We’ve just gotten off the worst week for the Dow in history, ending up on 10/10 at 8451.19. But then, oil is way down to $77.70 per barrel, and the euro has dropped from a July 14th peak of $1.59 to $1.33. 30-year fixed rate mortgages are at 5.97%, and 48-month car loans are at 6.83%.
It is important not to conflate “the economy,” which relates to all goods and services, to financial markets, that deal only with money. The two are related, but failure in one does not necessarily lead to failure in the other. Still, you hear crazy stories, such as when my wife told me that the nail salon she goes to was way down in business, presumably because of “the economy.”
It’s hard to believe that the clientele of that place would be so dominated by financial executives who might have recently lost their jobs. Rather, this is a silly, but dangerous symptom of foolish panic.
Certainly, anyone living off stock market related investments is unhappy right now, since their apparent value has dropped—at lot—since the beginning of this year. And, anyone with a 401(k) plan has seen its value erode over the last few weeks. However, unless you are going to retire soon, this is of no real concern. After all, the market does have its ups and downs, although for some years, “experts” have been telling you that the stock market—and housing prices—can only go up.
We are told that one cause of the banking sector problems is that mortgage loans were given to people who could not pay them back. It is bad to make loans to people who can’t repay. Then, against the wishes of perhaps 90% of Americans, a gigantic bailout bill is passed, and money will be given to certain businesses (such as AIG) that cannot pay it back. I suppose that it is good to make loans to certain favored businesses that can’t repay.
The presidential race appears to be tight, with daily “tracking polls” going back and forth, but usually showing a lead for Obama. Given that there will likely be more than 120 million votes cast on November 4th, it is not at all clear to me how interviewing 1000 voters can possibly give an accurate picture of the American electorate. Consider that every single interview represents 120,000 voters.
The pollsters will argue that they can come up with some magical cross-section in this sample of 1000 voters, such that every single demographic, psychographic, and cultural parameter will be met. Or, if the cross-section is not so perfect, they would say it doesn’t really matter. For example, they believe that most Blacks and Jews will vote for Obama, and this can be tweaked to a chosen percentage in the overall software.
But, what other factors are being missed? Let us assume that there is a certain component of the White voting bloc that is simply racist, and will never vote for Obama. Note that I am NOT talking about the so-called Bradley effect, whereby Tom Bradley, a Black man, was always polling ahead (8-14 points) of George Deukmejian in the 1982 California gubernatorial election, yet lost (narrowly by 49.28% to 48.09%). Usually not mentioned in these discussions is that Deukmejian crushed Bradley in the 1986 rematch (60.54% to 37.38%).
Instead, I am wondering if the pollsters have actually built in a White racism component into the software. Or, do they include in the profile of 1000 voters a White racist interview? If they do, exactly how have they determined that the interviewee is a racist? More than that, are there high and low demographic White racists?
And, what about Hispanic racists? It is well-known that a goodly number of Mexican-Americans (primarily in California and Texas) are not crazy about Black people. Some have even suggested that these sentiments could put California—a longtime blue state—in play in this election. One wonders how this effect has been dealt with in polling software, not to mention the interview process.
One thing is for sure. Campaign 2008 has been covered to death, and most Americans will be glad when it’s over, and even more glad if their candidate wins.