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2010 Ramblings

Polls can be highly unreliable indicators of future results and the most suspect, those polls commissioned by news organizations, are often used to establish a false premise on which an opinion piece is served up as a news story. However, there are two polls that I'm watching closely now in the aftermath of last week's elections in Virginia and New Jersey. Gallup reported today that the Republicans are ahead in the generic ballot for 2010 by a 48%-44% margin. Generic ballots are often misleading because voters have a habit of disliking all congressmen except their own. That said, in the Gallup data released today there was this interesting information:

PRINCETON, NJ -- Republicans have moved ahead of Democrats by 48% to 44% among registered voters in the latest update on Gallup's generic congressional ballot for the 2010 House elections, after trailing by six points in July and two points last month. The Nov. 5-8 update comes just after Republican victories in the New Jersey and Virginia gubernatorial elections, which saw Republicans, replace Democrats as governors of those states.

As was the case in last Tuesday's gubernatorial elections, independents are helping the Republicans' cause. In the latest poll, independent registered voters favor the Republican candidate by 52% to 30%. Both parties maintain similar loyalty from their bases, with 91% of Democratic registered voters preferring the Democratic candidate and 93% of Republican voters preferring the Republican.

Since Gallup regularly began using the generic ballot to measure registered voters' preferences for the House of Representatives in 1950, it has been rare for Republicans to have an advantage over Democrats. This is likely because more Americans usually identify as Democrats than as Republicans, but Republicans can offset this typical Democratic advantage in preferences with greater turnout on Election Day. Most of the prior Republican registered-voter leads on the generic ballot in Gallup polling occurred in 1994 and 2002, two strong years for the GOP.

As has been noted before on this blog, voters are keen to the differences between Candidate Obama and President Obama. Whatever suspicions there might have been last spring that Candidate Obama would rule as a moderate have long since been replaced by a deep resentment among an electorate that has learned that Candidate Obama was a poseur on a list of issues. Which brings me to the second poll I watch closely, a highly unscientific process I conduct my self. I'm a corporate finance consultant and one of the many enjoyable elements of my work (when I have work) is that I get to ask lots of different people lots of different questions.

In a nutshell, when I poll people I interact with daily, here is what they are talking about:

  • If someone has a job, they are worried they will lose it.
  • If someone doesn't have a job, they are worried they will not find one for a long time.
  • Personal spending has been cut dramatically. Those cuts will increase.
  • Small business owners have slashed jobs and expenses at record rates. And they are not finished cutting.
  • Small business owners can't get loans renewed at banks they have done business with for decades.
  • Bankers are worried about their own jobs and careers for the first time in a generation.
  • Small businesses are very slow to pay vendors and suppliers; on the other hand, they can't collect money from their customers. There is no liquidity in small business (and remember, small business is by definition any company with $500 million in revenues or less)
  • Commercial real estate is a disaster for which there is no cure. Thousands (not hundreds) of banks will fail.

In short, there is enormous frustration with "Washington"; President Obama and Congress are the object of this growing level of bipartisan anger and despair. Ironically, a jobless recovery will create more political volatility than no recovery at all because it will underline the inimical issue of winners versus losers. In an era of rapidly expanding government employment I can't envision a heavily taxed, more regulated private sector (that creates the wealth that pays for those government jobs) remaining civil as they see themselves as the losers in this political equation.


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Comments (10)

Excellent post, Hugh. I al... (Below threshold)

Excellent post, Hugh. I always enjoy your posts.


What recovery? You mean th... (Below threshold)

What recovery? You mean the blip caused by free money for cars & houses? Who pays for that?

Not me, since I've been out of work since January. That's the only upside I keep telling myself.

Starve the beast, go Galt.

Good post, Hugh. I've made ... (Below threshold)

Good post, Hugh. I've made similar observations in the semiconductor industry as an increasing number of companies, large and small, have gone 'Galt' and shipped out to countries that behave as though they actually want them there. My own company made the decision earlier this year to relocate to Malaysia. Now, most of the politicians are choosing to make this about evil business owners exploiting foreign labor forces. But, our decision really came down to whether we could continue to trust the capricious U.S. government. We observe a business environment that changes with the whims of the politburo. I recently read China's Long March toward Rule of Law and found a very good argument for the relationship between law and economic development. Anybody would be a fool to expose capital in this environment, which is why we won't see much of a U.S. recovery, but things are picking up remarkably here in Asia.

But Hugh, the MSM says that... (Below threshold)

But Hugh, the MSM says that the recession is over! Happy Days are Here Again! The country is moving forward! Just ask the resident Obamabots, SAUD, VIC, BryanD, Stevie Green, et al.

Soon multi-colored unicorns will dance through the air, creating "FREE" energy while clearing the skies. Rumor has it that Obama will cause the oceans to freeze in the far north this winter, saving the planet from imminent oblivion.

Soon Iran, North Korea and the Palestinians will be eating out of our hand, because none can withstand the splendor of His oratory.

If all else fails, remember, "It's Bush's fault" (TM DNC, licensed to the Obama Administration)

the American public is star... (Below threshold)

the American public is starting to realize that the DEMOCRATS have controlled the House AND Senate since 2006.

This recsession began in 2007.

And it's only getting worse since they care more for CONTROLLING Americans than helping them!

2010 is going to be brutal for Democrats.


Nice piece Hugh.It... (Below threshold)
Nancy's Nazi:

Nice piece Hugh.

It amazes me that our "leadership" doesn't understand the concept of "killing the goose that layed the golden egg" theory. Our GDP is finite in size and will not support the level of taxation needed to support these new adventures we're embarking on. The only budget item they'll consider cutting besides medicare is national defense, and in a time of terrorism yet (ooops I mean "man-created" disasters).

As most economists (outside the democratic party) will tell you, govt spending does not contribute to GDP, as it a) produces no tangible goods and services, and b) must first take capital from the private sector before it gives back. This administration has chosen to do NOTHING to grow GDP and will actually cause it to decline via increased taxes (read what Milton Friedman has to say about taxation and it's effect on the common good).

Now let's throw in a little of the double dingbats Boxer and Kerry's Cap and Tax legislation and you've got real problems. You think manufacturing jobs fled the country before now? You ain't seen nothing yet.

So it doesn't take a Wharton School economist to understand that as the tax base shrinks when companies relocate elsewhere GDP also declines. And who will then pay for your health care and to "save the planet"? Ask Bawwnney Fwank, Chris "sandwich" Dodd, Nancy Pelosi, Biden, Obama, and the rest. Be gentle with them. After all, none have ever met a payroll, worried about filling orders, negotiated raw material supplier contracts, weathered business cyclical downturns, sweated about strategic planning, done succession planning, conducted market surveys, begged for an operating loan, been grilled by investors on quarterly earnings calls........

But...but...my stocks are u... (Below threshold)

But...but...my stocks are up! Gold is through the roof! We must be on the road to recovery.

Mmm mmm mmm.

I know you were being facet... (Below threshold)
JustRuss IT1(SW) USN [reitred]:

I know you were being facetious but just a note to everybody. If Stocks are up AND gold is up, something is about to break one way or the other.

Good post Hugh,Ano... (Below threshold)

Good post Hugh,

Another thing you might mention, from water cooler polling, is the HUGE fear that myself and my Gen X and Y compatriots have and that is the fear of INFLATION.

One of my distinct childhood memories is in the late 70's and early 80's, when cokes were 10-15 cents and almost overnight they were 50. Candybars were a quarter and the next day 69 cents. I know this seems simplistic, but when your 10 yrs old and your parents say one day "Go get a candy bar" and the next day refuse to let you have it b/c it's "too expensive" it sticks with you. As this congress and president dither around with social engeneering a socialist country and spread the wealth. I and other parents are afraid we will have to start telling our kids, which many of us allready are, "Sorry guys that's just too expensive."

The bloated money supply, the run up on gold and certain inflation proof stocks, I for one have allready cut out all needless activities and put vacation and other buying plans on hold. For the first time, since I was a kid, I'm generally worried and the fact that I have a clearer picture of why is even more frightening.

> Commercial real estate... (Below threshold)

> Commercial real estate is a disaster for which there is no cure.

There is a cure. It's called bankruptcy. It works, I suggest we give it a try (instead of an endless series of bailouts)






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