Election 2012

AIG Stock Sale Doesn't Justify Bailout Package

The U.S. government, for the first time since 2008, is officially a minority stakeholder in American International Group Inc. (NYSE: AIG), with an $18 billion stock sale that made money for taxpayers.

The AIG stock sale will reduce the government's stake in the insurance company to about 22% from 53%.

The U.S. Treasury Department announced Sunday it was selling a large chunk of shares in the bailed-out insurer. The government saved AIG in 2008 and 2009 with a bailout package that totaled around $182 billion.

Including Monday's sale and money from AIG, the Treasury claims it has recovered a total of $197.4 billion from AIG - a $15 billion profit for taxpayers.

It's not surprising the government is selling AIG shares. What is unexpected is that such a large chunk of AIG stock will be released into the market at once, instead of spaced out over time.

One reason to shed the stock faster than planned is to credit U.S. President Barack Obama with taxpayer profit ahead of a tight race for the White House.

White House Press Secretary Jay Carney said Monday, "We have been committed to exiting those investments as quickly as practicable. What it does demonstrate is an ongoing commitment to recover taxpayer money. It's safe to say the president is pleased with the progress being made as we wind down these investments."

But even with a multi-billion dollar profit, defending private-sector bailouts is an impossible sell to most voters.

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National Conventions: It's My Party and I'll Lie If I Want To

Now that both the Republican and Democratic national conventions are over, one key question remains: Which side has the best liars?

If America's two major political parties have anything in common, it's the ability to fold, twist and mutilate the facts of any given subject.

Almost every speaker at both national conventions did their utmost to uphold this ignoble tradition of American politics.

When the media called several GOP speakers on their political lies, a pollster for GOP candidate Mitt Romney, Neil Newhouse, responded with what may have been the most truthful words spoken by any political figure over the past two weeks:

"We're not going to let our campaign be dictated by fact-checkers."

The Democrats, of course, gleefully pointed this out at their national convention a few days later even while committing transgressions of their own.

Hypocrisy, thy name is politics.

Since the American voter deserves better in Election 2012, here's a more accurate look at some the truth-challenged rhetoric uttered by the people who want us to trust them with running the country:

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August U.S. Jobs Report Critical for President Obama

The August U.S. jobs report is critical on many levels.

Due out tomorrow (Friday) by the U.S. Labor Department, the August report isn't expected to be enough to lower the U.S. unemployment rate.

An uninspiring 120,000 jobs are expected to have been added in August, according to a CNNMoney survey, a notable slowdown in hiring from July's seasonally adjusted 163,000.

July's number was the strongest showing in five months, yet it still was not vigorous enough to keep up with population growth. The unemployment rate actually ticked up a notch to an unhealthy 8.3%.

Here are two reasons tomorrow's U.S. jobs report is a biggie.

August U.S. Jobs Report: What's at Stake?

  • President Obama's Obstacle

    The employment report comes just weeks before the November presidential election. President Obama and his administration have long been blamed for the stagnant and elevated unemployment level, the lack of job creation and as a result, the slow going economy.

    With just three more monthly jobs reports due out prior to the November election, Team Obama could certainly use a boost from better-than-expected numbers. The president is treading at break-even level on jobs and it is very doubtful that the unemployment rate will fall below 8% by then.

    "The soft economic environment that we're having is not going to be good for any incumbent. It's a tough sell for anyone in office," Sam Bullard, a Wells Fargo senior economist told CNN Money.

    No incumbent president has won re-election with an unemployment rate greater than 7.2% since FDR's rein.

    On the other side of things, according to a piece in Business Insider, a top Wall Street source who backs presidential hopeful Mitt Romney said a robust showing in Friday's report bodes well for President Obama. "If the number is good Friday it doubles his [President Obama's] bounce. Maybe triples it. If it comes in really low, it could extinguish it. I don't think there's ever been a more important jobs number, politically, than this one."

    If the report nearly meets or matches the expected 120,000, it "won't matter as much" according to the source.

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Election 2012: Why the GOP Is Really Talking About the Gold Standard

One of the most surprising proposals from the Republican National Convention was that the GOP platform for Election 2012 includes a commission analyzing a return to the gold standard.

Ever since the United States went off the gold standard in 1971 the U.S. monetary base has grown to its current level of roughly $2.56 trillion. With this increase has come an even more alarming rise in the federal deficit. Currently the U.S. has around $222 trillion in unfunded liabilities.

That's why many, most notably Rep. Ron Paul, R-TX, have called for a return to the gold standard and a compete audit of the Federal Reserve.

But as opponents are quick to point out, it is impractical, impossible, and highly unlikely that America's enormous monetary supply would be backed by gold.

Some on the left, such as Paul Krugman of The New York Times, called the return to the gold standard "an almost comically (and cosmically) bad idea."

So why would the GOP bring it up?

Experts have theorized that the inclusion of a gold standard commission on the GOP party's platform is just a way to encourage Ron Paul supporters to join the Romney camp.

Within the GOP there are worries that these devoted "Paulites" will not vote for Romney unless more of Paul's agenda is taken seriously. The move to "audit the Fed" and a return to the gold standard are two ideas Paul supporters care most about.

But there's more to the gold standard proposal than pleasing Paulites.

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Election 2012: Obama's Odds Are Pretty Good if You Ask Mr. Market

If you want to know who's going to win Election 2012, just ask Mr. Market. He has a knack for picking presidential winners.

As it happens, stock market performance in the years and months leading up to a presidential election is one of the most reliable indicators of who will win and who will lose.

And the way things look at the moment, Mr. Market really likes the President Barack Obama reelection odds.
Obama Reelection odds
"It's suggesting that Obama's got a better chance than people think," Jeff Hirsch of Stock Trader's Almanac told Yahoo's Breakout last week. "Incumbent victories are accompanied by much larger gains in the stock market. The Dow Jones has been up significantly higher in election years when incumbents win. And it looks like the track that we're on here."

Hirsch's data shows that since 1901, election years in which the incumbent wins enjoy a Dow Jones Industrial Average rise of 6% by August and 12% by Election Day.

So far this year, the Dow is up nearly 8.5% -- comfortably in re-election territory for President Obama.

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Election 2012: A Candidate With Economic Heft, Paul Ryan is No Sarah Palin

Win or lose, the most recent vice-presidential choices never mattered much when it came to the economy.

From Joe Biden to Sarah Palin to John Edwards, none of them were ever known for their grasp of economic policy.

But Paul Ryan is different.

His selection as vice presidential nominee last weekend has significant implications for the economy if the Republican ticket wins Election 2012.

In fact, the selection tells us more about Mitt Romney than we knew before, since Ryan is committed to a group of policies difficult to implement but which would change the direction of U.S. fiscal policy.

If you're interested in an adult conversation about the dangers of the fiscal cliff, the selection of Paul Ryan ensures you are going to get one this fall.

As an investor, that means you need to position yourself to benefit from a GOP win, without damaging your wealth if the just about equal possibility occurs of losing to President Barack Obama and Vice-President Biden.

With Ryan now in the race, here's what you need to know about this up-and-comer from Wisconsin.

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What Investors Love About the Romney Tax Plan

With Election 2012 less than one hundred days away the verbal slingshots between the two candidates have picked up in negativity. Tax returns and tax policies have been the subject of the latest round of insults and political maneuvers.

The nonpartisan Tax Policy Center released a report claiming Mitt Romney's tax plan would "provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers."

President Obama responded by calling the Romney tax plan a Robin Hood reversal and dubbed the former governor's plan "Romney Hood."

Romney responded with a childish quip of his own calling the president's remarks "Obamaloney."

But if you want to take a step back from the negative tone of campaigning, one tax plan clearly stands out as a winner for investors.

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Vice Presidential Nominee Paul Ryan to Make Election a Budget War

In naming Rep. Paul Ryan, R-WI, as his vice presidential nominee, Mitt Romney ensured that the 2012 election will be mainly about how the country ultimately deals with its massive budget deficits.

Romney, the presumptive Republican presidential nominee, made his running mate announcement Saturday morning in Norfolk, VA. The choice of Ryan completes the ticket that will face off against President Barack Obama and Vice President Joe Biden in November.

Ryan, a seven-term congressman and chairman of the House Budget Committee, in March released a controversial budget proposal - the so-called Ryan Budget Plan -- that now figures to become a central part of the presidential campaign.

Ryan's Budget Plan would deal harshly with federal spending by making major changes to programs like Medicare, Medicaid and food stamps.

Republicans who support the plan say the austerity is needed to get the country's huge budget deficits under control. Democrats counter that the Ryan Budget Plan balances the budget on the backs of those who can least afford it.

So it's not too surprising that both parties are thrilled with Ryan as the VP nominee.

"I have long supported Paul Ryan's fiscal and entitlement reforms to return our country back on a path of fiscal health," said former Pennsylvania Senator Rick Santorum, a Republican presidential candidate who dropped out of the race in April. "At a time when our country is at an economic crossroads, Congressman Ryan's depth of knowledge on how to tackle these challenges is unparalleled."

Certainly, Senate Majority Leader Harry Reid, D-NV, based his reaction to the Ryan VP pick on the Ryan Budget Plan.

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Election 2012: Reid Has Nothing to Lose in Romney Tax Returns Rant

Senate Majority Leader Harry Reid, D-NV, appears to have one sole mission until November: Find a way to get the Mitt Romney tax returns released.

The tax returns battle began in the primaries when GOP rivals asked the former Massachusetts governor to release the information. Romney has released the past two years' of returns and refuses to share more.

Now Reid has gone full force in questioning Romney's secrecy, and doesn't appear to have any reason to stop.

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Election 2012: Is Mitt Romney a John Kerry Impersonator?

Be wary of the rich, slick politician from Massachusetts, he might seem eerily familiar.

He flip-flops. He's super-rich. And he has nice hair.

Only this time it's not Sen. John Kerry, D-MA. It's Republican candidate Mitt Romney, the former Governor of Massachusetts.

The comparisons are so similar Election 2012 pundits now compare it to the 2004 election which pitted Kerry against the incumbent George W. Bush.

Here's another similarity: Neither one comes off as likable-- not even to their supporters.

Even still, like Kerry, Romney has been heralded as the candidate most likely to defeat the incumbent even though he hasn't inspired or energized voters.

That may be why Republicans went through candidates earlier this year like they were Baskin-Robbins flavors of the month.

In the end, voters finally chose Romney over Rick Santorum, favoring the uncharismatic yet stable candidate over the exciting but controversial one.

But will Romney and Kerry also share an election loss?

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Mitt Romney's Running Mate: Meet the Candidates

Given the ramifications of Election 2012 on the markets and the economy, it's time to evaluate the potential candidates to become Mitt Romney's running mate.

As we approach the summer political conventions, curiosity is escalating over who will join Mitt Romney in seeking the White House. But the most obvious names and faces aren't necessarily the most likely choices.

Five favorites for Romney's running mate have emerged, but few of them deliver what Republicans ideally want in a vice president.

Here's a look at the current favorites, the dark horse candidates, and the candidates most likely to turn down the job despite their impressive resumes.

Mitt Romney's Running Mate in Election 2012: The Current Favorites

1. Ohio Senator Rob Portman

Voters outside of Ohio don't really know this junior senator from this quintessential swing state. But, just in case you didn't know, Ohio and its 18 electoral votes will surely be up for grabs this fall. And that has Republicans buzzing about Portman and his electability.

Portman provides popularity in the Midwestern trenches, where it will certainly be a dogfight up until Nov. 6. As an Ohio Congressman, Portman consistently won his southern Ohio House district with at least 70% of the vote. In his 2010 senate campaign, he won 57% of the vote and carried a staggering 82 of his state's 88 counties.

Portman also has received commendation for executive experience and time in Washington on his resume, having served George W. Bush as budget director.

Still, this executive experience could be his biggest weakness. Portman presided over then-record deficits during the Bush years, which doesn't mesh well with the GOP message of reducing government spending. Nonetheless, Portman provides political cover and popularity in a crucial swing state.

The only glaring downside for the Republicans would be that his departure from the Senate could lead to the party losing a critical spot come 2016 when Portman's seat is up for reelection.

Overall: Medium Risk, Medium Reward.

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Election 2012: Jobs Picture Won’t Brighten Before November

If President Barack Obama is pinning his Election 2012 hopes on better U.S. jobs reports in the months between now and November, he may want to get started on updating his resume.

The president's re-election bid took a blow on Friday when the U.S. Department of Labor reported the U.S. economy added just 80,000 jobs in June. That was far below analyst expectations of 100,000-125,000, and well short of the 125,000 needed to keep pace with population growth.

The disappointing U.S. jobs report came on the heels of other bad economic news, including a contraction in manufacturing activity and a decline in household spending.

"We had confirmation of what all of the other economic indicators have been signaling for some time, and that is a marked deceleration of the U.S. economy," Paul O'Keefe, director of economic research for the consulting firm J.H. Cohn and a former Labor Department official, told The Wall Street Journal. "This is not an outlier month. We've seen a deceleration in job growth since the beginning of the year."

While the headline unemployment rate held steady at 8.2%, the numbers are clearly going in the wrong direction. The Labor Department said 155,000 people joined the workforce in June -- almost double the number of jobs added.

An analysis by Hamilton Place Strategies calculated that the economy would need to add 219,000 jobs per month to get unemployment below 8% by Nov. 6.

Given the recent trend - 68,000 jobs in April, 77,000 in May and now 80,000 in June - it appears more likely the rate stays steady or even inches higher as we approach Election 2012.

Why U.S. Jobs Reports Won't Get Better

Unfortunately for President Obama, hiring won't increase significantly any time soon.

Businesses simply have too many concerns:

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GOP Slams President Obama's Taxmageddon Proposal

Following a spate of moribund economic news and the looming Taxmageddon that could further derail the sluggish U.S. economy, President Obama called on Congress yesterday (Monday) for help.

President Obama proposed that Congress pass a one-year extension of the Bush-era tax cuts set to expire at year's end for households earning $250,000 or less. He suggested letting the cuts expire for the wealthiest bunch.

"We don't need more top-down economics," the president said in an early afternoon press conference at the White House. "We tried that theory...we can't afford to go back to it. That's why I believe it's time for the cuts for the wealthiest Americans, including myself, to expire."

The Bush-era tax cuts, set up as a temporary measure, are due to expire on Dec. 31, meaning if they do the majority of Americans will see a steep rise in taxes overnight. A number of other tax increases are also set to take effect, giving the event the ominous Taxmageddon moniker.

The implications are huge. Families living paycheck to paycheck, or unemployment check to unemployment check, will be even more strapped. The result is an almost certain recession.

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WellPoint (NYSE: WLP) Rides the Obamacare Profit Wave Even Higher

Merger Monday lived up to its moniker today with news that WellPoint Inc. (NYSE: WLP), one of the largest U.S. health insurers, inked a deal to acquire Amerigroup Corp (NYSE: AGP).

The $4.9 billion deal would make the Indianapolis-based company the top private manager of Medicaid benefits.

The strategic move underscores WellPoint's bid to shore up its Medicaid business following the recent Supreme Court decision upholding Obamacare. The combined company will have a Medicaid business presence in 19 states, the largest in the nation.

The transaction is expected to close in early 2013. Under the terms of the all-cash deal, WellPoint will pay a lofty $92 a share for all outstanding shares of Amerigroup, a nearly 43% premium to the company's closing price prior to announcement.

WellPoint CEO Angela F. Braly said in a statement, "We believe that this combination will create an industry in the government sector serving Medicaid and Medicare enrollees. This is an opportunity to capitalize on the strengths of both companies to better serve our members and position our companies for future growth as the health insurance industry changes."

WellPoint has been on a buying spree of late. In May, the company purchased contact lens retailer 1-800-Contacts, and last year it picked up CareMore, a provider of managed care for the elderly.

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Election 2012: Battling for the Youth Vote

In the 2008 presidential election, U.S. President Barack Obama won in no small part due to the "youth vote."

Four years ago, voters under 30 formed about 17% of the electorate and cast twice as many ballots for President Obama as for opponent John McCain. This was in stark contrast to voters over 30 where only half supported the Democratic nominee.

It was the biggest generation gap in four decades of modern election polling. The election itself had the largest turnout since 1960 -- when another young, charismatic president made it to the White House.

But Election 2012 may be different.

This year President Obama could find it much more difficult to inspire the youngest voters with his message of hope. It will be hard for under-30, unemployed voters to believe this president is an "instrument of change" and a "visionary" when jobless numbers remain unusually high.

The latest unemployment numbers for 20- to 24-year-olds are 9.3% for college graduates and 12.9% overall. What's worse is the newest voters, aged 18-19, have a depressingly high unemployment rate of 23.5%.

A Reuters/Ipsos poll provided another foreboding statistic for the president: 54% of recent graduates say they think the country is on the wrong track.

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