USA 2012: Obama v Romney

[GGT]

I was thinking of countries with bigger economies than Estonia. UK, Spain, France, Italy....

In Romney's case, he can't have it both ways: he can't say it's illogical treat the US economy like a single state's (MASS) when it comes to taxes, budgets or policies (like RomneyCare)... and then suggest it's logical to treat the US economy like a solitary nation, independent of the rest of the world.

[RandBlade]

I remember a significant bump occurred after Palin was selected, it only lasted for a week or so but the point is that polls are often wrong this far out... need I remeind you the ups and downs of the Republican primary? Now if the polls are all showing for Obama in Sept and Oct then yeah... he's probably going to win. Five months from then? Not that worried.

There was a bump after the Convention, as there always is after Conventions - as I said, and why its normal to take polls around either Convention with a very large pinch of salt. Palin got selected at the Convention but I doubt its accurate to point all the bounce in her direction, whoever he'd chosen there'd likely have been a bounce.

Anyway the psephological evidence from '08 is that the polls were right this far out. Alternative elections may show other evidence, but '08 was a terrible example to give. June 2008's polling evidence was remarkably accurate.

[ar81]

"The Economy" is problematic for both of them, because we're connected to what happens in the EU. And where that goes....nobody knows. Some say Merkel, the ECB and IMF will decide who wins.

I'm interested to see how "Keynesian" Romney might actually be, if things go from worse to worser.

<related tangent: the political trap for the Fed, with their dual mandate to focus on employment and inflation. It's absurd to think monetary 'intervention' can do all the heavy lifting, while congress refuses to pass any policies that could help in the short term. Even Romney acknowledges that deep and immediate cuts in federal spending would throw us into a deeper recession, and we see evidence of that in certain European Austerity measures.>

EU crisis has been more of a distraction than anything else. Last year US was 7th worse developed country in terms of Debt vs GDP, and Spain was not among the top 10. Greece economy is just 1/4 of the size of Spain, so it is not a big deal. Also, EYP the greek intelligence agency identified speculative attacks on Greek debt. Four big financial entities that operate in Europe and US were massively selling greek bonds and buying them again with cheap prices at the end of the day, to raise risk premiums and profit. Greek crisis is very close to artificial, a media campaign to raise profit on greek bonds. I do not believe Euro will fall, and I do not think Greece will get out of Euro.

There is no real crisis, just a currency war. Banks are fighting to get profit and central banks are fighting to keep dollar/Euro as the most desirable currency. Fear of crisis is something aimed at moving people's money for financial gains and to raise risk premiums for banks to make more money with the misery of Europeans.

IMF bailout is about this:
1.Banks create toxic assets.
2.Media spreads fear, risk premiums go up, making it more profitable for banks. They say debt is a problem so countries need to be bailed out.
3.Governments borrow money, national debt goes up. So if debt is a problem, adding more debt is the solution?
4.Governments give the money to banks with toxic assets at an interest rate that is lower than bond rates (negative profit for government).
5.IMF may lend lend money ask for government spending cuts, which means firing people. When people get fired those who were consumers are not anymore. Companies go bankrupt as there are less consumers/customers, some companies fire even more people. Less companies and less people with jobs lowers tax income even more, worsening deficit.
6.IMF may lend money if there are privatizations. Of course, what will be privatized will be what was already profitable, so tax income is reduced, worsening deficit.

The problem of the Fed is that they think banks are the engine of economy while indeed they suck money dry. Banks lend money (P) and they ask repayment of borrowed money and interest (P+I). So in the end banks are sucking the interests (I) from the rest of economy, in net terms. Since no one provided the money to the economy to compensate for the interests banks suck, someone will not be able to pay.

When you make a macroeconomical analysis you realize that if people are fine, the economy are fine. Instead of giving money to banks, money should be given to people. Inflation? Yes, for some time while those who were poor now become customers. One less poor is one more customer. A company without customers cannot exist. Customers are the engine of the economy, not banks that suck the economy dry.

While FED and US politicians do not understand that one less poor is one more customer, and that if people are fine the economy will be fine, US will not be going out from the hole.

[GGT]

EU crisis has been more of a distraction than anything else. <snip>

There is no real crisis, just a currency war. Banks are fighting to get profit and central banks are fighting to keep dollar/Euro as the most desirable currency. Fear of crisis is something aimed at moving people's money for financial gains and to raise risk premiums for banks to make more money with the misery of Europeans.

The problem of the Fed is that they think banks are the engine of economy while indeed they suck money dry. Banks lend money (P) and they ask repayment of borrowed money and interest (P+I). So in the end banks are sucking the interests (I) from the rest of economy, in net terms. Since no one provided the money to the economy to compensate for the interests banks suck, someone will not be able to pay.

I disagree --- the EU crisis is real, not just a distraction, and much more than a currency war. It's real because banking and finance have become globally interconnected, especially through debt instruments that are viewed as investments. Traditional banking no longer works, because it's become intertwined with investment banking and high finance.

But I do agree --- that the Fed is hyper-focused on banks (and SIFI) as the engine of our economy. It makes sense, of course, because they're bankers. But they've gone from being bank-of-last-resort to making the Central Bank...central to all other banking and finance. Markets don't hang on what the Comptroller of Currency says, or press releases from FDIC, but they jump or dump based on Fed statements and beige papers. Boring depository banking that pays interest for the privilege of lending to others no longer exists...because the Fed lets banks borrow for free, and will even hold their "toxic assets". There's not much incentive for people to park cash in banks that don't pay interest, but charge tons of fees. Or even charge the customer for having and FDIC guaranteed account.

When you make a macroeconomical analysis you realize that if people are fine, the economy are fine. Instead of giving money to banks, money should be given to people. Inflation? Yes, for some time while those who were poor now become customers. One less poor is one more customer. A company without customers cannot exist. Customers are the engine of the economy, not banks that suck the economy dry.

While FED and US politicians do not understand that one less poor is one more customer, and that if people are fine the economy will be fine, US will not be going out from the hole.

It wasn't always this way, though. That boring old traditional banking once rewarded people for saving, accruing compound interest...and was also a way for people to borrow reasonable amounts to start a business, buy a home, etc. The S & L crisis should have been seen as a big red flag, but instead it got worse.

Also agree with you on what drives an economy --- customers --- and demand from consumers (even the frivolous type of conspicuous consumption). But bankers and politicians are more concerned with the capitol and capital, instead of Human Capital.