Saturday, September 20, 2008

The True "Blue" Recession: Are "Blue" State Economies in Trouble?

To be honest, I still have no real understanding why the Presidential election is as close as it is right now. It seems that the same arguements get made every night on the media/entertainment programs as they try to grasp the harsh reality that no matter what they do Sen John McCain could still win this thing. The reality of the situation is based on the unpopularity of President Bush, the Iraq War, and now the economy it begs the question why Sen. McCain is still within striking distance and why these media concerns have to be frustrated.

Many Democrats in the media are using that little card from the political deck known as the ace of race card to explain the current situation. Given a current Stanford University study regarding the campaigns that concluded that 40% of the electorate may harbor views against blacks that may contribute to votes being cast in opposition to Barack Obama may bear that out to some extent I guess but I think there is a deeper more profound rationale as to why this election in closer than it should be. Peoples own States.

There may be a "blue" State recession in place and it is about to get worse.

A "blue " State recession? What exactly does that mean?

Well, if you examine the current economic data of country and review the numbers you will find that most States that typically are known as true "red" leaning states have economies that appear not to be participating in this so-called "recession" that the mainstream media likes to pound away at everyday as a means of propping up their preferred candidate.

Sen. John McCain's comments about the economy this week demonstrates his disconnect, but not from the reality of the facts, but from the reality that most people follow what the media portrays. Those of us who are students of politics and history know that while McCain's statements were accurate in terms of GDP and unemployment levels, the average person who pays little to those or even understands them simply relies on the press to tell them what the economy is doing. Its the "tell me how I should feel" syndrome.

John McCain's comments while historically accurate was pure political idiocy.

Are we in a national recession? No.
Are we now facing a serious financial crisis? Yes.

Whose to blame? Frankly, everyone in Washington is to blame, especially "Barney's Rubble" (Barney Frank & Company). The fact that Barack Obama is trying to play things off like he had no part in any of it is rather a stretch of political truths, but then his campaign has demonstrated a real knack for such in the last few months. Thats not leadership.

So if we are not in a national recession yet, are we in a regional one? Maybe.

We have seen this before during different financial times and in fact one major area that illustrates the point the best is the housing market. There are actually some pretty good tracking mechanisms in the real estate market that can be used to show how different parts of the country have performed in terms of housing starts and home prices relative to other areas of the country.

But another approach would be to look at the current state of economies for some of the battleground states that seem to be in play in the election to explain exactly why this race may be so close.

If you look at Michigan, which is much tighter than many have predicted, is one state that Barack Obama needs to hold onto just as much as say Pennsylvania. Michigan currently is suffering on of the worst economies in the nation and just announced an 8.9% unemployment rate. The State incurred increase in taxes and the overall budget is in jeapordy under the poor leadership of Democratic Governor Grandholm. The State has a Republican legislature like Virginia, BUT if people want to make the legislature the scapegoat there than they certainly cannot at the same time blame President Bush given the last two years Congress has been controlled by Democrats.

So which is it? Is it Bush's fault or Congress? Is it Grandholm or the State Legislature? I wish the media would make up its mind on these matters, but again they are not really reporting the recent data from Michigan because they would hate for it to influence poorly on their candidate. 8.9% unemployment and the worst schools in the nation in Detriot, where they had to toss out the Mayor and no real coverage at all save covering the courtroom drama. What about the people of Michigan? Do they not deserve to have their story known. In fact, as close as it is in Michigan it gets a littel silly the way some outlets like MSNBC have now shifted focus away to places like New Mexico, Colorodo and Pennsylvania. When Obama was leadin by like eight points it was very important to cover, but now that is is even there appears to be no news. Go figure.

Ohio is another battleground State that Democrats thought that they could take away from the GOP stable and yet again, under a Democrat Governor the State has seen its unemployment rise to 7.2% and a net loss in jobs there that again is being placed on the steps of Bush. Evidently, the media has forgotten a littel thing called NAFTA inacted by President Clinton that to this day is still hurting the manufacturing areas of Ohio. And yet, the areas of Akron, Cleveland,canton, Toldeo, and Dayton still lean Democrat while Cincinnati and Columbus lean Republican. Its crazy.

I wonder whatever happened to Ross Perot? The guy might just deserve a medal. He predicted all, and I mean all of this including the financial crisis almost seventeen years ago. Is Ron paul the present day Ross Perot? Could be, but I doubt he would get the amount of votes Perot got in the national election. I wonder of Bill Clinton still sends Christmas cards to the Perots?

Illinois, the fighting Illini, have to fight for every job they got. While not a battleground state, it just goes to prove you get exactly what you vote for. They have unemployment around 7.5% and appear so entrenched in corruption that the only ones benefiting are the top and of course Barack Obama. Look at this guys own state. What has he down to help his own state? is he working with the Democratic Governor, the Democratic legislature, the other Democratic Senator, or the Democratic Mayor of Chicago? Illinois is a wonderful place but it is run frankly by a bunch of hulligans.

California is a state that suffering from some serious economic issues as well. Though the state has a Republican-lite Governor and has worked with the Democratic legislature as much as possible CA will still punch Obama's ticket in the Fall. Kerry took the State by 10% in 2004. It latest unemployment numbers are at 7.3%.

On another note lets take Virginia for instance. A Democratic Governor in Tim Kaine and a Republican legislature have returned in an unemployment rate of 4.4%, well below the national average. How was this accomplished? Well to be honest there will be a shortfall, but the economy has been aided by average taxes and increased spending in areas like the defense, contracting, consulting and such brought about by the War on Terror. Virginia has weathered many of the storms that other States could not in large part because of the employment rolls within the Federal government as well in Northern Virginia. The fact that things have not slipped has contributed more to Barack Obama keeping things really close in Virginia. In terms of housing, Northern Virginia (especially Manassas) has sufffered greatly in the mortgage crisis whereas as predominately and historically GOP areas like Central Virginia and Southwest were not hit as hard. Anoter result of the actions of "Barneys Rubble" in Washington. I do think Gov. Kaine, like Mitt Romney did in MA, with an opposition legislature has proven to be able to put Virginians first but am not looking forward to the proposed increase in taxes that may be on the horizon. Increased taxes, an Obama Presidency, and a net loss of jobs in technology and defense proposed by Obama may result in Virginia falling to the depths of Michigan, Ohio, or Illinois as well.

The bottomline here is that in States controlled by Democrats there appears to be a tendency to push for higher tax rates, higher regulations and increasingly higher environmental constraints upon economies and the end results are that "Blue" states have performed much poorer than say North Dakota, South Dakota, Idaho, Nebraska, and Okalahoma all with economies performing higher and better than the national averages and run by Republicans. This is a time for some real hard pressed budget considerations and a time to go NutriSystem or Weight Watchers with our State's financials.

And for the naysayers:

"Anyone who says we are in a recession, or heading into one-especially the wrost since the Great depression-is making up his own personal definition of "recession" and probably for his own political purposes" (Edward Leaner-UCLA economist)

Afterall a GDP growth rate of 3.4% and one growing 52 consecutive quaters is certainly not any "recession" I have ever experienced before. Not saying people are not hurting, not saying these are not difficult times, but I am saying this is not fundamentally a recession by any historical notion, but in these battleground states the issue of the economy is hightened in the debate because internally leaders have been ineffective.

Don't you just love it when Governors get on MSNBC and blame the Feds for all their woes? take some responsibility for a change like some Governors have for god sakes.

Some other data from other States in the mix:
Pennsylvania: (D) 5.8% (leaning Obama)
New Jersey: (D) 5.9% (tighter than expected-leans Obama)
South Carolina (R) 7.6% (safely McCain)
Florida: (R) 6.5% (toss-up)
*Though I like the (R) Governor down in Florida it has some real issues befronting it. If there is a state that may swing on the oil/drilling debate it could be FL. Those revenues could really assist that state. The hospitality industry and sales taxes from food, lodging, dining are getting hammered in 2008. Ask yourself, just how well did Disney World do this year with gas $4+?


Lucks Lane said...

Both the GOP and Dems share equal in this along with Wall st and big accounting firms.

Eric Cantor is one of the ring leaders taking lots of dough from Wall St and fighting regulation at every turn. He got more than money-his wife got a nice cushy job too.

Charter Colony said...

Lucks Lane the post I do not think was geared toward state economies and use of taxes, over regulation, and state revenues going to areas outside the neccessary infrastructure requirements because of programs that are and were never intended for government involvement.

This involves the priorities of government not Wall Street. The economies of scale in different regions may be different, but how these State systems are run demonstrates the the results of the differing ideologies.

The ALL take lots of dough from Wall Street. And by the way, though Eric Cantor may be a constant fundraiser, he did not get more money than Barack Obama has secured in a mere two years from the likes of "Barney's Rubble"-thats right Barney Frank and the rest like Chris Dodd who got money off the backs of Amercian workers and Obama's cushy ties to Freddie Mac and Fannie Mae really demonstrate how the Democrats are so concerned over the working class folks in the country.

Face it, they (Dems) pander as much to those people as Republicans do and it about power.

You want change, meaningful change, its not about the Presidency, its about term limits and the will to pass a balanced budget amendment like some States.

Until you have those, you will have the same folks peddling their wares in Washington to these leaders.

At least John McCain has been in Washington long enopugh for people to actually see what and who it is who has been trying to get into his pocket and fact is not many. On the other hand look at Biden--banking and credit card capital in Deleware contributing huge sums and his son worked for banking lobbyinfg firm.

Its a scam. wake up to the dilusion its the will of the people in Washington. They are willing to pander to you once every two years or once every four years and once you have voted you sit at the back of the bus of relevence. Hard pill to swallow but thats the reality of Washington.

You should be careful because the developers have the same form of hold over you Board of Supervisors. Where did all that anti-developer, smart growth rhetoric get you, a Board that simply approved the same things the previous Board was going to approve; more developments nthat in the end you will have to pay for in taxes to pay for county services to service about 20,000 new homes over the next ten to fifteen years throughout the county. Whose gonna pay for the schools that we do not have for all those homes; you are. You think they could get a bond done in this climate given Wall Street to build the schools; I doubt it.

James said...

The very reason this race is as tight as it is is two fold; one the quality of life in the battleground states while it should favor Democrats because of the economy does not because as you point out are run by Democrat legislatures or executives and two people are just not sold on the fact that Obama is the right agent of change at this time.

If Barack Obama had not portrayed himself and pandered to the far left of the Party, like Howard Dean did years ago, maybe people would be more inclined to "believe". His record for being one of the most liberal Senators does not help nor does his recently revealed connections with those associated with the mortgage industry and this crisis.

I firmly believe had the Democrats nominated Clinton they would be up by at least ten points solid if not more right now. Whether you like her or not, she has all the intangibles that Obama does not and McCain certainly would not be able to take the same hardline he has with Obama with her.

Based on the current polls its a toss-up, which I think favors the Republicans. If people have reservations today about Obama I see very little changing that come November, even the debates. And reservations translates into a plus for McCain. If McCain hold on to leads in Florida and concentrates in Ohio and wins there and can manage to pick up Michigan or fend off Obama in Virginia I think the electoral map will be like 2000.

Obama may win the popular votes but not the electoral. Again, the Obama campaigned played "delegates" in the Primary and the Republicans are playing electorals in the General.