CentristNet Blog

Dedicated To Providing Objective Information and Centrist Analysis of the American Political System.
October 13, 2008

Greatest One Day Stock Rally in History – Will McCain or Obama Benefit?

Author: AHFF Geoff - Categories: Daily Content - Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Will the Rally Help McCain?

Will the Rally Help McCain?

Never in the history of the Dow Jones Industrial Average has the index risen more than 500 points in a single session. After last week’s historic largest weekly percentage loss ever, today the greatest one-day rally in the history of Wall Street occurred, with the Dow Jones average rising almost 1000 points to close at about 9400, up 11%. One key question on everyone’s mind tonight is whether the rally will last or if is the last gasp of the bull market that disappeared last week. The other key question is whether McCain can use this rally to get past narrative of defeat that has smothered his campaign since the crisis began.

Most political observers agree that the race between Obama and McCain for the presidency turned from a near dead heat in mid-September into a substantial 7 point Obama lead today because of the crash of the U.S. and world financial markets. The freefall in McCain’s popularity has been greatly assisted during the economic crisis by McCain’s early mishandling of the crisis via his oft-repeated line that “the fundamentals of the economy are strong.” Many independent and centrist voters were turned off by McCain’s stubborn refusal to accept the depth of the problems in the economy and now lean towards Obama.

The final straw to put many swing voters onto Obama’s side was the quarter ending 401K reports which show striking declines in most Americans’ retirement accounts that came in the mail in the past week or so. Whether the nearly 1000 point rally can turn this trend around will be determined in the days to come.

The onus is clearly on McCain to perform in the upcoming debate and use the turning economic news to his advantage quickly and perhaps avoid the imminent landslide facing him today. Obama can also point to his steady leadership as pleasing to Wall Street and further highlight McCain’s erratic performance in the past month.

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October 9, 2008

Obama Buys Up Primetime on Networks as McCain Reaches Nadir of Campaign

Author: AHFF Geoff - Categories: Daily Content - Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Obama in Catbirds Seat

Obama in Catbird's Seat

In a stunning move only attempted once in presidential election history, the Obama campaign today finalized a deal to purchase an entire half hour block of broadcasting time from a major network. CBS sold Obama a half hour of time on Wednesday, October 29th, starting at 8:00PM. It appears Obama will present his closing argument to the American people in this fashion as negotiations are also ongoing with NBC and Fox for a similar half hour block of evening broadcasting.

The news of Obama’s strong network buy comes at time when John McCain’s campaign stands at its nadir and possibly its last legs. Three of the four debates are over, and both instant polls and later larger surveys of each debate show the public siding with the Democratic ticket. More troubling for the McCain campaign is the strong voter move to Obama over the past few weeks as world’s stock markets have steadily sold off with no end in sight. Indeed, today’s selloff of the Dow Jones Industrial Average pushed below 9000, the first time the Dow Jones has seen such depths since August of 2003, to close at 8,579.19. Over 20% of of the Dow Jones has been lost in the past seven trading days, nearing the 22.6% selloff on Black Monday in 1987.

Obama’s purchase of blocks of primetime network time follows in the footsteps of Ross Perot in 1992, the only prior presidential candidate to buy such half hour blocks of network time. In 1992, Perot purchased blocks of time on NBC and even beat some of the other networks for ratings at the time. Considering Obama’s popularity, Obama’s primetime show will undoubtably beat Perot’s numbers and perhaps all other competing broadcasting.

The move into blocks of network time comes on the heels of Obama’s purchase of an entire satellite channel, Channel 73, on the Dish TV network last week. Channel 73 is looping an effective two minute Obama economy ad entitled Barack Obama’s Plan for America. The fundraising advantage of the Obama campaign enables such large and unprecedented media buys and sets up Obama for a strong closing message.

Against that backdrop, the McCain campaign continued with a focus on Obama’s relationship with ex-terrorist William Ayers and explaining McCain’s debate night proposal to buy up mortgages directly and renegotiate them downward with the homeowners. Neither initiative appears to have picked up steam, and the media narrative continues to be dominated by discussion of Obama’s surge in popularity since the economic crisis began.

Centrist, independent and moderate voters are moving strongly towards Obama, and McCain has yet to find the right message to stem that tide. Considering the shocked reaction of many Americans to the recent stock market collapse, and Obama’s skillful linkage of this crash to the GOP as the market’s “final verdict” on GOP’s economic policies, no message may fit the bill for McCain.

McCain now stands nearly 10 points behind in most national tracking polls, with the esteemed Gallup tracking poll showing Obama with a commanding, campaign-best 11 point lead, 52-41%. State polls are following suit, with McCain at his lowest support level of the campaign in battlegrounds such as Virginia, Indiana, North Carolina, Missouri, Ohio, Pennsylvania and Florida. With only one debate to go and less than four weeks until election day, the McCain campaign is teetering on the edge of a collapse in support which would result in a electoral landslide not seen since Reagan’s victory over Mondale in 1984.

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September 23, 2008

Paulson vs. Congress live on Capital Hill on Bailout – History in the Making

Author: AHFF Geoff - Categories: Daily Content - Tags: , , , , , , , , , , , , ,
Paulson and Bernake testifying today in Congress

Paulson and Bernake testifying today in Congress

Today Treasury Secretary Henry Paulson and others are testifying on Capitol Hill regarding the Bush Administration’s request for authority from Congress to borrow up to $700 Billion Dollars for up to two years to purchase mortgage related assets, almost exclusively of the subprime variety. Both Paulson and Federal Reserve Chairman Ben Bernake urged immediate Congressional action to forestall and reverse the deepening credit crunch across America and the world and potentially avoid a deep recession. Paulson faces a tough sell as US likely voters oppose the bailout 44%-25% and centrist, politically independent voters oppose the bailout 47%-18%. Sensing some popular resistance, DC politicians are aggressively confronting Paulson’s plan.

While packaged and sold to U.S. and international financial institutions as relatively safe and adequately secured investments over the last few years, shares in some bundled subprime mortgage instruments are presently nearly impossible to value. The subprime mortgages are not producing cash flow as predicted because the borrowers cannot make the payments and foreclosures have been rising steadily since 2006. The viral effect of a continued collapse in value of the subprime securities purchased by financial institutions on markets throughout the world may be staunched by the bailout.

Both Democrats and Republicans are pushing for minor alterations of the Administration’s proposal to add oversight and limit executive pay for financial companies that participate in the bailout. Democrats are further battling the Administration directly by attempting to limit the lending authority to a one-year period, reduce the cap on lending to $150 Billion dollars and tack on proposals for a $50 Billion Dollar stimulus package. The risk of the bailout being delayed beyond this week based on partisan wrangling over the legislation is having a dampening effect on the stock market, with the Dow Jones Industrial Average losing over 500 points this week so far, dipping below 11,000.

Nothing less than the survival of the United States as the financial center of the world and the dollar as the world’s currency is at stake this week. No amount of hyperbole can overstate the risks facing the world economic system from the spread of complex financial instruments secured by bundled subprime mortgages on U.S. homes. Indeed, last week the Dow Jones was several hundred trades away from a free fall to 8300 according to insiders at large trading houses. Every American, whether a Democrat, Republican, another party or an independent centrist should read the text of the Administration’s plan, the various changes and additions offered and scrutinize the actions taken in the next few days which will rewrite American financial history.

The risk of inaction by the Democratic Congress is to anger centrist, independent voters who may turn on the Democrats if no bailout is passed and the markets free fall after Congress adjourns. Obama could also suffer if Democrats are perceived as stopping the bailout. The risk of action by the Democratic Congress is two-fold: if the bailout fails, Democrats will be blamed along with Bush and the GOP. If the bailout succeeds and the markets rally strongly before the election, the Presidential election may tip to John McCain. History will be written this week, and the political and economic pressure on Congress, the Administration and the Presidential candidates could not be higher.

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