Saturday Afternoon News REAL

Good Afternoon Conflucians!

In the mood to discuss some news?

The Nation Politic:

I read this yesterday morning from a link in the morning news thread down page, but it bears putting up here if you didn’t catch it.  It’s from RealClearPolitics and it’s entitled “Can the Clinton Coalition survive Obama? It’s a great look at Virginia as a bellweather state for why democrats are losing some voters quickly.

States with a Democratic base of liberals, urbanites, and minority voters — like California and New York — haven’t moved much against Democrats.  Obama’s polling numbers, as well as those of Democratic candidates for Governor and Senator, in classic “Emerging Democratic Majority” states like Colorado and Nevada are not looking good at all.  And of course in Jacksonian states like Kentucky, he’s below 40%.

This doesn’t mean that Democrats are doomed in 2010. An improved economy, Republican missteps, and a host of other factors could keep the band together for them. Maybe some of the more marginal voters that Obama brought to the polls to enact hope and change will return in 2010 to keep hope alive. But the personal nature of Obama’s victory is starting to show its downside for downticket Democrats.

The Clinton coalition is looking creaky. If Obama doesn’t improve and the coalition comes apart, Democrats could find themselves weaker than they were even in the 1980s and 1990s.

Over on Politico, Newt Gingrich is worried about Republicans eating their young alive in destructive primaries.  So what else is new?  There’s an entire group over there with an agenda that they expect every one to goosestep to … including women’s issues.

Former House Speaker Newt Gingrich predicted disaster for his party if the conservative wing of the GOP continues to field independent candidates to the right of the party’s nominee.

“If we get into a cycle where there are tea parties and there are conservative third-party candidates, we will make [Nancy] Pelosi speaker for life,” Gingrich told POLITICO in an interview Thursday, calling the practice “totally destructive.”

But Gingrich, who broke with many fellow conservatives by getting behind the liberal Republican who was nominated but ultimately dropped out and backed the Democrat in a New York special congressional election, admitted that Dede Scozzafava was too far to the left to hold the GOP’s center-right coalition together.

“That’s a mistake,” he said, referring to a candidacy such as Scozzafava’s. “But it’s equally clear that you can’t be a right-wing party and govern the country.”

Then, at the Wall Street Journal, Scott Rasmussen warns the democrats a little more about losing independents.  Given all this analysis, do you think independents have any where to go any more?  I sure as hell don’t want either party any more underwhat’s gone on and I hardly see Obama as too far to the left … what’s an independent to do?

Mr. Obama’s approval among likely voters has dropped to the low-50s in most polls, and the most recent Rasmussen Reports poll of likely voters shows him slightly below the 50% mark. This is a relatively low rating for new presidents. Mr. Obama’s approval rating began to slide in a serious way in early July, triggered by a bad unemployment report.

A look at more detailed data shows why Mr. Obama’s ratings are likely to drop even further.

A CNN poll released Nov. 6 found that 47% of Americans believe the top issue facing the country is the economy, while only 17% say its health care. However, the bulk of the president’s efforts over the past six months have been not on the economy but on health care, an issue in which he continues to draw negative ratings.

In a Rasmussen Reports poll taken after the House of Representatives passed health-care reform by the narrowest of margins last Saturday night, 54% of likely voters say they are opposed to the plan with only 45% in favor. Furthermore, in the all-important category of unaffiliated voters, 58% oppose the bill. That’s one of the reasons why so many moderate Democratic House members opposed it.

The CNN poll also shows that in addition to health care, a majority of Americans disapprove of how Mr. Obama is handling the economy, Afghanistan, Iraq, unemployment, illegal immigration and the federal budget deficit. Put simply, there isn’t a critical problem facing the country on which the president has positive ratings.

The Economy:

Are financial regulators captured by their banks and is that an inherent systemic problem?  Yes, says Steve Randy Waldman at Interfluidity in Discretion and Financial Regulation.

An enduring truth about financial regulation is this: Given the discretion to do so, financial regulators will always do the wrong thing.

It’s easy to explain why. In good times, regulators have every incentive to take banks at their optimistic word on asset valuations, and therefore on bank capitalization. It is almost impossible for bank regulators to be “tough” in good times, for the same reason it is almost impossible for mutual fund managers to be bearish through a bubble. A “conservative” bank examiner who lowballs valuation estimates will inevitably face angry pushback from the regulated bank. Moreover, the examiner will be “proven wrong”, again and again, until she loses her job. Her fuddyduddy theories about cash flow and credit analysis will not withstand empirical scrutiny, as crappy credits continually perform while asset prices rise. Valuations can remain irrational much longer than a regulator can remain employed.

Bad times, unfortunately, follow good times, and regulatory incentives are to do the wrong thing yet again. When bad times come, overoptimistic valuations have been widely tolerated. In fact, they will have become very common. Overvaluation of assets leads to overstatement of capital. Overstatement of capital permits banks to increase the scale of their lending, which directly increases reported profitability. Banks that overvalue wildly thrive in good times. Fuddyduddy banks lag and their CEOs are ousted and The Economist runs snarky stories about what schlubs they are. The miracle of competition ensures that many of the most important and successful banks will have balance sheets like helium balloons at the end of a boom. Then, like a pin from outer space, somebody somewhere fails to repay a loan

For being the Fed in the Sunny South, the Atlanta Fed’s Macroblog sure likes being dismal and gloomy in this analysis called “Small businesses, small banks, big problems?”

They still see problems coming for Commercial Real Estate  (CRE) and this will lead to further problems in small businesses who are hurting for customers now.

What are the connections between CRE and small business? An obvious direct link running from small businesses to CRE is that small businesses are an important source of demand for many types of commercial space. A link from CRE to small businesses is that CRE problems in banks could potentially affect credit availability for small businesses.

CRE pressures
The problems currently facing the CRE industry have been building for some time for both property owners and the holders of CRE debt:

• The income generated by nonresidential/nonowner-occupied CRE has generally been falling as vacancy rates on commercial space rose, and capitalization rates–the ratio of income to valuation–have climbed sharply.
• The decline in CRE valuations has created a significant amount of “rollover risk” when CRE loans and mortgages mature and need to be refinanced (about $340 billion in CRE debt is estimated to mature in 2010 and 2011). At the same time, delinquency rates on CRE loans have been increasing sharply, especially for CRE lending for residential construction and development purposes.

Cultural Shock and Shlock:

We know about SoD’s vagina wars …  now we have the War on Bambi according to The Economist.

As humans spread into once-rural areas, deer learned to adapt. With few or no natural predators, and thanks to the advent of hunting bans in developed areas, they thrived. There are an estimated 30m deer in America now, more than there were a century ago. The growing herds in urban and suburban areas have sparked a number of programmes to control the animals, not without controversy among humans.

In Town and Country, a suburb of St Louis, Missouri, the problem has reached a dire stage. The community suffers, on average, a collision a week between a deer and a car, and the animals are scoffing plants of all kinds in yards and gardens. After a series of heated hearings the city has decided to spend $150,000 on getting sharpshooters to kill 100 deer and veterinarians to sterilise another 100. The city has already tried other methods including paying for the relocation of deer, an ineffective tactic (the deer just came back) that has now been outlawed. The suburb has also banned people from feeding the deer, which has upset residents who like them.

What’s on your reading list today?

(As with all of our news threads, this one’s open!)

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