US Set to Re-stage Greek Tragedy

Germany, Europe and the world are hoping that the same fate is not in store for the US

By David Böcking

The US has more in common with heavily indebted southern European countries than it might like to admit. And if the country doesn't reach agreement on deficit reduction measures soon, the similarities could become impossible to ignore. The fiscal cliff looms in the near future, and it’s not just the US that is under threat.

The US has finally voted and the dark visions of America's future broadcast on television screens across the country -- and most intensively in battleground states -- have come to an end. Supporters of both Barack Obama and Mitt Romney had developed doomsday scenarios for what would happen if their candidate's opponent were to win. Four more years of Obama, the ads warned, would result in pure socialism. A Romney presidency would see the middle and lower classes brutally exploited.

But following Obama's re-election, Americans are now facing a different, much more real horror scenario: In just a few weeks time, thousands of children could be denied vaccinations, federally funded school programs could screech to a halt, adults may be forced to forego HIV tests and subsidized housing vouchers would dry up. Even the work of air-traffic controllers, the FBI, border officials and the military could be drastically curtailed.

That and more is looming just over the horizon according to the White House if the country is allowed to plunge off the "fiscal cliff" at the beginning of next year. Coined by Federal Reserve head Ben Bernanke, it refers to the vast array of cuts and tax increases which will automatically go into effect if Republicans and Democrats can't agree on measures to slash the US budget deficit.

Do We Have What It Takes To Get From Here To There? Part 2: China

Pull aside the curtain and what you find is a China crippled by corruption and debt

by Charles Hugh Smith

Does China have what it takes to get from here (industrialized export economy) to there (sustainable growth, widespread prosperity)? The same can be asked of every nation: do they have what it takes to move beyond their current limitations to the next level?

Let's start with the fundamentals, what every nation must have to establish a stable, sustainable, widely shared prosperity. These are not just ethical niceties--these are the foundation of economic security.

Consider corruption. Corruption isn't just a "values" issue: corrupt societies have corrupt economies, and these economies are severely limited by that corruption. A deeply, pervasively corrupt economy cannot get from here to there.

Corruption acts as a "tax" on the economy, siphoning money from the productive to the parasitic unproductive Elites skimming the bribes, payoffs, protection money, unofficial "fees," etc. By definition, the money skimmed by corruption reduces the disposable income of households and enterprises, reducing their consumption and investment.

"Income" derived from corruption is the classic example of "unearned" feudal rights being imposed on serfs, a broad-based "tax" that keeps them impoverished.

The other side of the corruption coin is transparency: thus it is no surprise that Transparency International is the organization that monitors corruption globally and that issues its annual The Corruption Perceptions Index that ranks countries/territories based on how corrupt their public sector is perceived to be.

The top of the least--most transparent, least corrupt--are Denmark, New Zealand, Singapore, Finland and Sweden, with Canada, Netherlands, Australia, Switzerland and Norway close behind.

Germany ranks 15, Japan 17, Chile 21, the U.S. 22, France 25, Spain 30, Souyth Korea 39, Italy 67, Brazil 69, China 78, India 87, Egypt and Mexico, tied at 98, Indonesia 110, Vietnam 116, Syria and Uganda, tied at 127, Azerbaijan 134, Iran 146, Russia 154, and at the bottom of the list (or the top if we are measuring corruption), Iraq, Afghanistan, Myanmar and Somalia at 175 - 178.

Back to Constitutional Conservatism

The GOP needs new ideas rooted in old ones

By JACK HUNTER

Now that Mitt Romney has lost, virtually everyone agrees that the Republican Party needs to change. Liberals say the GOP needs to become more moderate. Conservatives say it has become too moderate. In a way, both sides are right — and wrong.

The moderate Republican ticket that liberals and GOP establishment types covet has been tried recently: Mitt Romney and John McCain. Conservatives are right that a more moderate Republican Party is not the answer.

What many of them are wrong about is conservatism. To turn on talk radio or watch Fox News is not to experience the philosophy of Bill Buckley, the rhetoric of Ronald Reagan, or even something like the free market proposals of Jack Kemp. Aside from Paul Ryan’s proposals for entitlement reform—one of the few tangibly conservative and positive differences that separated the Romney and Obama tickets—the populist Right remained stuck on stupid: The President “apologizes” for America; the U.S is threatened by Sharia Law; “Where’s the birth certificate?” Obama eats dog. Donald Trump. Dinesh D’Souza.

Demagoguery, partisanship, and conspiracy theories do not represent ideas. They represent a lack of them. Throw in some clumsy language about “legitimate rape” and couple it with Romney’s Dubya impression on foreign policy, and Americans saw a “conservatism” they didn’t want. Who can blame them?

The Looming Sunni-Shia Crisis

Sectarian tension roils four Mideast countries

By KELLEY VLAHOS

No one — not Washington, nor the establishment press — seems ready to confront the Sunni-Shia conflagration that threatens to rock whatever narrow foreign policy hold the U.S. has in the region, promising a bleak landscape of war for years to come.

Foreign policy had been largely sidelined in American political discourse over the last year, but now that President Obama has secured a second term, and the roiling conditions in the Middle East before November 6 haven’t subsided — they will become harder to ignore.

“No one is paying attention to this,” says Adil Shamoo, an Iraqi-American author and professor at the University of Maryland. Shamoo was born and raised in Iraq and is a Chaldean Christian who is horrified at the sectarian strife that has divided his native country since the American invasion of Iraq nearly 10 years ago. He sees the American presence there as unleashing the simmering tensions between the Sunni and long-repressed Shia majority, leading to institutional discrimination and a backlash against other religious minorities, particularly the now-dwindling Iraqi Christian population. Worse, he sees the conflict playing out throughout the region today.

“I think it’s the most dangerous development in the Middle East, in the Muslim world,” he told TAC in a recent interview, “because you’re talking about hundreds of millions of people potentially fighting each other and it has become real now.”

Do We Have What It Takes To Get From Here To There? Part 1: Japan

The Japanese model of incrementally perfecting consumer technologies may well have have reached marginal returns

by Charles Hugh-Smith

Do we have what it takes to get from here to there?

This apparently simple question offers profound insights into the dynamics of individuals, households, enterprises and nation-states. If we answer this question honestly, it establishes a "road map" of what must be in place before a progression from here to a more sustainable future ("there") can take place.

Individuals, households, enterprises and nations can have goals--where they want to be in the future--but to get there, they need to construct the necessary foundation of values, processes, skillsets, networks, practical experience and capital.

Since my partner and I built about 100 houses back in the mid-1980s, I see building a house as a useful analogy for getting from here to there: each step requires different tools, skills, experience and sufficient capital invested to get to the next phase. If you don't have all of these in hand for each step, the goal of completing the house will remain a fantasy.

As correspondent Mark G. recently observed in an email, "hyper-centralized entities are institutionally incapable of adopting decentralized solutions." I immediately thought of the Federal Reserve, which has responded to a crisis of centralized "too big to fail" banks holding phantom collateral to support massive leverage and debt with increasingly centralized actions to recapitalize those same centralized banks.

Rolling Over The Fiscal Cliff

The Next Four Years Won't be as Good as the Last

BY LANCE ROBERTS

The people have spoken and President Obama will serve another four years presiding over the United States. Furthermore, there is very little change to the makeup of the House and the Senate, which leaves the Administration in the same battle for control as it was prior to the election. The question now is what will the next four years look like economically?

One thing that has been overlooked on many fronts is that Obama had control of the House and the Senate when he first entered office in 2009. This control lead to the passing of ObamaCare, successive bailout programs for housing, automobiles, and the financial industry which flooded the economy, and financial markets, with dollars - a lot of dollars. Those injections, combined with a massively bombed out economy from the financial crisis, led to a sharp rebound in economic growth which was almost entirely centered around inventory restocking and a resumption of exported goods and services.

However, in 2010, Obama lost control of the House to the Republicans which has led to two subsequent years of political gridlock. That gridlock has resulted in very little progress in providing the fiscal policies necessary to support economic growth.

This lack of progress, which has clouded the planning ability for small businesses, combined with the recession in Europe and slowdown in China, has reduced the need for continued buildup of inventories as the exportation of goods and services has been slowing. The chart below shows the boom in both exports and imports post the recessionary bottom as stimulus impacted the economy and the subsequent fade as economic strength has waned.

Desperate times for Cristina Fernandez

Argentina Cuts Voting Age as Fernandez Aims to Boost Support

By Eliana Raszewski

Argentine lawmakers approved a bill lowering the country’s voting age, a move that could rally youth support as President Cristina Fernandez de Kirchner tries to revert a slide in her popularity ahead of congressional elections next year.

The lower house approved the bill in a 131-2 vote yesterday, converting Argentina into one of only a handful of nations where 16-year-olds can vote. The government-backed bill, which passed the Senate in early October, allows young people to cast ballots two years before voting becomes mandatory at age 18.

Fernandez has courted young voters since being elected in 2007, naming members of the government-aligned “La Campora” youth group to top positions and tapping funds from the social security agency to provide students with free laptops. Expanding the suffrage may help build support for the government even further as the opposition tries to capitalize on growing frustration with Fernandez’s handling of the economy, political analyst Carlos Fara said.

“The government believes that the more politically active young people will vote for the ruling party,” said Fara, who runs Carlos Fara & Asociados in Buenos Aires.

3 Myths You Still Believe About Automotive Manufacturing

The idea of buying "American cars" is in several ways a myth that is used to sell cars

By Tyler Crowe

Last year's "Halftime in America" ad from Chrysler was probably meant to inspire patriotism and allude to the resurgence of American automotive manufacturing. What this ad failed to mention, though, was that it was brought to you by an Italian company.

The idea of buying "American cars" is in several ways a myth that is used to sell cars -- and it's not the only one.

Myth 1: Buying "American" cars
When Americans hear the term "American car," our knee-jerk association is the American brands. While it is true that General Motors (NYSE: GM  ) , Ford (NYSE: F  ) , and Chrysler originated in the United States, it doesn't necessarily mean the cars they manufacture are more American than the foreign brands. Every year, Cars.com puts out a list of the most "made in USA" cars on the road. This list measures whether the car is assembled in the U.S., and the percentage of parts that originate here. Of the 2012 models, five of the top seven come from Japanese manufacturers.

Car Make and Model	Assembly Plant	Percent "Made in U.S."
Toyota Camry	Georgetown, Ky.	80%
Ford F-150	Dearborn, Mich.	60%
Honda Accord	Marysville, Ohio	80%
Toyota Siena	Princeton, Idaho	75%
Honda Pilot	Lincoln, Ala.	70%
Chevrolet Traverse	Lansing, Mich.	75%
Toyota Tundra	San Antonio, Texas	80%

Sources: Cars.com and abcnews.go.com.

Fiscal Suicide as Recovery Strategy

Only solution: a return to markets

BY DETLEV S SCHLICHTER

I do not want to waste your time and my energy with shooting down misguided Keynesian schemes all the time, schemes that have been refuted long ago and should by now be instantly laughed out of town whenever put forward. But arch-Keynesian Richard Koo’s latest attempt in the commentary section of the Financial Times to justify out-of-control deficit spending in the United States as a smartly designed and necessary policy that will keep ‘aggregate demand’ up and lead to recovery, is making the rounds on the internet. Koo’s article is a mechanical and naïve exposition of the 101 of Keynesian stimulus doctrine, clearly aimed at those who still perceive the economy as a simple equation with Y, C, I and lots of G in it. If private demand falls out from under the bottom of the economy, it can be replaced with the government’s demand. Simple.

And wrong, of course.

But the piece is not without some educational value. I promise this will be shorter than my attack on the new money mysticism at the IMF.

Fiscal suicide as recovery strategy

I am not sure if even in Washington there is anybody left who still seriously claims that $1 trillion-plus deficits year-in and year-out are anything but a sure-fire sign of a public sector out of control – a public sector that despite generous and growing staffing levels is simply running out of fingers to put into the many holes from which the money is leaking. Yet Richard Koo wants us to believe there is a method to the recklessness, that this is a finely calibrated strategy to save the economy.

Koo’s story goes like this: The private sector has overdosed on credit in the preceding boom and is now in the process of balance sheet repair. Households and corporations are not borrowing, investing and spending but instead saving and paying down debt. This is sensible and unavoidable, and not even artificially low rates of zero percent can persuade them to change their ways and rather borrow and spend. This is where the government has to step in. It has to borrow the funds that corporations and households save and pay back to their original creditors, and spend these funds for the greater good so that ‘aggregate demand’ is kept from collapsing and the economy from tanking.

The Keynesians’ New Clothes

Après nous, le déluge

BY JOHN BUTLER
Since early 2010 I have been arguing against the core neo-Keynesian precepts of the economic and monetary policy mainstream. In general I have not been optimistic that, notwithstanding their abject failure to foresee the global financial crisis, and their ongoing, failed responses thereto, the mainstream would reconsider its views. But some interesting developments on multiple fronts indicate that they are doing just that. So does this represent the beginning of the end of the flawed neo-Keynesian policies that treat debt rather than savings as real wealth; consumption rather than investment as sustainable growth; and money as something to be manipulated to ‘manage’ the economy? Sadly, no. While they may realise that their policies are failing, what they are now contemplating is an even more radical programme of outright debt monetisation, wealth confiscation and vastly expanded central planning. Investors must take appropriate actions to protect themselves now, before such policies are implemented.

A Brief Word on the US Elections

Naturally there is all manner of comment out there at present about the investment implications of the US elections. My thoughts have already been expressed in the past. I will reprint two excerpts here and leave it at that. The first is from November 2010, when I briefly discussed the impact of a divided Congress, which will remain so divided for at least the next two years:

[G]ridlock, it would seem, makes it all the more likely that the government is going to go right on doing more or less as it has done during the past few years. This is made all the simpler by the fact that the vast bulk of the US federal budget is non-discretionary. Yes, that’s right: All the time and money spent lobbying and lawmaking in Washington may keep the local economy booming and fill the newspapers with all manner of suspenseful headlines but, in reality, it is increasingly irrelevant with respect to the overwhelming portion of the federal budget, which grows automatically and is no longer just chronically in deficit, but amidst weak economic growth, exponentially so.

So for all those out there who believe that somehow gridlock is good, think again. The US is on the path to economic ruin... Après nous, le déluge.¹

And more recently, during the just-concluded campaign, I had this to say:

President v Congress, Republicans v Democrats, left v right: If there is anything the post-WWII history of US monetary and fiscal policy should teach us, it should be that when it comes to growing the money supply and the federal debt, Washington DC is run by a single branch of government, a single party and a single point on the left-right spectrum. And this branch, the party that controls it and its political orientation is not something that changes with elections. It is a national political pathology.²

So now, with the US elections settled, let’s step back and take in the larger, global picture. It isn’t pretty.

The Era Of Big Government Is Back!

It’s more than just the nanny state, it’s the sugar daddy state

By Merrill Matthews

In his State of the Union speech on January 23, 1996, President Bill Clinton famously proclaimed, “The era of big government is over.”  If anything is clear from the Obama victory, it is that the era of big government is back.

While the pundits pour over the voter turnout results and parse their meaning for Republicans and future elections, there is at least one common thread uniting all of those who voted for President Obama: They all believe in big-government handouts and bailouts.

It’s more than just the nanny state, it’s the sugar daddy state.

More so than race or gender, the biggest divide in the country may be those who embrace the government as sugar daddy, versus those who don’t.  Obama’s whole campaign was based on handouts and bailouts.  While Governor Mitt Romney tried to maintain his focus on the economy, Obama stressed how much he had given away—and would give away if reelected.

In Michigan and Ohio the president wanted voters to know that he came to the rescue of the auto industry—though for some reason he didn’t blame George W. Bush, who actually initiated the first bailouts.

While Romney tried to talk about getting the government out of health care, Obama wanted to make sure women knew that he provided them with free contraceptives.

Four More Years

Get ready for real trouble

by Andrew P. Napolitano

Only in America can a president who inherits a deep recession and whose policies have actually made the effects of that recession worse get re-elected. Only in America can a president who wants the bureaucrats who can't run the Post Office to micromanage the administration of every American's health care get re-elected. Only in America can a president who kills Americans overseas who have never been charged or convicted of a crime get re-elected. And only in America can a president who borrowed and spent more than $5 trillion in fewer than four years, plans to repay none of it and promises to borrow another $5 trillion in his second term get re-elected.

What's going on here?

What is going on is the present-day proof of the truism observed by Thomas Jefferson and Alexander Hamilton, who rarely agreed on anything in public: When the voters recognize that the public treasury has become a public trough, they will send to Washington not persons who will promote self-reliance and foster an atmosphere of prosperity, but rather those who will give away the most cash and thereby create dependency. This is an attitude that, though present in some localities in the colonial era, was created at the federal level by Woodrow Wilson and Theodore Roosevelt, magnified by FDR, enhanced by LBJ, and eventually joined in by all modern-day Democrats and most contemporary Republicans.

Mitt Romney is one of those Republicans. He is no opponent of federal entitlements, and he basically promised to keep them where they are. Where they are is a cost to taxpayers of about $1.7 trillion a year. Under President Obama, however, the costs have actually increased, and so have the numbers of those who now receive them. Half of the country knows this, and so it has gleefully sent Obama back to office so he can send them more federal cash taken from the other half.

Bad Ideas Never Die

Gaga Over Galbraith

by Joseph T. Salerno

Based on his book sales, John Kenneth Galbraith was probably the most read economist of the 20th century. From the publication of his first bestselling book The Great Crash in 1954 through the 1980s, the American left-liberal intelligentsia and media breathlessly anticipated and wildly celebrated the publication of each new book. Nonetheless, most technical economists, regardless of their political orientation, did not take his work seriously. By the 1990s Galbraith's work had been thoroughly discredited among professional economists. Indeed, in his 1994 book, Peddling Prosperity, leftist economist Paul Krugman held up Galbraith as the prototype of a left-wing "policy entrepreneur" who, like his supply-sider counterparts on the Right, sought an audience among policymakers and the educated public, outside the cozy circle of academic economists.

In his book, Krugman ridiculed The New Industrial State, Galbraith's magnum opus. He pointed out its wildly erroneous predictions regarding the evolution of the US economy toward greater dominations by giant corporations that were insulated from market forces, manipulated consumer preferences at will through advertising, and whose interlocking managerial and technological elites (the ominously labeled "Technostructure") could make decisions without regard to the interests of stockholders. With rhetorical understatement, Krugman concurred with the sentiments of earlier academic critics, characterizing the book as one that "could safely be ignored."

The far-right-sounding ideas of Swiss greens EcoPop display the misanthropy of Malthusian thought

The greens showing their true colours

by Patrick Hayes 

For greens, the ends will always justify the means when it comes to saving the planet. In the UK, they have opportunistically latched themselves on to left-wing movements to try to gain purchase with a broader public. But, as Swiss campaign group Ecology and Population (EcoPop) has demonstrated, in an attempt to pursue their Malthusian goals, greens can be equally happy tapping into the anti-immigrant rhetoric of the far right.

In a stunt last week, members of EcoPop carried dozens of cardboard boxes into the Swiss chancellery which contained 120,700 certified signatures calling for immigration into Switzerland to be capped at 0.2 per cent of the resident population. Under Swiss law, this means that a referendum will now be held on the proposal. Such a move trumps even the efforts of the far-right Swiss People’s Party, which has long lobbied for greater immigration controls.

But these greens aren’t mobilising for an immigration clampdown with banners claiming ‘keep the darkies out’ as right-wing groups have done in the past. Nor are they using dodgy, discredited scientific arguments to justify racial superiority, wielding books like Madison Grant’s The Passing of The Great Race for evidence.

No, instead EcoPop delivers its demands for immigration curbs carrying a banner asking: ‘How many people can the Earth tolerate?’ The group’s members use the (equally dodgy and discredited) Malthusian science of population growth and babble on about our ‘finite planet’. And they have reportedly been strongly influenced by the theories of US Malthusian Paul Ehrlich, author of The Population Bomb.

EcoPop bends over backwards to claim that it is not singling out particular races when advocating its policies. According to the BBC, it claims to be ‘opposed to all forms of xenophobia and racism’. But, the group says, ‘Switzerland must limit immigration to avoid urbanisation and to preserve agricultural land’.

Defending the press as an unruly mess

The myth that the UK press is too free

by Mick Hume 

As the debate about press regulation warms up with the reportedly imminent publication of Lord Justice Leveson’s report, there seem to be some important misconceptions around.

On one side, those demanding regulation backed by statute appear to be either deluding themselves or attempting to delude the rest of us that this is not the same thing as state interference in the press. But it is.

On the other, some of those resisting such a regulatory system seem to assume that anything short of statutory-backed regulation would be a victory for press freedom. But it would not necessarily be so.

These issues came into focus at two events I spoke at recently, involving both sides of the debate. One was the first event of the Free Speech Network (FSN), a loose alliance of media-industry groups. The other speakers were Professor Tim Luckhurst, whose important pamphlet against statutory regulation, Responsibility Without Power, was launched at the meeting, and Conservative MP John Whittingdale, chair of the House of Commons Culture, Media and Sport committee. The audience included a lot of media people and various journalism lecturers and professors from the Hacked Off lobby – hackademics, the poachers-turned-gamekeepers of this whole debate. They were given plenty of scope to argue for statutory-backed press regulation by the chair, John Humphrys, in his best the-BBC-really-is-neutral mode (he even allowed them the last word, from the floor). Hacked Off’s celebrity voiceover artists were also there, but made less of a contribution: Hugh Grant went off in a huff after his Channel 4 film crew was refused entry, while Steve Coogan stood at the back looking grumpy throughout and at the end gave a half-hearted ‘boo’.

Russia's Socialist Heritage

Why is such a rich country so poor?

By Anthony de Jasay

Why should Russia lag so far behind other industrial countries, why is it unable to make more of its obvious economic potential?

Admittedly, the country is penalised by a number of initial structural handicaps. Culturally, it is neither fish nor fowl, being neither wholly European nor wholly Oriental on personal characteristics and traditions, suspicious of and suspected by both worlds. It extends over too large an area compared to its population, saddling both the production and the distribution of its output with heavier transport costs than countries of denser population have to bear. Perhaps most important, it has an unfriendly climate. Some historians, tongue in cheek, explain the expansionary drive of Russia over the last three centuries by the longing of its people to escape from the climate of their homeland and settle under a sunnier, less humid, healthier sky, yet still their own empire. As for cultivating the land, the saying goes that there are four natural catastrophes in Russia every year, Spring, Summer, Autumn and Winter.

All in all, however, the endowments almost certainly outweigh the handicaps. Russia, even after the secession of the Ukraine, has enough high-quality farmland. It has inexhaustible resources of timber and vast deposits of every kind of ore from iron and bauxite to gold, much of it low cost. Using these resources, there is a reasonably educated work force of mixed quality, working 1,900 hours a year that compares with about 1,500 in Western Europe. Russian workers are mostly obedient and bow to authority, they have weak unions, strikes are rare and wages are settled on the level of the enterprise rather than of the nationwide industry, an advantage the Russian labour market has over the West and that keeps unemployment at just over 5 per cent, close to the level of practically full employment. Skill from shop floor to middle management level is adequate. Far more decisive than any of these more or less commonplace advantages is Russia's exceptional oil and gas wealth, of which more below. Taking a rough-and-ready account of both the obvious helps and hindrances, the visitor from Mars would expect Russians to be no less prosperous than Englishmen, Frenchmen or Germans. His expectation would be legitimate, but very far out.

Who Killed Rudy Giuliani?

How Ron Paul won the war for conservatism’s future

By W. JAMES ANTLE III

When Ron Paul leaves office in January, he will have been more successful than many of the legislators who spent decades maligning him. Paul’s ideas have gradually gone from marginal to mainstream, and his record shows how much even a single determined man of principle can do to change a movement. In foreign policy especially, the Texas congressman leaves behind a new generation of leaders, both libertarian and conservative, who challenge the disastrous bipartisan consensus.

A decade ago, only seven Republican members of Congress voted against the Iraq War—six congressmen and one senator. The number of conservative legislators who opposed the war was even smaller still, the redoubtable trio of Jimmy Duncan, John Hostettler, and Paul.

The other dissenters were moderate to liberal Republicans representing districts where George W. Bush and any policy he proposed—much less sending young Americans to die in a war of choice—would have been deeply unpopular. Lincoln Chafee, the only GOP senator to vote against the authorization of force, was the son of the last great Rockefeller Republican and easily his party’s most liberal member of Congress. Connie Morella of Montgomery County, Maryland represented the most Democratic congressional district held by a Republican.

Rounding out this group was the unpredictable Iowan Jim Leach and Amo Houghton, a New Yorker who voted with Democrats on many issues. While Paul, Duncan, and Hostettler all opposed the war from the right, the bare majority of antiwar Republicans opposed it from the left.

Small as this group was, its ranks would soon grow thinner. Morella was defeated in 2002, right after voting against the war, the victim of redistricting by Maryland Democrats. Houghton retired after the 2004 elections. Chafee, Hostettler, and Leach were all defeated in the Democratic tidal wave of 2006.

Barack Obama’s new ethnic majority

An irresistible political force is about to meet an immovable economic object — on the edge of a vertiginous fiscal cliff

By John O'Sullivan

‘I’ve come back to Iowa one more time to ask for your vote,’ said President Obama at an emotional ‘last ever’ campaign meeting. ‘Because this is where our movement for change began, right here. Right here.’ And his eyes briefly moistened. The nostalgia was doubtless sincere, and the address correct, but it was misleading to describe his 2012 election campaign as a continuation of his earlier ‘movement for change’. In reality, it has been a smoothly ruthless operation to distract attention from a record that has been disappointingly bereft of change. He triumphed over himself as much as over the hapless Mitt Romney.

Until it produced a glossy economic leaflet so that the President could wave it as evidence that, like Romney, he too had a ‘plan’, the Obama campaign had concentrated on blaming George W. Bush for America’s continuing troubles. It denounced Romney as a vulture capitalist murderously hostile to ordinary people, and promised to protect women against the GOP’s supposed plan to abolish both contraception and abortion. Both sides ran relentlessly negative adverts but, as the result showed, the Democrats did it better. Obama will be President for another four years.

To win in circumstances that seemed ripe for his defeat is a remarkable achievement — but the victory can scarcely be described as glorious. The President almost tied with Romney (whom he reportedly despises) in the popular vote. The loss of Senate seats had little to do with his coattails but was largely due to the individual follies or bad luck of Republican candidates. Republicans retained control of the House and now control 30 governorships, the highest number since 2000. The President will have to deal with a hostile half of Congress in an atmosphere poisoned by the extraordinarily ruthless partisanship of this ‘post-partisan’. And in one vital particular, the campaign almost foundered.