Dow Jones Index Plunges Another 449 Points

The $85 billion bailout of the nation's largest insurance company, A.I.G. didn't calm investors. They drove the DJIA down another 449 points, closing at 10,610. In October 2007 it was 14,164, a drop of 3554 points or 25% from the high. Here is a chart of the DJIA for the past 12 months. It's not pretty.

The political consequences are becoming increasingly clear: the economy is going to drown out every other topic and both parties are struggling to find good responses. This is going to be easier for Democrats than Republicans, in part because the answer most voters want aligns well with the Democrats' traditional response: the government needs to regulate big business. The traditional Republican response is to let the market do its work and reward winners and punish losers. Eventually it will settle down. But for millions of people worried about their jobs, their houses, their investments, their pensions, and their futures, just waiting it out may not be so popular.

The Fed has pumped so much money into bailing out the financial industry that it has run out of cash and has asked the Treasury Dept. to give it $40 billion. To raise the money, the Treasury Dept. will have to auction off T-Bills. Everyone will be watching to see how much interest the government has to pay to sell them all.

Young Wins GOP Primary in Alaska

The final count is in and Rep. Don Young has won the Alaska Republican congressional primary, defeating Lt. Gov. Sean Parnell. Young, who is being investigated on ethics charges, will face Democrat Ethan Berkowitz. Young's win is good news for Democrats, bad news for Republicans. Polls have shown than Berkowitz can beat Young but would lose to Parnell. For Parnell, it is not all bad news, however. If Sarah Palin is elected Vice President, he gets to be governor of Alaska, not a bad consolation prize.

Alaska Attorney General Won't Honor Subpoenas

The Alaska attorney general has said that aides to Gov. Sarah Palin will not comply with subpoenas issued by the Alaska state legislature investigating an allegation that she abused her power as governor to settle a score with her estranged brother in law. The reason the attorney general gave is that the governor "has declined to participate" in the probe. It is not unusual for people under investigation to decline to participate but it is unprecedented for a state attorney general to openly say he will break the law and not honor lawful subpoenas. It is fairly clear from an audio tape already released that the allegation has merit and Palin wants to make sure that retired prosecutor Steve Branchflower won't be able to issue his report before the election. This approach is in contrast to that of indicted Alaska senator Ted Stevens who wants to get his trial over before the election so he can be found innocent and clear his name.

Livni Wins Kadima Primary

Whut? This is a test of your knowledge of world affairs. There was a primary election in Israel for the leadership of the Kadima Party yesterday and it was narrowly won by the Israeli foreign minister, a 50-year-old woman named Tzipi Livni (photo on the right). She now gets 6 weeks to form a coalition government. If she succeeds, which is thought to be likely, she will replace Israeli Prime Minister Ehud Olmert who is expected to resign this week due to a corruption scandal. If she fails to form a government, there will be a general election, something she does not want since the opposition is leading in the polls. Livni would be the second woman to lead Israel. Golda Meir was Prime Minister from 1969 to 1974. While Livni's election doesn't directly affect U.S. politics, it will certainly shake up the Middle East, which clearly affects the whole world. Women in the countries like Saudi Arabia who normally despise Israel are surely going to be noting that Israel has chosen a woman to lead the country for a second time while they have hardly any rights at all. Here is an article in Time written by her U.S. counterpart, Condi Rice. In any event, Livni is certain to become a worldwide symbol of a new generation of women taking power.

Election Day Problems Expected

With a huge number of new voters registered this year and new equipment and procedures in use in many states, the potential for chaos on election day is great. Nine million voters will use equipment that has changed since March. Statewide voter data bases in many states are in place to weed out voter fraud, but these data bases are known to contain many errors, which will lead to fights on election day about who is allowed to vote. Premier Election Systems (formerly called Diebold) has admitted that the software used in their machines in 34 states could cause votes to be dropped. The company has no solution. Both candidates are assembling teams of lawyers to deal with challenges. The last thing the country needs in the middle of an economic crisis with two wars going on is another disputed election with legal battles over faulty voting machines in multiple states. Here is a story in the Washington Post.

Bob Barr Not Getting Much Traction

Libertarian candidate Bob Barr, who potentially could be a spoiler isn't getting anywhere. His fundraising and polling are pathetic. This may be in part because he doesn't believe in Libertarian principles (such as keeping the government out of people's private lives). He is unlikely to do as well as the 2004 nominee, Michael Badnarik, who got 0.34% of the national vote, just behind Ralph Nader at 0.38%.

Today's Polls

We have 38 presidential polls today due to a large number of new ARG polls. The results are given below. The upshot is that John McCain has taken the lead in the electoral college 274 to 243. However, there are three large caveats. First, 13 states worth, 166 electoral votes, are statistical ties. If we look only at the states where one of the candidate's has a lead of 5% or more, Obama has 188 EVs to McCain's 184. In other words, it is very close (again this year). Second, McCain has not taken a single Kerry state from Obama while Obama has taken two states from those Bush won in 2004 (Iowa and New Mexico). Pennsylvania is currently a tie. Third, all these polls were taken before the meltdown on Wall St. Polls taken a week from now could look quite different.

We also have four Senate polls. It looks like the Democrats will pick up seats in New Mexico and Virginia while Oregon is too close to call.

We also have a House poll in PA-11, where challenger Lou Barletta is leading incumbent Paul Kanjorski. This may be the only House race in the country where an incumbent Democrat loses.

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