Mortgage lender collapses; real estate prices continue to fall

The big news today in housing is this, from Bloomberg:

American Home Mortgage Investment Corp. shares plunged 89 percent after the lender said it doesn’t have cash to fund new loans and may have to sell off assets. …

American Home caters to borrowers whose credit scores fall just short of standards for top-rated mortgages. The announcement provides fresh evidence that defaults may be spreading from subprime borrowers with the worst credit records to homeowners with more reliable repayment histories. The biggest U.S. mortgage lender, Countrywide Financial Corp., said last week overdue payments rose among some of its most creditworthy clients.

Shares of American Home, halted by the New York Stock Exchange before yesterday’s regular session, plummeted $9.32 from their July 27 close to $1.15 in 2:50 p.m. New York Stock Exchange composite trading. They changed hands at $6.39 in pre-market transactions yesterday. Two years ago, they fetched almost $40.

Banks pulled the money out because of fraud. Nice. Now the problem is that there is a second side to this. Housing prices are collapsing too. The Big Picture has the details, about among the hardest hit? Las Vegas, Miami, and Denver. Three swing states. Here’s their summary:

Pretty astonishing fall from the peak. And, based upon inventory levels and present sale rates, we are not remotely close to done.

Defaults and foreclosures. Falling house values. Those do not make for a good environment for economic optimism, which Republicans need to win elections.

Gallup studies confidence in candidates on issues

I think that this is an interesting poll and analysis. Gallup asked people how much confidence they had in various candidates to solve various issues. I just have several quick observations.

First, McCain and Giuliani, with relatively hawkish positions still hold the trust of most of Americans. They have the confidence of over 40% of Democrats on the war, although it would be hard to find much space to the right of McCain, especially, on this issue. While over half of independents trust  them too. It is interesting that while McCain is to the right of Giuliani on this issue, GOPers trust him less. On the flip side, the reason that Obama does so well on this question is that almost 30% of Republicans trust him. Of course, no one trusts Hillary.

Trust in Candidate to Handle the War in Iraq
Results by Party

  Rep Ind Dem




Rudy Giuliani




John McCain




Fred Thompson




Mitt Romney




There are very similar dynamics on terrorism, although it is clear that Giuliani’s credibility on that issue is qualitatively different than other candidates.

I have two theories for why the other GOP candidates do not do as well on these questions. The first is that they are unknown. The second is that the overall preference for the Dems on Iraq, but not terrorism, does not adhere to Giuliani and McCain. They are in a class of themselves that is distinct in some meaningful way from the loss of faith in the GOP. It will be interesting to see if Thompson is able to break free of this.

In general, though, my conclusion from the national security numbers is that Giuliani and McCain are the only GOP candidates who will be able to maintain traditional GOP advantages on national security issues. Giuliani because of 9/11, and McCain because he is a war hero.

On domestic issues, it is not so good for the GOP . The healthcare numbers make it clear that Hillary Clinton is in a league of her own. 91% of Dems trust her. 60% of independents trust her. It turns out that she’s probably moved to the right on this issue since the debacle of 1993. I think that this is yet more evidence that talk of "Hillary Care" and "universal healthcare" is unlikely to scare off independent voters. That is something the GOP needs to keep in mind. While I have a lot of problems with Mitt Romney, (perhaps an understatement?) he is absolutely correct that the GOP is going to need a genuine response in this debate. The GOP is almost certainly losing Senate seats, and has a small chance of getting the House back. The Dems are going to be in the driving seat on this debate and will set the framework. We need something to sell.

Trust in Candidate to Handle the Healthcare System
Results by Party Affiliation

  Rep Ind Dem




Rudy Giuliani




John McCain




Fred Thompson




Mitt Romney




Barack Obama




John Edwards




Hillary Clinton




It doesn’t get any better on the economy for us. Clinton, Obama, and Giuliani are in the first tier of trust. The second tier is McCain, and too a lesser extent, Edwards. If the wheels come off the economy, as it seems it might, it is going to get even worse for us.

The lessons of these numbers probably are that we need to highlight national security and that McCain and Giuliani are the ones who are capable of that. In addition, it seems that we are just in trouble on almost any domestic issue. Yet another argument for Giuliani or McCain.

The story of the week is corruption

But what the opening paragraph will be will depend on the Senate Republican Leadership and John McCain.

You see, no story about the Senate will be complete without mentioning that Senator Ted Stevens’ (R-AK) home was raided by the FBI and IRS. But Harry Reid has been kind enough to offer up the perfect compliment in the form of a gutted ethics bill.

Will the leadership back away from Senator Stevens, as recommended by Erick Erickson? Will it decide that an ethics bill from which Reid stripped the earmark reform is not adequate, and it will fight?

Or will it play the backroom politics, transactional, "factory game" and support the bill? That’s where my money is.

If leadership doesn’t step up, the only person who can give this bill a high-enough profile will be McCain. He has credibility with the American people and with the press to stand up and say "this is not right." If the leadership refuses to deliver the message, it is likely that John McCain is the only one who can cut through the cruft and do it.

Thompson’s fundraising numbers are a self-trap

Jim Geraghty posts the Thompson defense of their "disappointing" fundraising numbers. I, frankly, don’t know what to make of all of this, but I have two thoughts.

First, people are comparing John McCain, Mitt Romney, and Rudy Giuliani’s fundraising numbers to Fred Thompson’s. Simply, these are apples and oranges. McCain and Romney had been running for President for several years. Romney ran for his RGA position in 2004 and starting building his national fundraising network soon after. And Giuliani had started his political operation at least a year beforehand, collecting business cards and favors as he campaigned for candidates all over the country. Compare that to Thompson. I first heard his name circulated at CPAC, when it seemed laughable. Three months after that, he raises more money in one month than the total amount raised by any one 2nd tier candidate. Starting from scratch.

That said, it illustrates a trap that the Thompson campaign has set for itself. No plausible number was high enough to meet the expectations. And that’s going to be part of the problem for him. He will never be as conservative as the hopes and dreams of his followers. He will never be as articulate as Reagan. He will never (or at least not for a while) have the fundraising apparatus of someone who has been running for President for 3-4 years. Etc. Etc. Etc.

People might cut him some slack if his followers didn’t present him as the savior…

Corruption, ethics, and party brands

Karl Rove spoke to Members of Congress last week, and one of the issues that came up was ethics. Bob Novak has some of the story:

Karl Rove, President Bush’s political lieutenant, told a closed-door meeting of 2008 Republican House candidates and their aides Tuesday that it was less the war in Iraq than corruption in Congress that caused their party’s defeat in the 2006 elections.

Rove’s clear advice to the candidates is to distance themselves from the culture of Washington. Specifically, Republican candidates are urged to make clear they have no connection with disgraced congressmen such as Duke Cunningham and Mark Foley. In effect, Rove was rebutting the complaint inside the party that Bush is responsible for Republican miseries by invading Iraq.

While Novak sees a political agenda in this, I think that Rove is basically right. After all, people prefer Democrats on spending, deficits, etc. Ultimately, these probably boil down to the question, "who do you trust with your money"? And right now, silly as it sounds, the answer is Democrats.

That’s why it is so important that the GOP beats up the Dems over the ethics conference report. From Roll Call:

According to sources close to the issue, Majority Leader Harry Reid (D-Nev.) has called on Feingold to help push the bill over the goal line. Reid hopes Feingold’s progressive street credentials and reputation as a reform-minded lawmaker will help keep the left flank from bolting, particularly if Reid and Speaker Nancy Pelosi (D-Calif.) make controversial changes to the bill.

White House hopeful McCain, meanwhile, already has thrown in his lot with Sen. Jim DeMint (R-S.C.), who has attacked the secretive process Reid and Pelosi have used to rewrite the bill and has threatened to filibuster it if its earmark provisions are changed.

If anything is clear, it is that Pelosi and Reid and just doing the same-ole same-ole. If the GOP fights this successfully and makes the Dems the issue, then this could be an important turning point in 2008.  We shall see.

UPDATE: On cue, TPM Election Central comes up with this:

In a new memo, the firm lays out the results of focus groups it held in a pair of Congressional district held by GOP moderates who barely survived 2006, Mark Kirk (IL) and Jim Walsh (NY).

"Democrats in Congress are given credit for wanting change and most especially for ensuring that Bush no longer has a blank check from Congress," the memo says. "But in most voters’ minds, it boils down to results; good intentions and legitimate finger-pointing aside, things simply haven’t changed under Democratic control."

The memo concludes that Dems would fare better if they worked harder to focus voter attention on the fact that the Dem leadership’s agenda is being stymied by Presidential vetors and GOP obstructionism.

Which illustrates both the good and the bad. A filibuster without good communications may not be enough.

2002 versus 2008

Patrick Hynes makes a great point this morning with some videos of Jeanne Shaheen from her 2002 debate against now-Senator John Sununu:

I think Shaheen will win the Democrat primary if she decides to run. Easily. But I see her numbers coming down quite a bit when the public is made aware of her past statements:

Basically, it turns out that Shaheen was pro-Iraq war, pro-Bush tax cuts, and pro-Bush-style national security. (videos after the jump) The fact is, in what was then a solid GOP state you probably had to be. So let’s just work out some of her options. None of them are particularly good.

First, she can stand by her positions. More likely, she will drop Iraq like a hot potato, but stand by her position on tax cuts.  After all, Sununu has dropped his support for Iraq because "he never had any idea Bush would screw it up this badly" or something similar. Shaheen just takes the same line. But what about things like tax cuts, wiretapping, etc. She sticks with her statements. Call this the "stand by her principles" option.

Her problem is that there’s a big division in the NH Democratic Party right now between the lefty activists and the Democratic centrists. NH GOP Chair Fergus Cullen talked about it back in June:

Call it the Carol Shea-Porter Gravitational Effect. For the past decade, conventional wisdom held that New Hampshire Democrats had to position themselves as moderate centrists to win elections. Former governor Jeanne Shaheen taught her party that lesson. Mark Fernald ignored it to his peril. John Lynch absorbed it and, for a time, prospered.

Then in last fall’s congressional primary, war protester and unabashed left-wing activist Shea-Porter trounced the Shaheen School’s candidate, a play-it-safe political vegetarian who avoided the rhetorical red meat the Democratic base starved for in an effort to preserve his electablity. Shea-Porter went on to edge an incumbent Republican in one of the nation’s biggest upsets of 2006.

In other words, Shaheen was the model of centrism, back in the day. The NH Democratic Party may have learned a different lesson since then (or it may have gotten lucky in a really good environment) There is room for a nasty primary in NH on that question. Steve Marchand, the mayor of Portsmouth, could be the representative of the Carol Shea Porter school of principled left-wingism.

So her second option is to flip-flop and cave to the left. Now flip-flopping may be the new normal, but it is going to be a major attack on both sides in 2008 in the primaries and the general.  Ultimately, the question that Marchand and Carol Shea Porter will be asking is "does Shaheen have a principle?"

This raises a deeper question. In 2002, Democrats ran to the right, trying to avoid the bulldozer of 9-11. Five years later, the party base has been flooded with anti-war activists. Are the centrists who ran in 2002 electable in primaries? If they flip-flop are they going to be exposed to charges of  being unprincipled? Do progressive activists care?  In other words, as revolutions in parties bring new activists, they often bring new candidates. And the anti-war activism of the 70s reshaped (and ultimately discredited) the working-class Democratic Party that once was. After all, only part of what killed the Democratic Party in the 80s and 90s was their credibility on national security. The rest was the rest of the liberal agenda that finally won in the intra-party fights in 1974.

Perhaps the real question is, could the 2008 Democratic primaries, as the air saturates with attacks of flip-flopping on the war and other issues, end up being a battle between the new generation, the post-post-9/11 Democrats like Marchand, Obama, Carol Shea Porter, etc. versus the old Generation, the post-9/11 Democrats like Clinton, Shaheen, etc. What’s the legacy of all this going to be?

Where does that leave Shaheen in New Hampshire?

Videos after the jump. Continue reading

North Carolina changes electoral college allocation

This is a huge deal. North Carolina is changing the way that it allocates its electors in the electoral college.

So why does this matter? Because instead of the GOP almost certainly getting 15 electors, it will only get 9, with the other 6 going to the Dem, working off the congressional delegation allocation.

The Dems could probably do this in Arkansas and Louisiana too. Those are states that still have Southern Democrat majorities in the state legislatures and Democratic Governors.

Very, very clever.

What’s in the water in Missouri?

Turns out that Missouri may be going Ohio on us. A new SurveyUSA poll has some bad, bad news about what must be the environment in Missouri:

Missouri Republican Governor Matt Blunt’s Job Approval numbers inched into positive territory in July 2007 for the first time since taking office, according to SurveyUSA’s monthly tracking poll, a dramatic improvement from the poor marks Missourians have given Blunt in his first term. Today, 48% of Missourians statewide approve of Blunt’s performance, 46% disapprove, a Net Job Approval of "Plus 2." This is the first month Blunt has ever had a "Plus" Net Job Approval. Plus 2 compares with Net Job Approvals of "Minus 30" in March 2006, and Minus 20 or more for most of the months of his administration. Exclusive SurveyUSA tracking data is here. Against this backdrop, Blunt can take no comfort in SurveyUSA’s first look-ahead to the 2008 MO governor election. In a head-to-head hypothetical matchup against Democratic Attorney General Jay Nixon, Nixon defeats Blunt 3:2, carrying every part of the state.

The numbers are 57%-38% overall. Missouri is a must-win state for nearly any electoral college math for the GOP. And they are looking to sack their governor? Oy.

Also, I find it ironic that Mitt Romney’s biggest governor catch may not be able to win re-election either…

What is the RNC doing?

So I was poking around on YouTube and came up with this YouTube clip about Mitt Romney.  Something struck me about it: The Dems have trackers on our Presidential candidates. I checked with a source at the DNC, and he confirmed that DNC staff attend GOP presidential candidate events with trackers to video tape. They have produced this video and another. They are trying to frame the GOP candidates now. Note that this is not news. The DNC actually used this as the basis of a fundraising pitch. Referring to Macaca they said:

The Democratic Party needs to support that kind of diligent reporting in the new election cycle — with video crews permanently on the ground in early primary states, for example. What did John McCain say in New Hampshire? Who did Rudy Giuliani visit in Iowa? What did Mitt Romney do in South Carolina? The DNC needs to know the answers to these questions every time a Republican makes a campaign stop, and we have to be ready to take the proper course of action. Let’s set up a state-of-the-art operation to bypass the media and take the story of their lies, flip-flops, and out-of-whack priorities directly to you.

This is a side to the story about whether the amount of DNC attacks could be viewed as a frontrunner metric that was missed.

The DNC has research and is shaping opinion now. Furthermore, they are educating and familiarizing their activists, their bloggers, and the mainstream media about our candidates. That’s scary.

Where is the RNC on this stuff? Does anyone hear a peep out of them these days? Besides this fundraising letter?

YouTube debate splits elites and base. That’s good

Now, I was not a big fan of the CNN/YouTube debate. I largely agree with the criticism that CNN used their editorial ability to pick questions that they couldn’t ask as reporters. That said, I was struck by something this morning. Somehow this seemingly trivial debate managed to get Barack Obama and Hillary Clinton to talk about a real difference of policy and philosophy, instead of a stylistic one: whether Presidents should talk to bad countries. This real policy question has been debated for a full week now between Hillary and Obama, making the front page of the Post.

Not only the front page of the Post, but two opinions today. And yesterday two candidates from the other party, John McCain and Mitt Romney, have even gotten in to the discussion.

I think this is a real philosophical debate about foreign policy that cuts to a real fracture in the Democratic Party between (responsible) foreign policy elites and one  part of the liberal faction of the party base. And it took real people to ask this question. Why? Probably because the press is part of the same elite opinion formation apparatus as everyone else. (incidentally, that’s why they didn’t ask questions about Iraq. Very few serious people were asking questions about Iraq, so the press didn’t either)

In hindsight, it appears that the debate teased out a real difference between the elites of the Democratic Party and the base. That’s exactly what this debate should have done. This gimmicky debate has resulted in the first real large-scale policy clash of the 2008 cycle. Something that 8(?) media sponsored debates couldn’t really achieve.

Just imagine what kinds of exciting questions could be asked in the GOP debate.

Is it any surprise that the people who are running essentially against party elites like John McCain and Ron Paul are interested and Rudy Giuliani and Mitt Romney aren’t? Is it any surprise that the self-identified arbiter of conservative elite opinion, Hugh Hewitt, is opposed?

I think that means I have changed my mind on this. Let the debate go on! I guess that I am with Patrick Ruffini on this.