Saturday, September 12, 2015

Muslims killing Muslims - the world will never be the same



Posted by Shyam Moondra


How did an ideological conflict between the Muslims and “Infidels” or “Satan” evolve into Muslims killing Muslims? The geopolitical landscape in the Middle-East has changed forever devastating the lives of millions of Muslims, especially in Syria and Iraq.

Who would have thought that western educated Syrian President Bashar-al Assad, holed up in his luxurious presidential palace, would find it acceptable to kill his own people, including women and children, and see his country being turned into rubble, building by building, so he could remain the president of what little remains of his country? His Oxford education sure went down the toilet because he behaves like medieval barbarian and not like an educated man. Thousands of people being gassed and being forced to flee violence any way possible, even in overloaded flimsy boats at the risk of being drowned, and ending up in a foreign land only to be kicked by locals who hate Muslims or put in a cage like animals. Even if we accept the premise that in some countries there is intense dislike for the Muslims for whatever reasons, it’s hard to imagine what kind of a man or woman would find it alright to kick and trip hungry and panicked children running for their lives. It’s as if these “civilized” people lost their minds and transformed themselves into monsters who would treat helpless people with an utter lack of humanity. One could never forget the haunting image of a three-year old Kurdish Syrian boy lying lifeless on a Turkish beach; he and his mother and brother were trying to escape Syria in a boat that flipped over and they all perished. Their dream was to go to Canada and start a new life – but their fate betrayed them and their dream got lost forever. The images of refugee migrants with sad stricken faces packed in trains, or walking along the train tracks holding their children in their arms, or held in cages like animals look eerily similar to what happened to the Jews in Nazi Germany.

Why is it important for Iran to be a regional power with control over sovereign neighbors or Russia to have “sphere of influence” and a right to invade tiny neighbors at will if they ever tried to get loose from Russia's sphere or China to have control over the entire South China Sea, hundreds of miles away from their internationally recognized borders? Is the twenty-first century turning into a century of control freaks? Why don’t these power-conscious countries use their enormous power and resources to help their smaller neighbors prosper and live in peace rather than try to control them and bring nothing but destruction? If Iran wants to win over Iraq, Yemen, and Lebanon, or if Russia wants to win over Ukraine and Georgia, or if China wants to win over the Philippines and Vietnam, why not win over by becoming friends rather than try to control them by coercion and use of military force.

Al Qaeda and ISIS (a former Al Qaeda branch in Iraq) are fighting among themselves, killing their own people, raping women in a twisted interpretation of the Koran, and declaring victories over the graveyard of the massacred innocent people. They are even destroying rare archaeological monuments that one would have thought that they would actually work hard to preserve for future generations. They are destroying cities and villages left and right, uprooting common helpless people from their homes, and forcing them to run into an uncertain future. Why are these devout Muslims causing so much pain and hardship to other Muslims? Where does it say in the Koran that it’s alright to cut throats of innocent people or burn their bodies and broadcast these evil deeds on social media for the whole world to see – what kind of satisfaction do these people get from extreme cruelty? It would be nice if  these insane “religious” leaders stop for a minute and think what positive would come out of their rage, how would they live with all of the destruction they are causing, and how are they going to rebuild when (and if) it’s all over?

Amidst the anguish of what we see on TV, day in and day out, there are some bright spots – it’s commendable that many western countries are coming forward to give these homeless and countryless Muslims shelter and a chance to rebuild their shattered lives, despite the fact that the people who recently murdered innocent people on the streets of Paris were Muslims. Where are those self-proclaimed great powers, Russia, China, and Iran? How come they are not offering to accept these frightened innocent people in their countries and give them asylum like the Western countries are doing? You don’t become a great power just by displaying your military might in parades; you become great by exercising moral authority and by empowering humanity. Germany, France, the U.K., Australia, Canada, and the U.S. must be commended for announcing to accept tens of thousands of these migrant refugees.

So how does this nightmare end? Would ISIS and Al Qaeda leaders or self-possessed leaders like Assad ever come to their senses and realize that they are on a path of total destruction and nothing good will come out of this? Probably not. The only recourse is that the rest of the world come together militarily and financially to defeat the misguided wrongdoers who have caused so much destruction and pain and suffering to the people of their own faith. The United Nations must develop a global military and humanitarian approach to defeat this menace and bring peace to the Middle-East region. Standing on the sidelines or looking for a geopolitical advantage is not an option for the major powers. The West, Russia, China, and all Muslim countries must find an effective way to defeat Islamic extremism and save the world from abyss.

Tuesday, September 1, 2015

Let the show begin – Trumpmenia is in, political correctness is out



Posted by Shyam Moondra


The 2016 presidential race has begun and the Trump brand of politics is surprisingly resonating with the people who are fed up with the “Do Nothing” Congress. There is a clear consensus that the politicians in Washington, DC have lost their way and they are not only not solving any problems but they are making the lives of people harder than ought to be, and under their leadership the country is rapidly sliding into chaos with slow-growth economy, high unemployment, stagnated incomes, loss of America’s prestige in the world, and increasing extremism within the society. It was not a “huge” job for billionaire Donald Trump, a graduate of ivy-league school, to tap into this utter disillusionment among the voters and deliver his inspiring message in politically incorrect way with a catchy slogan “Make America Great Again.” Traditional politicians armed with hundreds of millions of campaign dollars raised via super-PACs, don’t quite know how to counter Trumpmenia. The voters are mesmerized by Trump’s blunt talk against the “stupid” government and they seem to believe that he is the only one in the pack who could actually solve the people’s problems and restore America’s greatness again. The voters also believe that Trump, who is using his own fortune to run for the presidency, is not controlled by lobbyists as every other candidate is; hence, they conclude that Trump will do what is in the best interest of the country rather than what’s best for raising campaign funds and getting re-elected.

Below is a snapshot of where we stand in the evolving presidential race which has all the trademarks of a Shakespearean comedy-cum-drama (mostly because of Trump’s speaking his mind in uninhibited way, using words that other politicians wouldn’t dare to utter in public):

·         The gap between the rich and the poor is at its worst in recent history. In the aftermath of the 2008 financial crisis, the ultra-easy monetary policies pursued by the U.S. Federal Reserve Board and the ECB in EU have benefited the rich the most, thereby worsening income inequality. This has led to a wave of socialistic sentiment spreading throughout the world, especially in the U.S. and EU. With the rich becoming richer and the middle-class hit very hard, the support for right-wing conservatism (that espouses trickle-down economics) has steadily declined in the U.S. This trend will be a key factor in the upcoming presidential elections in the U.S. as well as national elections in the U.K.  The recent polls show that candidates who consider themselves as conservatives are lagging while pragmatists and socialists (e.g., Donald Trump and Sen. Bernie Sanders) are doing relatively better. In the U.K. the Labor Party is well situated to prevail over the Conservative Party.
 
·         With the approval rating of the Congress stuck in low 10’s for many years, mostly because of the gridlock in Washington, DC and lackluster leadership by the Congressional leaders, the time seems ripe for tossing the political system upside down. The people are disgusted and they are shouting that they will not take it anymore. They want to throw the “Do Nothing” Congress under the bus and start all over. The people believe that the members of Congress are not earning their paychecks and perks. These "stupid" people, as Trump likes to call them, know that their approval rating is very low and yet they just don't care and they continue to stick to their chairs. Most honorable people would rather say that if people disapprove of their performance, then they should just leave. But no, they found the best career there is where they are paid handsomely and they have the lucrative benefits, and they don't even have to be in office to do absolutely nothing. The people wouldn't hesitate to elect Trump and let him loose and straighten out Washington DC - Trump could chase these no-good people out of the Capitol or make them earn their paychecks. President Trump would not hesitate to shame these Senators and Congressmen in colorful language and work to terminate their medical benefits (they can buy their own on Government Exchanges), drop pensions (like many private-sector companies are doing), and make them fill out time sheets and pay for hours they actually do work (after all, paychecks of the members of Congress are handled by the U.S. Treasury department).
 
·         President Barack Obama’s aloofness and unimaginative governing style have unnecessarily prolonged the economic recovery period in the post-financial crisis of 2008. Obama’s lack of popularity at home and his cautious approach to world events (commonly referred to as “leading from behind”), has led to a decline in America’s prestige and it has created a sort of vacuum which has led to unprecedented instability in the Middle East caused by the rise of ISIS, Russian annexation of Crimea, and China’s aggressive policies in the South China Sea. Today, the world peace and security are in a more dangerous space than they were before Obama took office in 2009. The voters are tired of the capital’s destructive political culture and they have a strong dislike for the establishment candidates in both parties, Gov. Jeb Bush (Republican) and Secretary Hillary Clinton (Democrat). The voters’ calculation is that it will take an outsider, such as Trump, to change the status quo which explains why candidates who have never held a political office before are doing much better so far than the big name candidates that are supported by the established party infrastructure (fund raisers and political advisors).

 
Below is a look at the major candidates:

Hillary Clinton (Democrat): 

In recent polls, a majority of people have said that Hillary Clinton is a liar, conniving, dishonest, and untrustworthy. As the Secretary of State, Clinton used a private e-mail server located in the basement of her house; when this became publicly known, she had half of the e-mails deleted and the server wiped clean (so that the deleted e-mails couldn’t be retrieved) before handing over the server to the FBI under a court order. The people strongly suspect that Clinton has been trying to hide wrongdoings. The speculation is that Clinton may have gotten rid of e-mails that Congressional Republicans were seeking in connection with the killing of American ambassador and other personnel at Benghazi in Libya. Some suspect that those e-mails contained classified information which would be considered illegal. There is also speculation that those e-mails may have contained evidence of a clever influence peddling scheme: Clinton, as the Secretary of State, would use her influence to help foreign governments or companies, and, in return, these governments and companies would invite her husband Bill or her daughter Chelsea for paid speeches (paying as much as $700,000 per speech) and make generous donations to Clinton Foundation. The New York Times reported that Clinton intervened with IRS to help Swiss bank UBS on the issue of its role in helping Americans evade income taxes and, in return, UBS invited Bill for paid speeches and donated money to Clinton Foundation. This scheme of influence peddling explains how Clintons became so rich so quickly. When they left the White House in 2000, Clinton said that they were “broke” but now they are reportedly worth hundreds of millions of dollars. Also, there have been reports that the Clintons have been using the Foundation money to fly in private jets and stay in five-star hotels, and spend relatively less on charity work when compared with other charities. Even Trump commented that if he had known that the Clintons would be flying in private jets, he would not have donated money to their Foundation. There are some people who think that Clinton’s deleting e-mails and wiping clean the mail server before handing over to the FBI amount to obstruction of justice and she should be prosecuted. It seems like the Watergate scandal all over again! President Richard Nixon tried to withhold evidence, tamper with the evidence, and even destroy evidence - and to the end he kept saying that he did nothing wrong. Every day, there were new revelations and finally investigators found the smoking gun - Nixon resigned and he was immediately pardoned by incoming President Gerald Ford so Nixon wouldn't end up in jail for numerous unlawful activities including obstruction of justice. The FBI is still investigating e-mails and Clinton is expected to appear before Congressional committees that are investigating the Benghazi case. Even though Clinton deleted half of the e-mails, those e-mails could still be out there with those who either sent or received those e-mails. This whole issue of e-mails is creating a big uncertainty about the viability of Clinton’s candidacy and her disapproval rating is steadily going up. The vulnerability of Clinton candidacy is prompting Vice President Joe Biden to consider jumping into the race.

Deleted e-mails are the key to exposing any alleged criminal activities. FBI should follow the money trail - who gave how much money to Bill and Chelsea and to Foundation and also look into how Foundation money was spent. Would Obama appointed Attorney General seriously look into all of this? During Obama’s recent vacation, he was seen playing golf with Bill Clinton – given active e-mail investigations, was that Obama’s signal to FBI to not aggressively pursue Hillary Clinton’s e-mail issues?

In terms of policy, Clinton has put forward a detailed plan to make college education free, funded by tax dollars. However, there is a general belief that Clinton’s proposed $350 billion college education plan is a dumb idea and it will never pass Republican controlled Congress. More government money means a green light to schools to keep increasing the tuition fee. Instead of making more money available, the government should regulate tuition fee and try to control the college cost, which has been increasing at a much higher rate than the overall inflation.

Donald Trump (Republican):

Trump is the only candidate who can call the members of Congress as “stupid” or a female journalist as “bimbo” and the people would cheer him every time he uttered politically-incorrect words. The voters think that Trump is telling the truth and he is someone who wouldn’t hesitate to tell the people what he thinks (e.g., deporting all illegal immigrants including those who were born here off parents who came to the U.S. illegally). If any other candidate talked as bluntly as Trump does, that candidate would have crashed and burned already. Blunt talk has become a trademark of Trump and the voters seem to approve as is evident from the poll numbers that show Trump is way ahead of all other candidates. The crowds at his rallies are bigger than at the rallies of all other candidates combined.

One of the reasons why Trump is winning over the voters is that he has highlighted many issues that are also on the minds of voters. Trump has been traveling around the country in his own plane and helicopter tirelessly and the enthusiastic crowds at each stop are responding positively to his hard work (no other candidate has had that many rallies or held that many press conferences).

On policy matters, Trump has talked about the following issues without offering specific plans:

·         Immigration: Trump plans to build a wall on our southern border with Mexico (paid for by increased visa fee for Mexicans), increase drone surveillance, and border patrols. Our southern border is so porous that many non-Mexicans are crossing it illegally either looking for better life for their families or entering the country to engage in espionage or even terrorism. He plans to deport all illegal immigrants including the children who were born here off illegal immigrants. Trump wants to shut down shelters and discontinue welfare programs for those who came here illegally. These benefits are only inviting even more illegal immigrants. Most people agree with Trump on his plan.
 
·         Trump is angry at Obama, who has been dealing with China with soft gloves and letting China gain at our expense. Trump wants to change the U.S. policy towards China dramatically and bring the manufacturing jobs back to the U.S. He will also deal harshly with the U.S. businesses that are exporting the jobs overseas – he said that he will never eat Oreo cookies made by Nabisco because they moved their plant to Mexico. Again, the American people whole heartedly approve his thinking. Trump has mastered the art of deal-making and many people think that he would negotiate better trade deals than Obama.

·         Trump believes that Obama has proven to be a weak international leader and he has decimated our military. He plans to increase defense spending and make the U.S. military a truly superpower to be feared.
 
·         Trump has made treating the veterans better and fixing the veteran hospital a major issue of his campaign and most Americans agree with that.

·         Trump plans to increase taxes by eliminating the tax loophole granted to rich hedge fund managers who are not paying their fair share of taxes. This position is widely supported by the “Occupy Wall Street” activists.

·         Trump believes that under Obama the government regulations have increased exponentially that are hurting our economy, especially the small businesses. He plans to roll back regulations and make the government smaller but more efficient. This resonates well with the members of the Tea Party.
 
·         Most people agree with Trump that we should fight only those wars that need to be fought and we should just let our military commanders win rather than constrain them with all kinds of political considerations. Many voters also agree that we should not fight wars for other countries without being compensated. If Japan or Saudi Arabia or anyone else wants us to partner with them in fighting terrorism or our common adversaries, we shouldn’t be the only one paying for those efforts.

The voters tend to believe that Trump is a no-nonsense business mogul who would rely on good management and competent managers. He will be tougher with Putin and restore American prestige in the world. Under Trump, economy would fare better. Also, he is loaded with money, so he is not in this for money (his campaign is funded by himself so he will not have lobbyists dictating his policies). Even though many voters feel uncomfortable with Trump’s bombastic style and blunt talk, Americans could take a chance with him - if you want the current grid-locked government to work, somebody has to turn it upside down and Trump is the only man who could do it. Assuming Trump can execute his campaign promises, he could do a much better job in managing economy and military than other candidates, while being open minded and pragmatic about social issues. Trump is not an ideologue and many Americans are where he is and that explains why he is resonating with the voters.

Jeb Bush (Republican):

So far, Bush has been a big disappointment. He is not clear on his positions, he has not explained why he wants to be the president, and he comes across as too laid back and an unlikely person who could change things in Washington DC. Also, most voters are fatigued with the names of Bush and Clinton (combined they have had five presidential and two vice-presidential terms already) and they really want someone else who is an “outsider.” The voters don’t believe Bush or Clinton would be able to change the status quo in Washington, DC.

Bush's performance on the campaign trail and the first debate has been surprisingly weak. In one video, his angry exchange with one of the voters was kind of strange that made him look un-presidential. He has flip-flopped on Iraq war several times and his inability to articulate his positions on other issues clearly is very damaging.


The voters elected a black man twice, so it's very unlikely that they will elect another minority this time (if they did, it would reflect poorly on whites as if they don't have presidential caliber people - it would be like minority Sunnis ruling Iraq and we know how that turned out). So that leaves out Dr. Ben Carson, Sen. Ted Cruz, and Sen. Marco Rubio. Gov. Chris Christie can't win even in his home state, so he is out. Gov. Jim Walker is too anti-blue collar which worked in his home state for local elections, but he has not yet found his grooves on the presidential campaign trail. Sen. Rand Paul is a niche Tea Party candidate which lost its vigor in the last couple of years, so he is out. Gov. John Kasich is too nice and not conservative enough; perhaps a likely vice-presidential candidate. Gov. Huckabee is too evangelical which is a turn off to many voters. Carly Fiorina, while she did alright in the first second-tier debate, her negatives include her tenure at Hewlett-Packard that left tens of thousands of employees without jobs and she was fired by the Hewlett-Packard Board. Also, she ran for an elective office before but she was defeated. So, Fiorina is out. The establishment seems to be pushing Bush (judging from the fact that his campaign has raised over $100 million so far, mostly through PACs), but his performance in the first debate and on the trail has been lackluster and voters are tired of the “Bush” name. Trump is ahead in the polls, but the voters have questions about his temperament and, if elected, can he deliver on his promises.

On the Democratic side, Clinton is leading in the polls but Sen. Bernie Sanders is proving to be remarkably strong. However, the country is unlikely to go along with a third socialist Obama-term, so Sanders has no chance (even if he defeats Clinton in the primaries or he gets the nomination by default because Clinton is forced to withdraw from the race because of the e-mail controversy), he is unlikely to be elected as the president.

The election is more than one year away which, in terms of presidential politics, is like eternity. Undoubtedly, there will be ups and downs and changing polls as we go through the remaining debates, but as of now it looks like it would be a Trump vs Clinton contest. The game has just begun, more chapters in this Shakespearean saga are yet to be written.


Friday, June 26, 2015

Bull market prolonged by sluggish economic recovery – it has more upside potential

Posted by Shyam Moondra

In recent months, the “overheated” bond market has declined with a sharp increase in the yield of the 10-year Treasuries, while the stock market has traded in a narrow range. The bulls are frustrated because the broader stock index DJIA is not moving up faster with heavy volume and the bears are disappointed because the market is not having the expected big correction of 10-20% even after a long bull-run over the last seven years. That leaves the stock market in a limbo and many investors are not sure how to trade, which is apparent from the declining trading volume.

Below is a synopsis of various economic and political factors that suggest that the stocks still have an upside potential and we might see DJIA surpassing the 19,000 mark in the coming months:

·         The economy has been recovering from the financial crisis of 2008 at a tepid annual rate of 1-3% (historically, post-recession recovery rate of 4% is not uncommon), which has prolonged the recovery period beyond the usual four to five years. An over-heated economy coupled with out-of-control commodity markets are a pre-requisite for an impending recession; however, at the present time, we have neither and as such we could see continuing sluggish economic recovery for another couple of years.

·         The jobs numbers have been good but not very strong and, therefore, even after seven years of recovery, we are still not close to the full-employment level (i.e., unemployment rate of 4.5%). As a result, the wage inflation has thus far been negligible, which has allowed the corporations to keep their costs down and allowed FED to defer any increases in the funds rate, thereby continuing with their accommodative monetary policy.

·         The inflation continues to be very low and within the FED’s targeted range, thanks to the decline in oil prices. Given that commodity markets are not over-heated (even after seven years of economic recovery), it’s reasonable to assume that inflation will remain in check for the foreseeable future. Low inflation is always good for the stocks.

·         In recent weeks, the bond market has declined (after an extraordinary bull run that created the bond bubble) with the interest rates spiking up but they still remain below historical levels. Given lower inflationary pressures, the FED is expected to increase the funds rate in small increments starting this year; however, the market has already discounted the first couple of small increases that are likely to take place in September and December of this year. The market will wait and see how these increases continue next year in terms of their magnitude and timing before reacting to interest rate increases. Since next year we have the presidential election, the FED is unlikely to change policies drastically and give the perception of taking sides; therefore, the FED will continue its slow and steady approach at least through 2016. For now, so far as the interest rates are concerned, the stock market has a green light to continue its upward march. As the bond bubble bursts, some of that money could end up in stocks and help with the bull-run.

·         The stock market recovery has also been slow coincident with sluggish economic recovery, which explains why even after seven years of a bull run, the market is not overheated and the stock valuations are quite reasonable. The forward PE of 15.94 for DJIA, 17.81 for S&P 500, and 19.45 for NASDAQ are not excessive and they are much lower than what they were at the market peaks of 2000 and 2007 (when they were in the high-20’s to 90’s range). Also, the current common stock dividend is higher than a year ago and is very attractive compared with the bond yields. Therefore, a case could be made that bonds have room to go down more and stocks have room to go up more.
 
·         The auto and housing sales continue to be very strong, mostly because these markets were hurt really badly by the financial crisis and there was a huge pent up demand built up over the last few years. The current strong demand for auto and houses mean that economy will continue to grow in the foreseeable future and the stock market will keep going up with them.

·         In recent years, European countries have taken unprecedented austerity programs to cut government spending, which, in the near-term, has proven to be painful and it has even slowed down economic growth; however, those sacrifices are beginning to pay off and it is expected that the European economy would start picking up the pace in the coming months. The QE program recently started by the European Central Bank will also help revive the EU economy. Also, strong dollar is increasing the European exports to the U.S., thereby giving a boost to their economy. In the intermediate-to-long term, strong European economy will spur global growth which will also benefit the U.S.
 
·        We have just begun the presidential election season and this time financial markets would be   more sensitive to who is elected as the President than ever before. President Barack Obama is viewed by many, perhaps unfairly, that he is anti-business. Therefore, businesses may favor a business-friendly Republican in the White House, who might reduce taxes, streamline government regulations, and spend more on military.

·         Some of the specific sectors that could be the leaders in the next phase of the bull-run for the stocks could include banks, military system manufacturers, and technology companies.

Given that interest rates are likely to go up this year and next, the banking sector would see their interest spread increase and thus help boost their profitability. The bank stocks, which have gone up in the last couple of weeks, will benefit from interest rate increases and may lead the new bull phase of the stock market. Many banks are currently selling near or below their book values; they could easily move up to at least 1.2 to 1.4 times their book values, assuming we would see more increases in their dividends and buybacks of their own shares in the coming months. If a Republican wins the White House in 2016, it’s safe to assume that bank regulations emanating from Dodd-Frank bill would be scaled back, which will greatly reduce banks’ operating costs and make it possible for them to take greater risks than they are able to do now by lending more to small businesses that could help create more jobs

Recent geopolitical developments such as Russia’s illegal annexation of Crimea, China’s aggressive policies in the South China sea, and the turmoil caused by the Islamic militants in the Middle East and Africa have prompted countries around the world (including the U.S.) to increase the budgets for their defense departments. The U.S. military systems manufacturers are likely to see increased demand for their products and services worldwide over the next several years and thus could become one of the leading sectors to push the stock market up. Given that Republicans favor strong defense, if a Republican is elected as the next President, the stocks of the defense manufacturers would get a big boost.

Although NASDAQ set a new record high last week (beating the last record set back in 2000), the forward PE is only 19.45 compared with 90 in 2000. This suggests that the technology sector could also be one of the leaders that will take the broader stock market to new record high levels in the coming months.

Given that the current stock valuations are not excessive and that we will continue to have low interest rate/low inflation environment for the near-term, the stock market has more room to go up at least for the rest of this year and early next year. At some point in 2016, depending on if a pro-business candidate is elected as the President and depending on inflation situation and how aggressive the Fed is on increasing interest rates, it is possible that we may finally see a correction that many bears have been expecting. But for now, the stock market may continue its slow upward march towards DJIA of 19,000.

DISCLAIMER: The blogger is long in the sectors mentioned in this blog.



Saturday, April 18, 2015

Hillary Clinton's road to presidency involves a sharp right turn

Posted by Shyam Moondra
 
With the formal announcement by former Secretary of State Hillary Clinton that she is now officially running for the White House, it is widely believed that she will get the nomination of the Democratic Party. On the Republican side, several politicians have already announced their candidacies (or plan to announce in the near future) for the highest office of the land, but most of them do not have a realistic chance of getting their party's nomination. It's highly unlikely that the country would elect a minority the third time in a row - twice a Black man and now a Hispanic. So, that rules out Sen. Marco Rubio (R-FL) and Sen. Ted Cruz (R-TX). Sen. Ron Paul (R-KY), a Tea Party inspired candidate, is a niche politician with underwhelming following primarily because of the declining vigor of Tea Party itself. Gov. Scott Walker (R-WI)  is viewed as too rightist for the mainstream America. The candidacy of Gov. Jeb Bush (R-FL), the younger brother of the former two-term president, George W. Bush, is burdened by the fact that former president's misadventures in Iraq and Afghanistan are still too fresh on people's minds - his unnecessary wars cost the U.S. Treasury almost $1 trillion and his pro-rich policies widened the gap between the rich and the poor. On the other hand, Democrat Clinton has better odds to become the next president, especially because of the strong support she enjoys among women, the largest voting block of the electorate, who sincerely believe that it's about time for a woman to have the most powerful job in the world. However, Clinton knows that in politics nothing is ever guaranteed; she learned that in the primaries running up to the 2008 election when she lost to President Barack Obama for the Democratic Party nomination. Clinton understands that a lot of hard work lies ahead.

Obama won presidency twice because many people thought that the Republican candidates in the last two presidential elections were the clones of discredited former President Bush; Sen. John McCain (R-AZ) was too trigger-happy hawkish at a time when people were fatigued by non-stop wars and Gov. Mitt Romney (R-MA) was too pro-rich at a time when the poor were left way behind. Obama, however, turned out to be too liberal for the majority of Americans, who politically tend to be centrist, and his policies have fallen flat, as is evident from his consistently and persistently low approval rating. Clearly, it would be foolish for Clinton to envision a third Obama-term and run on his record.

Below is a list of things that Clinton needs to do:

  1. Be confident, but not over-confident. Behave as an underdog; it worked for Bill Clinton when he ran the first time for the White House and it also worked for Obama's first bid.
  2. To be a strong leader, one doesn't have to be blunt and sarcastic all the time. As a president, Clinton would have to come across as a thoughtful stateswoman, here and abroad. The people generally don't like leaders who are sarcastic and angry. Clinton needs to be a Truman, looking calm but carrying a big stick.
  3. Clinton must be willing to govern from slightly right of the center (just like her husband did). Most Americans are at the center and that's where the voters are in large numbers. Obama made a mistake of coming across as an enemy of business (may be somewhat unfair perception) and someone who was solely focused on poor people. To win, Clinton would need to put together a coalition of moderate and conservative Democrats, moderate Republicans, and centrist Independents. Clinton (and her husband before her) has a strong track record with Blacks and Hispanics, so in the general election she doesn't need to worry too much about them (of course, to make sure that they don't stay home on the election day, she will have to have special campaign events targeting them, but those events should be low-key and far fewer in-between). Clinton may have the temptation to behave like a liberal to win in the primary election but talk more like a conservative in the general election to appeal to the moderate Republicans and Independents. However, that strategy will raise the question if Clinton has any core values and principles. The voters generally don't like candidates who change their positions on issues depending on which way the political wind is blowing.
  4. On policy matters, the following is what a majority of Americans are looking for:
  • Obama has resurrected the welfare state that former President Bill Clinton dismantled during his presidency. It has been estimated that under Obama, the welfare cost has zoomed up to almost a trillion dollars a year that include food aid, disability benefits, social services, educational assistance, housing assistance, vocational training, medical assistance, energy and utility assistance, child care and development, etc. Many of these welfare programs are fraught with waste, fraud, and abuse and they are growing at an alarming rate which could worsen the budget deficit problem. While Obama’s focus on helping the poor is noble, the welfare state is just a band aid approach to dealing with the broader issues of unemployment or under-employment and poverty. The welfare programs, without an expanding economy, make the poor people permanently dependent on the government which is hardly an ideal outcome. This approach actually locks the poor people in perpetual poverty without any realistic hope to get out of the sink hole. What we need right now is to find a way to grow economy at a faster clip and create high-paying jobs, and at the same time train the chronically unemployed people to fill those jobs (The Moondra Post, February 12, 2014). Clinton would have to make it clear to moderate Republicans and Independents that she intends to move the people from welfare rolls to payrolls. As the saying goes, if you give a man a fish you feed him for one day, but if you teach him how to catch a fish you set him for life. The increased focus on welfare programs have in fact worsened the gap between the rich and poor.
  • The federal tax code, full of special treatments in the form of tax rebates and credits, is no longer fair and it urgently needs to be reformed. Clinton must commit to put this issue at the top of her agenda and work with the Congressional Republicans to achieve a simpler and fairer tax code.
  • The issue of government spending beyond its means is a burning issue for many Americans, Republicans or Democrats. Just like Bill Clinton, Hillary Clinton needs to clearly state that achieving a balanced budget and bringing down the national debt would be her goals. Clinton needs to express her willingness to find common ground with Republicans on proposing meaningful spending reforms as well as targeted tax increases to balance the budget.
  • Our roads, highways, bridges, and tunnels are crumbling, all too visible to most Americans when they step out of their homes and see roads riddled with pot-holes that are beyond patchwork repairs. Most Americans would support a temporary special gasoline tax to pay for repairing our infrastructure that is vital for competing in global trade. This infrastructure spending will act like a stimulus to economy and create millions of new jobs.
  • In the area of foreign affairs, given the turmoil in the Middle-East, Russia's aggression in Ukraine, and China's assertive policies in the South China Sea, it is important to have strong military and as such Clinton must speak about the need for increasing the defense budget. Obama's perceived image of leading from the behind has emboldened our adversaries, so the next president would have to restore America's credibility in the world by providing strong leadership on the global stage. Having served as the Secretary of State, Clinton has valuable hands-on experience in foreign affairs that would give her an advantage over her opponents in the 2016 election.
  • To solve the problem of widening income gap between the rich and poor, Clinton could use Small Business Administration as a vehicle to give the poor a chance to become rich by providing the necessary training and financing. Small businesses create jobs, so Clinton should make it clear to the Republicans that she would work with them to make Small Business Administration an important department within the federal government and appoint a cabinet level secretary to run it.
  • In the aftermath of the financial crisis of 2008, the government regulations on banks have gone too far;  the banks are now "over safe" which decreases the efficiency of capital flow and that is preventing economy from attaining robust 4% or higher GDP growth rate (The Moondra Post, June 8, 2014). Clinton should work with Republicans to streamline and prune these regulations and let the free-market economy work without the heavy handed micro-management of the publicly held financial institutions (e.g., making decisions on dividends and stock buybacks).

Clinton is not expected to have tough competition in the primaries; therefore, she should start thinking about her vision for the general election of 2016. Given Obama's low approval rating, Clinton would have to articulate her vision for the future that puts her slightly on the right of the center of the political spectrum. To win the presidency, Clinton would need to put together a broader coalition that also includes moderate Republicans. Obama moved too far to the left, making it harder for him to work effectively with the Congressional Republicans that now control both the Senate and House and develop bi-partisan solutions to the problems. If Clinton wants to tear-down the ugly gridlock in Washington, DC and have a successful presidency, she would have to incorporate some of the Republican policy ideas as part of her own vision. This simply means that she will have to make a sharp right turn to get to the White House.

Saturday, March 14, 2015

Republicans' non-stop extremism is a political suicide




Posted by Shyam Moondra

 
Not long ago, the Congressional Republicans, inspired by their Tea Party comrades, refused to raise the federal debt ceiling and even advocated to default on national debt. They threatened to shut down the government unless President Barack Obama accepted their proposals of decimating Social Security and Medicare programs to balance the budget. Those extreme tactics backfired; the U.S. debt was downgraded by the rating agencies and Obama easily won a second term as the president. The American people were thoroughly disgusted with the extreme tactics of Republicans which was reflected in the historically low approval rating of the Congress as an institution. After that debacle, one would think that Republicans learned their lesson. However, recently, Republicans again attempted to use extreme tactics and those tactics are again backfiring on them, which is not ideal on the eve of next year’s national elections.

In recent weeks, House Republicans first tried to shut down Department of Homeland Security (DHS) by introducing a bill that would have approved funding for DHS only if Obama's executive order on immigration was rescinded. To the embarrassment of Republican House Speaker John Boehner, the bill failed to win a majority of votes in the House. Even if that bill had passed in the House, there was no certainty that the Senate would have approved it, given a slim majority of Republicans there. And even if the bill cleared both Houses, Obama would have vetoed it with no chance of a two-thirds majority vote in the Congress to override the presidential veto. So, the question is, as a matter of tactic, what was the point in threatening to shut down DHS in face of increasing terrorist threats from ISIS and Al Qaeda. At the last minute, Boehner blinked and the House passed a clean bill to fund DHS, just hours before DHS was about to be shut down.

Then came Boehner’s invitation to Israeli Prime Minister Benjamin Netanyahu to give a speech to a joint session of Congress denouncing the nuclear deal that the major world powers and Iran were negotiating. Boehner extended the invitation directly to Netanyahu bypassing the White House, which was a major breach of protocol. Obama refused to meet with Netanyahu during his visit to Washington, DC and Vice President Joseph Biden, who usually presides over such joint meetings of the Congress, was conveniently absent because of a “previously scheduled” foreign trip. Many Congressional Democrats also skipped the Netanyahu’s speech. Since its inception, Israel has enjoyed bi-partition support from both parties and has received close to $1 trillion in foreign aid. However, Boehner’s extreme tactic of inviting Netanyahu without first clearing with the White House backfired and a majority of Americans disapproved the way Boehner did it. Boehner’s misstep also brought to the forefront the question why we are still giving financial aid to Israel whose economy has steadily improved in recent years and their per-capita income now equals those of many affluent European countries. The solid bi-partition Congressional support for Israel is, at the moment, fractured, which might work against Netanyahu in his bid to remain as Prime Minister after next Tuesday’s Israeli elections.

Last week, Republicans did it again, this time in the Senate. Forty-seven Republican senators sent an unprecedented open letter to the leaders of Iran, telling them that whatever deal they reach on nuclear issue with Obama, could be reversed by the next President or by the Congress. They did so knowing that the executive branch of the government has the sole constitutional authority to manage foreign affairs of the U.S. In fact, under the Logan Act, which prohibits individual citizens from negotiating with foreign governments, these senators may have committed a crime. Of course, the authors of the letter in question argue that they were merely informing the Iranian government about the U.S. constitution and that they were not trying to negotiate a separate nuclear deal. Many Republicans believe that the proposed deal between the major powers (five permanent members of the U.N. Security Council and Germany) and Iran (which stipulates restrictions on Iran’s nuclear activities for ten years in exchange for removing trade and financial sanctions imposed on Iran by the UNSC) leaves the door open for Iran to develop nuclear weapons after ten years. When the letter became public, there was a wave of press editorials denouncing the move; the Republican tactic was termed as dumb, unproductive, and unpatriotic. The Republican letter to an adversary made the U.S. look like a divided country and that was hardly a positive thing for bringing the nuclear negotiations with Iran to a successful conclusion. Some of our closest allies called the letter unhelpful and mused over dysfunctional political landscape in Washington, DC. Even Iranian leaders blasted the letter and used it to support their own propaganda that the U.S. was disintegrating. Facing criticism at home and abroad, some of the senators, who signed the letter, began to publicly wonder if sending that letter to Iranian leaders was a wise move.

Every time Republicans engaged in an act of extremism, they failed and yet they keep making the same mistake again and again. In democracy, extremism is a political liability because most Americans are at the center of the political spectrum. A simple math would dictate that extremism is a losing tactic; it turns off the voters, who are now beginning to wonder if Republicans can really govern a divided nation. Recent mishaps of Republicans will hurt them in next year’s national and local elections.