Daily Archives: November 7, 2012

Mr Obama is not careful, he could sink into a quagmire of problems. Yet there is a solution to each big challenge he faces. In the Middle East, he should revisit the speeches he made in Cairo and Istanbul – and implement them. In China, Xi Jinping wants nothing more than a deep economic engagement with America. And if Mr Obama has to cut US defence budgets, there could not be a more propitious moment to do so. The stars are aligned in his favour: all he has to do now is to lead.  Read more

What bit the dust on Tuesday was the world of denial in which Republicans have immured themselves ever since the rise of the Tea Party in 2009. This is a universe in which the financial crash was caused by over-regulation; one in which, despite years of brutal drought and violent weather patterns, climate change is a liberal hoax; a country that can correct a vast structural deficit without ever raising additional revenue, while expanding the military budget beyond anything sought by the Pentagon; a belief system in which Mr Obama was the source of all economic ills rather than the steward of the most intractable crisis since the Depression. The mantra was that a business executive would, simply by virtue of that fact, effect a magical rejuvenation of the staggering American economy. Read more

What ought to pain Republicans most about Barack Obama’s victory is that 2012 was entirely winnable for them. In European elections over the past few years, voters have thrown out leaders who were in charge during the worst of the financial crisis, whether those leaders deserved the blame or not.

Macroeconomic indicators in the United States, where an unemployment rate of 8 per cent is highly correlated with defeat for the incumbent party, pointed in the same direction. Mr Obama himself had proven a disappointment to many of his former supporters, going from a beloved symbol of generational and social change in 2008 to a detached and remote figure, with limited ability to touch an emotional chord in the electorate.

That Mitt Romney lost nonetheless is in part a tribute to his own weaknesses as a candidate. The Obama campaign put Mr Romney on the defensive early about his work at Bain Capital, and left him there. The Republican nominee made any number of horrendous gaffes. He ran a disastrous Republican convention. He never found a way to talk about himself or his agenda that middle-class voters could relate to. Read more

There is nothing better than the widespread perception of a close election for the full spectrum of “experts” to get carried away with what might occur under alternative outcomes. And carried away they were.

Many argued that the two presidential candidates would implement meaningfully different economic policies and, thus, trigger different market reactions. But now that the election outcome is known, it will soon become apparent that the main risk is that investors’ prospects remain hostage to the same issues that existed long before the election. Read more