and American Idol winners, and the underground is all electro, all the time. Could a generation of kids be about to lose their jobs and pick up guitars?