Tuesday, February 21, 2012

Obama Will Probably Win.


Presidents entering their term at the tail end of a recession are likely to win re-election. Obama was inaugurated January 2009, recession ended June 2009 (I don't care if he wants to claim credit for the ending of the recession or not, it ended shortly after his entering office is all that matters), he's been likely to win for the past three years.

I think you and most are paying far too much attention to Europe and Greece, particularly since the implicit assumption in your if this then that calculus, is all else remains equal. First I don't think the chain of events: Testicle squeeze, Greeks leave Euro, whole EU economy comes unraveled is a certainty. Sounds like you are reading too many of those economists you so disdain, or worse, reading too many politial commentators who get paid by the word, so they produce lots of words. Secondly, all else never remains equal. Then, how all of that impacts the US economy has a great deal of uncertainty surrounding it.

The economy has been improving for years, since June 2009 to be precise, employment is increasing, corporate profit growth is robust, monetary and fiscal policy remain very accomodative. And yes, the Republicans are going to nominate a weak candidate. I agree, they are pathetic lot. All of that bodes well for Obama.

The real contests will be the House and Senate. I'm not going to worry my pretty little head yet on how those contests go. My guess is the big Republican dollars, particularly independent groups controlled by Dick Armey and Karl Rove, will go towards House and Senate races. Since the Republicans won control in many states in the 2010 elections and 2010 was a resdistricting year, they have an advantage there.

All in all, a divided government, would be an excellent result. Both parties overreach when they have House, Senate and Presidency. In my opinion, the chances are better real solutions to our most pressing fiscal time bomb, Medicare, will occur with a divided government.




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