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Daily Affirmations 5/5

1. Nate Silver puzzles over Tim Pawlenty's willingness to continue backing Norm Coleman even as his own popularity dwindles, in a blue state:

Arguably, in fact, the Franken affair is already impairing Pawlenty's political fortunes. According to polling from SurveyUSA, Pawlenty's popularity has suffered significantly since the November election, and he now has a net-negative approval rating, with 50 percent of Minnesotans disapproving of his performance and 46 percent approving. The Star Tribune has also found Pawlenty's approval to have declined to 48 percent -- against 36 percent disapproving -- the lowest figure it has tested, while polling from Public Policy Polling last month found just 46 percent approving of Pawlenty's performance (against 40 percent disapproval) and that some three-fifths of Minnesotans think he should certify Franken.

It is hard to know whether the decline in Pawlenty's approval is owing to the results of the Senate contest itself. Minnesota, like most states, is currently facing a budget crisis, and this is a rough time for governors in general.

What seems reasonably clear, however, is that Pawlenty does not have a whole heck of a lot of political capital to spare. It is intrinsically difficult to be a Republican in Minnesota, and his re-election bid in 2010 may already be in danger. If he is seen as dragging out the contest and carrying water for the national Republicans once the state Supreme Court rules, he may get himself in even more trouble.

Good point, Nate Silver!

2. James Surowieki, citing NYU economist Thomas Philippon, points out that previous banking booms have accompanied technological changes that made the economy more productive. The housing boom didn't:

This wasn’t the first time that something like this had happened. There have been three big banking booms in modern U.S. history. The first began in the late nineteenth century, during the Second Industrial Revolution, when bankers like J. P. Morgan funded the creation of industrial giants like U.S. Steel and International Harvester. The second wave came in the twenties, as electrification transformed manufacturing, and the modern consumer economy took hold. The third wave accompanied the information-technology revolution. Each wave, Philippon shows, was propelled by the need to fund new businesses, and each left finance significantly bigger than before. In all these cases, it wasn’t so much that the bankers had changed; the world had.

The same can’t be said, though, of the boom of the past decade. The housing bubble was unique, and uniquely awful. Each of the previous waves had come in response to a profound shift in the real economy. With the housing bubble, by contrast, there was no meaningful development in the real economy that could explain why homes were suddenly so much more attractive or valuable.

Good points, James Surowieki and Thomas Philippon!

--Jonathan Chait