The last 8 years were not free markets.

Insomuch as the last 8 years were not free & unfettered competition.

Corporate Welfare.

The last 8 years have been welfare for the largest corporations. And the super-rich.

The obvious ones? High-bracket Tax cuts. Incentives. NAFTA. De-regulation. Corporate tax-cuts.

Where has been the assistance (or at least, no harm) to small & mid-size American business? Growing of the middle class?

Spend for your Country?

Instead the middle-class have faced falling incomes, whilst being constantly told to go into debt ’shopping for America’.

Another cost? 2 wars. That were not well implemented. Especially financially. The USA is still subsidizing Iraq to $10 billion a month.

And the wars have damaged, not benefited, opportunities for American business.

No trickle.

These measures simply mean that those in the middle-class pay for more of the goods & services delivered by government.

The wealth doesn’t trickle down much.

In short, not Capitalism.

In fact, these measures have blocked small business in the long-run.

Most evidently, causing a dramatic revaluation of mortgages threatens the financing of small business.

Leading economist, Hernando De Soto makes the case for small business existence being dependent on mortgage financing.

This is before the magnifier of credit problems, and large corporate bankruptcies & cutbacks. Small business often depends on large customers.

Concentration of Wealth.

An America which transfers wealth to a bureaucratic Military Industrial Complex and super-large corporations is not being capitalist.

Not in the American sense. The sense of opportunity. Of a fair playing field.

America is not a socialist country. But in giving welfare to interests groups and calling it capitalism the Government of the USA have not been practising actual Capitalism.

America should be pro-business. America should be pro-markets.

But transferring wealth to an elite is not true American Capitalism.

2thinknow Capitalism.

True wealth is local innovation. Local firms, in local towns. Supporting real business, and removing barriers to these business success.

It’s not giving free kicks to Enron, Halliburton, Lehman, Merrill or others.

Nor giving corporate zero-shuffling employees the same pay you give true capitalists.

Innovation is created by business. Sometimes by government, as in France. Each country has its way.

Create wealth.

But innovation and sustainable wealth is never created by favours to friends. it is created by a level playing field, and the ability of businesses with ideas to implement them.

Innovation & sustainable wealth should be about removing barriers to business, evenly & fairly. Supporting business. Not subsidies. Nor socializing losses.

That, and the last 8 years of grabbing gains, would be crony capitalism. Always ends badly.

Republican thought-leaders might like to think about that, as why they lost the battle of ideas. And not confuse the last 8 years of executive options & largesse with classical capitalism, supporting business & entrepreneurs.

Nobody has admitted it yet. The decline trend is well in its death spiral, the day Iemma resigned. There is no rebirth without change.

“The Governor may…..remove from his office, or suspend from the exercise of the same, any person exercising any office, or place, in the State…”
– The Royal Instructions, Clause 10

NSW, Doomed.

NSW politicians have destroyed Australia’s most prosperous state.

Largely run by factional hacks, and political plotters, NSW is now only a political state.

No one is professionally managing the basics. Economy, jobs, investment, urban planning or infrastructure. No forward-thinking.

Certainly, no innovation in Government.

NSW was under-performing before the boom. And now is in a truly disastrous state. Under-performance will be magnified by entering a severe national downturn.

There is a mid-term threat of NSW facing dire financial defaults.

Competence.

The Mini-Budget represented an incompetent handling of the crisis. It is the exact opposite of economic medicine needed.

Raising taxes & no stimulus was largely how Hoover brought on the Great Depression, according to many economists.

Read Sydney’s respected Ross Gittins here, describing the mini-budget as a “sham”and “will in fact make things worse… produced not because of the downturn, but in spite of it.”

The NSW Government is acting against the long-term interests of its citizens. When leading economists tell them what they are doing is incompetent, why are they doing it?

Self-interest.

Simple. The Rees Government is acting to save its political skin. It’s purely factional. And political. It is no longer acting as a part of the Government. These representatives are not in the interests of those who democratically elected them.

History has shown that once a decline has commenced, even unprecedented economic butchery to arrest a declining credit rating will not cause the decline to halt.

If NSW was a company the management (and board) would have been sacked & replaced. For acting against shareholders interests.

Opportunity.

The 2thinknow View is that NSW is in terminal decline short to mid-term. NSW probably actually hit bottom in late 2006. But the current government is delaying a turnaround.

NSW has an educated hard-working workforce. High profile overseas. Economic infrastructure that requires maintenance. Resources. Assets.

NSW has better assets than other Australian states that are outperforming it. Under-performing the index, in business terms, means the management have failed.

A competent business manager could pull NSW out of its current mess.

Not these stooges…

But to lead NSW out of the crisis it is in, and to prevent a further deepening of the crisis and crash into disaster, the government MUST be replaced.

If the crisis turns even slightly worse, then having the NSW government led by it’s current pack of self-serving idiots is a disaster.

These political hacks & plotters led the state into this mess. They cannot lead the state clear of this mess.

The 2thinknow View is that the Carr-Iemma-Rees team  have mismanaged the state of NSW. Decisions have been taken against the long-term interest of the State’s people.

How?

The Governor of NSW, Professor Marie Bashir, can dismiss the NSW government. As the representative of the Queen in Australia.

Dismissal has been done before. In fact, examples of the dismissal are taught in the NSW school curriculum.

“In the exercise of the powers and authorities vested in him, the Governor shall be guided by the advice of the Executive Council, but if in any case he shall see sufficient cause to dissent from the opinion of the said Council, he may act in the exercise of his said powers and authorities in opposition to the opinion of the Council, reporting the matter to Us without delay, with the reasons for his so acting.”
– The Royal Instructions, Clause 6

“The Governor may…..remove from his office, or suspend from the exercise of the same, any person exercising any office, or place, in the State…”
– Clause 10

Cause to Dissent.

There are numerous legal grounds available for dismissal.

If the Governor, Prof Bashir, believes the NSW government is acting incompetently and against the interest of the State then she should act to dismiss.

In 1932 the Governor waited until the crisis had turned into a depression to dismiss Jack Lang.

Unprecedented Under-Performance

The 2thinknow View is that the NSW Government is damaging the State of NSW.

And acting as a magnifier on any economic downturn.

The Governor can wait and see.

But 2010 elections can cost a lot of NSW citizens jobs and homes.

The key point is the NSW government is acting against its citizens economic interest in a time of crisis. The NSW government is preserving power at all costs.

Dismissal should be used, is intended to be used, when politicians act against the interest of their citizens. It is a matter of time. And losses.

What do you think, how far gone do you think NSW is?

2thinknow do.

We predicted it would shift, and that their would be an economic crisis. Correctly. Back in October 2007, before others.

If you would like to see what it all means, including Obama’s election, see these slides on slideshare.

Opportunity for Local Innovation.

There are a lot of economic opportunities out there, but bright minds need opportunity.

Creativity needs its voice. Anyway, look at the slides.

I hope they help you in your quest to profit in the Bear Market.

Thanks to SlideShare for spreading this message, by placing the slideshow on the front of their website.

And to all readers & netizens who send us positive messages about our work in nascent trend analysis, used to predict the economic crisis.

Recently the National Party were kingmakers in West Australia State elections.

Now it looks like the National Party may win in the New Zealand elections.

Barnaby’s Voice.

An independent thinker, one of the few who stood up to John Howard, Barnaby Joyce has the leadership & charisma to be a national leader. In 8-12 years.

It may be too soon, and it may not eventuate, but this is an interesting thought.

Trends for the National Party.

Food supply & water supply are shaping as global dominant paradigms.

Environmental & climate change issues are also global themes.

At a national level, farmers are recognized by many as best equipped to manage these themes. (Farming in Australia is a different practice than the USA).

Coupled with a disillusionment with ideological hollow dogma of detached city politicians, the trends support a resurgence by country politicians.

Issues create Opportunities.

The efficiency in farming of a country, creates the opportunity for members of society to be employed in jobs other than food production. Compared with Hunter Gatherers.

Although obvious, these points are often forgotten. Primal human forces are artfully outlined by Azar Gat in his in-depth tome War in Human Civilization

Nascent trend analysis, by 2thinknow, leads to the view that the National Party may well indeed experience a renaissance based on practical policies in water, food & environment.

There are no forces more intrinsically fundamental to the economy. Food. Water. Environment.

Food & Water, then Money.

Those discussing the economic crisis fail to see that this short-to-mid-term trend is overtaken by the dominant long term themes of threats to environment, food & water supply.

In short, 2thinknow view survivability & population as dominant themes.

Survivability trumps means of exchange.

Past & Future.

And in Australia, let’s not forget Robert Menzies force in the Liberals & Nationals.

In the future, watch Barnaby Joyce, Nationals leader.

Lehman Brothers collapse impacted the impetus of Turnbull as a viable Federal alternative. Turnbull is ideologically big city, big money.

And other than a return to Victoria’s more thoughtful Costello, or perhaps Sydney’s likeable action man Hockey, federally the Liberal party lacks leadership. Unless Victoria’s can-do Kennett stands up. But Jeff has vocal enemies.

Federally there is a Liberal vacuum, other than investment banker Turnbull who is a troubling figure for many Australians.

Perhaps Barnaby Joyce may become Opposition Leader? Interesting.

Or could it be in 8-12 years, another Queenslander (albeit born in NSW)  or perhaps a West Australian in charge?

It’s 8 years away… but…

Whatever way it goes, regional Australia (& the National party) will produce a future leader mid-term. And at this early stage, it’s likely to be Barnaby Joyce.

What do you think? Can you see Barnaby Joyce or someone else as the the next generation of Australian leader? Do you support a resurgence of the country parties?

Obama has won the US Presidency with a probable popular vote of up to 5%.

Political Winds. Economic Trends.

The key significance of Obama, is a little-noticed trend.

Economic local-ism.

Grass-roots.

Ground-up.

In Talbott’s book, Obamanomics, he refers to Obama’s ideas “bottom-up economics”.

Read it: Obamanomics: How Bottom-Up Economic Prosperity Will Replace Trickle-Down Economics

Economics is trend # 1.

Economics has changed.

With the surge of China, Economic Crisis &  under-reported power of Europe, economic intervention is back. Economic regulation is back.

The trends have shifted at the infancy stage, and represent a paradigm shift. Unimaginable to most in 2007, or even 08.

2thinknow predicted the shift in 2007 & 2008 using proprietary nascent trend analysis techniques.

The economy functions best with moderation & practical ideas.

And the trend marking the decline of Economic Extremism has accelerated.

2thinknow views America as needing rebuilding.

Local infrastructure. Local jobs. Local economics. Local Innovation.

It all starts now.

How do you think an Obama victory may impact your economic interests?

OK, perhaps more on Democrat houses in the last 8 years. Bush won in part due to voting issues. And look how that turned out.

The current election has had problems: Voting machine problems reported on East Coast, in Midwest or Voting machine problems or Washington Post reports

This is a historical issue with electronic machines.

Below is a brief slide-show of the variety of voting machines in the USA, with thanks to HaveAWord on SlideShare.

Trends, declining technology.

Using these machines is too complex. The reason is a long-standing slow trend that has produced a USA trailing other countries in infrastructure.

The USA used to be ahead.

Airports. The Federal Reserve. Banking Regulation. Mobile phones. Rail. Inner-city transport. Laws.

European Union, UK, and some sectors of Asia, are ahead of USA.

It damages America’s standing in technology & ideas when it’s own infrastructure fails. This diminishes opportunities for US companies.

The 2thinknow View.

Voting is back to basics. Electronic or mechanical voting machines are too complex. And in America too diverse.

Australia has paper voting ballets. Completed & monitored by an independent Australian Electoral Commission.

Australians still use school voting halls, town halls & local community centres.

Many other Western democracies have better systems, including EU states.

The know-how is out there. But the key is to remove partisan & local actions from the process.

Australia also leads the USA in banking regulation & other current US issues.

Leadership.

The USA is capable of leadership again.

It’s part of a broader rebuilding of America, 2thinknow believes can be done, to reverse the long-term decline.

What do you think? What will it take? Any problems with voting machines?

Schwarzenegger, a Republican, married to a Kennedy Democrat, will become the nations most senior Republican, as the party moves back to the centre.

There’s an interesting video of Governor Schwarzenegger’s idea for a “Bipartisan Commission Will Address Chronic Budget Problems”. Read the release here.

Schwarzenegger Action, Ideas.

Interestingly, Obama winning means Schwarzenegger will be the symbolic leader. Vindicated in opposition to Bush on many policies. Bi-partisan. Moderate. Results-driven. Environmentally-focussed. New ideas.

A lot of power in those trends, when GOP licks it wounds, and presumably kills off the Neo-Conservative & right-wing economics that deepened America’s economic wounds.

2thinknow Nascent Trends.

There is the seed of a trend. If Obama wins, the Republicans will need to move away from extreme-Right economics of the Neo-Conservatives.

This leaves a space for a centre-moderate proven Republican as candicate in 8 years. Or even 4. And Schwarzenegger, is well-regarded for his work in turning around California.

It’s 2thinknow’s role to look at trends well ahead, and trends enter nascency during periods of change. We have used nascent trend analysis to predict the stock-market crash since 2007, including the September shock event.

The 2thinknow View.

And although the trend could be reversed, a Schwarzenegger Presidency in 2016, and moderation of GOP free-market extremism, would be a likely political shift.

Your thoughts?

We hope this time the result is not tangled up in electoral court-cases or misanthropic journalism, as was the case in Gore v Bush.

We’ll look now at how trends support Obama.

Trends Support Obama.

Australia’s Centre Left.

The fortune of leaders are often tied to the same trends in English-speaking countries. Reagan-Thatcher. Clinton-Blair. Bush-Howard.

Australia’s Prime Minister Rudd represents generational change, Obama does too.

2thinknow accurately predicted the result of the Rudd election, and the margin within 1%, using nascent trend analysis.

We are doing a much-simplified version of that analysis about Obama now. We have less data, and more complexity for Obama.

Economics.

The dominating trend. Americans vote with their wallets.

Reaganomics, did end Jimmy Carter poverty & 70s malaise.

Bush Snr was voted out on economics. Clinton was voted in.

And Clinton & Reagan both reinvigorated America, mid-term. In different ways.

New ideas. Change.

Obama walks & talks change. There is a sense in America it is time for a change.

McCain is a decent man, but his negatives are too high on change.

His change force is Palin, but that boosts his negatives. Many citizens are rightly concerned about letting her into the White House.

Policy.

Obama policies are more in tune with the economic pain of citizens. Talbott’s book, Obamanomics, sets out broad principles.

One example, it always makes sense to tax the rich more than the poor.

They have the means to offset tax anyway, so they will still pay less.

Clinton People.

For many people there is a sense this is a return to the economic better times of Clinton. And Obama has Clinton people for the economics.

GWB, by contrast, had Nixon people and Bush people.

In comparison, Phil Gramm (McCain’s economist) is so out of touch in the French Revolution he would have ordered a magnum of champagne whilst the citizens stormed the Bastille.

McCain also has done himself no favours on economics, and standard GOP party policies will not return wealth to the bedrock middle class.

The broad opinion is that most likely, McCain policies will be similar to Bush GOP policies.

Bush was a President who does not understand economics, and Cheney was pulling the levers. Even Republicans no longer, en masse, support Bush.

The Influencing Trends?

The so-called Bradley Effect.

This is the theory that people will say they will vote for a black man, but will not.

Most likely this will have a small percentage impact on Obama, meaning the polls will be out by up to a percentage.

There is a small chance McCain could win on this basis, coupled with voter turn-out.

Voter turn-out.

This is complicated by voter turn out. If Obama seems to be going to ‘win’, many Obama supporters won’t vote. Or many McCain supporters will get fired up.

This can be emphasised by media opinion on results during voting day.

Foreign Policy.

Wars in Iraq & Afghanistan impact Americans.

A possible terrorist strike in Indonesia, is regarded by some as plausible in the next 48  hours due to the Bali Bombers execution. This may favour McCain, and shift the focus.

The 2thinknow View.

McCain, Unsteady.

People often vote for one candidate & against another.

McCain has looked ill-at-ease with many of his own positions. People see this.

I do believe McCain is a good man, which is why he blinks too much when he disagrees with what he is saying. Watch the Letterman interview on YouTube. It’s enlightening.

Attack ads & ‘going negative’ often backfire. Palin was a poor choice. And his overall goofiness is a sign of unease, and his own discomfort. But McCain is back ‘on-message’ at current.

McCain Economic Policy.

McCain’s policy positions of tax cuts for corporations will not work. They will damage small business, and further help big business to buy assets in a down turn. Joe the Plumber, probably better off with Obama.

However, many voters don’t normally make distinction between pro-corporate pro-business, and pro-business, pro-jobs. In the American psyche, few want to tax the rich, because they hope to be the rich.

Most innovation and jobs come from small to mid-size business. And growth comes from these entrepreneurs & mid-size businesses.

Eye-to-Eye.

Early on, 2thinknow trends thought America needed steadying, so supported McCain & Hillary. Hillary is no longer an option. McCain turned out to be less steadying than Obama.

America needs stabilising. And McCain hasn’t got the economic or international policies.

2thinknow don’t agree with blaming Clinton (or Greenspan) for the current crisis.

Fact is, having a President like GWB who didn’t understand economics and couldn’t debate his advisors opinions was a mistake.

United States of America is a far more complex & bigger challenge than in the 18th & 19th century. The USA could survive with less knowledgeable Presidents, then, when Government was more local.

Now there is only one choice against an unsteady McCain. Steady Obama.

2thinknow’s analysis.

2thinknow were a slow convert to Obama.

However, foregoing Hillary, Obama’s policies & debate performance shows a keen mind and intellectual ability to debate ideas in-depth with flexibility & nous.

And unlike Palin (GWB v 2), Biden would make a good President.

In the end, the final margin may be an uncertain 2-7% to Obama. We believe there is an 80% chance of this probability.

5% victory margin to Obama would be 2thinknow’s likely outcome, based on a a very limited data set, and incomplete nascent trend analysis. The assumption is that Bradley & voter turn-out won’t impact more than a few percent in an economic crisis.

This election is too complex to predict a single set of outcomes using trend analysis. Nascent trend analysis also requires broad local psychological understanding of numerous groups. Headline data is here.

2thinknow would need more data & analysis to be confident, and even the complexity makes it difficulty with 50 states & multiple voting methods.

However, we believe there is a 20% chance of a tight McCain victory based on Bradley & turn-out, in this case this is magnified if there is a terrorist attack in Indonesia or elsewhere.

2thinknow Final View.

2thinknow’s final view is that we predict an Obama victory based on the one over-arching trend that unifies all Americans above race, religion or creed.

Money-in-the-back-pocket. 

But 2thinknow analysis believe the election will be closer than many polls suggest, and there is a significant discount factor on poll data.

And if you haven’t tried out SlideShare, click thru & try it out. SlideShare is great for communicating.

Trends.

Trends support change, and a return to a US presidency where the president knows how to do his job.

Whether Obama or McCain, both are fundamentally competent politicians. Paul Daley, sets out the case for change (return to normalcy, decency & competence) in The Age here.

The current US administration deepened the current economic crisis & are now fighting in a war on two fronts. If Gore had won, it would have been different.

Get understanding.

I recommend Gore’s Assault on Reason for a view on the Presidency. Friedman’s latest is also worth a read, for a preview of change.

Or Obamanomics, by John Talbott, for a preview on Obama’s economics. Really is the end of the Reagonomics trend.

2 Types of Change.

Obama would represent political change, and generational change.

This is the type of change needed to solve the deepening crisis. It will be harder to solve this century’s problems, with last century’s man.

As Australian/UK election trends often preview US elections, Rudd’s victory in Australia previews Obama, in principle.

That’s the 2thinknow View based on trends.

What do you think?

“The economy suffered its biggest decline since 2001 in the third quarter, ushering in what may be the worst recession in a quarter-century … Gross domestic product contracted at a 0.3% pace from July to September, according to a Commerce Department report.

“The crisis really kicked up in late September,” Ethan Harris, co-head of US economic research at Barclays Capital Inc. in New York, said in a Bloomberg Television interview. “We’re going to be looking at a very unfriendly GDP number in the fourth quarter, with a drop of 2 to 4%.” –
US economy goes into reverse

The 2thinknow View.

The trends indicate a strong US recession. They have indicated a recession, since December 2007 when, ahead of others, 2thinknow predicted a US recession, using our proprietary nascent trend analysis.

The broad trend lengthening & deepening such a recession is volatility.

The duration of volatility will be determined in part by the decisions until December during the lame-duck session of the current US president.

And how long it takes to set asset prices.

Sources of Finance.

One reason the credit crisis effects business, is business capital & confidence are both tied to stock market & house prices.

Listed companies are financed by share issues. ie. the stock market.

Small business is financed by mortgages. And sometimes personal loans or credit cards. But often it traces back to bricks & mortar.

For an interesting explanation of the economics of small business financing, that is often over-looked, read Peruvian economist Hernando De Soto. His Mystery of Capital (on Amazon, at right) is one of the best books on economics of wealth ever written.

Short-Term US economic Trends.

High levels of personal debt. Liquidity problems. Falling employment. Assets that cannot find a price. Reduced spending on coffee, y spending. Distrust in Government response. Lack of trust in banking & finance system. Incompetent Federal Government.

Short-term, the market is testing various levels until it sets a new price for assets such as property or stocks.

All of these trends short-term create a perfect storm.

Long-Term US economic trends.

Producing nothing. Financial services focus. Shipping jobs off shore. Debt, debt, debt. Consumption driven growth.

These negative trends are the true cause. The ‘magic happens’ economic theory of shipping jobs to China, and buying back finished goods, in the name of free trade produces the illusion of wealth. Even more illusory when backed by debt.

As a trend, this theory has just started to reach the end of it’s cycle. This time around.

What’s good for GM is good for America?

Interestingly GM lost approximately US $15 Billion, in August. Then, revised upwards after finding some extra zeros.

Looks like big cars, finance alone as a profit centre & global supply chains didn’t work out so well. GM was a great company, and could be again.

There was a ‘joke’ inside Ford. Why don’t we just shut down all the plants, and let some else make the cars?

Perhaps if GM had stuck to making ‘local cars people want to buy?’

Made in China.

The fact is, China is producing the goods America buys. And India delivers the services.

Trade is essential.

Yet 2thinknow view the local economy as the key to wealth.

Not WalMart’s China & lower minimum wage strategy. Bad for local communities, but great in theory. Economic theory.

What’s your view?