Sympathy For The Devil

Over at The New Republic, Jon Chait argues that Rush Limbaugh is right:(emphasis moi)

Rush Limbaugh is drawing some ridicule for saying, "One thing we can all do is stop assuming that the way to beat [the Democrats] is with better policy ideas." But I think he's basically right. Good ideas are meritorious. But being meritorious isn't what wins elections. Most voters have only the faintest idea what policy ideas candidates advocate when running or implement when in office. External conditions (such as the economy, but war and scandal matter also) have much more influence over which party wins.

A few years ago I made a more extensive argument against the idea that "new ideas" were the key to a Democratic resurgence. It was written in the wake of the 2004 election, when there was near-total agreement on right, left and center that Democratic Party's electoral defeat was a result of its intellectual defeat. My argument drew a lot of ridicule, mostly from people who didn't understand the distinction between the public value of good ideas (high) and the political value of good ideas (low)--see Jonah Goldberg and Kenneth Baer and Andrei Cherny. Baer and Cherny wrote:

Now, it is progressives that have a choice. Most of the voices inside Washington believe that conservative errors and overreaching--along with more effective voter targeting and door-knocking by Democrats, more compelling TV ads and new "frames" for old policies--will yield enough votes so that in a closely divided nation, Democrats might eke out a victory and regain power.

We disagree.

I think it's pretty clear that the Democratic comeback since then has had next-to-nothing to with developing "new ideas" and almost everything to do with Republican failure, the state of the economy, and a really effective presidential nominee. yes, Democratic ideas proved more popular, but they really were the same basic ideas the party had advocated for years.

In other words, the public is misinformed and stupid, policy is useless, and the Republicans lost the election (not that the Democrats won).

This argument fails on two basic points. First of all Clinton was the candidate of the same ideas Democrats had, not Obama. Democrats clearly chose Obama, although it was close. People went out of their way to learn about candidates' positions in 2008. Obama won precisely because he had better ideas. So many people said that issues didn't matter, that a black man could never win an election for President. They were wrong. Issues decided the primary, and in turn they decided the election as well. After eight year where policies were dictated and not debated, Americans were hungry for more, hungry for a process that worked. They got involved. They voted in record numbers. They voted on issues and policies.

Second, it was the Republican policies of the last several years that caused the problems they had. Policies on the markets, policies on Iraq and Afghanistan, policies on science, all the problems with the Republican party were problems with Republican policies. It was those policies that have put us in the mess we're in now. These policies failed, and America rejected them. They also rejected much of Clinton's playbook too. The result was Obama's new ideas and radically different policies.

That's the bottom line. Policies decided 2008 from beginning to end of the campaign.

All Fall Down

Dow closed down nearly 300 points to under 6,800 as AIG's record loss simply crushed the life out of the market. This is not a good sign, folks. I think we're headed down a nasty slope here and we're back into freefall mode. At this point, even Nouriel Roubini is scared.

LAST year, the debate over how long the recession will last was between those in the consensus who argued that it would be V-shaped — only about eight months long like those in 1990 to 1991 and in 2001 — and those like me who argued that it would last at least three times as long, 24 months, and be more than three times as deep as the previous two.

Today, as we enter the 15th month, it’s obvious that we are already in a painful U-shaped recession that has become global and will last at least until the end of the year — 24 months, the longest since the Great Depression. Even if the gross domestic product grows in 2010, it is likely to be no higher than 1 percent. And at that rate, with the unemployment rate rising toward 10 percent, we will still be substantially in a recession.

Even if appropriate aggressive policy actions were undertaken — monetary and fiscal stimulus, bank clean-up and credit restoration, mortgage debt reduction for insolvent households — the growth rate would not rise closer to 2 percent until 2011. So this recession may last 36 months.

And things could get worse. We now face a 1 in 3 chance that, if appropriate policies are not put in place, this ugly U-shaped recession may turn into a more virulent L-shaped near-depression or stag-deflation (a deadly combination of economic stagnation and price deflation) like the one Japan experienced in the 1990s after its real estate and equity bubbles burst.

A 36 month depression, meaning no real recovery until first quarter 2011. That's a terrifying thought, and it should be terrifying. Two more years is enough for the Dow to disintegrate back down to under 4k...levels last seen in 1995...or worse 3k, levels last seen when Clinton was elected in late 1992. We could be looking at 20 years of economic growth reversed in this country. That's a tremendous thing.

If we're really looking now at recession in 2011, it might as well be a depression. It's a word even the AP is throwing around at this point. If housing has another 20% to fall, then anyone who buys now is dooming themselves. If there's no housing stabilization, there will be no US recovery. No US recovery means no global recovery, and the whole thing could come crashing down. Americans are already trading down from steak to chicken. Ask your Great Depression era relatives about chicken sometime...there are some who refuse to eat it even today because they couldn't get beef or pork during the depression and didn't want to be reminded of having to eat a "poor man's food."

If you think it's bad now, just wait.

Marking Territory

How cute. Michael Steele gets all angry when somebody tells him Rush Limbaugh runs the GOP rather than, you know, Michael Steele, Chairman of the RNC.

HUGHLEY: You know what we do, we talk like we’re talking now. You have your view. I have mine. We don’t need incendiary rhetoric.

STEELE: Exactly.

HUGHLEY: Like Rush Limbaugh, who is the de facto leader of the Republican Party.

STEELE: No, he’s not.

HUGHLEY: I will tell you what …

STEELE: I’m the de facto leader of the Republican Party.

Sure you are Mike.

Sure you are.

[UPDATE] And Rush in turn tears Michael Steele a new one for daring to cross El Rushbo. Gotta love it.

Responding to criticism by recently-elected RNC chairman Michael Steele, talk show host Rush Limbaugh tore into the party's leader, contending that Steele is actually "not the head of the Republican Party," cautioning that the chairman is off to a "shaky start."

I'm not sure which is the more laughable proposition, Steele as head of the GOP getting his ass handed to him by a radio host, or that same radio host really being the de facto leader of the party.

"Michael Steele, you are head of the RNC," said Limbaugh. "You are not head of the Republican Party."

"I hope... he realizes he's not a talking head pundit," said Limbaugh on Monday. After telling him to go behind the scenes and do the work he's been hired to do, the radio host added, "He's off to a shaky start."

The first clue that Limbaugh would lampoon the GOP leader came in an e-mail to Politico.

"I’ll handle it on the radio," he wrote.

"Mr. Steele, if you want to lead the Republican party -- as you say you do -- you need to run for and win the presidency," said Limbaugh, adding that Steele isn't going to lead the party by being "cute" on cable news.

Since El Rushbo isn't going to take any crap from any Republican who is not in the White House, I say the GOP should enjoy the monster they have created. They're stuck with him for quite some time now.

The GOP is still taking marching orders from Rush, and they will continue to.

[UPDATE 2] And now, Steele has in fact apologized to Rush Limbaugh.

Republican National Committee Chairman Michael Steele says he has reached out to Rush Limbaugh to tell him he meant no offense when he referred to the popular conservative radio host as an “entertainer” whose show can be “incendiary.”

“My intent was not to go after Rush – I have enormous respect for Rush Limbaugh,” Steele said in a telephone interview. “I was maybe a little bit inarticulate. … There was no attempt on my part to diminish his voice or his leadership.”

As Darth Vader once said, "Now your failure is complete." Rush completely owns you assholes. Both John Cole and Andrew Sullivan think Rush should just run for President himself himself in 2012. And why not? As Cole says, "It's Rush's party now." There's no way this can ever be walked back. The ads for the Dems write themselves for the next four years.

If it wasn't so pathetic, so indicative of the total failure of the Republican Party at this point (and I will argue with my last breath that a solid, intelligent opposition party is necessary for the functioning of America) it would be hysterical.

[UPDATE 3] Josh Marshall has the best line of the year so far:

Dems gloat after Rush awards himself sole custody of Steele's testicles.

The Oxycontinfather runs this town, bitch. You work for him, Mike.

House Of Cards

Over the weekend, Zandardad mentioned to me that he's really, really sick of seeing the stock market tank. In the last 18 months, the market has lost 50% off its October 2007 peak. We both agreed that there's little hope for a recovery until the housing market turns around. Eventually, Pops argues, Americans are going to decide to buy houses again. That's true to a point.

The problem is that it's much harder to get a mortgage these days. It's a reverse "Paradox of Thrift" scenario, call it the "Paradox of Lending." Banks don't want to lend long-term right now in this market. When the housing market is continuing to collapse, making a mortgage loan right now is good for the industry as a whole, but very bad for banks individually. Banks make money long-term on mortgages, and in the short-term they were making even more as home prices went up. If the person couldn't afford the mortgage, the home asset the bank would repossess would still go up in value. It was okay to make zero down payment mortgage loans because the market was going up, up, up.

But now, making a mortgage loan is a huge risk for the bank. They are demanding as much as 15%-20% up front as a down payment now, so the practical upshot is that the home that was out of reach at $300,000 and no down payment is even more out of reach at $200,000 and 30 to 40k up front. That turns into an even worse short term deal for the consumer should that home drop in price. They've sunk tens of thousands into a home up front that will probably lose another 25% or more in value. Good deal for the banks, but in today's job market a suicidal move.

Until the housing market bottoms out, it's not going to turn around. And it won't bottom out until people can buy. Banks want a big down payment now, one that people can't afford, and the irony now is for Americans tapped out in personal debt, and especially having lost a huge chunk of equity in their current home and in the stock market, it's harder to buy a home at these prices then it was in 2006, even though the total price is far less.

Still, home prices do have a ways to go. For the most part they are still too high, which shows you just how out of control the housing bubble got. At this point government intervention is the only thing that will get this housing market out of the death spiral it's in. Obama is at least taking steps to keep people in their homes, but Republicans continue to say keeping Americans in their homes is not the government's business.

Has it occurred to the Republicans that if the government doesn't do this, then the free market is incapable of doing so until home prices fall nationally to Detroit levels?

According to the Chicago Tribune, the median price for a home sold in the month of December 2008 in Motor City is Seven Thousand, Five Hundred dollars.

Let me run that by you again.

You can buy a house in Detroit for less than the cost of a used car. That, ladies and gentlemen, is what is in store for the rest of the country should this death spiral continue. Folks who bought mortgages in the 90's and early 2000's are in real, real trouble nationally. When home prices drop so low that they end up owing more on their house than the house is worth, the banks will jack up their mortgages. They will lose their homes. In turn, this will depress housing prices even more, and more people will leave and lose their homes...depressing housing prices even more until we get the Detroit Scenario all over. It's happening to a lot of other cities in the US right now too.

The country is slowly coming apart at the seams right now, one housing disaster at a time. The housing depression has reached critical mass, folks. We're on the edge of a complete meltdown in this country. Pray Obama can help fix it.

StupidiNews!

• Insurance giant AIG reported a staggering $62 billion loss this morning.
• A new study shows universal health care would cost six times less than the bank bailouts.
• Secretary of State Hillary Clinton takes a crack at Middle East peacemaker.
• Eastern European countries are concerned Obama may backtrack on regional security deals.
• Microsoft is getting into the t-shirt business and calling it "Softwear".