Kevin Drum

Priceless

| Wed Oct. 22, 2008 1:55 PM EDT

PRICELESS....Email from a friend at 12:14 pm:

Prediction: By the end of the week, someone will make a Sarah Palin spot that is a takeoff on the Mastercard "Priceless" ads.

End of the week? Here's former McCain advisor Mike Murphy blogging at Swampland at 1:00 pm:

New ad slogan: "Clothes for Gov. Palin? $150,000. Time machine to go back two months to late August and ask what the Hell were Schmidt and Davis thinking when they cooked up this idea and sold it to McCain? Priceless."

I think my friend is still working on old-fashioned MSM time. We'll probably have three or four versions of that ad up on YouTube by tomorrow morning at the latest. Sometime tonight is probably a better guess.

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Chart of the Day - 10.22.2008

| Wed Oct. 22, 2008 12:35 PM EDT

CHART OF THE DAY....Via Alex Tabarrok, a trio of boffins at the Minneapolis Fed argue that the credit crisis is a myth. Using Fed data they demonstrate that bank credit is up, loans and leases are up, commercial loans are up, consumer loans are up, and interbank loans are up. This is all potentially interesting, but unfortunately they then proceed to ruin their credibility by saying blandly that "while commercial paper issued by financial institutions has declined, commercial paper issued by nonfinancial institutions is essentially unchanged during the financial crisis." Technically that's true, but commercial paper from financial institutions makes up 80% of the entire market, and Figure 6A shows it plunging over the past month like a barrel jumper at Niagara Falls. You'd think that might have been worth a more vigorous mention.

I'm going to go out on a limb and suggest that using aggregate data like this somehow misses the story. It also probably doesn't take into account all the term facilities and loan guarantees that the Fed has put in place over the past year. Still, seeing some data that challenges the conventional wisdom is always worthwhile. Even if it turns out to be wrong, reading the explanation of why it's wrong should be instructive. Perhaps some enterprising econblogger will provide us with just that.

The Market

| Wed Oct. 22, 2008 11:59 AM EDT

THE MARKET....Stocks are down today:

Worries about the corporate sector sent stocks on Wall Street lower again on Wednesday, with the Dow Jones industrials dropping more than 400 points before recovering slightly.

....The problems have appeared in a range of industries. The aviation giant Boeing saw profits fall 38 percent last quarter. Merck, the pharmaceutical company, posted a 28 percent drop in net income and will cut jobs. The North Carolina-based bank Wachovia, which was recently acquired by Wells Fargo, suffered a $23.7 billion net loss.

Stocks have been swinging around pretty wildly over the past few weeks as investors have responded to the drama of the credit crisis, but it's worth keeping in mind that over the long term this is what really matters. If earnings reports stayed strong regardless of credit market problems, then the market would do fine. But that's extremely unlikely to be the case. We've got at least a year of weak corporate earnings ahead of us, and that almost certainly means we've also got at least a year of declining stock prices ahead of us too. Main Street's suffering is just starting.

ZZZZZZ

| Wed Oct. 22, 2008 11:52 AM EDT

ZZZZZZ....An apparently well known jihadist has posted a message suggesting that al-Qaeda should mount an attack on the U.S. in order to help the election chances of John McCain:

The message, posted Monday on the password-protected al-Hesbah Web site, said if al-Qaida wants to exhaust the United States militarily and economically, "impetuous" Republican presidential candidate Sen. John McCain is the better choice because he is more likely to continue the wars in Iraq and Afghanistan.

...."If al-Qaida carries out a big operation against American interests," the message said, "this act will be support of McCain because it will push the Americans deliberately to vote for McCain so that he takes revenge for them against al-Qaida. Al-Qaida then will succeed in exhausting America till its last year in it."

Yawn. I imagine that al-Qaeda will continue mounting attacks on the United States whenever it's actually capable of doing so and regardless of who's president. Screw 'em.

Rat, Meet Sinking Ship

| Wed Oct. 22, 2008 1:13 AM EDT

RAT, MEET SINKING SHIP....The New York Times reports that the McCain campaign has stopped making "hybrids," ads that are jointly sponsored by both McCain and the Republican Party. The official reason is that the law requires hybrids to promote both the presidential candidate and the rest of the party, which muddies the McCain campaign's famously laserlike messaging machine. Henry Farrell isn't buying:

While mixed messages are a significant problem, I (as an admitted naif on these issues) would have thought that getting completely swamped by your opponent's advertising is a rather bigger one. Isn't a more plausible interpretation of this decision that the RNC are finally pulling the plug on their subsidization of the McCain campaign, and the McCain folks are trying to put the best face that they can on it?

That sounds like a pretty plausible interpretation to me. After all, the RNC can read poll averages as well as the rest of us. The latest from RealClear Politics is below.

Slush Fund?

| Tue Oct. 21, 2008 11:53 PM EDT

SLUSH FUND?....Politico reports that the Republican National Committee has apparently spent $150,000 (so far!) to outfit Sarah Palin for the rigors of vice presidential campaigning. Her expenses included $5,000 on hair and makeup, $5,000 at Atelier for men's clothing (for Todd? Track? Levi?), and $140,000 on a series of shopping trips to Saks Fifth Avenue, Neiman Marcus, Barney's, Bloomingdale's, and Macy's. Matt Yglesias comments:

I'm a little bit surprised to learn that expenditures of that sort are legal. They appear on the disclosure forms, so apparently they are, but this seems to open the door to candidates using party committee money as a personal slush fund.

This just goes to show how cynical our younger generation has become. I'm sure that after the campaign is over the RNC plans to donate the clothing to homeless shelters in small towns around the country where they don't have stores like Saks or Barney's. That's no slush fund. It's just people helping people.

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Damn Kids

| Tue Oct. 21, 2008 7:25 PM EDT

DAMN KIDS....From the Wall Street Journal today, Ron Alsop writes about the upcoming generation of "millennials" who are starting to enter the workplace:

If there is one overriding perception of the millennial generation, it's that these young people have great — and sometimes outlandish — expectations. Employers realize the millennials are their future work force, but they are concerned about this generation's desire to shape their jobs to fit their lives rather than adapt their lives to the workplace.

...."They really do seem to want everything, and I can't decide if it's an inability or an unwillingness to make trade-offs," says Derrick Bolton, assistant dean and M.B.A. admissions director at Stanford University's Graduate School of Business. "They want to be CEO, for example, but they say they don't want to give up time with their families."

Damn coddled kids these days. Who do they think they are? For comparison, here's how kids viewed corporate work half a century ago. It's from The Organization Man, published in 1956:

On the matter of overwork they are particularly stern. They want to work hard, but not too hard; the good, equable life is paramount and they see no conflict between enjoying it and getting ahead. The usual top executive, they believe, works much too hard, and there are few subjects upon which they will discourse more emphatically than the folly of elders who have a single-minded devotion to work. Is it, they ask, really necessary any more? Or, for that matter, moral?

....Out of necessity, then, as well as natural desire, the wise young man is going to enjoy himself — plenty of time with the kids, some good hobbies, and later on he'll certainly go for more reading and music and stuff like that. He will, in sum, be the apotheosis of the well-rounded man: obtrusive in no particular, excessive in no zeal.

Damn coddled kids those days. Who did they think they were?

Bailout Watch - 10.21.2008

| Tue Oct. 21, 2008 2:11 PM EDT

BAILOUT WATCH....The latest financial bailout news:

The Federal Reserve, continuing its expansive campaign to try to keep cash flowing through the financial system, unveiled a new program today that acts as a backstop to money market mutual funds....The Fed said this morning that it will lend up to $540 billion to new special entities that will stand ready to buy up that short-term debt from money market mutual funds.

Well, we're now guaranteeing money funds, the commercial paper market, interbank lending, and commercial deposits up to $250,000. There are so many term lending facilities available I can't even keep track of them. We're buying up toxic assets from banks and providing them with $250 billion of new capital (so far) whether they want it or not. What's next? Guaranteeing the pork belly market?

It's no wonder that even Ben Bernanke now favors a fiscal stimulus package that he'd normally hate. There's really not too much left to do, is there?

Five Words

| Tue Oct. 21, 2008 1:10 PM EDT

FIVE WORDS....Five words I hope to hear a lot less of after November 4th:

  • acorn

  • right

  • airs

  • moose

  • bush

These are, of course, all perfectly ordinary words that have done nothing to deserve criticism. But life is unfair. I still don't want to hear them. Feel free to leave other candidates in comments.

A Prediction

| Tue Oct. 21, 2008 1:07 PM EDT

A PREDICTION....Two weeks from right now we will all be desperately waiting for someone to leak the early exit polls even though we know perfectly well that early exit polls don't mean a thing.