Yesterday, Republican Vice-Presidential candidate Governor Sarah Palin, or the Palinator as some of her more excitable fans have taken to calling her, took to the stage in Minnesota to make her pitch. There must have been some trepidation in Republican ranks. She is to most after all, a complete unknown, venturing into the Lower 48 and bringing who knows what surprise moose nuggets in the back of her snowmobile. But judging by the satiated reaction of the local chapter of the Republican Party tub-thumping brigade we now know that Gov Palin gives good speech.
Palin spruiked herself, she spruiked McCain the wartime hero and took a series of swipes at Obama using the predictable terrorist appeasing, high taxing, inexperienced angles. She added a couple of small surprises that shes taken on big-oil, that she wants to see America weaned off foreign energy (a good thing for us all), and wants greater use of renewables. But she also proclaims the Alaskan wilderness as ripe for the raping so my guess is that the renewables talk is just convention fluff, and big oil will forgive her once the tenders are out.
For all her sassiness, Palin said little about Americas economy except the usual Danger: high-taxing liberals line. In contrast, Obama did talk about the economy in Denver, and although as I write, McCain is yet to speak, surely Obama holds the trump card in this most important of suits. Why? Because the Bush/Cheney Republicans have completely stuffed the US economy.
Washington is broken and the original maverick will fix it, says the GOP website, and In politics, there are some candidates who use change to promote their careers. And then there are those, like John McCain, who use their careers to promote change says Sarah Palin. Theres an awful lot of talk about change and thats because they must distance themselves from the tainted Bush legacy.
Bush and Cheney have pushed the small government/low taxes/strong America line for the last eight years (whether they achieved it or not is moot, that was their framing) and now the economy is in the doldrums. And it looks like McCain and Palin are pushing you guessed it the small government/low taxes/strong America line again but this time, somehow, it will be different because well theyre Mavericks, and presumably theyve got a completely different set of Republican mates to bring to Washington when all the old Republican mates are swept aside.
There could be, as Guy Rundle cleverly observes, some opportunities for the candidates themselves to swing this one way or the other in the presidential and vice-presidential debates, but there seems to me to be a bigger set of factors at play than can be steered by any candidates rhetoric.
The economy, as mentioned, is stuffed. Jobs and manufacturing are going offshore, and the USs economic advantage over its big strategic competitors is waning. Anyone arguing for a strong America must surely be fixing that first. Obama can offer something new here. Something that hasnt been tried at least since Bill Clinton was cooking with gas while the GOP (to date at least) seems to offer more of the slop thats been served up before.
Another factor to bear in mind is McCains longevity. Not the proverbial heartbeat, that would separate the ‘hockey mom’ from the nuclear launch codes, but the fact that McCain has said hell only run for one term. Hell only be there for a couple of years before he becomes branded a lame duck President, as they always are when their term draws to a close and the cycle begins anew. So in this campaign McCain can only legitimately pitch a four year agenda to fix the economy and fix everything else thats wrong with America, and he’ll really need to achieve the major changes within about two years. A hard ask given that George Bush has spent eight solid years at ruining it.
Obama can stress both a different approach, and that fact that hell be around for the whole time to see his plan through. Its the sort of line thats got to appeal to the residual protestant work ethic that middle America imagines it still has.
Nah McCains not going to take this one. America needs a change, and I think they know it. And the world needs a rest from the pious fundamentalist chest-beating Republicans. And the West needs America to become strong and vital and inspirational again. Cmon America we need you back.
McCain’s intentions with regard to seeking a possible second term seem to change with his mood but the latest version is that he promises no such thing.
The economy is stuffed? Yea? How bad do you reckon because last quarter’s GDP was revised up to +3.3%. If only the EU’s (or ours now) was as stuffed with last comparable quarter GDP lobbing in at -.2% for the EU area.
There are mass graves all over the world littered with (former)people underselling the US economy:-) Don’t do it, Rex, as you’re far too young to be taking a risks like that. :-)
I don’t particularly like Palin but she did give an okay speech.
And Rex, why would Obama’s high taxing policies bring America back exactly. You need to explain that one to me even though I think both candidates stink to high heaven.
Yea the president who could never find his veto pen when appropriations bills hit the desk. Unfortunately he was never a small government GOPer and only hope we never see that name again going up for contention.
Ken:
Don’t you think it’s a little presumptuous of McCain or any candidate to be talking about going for a second term before getting the November elections? I would think the stock answer for any candidate is that they are not looking beyond November. I bet Obama would answer in exactly the same way unless he’s too busy parting the waters.
And look that this astonishingly good stat released a few hours ago:
Not exactly what a bad economy dishes out, Rex.
JC, People don’t live stats mate.
Fair call Ken, I wasn’t up with McCain most recent vascillations.
“why would Obamas high taxing policies bring America back exactly”
I think for a start because it means that the US could stop borrowing money from various Gulf states and China.
What, more protectionism and less
free tradejobs and manufacturing going offshoreand making American prices lower?No, protectionism has been tried before. And Obama has really never stressed any differences from the Democrat majority of the day, as testified to by his voting record.
As opposed to say, McCain, who has stressed different approaches for 30 years now.
Um, undubitably. The machine pollies this time are the Dems, only (and ultra-machine pollies at that!). Whereas the last 20 years have pitted machine pollie against machine pollie. Not necessarily a bad thing, but not a debatable thing either.
I never know what you mean by fundamentalist, but I doubt McCain comes under any definition thereof.
Finally,
No, but if they want to make empirical claims it is handy for them to have a faint idea of them.
Just remember about the USA the initial estimate of GDP is a joke with the Commerce department making estimates of various sectors. When they get it badly wrong as they did in this quarter concerning trade it is adjusted upwards.
Secondly the Yanks use annualised figures not annual figures so adjustments look much larger then they actually are.
Productivity figures are always residuals and so are much less reliable to talk about on a quarterly basis and of course are very prone to re-adjustment especially in Yankland.
Lastly Rogoff and Reinhart wrote a very good paper on the consequences of financial crises. This means Yankland can look forward to sub-par growth for some time.
We don’t have any of that. We have profits at record highs as a % of GDP and even the the most conservative realisation ratios large capital expenditure coming on board over the next year.
Moreover we don’t have any problems of sub-prime loans.
Our low doc loans here still used credit checks and of course documentation ( simply at little less than usual.)
Even in no doc loans most demand property as collateral.
This is a far cry from the Yanks.
We have much better regulators, standards and a central bank.
The Bush years look very bleak in economic terms
I don’t think she gives good speech at all.
Flimsy
Shallow
Lacking in gravitas
There were some good lines, but my main impression was “what were they thinking”
No amount of mindless cheering and whooping could cover her lack of experience, and moral authority.
Rex:
You think they should use the stars then?
“Michael K” ( Yes, it’s Homer):
You think their numbers are suspect because they’re not using German statistical methodology 1933 to 1945?
JC,
you obviously don’t have the first clue about what I wrote about because, let us be charitable, you are very confused.
I haven’t said the stats are suspect at all.
The last comment directed to “Michael” (yes it’s Homer) may seem confusing so let me quickly explain.
Homer has recently been getting a bollocking for defending Nazi economics over at Catallaxy. He’s been arguing that Nazi statistical methods were honest whereas everyone else has asserted otherwise.
We now have the truly unique situation where Homer is dissing US statistical methods and defending those of a totalitarian regime. As usual Homer gets himself in another fine mess.
You are a complete idiot.
you clearly do not have a clue about US economics and get confused and then come here and lie about German statistics in 1932-36.
No-one supported you and Mark JC. No-one and you could provide no academic support either.
Homes, settle down and think about this for a second.
This is hardly the place to be talking about Nazi economics by the way.
I’m merely bringing up the point that you’re critical of US stats methods yet had an unwavering degree of “loyalty” to 1933-45 German stat gathering methods. I can’t see why you’re so angry as I think you ought to be agreeing with my comment.
1. you did say:
and
2.you have defended German stats. 1933-45 as being accurate. (haven’t you?)
So what possible problem can you have with my summation of your argument to make you seem so “angrified”?
You can argue about the quality of the GDP and the productivity data until you are blue in the face, but the fact is it is America that is the source of the current global economic slowdown.
It is the American banks that invented the Frankensteinian structured products that are now crippling the global financial system. It was Bush that turned Clinton’s budget surplus into a trillion dollar deficit, thanks to his reckless warmongering in Iraq and tax cuts for his rich mates.
The US Federal Reserve, that bastion of free market economics, bailed out the banks earlier this year at the urgings of the Wall Street arm of the Republican Party and now the economic fundamentalists lecture us about the threat of socialism.
Give me a break
JC, the advanced estimate is a method only used by the US Commerce department.
So are annualised figures. The data is fine.
Ask the ABS about it indeed ask anyone who has studied statistics
I talked about 1932-36 and yes they were fine and yes you couldn’t provide a single academic for your position which is usual for you
Not sure I’d snidely bag having a 44 year old hockey-mom a heartbeat from the nuclear codes while looking forward to a 46 year old lawyer turned community organiser and then part time senator spending 8 years fixing the economy with his new approach (of what exactly).
You might legitimately think all 4 are pretty ordinary choices, but the comparison between Obama and Palin is particularly fraught. Sounding nice is not the same thing as sounding sensible and I don’t recall Obama saying anything that could be recognised as a sensible economic policy.
That’s a good point pedro
Not necessarily it isn’t – Rex wasn’t looking for anything that sounded like good economic policy, so he won’t care.
Neither camp has sensible economic policies.
McCain increases the deficit more and cuts taxes more whilst Obama cuts tax to far more people.
Patrick, this:
“The economy, as mentioned, is stuffed. Jobs and manufacturing are going offshore, and the USs economic advantage over its big strategic competitors is waning. Anyone arguing for a strong America must surely be fixing that first. Obama can offer something new here.”
gave me the impression Rex was looking forward to the economic miracle of higher taxes.
Homer, cutting taxes to more people (and coming from you I’d have to check if it’s true) is not as good as cutting taxes more.
Cutting taxes period when the budget is in crisis is plain silly.
McCain is cutting mainly to the top 1% of taxpayers and comapny tax.
Obama is cutting taxes to midlle class types.
go and look at the tax policy centre
Sorry Homer, is the budget in crisis or the US economy?
Cutting taxes is great for the economy. If the budget really is in crises then cutting spending is the way to go. But I would have thought a Keynesian like you would have been all for counter-cyclical pump priming and running deficits until the turn around comes.
Cutting taxes to the rich makes more money available for investment. Cutting taxes to the middle class essentially means small amounts of money widely distributed and likely spent on minor consumption. Though I will allow that a fair bit of that money would currently go on paying back debt. But I’d like to see your case that cuts lower down the tax tree are good for the economy as compared to cuts for the rich.
Here you go Homer, a quote from the Tax Foundation
“Dan Mitchell, summed the future of the American tax burden up quite nicely:
No matter who wins, it’s going to grow.
Mitchell also offered a fair comparison of the two distinct tax proposals. Obama’s plan, according to Mitchell, means “higher taxes on work, savings, and investment.” He pointed out that politicians understand the economics at play when they tax activities like smoking: higher taxes, less smoking. Why then, he asked, would we want to increase taxes on work, savings, and investment?
As for McCain, Mitchell states that his agenda is much better than Obama’s at encouraging economic growth and development. McCain’s track record, however, left Mitchell unsure of the sincerity of this election season proposal.”
Yes, perhaps he was (looking forward to the economic miracle of higher taxes).
But that is not incompatible with my point :)
Homes:
Pedro raises an excellent point. Aren’t but a little inconsistent here. Wouldn’t you want a big gaping deficit if as you infer the US economy is in the toilet. Homes, you gotta work with us here. Help the kids out.
“The US Federal Reserve, that bastion of free market economics, bailed out the banks earlier this year at the urgings of the Wall Street arm of the Republican Party”
Not just the them. The Chinese government is evidentally sending some of their minions to get them to do the same thing.
http://www.bloomberg.com/apps/news?pid=20601080&sid=aslo2E01QVFI&refer=asia
conrad:
The Chinese are one of the biggest holders of US Agency paper if not the biggest. i bet they would be more than a little upset if Fred and Fannie died in a head on.
I agree JC, but that’s the problem. If you lend lots of money from people that don’t have any great love for you, then they will obviously put their interests ahead of yours. That wouldn’t normally be a problem (say, if I went broke the bank would just reposes my assets, and it would be tough to me), but it is a problem once you add politics to the mix and if you are still dependent on them (which the US is looking at the CAD). Do you really want China or Saudi Arabia dictating the US economic policy? or what happens if they have some legitimate political dispute? What’s going to happen if some crazy in Saudia Arabia just says “we’ll drop 100 billion of your currency tomorrow”? It’s not going to be pretty.
Conrad I reckon that the Chinese have a bum deal if they are lending big money to the US and have a trade surplus. Essentially, they are sending goods to the US on hock. The US has the goods and the chinese have the risk.
Pedro, I reckon they’ve got the bum deal tradewise too. Alternatively, it is extremely good political protection — in this case, the US has the risk.
I’ll translate for the normals out there: The corps sacked a bunch of people and jiggied their end of year reporting to make it look like they can run equally well without those people. The remaining workforce are cutting corners and skipping on routing maintenance in order to spread themselves thinly and cover the gaps. Meanwhile the company shrinks, and the senior management milk it as hard as they can (knowing that bailing out sooner is safer than waiting till the bitter end).
Hey, don’t let me stop any of you guys putting your money where your mouth is and buying up plenty of US shares. May I suggest the big auto makers might be an excellent choice if you enjoy losing? You can even buy US dollars right now if you think the current rise of the USD is going to be sustained (and have fun losing even more on that one). Take a look at the Aussie dollar to the US and tell me what amazing event went through the economy of either nation to create a massive turnaround mid-July?
There’s only one event… the election, and the figures are cooked. The US economy is sick and the US government think they can hide it for a few months more.
Pedro,
The Tax foundations figures aint worth spit.
I wouldn’t bother with it.
I said the Tax Policy Centre. They give a very look at both camps.
You only use Fiscal policy when monetary policy is impotent such as a liquidty trap. I do not see that.
To adovate that is simply to be a barstard Keynesian!
Cutting taxes is fine if one is cutting expendiure as well but neither is really attempting to do that.
McCain is the one increasing the deficit more
That rather depends on what China’s objectives are. They are long-term thinkers: while making a profit is nice, it is a secondary concern to building up the nation as a whole. What builds a nation? Not money, and not goods either. Nations are built on people, technology, infrastructure and access to natural resources. China has made gains in all those areas: training their people, consolidating foreign technology, modernising their infrastructure and gaining access to resources from Aftrica, Australia and the Middle East.
Stand at a level crossing in Port Hedland while an ore train goes past. It’s an exercise in both patience and understanding just how much Australian soil ships to Asia every year.
If China never get repaid for their dodgy power drills, unsafe toys and cheap clothing then that’s a loss they can take on the chin, still smiling.
Meanwhile, America has bridges falling down, a shrinking manufacturing sector, and bugger all investment in educating their own people. Their oil supply is drying up, their technology is still good (but the relative gap between US tech and everywhere else is closing) their iron grip on South America is weakening and they have less supporters worldwide than ever before. I feel a John Kerry speech moment coming on:
This is from the guy who not only went to Vietnam but actually obeyed orders (you know, team player, cares about his country).
Tel:
No one is saying the US is in good shape, however it’s propensity is to always make a comeback and win in the 12th round. Europe on the other hand is on the mat in the first few seconds of the first round and stays like that for ages.
If you think they’re cooking the books there’s always the GAO and the Dem congress to hear your story. So I suggest you contact the ranking congressmen and tell them what executive are up to.
I have. I’m scaled in buyer of Morgan Stanely, Well Fargo, Citigroup (little), KBE Homes, Caterpillar, and a few others like QQQQ and an oil refiner.
Why? They’re basically health care companies that happen to make cars on the side. they’ll be a good buy after they come out of bankruptcy and get rid of the union monkey off their back.
.
I bought the Dollar against Sterling in August but sold out too early. You think the buck is going to keep going? I think Sterling belongs at around 1.40.
Several things.
the US dollar was massively undervalued. Fair value against the the pound and the Euro was 30-40% from the dollar lows. Also the market was very surprised with the speed of the slow down in Europe, Japan and Oz. the expectation is the US will move out of its slumber faster than other other economies.
The US Dollar is still very undervalued on a ppp basis.
The Australian Dollar always does well when the world’s risk appetite jaws are open wide and does badly when the jaws close shut. Ask the Japanese housewife why she’s panicking.
I think you’re over egging your US doomsday scenario. Just remember that lots of people have lost their shirts trying the same thing.
Tel:
“That rather depends on what Chinas objectives are. They are long-term thinkers: while making a profit is nice, it is a secondary concern to building up the nation as a whole.”
Me thinks I heard the same about the Japs, just before they built us (and no doubt others) heaps of nifty hotels and golf courses before lapsing into a decade plus recession. Inscrutable Eastern wisdom I s’pose.
You don’t build nations by giving stuff away. Not that I’m saying the Chinese are giving stuff away. My point was more that sometimes the debt is so big the lender is in dread of the borrower.
“Me thinks I heard the same about the Japs, just before they built us (and no doubt others) heaps of nifty hotels and golf courses before lapsing into a decade plus recession. Inscrutable Eastern wisdom I spose”
Try taking population growth into account, and then tell us how much better off Australians are than the Japanese. In any case, their recession wasn’t caused by overseas investment, so buying overseas assets at the time versus inflated ones at home makes sense. In any case, their problems were caused by a huge speculative bubble at home (notice any parallels here?), not buying overseas assets.
“My point was more that sometimes the debt is so big the lender is in dread of the borrower”
I think you are confusing banks with countries. Banks are rational entities whose main goal is to make money. Countries have lots of objectives, some of them nationalistic and not very rational. If you have billions of dollars of surplus cash floating about, wasting some of it to spite others is probably worthwhile (or not wasting it to buy up their good assets with SWFs probably is also).
That surely isn’t serious? SWFs are mostly sitting on massive losses from their recent forays into US banks, in particular!!
“That surely isnt serious? SWFs are mostly sitting on massive losses”
So is my superannuation (and probably your superannuation and most other people in the world’s supperannuation also), but that doesn’t mean it isn’t a good idea given the alternative of buying just treasury bonds, especially once you have enough of the latter to gain the political clout you need (do you need more than 350 billion?).
Incidentally, I was under the impression that we don’t know where the massive losses are, or even what sort of a composition these funds have in their portfolios, since most of the SWFs are essentially unidentifiable. For example, where did all the recent cash come from for Chinalco to buy Rio Tinto shares (I assume a pretty good and strategic purchase if your main goal is to secure resources)? I assume this is just the Chinese government slush fund in another guise, especially because these sorts of assets are being bought up world-wide (try checking out PetroChina).
Conrad, try going back and look at the names that shoveled money into the first tranche of the bank and i-bank recaps. The entire SWF gang was in there:-) There’s a lot of wound licking after that.
They still need iron, coal, gas, uranium, gold, zinc and food, just like they did six months ago. Sure there is a speculative component, no disagreement there, but if it was all about risk and panic then I would expect those jaws to have snapped shut back in January/February/March when the Aussie bank shares came tumbling down.
My belief is that the US govt is shining up the chromework ready to sell the old girl to the voters and it’s all going to fall flat by Christmas at the latest (maybe sooner, if Obama is very lucky, maybe before the election). They seem to be selling gold, keeping gold prices down and the US dollar up — a short term strategy at best. I certainly expect the Aussie dollar to be back over 95 US cents before the year is out.
Yea, they all need those goodies. Beats me why the Aussie is at 98 cents and they still need those goodies and then the Aussie is 81 cents and they still need those goodies. If I could figure that out in a timely fashion I’d be living in Bermuda.
The US Dollar was woefully undervalued and still continues to be against the Euro and the Pound.
A decent marker for world liquidity is the Euro/Yen rate and it’s had a very big move to down recently too.
So too the Aussie Dollar, particularly when the Japanese housewife not only refuses to buy Aussie bonds, but also sells out what she has in the portfolio which seems to be what we have experienced recently.