Friday, October 17, 2008

AP in Tank for Obama - Poll Analysis Proves It

Today the DrudgeReport headlined an AP/Yahoo Poll with the message: Obama 42, McCain 40, a surprising contrast to many of the other media-generated polls showing Obama with leads of 6 to 10 percentage points.

Drudge has to Link to PDF

I was curious why Drudge's link to the AP/Yahoo Poll went to a PDF that needed to be downloaded, and that the download was the actual polling data, but I checked it out anyway. Here's the Poll link.

Sure enough, there on page six of the poll was the 42-40 result, with Obama only up by 2 points among likely voters.

Why Drudge had to Link the PDF


So why didn't Drudge just link to the AP article on the poll as written by AP writers, Alan Fram and Trevor Tompson? See for yourself. Here's a link to the AP story headlined: Poll: Voters Souring on McCain, Obama Stays Steady
.

Take a look. Not a word of the narrow 2-point lead by Obama appears in the entire article. Instead, it's filled with items that indicate McCain is losing ground to Obama.

What Else Did Fram/Tompson Miss?

Given that these two managed to write a fairly lengthy article about their own poll but miss the main result of the poll, that is, who's leading and by how much, I thought it might be interesting to see if they ignored any other interesting results.

You be the judge. Is the Associated Press in the tank for Obama?

Some Evidence AP has Tanked Big Time

The PDF compiles eight sequential polls taken over several months and I'm not sure when the previous ones were dated. However the oldest is referred to as Wave 1 and the latest as Wave 8 in the data.

Should Fram/Tompson possibly have mentioned the result on page 8 showing that in the first poll taken (Wave 1) only 18% of the respondents approved of Congress's performance but that by in the latest poll (Wave 8) that number had dropped to a pathetic 11%. Might they have mentioned that the percentage who disapproved had risen from 59% in the first poll taken (Wave 1) to an astounding 73% in the latest poll (Wave 8.) Would it have been useful information to point out that both houses of Congress have been under management by Democrats during that time?

Even More-Damning Evidence


At the top of page 26 of the PDF, respondents who did not identify with either party have been asked during each poll whether they felt they were closer to being Democrat or Republican. In the first poll taken 31% said Democrat and only 26% said Republican. Remember now, these are voters who didn't associate themselves with either party.

In the intervening polls, the numbers stayed about 4 points apart with the poll just before this last one showing 32% Democrat and 28% Republican. And what of the latest poll? Republicans 30%, Democrats 29%, a five-point swing among independents and undecideds in favor of Republicans!

Yet not a mention in the story by Fram/Tompson.

Misleading by Omission

Instead we get this from Fram and Tompson: Less than three weeks from Election Day, Obama has taken a solid lead over McCain in most national and swing-state polls. The AP-Yahoo! News survey underscores the morale problem McCain faces.

Note they refer to Obama's "solid lead" in most polls while ignoring the tenuous lead in their own polling data. Instead they use data from their own poll to "underscore the morale problem McCain faces."

The Long and the Short of it all

Well, I'll tell you what guys. If you were even reasonably objective reporters and gave both sides of the story maybe McCain wouldn't be facing an (apparent) morale problem. What if your headline was instead: Poll: In Spite of Unease, Independents Shifting to Republicans. Or, if you were in the tank for McCain like you are Obama, even this would be possible: Poll: Dissatisfied with Dem Congress, Independents Leaning Republican.

Hey, a couple of stories like that and maybe McCain wouldn't even be facing a morale problem, especially with the supposedly-unbiased AP writers feeding stories to most of the smaller news outlets in the United States, not to mention the rest of the world.

Friday, September 26, 2008

Is a Bank Holiday in Our Immediate Future?

Google "bank holiday" and on the first two pages you will get primarily a listing of dates when banks are officially closed, a couple of articles on the 1933 event, a news article titled "Bank Holiday" that doesn't address the topic at all, an article about the news slant in one community when the 1933 bank holiday was declared and a wikipedia entry that is all of two short paragraphs describing the 1933 bank holiday imposed by President Roosevelt which reads:

United States Bank Holiday

"The United States Bank Holiday of the Great Depression took place in 1933 when Franklin D. Roosevelt closed the banks from March 6 to March 10 to keep depositors from bankrupting the banking system by withdrawing all their money.

"Banks were allowed to reopen when they could prove that the money in their reserves was greater than or equal to the money that had been deposited in. If the banks were unsound they would stay closed or could apply for a government loan in order to keep from declaring bankruptcy."


Today's News is Void of the Concept

Google lists no current day story using the phrase "bank holiday" (except the misleadingly titled one mentioned already.) A Real Clear Politics search yields zero results as well.

The point is that we are on the verge of shutting off credit worldwide if our Congress can't get its act together, but no one has yet begun to seriously consider what that will mean to you and me. Well, it means a bank holiday, pure and simple. That's the only logical outcome when panic sets in, as it will begin to do as early as today, or over the weekend, if the dithering in DC continues.

How will a Modern-Day Bank Holiday Work? Can it Work?

It was easy in 1933. The article on Charlottesville claimed that bank employees cheerfully pasted "Closed" signs on the front of the bank doors and went home to relax in the sun. The local news of the day was upbeat, claiming that residents of Charlottesville were resourceful, their bank was in fine shape, and that they would easily ride out the storm.

That was then. No credit or debit cards, no international dealings of consequence, no instant internet communication of news (and of rumors) and, perhaps most important, most households had plenty of canned goods stashed in the pantries plus a garden, a few chickens, a hog and a cow to provide food for the table for weeks, if not months.

Today, will the grocery store take your credit card during a bank holiday? Will the gas station? Will you even be allowed to use it? Besides potato chips, Doritos, a twelve-pack of beer and a few cans of Pepsi, do you have any food in the house? Do you have enough cash to eat at McDonald's for the next few weeks? Will McDonald's be open? Will you be able to get through the bank's doors to get the cash you prudently stashed in your safe deposit box? Are you beginning to see why people used to stuff money in mattresses or bury it in a coffee can in the back yard after the 1930's? Do you understand why this only happens every 50-60 years, after all the grandparents have who last experienced it have passed on?

This is Serious

A co-worker of my spouse said we should just let all the Wall Street people suffer. To hell with a "rescue plan." People don't realize that this is about them, not Wall Street, and with the news media fractured into two camps today, one liberal and one conservative, and with no one in the middle looking for the truth except a few bloggers (well, okay, maybe a few million bloggers) no one knows who to believe anymore, so they don't trust the words of anyone in a position of authority.

The President of the United States goes on television in prime time and tells us the country (that's all of us, folks) is in serious trouble and his speech is parsed for politics and otherwise ignored. This isn't about politics, or it shouldn't be. It's about preserving what we have and maintaining order while we do so.

Who'll Get the Blame This Time?


A Republican Congress shut down the government during the Clinton administration over a budget disagreement. It's generally agreed that Clinton, using his bully pulpit, managed to cast most of the blame for the (relatively mild) public inconvenience on the Republicans in Congress and they suffered at the next election, as I recall.

Today, a Democratic Congress (for those of you finally paying attention who have ignored politics for years, yes, the Democrats now control both houses of Congress and have done so for the past two years, and yes, their approval rate is in single digits now at 9%, and about to go lower if they're not very, very careful) is responding to the President's urgent request by larding up the legislation with provisions that will serve no benefit to the general public, but will go a long ways toward solidifying their political powers. Republican legislators are rationally attempting to block such a move, and so we are at a standstill.

So, who gets the blame when this mess forces the President to declare a bank holiday? My money is on the bully pulpit. It's a lot easier to get everyone to listen attentively to a national address when the gas station just turned down your credit card, you only had $5 in your wallet and were barely to get enough gas to get home from work (because you had to go out of your way to drop off a friend who carries no cash at all anymore.)

What the President Should Consider Saying

"Folks, we have a problem. It was caused by politicians constantly seeking more and more power for themselves. As a pack, they quit working as your servants and now have you serving their needs. I ran as a "compassionate conservative" but there is no room for true compassion in this town anymore because compassion requires caring about someone other than yourself, and everyone in DC is out for themselves, with just a few precious exceptions.

"I am now calling on every sitting legislator to bring me a rescue bill that meets two criteria."


The First Criterion


"First, it must be a clean rescue bill that I can sign, and I will tell them what I consider "clean" after consulting with my economic advisers. No politics; just deal with the problem. This, however, will be just a short-term fix."

The Second Criterion

"Second, to address the systemic cancer that Washington politics has become, I will only accept the rescue bill if it includes an ironclad provision for term limits for Congressional office. If there are not enough legislators who will sign on to term limits to pass a bill, then we will get no rescue bill and you will see where their sentiments really lie, with their own personal fiefdoms."

The Long-Term Solution

"Immediately upon being provided the legislation I am requesting, I will sign it upon one further condition. The legislators supporting it must each give me their personal guarantees that the next order of business they take up will be a Constitutional Amendment that incorporates term limits for legislators into the U.S. Constitution.

"If they promise to do so, and renege on that promise, I will trust you, the voters, to take your revenge on them at the ballot box this November. Only by term-limiting our legislature will we ever end this continual, and cancerous, growth of government that now threatens your very livelihoods."


It's Time to Choose


We have reached the point in this country where we now get to choose the path we are going to follow. One path, built on self-reliance and personal responsibility and yes, personal service, will lead us out of the mess our political class has created and the other, built on what is essentially the continuous greed of politicians, will drive our economy to levels not seen since the 1930's but, I fear, absent the civility that prevailed then. It is high time that our politicians learn that they are to return to the life of a normal taxpaying citizen after serving us for a few years, rather than reposing in resplendent mansions while retaining the powers of office.

If you blame President George Bush for all this, so be it; he's being term-limited out of office in January. But if you also wonder at the possibly that our esteemed , 9% approval-rated, Congress just might share a bit of the blame as well, then wouldn't it be nice if they, too, were facing a term limit somewhere down the line? Wouldn't it be ironic if our sitting-duck President could turn the passel of them into a flock of sitting ducks as well?

Thursday, September 25, 2008

The Liberal Bias of the Press


Following is an adaptation of an unpublished Letter to the Editor written in September 2000 regarding the liberal bias of the mainstream news organizations

To the Editor,

Your recent editorial "Bush vs. the Press" was on the mark and prompted me to write about the most underappreciated story of the decade regarding press bias.

In 1993 and 1994, during the first two years of the Clinton administration, the liberal press dropped their guard. The liberal members of the press developed a distaste for the Clintons over that time, probably as much for what they didn't get done as for what they did. Regardless of the reasons, news coverage and commentary by the mainstream press during the months leading up to the 1994 Congressional elections was not complimentary to the Clinton presidency to that time.


As I watched the coverage, often in disbelief, I began to expect the November 1994 Republican landslide. Why? Because I've always believed that if the American people were ever given balanced political coverage they would vote conservative, because on balance we are a conservative people.

Night after night during 1994, the Dan Rathers and Peter Jennings of the world tsk, tsked their way through reports of what the Clinton administration was up to. As I said, I could hardly believe my eyes and ears. Now, I'm not saying that I expected the degree of the rout, nor the winning of both houses of Congress. But I am saying that I did expect a rout and was not surprised at its extent.

Following the historic rout, two major conclusions were drawn by the involved parties.

First, in an effort to comprehend the incomprehensible, the Republicans went searching for the reason for their unanticipated success. After all, they did not expect such a rout. They settled on the Contract with America and Newt Gingrich, i.e., it happened because Republicans have such great ideas. Now I will wager that not one voter in five had heard of that Contract prior to election day, that not one in ten could recite one point in the Contract with certainty, and that not one in fifty cast their vote on the basis of what was in the Contract with America. Yet, in a "Well, pat me on the back for coming up with a winning idea" mood, the Republicans drew the wrong conclusion from the rout, a conclusion that they trumpeted loudly and that resulted in the elevation of Newt Gingrich to the highest Republican ranks for a time.

The second conclusion was drawn by the liberal media. While the Republicans were patting themselves on the back for their "winning ideas" the media was coming to its senses. They discovered the implications of providing voters the unvarnished truth, to their horror. Unlike the Republicans, who drew the wrong conclusion from the rout, the liberal media drew the correct one and vowed never again to repeat their mistake.

All that it takes to understand and appreciate the ability of President Clinton to get away with virtually any outrageous action that he desires (and he certainly has) is to realize that the liberal media will never again refuse to back their candidate, regardless of the detriment to the country.

The lessons to be drawn from this by Republicans:

First, stop kidding yourselves. Your ideas didn't win the 1994 election; the liberal media gave it to you by default.

Second, stop kidding yourselves: Conservatives will never get fair treatment from the vast liberal elements of the press. The last six years of President Clinton are ample verification of this.

Third, reassess the opposition. Your true opponent is not the Democrats, who can be convinced, cajoled or compromised with, but the liberal media, who cannot ever again be convinced to be impartial, especially after 1994.The way for conservative ideas to win in America, a conservative country, is to cut off the blood supply of the liberal tumor we call the news media. They want information for a story? Fine, but they shouldn't get an hour of face-to-face with the politicians they've dumping on for years! Let them do their own digging or better yet let them read the face-to-face interviews written by the people that Republicans can count on to treat their ideas fairly. Get the most offensive among them off the campaign buses and planes and out of your offices.

Do this, and all hell will break loose. But do it to the worst offenders, and cite specific instances of biased, underhanded reporting and simply cut them off. In time the truly honest reporters will realize that things have gone too far and they will be glad that someone had the sense to restore order. But so long as conservative reporters continue to get blackballed the way they do by their counterparts it isn't going to happen without conscious effort on the part of conservatives in positions of power.

Take a day or so and research the news leading up to November 1994. You will see that I am right. I know I am, because I watched it unfold, kept pinching myself that it was not a dream I was watching, and was therefore expecting a rout. Seriously.

Present Day Thoughts


It appears to me that John McCain, once supposedly beloved by the very media pack that now is solidly in the tank for Barack Obama, has taken the tack I suggested above. It's no coincidence that Sarah Palin, who has demonstrated a remarkable ability to handle herself in public and to defend her ideas, even when the interviewer is as hostile, aggressive and condescending as Charles Gibson, is being withheld from the mainstream press. Why feed such a pack information when all they will do is twist and distort, pick and choose, until the words written bear no reflection of the words originally spoken. Oh, they will sound the same, as when Gibson reassured Sarah Palin that he was exactly quoting her on God and war, and when Obama took Rush Limbaugh's actual feed for the anti-immigrant ad, but they will not reflect the original intent.

The real lesson that Republicans should have drawn from the 1994 rout was that the game is rigged as long as Republicans continue to show outward respect for the reporters that bear them nothing but ill will. Until they realize that and start excluding them overtly and explaining to the public why, the battle will alway be lopsided. Maybe the McCain campaign has figured this out?

Sunday, September 21, 2008

Guarantee All Bank Deposits - A Cautionary Note


Jeremy J. Siegel, in an editorial titled Guarantee All Bank Deposits, (WSJ, Sep 20, 2008), makes an excellent case for having the government guarantee all deposits, including money market funds, to avert the sort of panic that threatened us over the past week. Speaking as one who told friends a couple of months ago that it was probably time to stash cash in a safe deposit box (I didn't, but perhaps should have), I can appreciate the urgency of doing something along the lines suggested by Mr. Siegel.

The Cautionary Note

However, while Mr. Siegel covered a lot in his short editorial, he left out one crucial matter that any law authorizing the U.S. Government to guarantee all money market and savings deposits absolutely must address or we will risk creating a FNMA-like risk all over again. Simply put, if an investor desires the safety of a government guarantee, then that investor must also accept the level of interest paid on short-term government securities, i.e., on U.S. Treasury Bills. If this is not part of the package, a tremendous arbitrage opportunity is created, one that puts the taxpayer at risk yet again, for then money market managers will be free to invest in the riskiest of assets without fear of immediate consequences. Those investing in the highest yielding (riskiest) paper will be able to offer the most attractive yields and attract the most investors. Investors, knowing that their deposits are guaranteed, will have no incentive to assess the risk of the underlying investments going sour, just as investors in CD's currently scour the countryside looking for the highest yields in the riskiest banks as long as they keep their balances under $100,000 per bank.

A Tentative Answer

So, what's to be done? Well, one possibility is to turn this problem into an opportunity for the government (actually, for the taxpayers, for once.) How? By giving investors several choices up front.

The First Choice - Keep Today's Arrangement as One Option

If they choose to forgo the guarantee (and why should they not have that choice?) then they will be able to invest in non-guaranteed money market funds and buy CD's that are clearly named as such, for example a Citigroup 12-month NonGuaranteed CD, that bear the risk of the underlying credits going sour. In this investment category, banks and money market funds will compete for business on a yield basis as they currently do, but will always face the threat of massive withdrawals should they make poor investment choices. And these investors, of course, will bear the risk of a loss if they can't exit their investments at cost.

The Second Choice - Offering a Complete Guarantee

On the other end of the spectrum, banks and money market funds should be able to offer investments with a solid government guarantee, yielding the Treasury Bill rate for the respective maturities chosen, or some close approximation of it. However, to keep a viable short-term credit market functioning in the real economy (after all, the real economy should be the emphasis here, not government), those banks and money market funds should still be permitted to invest in non-government guaranteed paper. When they do so, however, the government (think taxpayers here) should get a cut of the action, and a substantial cut at that, in exchange for issuing the guarantee. For example, if a money market fund is buying commercial paper at a five percent yield and paying out only three percent (the T-Bill rate) to its investors, the two percent spread is available for some creative usage.

Remember now, the purchaser of the money fund only expects a 3% return, so what incentive does the money fund manager have to purchase commercial paper paying 5%? Well, that depends on what he's required to do with the extra 2%. Here's one possibility, among many. Set up three reserve accounts in which to accumulate the excess funds earned, as follows:

The Three Reserve Accounts

1. The Taxpayer Account - Place 50% of the excess earnings of the money fund into this account and rebate the balance directly to the U.S. Government (the taxpayers) quarterly to compensate them for taking on the risk of guaranteeing all such deposits.

2. The Risk Reserve Account - Place 50% of the excess earnings in an account similar to the current FDIC account that currently guarantees bank deposits under $100,000 and utilize this account first whenever a money market fund or savings institution is forced to call on the government guarantee.

3. The Excess Earnings Account - After a particular money market fund has deposited reserves equal to a certain percentage of its outstanding assets in the Risk Reserve Account above, any amount remaining can be deposited in this Excess Earnings Account and will be available to pay out to depositors in the form of a higher interest rate.

Additional Considerations

1. The percentages listed above are obviously arbitrary and are highly subject to lobbying efforts by affected parties. Hopefully, our future leaders will have been sufficiently traumatized by current events to put the taxpayer first when designing any plan similar to the one being discussed here.

2. When some money funds and banks begin to accumulate funds in their Excess Earnings Accounts they will then be able to offer a higher yield to depositors. This will draw more deposits to those institutions, but those will be the very institutions that have a) most rewarded the taxpayers and b) filled their Risk Reserve Accounts, so the best-managed institutions will be attracting the additional funds.

3. A flood of funds into one institution due to its sudden ability to pay a "bonus rate" will result in a need to once-again replenish the Risk Reserve Account, so this will be a limiting factor on any one fund gaining undue advantage.

The Third Choice - In Between

This is the messy one, but a third possible option would be to place a government guarantee on a percentage of the assets invested, say 80%, with any excess earned over the relevant T-bill rate to be shared between the government (again, the taxpayers) that is offering the partial guarantee and the investors. The first payments to the government could be allocated to the FDIC-like institution until any particular money fund or bank had contributed sufficient funds to cover a significant percentage of any future losses by the fund. After that contribution limit is reached, the government would get the use of any additional funds.

Meanwhile, the investor would enjoy a somewhat higher return for taking the risk of losing 20% of his assets in any particular institution, but the security behind those assets would continue to increase as the Reserve Fund grows.

Conclusion

However it is accomplished, any law authorizing the guarantee of all deposits, including money market deposits, must deal with the risk discussed at the outset of this commentary. Offering investors three distinct choices would enable them to choose the risk/reward trade off that best suits their needs and individual personalities. They could go it alone without the government guarantee while earning the maximum income, or they could cut risk to near zero by accepting a T-Bill rate in return, or they could take a middle path and earn a greater return by taking on a reasonable risk. In the meantime, the taxpayers would be receiving a significant return in exchange for issuing the guarantee and FDIC-like reserves would be building to mitigate the impact of a future meltdown in the short-term financial markets.

Is this exactly what should be done? Probably not, but something does need to be done along these lines because just guaranteeing all deposits will be another disaster waiting in the wings. It might take years to materialize, but materialize it most certainly will.