The economic depression indicator meter.
Depression indicator meter: Updated March 20th 2008
The index is at -37
When the index is at -200 we are in a great depression.
Index rises to -37
5/2/2008 Slight rise in GDP and unemployment number goes down.
4/14/2008 Corporate profits edging down, along with consumer confidence.
4/03/2008 Unemployment rises slightly as 80,000 lose jobs.
3/26/2008 Durable goods drop and consumer confidence drops again.
3/24/2008 Index rises to -35 from -37. Sales of pre-existing homes unexpectedly rise.
3/20/2008 Update due to manufacturing index falling for a fifth straight month.
The meter indicates how likely we are to enter a recession, depression, or to experience economic growth. The meter is based on 20 economic factors. Some of these factors change (The Sub-Prime mortgage crisis). They are weighted based on their level and trend during previous recessions, and the great depression.
Currently GDP is growing ever so slightly, international trade is up, and U.S. exports are up. The average hours worked is stable and bank credit, despite the recent sub-prime woes appears to be somewhat stable. These offset the other factors, almost all of which are down. As new information is updated (unemployment figures, the stock market, interest rates, etc.) the needle moves.
Current indicators
| Housing crisis |
| Stock market |
| Fed posture |
| Unemployment rate |
| Price of Oil |
| Price of Gold |
| Consumer confidence |
| Banks failing |
| New housing starts |
| Quarterly services |
| Manufacturing shipments/orders |
| GDP |
| Business investment |
| Productivity |
| Consumer credit |
| International trade |
| Bank credit (Total commercial) |
| Inflation |
| Average weekly hours worked |
| corporate profits |
Top Stories
A simple plan for fixing the economy.
A simple plan to fix the economy.
Any student of history will tell you that the economic problems facing the United States are enormous in scope, but rather simple in complexity. The short term issues are easy to fix both structurally, and politically, we simply need to invigorate the business climate. Over a longer period of time one cannot discount the potential disaster associated with Social Security and Medicare benefits promised to eighty million baby boomers. Honoring this promise will require deficit spending for years. But if we set our house in order today, we will have the liquidity and confidence of creditors to meet the demand.
The plan I am outlining is nothing new. It is the path lighted for us by past politicians, economists and the march of time itself. Big problems aren't always complex. This is one of those instances.
This plan will result in rather quick economic growth, based on real productivity, and it will check inflation.
1. Lower the capital gains tax rate to 7%, permanently. When nations lower capital gains tax rates, economies and revenues to the government rise. There is no historical empirical data to suggest otherwise, and in fact, very little anecdotal evidence.
2. Increase oil exploration and drilling in Alaska and the Gulf of Mexico. Oil prices are effecting everything we buy. We must approach the task of exploiting American based oil assets with the same vigor we approached re-arming for World War II.
3. Overturn Sarbanes-Oxley. This misguided piece of legislation costs public companies billions in productivity. It is a horribly conceived bit of law, that does nothing to protect investors from criminals.
4. Remove as much regulation on small business as can possibly be accomplished in ninety days. The family leave act, Americans with disabilities act, and as many as 80 other regulations could conceivably free up more than one trillion dollars per year.1 Many of these regulations offer no real protection to the general public, and of those that do, the cost often far exceeds the supposed benefit.
5. Do not intervene in the housing market. Housing prices were run up in many areas because of speculative buying and selling "flipping". Perpetuating this bubble will only cause further ruin. If the prices are allowed to settle at a more natural level, the crisis will quickly pass with minimal impact on the overall economy.
6. Drastically reduce illegal immigration and begin massive deportment of illegals in the country. Rising health care costs related to illegal immigrants are pushing up health insurance rates for small business, and employees, while causing severe economic pressure on border state hospitals. These illegal workers are also pushing wages down even further for the working poor. Build the border wall to discourage repeat offenders.
7. Drastically increase the visas allotted for highly skilled technical workers. These highly skilled workers will pay taxes, and keep jobs in the United States. Unlike low-skilled jobs these positions bring with them high pay and disposable income so necessary to growing our economy.
8. Cut government spending by ten percent. Even social security direct payments will need to be cut by 2.5 %. This will solve the short term deficit problem and allow for further tax cuts to stimulate the economy. Welfare and food stamp payments will also need to be cut. One of the biggest health problems of the poor is obesity2, let no one tell you people will starve if food stamps are cut by 5%.
9. Protect the drug companies from class action suits once a drug has been approved by the FDA. This alone will lower health care costs, specifically for the aging baby boomer generation.
10. Rewrite HIPAA laws. While portability is good, much of the HIPAA regulations have increased health care costs with no discernable benefit to health care consumers or providers.
11. Cut military spending by twenty-percent across the board. Re-focus military spending on defensive initiatives (missile defense). Drastically cut overseas troop deployments. Dragon slaying is a diversion for nations flush with cash, in times of economic woe, it is a recipe for disaster.
12. Streamline the process for building nuclear power plants. Nuclear power is more environmentally friendly, and cheaper than fossil fuels. The construction of these power plants is over-regulated and is strangling our economy.
13. Promote free trade. The Smoot-Hawley rhetoric from the Obama and Clinton campaigns will lead to , the same thing the first Smoot-Hawley tariffs led to , increased misery. Cheap imports are a staple of growing economies. Our growth is not dependent on building walls, it is dependent on increasing our competitive advantage. This is done by lowering taxes and regulations. Paying fourteen dollars for a pair of socks is not going to grow our economy.
All of these ideas are easy to implement. Incorporated together they will build a strong foundation for growing our economy quickly, and allowing us to meet the demands of the future. The United States economy is in dire straights. Thankfully, it is easy to fix, as most (not all, but most) of the problems were created by our government.
The time has come for us to put the politicians feet to the fire. No longer can we listen to nonsense about Universal healthcare. There simply isn't any money for it. Universal health care is about increasing access to health care, not decreasing the cost. The time has come for the American giant to rise from his slumber and confront the beast. The beast is nothing more than sloth and ignorance. We are all guilty. Make no mistake the winds of economic chaos are strengthening and their gusts threaten to blow your very livelihood away. This is not the time for slick politically speak, or straight talk that isn't straight about anything. The election of 2008 is not about change, or staying the course, it is about real leadership.
History will judge us harshly if we continue on the path we have taken. The world wide web has opened up mountains of data for historical research. I urge you to get involved. We must find a leader willing to make tough decisions, and one who can lead as all great leaders do, by building a consensus if possible, standing alone if necessary. I do not know who will win the presidential election in November. I do know that if it is McCain, Clinton or Obama, it will be a one term presidency.
Sources
1. Advocacy created the r3 initiative because complying with federal regulations
now costs our economy $1.1 trillion per year, which costs more per household
than healthcare. The smallest of businesses bear the brunt of regulations. They annually pay 45 percent more per employee to comply with federal
regulations than big businesses do.
From SBA advocacy.
2. www.usatoday.com/news/health/2006-05-23-obesity-teens_x.htm
Author note:
Eric Gurr is the President and founder of U4Prez.com. He writes regularly in his blog at
blog.u4prez.com. Eric is 43 years old
and is married with three children.
He can be reached at egurr@intralinkinc.com
Did McCain set up conservative talk show host?
This is potentially a big problem for McCain in the general election. Ohio is a pivotal state, and Cunningham is wildly popular in the southwest corner which includes Cincinnati and Hamilton county. As local commentator Jack Atherton has pointed out, Ohio (and especially Cincinnati) is nothing if not loyal. One need look no further than the Pete Rose incident to see Ohioan's not only have a long memory, they are fiercely loyal and more than willing to hold a grudge.
I guess the other question that begs answering is "Is Barack Obama thick skinned enough to be President of The United States?
Cunningham's side of the story can be found here. http://www.700wlw.com/main.html
Fired up about what?
But why? Obama is a smart guy, and he gives a very passionate speech. But he has exhibited no substance whatsoever. He simply will not articulate a position. As I have mentioned before this is one of the most crucial elections in the nations history. Eighty million baby-boomers are about to retire and have been promised social security and medicare. In all his wisdom President Bush decided to add to this thirty trillion dollar shortfall, by passing a prescription drug plan. There are at least twelve million illegal immigrants in this country, many not paying social security, businesses are increasingly burdened under crushing health care costs, and about one quarter of the Muslim world appears bent on our destruction.
So what say you Mr. Obama?
Let us take a look at this potential train wreck of a presidency.
On immigration he has taken every position and no position. Just like John McCain, Obama has shown that he has no idea at all what the underlying problem is. If we give amnesty to twelve million illegal immigrants, they will quickly be twelve million citizens without jobs. Let me make this clear so that all of the politicians can finally understand why we have illegal immigration. Businesses hire illegal immigrants not because of lower wages, it is because they can skirt regulations. Illegal immigrants don't need get health insurance or unemployment insurance. They usually don't pay social security or other federal taxes matched by employers. Immigrants have a hard time filing suit for being mistreated on the job site. They are cheaper to employ (much cheaper) not because of the dollar wages, but because expensive regulatory and tax burdens are skipped. Obama in his website says the the burden of illegal immigration raids fell on immigrants families. I have no idea what this means, and neither does he.
On Health Care.
Obama and Hillary both would like a national health care plan of some fashion. National health care is an issue of access, not cost savings. The only way a national health care plan can cut costs, (and thus help stimulate the economy) is if it is coupled with tort reform, and rationing. This is exactly what happens in every nation with national health care, and it is still always more expensive. With eighty million people coming in to the medicare system over the next twenty five years, we can't have national health care, that ship has sailed. The candidates should be soley focused on saving medicare.
On the terror threat.
Obama has said we need to talk to Iran. This is bullshit. Talking is a great idea, but it isn't a policy. What does he intend to talk about? Does Obama not understand the issue? Iran wants to exert influence in the Middle East, and they would like the United States to get out of the way. They would also apparently like to nuke Israel. And what is Mr. Obama's position on Russia? North Korea? Turkey and the Kurds, The missile defense shield? Barack Obama has no foreign policy. He hopes to cover over the issue with flowery speeches about how rough he had it growing up, get your vote, and then make up the policy as he goes. In today's world, I can't think of a more dangerous approach. McCain and Hillary Clinton at least tell you what they want to do, and to some extent how they will go about it. In Iraq Obama simply wants to go home. What that means he doesn't tell us. Hillary Clinton does, she would use rapid response with a small contingent to hot spots. This is a perfectly valid and logical approach. John McCain wants to stay the course and stabilize Iraq and the Middle East. This is again, perfectly valid and logical. Obama, again, has no plan at all.
On the economy
Obama wants to spend more money, much more. This much is clear. But if I may digress a bit, we have about a thirty trillion dollar shortfall ahead of us, and the first bill arrived January 1. My friends we are simply not going to tax the rich and have them pay their fair share to paper over this problem. There isn't enough money available. But even here Obama is not clear on exactly what he will do.
You need not take my word for anything. Visit barackobama.com and look at his website, and listen to his speeches. But you must listen with your brain, not with your heart. I think it would do wonders for this country to have an African-American president. Barack Obama cannot be that president. He is a slick politician, a smart man, and a great speech giver. He also has absolutely no idea what he wants to do when he becomes president. The only thing we can glean from his speeches and website is that he wants everyone to feel good. That may be hard to do with chronic unemployment, no health care for our senior citizens, and social security cuts of fifty to sixty percent. This is what we face, the math doesn't work any other way. I don't think John McCain is much better, and Hillary Clinton is probably still to divisive to lead the nation, but let's give credit where it is due. At least these two offer a position and take their hits. Barack Obama just wants us to feel good.
I think the saddest part of this entire election is that the solutions are well documented. We have seen it done by Adenauer in post World War II Germany, and De Gaulle in France. We have seen it done by Thatcher in England, and Roosevelt in The United States.
Here is what history tells us will work.
Liquidate the bad debt.
That means some people will lose their homes. But it will stop the bubble and strengthen the economy.
Drastically lower business regulations, and I mean drastically.
This will stimulate the economy and we will see GDP growth approaching double digits. This will help pay for social security and medicare for the next twenty-five to thirty years.
Cut government spending by twenty percent.
Coupled with a growth in revenues from an expanding economy this will allow us to pay down a large portion of the debt over the next ten years.
Strengthen the rule of law by protecting private property rights and enforcing contract law.
Free market capitalism cannot function without the rule of law.
Strengthen the social safety net to truly protect the middle class.
We need to give the poor what they need to survive, we are not obligated to make them comfortable. If you want to see this nation ripped apart at the seems, violently, then cut the safety net from under the feet of the very people who have paid for it for the last fifty years. Benefits must be cut for the non-working poor. If the economy slips in to a deep recession, we must offer the same protection to the middle class that we have offered to the poor for decades. They have earned it and deserve it.
Stop complaining about social issues.
Gays are not ruining this country. They are just like you and I. A group of idiots in San Francisco doesn't reflect the entire gay population any more than the KKK reflects the white population. Affirmative action is not ruining this country. Technology has made gun control an issue of the 1960's not the twenty first century. It is time to focus on the truly important issues facing this country. They are serious, potentially devastating, and relatively easy to fix, if we follow learn from the past.
And most importantly!
Don't vote for people who will not tell you what they are going to do. If Chris Matthews just wants a good looking president he can vote for Britanny Spears, I think substance is more important.
The real race issue in America
Bill Clinton is putting it all out front for Hillary. Blacks are going to vote for a black, according to Bill.
The truth is, black Americans shouldn't be voting for either of these candidates.
Why? Because the Democratic party has thoroughly abandoned African-Americans in the middle and lower economic classes. In 1865 slavery ended. One hundred years later, blacks finally were able to get off the back of the bus. Voting rights followed along with affirmative action, which allowed many economically impoverished blacks to move in to the middle class, and even the upper middle class and wealthy class.
Two short generations later, Democrats are throwing blacks under the bus. It seems the Democrats (and Republicans to be fair) noticed that Mexicans (You can call them Hispanics if you are politically correct) are a larger voting block, and so the pandering began in earnest.
Now the Democrats are content to throw the economically poor blacks under the bus, all in the name of political expedience.
Most illegal immigrants in to this country are Hispanic. Democrats and a few Republicans would like to give these folks amnesty. The Democrats would very much like to win the Hispanic vote for years to come, and they see amnesty as a sure way to bring these people in to the fold.
At what price?
Vicente Fox (Mexico's former president) commented famously that Mexicans were taking jobs that "even blacks" wouldn't take. Democrats and Republicans alike I think used this as the silent cover they were both looking for. I've heard Republican pundits for years refer to these illegal immigrants as simply migrant agriculture workers. The Mexicans are just lettuce pickers, they're not taking real jobs. The Democrats appear to have fallen in to the same trap. But this is simply not true. If you've ever been to a construction site in the suburbs of any major city, you know it's not true. Mexican are doing framing, drywall, painting, plumbing and electrical work.
The supervisors (and higher paid positions) tend to go to bi-lingual Hispanics (which just makes sense).
The problem thus extends well beyond the low wages of the workers.
But even with the lower end jobs which we are told "blacks won't take" there is more to the story. Of course blacks won't take them, who would? The wages are depressed.
But illegal immigrants are being paid just as much as Americans!
This is misleading. The cost is actually much lower to the employer, and everyone knows this. If you pay an illegal twelve dollars per hour, your cost is, twelve dollars per hour. If you pay an American citizen twelve dollars per hour, the employers cost is actually much higher. He must pay social security tax, unemployment taxes, and he is open to a law suit if the worker is hurt on the job due to the employer's negligence.
Thus wages are of course artificially depressed. This hurts the working poor.
I kid you not, I have actually heard Republicans say, "This is good, it keeps inflation down." This is one of those times in life when you wish you had an old leather glove to slap someone in the face with. Of course it keeps inflation down, lots of illegal activity does this. To be fair, most Republicans don't feel this way, but there are a few.
Here is the real problem
Illegal workers not only are lowering the wages, they are taking jobs from the working poor. And not just the low end jobs. How many lower income blacks and whites have not been able to get a job, because someone who shouldn't be in the country took it? Could the low end job lead to a supervisors position (which pays better)? Or to an middle income black American creating his own drywall business? And yes, I realize the unemployment rate is low. This does not change the economic dynamic of lowering wages, at the low end. It also does not change the fact that even if it were a net positive (which it is not) it subverts the rule of law. The rule of law is not just important in that it is a set of rules to make society more stable. It is the consistency expressed in the rule of law that allows business, and society, to function over the long haul. When the rule of law is not enforced strictly, but by what we believe to important on any given day, there really is no rule of law.
The problem then summarized is this.
If we allow illegal immigrants to take low end jobs, we further depress wages already at the low end.
Then those on the lower rungs of the economic ladder have no first step towards the middle class.
If we then start to roll back affirmative action,
Then we have hit the African-American people on the head twice.
Can there be any doubt that blacks were a repressed minority for the hundred years after slavery? I think not. During the civil rights movement some real progress was made. But is two generations enough to end affirmative action and call it a success? In my opinion, probably not just yet. Some scaling back in the next twenty or thirty years may be a good idea, but abandoning the program after two short generations is not enough of a rising tide to lift all of the boats, so to speak.
If we further aggravate the problem by allowing Democrats to sell out the blacks in favor of illegal immigrants, we are really just setting the entire nation back forty years.
We clearly can't have affirmative action policies forever. This would just feed in to the myth that blacks are somehow intellectually inferior and will need the help of government forever. We have too much evidence that blacks can succeed and compete when the playing field is level.
On the other hand, we are in no position forty short years after civil rights gains, to throw blacks under the bus for the votes of Hispanics. It is not only bad policy, it's downright sinister. What we see emerging is the necessity for policy built from the left and the right. But here, compromise isn't the solution. We don't want to shrink some affirmative action, shrink some illegal immigration. This just muddies the water and results in bad legislation, thus furthering the problem.
The real solution is to follow the law. Stop illegal immigration immediately. The Democrats are clearly of no mind to do this. Black Americans in 2008 have a much better chance of extending affirmative action with Republicans, than they do stopping illegal immigration with Democrats. If a recession begins to take hold, this will become very clear to blacks, and they may be inclined for the first time in decades to abandon the Democrats, and vote for the candidate that best meets the needs of the larger black community.
Mitt not re-upping his S.C. and Fla. TV time
Although the members of u4prez don't really appear to be to passionate in their support for him, he is clearly nationally in the hunt.
2008 a watershed year.
2008 the Watershed year
The malls were filled the Saturday before Christmas.
Last minute shoppers in Cincinnati, bundled up against a howling wind, were now
sweating it out in long lines waiting to make their purchases. While
waiting in those lines, it was hard to miss the furrowed brows of mothers looking
at the cheap gifts along the lines. The smaller children were scampering
around in eager anticipation. But the look on Mom and Dad's faces told a
different story. The smiles were a bit quicker to fade this year, have
you noticed?
The scene should not have been unusual. If it were a week before
Christmas, it would have been the norm. And of course there is always a
mad dash at the last minute. The procrastinators always muck up the works those
last couple of days. The week before Christmas the malls were busy, but
not bustling. The parking lots were crowded, but not full. And perhaps
the most telling sign this Saturday was the type of shopping. People were
filling shopping carts. This wasn't the normal last minute, pick up something
quick for Aunt Mary. No this was real shopping. Done with a frenzy,
and done because fear had kept many of these shoppers home until the last
minute.
2008 will be the most important year in a generation, and perhaps many generations.
The first crisis,
economics.
The sub-prime lending collapse has brought out some old familiar terms. We hear the economic fundamentals are still strong, this is not true. We hear from the brilliant economic pundits that the Fed must “restore liquidity” to the markets. This is also misleading.
Liquidity by definition is the ease at which assets can be converted in to cash. But “Cash” is a loaded word. When the fed lowers interest rates, it isn’t creating liquidity, it is creating inflation. Yes, you can increase liquidity by pumping huge amounts of cash in to the economy. So what? The liquidated $500,000 home is now worth $250,000. The fact that we have papered over the loss makes no difference to the bottom line.
Somewhere along the line, even the experts forgot how to grow an economy. You increase cash (real purchasing power) by increase productivity. Not just flooding the economy with hundred dollar bills.
Even more shocking, I have heard more than one of these economic gurus talk about how the sub-prime collapse really doesn’t affect all that many people. I guess “many people” is a relative term these days. Let me tell you the specific people in the United States who this affects: every last one of us. If you have owned a home for ten years, bought it on good credit, and make your payments on time, the crises effects you. Do you have a job? The crisis affects you. Are you on unemployment, welfare, or social security? The crisis affects you.
This is so simple. If there are two hundred houses in your neighborhood, and ten of them are for sale, there is competition. This translates in to price pressure. When the economy is growing, the pressure is limited. With many buyers in the market, the pressure eases. When the economy is slowing, the pressure is more intense. Now add in the fact that one in ten of these home owners trying to sell has a loan with a rising interest rate. More downward pressure. In a matter of a few months, housing prices in your neighborhood go way down. When prices go down a few things happen. You have less equity, so you can’t borrow against your home. The value of your house goes down, so the tax base goes down, and local governments have to scramble to try and raise your taxes. People who were planning on building a home, now find it is much cheaper to buy an existing home, or stay where they are, this puts construction workers on unemployment, which raises the need for more taxes. The construction workers, stop buying cars, refrigerators and Ipods, which puts more people out of work.
In short, if this sub-prime issue isn’t fixed, we’ve got real problems.
The blame game. In the twenty-first century, the first thing we do when a crisis hits is to strike a political pose. Do we blame George Bush? Many Democrats have blamed Bush for the attacks of September 11th, so an economic crisis can be blamed on him as well. How about Bill Clinton? We can also blame congress, the federal reserve system, or governors. We can blame the economic pundits on television, the liberal media, the corporate media.
But this won’t fly will it? When it gets right down to it, we all know who is to blame. We are. We, who had to have granite counter tops in our kitchens. We who just had to have a bigger house to entertain in. We who bought a Lexus, when we would have gotten the exact same utility out of a Chevrolet.
So how do we fix it?
Instead of having the wizards at the fed pump fiat currency in to the economy let’s fix it the old way, by increasing productivity. If there is one thing the government does well, it creates laws. These laws aimed at regulating business fall on small business the hardest. Yet small businesses employ most people. Most of these regulations provide little or no benefit or relief to the average American. Yet they cost the average American thousands of dollars per year in pay. Particular attention should be paid to regulations that are a heavy financial burden, and sap productivity.
We should also fix the spiraling cost of health care. Everyone knows what the problem is, and everyone is afraid to say it, ok I’ll say it. We need to stop the lawyers and bureaucrats from skimming off the top. The lawyers do it with ridiculous law suites, the bureaucrats do it by forcing health care providers to spend billions of dollars complying with a literal mountain of paper work. An exemption should be created for any drug that is approved by the FDA. The paper work mountain should be drastically reduced, and oversight budget and penalties for fraud, drastically increased.
These few little things will stimulate the economy and productivity. If we’re going to paper over a problem with more cash, we should at least insist the cash be real, and not just printed.
Planning for the
worst case scenario.
If things do go terribly awry in 2008 the government can still borrow money. The debt is a towering 9.2 trillion dollars, but with a Gross Domestic Product at just over 13 trillion, we are still viewed as credit worthy. But it is getting close. A severe recession or economic depression would lower that GDP at the same time pressure is put on to increase the debt. Our public debt is currently about 65% of GDP. Japan, by contrast has a public debt that is nearly 200% of GDP. As our debt starts to spiral towards 100% to 150% of GDP, the cost of continued borrowing sky-rockets. A cut of government spending immediately in the range of 15% to 20% would go a long way towards softening the blow of a severe economic downturn.
The second crisis:
Should a severe recession turn in to an economic depression we will no doubt witness social unrest that will make the sixties look like a tea party. The broad middle class, who have paid so much in to the social safety net over the last fifty years, will wonder where that net has gone now that they need it. The first casualty will be the illegal immigrants, but the legal immigrants will be a close second. The pressure put on politicians to deport all non-citizens will be too much to bear. The bad news is, this will work. The illegal immigrants will be quickly shuttled out of the country, freeing up a few million jobs, and unemployment will go down. When businesses have to start paying higher wages to citizens, and the associated cost of compliance is factored in, prices will go up. The jury is still out on whether or not this will be good. All things considered, inflation is generally better than deflation. With inflation your dollar of course doesn’t go as far. With deflation, you don’t have any dollars. The jobs created by a mass exodus of low skilled, low wage immigrant workers, won’t necessarily help the economy become more productive. They will stop the bleeding of government debt by lowering the number of people on relief. The entire illegal immigrant issue is riddled with complexities. The rule of law, the damage done to the tax base by the underground economy, and the potential for violence to erupt when the government tries to give the boot to four or five million people all will need to be considered thoughtfully.
The social unrest will ultimately turn not on racial or ethnic status, but socio-economic status. Those that have been on the dole for years, or generations will be attacked politically. If the well runs dry, those that have paid to fill that well for so many years will demand that those receiving public aid are worthy of that support. How far this will go is anyone’s guess.
Other issues to watch
in 2008.
The United States has always been a nation prone to short bouts of hysteria. From the Salem witch trials, to prohibition and now to Global Warming. Every day it seems another scientific head pops up and says, “Wait a minute, this may not be right.” Gore and his supporters in the media have played a very dangerous game with this issue and a backlash could spell disaster for the environmental movement. Pollution is still a bad thing last we checked. If C02 is proven not to be the main factor in global warming, who will listen when a real environmental crisis hits?
The Middle East may finally reach the point of meltdown. While the insurgency in Iraq appears to be softening, we still have a few big problems to contend with. Unrest in Pakistan is almost certain to grow, and spread. The intelligence on Iran and the bomb have become comical. In Iraq Bush was roundly criticized for putting too much stock in reports of weapons of mass destruction. In Iraq, a single report declares that the threat has largely been overplayed, and Bush is criticized for not believing it. Errors on the side of safety have always been considered prudent. Today, intelligence is used as a political tool by both sides. Unless the more intelligent members of congress step up, we are in for a rough ride. Perhaps the most unsettling bit of news in the world over the last few weeks has involved Israel. Two articles caught my eye. The first was about younger Jews leaving Israel. The second was about a fairly large slow down in immigration to Israel. While some may applaud these developments, they are not looking at the big picture. The government of Israel may be forced in to a dark corner. If the citizens are so fed up with the violence that they are leaving, there is not much reason for restraint. This will get ugly for everyone involved. The only hope may be that everyone is just tired of fighting. I spent a week in Los Angeles over the summer. I’m not one for driving in slow traffic, so I hired a car and driver. My driver was a former Israeli soldier who had decided to leave for America. When I ask him why, he said he was just tired of all the fighting. He told me that the Palestinians he knew felt the same way. They just wanted to be left alone to live their lives. Whether this evolves to a much needed peace in the region, or finally pushes the radicals on both sides in to the big showdown remains to be seen.
Oil prices will start to come back down. The price of a gallon of gas is going to push the Democrats to open up Anwar, and begin more drilling in the Gulf of Mexico. Other exploration across the globe is starting to bear fruit, and this crash is going to be monumental. 2008 may be a bit early, but by the end of 2009 oil will be well below $50 per barrel. If you factor in a slowing economy, we could see an oil price crash that costs some of the speculators billions. It may be a small stretch but I wouldn’t be surprised to see oil at $25 a barrel for a short time.
The consumer driven economy is going to slow down. If the economy starts to slow seriously, a lot of people are going to realize that much of the money they’ve spent over the last ten years has been wasted on things they really didn’t need. Five dollar cups of coffee and five hundred dollar game systems will go first. Fifty thousand dollar cars will be a close second.
We close 2007 at a cross road in all of our lives. If we come through the sub-prime crisis the way we did the savings and loan mess, we may be in for the longest ride of prosperity the world has ever witnessed. The information revolution still has a long way to go and productivity increases could become astronomical. Even small businesses are starting to run their operations much more efficiently. If the government frees up the entrepreneurs and small businesses even just a little, we could be in for a great ride. But this is a long shot. Politicians like to create legislation, all laws and regulations have price to be paid. For thirty years now we’ve overcome that cost with increases in productivity tied directly to the microchip and the software the runs them. If we elect sober, forward thinking people in 2008, the world will be a much better place. If we elect leaders who put the economy first, who think long term about the debt, business regulation, and the infrastructure that makes it possible, all on the planet will see a healthy rise in their standard of living. I’m not holding my breath.
You have to be a politician
A small off-hand quote by Ron Paul may have made his bid for the white house a bit more difficult. When Paul quoted Sinclair Lewis, 'When fascism comes to this country, it will be wrapped in the flag, carrying a cross.' He may have inadvertently alienated a large base of the Republican party, and a smaller, but important independent group.
This is a perfect example of why long-shots tend to be, well, long-shots. Dr. Paul was doing quite well raising money on a libertarian message that appealed to both Republicans and Democrats. He showed great character by not changing his positions with the polls, and speaking directly to the voters. So why bring religion in to it? Especially with a quote that could (and will be) used by same to paint him as anti-Christian? Ron Paul is certainly not against Christianity or any other organized religion. No, this is not a sign of religious intolerance, it is a sign of poor campaigning.
Ardent supporters will say the this is the essence of Ron Paul. He is not a politician, that is why he is so appealing. While not being a politician may be a great character trait, it isn't going to help you win political elections. One need not glad hand every person he meets, like a Bill Clinton, but he should be politically savvy enough to avoid stepping in the quicksand. All of the candidates will make mistakes. The real politicians will generally avoid making mistakes that alienate a large block of their party. It really is as simple as this, if you're going to run for political office, you have to be a politician. During a campaign, you must bite your tongue from time to time, and you'll need to be vague on some issues.
We see a similar fault in Fred Thompson's campaign. Check out this piece from Roger Simon at the politico.com .
Both of these guys are struggling with the same problem, they simply don't want to be politicians. Sadly for their supporters, politicians win elections.
The internet and the speed and breadth at which information can reach the masses has certainly given a boost to long shot candidates, and made races tighter. More available information allows voters more of an opportunity to identify with a specific candidate. This wealth of information gives the supporter the impression that he has found the perfect candidate. This "custom fit" candidate then enjoys ardent support.
But if it is easier to build a strong base, it is just as easy to lose broad based support. Two percent of the voters supporting your campaign fanatically is a great starting point, but it isn't enough.
So what is this new paradigm for presidential campaigning?
The old way was the Nixonian, run as hard to the right as you can during the primaries, and the run back to the middle during the election. With explosion of information and the volatility in the shortened primary season the new paradigm is this: In the early (the earlier the better) stages of the primary, stick to your positions on a few issues to build your strong base. Then expand to gobble up the majority within your party as it unfolds. This has never been more clear (or easier to do) than it should have been this election cycle. Especially for Ron Paul. Once he saw the masses in the Republican party going to Huckabee, he simply had to co-opt Huckabee's rhetoric to appeal to the social conservatives. "But Ron Paul is a libertarian Republican" you say. "How can he all of a sudden become a Christian social conservative?"
Excellent question. The candidate (Ron Paul in this case) needs to do the heavy lifting of digging beneath the surface of the wants and desires of the Christian conservative. What are the primary issues, that drive them to support Huckabee? Is it the securalizing of Christmas? Then come out in support of communities putting up Christmas trees, and nativity scenes. Is it gay marriage? Then build a platform that allows for civil unions but doesn't include the word "marriage". The way to expand your support to the broader base need not entail a sacrificing of a candidate's core beliefs. But it does require the candidate to look within himself and see where he and the block of voters agree. Then put that position at the top of the agenda to grab that support.
The web paradigm, Fred Thompson and Joe Biden.
I put these two candidates together because the both face the same problem, but for perhaps different reasons. Thompson doesn't like the glad handing and chicken dinners. He has been called lazy, which I think is just lazy journalism. The cold hard fact is that some people just don't like pressing the flesh. A small town southerner like Fred Thompson, is perhaps the least likely person to desire wandering down main street from coffee shop to coffee shop making small talk with people he has never met. The end result is that Thompson hasn't been able to get much of a message out. Biden on the other hand is having the same problem for different reasons. If we look at the Democratic party campaign right now one thing should be crystal clear, the top of the heap is built on a huge house of cards. Hillary Clinton has performed just atrociusly in the debates, many in her own party wonder if she can win a national election and the only place to go would appear to be down. Barack Obama does have an experience problem. There is no other way to look at it. He gives a great speech, he is clearly intelligent, and he is a likable guy. But this like of experience is more than just a bullseye for his opponents to throw darts towards. It is a real problem. When he gets in to one on one debates with the Republican nominee he's going to lack policy and leadership experience, which help him formulate answers and positions on the fly. The guy lurking in the shadows is John Edwards, and that plastic personality is not going to fly when it's front and center. Joe Biden should be licking his chops. He has years of experience, he has taken moderate positions on some issues, and his baggage really isn't all that bad. But he can't get any face time.
Enter politics 2.0.
If both of these candidates would embrace the new technologies available to them, they could gain a big bounce within weeks.
Here is what I would suggest.
Spend some of the campaign war chest driving potential supporters to your website. Spend at least twelve hours a day, three days a week, on that website. Answer questions with real time chat, respond to e-mails personally, and have a phone sitting right next to you. When an e-mail comes, pick up the damn phone and call the person. Chat for a few minutes, try to address the issue, and offer to follow up. You'll have a sure thing supporter, and in most cases, an instant word-of-mouth die hard supporter. Your campaign staff can categorize the questions and you may answer a few hundred with a single response. When you make that response, again, personalize it.
Start your response with, "We've gotten this question from Mary Smith in Idaho, John Jones in New York city, Joe Blow from Birmingham and a few more of you".
The next step is to work with the bloggers. Scour technorati and digg and see what the bloggers are saying, then respond directly to the blog. Addressing just ten blogs a day, two or three days a week can get your message out to hundreds of thousands of interested voters.
Let me summarize a bit. As I've said, to win a political campaign, you need to be a politician. But it's 2007, and there is more than one way to politic.
Now go to U4prez and start your campaign. And Fred, Joe, Ron or anyone else trying to increase exposure, call me and I'll set up an on-line QnA for you on the site, and you can start broadening your base.
The messy election of 2008.
The Democrats don't have it much better. Hillary Clinton's star is fading fast. She performs terribly in debates, and she can't answer simple position questions without wetting her finger and holding it up. But her biggest problem may be she hasn't clearly created a case of what she would do as president. Even her most ardent supporters have no idea what her direction would be for the country. Barack Obama has Oprah's support, which is worth a lot. He is a great speech maker, and he does step out of the mold and take a chance now and again ("I would talk to the Iranians.").
If Obama had a bit more experience, he would have a more measurable track record, and would probably be running away with the nomination. But his unknowns are hurting him.
Some of his exasperated supporters are wrongly assuming a black man can't get elected in the United States yet. This is complete bullshit. Colin Powell would have won. He enjoyed wide spread support, Obama, at this point, doesn't.
John Edwards has exhibited a thorough knowledge of the issues. He has some decent ideas, if you're a Democrat, a track record that can be checked, and he's got more experience than Barack Obama. He also comes across as a bit of a flake. And sometimes, it's laughable.
The Democrats also have Joe Biden, Christopher Dodd, and Bill Richardson. All decent men, with leadership experience, solid Democratic ideals, years of experience, an internal network that would allow them to build effective cabinets, and they are likable. None of them has a chance.
Why? The Democratic party has come full circle. FDR was able to unify the party around a few core issues. The biggest of which was building a basic safety net for the average working American. The Democratic party today is so factionalized, that the nominee with a long track record, and broad appeal, can't possibly win. You have to pick three or four factions, go hard after them, and hope everyone else goes along for the ride.
The Republicans on the other hand have a bit too much "diversity" in their candidates. This is both good and bad. If you can't find a Republican you support, you're just not looking hard enough. On the other hand, they are so drastically different, it's going to be difficult to build a broad support base once the nomination has been secured.
What a mess!
So what's the lesson? The party leaders are going to have to make a choice. They should pick no more than two or three candidates, and then thrown as much support behind them as possible. This will allow the nominee to shore up a base, and give a few front runners much more exposure.
The big winners in 2008 may be those states that didn't push their primaries up so early in the process. One thing is for sure, Iowa and New Hampshire have never been so un-important in an election. South Carolina? perhaps a bit more, but Florida, Ohio, California, and some of the other big states in the middle may hold the cards this time out. And who knows, one party may actually go down to the wire in '08.
So what's with this Huckabee guy?
And now the economy seems to be teetering on the brink of a possible recession. While many of the doom sayers like the New York Times have who are predicting a sever recession or even another depression are way off base, a mild or even moderate recession is surely possible. The Sub Prime "crisis" from all available information appears to be over a sum of about 600 billion dollars. That's not chump change, but in a fourteen trillion dollars, it's not going to have a huge impact. Most of the stock market issues, and slow downs in the economy can be attributed to fear, as much as the downturn in the sub prime market. That being said, a softening of the economy is quite possible over the next several months. Mike Huckabee has a track record of supporting a fairly broad social safety net. This is clearly attracting supporters at this time. If the economy continues to be suspect, Huckabee has a pretty good chance of winning the nomination. If we head in to recession, Huckabee probably gains support.
How would a recession effect the Democrats? Hillary's already faltering campaign would come to a screeching halt. We must be honest here, most of her support is on the social issues. Will she be trusted to handle a weakening or recessed economy? The picture is just as bleak for Barak Obama. While he matches up better against Republicans than Hillary, his inexperience would cost him votes. So who does a suspect economy help on the Democrats side? John Edwards of course. He has name recognition thanks to the last presidential election, and he's been around awhile to have gained some experience in the public's eye.
The best thing about the 2008 election?
We're two months from the first primary, and the races are tightening among several candidates. At least it will be interesting.