Tag: USA

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I was right, pretty-much-right and wrong all at once!

The girl’s got spunk. Back on the 20th of Feb, I predicted that while Hillary Clinton would win the popular vote in Ohio and Texas, she would barely win in the pledged delegates from those states. On that basis, I further predicted that Clinton would be written off by the 10th of March, even if she hadn’t conceded yet.

As evidence that you should always quit while you’re ahead, I was right on the first prediction, pretty-much-right on the second and, it would seem, not even close to being right on the third. Clinton won the popular vote in both states (1.46 million vs. 1.36 in Texas, 1.21 vs. 0.98 in Ohio). In the pledged-delegate counts, Clinton currently leads 92-91 in Texas (10 still too close to call) and 74-65 in Ohio (2 still too close to call). My prediction was bang on the money in Texas, but arguably a bit wide of the mark in Ohio. But when it comes to considering the on-going Clinton campaign, nobody is talking about Howard Dean tapping Clinton on the shoulder for a quiet chat now; all talk is about Pennsylvania in six weeks’ time.

That is a remarkable story and not because of the 3am telephone call or Obama’s views on NAFTA (although those certainly helped Clinton), but because of the successful lowering of expectations that the Clinton campaign managed to bring about. Immediately after Wisconsin and Hawaii, all talk was that Clinton needed to win, and win big, in both Texas and Ohio in order to go on. A week ago the talk was that she could justify going on if she won with a wide margin in at least one of them. In the day or two before, the word was that she would push on if she at least one the popular vote in one of the two. That lowering of expectations meant that when she won both popular votes by a solid margin and both delegate counts (albeit by small margins), it looks like a blow-out for her and gives the impression of renewed momentum.

My original observation, that Barack Obama has been in front since day one, still holds true. Using the data at Real Clear Politics, the running totals for pledged delegates have been:

Date Barack Obama: running total Barack Obama: share of pledged delegates Hillary Clinton: running total
3 Jan (IA) 16 51.6% 15
8 Jan (NH) 25 51.0% 24
19 Jan (NV) 38 51.4% 36
26 Jan (SC) 63 56.8% 48
5 Feb (Super Tuesday) 906 50.8% 876
9 Feb (LA, NE, WA, Virgin Is.) 1012 52.1% 931
10 Feb (ME) 1027 52.2% 940
12 Feb (DC, MD, VA, Dem.s Abroad) 1137 53.2% 1001
19 Feb (HI, WI) 1193 53.5% 1038
04 Mar (OH, RI, TX, VT) 1366 52.8% 1222

obama-ahead-08-03-06.jpg

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My my …

The Obama camp must be pissed at this:

March 2 (Bloomberg) — Florida Governor Charlie Crist said he’d support a repeat of the Democratic presidential primary so the state’s delegates can be counted at the party’s national convention.

Democratic National Committee Chairman Howard Dean said he’s open to the possibility. Primary elections are paid for by a state’s taxpayers, so the offer from Crist, a Republican, is “very helpful” because money is an issue, Dean said.

“We’re very willing to listen to the people of Florida,” Dean said on CNN’s “Late Edition” program today.

The Democratic Party stripped Michigan and Florida of their delegates to the convention as punishment for holding votes before the sanctioned date of Feb. 5. House Speaker Nancy Pelosi, head of the Democratic National Convention, said last month that delegates from those states shouldn’t decide the nomination.

New York Senator Clinton beat Illinois Senator Barack Obama in the Florida contest Jan. 29, though neither campaigned there in accordance with the party’s decision. Clinton won in Michigan after her rivals withdrew from the ballot.

Clinton said Jan. 25 that delegates from Florida and Michigan should be seated at the Democratic National Convention in August.

Dean said the dispute over seating delegates is the fault party leaders, not Florida voters.

“If they would like to fix that problem so that we can seat Florida without any problems, of course we would like to seat Florida,” he said.

Crist said, “I think it’s very important though that those delegates are seated.

“I’m hopeful that the Democratic National Committee comes to the conclusion it’s the right thing to do,” he said on CNN today.

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Two weeks to go

Continuing on my theme of predicting that the winner among the pledged delegates will win the Democratic Party’s nomination because the super delegates will (probably) flock to the leader among pledged delegates in order to build the appearance of unanimity and avoid a floor fight at the convention (see here and here), I’ve updated my table. I’m now using the data from Real Clear Politics for no particular reason beyond ease of extraction.

Date Barack Obama: running total Barack Obama: share of pledged delegates Hillary Clinton: running total
3 Jan (IA) 16 51.6% 15
8 Jan (NH) 25 51.0% 24
19 Jan (NV) 38 51.4% 36
26 Jan (SC) 63 56.8% 48
5 Feb (Super Tuesday) 906 50.8% 876
9 Feb (LA, NE, WA, Virgin Is.) 1012 52.1% 931
10 Feb (ME) 1027 52.2% 940
12 Feb (DC, MD, VA) 1134 53.2% 996
19 Feb (HI, WI) 1185 53.6% 1024

obama-ahead-08-02-20.jpg

The RCP data still include estimates and don’t include 56 delegates that have nominally already been allocated (26 are with Edwards, 30 RCP aren’t willing to estimate one way or the other, but since 10 of those 30 are in Hawaii, it seems safe to say that they’ll break for Obama overall). For the sake of simplicity, let’s assume that the 56 break down as 30 to Obama and 26 to Clinton (that’s 53.5% of them to Obama). That gives us 1215 for Obama and 1050 to Clinton to-date.

There are 988 pledged delegates to go (giving 3253 in total). To win the pledged delegates race, a candidate needs 1627. That means that Obama only needs 412, or 41.7%, of the remaining 988 to-be-pledged delegates. Clinton needs 577, or 58.4%, of the remainder.

As an indication of how tough that will be, Clinton’s best vote performance so far was 57% in New York. She has only managed to break 55% of delegates pledged in 9 out of 37 primaries/caucuses so far and that’s including American Samoa that only had three delegates to give. If she is going to do it, her wins in Texas (193 to-be-pledged delegates) and Ohio (141) will need to be huge. I just can’t see it happening.

The polls do have Clinton up with 50.2% vs. 42.6% in Texas and 52.7% vs. 38.0% in Ohio on average. That’s a pretty big undecided gap, but I can’t see it all breaking for Clinton given the apparent movement towards Obama in the more recent polls. By comparison, the betting markets at InTrade put Obama at a 68% chance of winning in Texas and a 49% chance of winning in Ohio. I suspect that the betting market is a little overly pro-Obama, just as it was in the lead-up to New Hampshire, but just like in New Hampshire, I think that although Hillary Clinton will win the headline vote, she’ll barely win in the delegates pledged.

So, my prediction: Come the 5th of March, Obama will still be ahead in pledged delegates and will probably still be ahead after adding in the ridiculously apportioned super-delegates by the Main Stream Media estimates. Look for it to be all over bar the shouting in two weeks.

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Paul Krugman: Hanrahan of the Econ-Blogosphere

I’ve got a lot of time for Paul Krugman. People just love to hate the guy, or at least dismiss him as a crank and wonder what he’s going to do when Mr. Bush moves back to Texas, but the man was – for years! – practically the lone beacon of criticism of the Whitehouse in a country that seems to want to beatify its presidents. You can debate the good and bad points of the W. Bush presidency all you like, but the fact remains that America is a country that doesn’t like dissing their sitting president. It seems to make them feel dirty or “unAmerican” or something.  Try asking the Poms to lay off their P.M. for a week.

Anyway, this latest piece by Prof. Krugman got me thinking:

But the plunge in consumer confidence in recent weeks is pretty startling. The chart below shows the University of Michigan index; consumer confidence is now lower than it ever was during the 2001 recession and aftermath, and close to its worst levels during the early 90s, when the unemployment rate went well above 7 percent.

Bit by bit, the evidence is mounting that the wheels are coming off this economy.

I don’t want to dispute the facts of the brief post, just the sentiment. The “wheels are coming off”? Come on. The U.S. is probably entering, if it hasn’t already entered, a recession. That is not the wheels coming off the economy. That is a perfectly normal phenomenon and Professor Krugman knows it. It’s also arguably a necessary phenomenon and I’d be stunned if Professor Krugman didn’t know those arguments. If you want an example of an economy with the wheels off, look at Zimbabwe. Now that, to mix our tired metaphors, is a train wreck.

All of which reminded me of a famous (in Australia, anyway) poem by Patrick Hartigan (1878-1952) writing under the pseudonym of John O’Brien:

Said Hanrahan

“We’ll all be rooned,” said Hanrahan,
In accents most forlorn,
Outside the church, ere Mass began,
One frosty Sunday morn.

The congregation stood about,
Coat-collars to the ears,
And talked of stock, and crops, and drought,
As it had done for years.

“It’s looking crook,” said Daniel Croke;
“Bedad, it’s cruke, me lad,
For never since the banks went broke
Has seasons been so bad.”

“It’s dry, all right,” said young O’Neil,
With which astute remark
He squatted down upon his heel
And chewed a piece of bark.

And so around the chorus ran
“It’s keepin’ dry, no doubt.”
“We’ll all be rooned,” said Hanrahan,
“Before the year is out.”

“The crops are done; ye’ll have your work
To save one bag of grain;
From here way out to Back-o’-Bourke
They’re singin’ out for rain.

“They’re singin’ out for rain,” he said,
“And all the tanks are dry.”
The congregation scratched its head,
And gazed around the sky.

“There won’t be grass, in any case,
Enough to feed an ass;
There’s not a blade on Casey’s place
As I came down to Mass.”

“If rain don’t come this month,” said Dan,
And cleared his throat to speak —
“We’ll all be rooned,” said Hanrahan,
“If rain don’t come this week.”

A heavy silence seemed to steal
On all at this remark;
And each man squatted on his heel,
And chewed a piece of bark.

“We want an inch of rain, we do,”
O’Neil observed at last;
But Croke “maintained” we wanted two
To put the danger past.

“If we don’t get three inches, man,
Or four to break this drought,
We’ll all be rooned,” said Hanrahan,
“Before the year is out.”

In God’s good time down came the rain;
And all the afternoon
On iron roof and window-pane
It drummed a homely tune.

And through the night it pattered still,
And lightsome, gladsome elves
On dripping spout and window-sill
Kept talking to themselves.

It pelted, pelted all day long,
A-singing at its work,
Till every heart took up the song
Way out to Back-o’-Bourke.

And every creek a banker ran,
And dams filled overtop;
“We’ll all be rooned,” said Hanrahan,
“If this rain doesn’t stop.”

And stop it did, in God’s good time;
And spring came in to fold
A mantle o’er the hills sublime
Of green and pink and gold.

And days went by on dancing feet,
With harvest-hopes immense,
And laughing eyes beheld the wheat
Nid-nodding o’er the fence.

And, oh, the smiles on every face,
As happy lad and lass
Through grass knee-deep on Casey’s place
Went riding down to Mass.

While round the church in clothes genteel
Discoursed the men of mark,
And each man squatted on his heel,
And chewed his piece of bark.

“There’ll be bush-fires for sure, me man,
There will, without a doubt;
We’ll all be rooned,” said Hanrahan,
“Before the year is out.”

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Why is the US Fed lowering interest rates?

Continuing on from my previous wondering about how panic-driven and effective current US (monetary) policy is, I notice these two posts from Paul Krugman …

Ben Bernanke has cut interest rates a lot since last summer. But can he make a difference? Or is he just, as the old line has it, pushing on a string?

Here’s the Fed funds target rate (red line) — which is what the Fed actually controls — versus the interest rate on Baa corporate bonds (blue line), which is probably a better guide to what matters for actual business spending.

It’s pretty grim. Basically, deteriorating credit conditions have offset everything the Fed has done. Doubleplus ungood.

INSERT DESCRIPTION

… and Brad DeLong …

Further cuts in the federal funds rate are on the way. Ben Bernanke is talking about how we are in a slow-moving financial crisis of DeLong Type II: one in which large financial institutions are insolvent–“pressure on bank balance sheets”–and in which lower short-term interest rates and a steeper yield curve are a way of providing institutions with the life jackets they need to paddle to shore.

Larry Meyers has pointed out that the BBB yield is no lower than it was in July–that all the easing has had no effect on the cost of capital that the financial markets feed to the “real economy,” and hence that Fed policy today is no more stimulative than it was last summer.

I’m more inclined to agree with Brad’s assessment than Paul’s implicit prediction of gloom, although it depends on what you think the Fed should be looking at.  Paul is clearly hoping for a decrease in long-term rates so-as to stimulate the real economy, while Brad is simply noting that steeper yield curves, manifested here through a drop in base rates and no movement in longer-term paper, are pumping up banks’ profit flows, which will help them deal with the hideous losses from the sub-prime mess, the monoline insurer implosion and all the other nasties out there.

This seems like pretty clear “Bernanke put” behaviour to me.  The banks need the short-term increase in profit flows in order to stay solvent in the medium-term.  Whether Mr Bernanke is pushing down the base rate because the banks can’t lift the yields on long-term debt or because he doesn’t want them to (since that would hit the real economy) is a moot point.

This doesn’t change the fact that Bernanke is slopping out the good times to save the industry from its own mistakes.  It’s probably safe to say that there’ll be no more knuckles rapped (except maybe those of the ratings agencies), so the real question is whether they’ll be allowed to make the same mistakes again …

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Are we at the tipping point?

Just after the Maine primary, I wondered whether Obama may have been in front all along on the basis that he has been ahead all the way in pledged delegates and the super delegates will probably flock to the leader among pledged delegates in order to build the appearance of unanimity and avoid a floor fight at the convention.

We’ve just had the primaries in Virginia, Maryland and the District of Columbia and as expected, Barack Obama appears to have won all three by strong margins. Here are the updated table and graph, although the data for the 12th of February are still very much estimates:

Date Barack Obama: running total Barack Obama: share of pledged delegates Hillary Clinton: running total Hillary Clinton: share of pledged delegates
3 Jan (IA) 16 51.6% 15 48.4%
8 Jan (NH) 25 51.0% 24 49.0%
19 Jan (NV) 38 51.4% 36 48.6%
26 Jan (SC) 63 56.8% 48 43.2%
5 Feb (Super Tuesday) 903 50.1% 898 49.9%
9 Feb (LA, NE, WA, Virgin Is.) 998 51.4% 944 48.6%
10 Feb (ME) 1013 51.5% 953 48.5%
12 Feb (DC, MD, VA) 1111 52.5% 1006 47.5%

obama-ahead-08-02-13.jpg

And just as I predicted (well, Chris Bowers predicted and I agreed), we are starting to see twitchy movement in the super delegates. On the one hand, we have people calling for them to vote according to the will of their constituents. Ryan Avent is typical:

[I]t seems that Obama has an excellent chance at winning the District primary tomorrow. Should that be the case, it would be incredibly unfortunate if the District’s superdelegates essentially undid the wishes of the voting public … It is especially galling that D.C. Councilmembers, so familiar with the frustration of disenfranchisement, would contribute to the further erosion of the District’s electoral clout.

… and the super delegates are listening. Nancy Pelosi, Speaker of the House of Representatives and one of the most influential of currently-neutral super delegates, is “leaning” towards Obama:

A senior adviser to Nancy Pelosi, the Speaker of the House of Representatives, has suggested that she – along with other “party elders” – will step into the ring to end this extraordinary contest if it threatens Democratic hopes of winning back the White House or maintaining control over Congress. Ms Pelosi says that she is “torn” and that “the people will speak – that’s the beauty of a democracy,” before adding: “My focus is on re-electing a Democratic majority in the House of Representatives.”

Her voice would carry great authority among uncommitted super-delegates on Capitol Hill – and she is said to be “leaning” towards Mr Obama. “The party Establishment is not going to turn its back on a candidate who is generating this tremendous excitement and bringing all these new voters into the political process,” said a source close to her. Mr Obama’s team are pressing the same message, especially to members of Congress in districts where he has already won and who may not wish to alienate their core vote in an election year.

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Barack Obama: winning since day 1?

Via Matthew Ylesias, I came across this piece by Chris Bowers: “Now Is Not The Time To Count Super Delegates”

Right now, with the exception of NBC news, most news outlets are counting super delegates in their running delegate total for the Democratic nomination … From 1984 to 2004, the overwhelming majority of super delegates have cast their convention votes for the candidate who won more votes during the primary and caucus season. This was just as true for Mondale in 1984 as it was for Kerry in 2004. On every single occasion, large numbers of super delegates switched their early, public support for a candidate in favor of the candidate who had the most popular support from voters in Democratic primaries and participants in Democratic caucuses.

This is important stuff. For the 2008 nomination, the Democratic Party will have 3,253 pledged delegates at their August convention and 796 unpledged (or “super”) delegates. If the super-delegates break 90-10 for the winner among pledged delegates, a 1,627 vs. 1,626 split in the pledged delegates would end up as a 2,343 vs. 1,706 vote at the convention and so look like a blow-out for the winner.

Why do they do it? Because they want the public to see the Democratic Party lining up behind a clear candidate. A bitter, narrow fight on the convention floor looks like a divided party that cannot come together and lead, whereas a large win looks like momentum and inevitability. It’s also important to note that, by and large, the super-delegates are up for re-election themselves. From Wikipedia: “In 2008, the superdelegates include 221 members of the U.S. House of Representatives, 48 senators, including the District of Columbia’s two shadow senators, 31 state and territorial governors, 397 members of the Democratic National Committee, 23 distinguished party leaders, and 76 others.” Nobody wants to be running for re-election as the guy or girl who voted against their own presidential candidate.

Given all that, I thought I’d have a look at how Mr. Obama and Mrs. Clinton have being going in just the pledged delegates. The data below comes mostly from CNN. Some of the counts are still just estimates. Note that I am ignoring the delegates awarded to John Edwards.

 

Date Barack Obama: running total Barack Obama: fraction of pledged delegates Hillary Clinton: running total Hillary Clinton: fraction of pledged delegates
3 Jan 16 51.6% 15 48.4%
8 Jan 25 51.0% 24 49.0%
19 Jan 38 51.4% 36 48.6%
26 Jan 63 56.8% 48 43.2%
5 Feb 901 50.1% 899 49.9%
9 Feb 987 51.1% 944 48.9%
10 Feb 1002 51.3% 953 48.7%

obama-ahead.jpg

In the lead up to super (dooper) Tuesday on the 5th of February, Hillary Clinton had to temporarily stump up US$5 million of her own money. Following the Maine caucus on the 10th of February, she changed her campaign manager. On the 12th of February, the states of Maryland and Virginia and the District of Columbia will vote in their primaries and the Democrats Abroad will finish taking its votes (they started on the 5th of Feb). The polls have Obama clearly in front in Maryland (by 21 points on average) and Virginia (by 17 points on average). The betting markets estimate his chances of winning in Maryland and Virginia at 97.7% and 96.0% respectively. On the 19th of February, Hawaii (where Obama was born) will have its caucus and Wisconsin will have its primary.

It’s not until Texas, Rhode Island, Vermont and Ohio on the 4th of March that pundits are predicting the next win for Hillary, but there’s no guarantee that she’ll win enough to get in front.

Perhaps the “coming from behind” story is wrong. Perhaps Barack Obama has been in front every step of the way in 2008.

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Heading for parity?

Canadians celebrated when the Canadian dollar (“the loonie”) hit parity with the U.S. dollar in September last year. At the time, there was some speculation about whether the Australian dollar might follow suit. You’re going to see some more speculation over the next few days. Fundamentals aside, there are two main things that are serving to push the Australian dollar up: the resource boom in Australia and the spread in the interest rates between the two countries, and the latter of those is about to jump.

The US Federal Reserve cut interest rates by 75 basis points a week ago in a surprise, out-of-cycle move. Today they are expected to announce a further cut. Apparently the markets are predicting that there’s an 80% likelihood that it will be a further 50 basis point drop. Next week on the 5th of February, on the back of some truly disastrous inflation figures, the Reserve Bank of Australia will probably raise their rate by 25 basis points.  That would be an enormous, 150-point increase in the spread in the space of just two weeks.  On that basis, it’s not at all surprising that the markets are already pushing up the AUD.