Confusion

It's been a week or so since I wrote about anything political, for two reasons: the financial crisis seems much more pertinent, interesting, and fun, to me, and because as far as I can tell, the candidates are acting pretty much as I predicted they would back when I was speaking on a more theoretical plane. (See Striving for the center.) During the first presidential debate, Obama tried very hard indeed to portray himself as the epitome of political moderation, despite the fact that, objectively speaking, Obama breaks with his party line much less frequently than does McCain, if the Senatorial voting record is to be used as an objective measure. McCain tried to echo Reagan, and failed, for the most part. Both spoke elegantly (Obama more so) and touted their records to try to indicate what they would do if elected (McCain more so). On the whole, I was surprised by how civil the debate was, and though neither candidate had me in tears with his masterful rhetoric, on the whole they both did a pretty good job. I will say that Obama stuck it to McCain on tax policy; McCain never offered an effective rebuttal for why the wealthy might deserve more of a tax break than the middle class, (and there are plenty). McCain, (or John McRage as my brother calls him), evidenced more fervour than I expected, and successfully communicated that he, in fact, has a whole lot more experience than does Obama.


I didn't pay nearly as much attention to the VP debate as I should have, for a couple of reasons. First, I expected Palin to mess up so substantially that I seriously discounted any positive reaction the debate could have on the Republican chances. However, she didn't flub up anything too serious (how could a Vice-Presidential candidate not know what the Bush Doctrine is in the vaguest of terms?), and Half Sigma, an explicitly conservative political blogger, had some interesting things to say about both Palin as a candidate and the VP debate specifically. Of particular interest, at least to me, was his reflection on taxes:

All discussions of tax issues are these debates (stet.) are so shallow from both sides that I don't even know where to start criticizing. The U.S. has exceptionally high corporate tax rates, and one also needs to understand that corporate income is taxed twice, once at the corporate level, and again when shareholders profit by receiving dividends or capital gains. On the other hand, Obama actually had a valid point during the presidential debate last week when he mentioned that corporations have too many loopholes. Loopholes are evil and need to be closed. If loopholes are closed, then marginal tax rates can be lowered without any revenue being lost. With respect to personal taxes, once again, the tax code is too complicated and has too many deductions, credits, exemptions, and what-have-you (stet.). Obama wants to take us back to the tax code of the 1970s, a decade known for its economic malaise. The marginal federal rate was 70%, but because of so many shenanigans that taxpayers could do involving accelerated depreciation and limited partnerships, a lot of the wealthy had to pay significantly more taxes after Reagan "lowered" taxes.

Tax policy ought to be a big issue in the campaigns, but neither candidate has spoken that extensively about what ought to be done.


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A large peculiarity that I cannot reasonably explain is the behavior of the markets over the past two weeks.




Why is there a bear run on the McCain ticket? Yes, McCain made a huge blunder in proposing halting the first debate to go work in Congress; neither he nor Obama have been present for some time, because they have been campaigning. Yes, Palin seems dumb when she can't answer basic questions, at least from the Democratic perspective, but equally pertinent to the situation is the Republican claim that Biden is a blowhard. One would think these issues would lead to temporary fluctuations in price, but this is looking more and more like a trend leading up to a political certainty come election day. My only hypothesis is that market actors are fearful that, should McCain die, Palin will be incompetant to run the country. This fear strikes me as somewhat unfounded, as she is the only one of the four who has any executive experience. Her approval rating was pretty high, last time I checked...


We'll just have to wait it out to see what happens over the next few weeks... For the record, I sold my shares of McCain at around 52, and bought more when he started doing poorly, at around 47, on the assumption that the race would remain tight and I could profit off of market noise... oops.