‘Decision 2012’ Through An ETF Lens

November 02, 2012


Deeply Split Electorate

Finally, in a broader sense, the upcoming election could end up making the rift between conservatives and liberals a little deeper.

That seems even more likely on the heels of Hurricane Sandy’s destruction along the eastern shore.

“Superstorm Sandy is a crisis for millions of Americans, just as the Financial Crisis and Great Recession challenged—and continue to challenge—similar numbers of citizens,” ConvergEx’s Colas said in a note published this morning.

“How government—Federal, state and local—respond to crisis has a disproportionate impact on how many Americans view its efficacy in more mundane matters.”

More to the point, Hurricane Sandy has likely increased chances of Romney winning the popular vote—even if Obama’s re-election seems more probable than a Romney victory at this time. In other words, Obama could win the presidency in the electoral college, but risks losing the popular vote.

Colas said that seems more probable after the storm because the damage wreaked by Sandy appears to have disproportionately affected Democratic-leaning voting precincts, meaning a big enough number of Obama supporters may not get to cast their ballots, causing a “split decision.”

That split is something that would be detrimental to the future of the U.S. economy, as prospects of any effective government compromise and action needed to keep it from sliding back into a recession might be doomed.

“The classic case study is the 2000 presidential campaign, where then-Vice President Al Gore won the popular contest by over 500,000 votes but lost the Electoral College after a Supreme Court case,” Colas said.

“While the current rancorous state of D.C. politics has many fathers, the 2000 election would pass any paternity test in assessing why Democrats and Republicans haven’t shared their toys over the past decade,” he added.

The so-called fiscal cliff marked by reduced spending and increased taxes—something many expect to materialize in an Obama win—is a “very scary issue,” Colas told IndexUniverse.

Partisan rancor aside, Colas said the fiscal cliff calls for “Congress to work on a coherent fashion” if it is to address this problem effectively.

But split loyalties will all but ensure a lack of productivity in Washington if one candidate has the office and the other the bragging rights from winning the popular vote.

“Not being productive for another four years is certainly something we can’t afford,” Colas said.


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