The sustained barrage of nastiness from the McCain campaign has definitely moved the needle, but not in the direction he was hoping. The biggest impact has been on his own favorability, which has continued its decline. Senator Obama has weathered the attacks unscathed, maintaining his favorability while widening his lead in the tracking polls.
There’s a new CBS/NYT poll out today: Obama 53% – McCain 39% (LV).
Two of my favorite media outlets (NPR and Slate) have been talking about a number I’d never heard of before: the TED spread. It’s the difference between interest rates on inter-bank loans and treasury bills. It can be used to gauge the health of credit markets, and right now it looks really bad.
An increasing TED spread indicates increasing risk aversion in the market. Investors are favoring [safer] government debt over corporate debt. Banks are afraid to lend to each other because the borrower could fail, or they might need cash to survive their own crisis.
The TED spread is normally around 0.5 percent. Over the past year, it’s bounced around between 1 and 2 percent. Economists started to freak out when it topped 3 percent last month. On Friday, it was as high as 4.65 percent.
The credit market has seized up. The plunging Dow is reflecting that liquidity is critical to business. Credit is the lifeblood of our economy. Until credit markets are righted, things will continue to get worse. Perhaps much worse.
Keep an eye on the TED spread.
Over the past few weeks, Senator McCain’s political fortunes have fallen nearly as quickly as my 401K. His erratic response to the financial crisis has not played well with voters. (Also, his running mate’s coach turned back into a pumpkin.) With just four weeks remaining before the election, polls are clearly and decisively trending toward Obama.
Desperate times call for desperate measures. The McCain campaign can’t get any traction on actual issues, so they’re taking a turn for the low road. They’re betting they can distract the American people by attacking Obama’s character. There are some problems with this strategy, however.
First, it’s nothing we haven’t heard before. Most of these jabs were thrown during the brutal primary season (thanks, Hillary). We have already factored them into our decision-making process.
Second, guilt-by-association will backfire. Yes, Obama served on a charity board with a reformed 1960s radical. There are plenty of unsavory skeletons in the McCain-Palin closet: Charles Keating, John Singlaub, Joe Vogler. Do they really want us to know who they’ve been palling around with?
Third, and perhaps most importantly, the American people are really hurting right now. While McCain is wallowing in petty attacks, voters are screaming for substance. It won’t take long for our frustration to turn to resentment.
The Dow dropped another 500 points today. The economic crisis is deepening, and John McCain is trying to change the subject by having Joe Six-Pack fire off zingers from the campaign trail. Something tells me that’s not going to resonate.
