Wednesday, November 7, 2012 - Status Quo

Status Quo

by Sinclair Noe

DOW – 312 = 12,932
SPX – 33 = 1394
NAS – 74 = 2937
10 YR YLD -.11 = 1.63%
OIL – 4.11 = 84.60
GOLD + .40 = 1718.30
SILV - .18 = 31.94

Technically speaking, Barack Obama, Joe Biden and Senate Democrats were Election Day's big winners. But that's only if you believe something called the election results. Who were the night's real winners?

The policy wonks and demographic statisticians were big time winners. They were able to data mine and focus like a laser on key counties and precincts, and they played it to perfection. The Republican presidential primary candidates, who are no longer lonely. Chris Christie, because whatever his chances for 2016, he got to meet the Boss (Springsteen, not Obama). Tim Geithner, who now gets to land a cushy job as director of such and such bank or a big endorsement deal from TurboTax. Governor Jerry Brown because he doesn't have to go back to the drawing board. That guy from fivethirtyeight, who nailed the prognosticating. And Barack Obama had an okay night.

The losers would have to include all the lawyers who were itching for a recount. The state of Florida which showed they are incapable of a count. All those dudes in Colorado who will have to listen to all those jokes about Rocky Mountain High. Kid Rock, just because. Twitter, just because. And Barack Obama because he still has 4 more years.

The good news is that the age of big money in politics is over. Another big story from last night: Billions spent on this election, virtually no change. Karl Rove's superPac spent $100 million to defeat Obama and elect conservatives, and it got zilch for it. Romney raised a fortune, and he was never able to get any traction, except after the first debate, which was not an actual media buy. Sheldon Adelson spent a fortune and got nothing in return; he now knows what the customers in his casinos feel like. Sure, people will still spend and raise a ton of money in the future (and in the primaries, it may remain important for awhile), but the bottom line is that every dollar is getting less and less return on investment. Big money isn't gone, it just has a lousy ROI.

Now that the election is over, let's test you electoral IQ: From the NewYorker

How many unqualified voters were estimated by the chief of police of Phoenix, Arizona, to have forged ballots using invisible ink, wrapped them around rocks, and flung them through polling-station windows while illegal-alien poll-watchers stood idly by, munching nachos and swigging Coronas?

• Immediately after the 2012 Presidential election, the electoral college announced that it is merging with a) the Federal Bureau of Threads and Screws, b) Phoenix University, c) the Broadway musical “Rebecca.”

• Every election-watcher knows that 2012 Presidential election absentee ballots were counted at absentee polling stations by absentee voting-precinct officials—but did these ballots count if they went to an absentee candidate? Answer: Delayed, still waiting for absent absentee-voting expert.

• New York tycoon Donald Trump failed to cast his Presidential vote because a) his ballot got tangled up in his hair and could not be dislodged before the polls closed; b) the Board of Elections refused to allow him to cast his own exclusive personal gold ballot featuring his photo portrait; c) he demanded to vote ten times to reflect his stature.

• True or False? Former Democratic V.P. candidate Sen. Joe Lieberman watched the returns by shuttling between two different TVs, one tuned to Fox and the other to PBS.

• Political analyst/gadfly/operative James Carville’s explanation of the election outcome was comprehended by: a) one Louisianan, b) two Louisianans, c) three people, counting his wife, Mary Matalin.

• True or False? Midwestern political activist Joe the Plumber demanded a recount of his vote.

• Lie or Otherwise? According to the citizen-action group O.B.A.M.A. (Obama Believes America Means Atheism), strong-arm thugs prevented God and Jesus from voting.

• Immediately following the closing of the polls, Michiganders For An Even More Broke Michigan claimed that the government’s failed auto-bailout scheme deprived how many registered voters of their chance to cast their ballots because they had no cars to drive themselves to the polls in? Best guess_____ Second-best guess_____ Wild guess_____.

• False or True? Immediately after the polls closed, the Rick Perry Foundation think tank filed for bankruptcy.

Here’s an interesting new data point that the St Louis Fed has put together to calculate recession probabilities:

“Recession probabilities for the United States are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales. “

What’s interesting about this index is the current reading.  At 20%, the index is at a level that has ALWAYS been followed by a recession. The index has never approached 20% without a subsequent recession.  All 6 recessions since 1967 have coincided with 20%+ readings in the US Recession Probabilities index.

Fitch Ratings said that there would be "no fiscal honeymoon" for Obama, warning that the U.S. probably would lose its AAA credit rating if Obama and Congress don't address looming tax increases, spending cuts and the fast-approaching debt ceiling.

Fitch said: "The economic policy challenge facing the president is to put in place a credible deficit-reduction plan necessary to underpin economic recovery and confidence in the full faith and credit of the U.S."

The expiration of Bush-era tax cuts and the start of automatic spending cuts to reduce the deficit will take place Jan. 1. In addition, the government will hit its $16.4-trillion debt limit near the end of the year. Treasury officials said they can take steps to allow continued borrowing, but the nation would face a possible default early in 2013 if the limit isn't increased.

Moody's warned in September that failure to reach a deficit-reduction deal probably would lead it to downgrade the U.S. rating. And Fitch echoed that today.

"Avoiding the fiscal cliff and a timely increase in the debt ceiling would support the economic recovery and send a positive signal that agreement can be reached on a credible plan to reduce the federal budget deficit and stabilize federal debt over the medium term, consistent with the U.S. retaining its 'AAA' status," Fitch said.

"Conversely, failure to reach even a temporary arrangement to prevent the full range of tax increases and spending cuts implied by the fiscal cliff and a repeat of the August 2011 debt ceiling episode would mean that the general election had not resolved the political gridlock in Washington and likely result in a sovereign rating downgrade by Fitch."

Greek police fired water cannon and fought running battles with protesters hurling petrol bombs outside parliament during the biggest rally in over a year against spending cuts the country must approve to avert bankruptcy.

Nearly 100,000 Greeks waving flags and chanting "Fight! They're drinking our blood" packed the square outside parliament as lawmakers neared a vote on unpopular budget cuts and labor reforms that the government is narrowly expected to win.

Violence erupted when a handful of protesters tried to break through a barricade to enter parliament, prompting riot police to respond with teargas, stun grenades and, for the first time in an anti-austerity protest, water cannon.

More chaos reigned inside the assembly, where the session was briefly interrupted when parliamentary workers went on strike to protest against a clause that would have cut their salaries. In a humiliating about-face, the government was forced to cancel the measure to allow the session to resume. The Greek Prime Minister Antonis Samaras said: "Today we vote on whether we will remain in the euro zone or return to international isolation, meet complete bankruptcy and end up in the drachma."

If the parliament sides with the Austerity Troika and its plan to put banks before people then there will be serious unrest. Not least because many Greeks no longer believe their parliament or their democracy work for them. They are increasingly seen as the mouth-piece of an occupying power.

Meanwhile, European Central Bank President Mario Draghi said the debt crisis is hurting Europe’s largest economy and the European Commission cut its growth forecasts for the euro area .The European Commission cut its growth forecast for the euro zone as the debt crisis ravages southern Europe and gnaws at the economic performance of export-driven Germany. Draghi said: “Germany has so far been largely insulated from some of the difficulties elsewhere in the euro area, but the latest data suggest that these developments are now starting to affect the German economy.”

The 17-nation euro economy will expand 0.1 percent in 2013, down from a May forecast of 1 percent, the Brussels-based commission said today. It cut the forecast for Germany to 0.8 percent from 1.7 percent. The German finance ministry said factory orders were down 3.3% in September from the month before shocking economists who had forecast a 0.4% drop. Taken with figures showing German business confidence has fallen to the lowest in two-and-a-half years, the data was described as “a catastrophe and very bad news.”

Spain is braced for the European Commission to axe its forecast growth for the country after El Pais obtained a draft of the predictions. According to the Spanish newspaper, the EC, which is due to publish figures tomorrow has changed its forecast for 2013 GDP from 0.5pc to 1.5pc.

So, after all that, we're back to the status quo.