2008 Presidential Election Analysis

I believe that every human mind feels pleasure in doing good to another.

As I've watched the Presidential election debates and read pundits' comments about various candidates, I have been intrigued how similar the pundit's job is to that of investment managers.  In investments, it is surprise that initiates movement positive surprise positive movements, negative surprise negative movement.  Like the media pundits forecasting the political landscape, brokerage houses economists and analysts provide forecasts for the expected economic landscape.  The only useful information though is information everybody doesn't know. 

My educational and work background is in finance.  After college, I worked for the U.S. Treasury Department's Comptroller of the Currency as a National Bank Examiner.  Following that I worked in Nebraska for chronologically; a bank, a mutual insurance company, and then a bank holding company.  That seems like a former life now.  After 15 years, the uniform i.e. suit and tie, just never seemed to fit.  

I transitioned to 12 acres in Iowa near a public forest where living in a pickup camper I built a house in the southern Iowa timber and then lived off the grid for 7 years reading at night by lamp light in an beautiful cedar home I designed and built.  It was a case of the old adage: "You can take the boy off the farm, but you can't take the farm out of the boy."  I'm now a confirmed redneck with proud blue collar roots who for a time, transitioned to professional investment management. 

There are many analytical skills from that background that are useful in considering the likely winner of the 2008 Presidential Race.  What everybody knows is already reflected in current prices in the market, and in conventional expectations in the political arena.  In investments the "experts" are almost always wrong at major turning points, and I sense the same is true today in the political arena.  I sense there is a major shift underway in the current election that is being masked in a sea of conventional wisdom that is anything but wisdom.

I thought I would take an investors perspective and look at the current political race and attempt a reasonable forecast of who is likely to win the current presidential race prior to the first caucus, just to see if I've lost my touch.  Or, whether I still have the analytical skills to dust off the crystal ball, put my biases in the wastebasket of collective conventional wisdom and seek some lead indicators of who has the momentum, the organization, the integrity, believability and vision to win the 2008 Presidential Election. 

As I mentioned earlier, it is change that drives markets, and I expect change is the key determinate of accurate expectation about the current political race.  There are several major changes since the last election that I perceive are crucial to forecasting the current race's ultimate winner.  The first of these changes is the persistent and accelerating impact of the internet on all aspects of our lives.  The internet reaches all corners of the planet, and tirelessly garners greater and greater share of all markets: entertainment, news, communication, retail and wholesale trade, education, information, networking and of course politics. 

The second significant shift underway and undoubtedly symbiotically tied to the internet's explosive growth is the emergence of greater freedom and collapse of totalitarian regimes throughout the world.  Examples include the demise of the Soviet Union and greater economic freedoms and private ownership in China.  However, contrasting this has been the rise in globalism and the sinister creep of fear leading to willingness to forego personal liberty in a misguided search for greater safety.  I sense that the winner of this election will determine which trend is amplified.

It is important to understand that everyone brings biases to any analysis.  A political pundit is biased to support the groups which have historically been his supporters.  Undoubtedly, my analysis will also be biased, but I am going to make every effort to avoid reaching a premature conclusion and simply present evidence from which you can draw your own conclusions.  But, rest assured in advance I may fail miserably in this effort to avoid bias.  That is why I am choosing to avoid early conclusion and merely looking at evidence. 

Regardless of my conclusion I challenge you to consider the evidence, and reach your own.  Click on the links I've provided, leave those you've found in your comments.  I personally ask you not agree with me, but give me your best reasoned analysis.  Challenge any bias I display.  Criticize my analysis if you feel led too. I hope to learn much from you.  I respect you and trust that together we will make the right choice for the nation during this election.

One of the best forecasting tools in investments is market action itself.  Market trends tend to anticipate news and move accordingly before positive or negative news is announced.  This is likely influenced by inside information and analysis of available information to anticipate outcomes.  From a political perspective, I sense we should look at the closest things to price movement that are available.  Our objective is not to just see the current level of voter interest, but to ascertain trend and the underlying causes to anticipate future results.  To the extent possible I intend to consider all candidates, not some pre-selected subsection arbitrarily considered serious.

Betting Odds

Perhaps the closest thing to a "market" is betting odds.  So what are the trends here, and what factors underlie them?

According to Bloomberg.com, "when the election is just weeks away, betting odds have historically been better indicators of election results worldwide than polling. Here are their current best odds offered worldwide on the next U.S. presidential election:

Winning party:

Democrats 1-2
Republicans 2-1
Any other winner 66-1

Next president:

Hillary Clinton     Even (1-1)
Rudolph Giuliani    11-2
Barack Obama         9-1
Mitt Romney         10-1
Ron Paul            22-1
Al Gore             25-1
Mike Huckabee       30-1
Fred Thompson       33-1
John Edwards        33-1
John McCain         50-1
Michael Bloomberg   50-1
Bill Richardson    100-1

But, we don't just want to consider betting odds, we also want to see the trend in the odds.  What's changing and why?

 

http://www.oddschecker.com/  reports the following odds

Google Searches and Meetup Groups

As mentioned earlier, the key difference in this race from previous race is the increased impact of the internet.  Internet debates, polling, organization and information sources are lessening the power and influence of conventional news sources of cable and network broadcasters, magazines and newspaper.  The internet has lessened the stranglehold of political parties and special interests groups on campaign organization and are leading to powerful spontaneous grass roots political effort like the widely reported Cinderella story of Ron Paul.  A  spontaneous internet grass roots effort pulled Ron Paul's campaign from virtual obscurity through no direct effort of his campaign organization.  Rather, spontaneous effort of private individuals with whom his message resonated broadcast his message over the internet.  http://www.pbs.org/now/shows/350/preview.html   

The following link shows trends on Google, Yahoo, Live and Alexa for presidential searches. http://www.searchengineoptimizationcompany.ca/seoblog/World%20Wide%20Web/search-engines/presidental-candidates-for-2008-us-election-search-perspective/07122007

The following link shows a comparison of the number of meetup groups established for each candidate: http://www.meetup.com/topics/polact/cand/pres/   Ron Paul leads the pack with 1342 groups followed by 247 for Mike Huckabee.  By comparison, Barack Obama has 63 and Hillary Clinton 43 groups.  This of course does not mean that these leading candidates in meetup groups will necessarily win.  Conventional media still has great influence that it is wielding in this campaign.  Also the political organization of established candidates must be considered in this analysis.  However, the internet will be a significant factor in the caucuses. 

A brief review of Youtube or Google will demonstrate the power these tools evidence in straw polls and the show of support for candidates with strong internet support: http://www.youtube.com/watch?v=j8SgZELRjpo  Fund raising has been re-invented.

I sense this is pivotal in the caucuses.  The caucuses are an exercise in voter enthusiasm.  Traditionally they have been an exercise for the "party faithful", but this election appears to be a watershed of emotional outpouring against politics as usual.  Younger voters are being energized to participate in a process that has historically been ignored by the average voter.  I sense the dialogue of political opinion, ideas, and honest concern for the future has never been greater.   I sense this reduces the effectiveness and accuracy of conventional polling techniques and conventional wisdom from mainstream media.

I sense that this election will turn into a test of personal values.  People are seeing the forgotten dreams of youth and they are reaching for them, many for the first time through the political process.  We are tired of war with 70% of American people opposing the Iraq engagement.  I conceive that this will be a significant factor in the 2008 election.   As voters become more sophisticated, and more self directed in their search for information, no longer are they looking for pundit's opinion.  They are choosing for themselves with greater information than at any time in history. The media standards of former years are changing in ways few anticipated as we garner greater and more diverse information from blogs, email, ezines, reprints, online news sources and internet copies of video.  The speed on information transfer has become nearly instantaneous, and is no longer time sensitive.  The internet is having a greater influence on the political landscape than anything since Guttenberg's printing press. 

I suggest that despite the fear being pedaled by Cassandra's singing Chicken Little's praises that we are on the cusp of a world wide renaissance of humanity and an evolution to the next level of human empowerment.  I believe this presidential election will represent a watershed for advocates of freedom, prosperity, peace and kindness, and begin a domino effect of greater personal freedom and responsibility world wide.   I see a bright shining future for all of mankind, a Civilization of the Universe.  I invite you to join me in this historic event.  Analyze the candidates.  Search your heart for honesty.  See the future of our world free of chains of slavery, violence and oppression.  Get involved and vote your conscience.  Our future is in your hands.  Choose wisely.

Conclusion:

Based upon my analysis, I honestly sense that Ron Paul can win the Republican nomination for president.  I also perceive that current trends and the outpouring of heartfelt emotional support for one candidate represents a tipping point of individual voting power   overwhelming political debate during this election.  Ron Paul's integrity is readily apparent in his consistent voting record, his candid answers during debates and his clear reasoned vision of a bright future for America.  I commend his honesty, his forthrightness and his vision.  Many question his elimination of personal income taxes, the IRS, and other agencies.  However, I would remind you that he also advocates the elimination of the Federal Reserve.  This is highly significant.

Think about money for a second.  Pull out a bill and look at it.  It says on the bill FEDERAL RESERVE NOTE.  It is a promise to pay.  I also have issued several bank notes which represent my promise to pay.  However, I unlike the Federal Reserve must provide something of value to others to earn Federal Reserve Notes to repay my notes.  The Federal Reserve Bank however can issue more Federal Reserve Notes.  This would be the equivalent to me issuing more personal notes to discharge my obligations.

The Federal Reserve issues notes that are backed only by the paper they are printed on.  Our only assurance of their value is the "goodwill" of these private bankers not to issue more notes and thus reduce their value.  Their record in this has not been particularly good historically.  For this "service" they charge interest to member banks to borrow Federal Reserve Notes to cover their reserve requirements etc.  The total interest charged by the Federal Reserve equals the revenues the US Government collects in personal income taxes.  This interest collected by the Federal Reserve does not go to the Federal Government for social programs, defense, public works etc.  It goes to line the pockets of the wealthy individuals who own the Federal Reserve Bank. 

If the Federal Reserve Bank services were provided by the US Treasury, these interest payments would be left in the Federal Government coffers instead of being diverted to enrich private investors.  That's it in a nutshell.  Private bankers are taking an amount equaling the Total Federal Revenue from Personal Income Taxes for providing slips of paper that have no more value than the strings of shells used in America before Columbus.  Eliminating the Federal Reserve, a sound fiscal and monetary policy with no federal income taxes will lead to an explosion in economic activity the likes of which the world has not seen since the industrial revolution.

Ron Paul's support of the constitution, limited government and freedom are a breath of fresh air in a world of disingenuous compromises.  The concerns expressed by many over the rule of law, disintegrating liberties, rising taxes, unjust war, and financial problems faced by our country are valid.  However I have great confidence in this country's voter to see through the illusion to recognize honest policies instead of the parasitical self destruction advocated by most politicians.  The Donner Party and Harry Callahan do not serve as valid models for rational government. We have not had a reasoned voice for freedom at the helm of government since Ronald Reagan.  The excitement shown by Paul supporters indicates the ideas of the founding fathers are not dead.    I predict that Ron Paul will win the 2008 presidential election.  This internet poll concurs http://www.whowouldtheworldelect.com/

James T. Hitt
December 11, 2007