Quick Hits - February 8, 2012

A very busy morning has me working late on today's QH..

Rick Santorum scored a hat trick in yesterday's trio of GOP Presidential primaries in Colorado, Minnesota, and Missouri turning the GOP Presidential nomination race on its edge.  With the sweep, Mitt Romney seems a little less inevitable...and Newt Gingrich who fared even worse than Romney seems far closer to leaving than to staying to the convention.  The other big loser on the night?  Ron Paul whose campaign is supposed to be geared for the caucus format in Colorado and Minnesota.

Rick Santorum's wins in all three states was impressive.  In Colorado, the one state that Romney thought he would be able to hold on, Santorum beat him 40% to 35%.  In both Minnesota and Missouri, Santorum hammered his opponents, besting Paul 45%-27% (Romney third) and then Romney (55% - 25%) respectively.

There are a number of takeaways from last night's results. 

Newt Gingrich's decision to skip Missouri looks to be a mistake as he left Santorum vs Romney - and Santorum proved that Newt is not the conservative alternative to either Romney or Obama.  His campaign is in real trouble yet again.

Ron Paul's organization and appeal did not help him in Colorado - or all that much in Minnesota.  He is still little more than a fringe candidate appealing to followers who reside in the political fringes.  Paul will stick it through - but thoughts of having any measurable power at the convention took a hit.

Mitt Romney is seeing the effects of two different backlashes.  One is the backlash on the negative war he's waged with Newt Gingrich.  While he is beating Gingrich, he is also alienating some of the GOP base.  The second backlash is towards Romney's positions, the flip-flop accusations, Romneycare, and his positions when Governor of Massachusetts.  While Gingrich's attacks from the left have not done as much damage on Romney as the reverse attacks, 'Obama Lite' is one that I think is getting traction.

Rick Santorum has managed to stay, so far, from the main fray.  This will change as Romney will start focusing more on Santorum.  While evangelicals and hard core conservatives support Santorum, he needs to expand more in his reach - grabbing as much of the 'Anyone but Obama' vote as possible while demonstrating himself as better than Romney.  That's a tall order, but possible - particularly if Romney gets off message or goes too negative.

This is race - and will be until June.

Despite the prayers of the Obama campaign, or the efforts of the mainstream media to convince America that the recovery is finally here, the economic challenges for President Obama remain.  This remains the slowest recovery in the post-World War 2 time frame.  In many measures, things aren't so much as improving as they have stopped or slowed getting any worse. 

As many are noting in the wake of the celebrations around the January jobs report, the adjustment made by the Administration to reflect their model of the American workforce removed 1.2 million workers from the calculation.  The shadow unemployment rate during this recession and prolonged recovery has increased as reflected in the above chart.  Include those who are underemployed - like those who used to have full time jobs and are now working only part time or at jobs well under their usual levels - and this percentage shoots over 15.1% in the most generous (to the Administration) assumptions.

If one is in this area of shadow unemployment, you remain challenged to pay your rent or mortgage.  You're struggling to pay your bills- noticing that gasoline has gone up over 100% in the last 2 years - and seeing it starting a new hike to the $4.50 - $5 / gallon level for this summer.   What's happened to your food prices - meats, milk, eggs, etc?  These prices have also increased - and for packaged foods, often the package size has shrunk.  How about your electricity bill?  These have gone up across the country - and will continue to do so.  Fuel oil for heating?  The warmer than normal temps have been your only break there.

Is it because of the anemic recovery or the policies of the Obama Administration that dependency on the government has surged 23% under President Obama?  Is this a side effect or by design?  67 million Americans now rely on some federal programs - the biggest jump since the Carter Administration.

Remember the kerfuffle against Mitt Romney over his comment regarding the poor - and that because they have a safety net, his focus is going to be on the middle class?  The attacks against Romney were led from the progressive left - attacking him for his lack of compassion towards the poor.  How about the compassion of the progressive left towards the poor?

A New Jersey teachers union chief whose salary tops $300,000 is under fire for saying in a recent interview that "life's not always fair" while arguing against vouchers to send poor students to private schools.

New Jersey Education Association Executive Director Vincent Giordano made the comment on the local "New Jersey Capitol Report" program over the weekend. During the interview, he was challenged by the host on why low-income families should not have the same options as other families when their child is in a failing school.

$300K / year as a union official. 

The New York Post is highlighting a report that castigates the Port Authority of NY and NJ for their complete and utter mismanagement and incompetence when it comes to managing the rebuilding of Ground Zero.

What is being seen in NYC over the PA and Ground Zero is nothing new when it comes to public sector government.  In the Boston area - reference the 'Big Dig'.  Originally estimated to cost just under $3 billion, the project finished years behind schedule and at a nearly $16 billion total cost.  Here in CA, we are seeing the same thing with the politically driven and motivated High Speed Rail Network where in just three years costs have nearly tripled from $32 billion to nearly $117 billion.

Can anyone cite a modern day major government project / initiative where the project has been completed on time and on the original budget?  I can't think of any.  In the private sector, the expectations are that on time and on budget is the norm - and those who cannot deliver, may find themselves looking for a new job.  Why does the public sector get a pass?

Why do we, as taxpayers, tolerate government inefficiencies?  San Francisco California touts itself as a 'business friendly city' - and that it's policies do not inhibit the creation of businesses.  But the truth there, and in much of California is different.

Ms. Pries said she had to endure months of runaround and pay a lawyer to determine whether her location (a former grocery, vacant for years) was eligible to become a restaurant. There were permit fees of $20,000; a demand that she create a detailed map of all existing area businesses (the city didn’t have one); and an $11,000 charge just to turn on the water.

The ice cream shop’s travails are at odds with the frequent promises made by the mayor and many supervisors that small businesses and job creation are top priorities.
The matter has also alarmed some business leaders, who point out that few small ventures could survive such long delays.

“Someone of lesser fortitude would have left three months into it,” Ted Loewenberg, president of the Haight Ashbury Improvement Association, said of Ms. Pries. “Through these hard times we’ve heard all the rhetoric about streamlining the process, about one-stop shopping. It hasn’t happened.”

Greece has missed another deadline associated for the EU bailout that they need. Greek political leaders are meeting today to review a potential debt deal - but many concerns and details remain unanswered and unaddressed. 

The European Central Bank did make a major concession towards a 2nd bailout deal (Greece received a bailout 21 months ago) by agreeing to accept losses on their holdings of Greek debt, but apparently not at the same level as private investors are expected to take (~70%).  With Greece facing national elections in April, politicians in Greece are loath to make any major concessions or promises beyond their current unpopular decisions to reduce minimum wage by 20%, reduce spending by 3 billion Euros, and eliminate 15,000 civil service jobs this summer.

Add to this is the fact that the target that Greece needs for this current bailout is a moving target...it's getting higher almost daily...

Very quickly: some of you will have seen that Greece’s tax revenue from VAT collapsed by 18.7pc in January from a year earlier. 

Nobody can seriously blame tax evasion for this. It has happened because 60,000 small firms and family businesses have gone bankrupt since the summer. 

The VAT rate for food and drink rose from 13pc to 23pc in September to comply with EU-IMF Troika demands. The revenue effect has been overwhelmed by the contraction of the economy. 

Overall tax receipts fell 7pc year-on-year. 

This is a damning indictment of the EU-imposed strategy. Greece is chasing its tail. The budget deficit is stuck near 8pc to 9pc of GDP because the economic base is shrinking so fast. 

Let me just add that it makes little difference whether or not Lucas Papademos secures triparty agreement today – or soon – for a debt deal.

A group of a dozen French economists are proposing that now is the time for the EU and ECH to plan on an orderly return to individual national currencies in the Eurozone as opposed to remaining tied to the Euro or providing more powers to central banks above and beyond any democratic oversight.

Effectively, the best course for Europe is to remake the EU back into a free trade zone that offers Eurozone members the best possible trade practices.  Going beyond this, is a mistake in the long run.

The Syrian military continues to pummel Homs - over 200 rockets hit one residential neighborhood in just a three hour period.  Opposition groups are claiming that these attacks have killed another 100 civilians as the city is a free fire zone for the Assad government.  Reports from Turkey indicated that Iran has dispatched a senior Iranian military officer and 15,000 Quds Force soldiers to Syria to provide direct assistance the Assad regime - and attacking rebels / civilians in Syrian cities.

The Obama Administration remains unable to take any leadership steps towards addressing the continuing violence in Syria.  Combined with the failure of the Administration to address the actions of Iran or now Egypt, which is holding 19 Americans as hostages / facing criminal charges for promoting democracy in the country, the US has no effective MidEast policy beyond bashing Israel.


On This Day in History

1587 - Mary Queen of Scots is beheaded for her complicity in a plot to murder Queen Elizabeth I

1725 - Peter the Great, Emperor of Russia, dies.  While Emperor, Peter founded the new capital of Russia, St. Petersburg, and enacted major reforms and changes modeled after Western Europe.  During his reign, he made Russia a major European power.

1904 - The Russo-Japanese war begins as Japan launches a surprise attack on Port Arthur, a Russian naval base in China.  Japan was seeking to expand into Manchuria / Northern China.