US prosperity at stake in poll
I've been trying to second-guess the effect the outcome of the US presidential election will have on global stock markets.
Last Friday's improving employment data offered some clues. The number of jobs created by the US economy in October was well ahead of forecasts, but Wall Street declined sharply after the release of the report, discounting that the steady recovery in business activity could sway undecided voters towards President Barack Obama.
Although pollsters reckon the result was delicately balanced, the uptick in home prices and declining unemployment rate, on top of the president's vigilance and capable management during the recent storm emergency, won him wanted praise. Unfairly, Wall Street despises Obama. The president was elected two months after giant investment banker Lehman Brothers collapsed in September 2008; the upshot of almost two decades of overindulgence and irresponsibility in the financial industry.
The US economy (and the world economy, for that matter) was on the brink of plunging into a giant abyss and it was only the desperate intervention of Hank Paulsen (Secretary of the Treasury), Ben Bernanke (US Federal Reserve Governor) and Tim Geithner (New York Federal Reserve Governor) who persuaded president George Bush to use taxpayers' money to bail out the crumbling banking system, that rescued it from complete devastation. The turmoil, though, led to the promulgation of the "Dodd Frank" act in 2010 - sweeping legislation enacted to avert future crises and bail-outs in financial markets through improved oversight, risk evaluation and accounting. Although widely welcomed, the law also introduced stricter measures aimed at limiting trading and eradicating reckless speculation that many Wall Street insiders argued were unduly restrictive and overly retaliatory.
Admittedly, Obama is seldom at ease discussing business and his poor understanding of economic policy was critically exposed in the first of three organised debates with Republican candidate Mitt Romney. The president's dismal showing enhanced his opponent's approval ratings and, for the first time in the long run-up to the election, made him a serious contender for the White House.
Still in Obama's defence, he and Secretary of the Treasury Tim Geithner have stood firmly behind Bernanke's unconventional policy of quantitative easing and unwavering commitment to keep interest rates at historically low levels. Employment growth has been pedestrian and detractors continually attack the enormous cost to the treasury of creating a single job, but the turbulence in world markets was so severe it was irrational to expect a trouble-free and speedy recovery.
Finally, though, Bernanke's patience and resolve are starting to pay off. Banks have repaired their balance sheets and are beginning to lend money again. Access to mortgage finance at record low rates has checked the fall in property prices, shoring up construction and other associated industries.
The stock market has recovered from its depths in 2009, bolstering pension plans and lifting householders' net worth. Trying to alter course at this stage, as Romney is forcefully proposing, would set back the US economy for years.
Four years ago we were inspired by a young, brainy, educated family man with a strong sense of purpose and refreshing swagger who we all believed would restore America's flagging popularity after eight years suffering the rule of the intensely unpopular Bush.
Regrettably, though, like so many former admirers, we're still waiting for the Obama wow. Personally, I cannot recall a single speech that has sent shivers down my spine, nor can I recount any initiatives that permit me to define his presidency. He killed Osama bin Laden, but counter to that, he has failed to make even the slightest progress brokering a peace deal between Israel and the Palestinians and his premature withdrawals from Iraq and Afghanistan have left both countries in chaos.
His election crusade was pointed at Romney's flaws rather than on his own strengths, and for a man who once embodied hope and change, he has offered few insights of what might lie ahead if he is victorious. Not that I have any close affinity for Romney, even with his impressive credentials as CEO of Baine and governor of Massachusetts.
His vigorous crusade to bomb Iran, clobber Syria, brand China a currency manipulator and reduce taxes that would largely favour the rich has left me distrustful.
But my opinions count for nothing. Obama and Romney are running neck and neck. The election will be decided on the number of electoral votes each candidate accumulates. Every state is allocated a number of votes, roughly proportional to the size of its population, that are awarded to the contender with the majority of support. California is the biggest college with 55 electoral votes, followed by Texas with 38 and New York and Florida with 29 each. In total there are 538 votes. Traditionally the west and east coasts have leaned towards the Democrats while Middle America has favoured the Republicans. At present polls suggest Obama has a safe 201 votes to Romney's 191, but swing states like Ohio (18), Pennsylvania (20), Michigan (16) and North Carolina (15) could eventually influence the outcome.
Regardless of who wins, neither candidate has a chance of navigating a myriad of obstacles frustrating America's prosperity without bipartisan support. For everyone's sake, we can only pray both the victor and the vanquished set aside the schoolboy unpleasantries that underpinned their election campaigns and turn their minds doggedly to rebuilding brand America.