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It's the economy, stupid

Discussion in 'Sports and News' started by The Big Ragu, Jun 1, 2012.

  1. The Big Ragu

    The Big Ragu Moderator Staff Member


    On the first Moddy presidential poll, I said that Obama would beat Romney. ... unless we saw bad economic news between now and November, and I saw the possibility of that with all of the consequence of miserable fiscal and monetary policy coming to a head. The question was how long Europe, the U.S. and China could hold off a collapse.

    The new employment report today was miserable. Job growth missed targets by a lot. And confidence in the economy is pretty bad right now.

    This is what all presidential races come down to. An incumbent wins if things are pretty steady. Unless the economic news is bleak, in which case he goes the way of Jimmy Carter.

    The whole world is in an economic slowdown right now, we are having mini-runs on banks in Europe, Spain is not going to hold up much longer, and the Euro is not going to survive more than another 6 months. China's economy has slowed down (making the communists in power vulnerable, actually). And the U.S. is in more debt than people realize and has monetized that debt with loose monetary policy in a way that is going to anchor our economy for years.

    The worldwide fallout from the accumulated mess and bad decisions is going to be worse than it was 2008-2009. The question is if things are very close to falling apart right now, or if there if there is just a continual decline through November, and we see a worldwide economic mess in 2013. If things deteriorate further over the summer, President Obama is very vulnerable. It doesn't matter who his opponent is. He had to be cussing up a storm when he saw those numbers.
  2. Mizzougrad96

    Mizzougrad96 Active Member

    The good news for Obama is that this came in June and not in September.
  3. Sharkmc

    Sharkmc New Member

    But what makes you think the numbers will be better in September? If what the Big Ragu is right, and I have no doubt he knows what he's talking about, the economic forecast for the next six months isn't going to change, meaning Obama is in deep do-do.
  4. Mizzougrad96

    Mizzougrad96 Active Member

    Well, if it comes up at all in September he can make himself look like a hero.

    I don't think I could say that Obama is in trouble until September. If gas prices start to go up and we get another bad jobs report, things could get very interesting...
  5. Greenhorn

    Greenhorn Active Member

    I've said all along that Obama will lose in November.

    George W. Bush was like the Ghost Whisperer: a horrible show that inexplicably ran for years while Obama is more like Party Down: a show I liked but ended too soon.
  6. MileHigh

    MileHigh Moderator Staff Member

    Agree with this. We're five months from Election Day -- and there are five more jobs reports to come. Things don't heat up until after the conventions -- Labor Day. It doesn't look good today. But today isn't Election Day.
  7. The Big Ragu

    The Big Ragu Moderator Staff Member

    I can't say what is going to happen to the worldwide economy. I have known there was going to be an economic collapse for at least the last two years, but I couldn't have told you when. That is the problem. I started shorting the Euro when it was at 1.43. And held on through some irrational rallies because they didn't make any sense.

    Politicians and central banks have a lot of tools at their disposal to whitewash things, and this hasn't played out quickly as a result. They can run up a lot of debt before it drowns them, and they have a unique ability to just print money to buy time. But that has been the playbook for way too long -- not just in Europe, but in the U.S., as well.

    Europe is in really bad shape. Structurally they have not done anything to address the mess and it is only worsening. Spain is in really bad shape. They are just billions of Euros away from a massive banking system collapse. It's a large economy in its own right, but the bigger effect is what I have said all along -- the runs on banks that are already percolating throughout Europe is going to create chaos. The whole continent is overleveraged.

    The fallout from the collapse of the Euro is going to hurt the U.S. worse than our own fiscal and monetary policy has. But we haven't made things better by sticking our own heads in the sand.

    This could drag on for a while, though. For the presidential election, it really is a matter of whether they can stave off a crisis past November, or whether a lot of things that are going to cause panic play out over the summer and into the fall. I can't predict it, though. Europe should have collapsed under its own weight at least two years ago, but a combination of BS bandaids and people deluding themselves with false hope has been enough to buy more than two years worth of time. Who is to say that they can't buy another half year?

    I wouldn't be surprised if our Federal Reserve is finding some covert way to funnel money to the ECB to bolster European banks -- at our expense. It has already done that, even though it is of questionable legality. I also wouldn't be completely surprised if we get a Eurobond scheme of some sort, which could put off the total collapse for months or even a year or more longer. I put the odds of that at less than 50/50, because I don't think Germany and Finland and even France (even with Hollande in charge now) are going to fund the last voyage of the Titanic without getting first dibs on the lifeboats.

    So really anything can still happen. But to my larger point always, this is all buying time. It isn't solving what are unsolvable (they passed that bridge long ago) problems that were caused by reckless governments and central banks.
  8. Bob Cook

    Bob Cook Active Member

    The issue isn't just whether people are dissatisfied with how Obama has handled the economy. It's whether they think Romney can do a better job. Given his lackluster "job creation" record in Massachusetts, the available evidence is that he won't do any better. Of course, this also assumes the president himself is 100 percent responsible for "job creation," which is a ridiculous construct, but it's the one we're running with.

    Anyway, I'm not sure that mere job numbers are going to drive the decision anyway. Voters know whether they or their friends are working, or have a chance to. The job numbers are there mostly for a market reaction. The numbers could say that 300,000 jobs a month are being added, but if you and your friends aren't getting them, those numbers mean fuck-all.

    Also, Romney is in the odd position of going into swing states such as Ohio and Florida and talking about how miserable everything is, at the same time the Republican governors in those states are going around talking about how wonderful everything is.

    As others have said, it's a long way to November. Could the Euro collapse? What happens if China's economy collapses? (It doesn't appear to be collapsing yet, but it's in trouble.) What is the fallout from whatever the U.S. Supreme Court says about health reform? What happens if Sheldon Adelson and the Koch Brothers pump $1 billion into superPACs? What happens when Obama starts really spending his money? What happens when (or if) Obama confronts Romney in debates for being for all these things he's now against? What happens is gas prices spike? Or fall? Or there's another Wall Street scandal?

    Just way to early to call these things.
  9. cranberry

    cranberry Well-Known Member

    Please. The Euro will survive because it's in the interests of all of Europe for it to survive. Germany will grudgingly realize that austerity by itself won't get the European economy growing again and negotiate a stimulus package. A long period of slow growth will ensue. The markets will react well.

    But if you're really, really scared about a global economic collapse, sure, go ahead and buy more gold.
  10. LongTimeListener

    LongTimeListener Well-Known Member

    I think I have it down now, the World According To Big Business And The GOP.

    Good economy + Republican president = greatest president ever! (Reagan)

    Good economy + Democratic president = he got lucky (Clinton)

    Bad economy + Republican president = victim of circumstance and Democrats (Bush I, II)

    Bad economy + Democratic president = worst president ever! (Obama)

    That about cover it?
  11. jackfinarelli

    jackfinarelli Well-Known Member

    Not quite...

    Bad economy + Democratic President = FDR (hardly the worst President ever)

    Bad economy + Democratic President = Jimmy Carter (in the running for worst President ever)

    What matters here is what the President's effect on making the economy better happened to be.

    Good economy + Republican President = Eisenhower (nowhere near the best President ever)

    Bad economy + Republican President = Nixon (hardly anyone thinks it was "bad luck" that got him)
  12. The Big Ragu

    The Big Ragu Moderator Staff Member

    I put it at less than 25 percent chance there is a Euro currency a year and a half from now. Even down to 1.23 right now, I still see plenty of room left to be shorting it. I wish I could say with certainty it is going to fail, because I'd bet you a couple of pints of Guinness -- paid for in dollars. There is still a chance there will be some Eurobond scheme that changes the nature of the currency but keeps something called a Euro around -- even if there are alternative currencies added to the mix. So I don't want that bet.

    Even more insane that the way the Euro has traded, though, is the dollar index. The dollar has weakened considerably the last few years overall, as it should have, but every time there is European news, almost on cue the dollar index trades up as people flee to this mistaken haven of "safety" -- ignoring the fact that the U.S. is in massive debt and has been crapping all over its currency, too. With the dollar index sitting right now at 83 +, if I had enough patience, and I didn't have better ideas for my money, I'd go way short on that dollar index and wait. You will have to sit through some rallies, but ultimately people will wake up to the fact that the dollar has to trade on its own strength -- which it has none of. It can't keep trading too high because it is a bit less ugly than the Euro. It may take some time for that story to play out, but on the course we are on -- more than a trillion dollars of new debt each year and a Federal Reserve tripping all over itself to print more worthless money to monetize that debt -- I don't see how we don't get well below the 72/73 levels we were at when people freaked about S&P downgrading U.S. debt last year. That is another one that is going to happen. I just can't say exactly how long, because as I said, politicians and central bankers have a lot of snake oil to play with to delay the consequences of what has been building up for a long time.
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