The joy of leftovers

Call it a sign of the times but in the last two months I have become hyperaware of leftovers, as in they should not go to waste. As I see it there are four levels of leftover consciousness: the first being not letting stuff hang around the refrigerator and get forgotten on the back of a shelf or the bottom of a drawer; second level may be the hardest and that is accepting the fact that every meal does not need to be a new distraction and can be a recent repeat; the third is not getting too excited when cooking and ending up with a dish that will feed ten when only three or four are eating; and the fourth is don't go to the market hungry, the major cause of buying too much.

On levels one and two I have been feeling righteous of late. I scan the refrigerator for lunch, dinner side dishes and late night snacks and I eat the food, or we are eating the food. Of course if a certain dish was horrible the first time the trick is realizing that no one will ever eat it again and then throwing it out right away instead of letting it just get pushed further back on the shelf and causing daily angst and fingerpointing. Lunch today was a leftover classic. There was a modest portion of couscous with lamb and chicken from a shotgun storefront Moroccan place at 39th and 9th Ave, a still marginalized area that has good reasonable ethnic food. That was takeout from last Wednesday night when I left Manhattan too late for dinner at home. It was still great. Add to that a large portion of string beans cooked in garlic, soy sauce and beef broth over high heat by my wife on Friday, better than great, and then a filet of chicken sorrentino from last night's takeout, and that was a leftover lunch that almost required a nap. Righteous and good, it's like recycling.

On level three I've blown it, but that is what led to my discovery of level three. Reaching a higher level of consciousness is not necessarily easy. Yesterday I made bean soup starting with a medley of seven types of dry beans from an Amish store in Caswell County, NC. They expanded dramatically during soaking. By the time the Benton's country ham, celery, carrots, celery soup, corn etc had been added I had somehow made bean soup for twenty. It in fact may be enough for thirty since the country ham gave it an intensity and heaviness that has no one coming back for more even though all agree that it's both tasty and healthy. I need to find a soup kitchen soon. That may be easier in a few months.

Fortunately level four has been part of my awareness, and shopping at Whole Foods reinforces that. One mistake goes a long way, as in buying their 360 Organic wasabi salad dressing two weeks ago. The logic was that it made no sense so it must be good. It will stay in the refrigerator for a few weeks and we'll see if a college student tries it.

Earlier I spotted a small container, second shelf, back right, of cut up pineapple that was less than half full. That should not go to waste and duty calls now.

A last word from J. Orlin Grabbe

In scouring web sites for interesting commentary today, I learned that J. Orlin Grabbe died earlier this year at the age of 60. Despite his eccentricity, or because of it, his website often provided some singular insights or commentary. The intensely libertarian, conspiracy obsessed, intellectually gifted Grabbe, a Harvard PhD. and former Wharton professor who in 1986 wrote a seminal analysis and widely used textbook on derivatives pricing, "International Financial Markets", died at his final home in Costa Rica(after leaving academia in the early '90's he first lived in Greenwich Village with his cat and then in Reno, Nevada near the tables). His website stands but without his commentary and choices of articles(and photographs one might add) it is nothing. I found one quote through Google that captures what his attitude would have been about recent financial events, as follows:

"Free lunch strategies have a habit of self-destructing. The Swiss economist Eugene Boehler had the context of such false and unsustainable images in mind when he noted that 'the modern economy is as much a dream factory as Hollywood'. It is based only a small part on real needs, and for the greatest part on fantasy and myth, he claimed. The stock exchange, far from ruling economic life, is at the mercy of the tides of collective make-believe. Depressions come about when there is a loss of economic myth." J. Orlin Grabbe

DEPRESSION, ugly correction, seismic adjustment, or just a gut check recession

Over the last two months politicians, economists, the media and investors have gradually expanded the current lexicon of an economic downturn. The speculation evolved from "painful correction" to "recession" to "are we going to say the D word" to "depression" and finally in the last week to "Great Depression". So, let's speculate here, take off the rose colored glasses and look at that Great Depression and how it compares to today. Here are a few thoughts on "not like" or "like" the big one.

---This year's equity decline has been crushing and fast, but unlike the crash of 1929 it was not preceeded by a period of wild speculation with price/earnings ratios in the stratosphere and everyone and their crazy uncle claiming clairvoyance in the search for the next parabolic mover. We already did that in the year 2000. In 2007 average p/e ratios ranged from 16 to 17, not 25 or higher as during the tech mania. Perhaps with that experience under our belt, meaning successfully digested, we became somewhat complacent and underestimated what was happening. It was different, but events rarely repeat themselves predictably. not like or like, someone else decide

---We have not had a calamitous exogenous event that destroyed large parts of the economy as the drought and dustbowl did in 1930 and 1931. We couldn't handle one either, so deal with the car companies in some assertive way so we don't create a man-made calamity of equal proportions(just not part of TARP). not like... yet

---We have the FDIC deposit guarantees. We have safety nets like Social Security, Medicare, Medicaid and unemployment insurance. not like

---There is a majority bipartisan belief that some government intervention through regulation and relief is necessary. There is no widespread belief that protectionism, high tariffs, a balanced budget and higher taxes are the right solution as the Roosevelt Democrats and the Hoover Republicans both believed in 1932. not like

---Many members of Congress and the administrations have little understanding of the economic implications of their actions and are focused on narrow aspects of big problems. like

---There is a significant issue of unequal income and wealth distribution in the country. In 1929 33% of all annual personal income went to the top 5% of the population, almost twice what it had been 20 years earlier. In 2007 25% of all annual personal income went to the top 5% and 51% to the top 20%. From 1979 to 2005 total personal income growth was 175% for the top 1%, 70% for the top 20%, and on average less than 15% for the bottom 80%. In the 1920's the top 1% of the population had 44% of all wealth and in 2003(last data found) that 1% had 39%. like

---"The virtue of the investment trust was that it brought about an almost complete divorce of the volume of corporate securities outstanding from the corporate assets in existence." This quote from "The Great Crash" demonstrates Galbraith's wry use of the word virtue. It is also a mirror image of what happened in the credit default swap market. like

---"The investment trusts had invested heavily in each other." Galbraith again, and does this in any way remind us of the "funds of funds" concept in the private banking world's marketing of hedge funds. Does it even bring to mind those ETFs that are just aggregations of investments in other ETFs. More importantly is there a correlation to the fact that today's hedge funds tended to run in packs, investing heavily in the same securities. like

---Margin loans to individual equity investors in the late 1920's were allowed at up to 90% of funds invested. That same ratio was applied to raw Florida land at the time. Many residential mortgages made to the least qualified buyers in 2005 and 2006 essentially had infinite leverage. Cioffi's Bear pair of hedge funds had borrowings at 30 to 5o times assets. like

---The crisis is and was global. like

That's enough. Whether we will fly through this market meltdown and back out again like the man of steel is unclear. Some believe or hope that the amount of activist government intervention expected and the prevalence of information technology will lead to a resolution totally unlike the prolonged 1930's slump with its 25% unemployment numbers. That just does not seem possible. While the number of parallels to that depression of the past are of concern, we live in a different world. There is one wild card however, from this perspective...

In the 1930's the United States was in the midst of a long term industrial economic expansion. It was severely interrupted but the business model, factors of production, and technology were essentially the same in the 1920's as they were when the stimulus of WWII led the country out of the 10 year depression. That continuity of business model cannot be said of the United States in the beginning of the 21st century. The old industrial model has been globalized, the service and technology model has been adopted and the disruptive impact of transitioning to the new business model over the last 25 years has been profound. An economic system built on the foundation of marketing to the consumer, and that consumer consuming, is imperiled by recent economic events. How soon can recovery really begin.

The Great Depression ended when industry expanded to produce the goods for war. That industrial expansion was massive. That industrial production forced mass migrations around the country to industrial job sites, moves that would not have taken place without the impetus of new work. Today in many parts of the country the old jobs are gone and the new ones pay marginal wages and benefits. The government and corporations fund new job training, computer skills and the like for a few years but what is attractive enough to go through the expense of moving to another location in hopes of a better job. Optimists see this as a period of necessary transition and despite the individual hardships believe that the long term transition to a broad based information technology and service driven business model will lead to greater prosperity. That may be right, but this current market disruption may prove to be a sticky wicket. Sticky Wicket, where did that come from. Post concluded.

And at the local diner...

There is one diner in our small well-off suburban town. There's one movie theater, one of those relics with the 1950's style semi-circular marquee with hand hung letters. Add a few butcher shops, delis, pizza parlors, barber shops and nail salons, plus lots of bank branches and real estate offices, drug stores, a Starbucks of course and one variety store and that's the three blocks of downtown. It works and the center of the social action is the diner. That's a space with 12 seats at the counter plus about 12 booths. At breakfast and lunch it is invariably full, or had been.

There has been much written about the radical drop off in U.S. consumer spending in the last two months, an almost unprecedented decline in such a short period of time. Here's the story from the home front.

For various reasons, travel, cooler weather, and cholesterol watching, I had not been down the hill to the diner in several weeks. On Tuesday I stopped in for lunch at 12:30 expecting to look in and see that there would be a wait for a seat at the counter and if one was available it would be a no elbow room slot that made reading a newspaper challenging. I had the entire counter to myself. By 12:45 two other folks joined me and by 1:00 a couple of the waiters decided to have their lunch early. This was almost unbelievable. Today, Manhattan clam chowder day, I returned for both the chowder and to see if I was hallucinating a few days ago. There were a few more patrons but the place was still half empty(half full not being the appropriate slant these days). This kind of anecdotal observation is more powerful than any stats in the media. Ballad of a Thin Man territory.

This is a town where many people are relatively fortunate, but the diner crowd is the most democratic(not as in a political party but as in diverse)place around. Are people really foregoing their tuna on rye toast and cup of pea soup and saving a few bucks by eating at home. Are they just not in an especially social mood as they find reasons for good cheer a little harder to come by of late.

One of the pizza parlors closed last week. Isn't pizza recession proof. Watching investments decline is painful, oh so painful of late, but the expectation or hope is that patience will mitigate the impact over time. That might not be the case anytime soon if core local businesses are being so obviously affected. This is getting serious.

Brief opinions on financial markets

There so many important issues flying around the financial markets that there is only time at the moment for opinions, it seems, not explanations. So here are a few:
---Everything that Paulsen said to a congressional panel today about the need to use TARP to create liquidity in the securitization markets is absolutely correct. Without a loosening in the securitization markets there can be no credit expansion, none at all.
---To repeat from a post last week, no TARP funds should be used to fund the car companies. That's a totally different issue which needs to be addressed but not with funds approved to de-ice the credit markets.
---Near term money into the auto companies is money almost immediately down the toilet, unlike the potential for significant recoveries under TARP. Toilets have a purpose, however, and if they buy time for a cure they may be justifiable.
---The decision on buying time for the car companies is crucial as it comes at the most inconvenient of times---understatement. Bankruptcy in more normal times would almost certainly be the best solution, but testing out bankruptcy of these core U.S. industries in the midst of today's economic downward spiral, a period of political transition as well, is a risky, if not reckless, bet. Let them go under a year from now if we can, as they will most certainly not eliminate their candidacy in the interim.
---GM's Rich Wagoner talking about the U.S. economy and his economists analysis of the devastating impact of the bankruptcy of the car companies is not helpful. One would just guess that he should be talking about how to rehab and revive his company, as who gives this Dukee any credibility on a bigger stage than the one that he has struggled to manage for a very long time, as CFO from the late '80's until now as CEO.
---The U.S. Congress is embarrassing. The House of Representatives, as a part of Congress, is incompetent, petty, and generally uneducated. I said that this would be opinion, so sorry for such an obvious comment. Perhaps the House members just represent the majority of their constituents, rather than lead them as one would presume is the role of leaders. So in representing their constituents they exaggerate the helplessness and resentment that they feel and look not for solutions but for punishment, a head on a stick for the homefolk.
---It was odd to hear Dodd today lambasting the auto companies for their mismanagement. Senator Dodd has been in Congress for almost 40 years, a Democrat who supported every labor union initiative for most of his time there. Now that the current car company leaders have inherited unworkable and misguided union contracts and retiree promises, he has the gall to castigate management for their situation. Management has not been good, no doubt about that, but their chances were slim to none by the time they took over. There is no way out, and the fingerprints of Dodd and many other politicians have been all over this crime for many years. As one pundit said yesterday, GM is an HMO that happens to make some cars.
---Senator Richard Shelby of Alabama is hideous, a bitter man of no ethics. Some of us experienced this years ago, but now he is putting on a show for everyone. He must see this as a last shot at ego building on the national stage. My God, he even makes Senator Carl Levin of Michigan look like a decent person in comparison, and that's saying a lot, now that's an opinion.

Keeping in mind that we are...

"as a species, inclined to historical solipsism. The past is what has led to us; the future is what is being created by us. We claim ownership, triumphantly, of the best of times, and also, self-pityingly, of the worst of times. We tend to confuse our scientific and technological progress with moral and social progress. And we forget a little too easily that evolution is not just a process which has brought the race to its current admirable position but one that which logically implies evolution away from us."

"Nothing to be Frightened of"
Julian Barnes
Knopf, 2008

John McCain's return

In the last two days of the presidential campaign John McCain twice interrupted somewhat vulgar crowds with calming comments, one time saying "my opponent is not a Muslim" and another time "my opponent is a good family man". Unlike his running mate the John McCain we once knew was uncomfortable with what his campaign had created. His concession speech was gracious. Now he is beginning to make the interview rounds, speaking for the most part with candor and good humor. This observer, however, is reminded of words in a famous book that is focused on a subject other than politics which observes "He is like the farmer who came up out of his cyclone cellar to find his home ruined. To his wife, he remarked, 'Don't see anything the matter here, Ma. Ain't it grand the wind stopped blowing."

After running a Rove/Atwater style campaign for three months focused solely on attacking his opponent with lies, innuendo, and half truths, inciting the worst in his audiences, and claiming foul when Obama ran adds that simply questioned his policies, McCain seems to think that all can go back to the way it was. After choosing a VP candidate that was completely unfit for the job and putting her on the national stage, after his stunt of suspending his campaign for the Treasury rescue and sabotaging the first crucial effort at showing decisiveness on the part of the U.S. government, after charging hard right on issues on which for years he had been a refreshing Republican voice of moderation, McCain wants to go back and reclaim his reputation for straight talk and integrity.

It's good to see him back, or trying to come back, but it will take more than a few days or weeks to recover what he has lost.

Not exactly reassuring

"This financial crisis, however, is about much more than just the stock market. It needs to be understood as a fundamental breakdown of the entire financial system, extending from the monetary-and-banking system through the bond market, the stock market, the insurance market, and the real estate market. It affects not only established financial institutions but also relatively novel ones such as hedge funds. It is global in scope and unfathomable in scale."
Niall Ferguson
"Wall Street Lays Another Egg"
Vanity Fair, December 2008

Guess it's best to stick with the egg whites, peppers, onions, and mushrooms for the breakfast omelet---this is an environment for the heart healthy only.

No buy programs in sight

Today was just dismal in the U.S. equity markets. Even looked at compared to recent weak performances it was an unusual day of selling. Where were those fake bounces we so look forward to in order to least digest our lunch in a moment of peace? Where were those contrarian gainers whose franchises for at least a day suggest that they are a great shelter from the storm? Nowhere to be found today, a day of slow mo relentless selling with any buying likely just being short sellers reaping their gains before some dead cat bounce forces their hand. Man oh man, Citigroup is again a hat size, first time since 1991. GM is now an economical 3, dollars not cylinders like some of those Honda hybrids. Amex wants $3.5 billion from Treasury, anticipation leading to their credit flu shot for card losses to come.

The U.S. markets are around 5.2% down across the board. Amazing how the math works. A couple of months ago the Dow down 400 would have been 4%, seven months ago is would have been closer to 3%. A 50% rally by the Dow between now and year end would still lead to a 25% loss on the Dow for the year. Who wouldn't take that, but it doesn't look likely. Catalyst needed, and it is obvious now that it cannot come from a government program.

U.S. investment banks now at disadvantage in talent wars

The U.S. investment banks are now likely to be at a decided disadvantage in the wars for the best talent versus the foreign owned investment banks. Despite the widespread damage to the business of late, there is and will always be seats at the table for those that are best at their jobs. So why the disadvantage for the U.S. firms?

The Treasury infusion of money into the banks for non-voting preferred stock has led politicians to claim that the U.S. taxpayers are owners of these banks in a broad sense such that some Democrats in Congress are asserting the right to broadly dictate management policies to these firms. The media has propagated this myth to the extent that it is becoming a truism. That gets to the talent war issue. If politicians and the public succeed in decimating the bonus pools of American investment banking practitioners, why would the best not be attracted to Credit Suisse, Deutsche, UBS, HSBC, and Barclays.

Admittedly, the compensation of the top executives at the U.S. firms is almost indefensible, especially in light of this year's market meltdown. Cutting those back significantly is not really an issue. It will happen. The majority of the bonus pools go to traders, capital markets managers, and investment bankers, the men and women who do the work delegated to them by those at the top. The traders in general work on contractural terms that specify at least a minimum(not so minimum to the rest of us) based on a percent of their earnings for the firm. If these contracts would be breached, the lawsuits would fly. The capital markets managers and the investment bankers are rewarded on a more subjective basis, based on both the profitibility of their businesses and their importance to the firm as a whole. These bonuses will be cut but how deeply is uncertain as this plays out. One thing is certain, however, and that is that firms not under the U.S. government's auspices will have much more leeway to pay what they want to the absolute best talent this year and in the next few years. That certainly will be the perception even though how it really plays out is unknowable.

So look for some top trading and markets teams to head to Credit Suisse and Deutsche early next year, top investment banking teams to those two and UBS, top asset management teams to those three plus Barclays, and top fx and interest rate deriviatives teams to those four and HSBC. It will happen.

No TARP for car companies

Democratic congressional leaders are asking the President to allocate a portion of the Treasury Asset Relief Program, or TARP, to fund the losses and health plan obligations of the car companies. That's a bad idea.

There is certainly a good argument to be made that the car companies need some propping up at the moment but using TARP doesn't make sense for the following reasons:
---TARP is designed to create liquidity for troubled financial assets
---TARP is approved for banks and S&Ls, with a caveat that insurance companies and banks with foreign parents can be added.
---Applying TARP to an industrial company that simply needs to spend the money at once to fund health plans and pay bills is money gone from day one. The TARP plan is to invest money in illiquid assets that will have value over time as markets eventually(in one year or in three years or...) return to a more normal state. Over time there can be a recovery by taxpayers of the investment. There is almost zero chance of any recovery from the auto makers as the Treasury will not be buying any market priced paper of potential value.
---It is important that the TARP $700 billion pool for financial assets be measured and monitored. The ultimate return on the money invested can restore confidence in the system over time. Muddying the waters with industrial bail-outs will make that difficult. As the business adage goes, "If it can't be measured it can't be managed".

As in the case of AIG, the Treasury and the President have multiple ways to approach challenging financial situations and the car industry issue is one that could have huge ripple effects if not addressed. They should, however, not use TARP. The Pelosi and Reid request to use TARP must have some opaque political rationale since it does not make sense on the surface. Could it be that they think the American public will think that it's all ok since they are taking money that's already been approved. Who knows, makes no sense.

Palin poll portends problems and raises the question "What is a Republican?"

Rasmussen poll results released yesterday suggest that 69% of Republican voters viewed the Palin VP candidacy as helping McCain, 91% have a favorable view of Palin, and 64% see her as the top pick for the 2012 Republican presidential nomination.

Who are these Republicans. Did they see her woeful lack of knowledge on basic civics and current events. Did they listen to her absurd claim of foreign policy experience. Did they not realize that most of her views were hollow repetitions of coached opinions. Did they see her reveling in racially biased chants and taunts by her crowds, never once stopping them with a reprimand or reminder of what's right, just smiling and almost laughing just as if they were saying "drill baby drill". Who are these Republicans?

Apparently what they saw was an attractive candidate with a supposedly homespun charisma who refused to be flummoxed by any of her missteps. They saw someone who was confident and ambitious. They saw a cipher who could deliver a speech in an upbeat and charged manner. They saw a confirmation of themselves and their aspirations for the simple America of their dreams that they want back. Just a guess as I don't get it.

If the Rasmussen poll was accurate in identifying those who are Republicans today it shows a party that has morphed into a type of anti-intellectualism, or anti-learning may be more accurate, and negative populism that is disturbing. It has little relationship to the party of Teddy Roosevelt, Eisenhower, Nixon, and Ford, or even to some extent that of Reagan. In those years the Republican party, like them or not, was still a party of ideas that valued knowledge and clear principles. Sarah Palin represents something completely different and the majority of the party as now constituted today stands behind what she represents.

While some folks are amused by all of this(in hindsight it's possible to be amused) and see Palin's survival as more entertainment on the horizon, another perspective suggests that this is disturbing and possibly dangerous. Please excuse any alarmist observation here, or hackneyed insight, but isn't the Palin phenomenon what poisoned Western Europe, as in Germany and Italy, in the 1930's. This resentment based and anti-knowledge based perversion of populism voiced by a relentless, charismatic, and questionably principled icon is not a good omen for our country. Flash in the pan, a one trick pony, hopefully that's the case, but if not be wary.

Lend what?

A Bloomberg article yesterday discussed the fact that the decline in LIBOR rates is not leading to a meaningful increase in the access to credit. A market "expert" was quoted as saying "I don't think the banks are willing to extend credit soon". Another Bloomberg article highlighted on the same page discussed the news that no, that's zero, credit card securitizations were done in October as compared to $17 billion of credit card securitizations in October 2007(and that was lower than October 2006).

There is, as they say, a disconnect between these two articles. The suggestion that banks are not willing to extend credit is missing the point. With the securitization markets not functioning, the banks cannot distribute debt that they originate. Everything at the moment stays on their balance sheets. With the regulators now carefully scrutinizing capital levels and risk profiles of banks for obvious reasons and with building,not destroying, shareholder value still an obligation of publicly traded companies, the banks cannot possibly hold enough debt on their balance sheets to compensate for the inability to distribute through securitization. In fact, the decline in access to bank credit is likely to get worse before it gets better.

Banks want to lend. That's an important part of their business. The business had become underwriting for distribution, not lending for balance sheet building. Going back to that old model takes a huge amount of the capacity to lend out of the system. Until overall financial system confidence* is restored and securitization markets again become viable, banks are hamstrung and no more able to find that goose that laid the golden egg than anyone else.


*Investors rule. Until government funds, pension funds, hedge funds, foreign investors, individual investors, high net worth investors, AND banks begin to expand their risk appetite again, beyond short term paper, bank lending will not be resusitated.

The wait is over and what did we learn...

---The Obama strategy of focusing on red areas in "battleground states", with the goal of cutting into the Republican margin of victory, worked. It could have been an expensive and time-consuming effort to lose states like Virginia by a respectable margin instead of by the usual ten percentage points. Instead a threshold was crossed and in North Carolina, Indiana, Ohio, Florida and Virginia the Obama campaign won. As a side note, until 2008 the biggest political news in my conservative hometown of Danville, Virginia in the last 5o years was when Senator John Warner brought his then wife Elizabeth Taylor to town in the early 1980's. This year Obama stopped for lunch at Short Sugars, Biden spoke at the Carrington Pavilion, and Tom Daschle held a forum as well. McCain still received almost 60% of the vote there(but not 70%) and neighboring Halifax County actually went for Obama.
---There will be a million post-mortems on the McCain campaign but one could hope that the takeaway would be that the Karl Rove/Lee Atwater campaign style is done with. McCain's hired guns that trained at the knee of Karl Rove turned the man we knew into somebody unrecognizable. They chose Sarah Palin, which turned out to be like drinking three Dr. Peppers in a row, great rush early but sluggish after that. From this perspective, McCain should have focused on the issues and demonstrated that he was above the ugly Republican political game. Then someone other than Sarah and himself might have called him a maverick. By the way, who actually calls himself a maverick, isn't that a third party observation.
---America is based on taking risks, on the optimism that there is the potential for better days, new discoveries, ideas that work. That had been true in its business entrepreneurship, in its image in the world as a place of opportunity and even at times in its politics. We've been through some lean years. With Obama, we to some extent step into the unknown, but that is in itself an affirmation of our spirit.

And the waiting will soon be over --- teens are tense

The results will begin coming in soon. It seems that the interest in the results is huge. The presidential election mania has spread from the usual political class to a much broader spectrum of the population, even to teenagers. Listening in the car to 14 and 15 year olds discuss the election("she didn't even know what the Bush Doctrine is") represents how fundamentally different this election has been. The only comparison may be the Kennedy and Nixon election in 1960. That year at least one 5th grade classroom was festooned with ribbons and pins, an event not organized by the teacher but simply spontaneous competitive sparring among classmates. Johnson and Goldwater had some of that youthful interest around as well, especially among those rebellious 14 year old Goldwater fans. After that, nothing until now for the tweener and young teen set to really get involved in, at least from one observation as either a teacher or a parent over much of the intervening years.

Some young teens who two months ago had not a clue how a president was elected and what the parties traditionally stood for are now fully engaged. One said to me yesterday, and I quote, "I should be able to vote. I know more than most of the people who get to vote."

"You may be right", and you'll certainly get to live a long time with the impact of this year's results.

Perhaps an unfair comment...

Every time that I look at John McCain, all I can see is the mass of scar tissue puffing out the left side of his face and then think of Sarah Palin as President.

ELECTION TENSION

Has there been an election in recent memory with as much tension built around the final days? This election feels a notch higher on the intensity scale, or maybe two or three notches.

With Palin rallies chanting "McCain not Hussein" and the uncertainty, justified or not, surrounding the true reaction to a black candidate at the time of choice by the broad American electorate, there's a palpable edge to this contest, a sharp edge. More importantly, one would hope, is the fact that there are significant differences between the two candidates, in policy, in style, in age, in experiences, in the approach to work, and in the approach to decisions. There has been much less of the usual general election move to the center on the part of either candidate. Obama has mostly stayed with his primary positions, moving modestly toward being more flexible on some issues, while McCain has moved decidedly away from the center, in both policy and tone. The more ardent supporters of both candidates are widely divided, sometimes in a hostile way, on most issues.

In addition, there is more of a global interest in this election than in any other U.S. presidential election in history. The reasons are multiple: the almost uniform disdain for George Bush; the candidacy of Obama, an intellectually disciplined candidate with multicultural background; a general desire for some resolution to the Iraq war; the unbelievable choice of Sarah Palin by McCain that is a global joke; and the realization that the financial crisis is not a fleeting event but one that calls for the best intelligence countries can provide from their leaders, not the same old views. That's one summary of the global view, certainly not completely right, but it's a shot. The point is that this election will have much of the world in a sweat as well. My God, The Economist has endorsed Obama.

And we wait.