New Republican strategy - if can't win elections, just rig them

Posted by Shyam Moondra

Republicans have a grand plan for winning the presidential elections in the future - just rig them. Their newly minted plan, being considered by Republican-controlled states such as Virginia and Wisconsin, will allow a presidential candidate to win a state in terms of electoral votes, even if the candidate doesn't get the most popular votes.

Last November, in the state of Virginia, President Barack Obama won a majority of popular votes and thus won all of state's 13 electoral votes under the present winner-take-all rule. However, Virginia's Republican-controlled legislature is currently considering to adopt a new rule which will allocate electoral votes based on the number of congressional districts won (under this proposed rule,  Republican candidate, Gov. Mitt Romney, would have won 9 electoral votes and Obama would have gotten only 4 electoral votes). Other Republican-controlled states that are reportedly contemplating to adopt similar changes in their electoral vote allocation rules include Wisconsin, Pennsylvania, Ohio, and Michigan. If this new rule were in effect in these states in 2012, Romney could have won the election.

In effect, Republican states want to destroy the basic premise of democracy in which each person's vote counts. Under the proposed Virginian rule, urban areas with millions of voters with a heavy concentration of Democrats will carry relatively less weight than rural districts with far fewer people dominated by Republicans. Reince Priebus, the re-elected chairman of the Republican National Committee, lamented that the idea was "intriguing" and worthy of consideration. However, at the same time, Priebus also said that the Republican Party needs to broaden its appeal. So the question is, how does exactly this extreme undemocratic proposal being pursued by Virginia, Wisconsin and other red states help broaden support?

In addition, some Republican controlled states are trying to pass a law that if a woman undergoes the abortion procedure, she will be committing a felony of destroying the evidence. Evidence of what? Abortion is a legal right that the U.S. Supreme Court granted forty years ago (Roe vs Wade). Do these Republican states want to circumvent the law of the land? Again, how does this extreme tactic help broaden the appeal of the Republican brand, especially to the female voters?

As the disapproval rating of the Republican Party skyrockets, an increasing number of Republicans are beginning to behave like thugs, who would go to any extreme to get what they want even in the face of opposition by an overwhelming number of their constituents. One could expect something like that to happen in Putin's Russia, but not here in the land of freedom, liberty, and justice.

A small minority of extremist elements within the Republican Party are engaged in subversion of our democratic principles and destruction of our legal system. That can't be the basis of becoming a legitimate power entrusted to govern. After the last ugly debt-ceiling debate (that resulted in the downgrade of the rating of the U.S. securities from AAA to AA+) and their twisted and "stupid" statements on rape and abortion (as Republican Gov. Bobby Jindal of Louisiana characterized them), these new crude election strategies will prove to be the final act of self-destruction. The Republican brand is already damaged and their new desperate attempts will only make people to distrust them even more; their continuing "stupid" acts would only mean their guaranteed further losses in the up-coming mid-term elections of 2014.

Bull market continues – DJIA headed to record high this year

Posted by Shyam Moondra The stock market continued to go up while negotiations between the Republicans and Democrats on “fiscal cliff” were still in flux, which suggests that the investors correctly anticipated that a deal would eventually be struck to avert falling off the cliff. In 2011, Republicans led the ugly debate on increasing the debt ceiling, which resulted in the downgrade of U.S. securities from AAA to AA+, and for that they got punished by the voters in the 2012 presidential and congressional elections. Apparently, Republicans realized that their continued intransigence was a sure prescription for self-destruction and, therefore, they went for the best “fiscal cliff” deal they could get from the Democrats. A wise political recalculation would again pave the way for successful negotiations on extending the debt ceiling before the end of March, when the U.S. Treasury will run out of options for avoiding a historic default by the U.S. government on its debt, and enacting tax reforms as well as spending cuts to reduce budget deficit. Investors seem to believe that Republicans are highly unlikely to cause a default or use government shutdown as a political ploy to achieve leverage in negotiations with the Democrats on fiscal matters.

In addition to the marginally improved political climate in Washington, D.C., the following economic trends suggest that the stock market may be ready to go up to record levels this year and DJIA may even hit 18,000 by the end of 2015.

• The EU situation has stabilized and the recent painful austerity programs would yield positive results in the future. The weak Euro would also help the Euro Zone countries with their export business, which would be positive for the global economic recovery. In 2012, real GDP contracted by 0.3% in the EU and by 0.4% in the Euro Zone. In 2013, GDP is projected to increase by 0.4% in the EU and by 0.1% in the Euro Zone.

• After a slowdown in 2012, the recent data on manufacturing and real estate prices suggest that the Chinese economy may be poised to rebound this year. A higher rate of economic growth in China would be a big plus for the global economy.

• In the U.S., economy continues to grow, albeit at a tepid pace, and it continues to create new jobs. In the past month, economy added 155,000 new jobs (over 4 million new jobs created in the last 27 months). The automobile demand continues to be near record levels and the housing data for recent months suggest that a gradual recovery in the housing industry is afoot. The housing rebound could prove to be a strong catalyst for a rapid growth in the GDP. Higher housing prices would also create a wealth effect, boosting consumer confidence and spending. The stock market has also recovered from the crash of 2008. Higher stock prices have increased the wealth of individuals, which would further increase consumer spending. One other sector which is unexpectedly doing well is energy; this industry is not only creating new jobs, but it also has the promise of our achieving energy independence within the next decade. Such a milestone would be a big plus for domestic economic growth and for our enhanced competitiveness in global trade.

• Slow but sustained economic growth combined with superb management of costs by corporations would produce handsome profits going forward, thereby boosting the stock prices. The corporations are enjoying record profit-margins and they have accumulated over $4 trillion of cash on their balance sheets that would guarantee further capital expansion and more hiring in the coming months and years.

• As the economy recovers, FED will probably start raising interest rates as early as next year, at which time the bond bubble will burst and part of that money will end up in equities, giving the stock market a further boost. Also, the fear of rising interest rates will induce the potential home buyers to start buying homes, which will be good for the economy and corporate profits. Higher interest rates will increase the interest rate margins for the banks, thereby increasing their profits. In 2008, weak financial sector brought down the economy and the stock market; in 2013-2014, we would probably see a strong financial sector leading the stock prices higher.

• In the near-term, the devastation caused by Hurricane Sandy and Nor'easter storm in the North-East will lead to extensive rebuilding efforts that will add to the GDP growth and corporate profits.

• Finally, the current stock valuation looks very attractive relative to future growth potential, given the present low interest rate/low inflation environment. The WSJ reports the current price-earning ratios for the trailing twelve months as: DJIA 14.92, S&P 500 17.28, and NASDAQ 16.45. Based on the historical trends, these ratios could rise to low-20’s before the stocks begin to look pricey. Therefore, by the end of 2014, we could very well see DJIA hitting the 18,000 mark.