Tomorrow

Last week's Wall Street Journal/NBC Presidential poll indicates a dead heat. Among 1,475 likely voters sampled, 48% said they will vote for Obama, 47% supported Romney. Adjusted for statistical significance, that's a difference of 7 voters.

So, if readers want to focus as they watch tomorrow's media coverage, here's a guide. Follow the developing results in the three major swing states - Virginia (13 electoral college votes), Florida (29), and Ohio (18), but also in two states that have not voted for a Republican candidate in decades - Pennsylvania (20) and Wisconsin (10).

Virginia has been predominantly Republican since 1952. Bob McDonnell, a Republican, won the governorship in 2010.  But Obama won in 2008, a reflection of changing demographics in the state's rapidly growing northern counties around Washington D.C. Polls show the 2012 race is as tight in Virginia as it is nationally - 48% for Obama, 47% for Romney. It's likely to be long into tomorrow night, at least, before results in Virginia are clear.

Florida is the ultimate swing state. Like Virginia, it became primarily Republican in 1952, and its current Governor, Rick Scott, is Republican. But in recent decades, its changing demographics have resulted in a much more politically diversified electorate that nonetheless still leans very slightly Republican. Recall the closeness of the Bush/Gore election in 2000, when it required a Supreme Court decision to determine the winner. Obama prevailed over McCain in 2008, but the current polls suggest a race much too close to predict. Especially in Florida, an Obama victory  depends critically on turnout among minorities and young people.

Ohio is the predictor state. It has chosen a losing candidate - Richard Nixon - only once since 1944. George Bush beat John Kerry in 2004, barely; Obama won in 2008 by a 5% margin. Obama leads by about the same margin in current polls. Debate over the 2009 auto bailout seems to be favoring Obama. He initiated a government re-structuring of the industry which Romney heavily criticized. Obama wraps up his campaign today at a Columbus rally.

Two more states, Pennsylvania and Wisconsin, don't usually swing. This year, however, the Romney campaign, sensing that the 18 votes in Ohio may be Obama's, scheduled a late-in-the-game stop on Sunday, in Philadelphia, hoping to take the state's 20 electoral votes, which have gone to the Democrats every time since 1988, as compensation for the likely loss in Ohio. In Wisconsin, where Democrats have also won the six elections since 1988, polls show Obama ahead, though by a much smaller margin than in 2008. But the state has an activist Republican Governor, Scott Walker, who easily survived a re-call election this year, by a greater margin than in his 2010 election. And, of course, Paul Ryan is from Wisconsin.

Here are two predictions from this writer. First, Obama will win nationally, because he carries Ohio. Secondly, voting irregularities, with ensuing re-counts, will delay the final result.

Detroit and Europe

Sentiment is accelerating in Detroit. Ford, yesterday, and GM, today, released Q3 revenues and earnings/share that easily exceeded New York analysts' expectations. 

But these good reports mask a sore point. Both companies' operations in Europe are awful. Each is clearly focused on European turnaround - closing redundant (and old) factories, shedding employees, and advancing new product introduction - to compete in a smaller, ever-more-competitive marketplace. For Ford and GM, it's all about lowering break-even points on the continent, and raising productivity, and doing it now while cash flow in America is so much improved. It will take a few years, company officials think.

And this - Fiat S.p.A., which at this point owns a majority of Michigan-based Chrysler, has just reiterated its desire to buy the remaining 41.5 per cent stake, a portion of which is held by a United Auto Workers healthcare trust for retired Chrysler workers (a so-called VEBA). Not tomorrow, but, as the original 2009 Chrysler bankruptcy agreement allows, by exercising call options for 3.3 per cent of Chrysler stock every six months. The process may be problematic (the VEBA is holding out for a higher price for the first tranche, filed for by Fiat last July). Fiat's intention, however, is clear, and Sergio Marchionne, its CEO, has shown resolve to a degree not unlike that of Alan Mulally's. His biggest challenge is financing the Chrysler stock re-purchases - Fiat in Europe needs fixing first.

Not Alone

Elected officials are being obstructive, and the central bank just initiated another round of quantitative easing.

But it is not in Washington. It's in Tokyo - a kind of Far Eastern version of political grid-lock, with the monetary authorities scrambling to fill the policy gap. Members of the Upper House of the Japanese Parliament, controlled by the opposition Liberal Democratic Party (LDP), are blocking passage of the latest bond issue to fund day-to-day government operations. Without it, public functions in Japan will cease.

This political leverage is not being applied as a means of reducing government spending - as the Republican Party in America did during last summer's debt-ceiling negotiations. Its much baser motivation is to force Prime Minister Yoshihiko Noda into establishing a firm date for a national election. Given that the Japanese economy is stalling, again, the LDP thinks now is the time to exploit such weakness in order to regain the leadership they held for much of the post-war period.

Prime Minister Noda's Democratic Party of Japan (DPJ) is hardly beyond its own political suasion. Despite expanding its quantitative easing just one month ago, the Japanese central bank has just announced $138 billion of further purchases of financial assets, to lower interest rates and thereby reignite aggregate demand. This is no doubt in response to more weak economic data. But the government's Economy Minister, Seiji Maehara, intervened, for a second time, at the Bank of Japan's monthly policy meeting, just to make certain that it would provide more easing. It is not normal procedure to pressure the Bank of Japan, at least not this blatantly.

Imagine, for a moment, the boost to confidence and employment, to stock prices and their multiples, and to budget positions and overall economic growth, if politicians in Japan, the third-largest economy in the world, and in America, could, in a phrase, get their act together. If they did, it would suddenly matter just a bit less that Europe is mired in debt and recession, or that China is at a critical inflection point as it transitions, after ten years, to a new political leader next month.

Singapore, Again

In a September posting titled Asian Function, this writer noted that the city- island-state of Singapore is the 5th richest country in the world, as measured by GDP per capita. What wasn't mentioned is Singapore's pronounced gap between rich and poor; its Gini co-efficient is just under 0.5, and rising, reflecting the low incomes of the heavy concentration of unskilled foreign workers who underpin the city's growth.

On the flip side of the inequality picture are Singapore's wealthy; Boston Consulting Group reports that the city has the highest percentage of millionaire households in the world. Such affluence, as observed by my daughter, Annie (who has just returned from a three-week business trip) is as palpable as the region's heat and humidity. Luxury-goods shops seem more luxurious than any where else, and busier. Even mid-scale stores, like Abercrombie & Fitch, are exceptional. In the face of harsh consequences, social order and business discipline prevail. At one of the many construction sites in the city, a prominently-displayed sign announced the project's completion date in 2013, not as a season, but to the exact day. And such projections are not frivolous; financial penalties are levied if they are missed.

Annie's attempts to adhere to a vegan diet were useless; pigs' ears, and other "edible" animal parts, however, were always available, and readily purchased by Singapore's well-to-do families who were ever-present in the numerous "food courts". And another observation "from the street" - rice and bread were white, never brown.

Annie also noted a certain "sense of London" - the juxtaposition of still grand British colonial hotels, on the one hand, and banks, from everywhere, on every corner. Singapore is one of the world's principal financial centers for, among other things, offshore wealth, with a reputation, like London a century ago, and Zurich a decade ago, as a tax haven. But, increasingly confronting unmanageable budget deficits and debt, European and American governments have become unwilling to tolerate tax evasion by their citizens. Singapore officials have blinked. Declaring to the world that they are as serious about financial crime as elsewhere, they announced just this month a tightening of directives to their resident banks. This is part of a new international agreement, with Germany, stating that "banking secrecy will not constitute an obstacle to exchanging information". In short, Singapore's bankers are not to resist if German officials request data about German citizens' bank accounts. By implication, other offshore depositors are also affected.

There is, of course, a quid-pro-quo here - Singapore's co-operation is expected to smooth passage of a Free Trade Agreement with the EU. As always, what matters most to Singapore is its international reputation. and enhancing its ease of trade with the world.

Fix It

American business is not just disgusted with American government. Given the climate of economic policy uncertainty, it is re-trenching, by conserving cash and holding back on investment and employment. But, it is also coming together as a single voice to intervene in Washington. 

Last week, this writer commented on a high-level business group, called the Partnership for New York City, members of which have been negotiating quietly with US administration officials and politicians of both parties​ to resolve the imminent  2013 "fiscal cliff".  This morning, another business group, with no doubt CEO membership that overlaps that of the Partnership, showed its public face by ringing the opening bell of the New York Stock Exchange. (It was also profiled in today's Wall Street Journal). The group, of some 80 corporate executives, calls itself, quite to the point,  Fix The Debt, a non-partisan (note, not bi-partisan) campaign to provide Washington with a wake-up call. If elected politicians cannot act together, in the face of another US and global recession, then, say the CEO's, they must act to break the logjam, so that appropriate short- and long-term fiscal policy, that supports monetary policy, is formed and implemented.

This CEO mobilization almost over-shadows the Presidential campaign. We can only hope that such intervention has better luck than what often occurs at the personal level.