Wednesday, January 25, 2012

Do Newts Bounce Like Dead Cats?

Here Lizard, Lizard
The "dead cat bounce" is a term commonly used in the world of investing.  A company, destined for the scrap heap of bankruptcy, has seen its stock go down and down.  From $100 to $10 to $1, it is on a steady decline.  Then, all of a sudden, it jumps up from $1 to $3.  But the jump isn't real - the fundamental problems that plague the company haven't gone away, people have just forgotten about how severe they are.  Before you know it, the stock is at $0 and the company is bankrupt.  Those who bought it at $3 are wondering what the heck they were thinking, boarding a sinking ship.  It's the same as dropping a dead cat out the will bounce up when it hits the ground, but that isn't because it's coming back to life...and it ends up just as dead on the ground a second later.

Is Newt Gingrich a sinking ship?  48 hours ago, he was on top of the world.  After having ridden the wave to the top of the polls earlier in the election season, Gingrich had been written off for dead.  Somehow, against all odds, seemingly, Gingrich battled back to win a clear cut victory in the South Carolina primary by a wide margin.  All of a sudden, he was up 9 points in some polls in Florida.  The whole narrative of Romney's inevitability was fading before our eyes.

48 hours later, his poll numbers in Florida seem to be dropping as fast as the gravity that pulls down a dead cat.  One poll out today has that 9 point lead diminished to 2 points, another has Romney ahead by 2 points.

So is Newt Gingrich a dead cat bouncing back to Earth or is there just noise in the polls?  Are we headed towards a nail-biter in Florida or will Romney be handily in command by Tuesday?

The debate on Thursday matters.  Where the torn apart conservative GOP electorate, stuck between an unelectable lizard and an unprincipled glove, finally come down on the question of whether they want the best chance to win or the best representation of their views comes down is just as critical.

Certainly no one in the GOP is happy.  And President Obama's battle for re-election against a tough economy and a toxic political environment looks less like a mountain and more like a speed bump every day.

Contrasts and Small Ball
President Obama can give a speech, lest any of us forget the best political skill of our Commander-in-Chief.  But the vision last night seemed a lot less ambitious, a lot more sober and a lot more political than his previous efforts at a State of the Union speech.

In reality, all State of the Union speeches are inherently political.  Most SOTU proposals go nowhere.  Did George H.W. Bush get his 1% across-the-board tax cut?  How about Bill Clinton's Hillarycare?  George W. Bush's privatization of social security and comprehensive immigration reform? Nowhere to be found.

So President Obama's goal wasn't to make a big sweeping set of policy initiatives.  It was to draw a contrast with Republicans and propose some easy wins.  Ban insider trading in Congress?  Who would be against that but crooked Senators?  Prevent the next Horizon oil spill?  Yeah, I think we are all on board with that.

It was a good speech that will give the President a short-term bump in the polls but will likely soon be forgotten in the deafening noise of the campaign. 

This was more a re-election announcement that a look at the state of our union.

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