Wednesday, November 26, 2008

Paul Volcker is a great addition to Team Obama

I am glad to see that P-E Barack Obama has found a great way to utilize the talent and experience of Paul Volcker. Although he had been talked about for Secretary of Treasury, that did not seem to be the right fit to me. Age is not a primary criterion, but "high energy" of the sort needed for hands-on operation of Treasury did not seem to be what Volcker is all about these days. But part-time head of a special team to oversee the administration's response to the financial and economic crisis with the President's Economic Recovery Advisory Board seems to be an ideal fit to me.

In short, after a slow start out of the gate, Team Obama is now firing on all cylinders. Not that any of these announcements actually "fix" anything at this moment, but they do help to instill confidence that Barack will have a great economic team in place on the real Day One of his administration on January 20, 2008.

I am also heartened by the fact that Barack has focused his team on hard-core pragmatic centrists and not the kind of "flighty" idealistic Progressive zealots that were his core supporters during the campaign. His economic team members are people focused on the job to be done rather than mindlessly babbling (and bubbling) "Yes we can! Yes we can!"

-- Jack Krupansky

Tuesday, November 25, 2008

Still too much Old Economy deadwood holding the New Economy back

Although President-elect Barack Obama has ambitious plans for creating millions of "green" jobs, the sad fact is that the U.S. economy is still heavily overweighed with Old Economy jobs and way too light on New Economy jobs. Jobs to rebuild infrastructure and schools will still primarily focus on keeping the Old Economy on life support. We should be trying to accomplish much more of basic education online with modern communication and social networking tools rather than creating more or simply newer so-called "class" rooms that do more to stifle creativity and enthusiasm than leverage it.

I am not sure what the answer is, but it still seems so unfortunate that the New Economy has failed so miserably at supplanting the Old Economy in the U.S. economic order.

One would have thought that pumping money into the New Economy would be the way to go rather than propping up General Motors and our endless highways that seem geared more to wasting energy rather than leveraging it.

The really sad thing is how hopelessly dependent the New Economy is on the Old Economy.

For example, I have selected a 100% "green" power option for my electricity supplier here in New York City (Energetix, 60% low-impact hydro and 40% wind power.) But, even though my raw electricity cost for this "green" power was less than $5 last month, it cost $15 for Old Economy ConEdison to "deliver" that "green" power to my apartment.

Hopefully, that dependence will gradually begin to diminish, but it may be another five years or even ten years before we actually start to see some serious light at the end of the tunnel and can finally start to contemplate a truly New Economy U.S. economy.

But for now, it is quite frustrating that "fiscal stimulus" for the U.S. economy will mostly focus on the Old Economy, even if a small fraction of the money does get "targeted" for "green" investments.

-- Jack Krupansky

Monday, November 24, 2008

Barack Obama's absolutely worst speech ever!

Although the leaked details of Barack Obama's new economic team were quite impressive and inspire great confidence, his announcement today was his absolutely worst speech ever! Not only was he simply reading from a written script, he was botching it left and right, stumbling even on relatively simple text. I was not sure whether to laugh or cry when he struggled with "macroeconomic." Sigh. He picked a great team, so why did Mr. Eloquence give such a poor presentation? Why did he waste so much time going into boring details about his nominees that can be found on a simple Wikipedia page? And why did he give such long-winded answers to very simple questions by reporters? Unfortunately, the obvious answer is that he simply is not comfortable with economics, finance, and economists. Fortunately, he has picked a strong team so that he can be hands-off and let them do their thing.

To be fair, this was not a speech per se. But seriously, major announcements need to be made with much more crispness and confidence, especially when the topic is of such a serious concern to all Americans.

The Dow was up almost 400 points today. I am convinced it would have been up 800 points or more if Barack had not given such a crappy speech.

-- Jack Krupansky

Lawrence Summers is a great choice to head Obama's National Economic Council

Although Lawrence Summers was a leading contender for Secretary of Treasury, heading the president's National Economic Council is a much better fit for his background and temperament, just as Treasury is a much better fit for Timothy Geithner.

One unknown is exactly how Bernanke and Geithner (not to mention Summers) will get along since formerly Geithner was a subordinate, in a position to carry out the policy decisions of the Federal Reserve Board and the Federal Reserve Open Market Committee. He certainly has proved that he can work well with Bernanke in his current role, but now he will have a somewhat more political role for the opposite party from Bernanke. I suspect things will work out fine, but we will have to see how it evolves, especially as Obama economic and financial policy takes on a life of its own, somewhat different from the policies of President Bush.

-- Jack Krupansky

Sunday, November 23, 2008

How much will it cost to create 2.5 million new jobs?

I applaud P-E Barack Obama's commitment to create 2.5 million jobs over the next two years. Now, the question is how much that will cost. I will make several assumptions:

  1. The goal is decent-paying middle class jobs that really do make a step forward in revitalizing the decimated middle class.
  2. The jobs would pay in the $50K to $100K range, or an average of $75K.
  3. Most of the jobs should be sustainable and not go away as soon as the fiscal stimulus spigot shuts off.
  4. It will take at least two to three years of federal stimulus before the private sector picks up the slack and federally-stimulated jobs become full-fledged private sector jobs. I will assume three years, just to be safe.
  5. We will create 1.25 million jobs in the first year and another 1.25 million jobs in the second year.

In addition to the cost of salary, there are also benefits, health care, retirement contributions, corporate overhead, and the profit margin needed for the private sector to want to preserve the job once it is created. Altogether, I estimate that stimulating a single $75K job will cost about $200K, per year, for three years, or a total of $600K over three years.

We can create five jobs for $1 million a year, or 5,000 jobs for $1 billion per year, or one million jobs for $200 billion per year, or 1.25 million jobs for $250 billion per year, or 2.5 million jobs for $500 billion per year.

So, if we create 1.25 million jobs in the first year the cost will be $250 billion. Creating another 1.25 million jobs will cost another $250 billion in the second year, plus another $250 billion to sustain the new jobs from the first year. Then it will cost $500 billion to sustain all 2.5 million jobs in the third year.

Over three years that total cost will be $250 billion plus $500 billion plus $500 billion or a grand total of $1.25 trillion dollars.

Yes, I would certainly hope that the private sector would pick up the slack well before three years, but there is too much potential for unexpected difficulties to feel very comfortable with that assumption.

Also, part of the stimulus will in fact flow back to the federal government in the form of taxes, but some unknown portion of that will also be lost to tax credits, especially as corporations are likely to initially receive some tax credit to create these new jobs.

Although some of the new jobs could be created in state and local governments, it would be better for job creation at that level to be funded by an increase in local and state tax revenues from the new jobs.

I would also argue that a significant percentage of these jobs, especially infrastructure rebuilding and maintenance really should be permanently part of the federal budget and not strictly simply a one-time stimulus expense. Say, something on the order of 20% of the jobs or 500 thousand jobs or 250 billion over three years or $100 billion per year on an ongoing basis.

In summary, we need to permanently increase the federal budget by $100 billion per year to cover "normal" infrastructure rebuild and maintenance, and then spend an additional $200 billion in the first year, plus $400 billion in the second year and third years for non-infrastructure jobs. The non-infrastructure or "stimulus" total would be $1.0 trillion. The infrastructure job cost over that three years would be $250 billion. The total would be $1.25 trillion.

There should probably also need to be a sharp increase in infrastructure usage fees to help make infrastructure projects at least partially pay for themselves. Otherwise, those projects end up being funded by general tax revenue. Ultimately, that is a "social" or political question of what share of the burden of infrastructure cost should be shouldered by users versus everyone as an integrated society.

-- Jack Krupansky

Friday, November 21, 2008

Is that the low for the stock markets?

Now that P-E Barack Obama has apparently selected Tim Geithner as the next Treasury Secretary to the approval of the financial markets, one might suspect that the stock market has set its low for this business cycle. Sure, it all depends on how well the rest of the new administration economic team comes together and hits the ground running after the inauguration with a robust fiscal stimulus plan, but it does look as if this is indeed likely to be the case. There is no guarantee any of this, but it does appear that the incoming Obama administration is coming together nicely and starting to set the stage for the beginnings of an economic renaissance in the Spring.

That said, it is possible if not very likely that short-term speculators will run the market up sharply and then back down sharply to "test" the low, and they may do that several more times before a solid bottom can be firmly established.

We will be getting a boatload of negative economic reports for months to come (e.g., the final report for Q4 GDP comes out in late March), but some of the leading economic indicators may start to show a little life sometime in January, particularly as retailers pursue post-holiday sales and euphoria over the new administration and the new fiscal stimulus plan take off. A GM, et al bailout "bridge" loan deal in December that gets the ball rolling for dramatic restructuring of Detroit could also provide the market with support. The FDIC and the Federal Reserve are both moving forward with additional support for the banks.

The most significant leading economic indicator of all is the stock market. People who sniff out a turnabout of economic activity place their early bets in the stock market. It may take weeks or even months before unemployment claims and mortgage applications begin to show a pickup in economic activity again, or at least start to show a slowing of the decline in activity.

The tentative intraday low for the Dow for this business cycle was 7,392.27. The closing low was 7,552.29, yesterday, Thursday, November 20, 2008.

The tentative intraday low for NASDAQ for this business cycle was 1,295.48. The closing low was 1,316.12, yesterday, Thursday, November 20, 2008.

The tentative intraday low for the S&P 500 for this business cycle was 741.02. The closing low was 752.44, yesterday, Thursday, November 20, 2008.

-- Jack Krupansky

Tim Geithner for Treasury?

The rumor mill has it that Federal Reserve Bank of New York president Tim Geithner will be announced as Barack Obama's appointee to be Secretary of Treasury. This is a wise choice and selects someone who has both a lot of experience and will be a fresh face in the Cabinet. The president of the NY Fed is also a permanent member of the Federal Reserve Open Market Committee, so we will be getting someone who has current experience sitting at the table in the middle of the current financial crisis. The NY Fed is responsible for carrying out all of the "market" and "system" decisions that are made by the Federal Reserve Board of Governors and the FOMC, and also it the Federal Reserve's main point of contact with Wall Street, giving Geithner access to the inside view of the crisis like no one else.

In short, I hope this rumor/leak is true. I suspect that it is.

Apparently, the stock market agrees, with the Dow up almost 500 points.

The rumor mill also says that Bill Richardson has been selected for Commerce. Another good choice.

So far, P-E Barack Obama is batting 1,000. He was a bit slow coming off the block, but is quickly coming up to speed.

-- Jack Krupansky

What about Bill?

The latest rumor-mongering has it that Hillary has effectively accepted the Secretary of State job, but that the announcement will not come until after Thanksgiving. Maybe they have to double-check the vetting or something, but there is no clarity as to the reason for a delayed announcement.

But, my big question is whether Bill Clinton might be given some role within the Obama administration, such as being an envoy in the Middle East, or some other negtotiation role, maybe with Iran or North Korea. Otherwise, his experience and knowledge and ability will be rather wasted since an appointment of Hillary to State will imply restrictions on Bill's private business activities.

Or... maybe he could take over Hillary's position in the U.S. Senate.

And then there is the other Bill, Bill Richardson. If he is not to get State, what role would make sense for him that he hasn't already filled back in the Clinton days (UN, Energy)?

-- Jack Krupansky

Is Hillary a done deal for Secretary of State?

According to news reports fed by leaks or rumors of leaks or whatever, Hillary Clinton is supposedly Barack Obama's final pick for Secretary of State. But, if that was really the case, why wouldn't he announce it? He appears to be using a "test by leak" strategy where a decision is floated by leaking it to see how it is received, giving him deniability and the opportunity to change his mind before finally going public. Assuming that this is his strategy and that no serious objections have been raised, that would strongly suggest that Hillary is virtually a done deal unless she decides to back out.

Personally, I would rather see Bill Richardson as Secretary of State and Hillary given some Senate leadership position and an opportunity to shape health care reform.

Finally, I am contemplating whether or when Hillary might seek to become Governor of New York as her next big jump.

-- Jack Krupansky

Thursday, November 20, 2008

What??!! Congress actually did manage to do something useful this week!?!!

Believe it or not, our lame-duck Congress actually managed to get something right this week. Today the Senate approved the extension of unemployment benefits. This is a relatively small thing, but at least it is a positive move forward on the economy.

As far as GM, it does now look as if Congress will pass at least some bandaid form of assistance for GM, et al after the Thanksgiving break, sufficient to assure people that the car companies can limp along until the big bailout in February after the new administration and Congress kick into gear.

Personally, I am fairly confident that GM, et al can limp to February without government aid, but with so many Wall Street vultures circling, a few extra billion dollars in cash with the promise of more to come will boost confidence that the companies are in fact going to survive.

I also continue believe that GM, et al need very radical restructuring, but Congress cannot dictate that in a few days. In fact, all Congress will really be able to do in February is slap a bunch of restrictions on the car companies and give them enough cash to make it through 2009, and then later in 2009 the companies will have to start the radical restructuring on their own.

So, this week is a week for Congress to rant and rave about every imaginable criticsim of Detroit. Next week they get to cool their heels and contemplate "The Abyss." And the following week they get to do the right thing, which they could have done this week if they had a commitment to progress rather than a commitment to partisan wrangling.

Incidentally, I do agree that they should not use the retooling loans for the bailout bridge funding. The retooling is all about the way forward after the big bailout. If anything, the February bailout should allocate even more dramatic retooling aid, coupled with agressive commitments to the environmental and energy agenda of the incoming administration. In fact, I would argue that we should offer Detroit as much retooling aid as it takes to completely revamp to a 100% plug-in hybrid product line within five years. Talk about being able to kill multiple birds with a single stone.

-- Jack Krupansky

Tuesday, November 18, 2008

Hail to Barack Obama, a consummate pragmatic centrist

Virtually every single move that Barack Obama has made since he won the election can be categorized as indicating that we is a hard-core, pragmatic centrist, rather than the kind of starry-eyed left-wing idealistic Progressive that so many of his supporters claimed that he was. Rather than getting rid of "Clinton people", he seems quite intent on utilizing them at almost every turn. The latest was "news" that Eric Holder, Deputy Attorney General for Clinton, would be Barack's appointee for Attorney General.

I keep waiting for Barack to make some decisions that are not right in line with what Bill Clinton would have made or Hillary if she was in his shoes, but so far he is toeing the pragmatic centrist line in a very disciplined manner.

Unlike the presidential campaign when I did not feel that I could support him even though I was willing to vote for him as the lesser of two evils, I now feel comfortable saying that I support him, since the election.

-- Jack Krupansky

How deep and long will the recession be?

At this point, most people accept that the U.S. economy is in a deep and long recession, but how deep and how long is total speculation at this stage. If there were no additional fiscal stimulus, the economy might begin to inch back upwards in six months to a year. With substantial fiscal stimulus the economy might begin to bounce back in three or four months.

One difficulty is that a stimulus-fueled recovery is not an indication that the economy is back to health. The real question is when the economy will be healthy on its own without significant stimulus. Otherwise, the removal of stimulus could simply result in a double-dip recession.

So, maybe the proper question is that how long the recession will last, but how long it will take before the underlying economy shows enough strength that most people would agree that the underlying recession is really over. That could be nine months, a year, eighteen months, or even two years.

Another difficulty is that virtually all government spending is effectively fiscal stimulus, so how do we really say that any particular dollar of government spending is really targeted at fighing a recession rather than a "normal" investment in a stable economy. For example, one element of fiscal stimulus is bound to be transportation construction spending for bridges and highway and the like. The Democrats would argue that we should have been doing that spending all along. So, maybe once we start that additional stimulus, it stays in place indefinitely, raising the baseline economy. In fact, one could argue that both the current and preceding recessions were due to the same cause, insufficient investment in government infrastructure.

I would also caution that military spending is also a fiscal stimulus, so any decline in military spending due to a withdrawal from Iraq (that doesn't immediately simply shift over to Afghanistan) will result in a decline in GDP unless replaced with other fiscal "investment." One unknown is the impact of returning a significant number of guard and reserve soldiers to civilian life, where their jobs are as uncertain as anybody else's.

As far as my headline question, I really do not know, but I suspect that the recession will "destroy" about 5% of GDP and that it will take another one to three months after a modest to moderate level of fiscal stimulus (starting in February?) before the underlying economy starts trending up from that "step down" in GDP. But, it is also possible that employment will continue to trend down and lag the overall GDP recovery by another six months after that.

Note that technically a recession ends as soon as the up-trend begins, which would be the month that a significant level of fiscal stimulus hits the streets. Recessions (ala NBER) are measured "peak to trough" and recoveries are measured "trough to peak." In other words, even if there is a 5% "step down" of GDP, we do not need to build back any of that 5% decline before a recovery can technically begin. This is a part of the reason why a jobs recovery typically will not kick in right away.

-- Jack Krupansky

How much fiscal stiimulus is needed? (Updated for Q4 forecast of real GDP of -3.9%)

[Updated to base estimates on the Macroeconomic Advisers estimate of -3.9% for Q4 real GDP.]

No matter how much money the government dispenses as economic stimulus, it is all for naught if it does not stimulate strong enough economic activity and expectation of future activity so that new jobs are created. So, two principles are needed: 1) commitment to continue the stimulus until the economy no longer needs it, and 2) enough money is spent each month to generate enough economic activity to force businesses to rehire or create new jobs. So, an open-ended commitment is needed, not unlike what we currently have with Iraq and the war on terror.

My best guess is that the economy is currently on a -1% to -3.5% annualized track. Given a $14.4 trillion annual economy, -1% annualized corresponds to a decline of -$12 billion per month ($14.4 trillion times 1% is $144 billion, divided by 12 is $12 billion.) A -3.5% annualized decline corresponds to a decline of -$42 billion per month.

But, getting back up to zero decline is not going to stimulate creation of jobs. We probably need to get up to +2% or even +3% so that businesses actually "feel" that the economy is "strong" enough (artificially, of course) to warrant and sustain rehiring and creation of new jobs.

So, my math says we would need a minimum of 3% (to get from -1% to +2%) to maybe up to 6.5% (to get from -3.5% to +3%.) In dollar terms that would be a range from $36 billion to $78 billion per month. That may sound like a modest amount of money, compared to say $700 billion, but that would be every month for some unknown number of months.

Again, this would have to be an open-ended commitment. I do not imagine that three or four months would be enough, but I do not imagine that more than a year would be required. That would be a range from a total of $180 ($36 billion for five months) to upwards of $780 billion ($78 billion for 10 months.) That may sound like a lot of money, but it may be what is needed to get the economy back on track.

As a nominal, initial plan, I would suggest starting with the estimate of annualized Q4 real GDP of -3.9% from Macroeconomic Advisers and pump out $83 billion per month for four months and then calibrate at that point based on actual economic activity and job creation. That would mean a nominal initial commitment to spend $332 billion.

So, that is my number for how much fiscal stimulus is needed to get the economy back on track: $332 billion. That is what Congress and the White House need to commit to once Barack Obama takes office.

-- Jack Krupansky

Monday, November 17, 2008

Hillary for Secretary of State?

Should Barack Obama appoint Hillary Clinton to be Secretary of State? Sure, why not. I am sure she would do a great job, but I would still prefer to see Bill Richardson in that post. Besides, I would hate the see Hillary having to spend half of her time squabbling with Joe "Mr. Know It All" Biden. And, I would rather have her continue to be my Senator.

It does appear to be true that Hillary does not have much of an edge in the Senate pecking order, but I would not count her out yet. Besides, until all of the votes are counted we won't really know how much the Democrats will need her (and Joe Lieberman) to fight off the bitter Republicans. We do not really know the trajectory of Ted Kennedy's health, but we do know Hillary's passion for pursuing universal health care. The Senate leadership should try to recognize the priority of getting results rather than the nit-picking of their seniority system.

Maybe Barack should pick a temporary Secretary of State for the next year or two to get the ball rolling, and then maybe Hillary will be a better bet to come in and take over at that point. In some sense, Richardson is better equipped to hit the ground running, with his UN, diplomatic, and Energy experience.

So, if I were in Barack's shoes, I would not worry so much about Beltway politics and focus on who will have the required focus and passion for showing leadership on the diplomatic front.

My advice to Barack: Bill Richardson for State and twist arms to get Hillary a position in the Senate worthy of her stature and abilities.

-- Jack Krupansky

Wednesday, November 12, 2008

Will GM be bailed out?

Despite all of the tortured wrangling over whether the bank bailout bill can or should be used to bail out GM, it does appear that Congress is likely to step in and at least pass a partial bailout next week. Given the long list of issues involved with bailing out GM, especially the restrictions which Congress would like to place on GM, it is rather unlikely that a full-blown $100 billion bailout would sail through Congress in just a few days. But, a "bridge" bailout to give GM a little breathing room until the new administration is in office and Congress has time to hold hearings, craft a detailed bailout proposal, and then enough time to sell the proposal to the various constituencies seems more likely. Maybe something in the $25 billion range makes sense.

The bank bailout bill was originally intended to shore up banks and the rest of the financial system and not be a general economic bailout. Sure, Congress can re-legislate the bailout, but that may simply open up a can of worms for all manner of other modifications that various groups want since few people are very happy with the current state of the bank bailout. Better to craft a simple, narrow bill to bridge GM until February or March.

Or... Pelosi and Reid can simply agree to pass the Coulmbia free-trade bill and then President Bush would be much more amenable to instruct Paulson to "interpret" the bank bailout program as desired to give $25 billion to GM. The easiest way would be to "buy" part or all of GM's interest in GMAC (which would fit naturally under the bank bailout) for $25 billion or so. Or, at least do that purchase as a "repo" loan to be paid off from the eventual full bailout in the spring. Actually, GMAC is probably not worth $25 billion, but a repo could be done anyway. Or, limit the bailout to the estimated value of GM's share of GMAC. That should probably be enough to hold GM until February or March.

In any case, some form of bailout is very likely. Bush, Pelosi, and Reid would all look rather stupid without it. They are simply playing a game of political chicken to see who blinks first.

-- Jack Krupansky

Sunday, November 09, 2008

Richardson for Secretary of State?

Bill Richardson is in fact my first choice for Secretary of State. Although, this would be another case of a Clinton veteran in the Obama administration while Barack Obama had "promised" that he was going to "turn the page." That can cut both ways, but he would give a lot of instant credibility to our diplomatic efforts and he would be able to hit the ground running. It would also be an indirect tip of the hat by Barack to the Clinton camp and the Clinton legacy that was bashed so enthusiastically by the Progressives during the primary campaign.

Barack is of course still free to pick someone else using criteria of his own, but it is starting to seem as though he is intent on picking the best people for the job rather than picking people that the Progressives might be enthusiastic about.

-- Jack Krupansky

Why is Obama so hands-off on the current Treasury bank bailout effort?

A lot of people, especially Democrats, are not very happy with the current state of the Treasury bank bailout effort, but oddly Barack Obama has "held his fire" in either vigorously endorsing or criticizing the Treasury program. Why would he do that? Reasons I can think of include:

  • He actually isn't a hard-core Progressive and in fact has definite Centrist leanings, so he does not want to tar himself as being merely yet another partisan sniper.
  • He actually wants to defer to the congressional Democrats as a gesture of good will in return for the support that they gave him in the election.
  • This is a deliberate effort on his part to attempt to pre-configure the relationship between the White House and Congress, where the White House sets big goals and then Congress tinkers with the details to meet those goals, so that there can be a shared sense of achievement, rather than having a lot of big congressional egos feeling that they are simply being used as rubber stamps. This appraoch could enable him to tackle much bigger efforts than if he were to focus only on efforts that the White House alone could "push" through Congress.
  • This is a deliberate effort to establish a bipartisan "tone" and to refrain from needlessly bashing "the other side" simply to run up some partisan political points.
  • He does in fact actually recognize the complexity and scope of the problem and simply wants to establish his "tone" as deliberate and thoughtful rather than another knee-jerk response. In his first news conference he used the phrase "deliberate haste" and explicitly emphasized his intention to be "deliberate."
  • He does in fact recognize that the best course is to let the current bailout run its course to the point where it is either clearly working or clearly broken before jumping into the fray.
  • He wants to wait until he announces his pick for Treasury and then delegate full responsibility for handling the financial crisis to him or her.
  • Maybe he is still considering the possibility of keeping Paulson on for an interim period to get the bailout fully operational, but simultaneously wants to keep his distance to preserve "deniability" if the bailout fails in any way.
  • Maybe it is all simply too much for a fledgling administration to digest so early in the game.
  • Maybe he does actually believe that the current bailout and bailout team is about as good as it is going to get, but does not want to admit that since it would deeply offend a lot of Democrats
  • Maybe he sincerely wants to establish a "tone" of extreme hands-off where he focuses on the big picture "vision stuff" and subordinates are charged with rolling up their sleeves and doing any detail work or even criticism.
  • Ultimately, this stuff really is really hard and there are no simple answers, so off-the-cuff critiques are particularly useless. Lesser politicians would babble anyway.

In short, I suspect that Barack is being so hands-off because he intends to be extremely hands-off. Yes, he will be the ultimate decisionmaker, but he recognizes that distributing responsibility and sense of participation and ultimately sense of achievement is critical for managing a problem of this complexity.

In other words, at this stage of the game I am willing to be quite generous. Seriously, I do think he has some serious "juice" up his sleeve and that he will in fact provide excellent leadership, but that is mostly a suspicion on my part rather than a belief that is backed up by hard facts.

There is an open question of whether true leadership means that the leader must hold the hands of the "babies" every single step of the way, or whether the true leader can succeed and thrive by keeping a slight distance from the "babies" who are afraid that the sky will fall if there is not a daily press conference that explains everything in extremely fine detail. For the record, I agree with Phil Gramm that we are in fact a "nation of whiners" and that the recession is far worse in our heads (and in the media) than it is in reality.

-- Jack Krupansky

Saturday, November 08, 2008

Need for fiscal reform at the state and local level

The current economic episode is highlighting the urgent need for reform of the fiscal management of state and local governments. In theory, "the government", which includes state and local governments, should lend a hand and help out when the economy struggles and goes into recession. Unfortunately, we are seeing that not only are state and local governments not helping, but they are in fact making the problem MUCH worse by cutting spending, services, and jobs. They are in fact doing the exact OPPOSITE of what they should be doing. Somehow, state and local governments picked up on Wall Street's "disease" and revamped their fiscal policies to exploit and leverage for "boom" times and to be completely unprepared and in fact wrong-footed for "lean" times. Now, state and local governments want (and do need) the Federal government to "bail" them out. Sure, the Federal government should in fact lend a hand and bail them out, but only after extracting promises to reform the fiscal policies of state and local governments that led to the need for a bailout.

What is needed is a credit facility that would issue debt secured by the U.S. Treasury and loan money to any state or local government that requests it. That federal guarantee would make the debt as good as "normal" Treasury debt, so it should trade easily in the debt market. The interest rate for the loans should be at least 5% to assure that the Federal government will earn a profit and that the state and local governments feel at least a little pain for their fiscal misbehavior and encourage the loans to be paid off ASAP.

The reform that is needed should have two components: 1) state and local governments must agree to be net savers in boom times, so that they can self-fund from their own deep reserves in lean times, and 2) state or local constitutional balanced-budget requirements need to be set aside in "extraordinary times" such as recessions when tax receipts fall sharply enough that even savings from boom times are insufficient to cover the shortfall.

There is simply no good excuse for the current situation where the response to economic weakness and a temporary shortfall of tax receipts is a significant cut in spending, services, and jobs. It is precisely in times such as these that state and local government spending, services, and jobs are most needed and should in fact be expanded rather than contracted.

Although I encourage balanced budgets, I would be cautious about increasing taxes. If taxes need to be increased, do it in boom times to raise reserves for lean times. But raising taxes in lean times is a particularly wrong-headed approach, probably driven by balanced-budget restrictions, and will simply lead to making the problem (economic  weakness) worse by taking even more money out of the pockets of consumers and businesses.

-- Jack Krupansky

Friday, November 07, 2008

Who is spilling on who?

Is the financial crisis spilling out into the economy or is it economic weakness spilling into the financial system, or both? In his first press conference, Barack Obama said that "We have a current financial crisis that is spilling out into the rest of the economy." Yes, that is what we all have been saying, but when I actually read it like that, it immediately occurs to me that the direction of spillage is a little more complicated, so that simply fixing the financial system does not automatically fix the economy.

The basic problem is that the economy, for example GM and the airlines, was actually not in great shape when the financial crisis was taking root. In fact, GM and significant portions of the so-called "old economy" were really in rather sad shape back in the 1990's and basically got a free pass as a result of the rise of the "new economy" and the tech boom in the late 1990's. The dot-com boom gave the car companies and airlines the mistaken impression that "old economy" companies were doing just fine, if not great.

Then the technology and dot-com boom ended. And then 9/11 came along. Then all of the old problems with the "old economy" resurfaced.

In response, the Federal Reserve lowered interest rates in 1.00%.

That caused four problems: 1) the creation of the housing bubble (and we know how that movie ended), 2) the creation of a credit bubble that left Wall Street (especially hedge funds) thinking that they were on the top of the world, 3) the creation of a commodities bubble, and 4) the "old economy" companies got another reprieve from their structural problems and misguidedly acted as if they were in good shape rather than on the edge of a precipice.

We have been seeing the effects of the collapse of those three bubbles, but now we are on the verge of re-opening the storage vault where we had hidden all of those "old economy" structural problems for over a decade. A few billion dollars won't put very much financial "lipstick" on those "old economy" skeletons and pigs.

The car companies. The airlines. The companies that support construction. The list goes on.

Sure, we can and should have fiscal stimulus for transportation and other infrastructure construction projects, but that will not result in sustainable job creation.

After lowering interest rates to 1.00% and then watching the three bubbles grow and grow, eventually the Federal Reserve decided that inflation was a looming issue and began to raise rates.

Wall Street does not like rising interest rates.

But, I am not convinced that rising rates alone triggered the current problems, at least directly.

Rather, the housing bubble was so extreme and Wall Street's credit bubble (and the rise of the so-called "shadow banking system" was so extreme that people were willing and permitted to buy houses at any price and at any interest rate. Wall Street (and not Fannie Mae and Freddie Mac) had gotten addicted to securitization and even preferred the riskier debt due to the higher fees. And rising housing prices alone was also fueling further demand.

Then the housing market essentially hit what is known as "buying exhaustion" -- everybody who wanted to buy a house had done so. Not every last person, but the volume of demand rapidly fell off. Even though the Fed was raising its short-term target rate, mortgage rates remained quite low. The shadow banking system and Wall Street securitization were interfering with the effect of the Fed trying to raise rates.

Roughly at the same time, the demand for securitized debt rapidly fell off. This was at least partially due to rising rates (the Fed) which quickly made a lot of other investments relatively more attractive than securitized debt.

Wall Street was screwed. They were dependent on securitization for fees, but the somewhat out of sync bizarre combination of falling demand for mortgages by consumers and falling demand for securitized mortgages by investors left Wall Street holding the "bag", in particular, structured investment vehicles (SIV) holding mortgages and mortgage-backed securities, while buyers of those securities were suddenly becoming scarce.

Now the "old economy" companies were screwed. Rising interest rates were directly impacting them, and suddenly Wall Street and the so-called "shadow banking system" were unable to supply the copious amounts of super-cheap credit that the "old economy" companies were addicted to, such as GMAC and zero-percent car loans.

And once the "old economy" companies are screwed, their workers are screwed.

The result is a significant recession.

In short, a non-recessionary cooling of the economy (deflation of the housing bubble) led to a financial crisis on Wall Street. That is not the fault of the Fed for raising rates, but the fault of Wall Street for misguidedly structuring itself to be critically dependent on low rates and no longer able to cope with rising rates. Then, the financial crisis on Wall Street led to a credit crunch, which crippled both the "old economy" and even the "new economy" (venture capital is suddenly scarce.)

We can and should blame Wall Street for becoming addicted to the housing bubble, but it was in fact a slowing in at least one sector of the economy that triggered the Wall Street financial crisis.

The point is that merely putting the Wall Street Humpty Dumpty back together again does not resolve the longstanding structural problems in the "old economy."

Simply throwing money at the "old economy" companies does not magically restructure their inherent problems away.

And simply throwing money at consumers (who may be out of work) to in turn throw at the "old economy" companies does not automatically create new and sustainable jobs.

Interestingly, two of the key structural problems in the "old economy" are pension liabilities and health care costs. With the new administration having a high priority on both retirement and health care, it seems rather obvious to me that we really do need to move both retirement and health care out of the corporate structure.

In summary, we need to do a bunch of things and they need to be done in parallel. For awhile the banking system was clearly the top priority, but I do think that Ben and Hank have that firmly in hand. Now, we have two "spill" effects to deal with, the structural problems of the "old economy" and consumers and "new economy" businesses that are feeling under significant pressure due to unemployment, tight credit, and spending cuts at the "old economy" companies.

-- Jack Krupansky

What will be Obama's first big move on the economic front?

At least it is clear that Barack Obama has a "pantheon" on economic advisers, and he has promised to "confront this economic crisis head-on", but the big question is what his first big move will be. Sure, he needs to appoint a Treasury secretary. Sure, he needs to appoint a council of economic advisers (although he temporarily has his current "transition economic advisory board.") But what is he/they actually going to do?

Of course, he could simply sit back and watch as Ben and Hank continue to work their financial magic for the next two and a half months.

He could also decide to keep Paulson at Treasury for an extended transition period, say through March. I am now thinking that this would be a best bet.

Ultimately, the first question is whether Barack believes that the current bailout effort at Treasury is consistent with the direction he will want to head on inauguration day. To date, he seems to agree would the rough outlines of Treasury's financial bailout, but as he digs in further I am sure that he will refine his approach. The question is whether he will simply make a relatively minor midcourse correction or seek to radically revamp the entire bailout scheme, or something in the middle. I suspect the latter, but maybe the priority is to get the new fiscal stimulus package put together and underway, and then go back and tinker with Treasury.

For reference, read the transcript of Obama's first press conference after meeting with his transition economic advisers. It is a great counterpoint to his election-night speech. In it he says:

... we've lost nearly 1.2 million jobs this year, and more than 10 million Americans are now unemployed. Tens of millions of families are struggling to figure out how to pay the bills and stay in their homes. Their stories are an urgent reminder that we are facing the greatest economic challenge of our lifetime, and we're going to have to act swiftly to resolve it.

I am still wondering exactly what timeframe he considers "swiftly."

-- Jack Krupansky

Can GM be saved from bankruptcy?

Flip a coin whether GM can actually avoid bankruptcy. On the one hand, the combination of the credit crunch, a sharp decline in consumer spending, a competitive disadvantage relative to Toyota, et al, and the potential for a deepening recession all point to extreme pressure on GM. But on the other hand, its bloated structure, continued reliance on gas guzzlers such as the Hummer, and continued reliance on GMAC for consumer financing, all strongly suggest plenty of room for restructuring. The open question is the degree of restructuring that GM is willing or able to do pre-bankruptcy vs. post-bankruptcy. Technically, I strongly suspect that they can do enough to avoid bankruptcy. Some of it might be a bit too painful to contemplate right now, but sliding towards bankruptcy will only make it more painful. I also suspect that there is a fair amount of posturing going on right now in an attempt to get some bigger "bailout bucks" from the government.

A few years ago I was convinced that GM would survive, but only if restructured within five years to the extent that it was no longer recognizable. Maybe we are finally approaching the point in time where that restructuring transition finally takes place. The whole situation has deterioated to the point where it looks as if this will transpire by the end of next year, if not sooner. I have no idea what the restructured result would look like. Maybe it would simply be a "Mini-GM" (GM-Mini?) that is only 25% the size of GM today and completely focused on vehicles of the future, such as the Volt, and whatever other brands are significantly profitable.

I suspect that the incoming Obama administration is unlikely to simply let GM "fail", but I sure hope they do not simply throw another $50 billion at them that simply helpes them limp along but not actually transform into a newer and leaner GM. We need a reinvigorated GM, not simply a subsidized GM, regardless of whether the economy is in a recession or not.

The government cannot simply help make GM much more competitive and not provide the same benefits to Ford and Chrysler.

Maybe the trick is to buy up a huge chunk of the assets of the three companies and then lease them back at an attractive rate so that the companies have the $100 billion or so of cash that they need for next year, while the government in fact gets a decent income stream from the leases. The companies would then be expected to buy out of the leases over the next five to ten years.

In short, I do believe that GM, et al can in fact be saved from bankruptcy, but only if the result at the end of the process is something new and completely different and that does not resemble the GM of today.

But, I suspect that what will happen is something in the middle, where GM, et al get a combination bailout, part of which is a simple loan payable over a number of years and part of which is simply a bridge loan for assets sales that would occur once the credit crunch has fully dissipated. My suspicion is that once they get this money, then they will quickly realize that they really do need to go for the dramatic restructuring.

I suspect that the final tab for the GM, et al will be in the $100 billion to $200 billion range.

Sure, the taxpayers will "foot the bill", at least initially, but if managed properly such a deal could be a net gain for Treasury over the next five to ten years.

Two restructuring steps I want to see are: 1) a complete spin-off of GM capital, either selling it to a bank, or creating a full-fledged bank from it, and 2) a complete spin-off of the GM pension fund, forming the core of a new private pension fund entity which would look like a privatized version of the Social Security Administration, and could take on pension fund operations from other companies as well. These two steps would help enormously in letting GM focus on being a lean and mean car company.

-- Jack Krupansky

Thursday, November 06, 2008

White house chief pit bull appointed

Barack Obama's first important staff appointment, chief of staff, Rahm Emanuel, is sure to be quite a pit bull for President Obama. "Hard-charging", "relentless", "tough-minded", "blunt", "high energy", "direct", "pragmatist", and all of that. Sounds like a good choice.

Oh, and he is a former Clinton staffer. Good for the pragmatic centrist angle, but not so good for the "new politics" and "turn the page" angle. Still, that is a net positive, from my own centrist perspective.

Oh, and he worked as a Wall Street investment banker. Hmmm... Ugghh... Well... the upside is that he will have enhanced credibility with the finance industry and political negotiations related to finance and the economy. The downside is the lack of a "turn the page" angle. Still, overall, this is a net plus.

Overall, this is a great pick and should really get the ball rolling.

-- Jack Krupansky

Transition to governing underway

The two notable aspects of Barack Obama's transition team is that it is now briskly underway in a very robust manner and that there are a significant number of Clinton "allies" involved. Granted, this is simply the transition team and not the actual administration staff and cabinet, but it is at least a sign that Barack does not intend to start out with a completely blank slate.

It is interesting that Barack is in fact considering Clinton appointees Larry Summers and Robert Rubin for the Treasury post. I do not have any problem with that. Although that would at least superficially fly in the face of "turning the page" on the "old guard" Democrats, Barack does have a practical problem of wanting to hit the ground running right in the middle of a massive financial crisis with a leader that is credible to the financial industry. Although, in truth, Summers was always more of an academic genius and did not have any roots in Wall Street, but maybe that in fact gives him credibility with Main Street and the liberal side of the Democratic party.

In short, Larry Summers would be a great pick (and my first pick) for Treasury, but it leaves the Obama administration starting out on a pragmatic, centrist foot, when the bulk of the campaign support had more of a non-moderate, progressive tone.

So, the big question will be whether the Treasury pick will be an anomoly or the shape of things to come. Sure, there are plenty of cabinet and agency slots available for fresh, young talent, but the big interest is in how the most senior and elite slots get filled early in the game.

-- Jack Krupansky

Wednesday, November 05, 2008

Missile defense in Eastern Europe

If VP-elect Joe Biden wants an opportunity to show off his foreign policy credentials, he should clue us all in about whether the Obama administration is going to continue ahead with missile defense installations in Eastern Europe, or whether Obama should simply reverse course and pull out of Eastern Europe. The Russians are certainly interested in showing that they can be tough with the U.S., so this is Joe's opportunity to figure out either how to bow out gracefully, or talk tough to the Russians.

-- Jack Krupansky

How much fiscal stiimulus is needed?

No matter how much money the government dispenses as economic stimulus, it is all for naught if it does not stimulate strong enough economic activity and expectation of future activity so that new jobs are created. So, two principles are needed: 1) commitment to continue the stimulus until the economy no longer needs it, and 2) enough money is spent each month to generate enough economic activity to force businesses to rehire or create new jobs. So, an open-ended commitment is needed, not unlike what we currently have with Iraq and the war on terror.

My best guess is that the economy is currently on a -1% to -2.5% annualized track. Given a $14.4 trillion annual economy, -1% annualized corresponds to a decline of -$12 billion per month ($14.4 trillion times 1% is $144 billion, divided by 12 is $12 billion.) A -2.5% annualized decline corresponds to a decline of -$30 billion per month.

But, getting back up to zero decline is not going to stimulate creation of jobs. We probably need to get up to +2% or even +3% so that businesses actually "feel" that the economy is "strong" enough (artificially, of course) to warrant and sustain rehiring and creation of new jobs.

So, my math says we would need a minimum of 3% (to get from -1% to +2%) to maybe up to 5.5% (to get from -2.5% to +3%.) In dollar terms that would be a range from $36 billion to $66 billion per month. That may sound like a modest amount of money, compared to say $700 billion, but that would be every month for some unknown number of months.

Again, this would have to be an open-ended commitment. I do not imagine that three or four months would be enough, but I do not imagine that more than a year would be required. That would be a range from a total of $180 ($36 billion for five months) to upwards of $660 billion ($66 billion for 10 months.) That may sound like a lot of money, but it may be what is needed to get the economy back on track.

As a nominal, initial plan, I would suggest a full $66 billion per month for four months and then calibrate there based on actually economic activity and job creation. That would mean a nominal initial commitment to spend $266 billion.

So, that is my number for how much fiscal stimulus is needed to get the economy back on track: $266 billion. That is what Congress and the White House need to commit to over the next two weeks.

-- Jack Krupansky

Ban torture

It will be interesting to see how many days it takes before the incoming Barack Obama administration publicly commits to issuing a presidential directive banning torture in all situations, and then how many days it takes after the inauguration before such a directive is actually issued.

A second issue is how the administration views "coercive interrogation" overall, not just when it rises to the level that internationally would be recognized as torture.

A third issue is how the incoming administration will view the rights of terrorism detainees, whether as prisoners of war or simply as criminal defendents, and whether aliens will be accorded comparable rights to U.S. citizens.

Fourth, we await a decision on the status of Guantanamo and whether and when detainees would be either released back to their native countries or transitioned to the criminal justice system here in the U.S. Or, whether they might truly become prisoners of war.

-- Jack Krupansky

Progressive or centrist?

Another big question I am waiting to answer is whether a Barack Obama administration will actually have a hard-core "progressive" flavor and tone, or whether Barack will make a right turn to realism and be more of a centrist. I suspect the latter, or possibly a blend, but I simply do not know. We will start to get a sense of his true ideological direction as soon as he starts announcing his key cabinet picks.

Again, my main suspicion is that his administration will have a modest "flavor" of progressive values, but otherwise be fairly moderate and centrist. After all, that is the signal that the selection of Biden as Vice President sent out. And his work with Republican Senator Luger also had that "flavor."

And certainly "reaching across the aisle" would require leaning in the centrist direction.

-- Jack Krupansky

The big question: Will Obama be hands-on or hands-off?

The single biggest question about the upcoming Barack Obama administration is whether Barack intends to be more of a hands-on manager or more of a hands-off executive focused on the big picture and selecting staff that he can trust to "do the right thing". I think he leans towards the latter, which is why his staff and cabinet appointments are so important, but that is more of a supicion on my part. He appears to have let David Plouffe and David Axelrod handle most of the details of his presidential campaign while he focused on the vision and big picture stuff, all to good effect. So, my suspicion is that we will see more of the same. Sure, he will be the ultimate decision maker, but the most important decisions will be the initial hiring decisions.

I am most anxious to see who Barack picks to head Treasury.

The Pentagon will be another early, high-interest pick. I suspect that Barack does not want to "run the war" from the Oval Office, but would prefer a "SecDef" who shares his vision and is ready to "just do it."

It will be interesting to see how Barack decides to divide up global repsonsibilities between State and the Pentagon, and then what role Biden will play in that scheme. And, of course, it will be quite interesting to see what kind of person gets picked for National Security Adviser.

Then there is the issue of who will be "point man" for Health Care reform. Sure, it could be the Health and Human Services secretary, but maybe it might be useful to keep the "reform czar" separate from the "keep the trains running on time" head of Health and Human Services. Tough choices to make here. What role Hillary and Ted Kennedy will play remains to be seen, but I suspect their roles will be strictly within the Senate and that Barack will pick a young go-getter, but I have no idea who that could be.

Another interesting question is how many corporate executives from the private sector will be tapped for some of these high-profile positions. Unfortunately, so many executives these days are distinctly "old guard." This means that Barack could tap one or two levels down in the corporate hierarchy to get to the younger rising stars.

Finally, Michelle Obama might have one or more high profile policy roles, rather that simply being First Lady and First Mother.

-- Jack Krupansky

Transition to governing

Now that we can check off the election step of the process, we can move on to what for me are the interesting stages of gaining a new president. Yes, we will also have more mindless celebration for the actual innauguration, but mostly we will be getting into the real "meat" of building a new administration.

The dense but still vague and sometimes overly-specific policy statements and campaign promises will probably wither on the vine in the face of reality, as they should, and be superceded and transcended by specific initiatives, many of which need to take root in Congress before they can effectively be pushed by the White House.

I am looking forward to the following:

  1. Naming of the transition team
  2. Naming of the cabinet, and whether it will be a strict "new broom" approach or whether some "retreads" from the Clinton years might sneak in as well
  3. Stating of principles that will be guiding policy rather than simply the mindless details
  4. Formulation and execution of the next fiscal stimulus package, before the innauguration
  5. Revised plan for finishing the cleanup of the mortgage mess, part to be put into effect post-innauguration, part negotiated with the current Congress and administration
  6. Statement of intentions and goals for the first 100 days
  7. Preliminary thoughts on a new architecture for regulating banking, finance, and investment
  8. Preliminary thoughts on a radical improvement in energy policy, especially alternative energy sources, investment, and creation of new jobs
  9. Preliminary thoughts on reinvigorating the middle class - a simple tax cut is a gimmick
  10. Preliminary thoughts on what exactly the role of government is in assuring the rapid creation of the next 10 million jobs and accelerating the transition from "old economy" to "new economy" jobs
  11. Preliminary thoughts on the respective roles of the public and private sector - in other words, do we need more socialism or not? Will government and government involvement need to grow dramatically?
  12. Preliminary thoughts on transitioning away from the Neoconservative "war on terror"
  13. Preliminary thoughts on how to make a real dent in health care
  14. Initial policy "priorities" and how they will evolve as costs and benefits and needs evolve

That is just a hint of the huge amount of work that is needed for a new administration to hit the ground running and to instill a sense of credibility for carrying through the vision espoused during the campaign.

To me, this is the "fun" stuff.

Sure, Barack Obama will also give plenty of rousing speeches, but 99% of the work will not be about speeches.

-- Jack Krupansky

Tuesday, November 04, 2008

Instant win

It was amusing to see the Obama electoral vote count sitting at 207 for quite a while waiting for the West Coast results to come in and then instantly see his number leap to 284 in the same sentence as the announcement that the West Coast polls had closed. The polls close and less than two seconds later Obama is declared the next president-elect. Technically, Obama now has his win, but we still do not know the final electoral college vote tally. I suspect that he will come in a bit higher than my forecast of 325 electoral college votes. Virginia was just called for him, bringing him to 297. Florida, North Carolina, Indiana, Missouri, and Colorado are still hanging.

-- Jack Krupansky

Celebrating in New York City

On my usual evening walk here in Manhattan I swing by either Rockefeller Plaza or Times Square. This evening I swung through both, where there were crowds gathering to watch the election results come in. Even before 9:00 p.m. there was a fair amount of cheering and celebrating. I got to Rockefeller Plaza just as Ohio was called by MSNBC. There was certainly a lot of cheeringat that point, especially since Pennsylvania had already been called. I stayed for a little while, long enough to see New York called, probably with the widest margin of any state (except for the District of Columbia which was 92% for Obama). The crowds were moderate size, but not huge. Although there was occasional cheering, especially when a called state was displayed, otherwise the people I could see were upbeat but not totally ecstatic. OTOH, I was near the fringe, so down in the center of things I imagine the frenzy was probably more pitched.

I write this at 10:57 p.m., with a fair number of projected wins already made, but do not see any reason to change my own personal projection from this morning:

Based on all of the polls I have seen, I would forecast that Barack Obama will win the popular vote with between 51% and 58% of the votes. It sure does look like a slam dunk for Barack to get an electoral college win or even a landslide, but the actual electoral college votes for Barack could literally be all over the map, from a low of 275 up to a high of 375.

Using the midpoints of those ranges, I will forecast that Obama will get 54.5% of the popular vote and 325 electoral college votes.

It is 11:03 a.m. ET as I "seal" this forecast.

-- Jack Krupansky

An Obama win?

Based on all of the polls I have seen, I would forecast that Barack Obama will win the popular vote with between 51% and 58% of the votes. It sure does look like a slam dunk for Barack to get an electoral college win or even a landslide, but the actual electoral college votes for Barack could literally be all over the map, from a low of 275 up to a high of 375.

Using the midpoints of those ranges, I will forecast that Obama will get 54.5% of the popular vote and 325 electoral college votes.

It is 11:03 a.m. ET as I "seal" this forecast.

-- Jack Krupansky

In and out in 45 minutes

Voting was actually almost a snap this morning here in New York City. I went by the Sutton Place Synagogue on 51st Street and saw a very long line with hundreds of people stretching all of the way down the block to Second Avenue and then three quarters of a block up towards 52nd Street. I decided to stay and see how quickly the line moved. In fact, it was moving quite quickly. Actually, part of the speed was due to people bailing out, usually after obsessing over their Blackberry for awhile. I got in line at 8:15 a.m. and was in the front door of the Synagogue barely 30 minutes later. Downstairs they had like two dozen voting machines and the same number of lines. It was quite crowded and reminded me of the Union Square farmer's market with half the people trying to stand in some line and the other half trying to push through and around the lines to get to someplace else. My line, for Election District (ED) 007 only had about five people in it, but was all the way in the back in the corner. I had my card, so it was easy for them to find my name. In and Out. I was walking out the door by 9:00 a.m., a grand total of 45 minutes. And I had been prepared for a two-hour wait. This was definitely smoother than even my best case scenario, especially given all the media obsessing on "voting problems."

I voted Democratic "party line" all the way and "No" on the one question on the ballot.

This morning on my walk to the synogogue and then on to get breakfast, I only saw one political button (Obama), one bumper sticker (Obama, on a delivery van stopped across the street from the synagogue), and one had-written Obama sign down the street (in the opposite direction from the line). There was one woman handing out "bookmarks" for the Assembly candidate. That was it. Nobody anywhere calling out for their candidate. Clearly New Yorkers have bigger fish to fry (like the implosion of Wall Street) than whichever of the two bozos gets to sit in W's chair. Oh, and somebody taped up a laser-printed Obama flyer at my apartment building extrance, which I pointed out to our super, who promptly mumbled something and tore it down. So much for policking in New York City. Actually, I think all of "them" are off in "battleground states", such as Pennsylvania, doing get-out-the-vote duty.

-- Jack Krupansky

Sunday, November 02, 2008

McCain on Saturday Night Live

I just watched the video of John McCain's appearance on Saturday Night Live and thought it went fairly well. It probably helped to humanize him a little relative to the left-wing propaganda of him being some kind of hideous, inhuman monster. He was a good sport, seemed to get his lines right, and seemed comfortable poking fun at his own campaign. Whether it nets him any votes is questionable, but at least it was a memorable high note here at the end of a vicious campaign.

-- Jack Krupansky