Sunday, November 30, 2008

Obama’s Big Donors

The Obama organization claimed small donors ($200 or below) dominated Obama’s campaign fundraising. That’s not true, according to the nonpartisan Campaign Finance Institute (CFI). The CFI reports 74% of Obama’s money came from those who gave over $200, and thus had to profile their identity. That’s almost exactly the same figure for Bush in 2004. Bush received 75% of his donations from those giving over $200.

Of course, Obama raised 57% ($200 million) more than Bush.

Thursday, November 27, 2008

Wealth Swings to Hong Kong

As New York gained from Europe’s problems after World War I, so Hong Kong will capitalize from the current financial crisis slamming New York. Los Angeles Times correspondent Don Lee writes about how world finance is shifting to Hong Kong:

With the U.S. and Europe worse off than others, there's little doubt that more capital and talent will swing toward Asia. And few places look as well positioned as Hong Kong to take advantage of that. “[T]here are three great listening posts: London, New York and Hong Kong," says Donald Straszheim, former global chief economist at Merrill Lynch in New York, [and] "Hong Kong is increasingly becoming globally important.”

The latest financial crisis has Western governments promising tougher regulation of banks and trading houses. . . "People want government to do more, but not to the extreme of the U.S., where the government takes control of everything," says Man Cheuk Fei, chief editor of Hong Kong Economic Journal. "Hong Kong senior officials argue that this is a golden opportunity to build one or two investment banks. . . . They can compete with the U.S. in the future."

Thanks to China, Hong Kong has surpassed New York in the number of initial public offerings in recent years. As much as 70% of Hong Kong's economic growth now depends on the mainland, says Donald Lam, assistant general manager at Hang Seng Bank, one of this city's largest.

David Dodwell, a British native who has lived here 20 years, says Hong Kong should come out stronger from the global economic turmoil, which he believes "will be the tipping point marking the end of U.S. hegemonic power." China "is going to be an increasingly powerful locomotive for the global economy," he says.

Tuesday, November 25, 2008

The Ugly Chinese

James Fallows likes to pick a subject and follow it in depth for an extended period, often leading to a book. He has written about technology, national defense, Japan, the media, Iraq, flying, and now China, with a forthcoming book entitled Postcards from Tomorrow Square. So what does Fallows see in China?

 Chinese “are generally optimistic about what life will hold 20 years from now[, 86%] satisfied with the country’s overall direction—the highest of all the countries [the Pew project] surveyed. . .”

 “National-level democracy might come to China or it might not—ever. . . But from the national level down to villages, where local officials are now elected, the government is by all reports becoming accountable. . . The system prides itself on learning about problems as they arise and relieving social pressure before it erupts.”

But Fallows picks on China for its “ignorance” of the outside world. One example: most people in China considered their country very “trustworthy,” while most people outside China thought the country was not trustworthy at all. I guess we outsiders know China better than its populace does.

To make his point about how unready Chinese are to handle the outside world, Fallows compares China’s party school emphasis on “loyalty, predictability, and party-line conformity” to the Bush administration’s staffing “its Embassy in Baghdad’s Green Zone mainly with people who followed the party line in Washington.”

So let me get this. China might be as horrible abroad as the Bush administration, which has basically won its prolonged, difficult struggle to bring democracy to Iraq. That bad, huh?

Friday, November 21, 2008

Obama’s Good News: Geithner for Treasury

Yesterday, the S&P 500 dropped to 752, below its last bear market low of 769 hit in October 2002. The last time the S&P was this low was 1997, when the index was on the upswing. Overall, My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), hit a new bottom of -6,179 (index is 3 months old—we run the FOX INDEX whenever it hits new lows), 92% of the way from healthy to the October 2002 bottom. Yesterday was indeed a Black Thursday [see chart].

Today, the market moved up sharply on the leaked news Tim Geithner, the head of Federal Reserve Bank of New York, will be named treasury secretary Monday. Obama has made the market nervous—traders worry about where he will take the economy. Geithner represents competence, he’s a known quantity, he’s been active working with Paulson on Paulson’s rescue plans, and Geithner’s appointment signals Obama wants a calm, steady hand guiding our economic future. Good news for the market and for America.

Wednesday, November 19, 2008

GM, Citicorp Troubles Cripple Market

Stocks fell to new 5-1/2 year lows today. People are losing faith in the survival of General Motors, the United Auto Workers, and Citicorp, as congressional Democrats talk about making cars greener. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped 577 points to its new bottom of -5,610 (index is 3 months old—we run the FOX INDEX whenever it hits new lows). It’s now 83% of the way from healthy to the bottom the market hit in October 2002, at the end of the last bust.

Clinton as Secretary of State: Second Thoughts?

Obama’s picking Clinton as Secretary of State seemed an astute move, bringing her inside the tent. But the Washington commentariat, the media’s elite, seems to think otherwise. The Washington Post’s David Ignatius says, “the idea of subcontracting foreign policy to Clinton -- a big, hungry, needy ego surrounded by a team that’s hungrier and needier still -- strikes me as a mistake of potentially enormous proportions.” His Washington Post colleague, guru-in-chief David Broder, believes Clinton is wrong for the job because Obama

does not need someone who will tell him how to approach the world or be his mentor in international relations. One of the principal reasons he was elected was that, relying on his instincts, he came to the correct conclusion that war with Iraq was not in America's interest. He was more right about that than most of us in Washington, including Hillary Clinton.

And the most influential Washington commentator on foreign policy, the New York Times’ Tom Friedman, doubts Obama will have Clinton’s back (he really means Clinton will have Obama’s back), “given all that has gone down between them and their staffs. . . particularly with Mrs. Clinton always thinking four to eight years ahead” to a “run again for the presidency.”

Friedman specifically rejects the “team of rivals” argument for appointing Clinton, a rejection given fuller treatment by historian Matthew Pinsker, who writes that while Obama loves Doris Kearns Goodwin's Team of Rivals book on the Lincoln presidency, in fact bringing all his rivals into his cabinet gave Lincoln serious problems.

Having Ignatius, Broder, and Friedman all diss the Clinton appointment is a sign that strong opposition is coming from the Obama camp, which is sharing its concerns with the commentariat. Clinton herself is getting ready for rejection by putting out the word she may not be interested in the post after all, though that “might simply reflect her need to create an alternative storyline if the deal falls apart.”

Anyway, the commentariat loves all this. With Democrats back in power after eight years in the wilderness, the media are once again players.

Friday, November 14, 2008

Wow. Clinton as Secretary of State.

I’m amazed by reports that Obama’s offered Secretary of State to Clinton. It would be an excellent selection, totally negating Obama’s error in overlooking Clinton for vice president. It pulls the party together, and should therefore give Obama enhanced power over congressional leaders.

And Obama avoids having any Clinton in the White House, something he would have had on his hands with Clinton as Veep. Clinton will be in another building, saddled with running a big bureaucracy, in constant conflict with the White House and Defense, and often on the road to less important spots (Obama will grab the best stuff).

Why would Clinton do it? She’s ready for something new, she will appreciate she has a better job than Biden’s (the job she wanted in August), and she gets to shape American foreign policy—probably the part of being president she most looked forward to. Meanwhile, Obama has her “inside the tent, (shooting) out.”

It’s About the Schools

The New York Times’ Nicholas Kristof writes that Obama is “sending signals that education may be on the back burner at the beginning of the new administration. He ranked it fifth among his priorities.” To Kristof, that’s a big mistake. Improved urban primary and secondary education is key to America’s economic future, Kristof believes.

How do we get to better schools? Kristof says,

A study by the Hamilton Project, a public policy group at the Brookings Institution, outlines several steps to boost weak schools: end rigid requirements for teacher certification that impede hiring, make tenure more difficult to get so that ineffective teachers can be weeded out after three years on the job and award hefty bonuses to good teachers willing to teach in low-income areas. If we want outstanding, inspiring teachers in difficult classrooms, we’re going to have to pay much more.

Pay teachers “much more.” OK. Obama will happily back that recommendation.

Thursday, November 06, 2008

Liberals Frighten Market

In my “election predictions” item, I concluded with this statement, “I believe the stock market will within 30 days show real unhappiness with [the liberal sweep].”

Wow, 30 days! Much too long! In the first two days after Obama’s election and liberal gains in both houses, the market has recorded its biggest two-day drop since October 1987. Many factors are at play in a down economy. But one of those factors is the liberal threat to raise taxes and push anti-business, pro-union regulations. Wall Street is showing its fears about what liberals will do, and wants Obama to reassure American business.

Wednesday, November 05, 2008

. . . But Defeat is an Orphan

As journalist Monica Langley wrote,

Axelrod . . . set out "seven pillars" the campaign must do well: the vice-presidential choice, the convention, a European trip to meet with heads of state and the four debates.

We said Axelrod/Obama had trouble with the first three “pillars.” But didn’t Obama-Biden win the four debates (Axelrod’s “pillars” 4-7), displaying steadiness and calm?

Why not? Front-runners are always steady and clam. And America’s September-October financial meltdown provided Obama his best possible outside event, vaulting him to a significant lead. Wall Street’s panic brought the Bush administration back before the cameras. Bush as president had responsibility for the economy. McCain wanted to be talking about foreign policy, anything but Bush. Obama wanted attention on Bush’s economy. Democrats, before September 15, were struggling to make the economy an issue. Things seemed bad, there were potential housing and credit crises, but the country was still growing.

No wonder McCain misspoke on September 15 [picture]. He needed the economy working. He had no backup plan for the economy going bad in a big way, an event that always turns out the party in power. Additionally, the Great Depression, the Kennedy-Johnson years, and Clinton’s presidency (“It’s the economy, stupid”) all tell us Democrats help us get out of bad economic situations caused by Republicans. So McCain inexpertly tried to wish an economic crisis away (“fundamentals are strong”).

Obama and victory’s 1000 other fathers are chief beneficiaries of an economy gone very bad—bad at just the time to settle an election.

Victory Has a Thousand Fathers

It’s pretty obvious the financial tsunami did in McCain’s election prospects, though Obama may have won a closer race anyway. But the journalists who write “history’s first draft” are busy minimizing the financial meltdown that riveted the country’s attention for most of the campaign’s final six weeks, while maximizing McCain-Palin’s media-exposed errors and Obama’s strategic brilliance.

Of course, McCain did hurt himself with that one bad quote. As Monica Langley described it in the Wall Street Journal:

[On September 15], the Dow Jones Industrial Average tumbled more than 500 points, with Lehman Brothers Holdings Inc. in bankruptcy court and other financial firms, such as American International Group Inc., struggling. On the stump, Sen. McCain sought to reassure voters. "The fundamentals of the economy are strong," he said. Sen. Obama attacked: "Sen. McCain, what economy are you talking about?" he said.

But one bad statement is different from Langley and others saying Obama was steady in the face of crisis, McCain wasn’t. Or suggesting Obama adeptly at McCain’s expense played out a strategy set months earlier, as Langley did when she quoted Obama chief strategist David Axelrod [picture]:

"From the start [of the general election campaign], we defined [the] election as about change versus more of the same." At their Chicago headquarters, Axelrod . . . set out "seven pillars" the campaign must do well: the vice-presidential choice, the convention, a European trip to meet with heads of state and the four debates.

If I could rewrite this “first draft” history of Axelrod’s “seven pillars” (above--incidentally, why modestly leave out the “of wisdom”? T.E. Lawrence’s autobiography was Seven Pillars of Wisdom, not “Seven Pillars”), I would say Axelrod/Obama 1) blew the vice presidential choice, 2) overdid the European trip, allowing McCain to separate “celebrity” Obama from ordinary Americans, 3) responded to their Europe error by toning down Obama’s closing speech in front of 80,000 screaming people so Obama wouldn’t come off as Hitler at a Nuremberg rally, and 4) arrived at September 15 tied with McCain in the polls, because people weren’t buying the idea that McCain-Palin were, as Axelrod said, “more of the same.”

Then the economic tsunami hit.

Historic Victory

From Tom Bevan, who runs the website “Real Clear Politics:”

Obama captured more votes than any candidate in history; a higher percentage of the popular vote than any Democrat since Lyndon Johnson, and a higher percentage of the white vote than John Kerry four years ago. . . make no mistake about it: last night voters handed Barack Obama and his fellow Democrats a mandate to take the country in a new direction.

Or an old direction, back to the New Deal and Great Society.

Monday, November 03, 2008

Election Predictions

Real Clear Politics” and the “Rothenberg Political Report” are my best sources for how the election will come out. Extrapolating from their work, I’m expecting Obama-Biden to win by about 8%, with roughly 380 electoral votes, for Democrats to pick up 8 senate seats to reach 59, including Saxby Chambliss of Georgia’s seat—but not Coleman’s in Minnesota nor McConnell’s in Kentucky—and for Democrats to gain 28 more house seats, for a total of 263 and a margin of 90.

It will be an historic victory for liberals, their greatest triumph since 1964. I believe the stock market will within 30 days show real unhappiness with the result.

In Battle of Quotes, Obama Wins 6 to 1

"I actually did vote for the $87 billion before I voted against it."

--John Kerry, March 16, 2004

Newsweek’s inside coverage of how Bush won re-election in 2004 made much of Kerry’s statement on funding the Iraq war (above). The Bush people saw immediately how it captured Kerry’s flip-flop-flip position on Iraq and the war on terrorism, and used Kerry’s words mercilessly against him. You could not have invented a better quote, and Kerry said it himself! One quote. One election lost.

I remember thinking, “Sure that quote was important, but isn’t it risky to build elections around a single ill-considered statement?” After all, “all who take the sword will perish by the sword” [Matthew 26:52]. And so it was. Democrats did the turnabout in 2008, using McCain's own words to defeat McCain. Here’s how:

1. Democrats used 3 phrases to define Bush and elect Democrats to Congress in 2006.

“my belief is we will, in fact, be greeted as liberators.”

--Dick Chaney, March 16, 2003

"Mission Accomplished"

--Banner behind George W. Bush during speech on USS Abraham Lincoln, May 1, 2003

"Brownie, you're doing a heck of a job."

-–George W. Bush, to FEMA director Michael Brown, while touring hurricane-ravaged Mississippi, Sept. 2, 2005

2. With a single old quote, Obama then nailed McCain to Bush.

“I voted with the president over 90 percent of the time, higher than a lot of my even Republican colleagues."

--John McCain, May 22, 2003

I didn’t think Obama would get away with marrying McCain to Bush. They are so different. I overlooked the power of that one televised quote from 2003, which held up because McCain’s “agree with Bush” votes later continued to hover around 90%.

3. Obama used two quotes, one just as the meltdown began, to portray McCain as unqualified to deal with the economy.

"The issue of economics is something that I've really never understood as well as I should.”

--John McCain, December 18, 2007

"Our economy, I think, is still -- the fundamentals of our economy are strong. . . “

--John McCain, September 15, 2008

These two McCain errors, tacked on to the reality of our economic meltdown, probably cost McCain any chance of winning.

Obama made a big mistake himself, and it hurt him for months afterwards, when he said:

You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them . . . And it's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.

--Barack Obama, April 5, 2008

The Obama campaign, however, never repeated that mistake, and Obama did everything he could to remind voters that he came from a low income background, raised by a white single mother and white grandparents from Kansas.

Two weeks ago, McCain thought he had the quote that might sink Obama at the last minute, when the Democrat told “Joe the Plumber:”

“I think when you spread the wealth around, it’s good for everybody.”

--Barack Obama, October 12, 2008

McCain was right to jump on Obama's statement. The quote showed Obama more interested in income redistribution than wealth creation. The problem is that in a bad economy, voters don’t see a problem with income redistribution. So in the end, the quote hardly touched Obama.

Sunday, November 02, 2008

More on Obama Changing Courts

In his article “Obama presidency could reshape courts,” Fred Barbash of “Politico” makes some of the same points as Northwestern’s Steven Calabresi. Like Calabresi, Barbish feels Obama,

through his appointments could have a profound impact on the judiciary for decades to come. In fact, Obama stands a greater chance than any Democratic President since Lyndon Johnson of making an impact on the both the appeals courts and the Supreme Court, especially if the Democrats get 60 seats in the Senate, which must confirm appointments.

And Barbish also spots that “Obama’s ideal appointee recognizes ‘who the weak are, and who the strong are in our society,’” setting the table for judges who place empathy ahead of justice.

Both Obama and ex-Judiciary Committee chair Joe Biden care greatly about the courts. Barbish quotes Harvard Law School’s Cass Sunstein, an Obama friend, advisor and former faculty colleague at the University of Chicago Law School saying, “The first thing to know about Obama, which hasn’t gotten sufficient attention, is that he is himself appointable to the Supreme Court. He is a constitutional specialist who has taught for many years,” and who “is obviously alert to the fact that there’s been a rightward drift on the court.” And as Biden put it, “the ideology of [the] judge makes a big difference.”

A big difference. Understatement.