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Wonkbook: The Crash of 2:54pm; health care and health-care repeal both unpopular; Iron Man 2!

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Remember that time the Dow dropped 1,000 points in, like, a minute? Yeah. Me too. And so does Wall Street. But now we're left with a whodunnit. Was it Greece? A computer glitch? Iron Man 2? And did you read what the CBO had to say about climate-change legislation?

Welcome to Wonkbook.

Agenda

House: Out of session today, but Rep. Ed Markey is leading a bipartisan delegation from the Energy and Commerce Committee on a fact-finding trip to the oil spill.

Senate: Debate continues on financial regulation.

White House: The president will speak on the unemployment numbers at 11am today.

And! The Labor Department releases unemployment data for April, the Federal Reserve releases data on consumer credit for March, Goldman Sachs holds its annual shareholder meeting, and Iron Man 2 comes out!

Top Stories

The crash of 2:54pm: "At its afternoon low, the Dow Jones Industrial Average had plummeted 998.50 points, its biggest intraday point drop ever. The swing from its intraday high was 1010.14 points," report Tom Lauricella and Peter McKay. Why? Explanations range from Greece contagion to a computer problem. But this isn't just a stock market problem.

Think global, or at least continental: "The fiscal crisis that began in Greece months ago is spreading across Europe like a virus, causing growing doubts about the fates of even nations with far more manageable levels of government debt," reports Neil Irwin. It is called a 'contagion effect,' an economist's metaphor for the rapid and hard-to-predict spread of financial crisis, driven by the fragility of investors' perceptions. They are a function of vicious cycles in which confidence in a country's ability to repay its debts falls, driving up the country's borrowing rates and thus making it all the harder for the nation to handle its debts."

"It leaves countries like Spain, the largest and most economically significant country in the path of the storm--at the mercy of global investors operating under the twin pressures of fear and greed. And it even can be true for countries that have managed their government debt responsibly--Spain has less debt relative to the size of its economy than the United States or Britain--if investors' views of their likely future deficits or ability to roll over debt shift."

Most-important-story-of-the-day interlude: "It isn't quite the breath of fresh air that Iron Man was, but this sequel comes close with solid performances and an action-packed plot," says Rotten Tomatoes.

Table of contents: Economy (more on the stock market whodunnit); FinReg (amendment to audit the Fed moves forward, amendment to break the big banks is voted down); Environment (CBO says climate change bills will reduce employment, but what about climate change?); Immigration (Schumer asks Arizona to hold off); Health-care reform (the bill is unpopular, but so is repeal).

Economy

A recipe for financial disaster: "Combine one part nervous traders, one part Greek crisis and one part trader error. Stir in one part central bank complacency. Bring to boil. Panic," writes Floyd Norris." That combination produced one of the wildest days ever in financial markets, with the Dow Jones industrial average, at one point, down almost 1,000 points while the euro sank to its lowest level in more than a year. There were substantial declines in emerging markets, whose economies had seemed to be booming, and in developed markets fearful of renewed recessions."

"Even though a substantial part of the worst plunge appeared to be linked to a trader error — one $40 stock fell for a time to one penny — prices had fallen around the world even before such mistakes began to happen."

This was no mere computer error, though. "Even after technical glitches were suspected and the trades were unwound, however, the markets and the world confronted the precarious state of the 60-year effort to create a single economy and a unified political system out of Europe's once-warring countries," writes Steve Pearlstein. "The Dow has already fallen more than 600 points in three days on fears that a European debt and banking crisis could drag the continent's economy back into recession and put the entire European project in jeopardy."

"As C. Fred Bergsten of the Peterson Institute put it this week, the fundamental problem is that even with a single currency and a unified political and bureaucratic structure, the arrangement is only a 'halfway house' on the way to genuine political and economic integration, and a rickety one at that. While capital and goods and tourists can move relatively freely across borders, workers and services cannot, and national governments continue to jealously protect their regulatory and fiscal prerogatives. Although the political and economic elites continue to swear allegiance to the European project, their top-down strategy continues to meet strong resistance from voters."

Tell me what happened, again? "What we were seeing was traders flailing around in a context of limited information and liquidity, trying to get a grip on what was or wasn’t going on," explains Felix Salmon. "There was always the possibility, after all, that the sellers knew something they didn’t, and that stocks were actually falling for a reason. So it took a few minutes for the market to realize that it was all just market volatility — and therefore a great buying opportunity for any trader."

"It’s been a very impressive day to learn how the stock-market sausage is made: I think we just saw the largest intraday fall, in point terms, that has ever happened. But the bigger lesson is that in the short term, any market can fail temporarily. The question is whether the jitters from this afternoon are going to mean increased volatility and risk aversion going forwards. My feeling is that, yes, they both will and should."

Can Greece remain in the Euro? "The only thing that could seriously reduce Greek pain would be an economic recovery, which would both generate higher revenues, reducing the need for spending cuts, and create jobs," writes Paul Krugman. "If Greece had its own currency, it could try to engineer such a recovery by devaluing that currency, increasing its export competitiveness. But Greece is on the euro."

"So how does this end? Logically, I see three ways Greece could stay on the euro. First, Greek workers could redeem themselves through suffering, accepting large wage cuts that make Greece competitive enough to add jobs again. Second, the European Central Bank could engage in much more expansionary policy, among other things buying lots of government debt, and accepting — indeed welcoming — the resulting inflation; this would make adjustment in Greece and other troubled euro-zone nations much easier. Or third, Berlin could become to Athens what Washington is to Sacramento — that is, fiscally stronger European governments could offer their weaker neighbors enough aid to make the crisis bearable."

Obama seeks modified line-item veto: "A president would have 45 working days after signing a spending bill into law to submit to Congress items to rescind, the administration official said, and Congress would have 25 days to act," reports Jackie Calmes. "The House and Senate would have to vote the package up or down, without amendments."

Risotto interlude: "To make great risotto you need really good stock, and a lot of butter," writes Mark Bittman.

FinReg

'Audit the Fed' becomes 'Audit the Fed once': "The compromise, endorsed by Senate Banking Committee Chairman Christopher Dodd (D., Conn.) and the Treasury, would require the Fed to disclose more details about its lending during the financial crisis," report Sudeep Reddy and Michael Crittenden. "It would also require a one-time audit of those loans and a one-time review of Fed governance. A formal vote was scheduled for late Thursday."

Proposal to break up big banks fails: "The amendment, proposed by Senators Sherrod Brown, Democrat of Ohio, and Ted Kaufman, Democrat of Delaware, would have forced some of the heaviest hitters on Wall Street, including Citigroup and Goldman Sachs, to shrink in size to limit the risk that big banks pose to the broader financial system," reports David Herszenhorn. "The vote was 61 to 33, with 29 Democrats and 3 Republicans and 1 independent in favor, and 27 Democrats and 33 Republicans and 1 independent opposed."

Small banks score in amendment process: "Senate lawmakers handed community banks another victory Thursday, passing an amendment to financial regulatory overhaul legislation that will shift the burden for deposit insurance to larger banks," reports Michael Crittenden. "Lawmakers voted 98-0 in favor of an amendment that would change the way the Federal Deposit Insurance Corp. charges banks for government-backing of bank deposits. The agency would base a bank's fees on its total assets minus tangible equity, instead of the traditional practice of basing assessments on a bank's domestic deposits."

Harkin wants to limit ATM fees: "Chalk up ATM fees on the list of amendments that may make their way into the bank-overhaul bill under debate in Washington," reports Jennifer Waters. "Sen. Tom Harkin (D., Iowa) introduced an amendment Wednesday that would cap fees for withdrawals at automated teller machines at just 50 cents per transaction."

Is this financial regulation that Wall Street can love? "Democrats did spend the past year threatening to unleash hell and all its furies on the financial sector, and in response a petrified Wall Street rushed to buy protection with millions of dollars in Democratic campaign tithes," opines Kimberley Strassel. "The party in power then produced legislation that—while bad in many, many ways—is something the biggest players can live with. When Goldman Sachs CEO Lloyd Blankfein last week told Congress he was 'generally supportive' of the Democratic bill, he meant it."

An end to fine print: "Over the past generation, the proliferation of fine print, in everything from car loans to credit card applications to television commercials, has shaken what we value about contracts," writes Elizabeth Warren. "Fine print means that one party (think: a big corporation) can lay down the terms of the deal in a way that the other party (think: a customer) is unlikely to figure out. Long after the contract has been signed, the party that inserted all the fine print can do almost anything -- raise prices, cut service, extend the contract -- all because the fine print says so...My proposal is simple: no more fine print. If you can't explain something in simple, straightforward terms, it shouldn't be part of the agreement."

College admissions interlude: A guy tries to get off MIT's waitlist -- through the power of song.

Environment

CBO estimates effects of climate-change legislation, but not of climate change: "CBO has analyzed the research on the effects that policies to reduce green house gases would have on employment and concluded that total employment during the next few decades would be slightly lower than would be the case in the absence of such policies," writes Doug Elmendorf. "Eventually, however, most workers who lost jobs would find new ones. In the absence of policies to reduce emissions of greenhouse gases, changes to the climate also might affect employment; however, this brief does not address such changes because that effect would probably arise after the next few decades, and it has not been studied as carefully by researchers."

Looking back on the Exxon-Valdez: "Two decades after the Exxon Valdez tanker ran aground near here, the economy and environment of Alaska's Prince William Sound have recovered somewhat, but some effects of the nation's last giant spill persist," reports Jim Carlton. "The scenes of blackened devastation have been replaced by a return to postcard-perfect views. But thick oil can still be found on beaches throughout the sound only a few inches beneath the sand. More than half of the roughly 20 major animal species hurt by the 1989 spill—including killer whales and sea otters—haven't fully recovered."

"A collapse of the region's once-rich herring fishery hammered Cordova, a town of about 2,200 still struggling to recover. Seeing fishermen on the Gulf Coast facing the same threat, Cordova fishermen offer them little cheer. 'All those people are absolutely screwed,' said 62-year-old Noel Pallas, one of many forced out of the fishing business by the spill."

Chinese energy use soars: "Even as China has set ambitious goals for itself in clean-energy production and reduction of global warming gases, the country’s surging demand for power from oil and coal has led to the largest six-month increase in the tonnage of human generated greenhouse gases ever by a single country," reports Keith Bradsher. "China’s leaders are so concerned about rising energy use and declining energy efficiency that the cabinet held a special meeting this week to discuss the problem, according to a statement Thursday from the ministry of industry and information technology. Coal-fired electricity and oil sales each climbed 24 percent in the first quarter from a year earlier, on the heels of similar increases in the fourth quarter."

House passes 'Cash for Caulkers': "The House approved a new economic stimulus bill Thursday that could lead to thousands of dollars in 'Cash for Caulkers' rebates for homeowners who renovate their homes with better insulation and energy-saving windows and doors," reports the Associated Press. "The Home Star bill, which passed 246 to 161, would authorize $5.7 billion over two years for a program that supporters, mostly Democrats, said would have the added benefits of invigorating the slumping construction industry and making the earth a little cleaner."

Learning from the BP oil spill: "What escalated the April 20 incident from a tragic accident to a catastrophe was not the blowout itself but the ensuing inferno that sunk the $650 million BP platform<" writes Nansen Salari. "Without the fire, the oil well leak could have probably been brought under control within a week. Thus it is critical to determine what future designs could best enhance survivability of giant offshore structures even under blowout conditions. Are there lessons to be learned from the airline industry, which has engineered significant reductiohttp://voices.washingtonpost.com/cgi-bin/mt/mt.cgi?__mode=view&_type=entry&id=182198&blog_id=479&saved_added=1ns in post-crash fires during the last decade?"

Use the fishermen: "Offer to buy back your oil at a price that will entice them to skim and deliver it to you," advises Jerome Dobson. "There's probably no other stretch on Earth that has as much available capacity as the Texas, Louisiana and Mississippi coasts, including barges, tankers, fishing boats, recreational boats -- and an incredibly resourceful workforce. Fishermen and watermen (including women) are accustomed to handling about as much fuel as fish, and they can do wonders with anything that floats. You will be astounded by the clever solutions they will invent for harvesting, separating and transporting oil."

The times-they-are-a-changing interlude: The modern food system is really playing havoc with our aphorisms.

Immigration

Chuck Schumer asks Arizona to hold off for a year: "When she signed the law, Brewer said she was forced to act because Washington had failed to fix the immigration system. In his letter, Schumer said he 'cannot agree more than urgent federal action is necessary this year.' He even said that he understood that as governor of Arizona, she felt 'duty-bound' to act. He then went on to call the new law 'wrong-headed,' 'likely unconstitutional' and unlikely to reduce illegal immigration into Arizona," reports Laura Meckler.

"As an alternative, he suggested that Arizona put its law on hold while Congress works on the problem. His proposal includes border security measures, an employment-verification system, a guest worker program and a path to legalization for those already in the country. Schumer asked her to urge Arizona’s two senators, Republicans John McCain and Jon Kyl, to get on board."

Health-care reform

Bill unpopular, repeal unpopular: "The Quinnipiac polls, conducted in three states across the past month, all find likely voters to have complex and contradictory views on these repeal lawsuits as well as health care reform itself," reports Sarah Kliff. "By a slight majority, likely voters tend to oppose the health care reform law. But they also tend to oppose the repeal lawsuits as a 'bad idea' that would, for a sizeable portion of voters, make them 'less likely' to support a given candidate. In short, voters simultaneously don’t want to health care reform but don’t want to challenge it either."

Appendix

Is Ben Roethlisberger ruining the Steelers? "Ron Vergerio, a Pittsburgh-area bus driver and commercial driver's license inspector, has devoted a significant portion of his epidermis to his beloved Steelers," writes Jack McCallum. "The artists at American Tattoo, a parlor in the Pittsburgh suburb of Verona, have spent more than 200 hours crafting Steelers-themed tats on Vergerio's back, chest and arms. One of the most striking images is that of Ben Roethlisberger standing tall, looking downfield, poised to throw—a quarterback's quarterback. Vergerio wears that one on his left biceps. Now even this most extreme of Steelers fans wonders if he should get a red line inked through it."

Closing credits: Wonkbook is compiled with the help of Dylan Matthews and Mike Shepard. Photo by bdjsb7.

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By Ezra Klein  |  May 7, 2010; 7:08 AM ET
Categories:  Wonkbook  
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Next: Secret holds are not the problem (but the Democrats would like to make them the problem)

Comments

The stock market is perpetually clever at finding new ways to skim off the hard earned gains of the common investor. Very convenient how a one-minute event can wipe out an entire year's worth of gains. I am very happy I am no longer invested in the stock market. It's a scam.

Posted by: Lomillialor | May 7, 2010 7:53 AM | Report abuse

Below is a detailed rebuttal to the CBO on it's climate take. Personally, I think the CBO is as inaccurate at predicting things as Sylvia Brown is. Someone please show me one CBO prediction on any major policy proposal that was spot-on. The CBO doesn't account for many key variables, including deliberate sabotage of policies.

http://climateprogress.org/2010/05/06/congressional-budget-office-cbo-analysis-climate-energy-bill/

Posted by: Lomillialor | May 7, 2010 8:00 AM | Report abuse

Iron Man 2: Something that crosses party lines and political ideologies. Can't we all agree that it would be a better world if an alcoholic multi-millionaire son of a war profiteer privatized world peace?

Posted by: Kevin_Willis | May 7, 2010 8:02 AM | Report abuse

Lomillalor,

You do realize that not everyone is out to get you. Just corporations, the government (under GWB that is) now the government is just peachy!, the bogeyman, the Easter Bunny and Ivan Vanko.


As far as the market goes imagine the lucky stiff that at 3:00 looked to buy Proctor and Gamble at 39.


As far as the market goes dollar cost average and you'll be fine. Now you're just buying a discount. Don't look at your 401k's for at least a month and then you'll be back to fine.

I love how some on here will bash the markets as Lomillalor does but then when corporations are doing well, showing profits and stock prices are up they bash them for profiteering yet don't mention how well their mutual funds and 401k's and pensions are doing then. WHY???

Posted by: visionbrkr | May 7, 2010 8:29 AM | Report abuse

oh and unemployment figures are out. Original estimates seemed to be holding at 9.7 and it went to 9.9.

I'm guessing we'll be hearing today how the labor force increased by 290,000. Good news absolutely. Problem for Dems is that people around elections only speak of the unemployment RATE not of the increase of decrease in the number of jobs. 9.9% is not a good number for them.

Posted by: visionbrkr | May 7, 2010 8:40 AM | Report abuse

"at the mercy of global investors operating under the twin pressures of fear and greed."

Another argument for heavily taxing or otherwise disincentivizing derivatives and arbitrage on world currencies. When a bunch of hyenas, I mean investors, short a currency and then use trades, rumors, market psychology, and other ways to depress the currency's value are simply preying on countries without the resources to fight off the attacks on their currency(or the market savvy to know that their currency is under attack), a national crisis is created where none existed before. It is an evil system that makes for misery for a country's population to add billions to international oligarchs manipulating the currency markets.

Posted by: srw3 | May 7, 2010 9:43 AM | Report abuse

vision

dollar cost averaging is not guaranteed to work during turbulent times or when the system is fixed (which it is now) or when you are retired and have no steady stream of income to invest. Retirees should have been in less risky investments anyway, but many weren't.

If you think the system ain't fixed, then go read about greece, GS, derivatives, naked short-selling, Madoff, the SEC/Wall-Street jobmill, and how institutional investors basically control everything. The people who consistently make money in the stock market now are either lucky or they spend large numbers of hours every week watching their picks and economic indicators.

Regarding turbulent times, they are here to stay for at least 10 more years (probably longer)

Posted by: Lomillialor | May 7, 2010 9:53 AM | Report abuse

vision : "I love how some on here will bash the markets as Lomillalor does but then when corporations are doing well, showing profits and stock prices are up they bash them for profiteering yet don't mention how well their mutual funds and 401k's and pensions are doing then. WHY???"

I don't have mutual funds or 401k's or pensions. I have everything in cash (even my IRA) because I don't trust the markets. Also, any retiree ought be in less risky investments anyway. So you see, your concern about me being a hypocrite is a stretch.

Posted by: Lomillialor | May 7, 2010 9:58 AM | Report abuse

vision : "You do realize that not everyone is out to get you."

No, just my money and my vote.

If you think the wealthy elite don't work hard to pull the strings (and to own the strings), or that markets aren't manipulated, and that this doesn't affect you, then you are being naive.

Go read the stories of how $100s billions were stolen from western states circa 2000/2001 by Enron and other energy companies as they manipulated the energy markets and then got GWB to appoint a Ken Lay oil man to become the chairman of FERC, a man who then fought against career FERC people to try to control the out of kilter energy market. This is one of the main reasons California went from solvency to near bankruptcy over night.

Also read the stories or watch the CBS 60 Minutes video how a few oil speculators and a few oil brokerage houses in Switzerland, London and NYC affect oil prices.

Also read the reports how the oil companies in the 80s (after Reagan's election) reduced the number of refineries from somewhere around 600 to 300 in just a few years in order to increase profit margins (i.e. raise oil prices).

The number of ways they control or influence supply and demand (and the markets) is breathtaking.

There's a reason the lobbyists are spending $100s millions fighting reforms. And it's not because they "don't" have influence on the ways they get their greedy hands on your money or your vote.

Posted by: Lomillialor | May 7, 2010 10:12 AM | Report abuse

Please god. stop calling it climate change legislation, you and everyone else are setting us up to fail. Its End of the Era of Cheap Oil Legislation. Or Domestic Energy Legislation. Anything. Please.

Posted by: nathanlindquist | May 7, 2010 10:25 AM | Report abuse

Kevin, I'm on board for a Iron Man 2 extravaganza today. I know there are a million problems brewing all over the world, but I needs me some deeply flawed techno genius billionaire in a suit that costs more than many countries' budgets and which he replaces every year.

I mean come on, like the smartest guy in the country needs oversight.

Posted by: MosBen | May 7, 2010 10:48 AM | Report abuse

@Lom: "I don't have mutual funds or 401k's or pensions"

Well, I have a (mandatory) retirement plan, now that I work for the government. And a little bit of money in a mutual fund in a ROTH IRA. Otherwise, everything is in cash now for me, too. It took me a while to realize the wisdom of that, and pretty much torpedoed my retirment . . . but Lom is 100%. Although I do support dollar cost averaging (in a top 25 index fund) if you have a lot of steady income and no debt. That's not me, so I'm not doing it. But it's a strategy that works pretty well over long periods of time, even in turbulent markets.

If you've dollar cost averaged for 30 years (in a market index fund) and the market crashes the day before you retire, you're actually still ahead of the game compared to CDs or money markets based on your original investment. If you're comparing it to the huge numbers you were seeing last year on your statement, then you feel like you've lost everything. But the fact is, you've still made 30% on the original cash invested. Which ends up being a much bigger payday then what you get back from Social Security or your average pension fund.

People who get excited that a single stock keeps going up and up and get in (usually late in the game) just to see all their money disappear--that's very different. ;)

Posted by: Kevin_Willis | May 7, 2010 10:57 AM | Report abuse

MosBen: I'm not sure when I'll actually get to see Iron Man 2 (too much stuff in the schedule) but I'm sure looking forward to it. If you can't trust an unstable, super-genius billionaire to unilaterally police the world (with no accountability or outside authority), then who can you trust?

Whiplash? War Machine? I don't think so. Well, maybe War Machine.

Posted by: Kevin_Willis | May 7, 2010 11:00 AM | Report abuse

Lomillalor,

while dollar cost averaging does not apply to everyone (especially the older investor looking to cash out soon) it does work and has 80 years of proof. If you choose to ignore that so be it. Keep it in cash. Nothing wrong with that. That being said when I'm speaking of DCA I'm not speaking of oil speculators and Ken Lay etc. That's comparing apples and oranges.


In your expert opinion you think we're in for turbulent times for at least the next 10 years? Please explain to me how you came up with that analytical calculation.

And you're right retirees should have been in less risky investments it they weren't willing to lose principal but if . . .

oh forget it. you're right. everyone's out to get you.

Posted by: visionbrkr | May 7, 2010 12:04 PM | Report abuse

I signed up for the Wonkbook email and, one week in, I have to say I'm surprised how much I enjoy having it show up in my inbox! The only thing that sucks about it is that all of the links are blind, so I can't see that this article comes from the NYT or whatever. But anyway, this is a great feature!

Posted by: HerooftheBeach | May 7, 2010 12:32 PM | Report abuse

"I'm guessing we'll be hearing today how the labor force increased by 290,000. Good news absolutely. Problem for Dems is that people around elections only speak of the unemployment RATE not of the increase of decrease in the number of jobs. 9.9% is not a good number for them."

Two things.

One, the election is still 6 months away. If job growth continues over that 6 month period. returning job seekers are likely to all find their way back in to the numbers, and then the rate will fall in line with job growth. It won't really be "around elections" for the average voter until well after Labor Day, and by then (if the current trend line continues) there should not be any lingering sense of ambiguity about the numbers.

Two, I'll give the public a little more credit about being able to understand the fact that as hiring improves, discouraged workers will re-enter the market. Recent polls have shown a definite uptick in people's optimism about the economy, the other numbers have been generally good all year, and government officials and the pundits have long warned the public that employment will be a lagging indicator in the recovery.

Of course, there are worries about a double dip (especially with the problems in the EU) and setbacks can happen between now and November, but I think today's news is cause for cautious optimism among Democrats.

Posted by: Patrick_M | May 7, 2010 12:50 PM | Report abuse

Subscribed to wonkbook, and now receiving promotional spam from the W.Post. Unsubscribed from that, and hope I'm still going to get wonkbook :/

Posted by: Ecks | May 7, 2010 3:29 PM | Report abuse

Patrick,

OK, I'll bite. What do you think the rate will be come September? 9%, 8.5%, 9.5%

Do you think any of those numbers equate to the general public being satisfied with how the country is being run (no matter who is to blame?)

Sure there's all those things to worry about as well as the issues regarding commerical credit, healthcare costs spiking 25+% per year. Trust me. As I've said before things are going to be worse before they're better.

Posted by: visionbrkr | May 7, 2010 4:29 PM | Report abuse

"OK, I'll bite. What do you think the rate will be come September? 9%, 8.5%, 9.5%

Do you think any of those numbers equate to the general public being satisfied with how the country is being run (no matter who is to blame?)

Sure there's all those things to worry about as well as the issues regarding commerical credit, healthcare costs spiking 25+% per year. Trust me. As I've said before things are going to be worse before they're better."


visionbrkr-


I don't pretend to have a prediction what the figure will be, mainly because it is unclear to me just how long we can expect that the number of unemployed returning to the hunt will continue to offset and distort the rate. More important than that number (whatever it is) I think (that absent unforeseen shocks) that if the current trend continues, people will feel that we are "heading in the right direction." Don't forget how high unemployment still was during Ronald Reagan's "Morning in America" campaign at the crest of his popularity.

It is just going to be harder for Republicans to make a compelling case that Democrats' economic policies have failed if GDP is growing and if hundreds of thousands of new private sector jobs are being created every month.

The American people are never entirely "satisfied with how the country is being run," but that's not the right barometer. The question is whether they will think that things are "headed in the right direction." If that is the case, the voters will be far less inclined to punish incumbents -- that sentiment may have already peaked.

I still expect that the Republicans will make gains, but I don't think John Boehner should be measuring for new curtains in the Speaker's office just yet, and certainly not based on today's employment figures.

Posted by: Patrick_M | May 7, 2010 6:38 PM | Report abuse

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