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Kerry - Will he win and would he make a difference?William R. Thomson With the coronation in Boston of JFK II as the Democratic aspirant to the White House in November's elections the question is can he win, will he win and, if he does, what impact will that have on domestic and international policies. With the polls showing the two candidates virtually neck and neck it is obvious that Kerry can win, but will he? The markets, as always, are one useful indicator. Kerry can take heart from the daily chart of George Bush's prospects as shown on www.tradesports.com a betting exchange. That shows Bush declining from a 75 percent probability of winning in January to a present level of 50 percent. If 'the trend is your friend' as they say in the markets, then Kerry is sitting comfortably at this point with less than 100 days till election day. History shows the undecided tend to make up their minds at the last moment and then to cast an unpopular incumbent out. Bush lost the popular vote in 2000 by half a million votes out of 101 million cast but won the all important electoral college vote by the slimmest of margins: 270 to 268. Some 500 votes in Florida settled the deal in his favour by giving him the 25 Floridian Electoral College votes. The westward and southern drift of the population means that if Bush wins the exact same states this time he would get 278 votes to Kerry's 260. That is the extent of Kerry's challenge, he needs one or two of the states won by Bush last time. These are the so-called swing states. That may not be much of a challenge. Bush, after all, is the first President since Herbert Hoover to go to the polls with less Americans at work than when he was elected. The war is becoming steadily more controversial and disliked by more and more voters. The polls indicate that New Hampshire with 4 votes could switch and support a fellow New Englander. The critical rust belt state of Ohio with 20 votes looks to be leaning towards Kerry. It is, after all, the archetypal rust belt state that has lost decently paid manufacturing jobs in the last four years, only to be partially substituted by less well-paid jobs at Wal-Mart and McDonalds. Florida (27 votes this year) itself could even be in play with more elderly northerners settling there and the younger Cuban-American crowd unhappy with the new restrictions placed on their travel to Cuba. Then their is a Muslim vote in the United States that is likely to switch massively away from Bush this year and could lead to a 1 million-vote swing in the popular vote. The Muslim vote is important in Michigan and Florida. The surging Latino vote could add to Kerry's prospective majority by several million. Add to that disaffected free market Bush supporters who may oppose or just not vote, an energized Democratic base able to bring out an extra percent or two, together with many of those voting for Nader last time and is easy to see how Kerry could roll-up a majority of several million popular votes and develop a landslide in the Electoral College. American politics has tended to run in 36 years cycles since at least the Civil War in 1860. The last change was in 1968 when Nixon ushered in the predominantly Republican, modern era. The cycle before that was in 1932 when Roosevelt defeated Hoover and started a largely Democratic era. Before that was the election of 1896 began the Republican nationalist era that begat the Spanish American War and the regulation of big business under Theodore Roosevelt. As American grows both grayer and, with immigration, more ethnic, the era of smaller government, lower taxes and less regulation seems in decline and yet another new era could be upon us. Kerry would be the first beneficiary of such a move. One final note: the fates may be against Bush. The only other father/son presidential combination (the Adams) both served one term each and all four Presidents elected with a smaller popular vote than the main challenger also failed to get reelected. The impact of a Kerry Presidency On the policy front, what impact will a Kerry presidency have? Partly, that depends on whether he controls Congress or not. It seems quite likely Congress will be split, the Senate could fall to the Democrats but the House remains Republican, so any legislative agenda can only proceed slowly. On the domestic front, there will be the natural tendency to try and put the economy in order to prepare for a favourable situation in 2008. Tax increases and changed spending priorities coupled with interest rate increases could all conspire to lead to a recession and a sagging stock market next year. Events in the oil markets could, however, lead to stagflation as the over-valued dollar corrects lower. But for outside observers, it is the international impact of a Kerry Presidency that is of most interest. Kerry, unusually, is an internationalist and so should be more mainstream with respect to foreign policy. The tone will definitely be different but the substance is likely to remain substantially the same. European leaders are clinging to the security blanket that change will return us to the status quo ante. But they should not bet on it too heavily: American foreign policy overall has changed since 911. The Europeans and the United Nations will be asked politely to fall in line, stump up men and money, if they do not, they can expect at best the back of the hand, at worst, a kick in the rear. The Washington think tanks are looking at the governance of a post Iraq world and Europe will not like what they are thinking. If Europe does not cooperate their advice will be that NATO will be downgraded further. They also see change in the international economic sphere and at the UN. These Americans would like to see the Euro-using European seats on the IMF, World Bank Boards consolidated thereby diminishing their voices even though they provide more of the funding. Similarly, at the UN, they would like to see the two European seats with vetos reduced to one, if the new European constitution becomes effective, and other growing powers such as Japan and India accommodated. On the Middle East, whilst the policy might be less blindly in Sharons' pocket, the pro-Israeli nature of the Administration will remain. The United States is likely to remain, as ever, the international rogue elephant, the essential partner that one cannot live with and cannot live without. William R. Thomson Bill Thomson
is Chairman of the Siam Recovery Fund and advises governments
and several asset management companies and institutions in Asia.
He was formerly Vice President of a major international bank
in Asia and is a former US Treasury official. He writes widely
and we really appreciate his words of wisdom at 321gold. |
