The Federal Open Market Committee (FOMC) concluded its two-day September meeting and released its statement.  The big news is that the Fed is planning another round of quantitative easing (money creation out of thin air).  This is the third round of it since 2008 and is therefore referred to as QE3, although not in the FOMC statement.

The statement contains the usual fluff, so there is no need to go over the entire thing.  I’ll just cover the major parts.

The FOMC stated, “To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month.  The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.”

In other words, the Federal Reserve will roll over expiring debt, but into longer-term securities.  This is a continuation of Operation Twist.

The new base money being added is the $40 billion per month.  In other words, we should see the adjusted monetary base increase by approximately $40 billion each month.

The FOMC statement continued, “The Committee will closely monitor incoming information on economic and financial developments in coming months.  If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.”

So QE3 is essentially open ended.  But they added the caveat that it is “in a context of price stability.”  In other words, the Fed will keep buying debt to help unemployment and it won’t stop until either there is an improvement in unemployment and the economy or if price inflation becomes a problem.

The FOMC statement also said that the federal funds rate will remain low until at least mid-2015.  That means the rate will be near zero for almost 7 years if they stick to that.

The most interesting part of the whole statement, aside from the announcement of QE3 itself, is how they are implementing it.  They are buying mortgage-backed securities (MBS) as opposed to the more typical buying of regular government debt.  But why would this help the economy?  The explanation doesn’t make any sense.  Mortgage rates are already at or near all-time lows.  If a 30-year fixed rate mortgage drops from 3.5% to 3.0%, is that really going to turn the economy around?

Ironically, immediately after the statement was released, the stock market went up, gold went up, and the 10-year yield went up.  The 10-year interest rate is highly correlated to mortgage rates.  So the Fed’s announcement actually sent rates up for a brief time, in opposition to what it is supposed to achieve.  The rate did come back down before the day was over, but bonds did not boom on the announcement the way that stocks and commodities did.

My big question is if the Fed’s buying of MBS will be like it did back almost 4 years ago.  Will the Fed pay the current market value for the securities?  Or will the Fed pay the old value for the MBS?  If it is the latter, then we know why the Fed is doing this whole thing.  It is another bailout of the major banks.  Perhaps the Fed knows something about the banks.  Perhaps it is afraid of the big banks being insolvent and is secretly bailing them out with this announcement.  If anyone knows with any certainty the answer to whether or not the Fed intends to pay the current market value for MBS, please drop a comment.

To put this whole thing in context, QE2 was about $600 billion over 8 months.  If the Fed does QE3 for one year, that will be $480 billion.  But this is still a huge number.  It is over 50% of what the Fed’s assets were back about 4 years ago.  I really believe that this could finally be the start of bigger price inflation.  There is a cost to this destructive policy and price inflation will be one of the costs.

Another anniversary of September 11 has just passed.  Americans have lost a lot of liberty since that time, while the U.S. government has gained power.

There is an ongoing debate about what happened on that day, now over 11 years ago.  Some people think it was an inside job.  Others think that the conspiracy theorists are nuts.  There are a few in the middle and probably a few who have never heard these theories.

There would not be much debate on this in a past era.  The internet has changed everything.  It is because of the internet that we can see some of the footage of 9/11, plus hear competing theories on what may have happened.

The one thing that has always baffled me is the collapse of the buildings.  These buildings collapsed at near free fall speed.  It didn’t seem right that this would happen.  You might expect a partial collapse, but it is bizarre for skyscrapers to fall into their own footprint without planned explosives being involved.

Of course, it wasn’t just the twin towers that fell that day.  Later in the day, World Trade Center building 7 collapsed, which wasn’t hit directly by an airplane.  You can view one video here.  If you go to YouTube and search for “WTC 7”, you will find many different videos, including a few trying to counter the conspiracy theorists.

WTC 7 was 47 stories high.  That is a huge building.  While it was less than half the size of the twin towers, it would have been one of the tallest buildings in many major U.S. cities.  For that thing to fall in less than 10 seconds is incredible.

If you believe that WTC7 came down because of explosives, then this leads to a whole series of questions and answers.  If that is the case, there wouldn’t have been time to plant the explosives between the time the planes hit and the time it collapsed.  This means that some people knew what was going to occur that day, at least a day or more in advance.  It means that some people knew an attack was coming and didn’t try to do anything to stop it or warn people.  Again, it leads to a lot of questions.

I find conspiracy theories fascinating.  I’m sure that some are true and some are not.  But as a libertarian, I’m not sure how much good and how much bad they do.

It amazes me that some people believe that 9/11 was an inside job that was orchestrated by the U.S. government, and yet some of these people are not libertarians.  Some of them believe we should have socialized healthcare.  I have to ask them: So you think that the U.S. government secretly murders innocent people and covers it up and uses it as an excuse to terrorize more people, and yet you trust the same people to provide you with good medical care?

The same goes for the JFK assassination.  Many people believe that it was a conspiracy.  Yet, if that is the case, then there was a coup that day.  There was an overthrow.  It means that the establishment guys at the top did not like where JFK was taking the country.  Could it have been his comment that he wanted to tear apart the CIA?  In any case, why would you believe in such a conspiracy and yet still be in favor of handing over power to these people?

In some ways, talking about potential conspiracies doesn’t do any good and can sometimes move the liberty agenda backwards.  You might persuade someone that 9/11 was an inside job, yet it won’t make him a libertarian.  Plus, there will be many people that will just be turned off at the suggestion that their government could do such a thing.  This will just make them firmer in their beliefs that government is there to help.

On the other hand, I think talking about potential conspiracies with some people might help the cause of liberty.  If you get someone who is open-minded and interested in the subject and you convince him that 9/11 was an inside job, it would probably at least make him more distrustful of his government.  While it may not make him an instant libertarian, it might move him one step closer and encourage him to do more research.

In conclusion, I think libertarians really need to be careful in picking their audiences when discussing conspiracy theories.  It would be interesting if a smoking gun appeared that implicated the U.S. government in the 9/11 attacks.  Would that be enough for Americans to withdraw their consent or would they just blame a few bad apples and continue to clamor for more government help?

Since the fall of 2008, the economy has struggled and unemployment has gone way up.  One interesting statistic that is frequently shown is government jobs.  Since the recession hit, the total number of government jobs has declined significantly.

Take a look at the last page of this report from the BLS.  The second to last graph clearly shows that employment in government has gone down in the last 3 or 4 years.  At the bottom, it says, “Since the end of the most recent recession in June 2009, government employment has declined by 670,000 or 3.0 percent.”

Here is the major problem.  These statistics are referring to overall government employment.  They are combining federal, state, and local.  If you look at the last chart, the total government employment went down from the previous month.  But the top bar shows that federal employment went up.

Back in May, Mitt Romney made a statement that we have 145,000 more government workers under Obama.  He has been criticized by some for this comment.  Some of his critics say that the total number of government workers has declined.  But Romney was technically near correct if he was just referring to federal government workers.  And in reality, that is what the president would have more control over, as opposed to state and local workers.

So while the federal government continues to expand (although perhaps more slowly than in the past), state and local governments have cut back drastically.  What is the reason for this disparity?

There is one main reason and that is the Federal Reserve (“the Fed”).  Since the recession hit, tax collections for governments at all levels have gone down.  This leaves them with a few choices.  They can raise tax rates, but even this may not lead to higher tax collections.  While this has been done by some state and local governments, it also hasn’t worked for many.  People don’t like tax increases, particularly when they are already struggling.  Another choice is for governments to cut spending, which has happened at the state and local levels, at least generally speaking.

The last main choice is to fill the gap by issuing debt.  But this is a problem for state and local governments.  They are limited in how much debt they can run up, whereas the federal government is far less limited.  The federal government can rely on the Fed to create money out of thin air to buy government bonds.  If the Fed did not exist, then the federal government would not be able to continue spending so much money for so long.  It would have had to cut spending by now or else face bankruptcy.

This is why it is so important to end the Fed.  The federal government would be forced to act more like state and local governments.  Sure, it would still do much damage and infringe on our liberties in many ways.  But its resources would at least be somewhat limited to its power of taxation.  It would not be able to run massive deficits and continue spending like we are in a boom.

State and local governments have had a real correction.  It hasn’t happened yet in Washington DC.  It has been prolonged and worsened by the Fed.  End the Fed.

Paul Craig Roberts writes frequently for LewRockwell.com.  He has been really solid on foreign policy and civil liberties from a libertarian standpoint.  Unfortunately, I can’t say the same for his economics.  He reminds me a bit of Pat Buchanan.  He understands some economics, but he makes some fundamental errors that are critical and it ruins much of his analysis.

In his latest article, Roberts writes about the latest unemployment numbers.  He discusses the fact that the unemployment rate is vastly understated, particularly due to it being much lower because of people being discouraged and giving up on looking for work.  So while I have my criticisms of some of the economics, there are some interesting statistics he points out.

Roberts really starts to get off track when he talks about the types of jobs that were created.  Of course, the number of jobs he is talking about (96,000 jobs) is insignificant.  It is practically a rounding error in a country of over 300 million people.  Regardless, he offers his opinion on the types of jobs being created.  He says they are “lowly paid third world jobs”.  He says, “52% of the new jobs created by the American superpower are lowly paid waitresses, bartenders, practical nurses, and hospital orderlies.”

But who is Roberts to say what jobs should and shouldn’t be created?  Is he trying to central plan the economy himself?  If that is where consumer demand is, then the market is responding.  The fact that some of these are low paying jobs shouldn’t matter either.  Unemployment is high right now, so we should expect lower wages to allow the market to clear.  It is supply and demand.  The demand for jobs is high, so we should expect wages to come down to clear the excess supply, which in this case is labor.

Roberts then goes on to make another statement showing his ignorance in economics.  After asking where the remainder of the jobs are, he answers, “A few thousand jobs in finance and insurance, jobs that absorb consumer incomes but produce no product.”

This statement makes absolutely no sense.  If there is no product being produced, then why would consumers spend any money on them?  Are they just not products that he is interested in?  Does he not believe that companies which provide services should be entitled to pursuing a profit?  Does he think that if something tangible that can be held in your hand is not being produced, then it doesn’t count for anything?

I discussed this subject over a year and a half ago.  I referenced an old article by Harry Browne.  Why do jobs have to be in manufacturing to count?  Roberts, and others with the same thought processes, do not understand that this is actually a blessing of the free market.  We live in a society dominated by “services” because we are relatively rich.  We don’t need everyone farming, sewing clothes, and building houses.  These things can be done with a relatively small number of people because of new technology and past capital investment.

Paul Craig Roberts is certainly correct to be concerned about the American economy.  But he should not pretend to know which jobs should be created and what they should pay.  If the free market does not create any new manufacturing jobs, that is because consumers are demanding something else, or else there is no free market (which certainly is the case now).  It means that the manufacturing needs and wants of consumers are already being taken care of, whether it be by other Americans, Chinese workers, or technology.  If it is the case of too much government interference, then the solution is to get the government out of the way.  But nobody should pretend like he knows what jobs should be created and how much they should pay.  That is central planning.

Hi Ted.

Well, if you don’t agree with the others on where to have lunch, at least you won’t be shot if you disagree and decide not to participate.

During Mitt Romney’s speech at the Republican National Convention, he laid out a brief five point plan to improve the economy.  As if libertarians needed another reason not to support this man, even when he gets somewhat specific, his proposed policies are still abysmal.

Romney starts out, “I have a plan to create 12 million new jobs.  It has 5 steps.  First, by 2020, North America will be energy independent by taking full advantage of our oil and coal and gas and nuclear and renewables.”

But why do we want to be energy independent?  Should we also be car independent?  Food independent?  Electronic independent?  Should we just seal off the borders of all trade?  And how is Romney going to do this?  Will he spend massive amounts of taxpayer money to find oil?  And what if the government, or the contractors hired to do it, can’t find enough to become “energy independent”?  Will we have to give up our cars?

Romney continues, “Second, we will give our fellow citizens the skills they need for jobs of today and the careers of tomorrow.  When it comes to the school your child will attend, every parent should have a choice, and every child should have a chance.”

Other than the “choice” part, that could have been said by any Democrat.  This is more top-down centralization of the so-called education system.  How nice of Romney that he will “give” his fellow citizens the skills they need.  How does he or any other politicians know what skills are needed.  This is pure central planning.

Romney continues, “Third, we will make trade work for America by forging new trade agreements.  And when nations cheat in trade, there will be unmistakable consequences.”

So what constitutes cheating and who will determine this?  Will it be Romney, the Congress, or some bureaucratic committee?  What will the consequences be?  Is he going to cut off trade with China?  Will he bomb China?  And why do we need new trade agreements?  Once again, this is total central planning.  Will Romney do this initiative through Congress or will he sign an executive order?  He obviously is not in favor of free trade, as free trade doesn’t really need any agreements.

Romney continues, “Fourth, to assure every entrepreneur and every job creator that their investments in America will not vanish as have those in Greece, we will cut the deficit and put America on track to a balanced budget.”

So we won’t actually have a balanced budget from a President Romney.  He will just get America on “track” for one.  How is Romney going to cut the deficit?  The only specific I have ever heard from Romney is that he is in favor of means testing for Social Security.  In other words, he wants to stiff the old people who are rich, while maintaining everything else.  So where is Romney going to come up with the other $1 trillion dollar or more in cuts necessary to balance the budget?  He is not advocating the elimination of one single department.  I want specifics and I have heard none out of Romney.  If he can’t offer anything substantial while he is campaigning, he certainly is not going to cut anything once he has political power.

Romney continues, “And fifth, we will champion small businesses, America’s engine of job growth.  That means reducing taxes on business, not raising them.  It means simplifying and modernizing the regulations that hurt small business the most.  And it means that we must rein in the skyrocketing cost of healthcare by repealing and replacing Obamacare.”

Did you catch that?  He wants to repeal and replace Obamacare.  What is his replacement?  Will it be Romneycare?  Will it be more socialized medicine than what Obamacare has to offer?  And what is this part about modernizing regulations?  Why does he have to simplify and modernize?  Why can’t he just repeal regulations?  Again, will he get this done through Congress?  Romney’s advocacy of lowering taxes on business is about the only part of this five point plan that is at all attractive to a libertarian.  Even there, who knows what he has in mind.

Libertarians should be very scared of a Romney presidency.  He does not offer any significant alternative to Obama.  At least with Obama in the White House, we have some opposition to big government coming from Congress, even if it is just in rhetoric only.

Here is a short list of phrases that libertarians should avoid, at least when used in a particular context.  I’m sure I will think of many more later.  If you have any suggestions, please leave them in the comments.

“The less fortunate” – when used to describe poor people.  Perhaps some poor people are less fortunate in that they grew up in a poor family with a bad childhood.  But this phrase is used by statists to imply that being poor is all because of bad luck.  It implies that poor people cannot help their own situation.

“The working class” – used to describe the middle or lower class.  It implies that rich people don’t work.  It implies that all rich people got their money through corruption or luck.  If anything, it is often high income people who work the most, particularly small business owners and professionals such as doctors and lawyers.

“We” – when it is used to describe actions of the government.  We didn’t bomb Iraq.  We didn’t run up the national debt.  It was specific people working for the U.S. government who did these things.

“The filthy rich” – used to describe very wealthy people.  Why is rich being filthy?  It was probably invented by statists who use class warfare to imply that having too much money is dirty.  While there certainly are some rich people who are filthy, particularly in our corporatist system, there are still many honest rich people out there who made their money through hard work, innovation, and pleasing customers.

“Ask” – is often used by statists who are actually referring to government force.  It sounds so much nicer to say that we are just “asking” the rich to pay more in taxes.  In reality, they are not asking at all.  They want to tell people to pay more taxes using the threat of violence.  If they are just asking, can people say “no” without going to jail?

“Help those in need” – is again used instead of referring to government force.  This is a code phrase for redistributing wealth.  When statists say they want to help those in need, they personally don’t want to help.  They want to force others to help those in need.

“Democracy” – is often used interchangeably with the term freedom, even though they mean entirely different things.  In fact, they are somewhat opposite.  Democracy is majority rule, which infringes on the rights and liberties of the minority.

“Fair or fairness” – is often used to mean the opposite of freedom, but in a subtle way.  Instead of free trade, many statists will advocate fair trade.  Fair to whom?  If two parties want to trade with each other, is it fair to them for someone else to interfere who has no business?

These are just a few of my favorites.  Many people who aren’t statists, including libertarians, will often unknowingly adopt some of the language of the statists.  We all do it at times.  It is good to be cognizant of our language.

Right after I wrote a blog post about government spending and unemployment, I read an interview (linked from LewRockwell.com) of Charles Goyette.  When I wrote my blog post, I was going after Keynesians, who think that government spending actually helps an economy and helps unemployment. Perhaps, unknowingly at the time, it was also attacking some libertarians, or hopefully setting them straight.

I greatly admire the writings of Charles Goyette.  His book, The Dollar Meltdown, is the one book that I have had permanently linked on my homepage.  Yet, reading this interview today, I felt like a child going to a football game to watch his favorite receiver, only to see him drop several passes while he was wide open in the end zone.

This interview, conducted by Martin Weiss, is a long read.  There are certainly several things that Goyette said in which I agree.  For this post today, I am just going to focus on a few of the things where I found myself vehemently disagreeing.

First, they talk about the coming fiscal cliff in 2013.  I discussed this yesterday.  I said that the media and politicians and even some conservative hosts are lumping together tax hikes and spending cuts.  Well, I guess I should have included Goyette and Weiss (the interviewer).  I don’t really consider them as part of the mainstream media.

Goyette starts off talking about the huge debts that the federal government has run up.  He partially blames our current situation on this and rightly so.  But then he talks about the Budget Control Act of 2011.  He talks about the cuts that will be imposed on defense, Health and Human Services, Medicare, and other entitlements.  He says, “Total: $109.5 billion pulled out of the economy and out of people’s pockets, starting this coming New Year’s Day and every year thereafter.”  The problem here is that Goyette is not talking about the tax hikes.  He is talking about spending cuts.  He has it completely backwards.  If the governments isn’t spending this money, then it will be in the people’s pockets who actually earned it.  This is what we need.  And this money will not be “pulled out of the economy”.  It just won’t be spent (misallocated) by government bureaucrats.

Goyette then says, “According to a recent university study, these and other cuts will destroy more than two million jobs throughout the economy.”

Goyette goes on about how the U.S. defense industry (as if most of it is really defensive spending) will be the hardest hit.  Then Weiss, the interviewer, adds to my misery and says, “after the Great Depression, it was thanks to massive increases in defense spending, for World War II, that the unemployment rate finally dropped.”

This is complete ignorance.  It could be spoken by Obama or Paul Krugman and I wouldn’t know the difference.  While unemployment dropped during WWII, much of it due to millions of young men going off to war, there was no recovery until after the war.  The recovery came in 1946 after federal spending was dramatically cut.  It was one of those rare times in American history when government actually scaled back dramatically.

If that isn’t enough, then Goyette discusses the bailouts and stimulus.  He says they are ending and that “we will NOT have that stimulus to fuel the economy or the stock market – and the impact could be severe.”

I might buy his argument about the stock market, as it seems highly dependent on government debt and money creation by the Fed.  He may even be right that it will expose the fragile economy.  But he needs to be clear that this is what needs to happen.  There should be major cuts in government spending far beyond what he is talking about.  Only then will we correct at least some of the major misallocations from the past.  We need a dramatic scaling back of government so that we can one day have a real recovery.

Lastly (as far as my major criticisms), Goyette talks about some of the ramifications and the appropriate investments.  He says that interest rates are going up.  He says to invest in an exchange traded fund (ETF) that bets on higher interest rates.  He thinks the Fed is suppressing interest rates.

I hate to break it to him, but the market has some say in all of this.  There is no doubt that the Fed’s buying of government debt affects rates and helps keep them down.  But the horrible economy and the fear people have of spending too much and borrowing too much is playing a major role in keeping interest rates down.

Why does he think higher rates are imminent now?  He thinks the Fed will do more money creation.  He thinks the economy is headed for a major downturn in 2013.  Wouldn’t these things keep interest rates low in the short term?

In his book The Dollar Meltdown, I disagreed with one piece of advice he offered.  At that time, he suggested shorting bonds (betting on higher interest rates), just as he is doing now.  I disagreed.  He was wrong on that point several years ago.  How can he be so sure he is right now?  That book is about three years old and rates are just as low or lower than they were then.

I still like Charles Goyette and his writings and I am thankful he is part of the libertarian movement.  With that said, he dropped a few too many passes in this interview and it was rather disappointing.  I hope to see some touchdowns the next time I read or listen to him.

Ron Paul was recently interviewed on Bloomberg TV.  At one point during the interview (at approximately 3:50 in the video), he suggested that government should cut spending.  The woman interviewing him then said, “How is cutting spending going to create jobs?”  And she said it in a rather condescending way.

There is also a lot of talk about a fiscal cliff coming at the beginning of 2013 because if Congress doesn’t act, then tax rates will go up and there will be mandatory spending cuts.  (These aren’t really spending cuts.  They are just cuts in the projected increase, but for the sake of this discussion, we’ll pretend like they really are cuts.)

It is funny (or maybe sad) that the media and politicians are portraying tax hikes and spending cuts on the same level.  They are both referred to as austerity measures at times.  I have even heard conservative commentators referring to the coming fiscal cliff and mentioning both tax hikes and government spending cuts, as if they somehow have the equivalent effects.

This is really the heart of Keynesianism.  It is one of the biggest fallacies that exists in economics and it does us all much harm.

The whole notion of creating jobs is actually kind of ridiculous.  It isn’t that we want to create jobs.  It is that we want to create wealth and we get that from production.  We get production from people working.  If we had unlimited wealth in this world, then it wouldn’t be necessary for anyone to work and we wouldn’t want to create any jobs.  I have explained this before.

The reason that there is high unemployment for people who want to work is due to government interference in the marketplace.  If this government intervention weren’t an issue, then creating jobs wouldn’t be on our mind.

So with that said, if jobs are going to be created, they should be jobs that meet consumer needs and wants.  They should produce something or help someone else produce something, whether that is a good or service.

Only the free market can properly allocate resources to best meet consumer demand.  When the government takes money (resources) through the threat of force and then spends it, these resources are being misallocated into areas that do not best meet consumer demands.

For people to say that cutting government spending hurts the economy or stifles job creation is ridiculous.  Not only is it wrong, but it is actually the opposite of the truth.  Cutting spending will help the economy in the long run and it will actually lead to good job creation.  This is the kind of job creation that satisfies the needs and wants of consumers and makes us wealthier.

By cutting government spending, it puts resources back into the hands of people and businesses.  While people may make bad decisions with some resources, like in starting a business that is unprofitable, they will be quickly corrected by the market through the profit and loss system.  The lack of profits will stop the wasting of resources, whereas there is no such mechanism when government is wasting resources (which it constantly does).

Even if a decline in government spending leads individuals to save more and invest more, there is nothing wrong with this.  We need savings and investment.  We need capital investment to produce more in the future.  This will eventually lead to a rise in our standard of living.  Without savings, a society is unlikely to advance at all.

In conclusion, government spending cuts is what this economy desperately needs.  We need more savings and investment.  We need a correction to reallocate all of the resources that have previously been misallocated due to government interference.  We need jobs that will produce goods and services that are most demanded by consumers.  This will ultimately lead to a sustained recovery and an increase in our standard of living.  More government spending will only keep us down.

The Republican National Convention is over and now we get to look forward to (or not) the Democratic National Convention.  While I am biasedly libertarian and will absolutely not vote for Romney or Obama, I am going to try to offer some unbiased analysis.

I didn’t watch the whole convention in Tampa, but I did see a few speeches.  I saw Rand Paul, Paul Ryan, Marco Rubio, Clint Eastwood, and Mitt Romney.  I have to say that out of all of those people, Romney was by far the least charismatic.  Perhaps Eastwood’s speech was a little strange, but it wasn’t boring.  Plus, it may have even rattled the establishment a little.  And I’m not saying that I believed all of the talk about liberty from the other speakers, but they were somewhat charismatic.

Romney, on the other hand, comes across as stiff and robotic.  He is another John Kerry or Al Gore.  He is a dud.  He does not come across as stupid like George W. Bush, but he doesn’t really come across as all that likeable.  He doesn’t come across as unlikeable either (except for some of the things he is saying).  He seems like a decent family man, but it is always hard to say.  I consider most politicians to be sleazy, and I’m sure he is no exception.  Regardless, he just doesn’t have much appeal to the average person.  Republicans are supporting him because they hate Obama.

I’m not saying that Romney’s lack of charisma is a reason to not support him, but it is a reason that millions of Americans won’t support him.  It should be for his bad policy proposals and his lack of principles, but it will be his lack of charisma that mostly haunts him.

After the Democrat’s convention, Obama will likely get a slight bounce back up in the polls.  At that point, I think Obama is the favorite to win the election.

Romney and the Republican establishment really ticked off the Ron Paul supporters in Tampa.  The word has spread quickly through the internet of their treatment.  My guess is that the large majority of Ron Paul people will not vote for Romney.  They probably won’t vote for Obama either.  Some will go to Gary Johnson, some will write in Ron Paul’s name, and some will stay home.  Regardless, Romney will not get many Paul supporters voting for him.

I do see one scenario where Obama could lose to Romney.  If there is some major bad economic news in the next two months, then Obama may be done.  For example, let’s say that the stock market (the Dow) drops 2,000 points over the next two months.  Let’s say that unemployment continues to tick back up.  This may be enough to tip the scales in favor of Romney.  Ironically, there is not much Obama can do about this.

Most potential voters are probably already decided at this point.  There is probably about 10% of the voting population who could still go either way.  If things stay the same between now and the election, then they will likely default towards Obama.  If things are looking worse, particularly economically, then they might decide to pull the lever for Romney.

I know I make a lot of Republicans mad when I say this, but I don’t thing it will matter much either way.  In some ways, Romney could possibly be worse if he decides to take military action against Iran. As far as economics, Romney will not be any better than Obama, especially because there will no longer be any opposition to big government coming from the House of Representatives, even if it is just in rhetoric only.  There might be a slight hope of repealing Obamacare if Romney wins, but even this is doubtful.  The Republicans would have to win the Senate and then they would actually have to get the votes for repeal.

As far as investment implications, I don’t think there are any.  Conservatives think that the economy is completely dependent upon extending the so-called Bush tax cuts.  Liberals (in the modern use of the term) think that the economy will run better if we tax the rich more.  But it all goes so far beyond tax rates.  More important is the spending, government regulations, and Fed policy.

If Romney is elected and all of the tax cuts are extended into 2013, it will not make much of a difference.  We are still facing a massive recession, or else massive price inflation before that.  It cannot be avoided at this point because of all of the previous malinvestment that has taken place.

It is somewhat ironic because the Democrats and Republicans should be hoping the other side wins.  Whoever is president in the next term is going to face major economic problems and is probably going take a lot of blame.  The problems have already been created.  The only way to solve them at this point is to cut spending massively and default on some of the government promises.  I don’t expect that out of Obama or Romney, unless they have no choice.

In conclusion, I predict Obama will win unless there is some kind of major change like a big drop in the stock market.  Intrade is also predicting an Obama win at this point, with about 58% voting (with their money) in favor of an Obama win.