WTF Happened? Pick Your Poison.

I can agree with the headline of this article, reprinted from the Huffington Post, but the majority of the analysis is plainly inconclusive (see comments). The Big Lesson is: Don’t believe everything you read in the media.

The Big Lesson From 2016 Is That Neither Party Has A Winning Vote Coalition

The Obama coalition turned out to be pretty weak, but Trump’s might be even weaker.

11/25/2016 03:49 pm ET

Donald Trump won the Electoral College by a 306-232 margin, but lost the popular vote by a more than 2 million votes (and still counting) ― more than any previous presidential winner ever has in a split decision. How this happened is a complex story, much more nuanced than most “here’s why Trump won” stories imply. [We don’t seek complexity, but clarity and accuracy.]

Almost all of those stories contain a piece of the puzzle, but in order to see the real story you need to consider all of the explanations combined. Neither party has much reason to celebrate the outcome of the 2016 election. Republicans have a demographics problem, and Democrats have a geography problem compounded by turnout issues. [Fair enough.]

At the state level, the 2016 vote patterns seem to show a sea of red states with blues isolated to the coasts plus Colorado, New Mexico, Minnesota and Illinois. Looking county-by-county, it becomes clear that the divide isn’t just coasts vs. flyover territory; it’s rural-urban. Pockets of blue in the major cities, college towns and a handful of majority-black areas in the South are evident in this view. TheNew York Times’ graphic below shows just how little actual land area went to Hillary Clinton at the county level: She won 15 percent of the land to Trump’s 85 percent.

 

Yet declaring the United States a country divided by population density overlooks several trends that are key to understanding Trump’s success. The urban-rural split is nothing new; perhaps it’s more exaggerated in 2016 than before, but we’ve known for a long time that rural areas are conservative and urban areas are liberal. But if we consider gradations ― not just dividing counties by which candidate a majority of voters selected, but shading by the proportion of Trump and Clinton voters in each county ― the story is far less clear.

If we can’t blame everything on the rural-urban divide, then what happened? There’s not one single reason why Clinton lost several states where majorities voted for President Barack Obama twice: there are several reasons. [Blogger’s Note: Of course there is more than one reason (i.e., variable) that explains this election outcome. The scientific question is what matters most. Again it is the enduring urban-rural divide and how these match up with the parties’ platforms. All these other explanations are anecdotal to this particular election, in other words, not part of a trend. The interesting new trend is the continued weakness of both party coalitions that has been unfolding over the past 25-40 years.]

These Purple States of America

A few, significant, subplots played out in the supposed Democratic “firewall” states of Pennsylvania, Michigan and Wisconsin, and the perennial battleground of Ohio. These states have been close recently, but in 2008 and 2012 Democrats were able to generate support among the rural working class to win over majorities of voters in the states.

But there was a sizable shift in 2016. It’s unclear how many people voted for Trump that had voted for Obama, but Trump did pull a larger percentage of the vote in many counties: more than Mitt Romney did in 2012. That could be in part different groups of voters turning out in 2016 as compared to 2012, but anecdotal stories and survey data reveal that there were some party switchers.

Turnout is part of the picture, though, particularly in Michigan and Wisconsin. AsHuffPost previously reported, turnout was down in Detroit’s Wayne County, Michigan and Milwaukee County, Wisconsin, in numbers large enough to swing the election in those states. Clinton received nearly 78,000 fewer votes in Wayne County than Obama did in 2012, and lost Michigan by under 12,000 votes. She underperformed Obama by 39,000 votes in Milwaukee County and lost Wisconsin by just over 27,000 votes.

Similar patterns of lower urban turnout were evident in Philadelphia and other cities in the Midwest. The numbers suggest these people didn’t vote for Trump: they just didn’t vote at all. And according to reports, the Clinton campaign didn’t make concerted efforts to get them to the polls. Many of these nonvoters were likely minorities who Democrats assumed would support the party in large numbers ― which they do, when they vote.

An additional subplot involves suburban areas and white women. Democrats hoped to make gains in these areas, particularly among typically-conservative women who might be turned off by Trump’s actions and rhetoric. That hope proved false. Nationally, suburban areas and white women voted for Trump in very similar proportions to their votes for Romney in 2012. Romney received 50 percent of the suburban vote, and Trump garnered 59 percent. Fifty-six percent of white women voted for Romney, and 52 percent supported Trump. [All exit poll data – see comments below.]

Nationally, as well as in the Rust Belt, Democrats lost support among the least educated groups. According to the exit polls, education didn’t matter much in 2012: Obama won college graduates by 2 points and non-college graduates by 4 points. Clinton won college graduates by 10 points and lost non-college graduates by 7 points. Relative to Obama’s totals, Clinton gained 2 points among college graduates and lost 7 points among non-college graduates.

The difference is even more stark among whites: Trump won white college graduates by 2 points, but he won white non-college graduates by 37 points. The racial breakdown isn’t provided in the 2012 results, but it’s safe to say there wasn’t that sharp of a divide among whites or there would have been a gap in the overall numbers. Among minorities, Clinton won college graduates by 50 points and non-college graduate by 56 points. Once you account for the educational divide, income doesn’t seem to make a difference in vote choice.

Yet despite all these trends that favored Trump, Clinton won the popular vote by a wider margin than several past presidents. Clinton cut the Republican advantage to around 5 points in the red state strongholds of Arizona and Georgia, and Texas dropped from a 16-point Republican advantage in 2012 to a 9 point win for Trump. California is still counting, but it looks like Clinton blew Trump out by nearly 30 points in the state ― substantially more than Obama’s 23-point win over Romney four years ago. [Duh. CA is an outlier in national politics these days.]

These results were likely driven by high support for Clinton among minority populations, particularly among Latinos and Hispanics in the Southwest. And although there’s some dispute over just how strongly that group supported Clinton, the most conservative estimates from the National Exit Polls indicate that Clinton won Latinos by 36 points. Other pre-election polls show even stronger Democratic leanings among the group.

Republicans also struggled with black voters. Trump’s 8 percent support is actually slightly more than Mitt Romney’s 6 percent in 2012, but slightly less than George W. Bush’s support among black voters in 2000 and 2004. Black turnout was slightly lower this year compared to 2012 as well, which helped states like Georgia stay red. An uptick in turnout among a group that so heavily favors Democrats has considerable potential to shift those states. [Hispanics, blacks, women, whites – these group identity variables are all driven by exit poll data, not reality.] 

The problem is that none of these states actually switched directions. Had Clinton won Arizona’s 11 electoral votes and Georgia’s 16 electoral votes, she still would have been short of the 270 mark, but it would have compensated for the losses in Michigan and Wisconsin, which combine for 26 electoral votes. But neither state appears as close to turning blue as some polls had indicated. So these gains meant nothing for the Electoral College, which is what really matters.

To state the obvious, as long as the Electoral College determines the winner, Democrats can’t rely on increasing support in already-blue states, and it seems that key red states aren’t ready to flip yet. The best strategy for 2020 will be to focus on the very narrow losses in the Rust Belt and win those voters back ― which probably means convincing them that Democrats are a better option for improving their economy than Republicans. Democrats clearly lost that battle this year. [That means a tough economic and social policy reversal for Democrats.]

Meanwhile Republicans will try to hold onto those gains and build their very fragile coalition that won the Electoral College. Whether it survives beyond 2016 is anyone’s guess. The Obama coalition didn’t outlast Obama, but the Trump coalition might not survive Trump.
………………..

A caution: most of the interpretations draw data from exit polls, which usually support the kind of personal narrative desired by media. In other words, the idea that our differences are driven by voter group characteristics is baked in the cake of exit polling. The dominant factor of geography and lifestyle choices is obscured by exit polls. Discount the exit poll inferences accordingly, but then what would journalists write about?

Taken at face value, the argument presented here merely outlines how the Obama era was a one-off and the same may hold true for the Trump regime. (Hillary Clinton could have won and that conclusion would still hold true, as confirmed by down ballot results.) But we have no real indication yet of Trump’s fate and reading the tea-leaves (“might not survive”) is a sign of wishful thinking, not objective analysis. I don’t expect much more from the inherent biases of the Huffington Post.

 

 

 

 

Debate? What Debate?

I can’t imagine a more sophomoric attempt at moderating a Presidential primary debate than what occurred last night under the direction of CNBC. Apparently there was no clear winner as much as an overwhelmingly clear loser: CNBC. One wonders when the media elites will address the real challenges and issues the American polity faces. I won’t hold my breath.

The last fiscally responsible adult we had in public service in Washington was Paul Volcker, and he was a Democrat. And elites wonder why the average American is fed up with national politics. Kudos to Cruz.

David Stockman eviscerates the pathetic performance in his blog reposted below:

The Fed’s elephantine $4.5 trillion balance sheet represents the greatest fiscal fraud ever conceived.

The fact is, the monetary madness in the Eccles Building is destroying free market capitalism by systematically and massively falsifying the prices of financial assets, and fueling a relentless, debilitating accumulation of debt throughout the warp and woof of the American economy and the rest of the world; and it’s simultaneously extinguishing political democracy by deeply subsidizing our crushing $19 trillion national debt.

Yet not one of three moderators during the entire two hour period asked a question about the elephant in the room.

The Debate: GOP Candidates Elevated, CNBC Eviscerated

by  • October 29, 2015

Well now. We actually got our money’s worth last night.

Almost with out exception the GOP candidates conveyed a compelling message that the state is not our savior, while the CNBC moderators spent the night fumbling with fantasy football and inanities about which vitamin supplements Ben Carson has used or endorsed.

But this was about more than tone. The interaction between the candidates and the CNBC moderators revealed the yawning gap between the bubble world at the intersection of Washington and Wall Street and the hard scrabble reality of economic stagnation and political alienation on main street America.

Yes, the CNBC moderators engaged in a deplorable display of gotcha journalism punctuated by a snarky self-righteousness that was downright offensive. John Harwood is surely secretly on the payroll of the Democratic National Committee and it was more than obvious why Becky Quick excels at serving tea to blathering old fools like Warren Buffett.

So they deserved the Cruz missile that came flying at them mid-way through the debate.

At that point the Senator from Texas had had enough, especially from Carl Quintanilla. The latter has spend years on CNBC commentating about the “market”, but wouldn’t know honest capitalism is if slapped him upside the head, and has apparently never meet a Washington intervention that he didn’t cheer on as something to help the stock averages go higher:

Let me say something at the outset. The questions that have been asked so far in this debate illustrate why the American people don’t trust the media. This is not a cage match. And if you look at the questions—Donald Trump, are you a comic book villain? Ben Carson, can you do math?… Marco Rubio, why don’t you resign? Jeb Bush, why have your numbers fallen? How about talking about substantive issues?”

Nor did the Texas Senator let up:

“Carl, I’m not finished yet. The contrast with the Democratic debate, where every thought and question from the media was ‘Which of you is more handsome and wise?”

As one pundit put it afterwards, “given the grievous injuries inflicted on Team CNBC”  by Cruz and the rest of the candidates, the only thing left to do was “to shoot the wounded”.

Actually, there is rather more. Last night was billed as a debate on domestic issues and the economy and CNBC is the communications medium of record about the daily comings and goings of the US economy and the financial markets at its center. Yet not one of three moderators during the entire two hour period asked a question about the elephant in the room.

They had to bring in from the sidelines the intrepid Rick Santelli to even get the Federal Reserve on the table. Its almost as if the CNBC commentators work on the set of the Truman Show and have no clue that it’s all make believe.

In the alternative, call this condition Bubble Blindness. It’s a contagious ideological disease that afflicts the entire corridor from Wall Street to Washington, and CNBC is the infected host that propagates it.

The fact is, the monetary madness in the Eccles Building is destroying free market capitalism by systematically and massively falsifying the prices of financial assets, and fueling a relentless, debilitating accumulation of debt throughout the warp and woof of the American economy and the rest of the world; and it’s simultaneously extinguishing political democracy by deeply subsidizing our crushing $19 trillion national debt.

The GOP politicians appropriately sputtered last night about the bipartisan beltway scam rammed through the House yesterday by Johnny Lawnchair, but they were given no opportunity by their clueless moderators to explore exactly why this kind of taxpayer betrayal happens over and over.

Well, there is a simple answer. The Fed’s elephantine $4.5 trillion balance sheet represents the greatest fiscal fraud ever conceived. Last year it paid the Treasury approximately $100 billion in absolutely phony profits scalped from its massive trove of Treasury debt and quasi-government GSE paper.

That is, over time Uncle Sam has purchased $4.5 trillion worth of real economic resources——in the form of goods, services, salaries and transfer payments——from the US economy, which were paid for with IOUs. These obligations to be redeemed in equivalent goods and services were eventually purchased by the Fed, but with merely fiat credits it conjured out of thin air.

And then the monetary charlatans behind the curtain at the Fed send back to the US treasury the coupons earned on these airballs, causing the politicians to think the national debt is no problem; and that they can buy aircraft carriers and GS-15 salaries indefinitely while booking a “profit” on their borrowings.

Folks, this is just plain madness. Back 1989 when the real median household income first hit its current level of about $54,000, this entire monetization scam would have been considered beyond the pale by even the inhabitants of the Eccles Building, and most certainly by everyone else in Washington——from the US Treasury to the Congressional budget committees to the summer interns in the Rayburn Building.

But after 25 years of central bank induced financialization of the US economy, there has developed a cult of the stock market and a Wall Street regime of relentless financial gambling in the guise of “investment”. Consequently, the massive aritificial inflation of financial asset values is not even recognized by CNBC and its fellow travelers in the main stream financial press—to say nothing of the gleeful punters who inhabit the casino.

But here’s the thing. How did the real median household income stagnant at $54,000 while the real value of the S&P 500 soared by nearly 4X? market cap of US debt and equity issues soared from 200% to 540% of GDP, and now weigh in a $93 trillion?

Real Median Household Income Vs. Inflation Adjusted S&P 500 - Click to enlarge

Likewise, how did the aggregate “market cap” of US debt and business equity soar from 200% to 540% of GDP when main street living standards were not rising at all? Could it be that something rotten and deformed has been injected into the very financial bloodstream of American capitalism—-something which the CNBC cheerleaders dare not acknowledge or even allow conservative politicians to explore in a public forum?

Total Marketable Securities and GDP - Click to enlarge

Worse still, this entire Fed-driven regime of Bubble Finance has inculcated in the casino and its media megaphones the insidious notion that the arms and agencies of government exist for one purpose above all others. Namely, to do “whatever it takes” to keep the bubble inflated and the stock market averages rising—–preferably every single day the market is open.

There was no more dramatic demonstration of that proposition than after the Wall Street meltdown in September 2008 when the as yet un-house broken GOP had had the courage to vote down TARP.

But when they were dragged back into the House chambers by Goldman Sachs and its plenipotentiaries in the US Treasury, the message was unmistakable. On one side of the CNBC screen was the House electronic voting board and on the other side was the second-by-second path of the S&P 500.  And delivering the voice-over narrative were the same clowns who could not even mention the Fed last night. The US Congress not dare to vote down TARP again, they fulminated.

It obviously didn’t. Yet right then and there the conservative opposition was broken, and the present statist regime of Bubble Finance was off to the races.

During the coming decade the nation will be battered and shattered by a monumental fiscal crisis and the bankruptcy of the bogus “trust funds” which now pay out upwards of $2 trillion per year to 70 million citizens. At length, the bearers of pitchforks and torches descending on Washington will surely ask how this all happened.

But they will not need to look much beyond last night’s debate for the answers. The nation’s fiscal process has been literally shutdown by the Fed and the Wall Street gamblers and media cheerleaders who insouciantly and relentlessly demand of Washington that it do “whatever it takes” to keep the bubble inflated.

As a result, we have had the absurdity of 82 months of ZIRP and a orgy of public debt monetization that has driven the weighted average cost of the Federal debt to a mere 1.75%.  And when a few courageous remnants of fiscal sanity like Senators Cruz and Rand Paul have had the courage to resist still another increase in the public debt ceiling, they have been treated as pariahs by Wall Street and the kind of snarky financial media types on display last night.

The fact is, the President has clear constitutional powers to prioritize spending in the absence of an increase in the debt ceiling. That is, he can pay the interest on the debt, keep the Veterans hospitals open, send out the social security checks and prioritize any other category of spending that he chooses from the current inflow of tax revenues, and for as long as it takes to legislate an honest fiscal retrenchment.

Needless to say, that would create howls of pain from the Federal vendors who wouldn’t get paid, the state and local governments which would have to wait for their grant payments and the Federal employees who would be put on furlough.

But that is not the reason that Mitch McConnell and Johnny Lawnchair have capitulated every time a debt ceiling crisis has reached the boiling point. That kind of action-forcing circumstance was managed by Washington innumerable times in the pre-Bubble Finance world, including upwards of a dozen times during my time in the Reagan White House.

But back then no one thought that Wall Street would have a hissy fit if the government shutdown for a few days or if the fiscal gravy train was temporarily put on hold; nor did politicians much care if it did.

My goodness. Paul Volcker had taught Wall Street a thing or two about the requisites of financial discipline in any event.

No, what is different now is that the establishment GOP politicians are petrified of a stock market collapse, and have been brow-beaten into the false belief that a government shutdown will create severe political costs.

Baloney. Even the totally botched affair in October 2013 created no lasting damage—-as attested to by the GOP sweep in the 2014 elections.

At the end of the day, all the hyperventilation about the political costs of a government shutdown or the forced prioritization of spending in the absence of a debt ceiling increase is pure Wall Street propaganda; and its an untruth amplified and repeated endlessly, loudly and often hysterically by its financial media handmaidens.

At least last night some GOP politicians gave it back to them good and hard.

Maybe there is some hope for release from the destructive pall of Bubble Finance, after all.

FREE Lunch!

IGWT-Kindle-Cover

Who said there’s no such thing as a FREE lunch?

FREE eBook download for *Two Days* only. This weekend, April 12&13, download a FREE copy of In God We Trust: A Novel of American Politics from Amazon.com (a $10 value):

Okay, so it won’t feed your belly, but maybe it’ll satisfy your soul…

Click here or the book cover to go to Amazon…

A chronicle of our times based on real events, In God We Trust is a story of political intrigue, religious and Freemason conspiracies, and the corruption of money. It’s the story of Dante Jefferson Washington, a young, black, religious conservative and Deputy Chief of Staff to South Carolina Senator Winston J. Sinclair. Dante’s ambitions for public service soon become entangled in the unholy alliance of money, politics, and religion that define our national political dysfunction. His journey echoes that of his Italian namesake in The Divine Comedy.

Dante pursues his Beatrice in a former college classmate, a beautiful immigrant medical student caught between her British Christian and Pakistani Muslim heritage. Their lives and those of their two closest friends are torn apart by the disaster of 9/11 and the war that follows.

——-

The author is a prize-winning political scientist and economist. The political narrative is informed by recent research into national partisan polarization that challenges and dispels some of the popular myths and ideological stereotypes promoted by both party extremes.

What is this book about?
On the plot level it’s about our current political dysfunction seen through the eyes of a “coming-of-age, loss of innocence” protagonist. It is also a mystery of conspiracies of Freemasons, religious orders, and backroom politics. On a timeless, philosophical level it’s about whether the social order should be derived from the laws of a higher power or from the laws established by man’s reason. Even if one rejects the idea of a higher power, the religions of the Book then reflect the wisdom of the ages, so the question is to what extent man’s enlightenment improves or supplants that wisdom of the ages. The answer is unclear and worth contemplating…

 

A Novel of American Politics

IGWT B1-tiny FB version

Today through Saturday (Nov. 26-30) the first book (Millennium) of my new novel on American politics, In God We Trust, is available as a ***FREE*** Kindle download. [Click on cover to go to Amazon page.]

The full book is also available in print and eBook for Kindle, iPad, Nook, and Android devices.

IGWT-tiny FB version

A chronicle of our times, In God We Trust is the story of Dante Jefferson Washington, a young, black, religious conservative seeking to make his mark on the Washington D.C. political stage. As Deputy Chief of Staff to South Carolina Senator Winston J. Sinclair, his lofty ambitions for public service soon become entangled in the web of partisan tribal conflict, religion, backroom conspiracies, and money that defines our national political dysfunction.

A social misfit because of his race and political ideals, Dante pursues his soul mate in a former college classmate, a beautiful immigrant medical student caught between her British Christian and Pakistani Muslim heritage. Their lives and those of their two closest friends are torn apart by the disaster of 9/11 and the war that follows.

What is this book about?

On the story/plot level it’s about our current political dysfunction seen through the eyes of a young “coming-of-age, loss of innocence” protagonist. It is also a mystery of conspiracies of Freemasons, religious orders, and backroom politics. At a timeless, philosophical level it’s about whether the foundation of social order should be derived from the laws of a higher power or from the laws established by man using reason. Even if one rejects the idea of a higher power, the religions of the Book then reflect the wisdom of the ages, so the question is to what extent man’s enlightenment improves or supplants that wisdom of the ages. The answer is unclear and worth contemplating…