Daily: Mitt Romney’s lurch to the right is neither credible nor wise; it’s disastrous
I have a backlog of links I could put into this post but I am going to get this out now to concentrate on one issue: the US presidential election and Mitt Romney’s meltdown. At the beginning of the year, I predicted that Romney would win the US election because the economy would be weak and this would be an electoral albatross for Obama. This may still be the case but a lot of argument from that post is starting to look wrong. Here’s what I wrote:
Romney will be elected President: when you look at one-term post World War II US presidents, usually an economic downturn killed them. The sixty Go-Go years were as much a problem for Johnson as Vietnam. Ford and Carter had stagflation and Bush 41 had the first jobless recovery. The Republicans can’t win if the economy holds. Obama has to hope 2012 will be good and I don’t think it will be good enough because he is unlikely to have won over many new voters through his policies but is likely to have lost some through low voter turnout apathy or defection because of his imperial-style anti-civil liberties approach. So this is about Obama and not about Romney. The Republicans cannot win with anyone else unless the economy tanks because the other Republican candidates are too far right of center and will drive up Democratic voter turnout and drive away moderates. Only Romney is moderate enough to win.
Did you get that? “Only Romney is moderate enough to win.” Absolutely wrong. Since I wrote that, Mitt Romney, the man who inspired Obamacare and presided over liberal Massachusetts and a democratic legislature, has moved decidedly to the right on almost every issue I can think of. And while this strategy may have worked during the primaries to win Republican support, it has proved disastrous during the general election campaign. Here’s why?
In the US, there are only two parties that count in its first past the post style electoral system. Minority parties can’t get representation because the US does not have a parliamentary system. So that means one has to appeal to the base of one of the two main parties to win. Over time, however, those bases have dwindled for varying reasons, much of it having to do with Nixon’s southern strategy that Reagan fully harnessed in my view. Working class whites and minorities had been the Democratic coalition that Roosevelt built. But in a post-civil rights America, this coalition was ripe for disintegration. The result has been a shift in voter allegiance toward more ideologically cohesive groups, making the two parties more ideologically polarized, but also reducing their base and therefore making independents and moderate voters more important.
So, any President that wants to win has to do so by appealing to enough independent and moderate voters to win the electoral votes in swing states like Florida, Virginia, Wisconsin, Ohio and Pennsylvania. If you lose any two between Pennsylvania, Ohio and Florida, you’re finished. Everyone knows that including Mitt Romney because he mentions this in the video below. Yet his message in the video below was guaranteed to lose moderate and independent voters. Take a look.
Read the commentary below, the most astute coming from moderate Republican writers (David Frum and David Brooks). Across the board, Romney has lurched to the right in a way that just isn’t credible given his record as Governor of Massachusetts. It’s almost as if he has to double down on this lurch to make it credible. But it isn’t working. It is a disaster. And I now think he will lose the election in November unless he pulls a rabbit out of the hat.
What will that mean? For Obama, it means the freedom of being a lame duck. He would govern more according to his ‘natural’ ideological position since he has no desire to be re-elected. I will be looking for signs that he will change tack in the coming months up to and after the election.
Remember, however, people have a penchant for voting against their own well-being if the ideological message is pitched in a way that resonates. A Republican member of Congress had this encounter during the US healthcare debates three years ago:
Someone reportedly told Inglis, “Keep your government hands off my Medicare.”
“I had to politely explain that, ‘Actually, sir, your health care is being provided by the government,'” Inglis told the Post. “But he wasn’t having any of it.”
Will this gentleman realize that Romney is calling him a moocher and reject Romney or will he see the others as moochers and cast his vote for Romney. We still don’t know yet. But the way Romney has put it has the least appeal for independent and moderate voters in states like Virginia, Pennsylvania, Florida and Ohio – and that’s what matters.
Romney links
Romney Has Support Among Lowest Income Voters
“Although President Barack Obama has a substantial voting edge over Republican Mitt Romney among low-income Americans, Romney still gets about a third of the vote among those whose household incomes are less than $24,000 a year. Although Romney does better on the other end of the income scale, Obama gets the support of more than four in 10 Americans who make $180,000 a year or more.”
Reader Reactions to Randian Romney – The Daily Beast
“Correct me if I am wrong, but doesn’t the “47% of Americans who pay no income tax” include an awful lot of senior citizens on Social Security and meager pensions? My parents (dad died at 82, mom passed at 90) paid no income tax the last 5 years of their lives (13 in the case of my mom) because their pension was too small for them to owe income tax! My dad was in the Navy during WWII; my mom was a civilian employee of the Dept. of War during WWII. “
Here’s Why Mitt’s 100% Wrong on the 47% – The Daily Beast
“Mitt Romney has just committed the worst presidential-candidate gaffe since Gerald Ford announced in 1976 that “there is no Soviet domination of Eastern Europe.”
Irreparable? To Romney’s image, yes; to his election chances … we’ll see. “
Mitt Romney and the 47 Percent: How His Luck as a Candidate Ran Out | Swampland | TIME.com
“As Romney wrapped up his primary campaign, the conservative columnist Charles Krauthammer, skeptical of Romney’s innate abilities, urged the would-be nominee to “pray for yet more luck, the quality Napoleon famously valued in his generals above all others.”
More recently, however, Romney’s luck has turned. His campaign has been star-crossed, veering from one minor disaster to another.”
Maureen Dowd Is Not an Anti-Semite – James Fallows – The Atlantic
“I agree with Maureen Dowd in nearly all of her criticism of the foreign policy team around Mitt Romney and Paul Ryan. In specific I agree with her (a) that since there is so little there, there to Romney’s own expressed foreign policy views, it is fair to observe that he has surrounded himself with advisors whose well-established past opinions are now reflected in his policy statements, and (b) that those advisors were deeply involved in leading the United States into its costliest foreign-policy error of at least the past 40 years, the invasion of Iraq. “
Thurston Howell Romney – NYTimes.com
“Forty-seven percent of the country, he said, are people “who are dependent upon government, who believe they are victims, who believe the government has a responsibility to take care of them, who believe they are entitled to health care, to food, to housing, to you name it.”
This comment suggests a few things. First, it suggests that he really doesn’t know much about the country he inhabits. Who are these freeloaders? Is it the Iraq war veteran who goes to the V.A.? Is it the student getting a loan to go to college? Is it the retiree on Social Security or Medicare?
[…]
Personally, I think he’s a kind, decent man who says stupid things because he is pretending to be something he is not — some sort of cartoonish government-hater. But it scarcely matters. He’s running a depressingly inept presidential campaign. Mr. Romney, your entitlement reform ideas are essential, but when will the incompetence stop?”
Neocons Slither Back – NYTimes.com
“Paul Wolfowitz, an Iraq war architect, weighed in on Fox News, slimily asserting that President Obama should not be allowed to “slither through” without a clear position on Libya.
Republicans are bananas on this one. They blame Obama for casting Hosni Mubarak overboard and contradict themselves by blaming him for not supporting the Arab Spring. One minute Romney parrots Bibi Netanyahu’s position on Iran, the next Obama’s.”
Spain
BBC News – Spain: Banks’ bad debts at new record
“The value of bad debts held by Spain’s banks in July rose to 169.3bn euros ($221bn; £136bn), according to latest figures from the central bank.
The Bank of Spain said 9.9% of banks’ total loans were in arrears, up from 9.4% a month before.”
Stiglitz cree que pedir el rescate sería un suicidio para España – CincoDías.com
Joseph Stiglitz is out saying that Spain would be suicidal to take a rescue package that committed the government to even more austerity as that would assuredly put Spain in a deflationary spiral. Thus far, the Rajoy government seems to listening as they have resisted going for a government bailout. Isn’t it a matter of time though? The contingent liabilities will mount and then there may be no way out. That’s what I expect.
La vivienda usada ha perdido ya un tercio de su valor desde 2008 – CincoDías.com
Existing home prices in Spain are now down over a third in price since the peak at the end of 2007. In the year to July 2012, house prices fell 14.4%, the worst contraction during the period.
Spain shuns further cuts as unrest grows – Telegraph
“Spain is digging in its heels against further austerity as protests sweep the country and mounting tensions with Catalan nationalists threaten to split the country.”
Spanier und Portugiesen protestieren gegen Sparkurs – SPIEGEL ONLINE
This weekend saw some pretty serious protests in Spain and Portugal. The austerity driving is killing those economies and people took to the streets. The next several foreign-language posts offer different views from within Europe – Austria, France, Germany and Spain
Le Figaro – Conjoncture : Les Espagnols restent mobilisés contre la rigueur
Massenproteste: “Sie wollen das Land ruinieren” – Spanien in der Krise – derStandard.at › Wirtschaft
La deuda pública roza el 76% del PIB y toca máximos de 100 años – CincoDías.com
Public sector debt reached its maximum level in Spain in the second quarter at 804 billion euros. This puts Spanish debt at 75.9% of GDP, the highest level since 1913. Forecasts are for this to rise above 80% by year-end.
United States
New Jersey Housing Suffers as Defaults Exceed Nevada: Mortgages – Bloomberg
“New Jersey’s judicial review of all foreclosures, which delays seizures to help borrowers, threatens to hold down prices for years as properties remain subject to repossession and then may be sold at a discount. That’s buffeting a housing market already hurt by unemployment that’s risen to a 35-year high.”
FedEx Says Economy Is Worsening, Cuts Outlook – US Business News – CNBC
“FedEx lowered its fiscal 2013 profit target on Tuesday, saying earnings could slide as much as 6 percent for the year, as a weakening world economy prompts customers to shift toward lower-priced and slower shipping options.”
Getting Off the Zero Bound – Tim Duy’s Fed Watch
“it is perfectly reasonable to believe that the next recession will hit before we lift off the zero bound. Moreover, it would be relatively uncommon for the peak-to-peak cycle to last more than 90 months. Only 4 of the last 11 cycles have exceeded this length of time.
So I am getting a little nervous that we will not lift off from the zero bound before the next recession hits. Or maybe the attempt to lift the economy off the zero bound is the trigger of that recession. In either case, I am thinking it would be very bad to be still at the zero bound when that recession hits. “
Empire State index hits nearly two-year low – Economic Report – MarketWatch
“Manufacturing activity in the New York region weakened again in September, according to data released Monday, raising fresh concern over a loss of momentum in the U.S. factories sector.
The Empire State index decreased to negative 10.4 in September from negative 5.9 in August, according to the manufacturing survey compiled by the Federal Reserve Bank of New York.”
Europe
Angela Merkel’s austerity postergirl, the thrifty Swabian housewife | World news | The Guardian
“In the sleepy, picturesque towns and villages of south-west Germany, the paragons of thrift are doing what they do best. They shop frugally, use credit cards rarely and save up to a third of a property’s value before applying for a mortgage.”
Gap Between Rich and Poor Grows in Germany – SPIEGEL ONLINE
“More than half of Germany’s privately-owned assets are held by the country’s richest 10 percent. Meanwhile, less than one percent is owned by the bottom 50 percent of households, according to a new German government report on the growing gap between rich and poor.”
Deutsche Bank: Two’s company | The Economist
“Start with capital. Deutsche has total assets of close to €2.1 trillion ($2.7 trillion), and total equity of €56 billion. In terms of simple leverage, the bank has just €1 in equity backing every €38 of assets. The bank argues that these figures are misleading. By netting off derivatives that offset each other and making a few other adjustments, it calculates its leverage ratio at 21 times, still considerably higher than most peers in Europe and America. Like other banks, Deutsche also argues that a simple leverage ratio is not much use in assessing the risks that lenders take. So a second measure to consider is its levels of risk-weighted assets (RWAs), in which the size of the balance-sheet is adjusted to reflect its riskiness.
Using RWAs as a lens is like looking at Deutsche Bank through its lobby sculpture, with the picture turned on its head. On this view Deutsche is a midsized and reasonably well-capitalised bank, ranking just eighth in size in Europe. Deutsche’s risk-weighted assets are calculated to be a mere 17% of its gross assets, compared with 53% at JPMorgan Chase and 25% at Barclays. Different accounting standards and the high quality of German corporate and mortgage lending explain some of this gap, but not all. “Deutsche is the most complex institution I have to deal with,” confesses one banking analyst.
The question many investors ask is which of these two pictures is more accurate.”
Will Germans Pick Up the Tab for Deutsche Bank, Too? – Bloomberg
“Deutsche Bank has long been a worry because it is one of the more thinly capitalized global megabanks.
Its official capital ratios might seem respectable to a casual observer: At the end of the second quarter, it reported a core Tier 1 capital ratio (a regulatory measure of equity) of 10.2 percent of total assets.
The problem with this measure is that it uses risk-weighted assets. In other words, if a bank can convince itself and its regulators that it can apply lower risk weights to a given portfolio, its capital ratio will look higher.
At the end of the second quarter, Deutsche Bank had total assets of 2.241 trillion euros ($2.93 trillion). Its total shareholder equity capital was 55.75 billion euros — a little less than 2.5 percent of total assets. That is a lot of leverage. Bloomberg News reported that this is the least equity (and most leverage) “among the 24 biggest European banks.””
“Germany finds itself wielding unprecedented influence in the postwar era. Launching a week-long series on the accidental empire at a key point in Europe’s history, we assess why the country appears so reluctant to save the continent”
Technology
Apple on pace to sell 1 billion iOS devices by 2015
“The projection was published on Monday by Horace Dediu of Asymco, who has projected iOS device sales through iTunes account growth. Apple announced at its iPhone 5 event last week that currently it has 435 million total active iTunes accounts.
Dediu calculated that Apple is currently adding about 12 million new iTunes accounts every month. He found that this growth pattern mirrors corresponding growth in iOS usage.”
Elsewhere
South Africa deploys army to deal with Lonmin dispute – Telegraph
“South African police on Sunday blocked and dispersed a march by hundreds of protesting miners against a security crackdown, as the army was drafted in to help subdue further violence at Lonmin’s nearby Marikana platinum mine.”
Anti-Japan protests spread in China – FT.com
“The weekend protests, the biggest flare-up of anti-Japan sentiment since at least 2005, were sparked by Tokyo’s decision to buy the Japanese-controlled Senkaku islands. Sovereignty over the islands, located in the East China Sea and known as Diaoyu in China, is also claimed by both Beijing and Taiwan. On Friday six Chinese state vessels entered Japanese waters around the islands, a move condemned by Tokyo.”
China-Japan Island Dispute Grows in ‘Blow’ for Global Economy – Businessweek
“Demonstrators took to the streets in a dozen cities across China including Beijing, Shanghai and Guangzhou, calling for Chinese sovereignty over disputed islands and the boycott of Japanese goods. In the city of Shenzhen, police used tear gas and water cannons to stop protesters from reaching a Japanese department store, Radio Television Hong Kong reported.”
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