ECONOMIC WOES COULD TURN BUSH'S 28% APPROVAL INTO 20% AND LOSE THE REPUBLICANS ANOTHER 50 HOUSE SEATS

I know it's not Anna Nicole Smith but I don't understand why the media is ignoring a story that will impact people nearly as much as the death of this magnificent icon, a warning from Alan Greenspan that the U.S. economy may slip back into recession by the end of the year. Maybe people just can't conceive of things being any worse than they already are.


Today's stock market crash may help shake some people up a little. The New York Times reports that "stocks plunged in New York today after a sell-off in China rattled markets worldwide and surprisingly weak economic data fanned fears that the economy may be more vulnerable to a downturn than widely thought." The S&P 500 lost around 3.5% of it's value, it's biggest loss since 9/11-- and wiping it all of the gains made so far in 2007. Aside from instability in the Chinese market and a weak durable goods orders report here also hurt, as did nervousness over the possible economic impact of rising defaults among high-risk borrowers, known as sub-prime borrowers because their credit histories are often spotty.

Now if you live in Mississippi, you already know how things can get worse... a big storm, an incompetent government and an overly greedy, unregulated insurance industry. I remember seeing Democratic Congressman Gene Taylor on TV some months ago fit to be tied over the rip off policies of the insurance companies. You might not expect a reactionary, pro-business near-Republican like Taylor to give a crap about his constituents-- and you'd be correct-- but this time the insurance companies were messing with him personally. Like Trent Lott, first Katrina and then the insurance industry screwed with Taylor. Now, of course, they're trying to settle his case. But he's still pissed.

When it comes to substantive issues Taylor tends to vote with Republicans more than with Democrats. In a purer world, his voting record would mean an automatic expulsion from the Democratic caucus. (But the district is a safe Republican one, he votes with Dems more than any Republican does, his Republican replacement would be much worse, Bush won the district against Kerry with 68% of the vote...) Still, hard to get too worked up over the sufferings of Congressman Taylor at the hands of the insurance industry when you look at how he has abandoned Democratic values to help empower and enrich them-- at the expense of ordinary working people. I'm sure he's sorry now. Let's see if he can do anything about it.

According to a story in today's CongressDaily Taylor's bill-- which will be fought tooth and claw by the powerful Insurance lobby-- seeks to have the federal government's flood insurance program cover wind damages.

Taylor has sponsored legislation that would allow homeowners to obtain windstorm coverage under the National Flood Insurance Program in areas where the local government has adopted building standards designed to reduce wind damage. Taylor contends his bill would prevent problems that occurred after hurricanes Katrina and Rita struck the Gulf Coast in 2005, when many private insurers did not cover or only partially covered wind claims, arguing that the main damage was caused by a flood surge.

Taylor and many other coastal residents have sued their insurance companies, contending the winds damaged their homes before the flood surge... "Let the screen door hit them in the rear end. As bad as they treated south Mississippi, denying claims, kicking people while they were down," Taylor said of State Farm. Other insurance carriers have left coastal markets because of potential huge liabilities from another Katrina-like storm.

State governments are scrambling to solve the problem, with Florida last month passing legislation that creates a state reinsurance fund up to $32 billion so carriers can continue to operate. Taylor contends his bill takes a better approach, instead of trying to solve the insurance crisis state by state. "If they have gone from being a bad actor to a non-actor, then there is a place for the [federal] government to step in, just like government stepped in in the late '60s under the same circumstances because the private sector didn't want to have to cover floods anymore," Taylor said. "You had people at risk and our nation was in position to step in and help some people and spread the risk." Taylor noted that unlike the current flood program, rates under his bill would be actuarially based so the new program would be deficit neutral. "As a fiscal conservative, someone who believes in a balanced budget, I am perfectly comfortable in asking for this because we are not going to offer it unless it pays for itself," Taylor said.

The head lobbyists (bribers) for the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America, Justin Roth and Ben McKay, seem to be accusing Taylor, a longtime reactionary corporate whore, of being a commie. "Taylor said he was not surprised by the opposition from much of the industry, but hoped to create a coalition with real estate brokers, home builders and commercial businesses to generate support because all those segments are threatened by the lack of affordable homeowner and commercial property insurance." May the best lobbyist win?


UPDATE: TOMORROW MIGHT NOT BE THAT GREAT EITHER

My pal Bonddad is an expert on this kind of stuff. Take a look at what he had to say about today's melt-down. "The bottom line is the volume indicates everybody was looking for the door today. The breaking of trend lines indicates a reversal occurred, further confirmed by the huge volume totals. The SPYs are clearly moving lower. The QQQQs need to move through 43.5 or so and the IWNs need to move through 78.60 for there to be a real break. But given today's action, we could have further drops tomorrow."