Weekly US politics news and updates thread - week of November 8

Since 10 states so far have finished redistricting, here's a summary of how each state's House borders have changed.

Alabama: 1D-6R (no change)

Somewhat more compact, but otherwise unchanged from last decade. AL-4 is still one of the most Republican districts in the US at R+65 (82-18). Will get sued for giving the 25% of black population and 35% of the Democratic population 15% of the districts, but this map is the status quo, so I can't imagine this lawsuit will go anywhere.

Colorado: 4D-1C-3R (+1C, +1 seat)

(C is for Competitive.)

The new seat of CO-8 is R+3 and consists of half of CO-7 in North Denver and stretches north to a similar latitude to fort Collins.

CO-1 is basically the same shape and D+40.
CO-7 expanded out from his preserved half of the district in West Denver into the rural areas, becoming D+6 (down from D+16) while CO-4 shrinks into the city and changes from D+12 to 16. CO-5 is basically just Colorado Springs but that city isn't that large so it stays at R+18.

Indiana: 2D-7R (no change)

ID-5 went from R+8 to R+22 and that's the only significant change here, achieved via moving ID-7 (the Indianapolis district) north taking more of the suburbs in ID-5. South Indianapolis was taken by ID-6  which is somewhat smaller and less Republican, but not by any significant amount. This surprised many, who were expecting 8-1 or even 9-0R gerrymanders.

Iowa: 2R-2C (+1R, -1C seat)

The 538 leans of the 4 districts are R+4, 6, 2 and 27, little changed from R+5, 4, 2 and 28. The districts are less compact though, IMO.

Maine: 1D-1R (no change)

The districts are basically the same as before. This is normally fine in a proportional house split like Maine's, but a Democratic incumbent is in the Republican district, and he is likely not going to be running in an environment nearly as favorable to the Dems as 2018 or 2020.

Nebraska: 2R-1C (no change)

The districts are very similar to before, but NE-2 is stretched out to be R+3 instead of neutral. The part of NE-2 taken by NE-1were traded for the border with Iowa being given to NE-3, making the districts look worse.

North Carolina: 10R-3D-1C (+2R, +1C, +1 seat)

The highlight of this map is Greensboro beimg stripped of it's district and Democratic representation in one fell swoop, forcing the Democratic incumbent there into an R+16 district. There is also NE's Black belt district being shifted from D+7 to D+1, which makes it harder for Democrats to keep it. This map too will face VRA lawsuits because both of these areas have lots of black people.

The districts, barring NC-11 and 12 are quite compact otherwise, which shows some skill on the GOP's part.

Districts 13 (Between Charlotte and Asheville) and district 4 (South of Asheville) are empty and will be filled by Republicans.

Oregon: 4D-1C-1R (+2D, -1C, +1 seat)

The map basically further splits Portland and Salem to give some of their Blue votes to the new district, which is D+3, although in 2020 . Meanwhile the other districts have their margins improved to D+7 and D+9 because OR-2 trades the city of Bend for a lot of Republican OR-4 down to the border and the new district takes a lot of fairly Republican land, only keeping a Democratic majority via splitting the medium-sized cities in Oregon.

Texas: 13D-1C-24R (+5D, -5C, +2R, +2 seats)

The seat count is kinda misleading because the 5 seats turned into Democratic seats already have Democratic incumbents and its more accurate to say 2 Republican seats have been added. I think everyone following this somewhat closely knows the GOP chose a defensive gerrymander here. The median seat in the state is now something R+22 when it used to be R+8, roughly the same to the state's partisan lean of R+11 or so.

West Virginia: 2R-0D (-1R, -1 Seat)

West Virginia is in many ways, the worst state in the Union, and this is reflected by the fact West Virginia has the same population it did 90 years ago and that it's population decreased since the 2010 census due to the people there leaving it. This was enough to take away one of WV's seats, leaving the state with the question of which 2 representatives will need to run in the same district, although I can't imagine those 3 dudes are any different from eachother. (I wrote this before one of those 3 house reps voted for the Build Back Better bill, although there's a high chance that if he's the one forced into someone else's district they let him vote for it knowing he wasn't gonna stay around.)

The nation-wide distribution of seats for these states that are done with or don't need redistricting is 30D-7C-62R, which is 5 more Democratic/Dem leaning seats, 4 more Republican/Rep leaning seats and 7 less competitive seats, which is somewhat expected.

Clearly the name of the game in this redistricting season is to have enough states under your control to eke out a few extra gerrymandered house districts in total by gerrymandering the handful of states where that's still possible since you already tried your best at gerrymandering everything 10 years ago. The size of the states you control aren't as relevant as you'd imagine because the amount of competitive districts in any given state tends to be much less varied than the total amount of seats simply because most states don't have more than 3 or so competitive seats in them.

J.P. Morgan's 2022 Long-Term Capital Market Assumptions

While Bitcoin has, from the start, been very volatile, it has also seen massive appreciation. The rapid rise of digital assets and the fortunes made by early adopters have attracted large pools of (mostly retail) capital. Also catering to investors’ speculative appetite has been a largely unregulated, relatively frictionless market where participants can trade on mobile devices 24/7. Cryptocurrency exchanges are the primary venue for trading activity, and Coinbase, the largest regulated crypto exchange in the U.S., has roughly 68 million customers.

Energy consumption is one concern. Bitcoin’s annual electricity use is nearly equal to Sweden’s. This is due, again, to Bitcoin’s proof-of-work validation structure, through which miners compete for the right to validate the latest block in the blockchain by solving complex computational problems. The race, repeated roughly every 10 minutes, in which only one of thousands of competitors wins in each iteration, rewards the winner in newly mined bitcoins.

Another, nonobvious limitation to cryptocurrencies is low transaction volume. Current cryptocurrency networks process a fraction of the transactions handled by Visa, Mastercard and PayPal. This may be due to cryptocurrencies’ various limitations as mediums of exchange. In the case of Bitcoin, however, the very energy-intensive nature of its “proof of work” verification structure (described below) imposes a physical limit on the pace of transactions. Other verification processes, such as the “proof of stake” structure used by, for example, the Cardano blockchain, have the potential to be faster. However, the path to speedier transactions generally implies a more centralized, or less secure, network than originally envisioned for cryptocurrencies.

Could volatility in cryptocurrencies trigger risks to global financial stability, as in the tech and housing bubbles?

Part of the damage caused by the bursting of the tech and housing bubbles came from very broad wealth losses, reflecting the diffusion of tech stocks and toxic credit instruments across households, corporate portfolios and bank balance sheets, as well as significant leverage. By contrast, the effect of the May 2021 Bitcoin collapse was pretty mild, showing that the diffusion of these instruments is not yet large enough to create spillover effects.

Tracking the distribution of cryptocurrencies in retail and institutional portfolios is not easy. According to Bloomberg Law, 2% of accounts control 95% of all bitcoins.10 But these concentration measures could be misleading because they are based on virtual addresses that can hide multiple users. Another recent report estimates that 31% of bitcoins are held by very large nonexchange entities likely to represent institutions, funds, custodians, over-the-counter desks and some high net worth individuals. On the other hand, it found that smaller entities represent around 23% of owners, indicating significant retail vinterest that has increased since 2017.11 Institutional investors are gradually growing but still have a low presence in this market, reducing the risk to financial stability from cryptocurrencies for the time being.

It is clear from our analysis that to date Bitcoin has demonstrated very unstable correlations with stocks and bonds, making it a poor choice as a portfolio diversifier.

Also like gold, bitcoins are limited in supply, suggesting they may offer some degree of inflation protection. The evidence so far, however, doesn’t seem to support this thesis.

For example, assuming Bitcoin volatility remains at its historical level, our analysis shows that even a 2.5% allocation to Bitcoin increases the annualized volatility (risk) of the portfolio by close to 2%. Given Bitcoin’s extreme volatility, an annualized return of 33% or 316% over five years – would be needed to maintain the portfolio’s Sharpe ratio and for the investment to be considered an appropriate use of the risk budget

CONCLUSION
At this point, we see cryptocurrencies as having significant shortcomings as broad mediums of exchange, and we take a cautious view of their role in portfolios beyond that of a call option on their underlying technology. We expect central bank digital currencies to become a part of the financial market landscape over the next decade or two and see this digital transition as achievable without significant financial disruption. But while some central bank digital currencies may incorporate elements of blockchain technology, the resulting landscape is likely to be something short of the idealized, authority-free, decentralized financial systems originally envisioned with the unveiling of the technological innovation that has made the explosive growth of cryptocurrencies possible.

Top US historian warns that Gosar's violent AOC tweet shows how the GOP risks maiming democracy to death

6% plus US inflation and still climbing

Given this backdrop of strong growth and high inflation that will only go higher in the near-term the case for an acceleration of Fed policy normalization is growing. Hence our view of 1Q QE conclusion and a minimum of two rate hikes in the second half of 2022.

QE & low rates have been driving asset inflation. I would not be surprised by a sudden, nasty contraction in the markets.

U.S. Consumer Sentiment Drops to 10-Year Low on Inflation Fears

&

Goldman just figured out why the labor shortage will last for a long time: 60% of the missing workers retired, many for good

Wage inflation here we come?