Friday, October 31, 2008


Cochin, 10/Oct /2008

In my previous post, I had talked about “the gambler’s prejudice” and why it is likely to cost Barack Obama the elections. I believe there is another force at work that will also serve to deny the presidency to Obama. This is the tendency of those who have set out (knowingly or unknowingly) on a path of self-destruction to reject the shot at redemption.

In a stock market prices fluctuate everyday. Yet, there are many traders who manage to make money out of the ups and downs. However, even as you enter the market to trade on the fluctuations, it is necessary to have a slightly longer term view about the direction where the market is headed for. And so it is when making predictions these days about the US presidential elections. After all, this is also a prediction about the future direction of that country.

I’ll begin with my long term view. The United States, even as it continues its reign for now as the sole superpower of the world, is in irreversible and terminal decline. Its days as the richest and most powerful country in the world are numbered.

Now, whenever there is a discussion about whether America is indeed in terminal decline, a lot of sensible people have made the point that America has recovered or ‘bounced’ back so often in the past that it would be premature to write it off. I have a different point of view. We all have heard stories about people who have a near-fatal accident or who fall victim to a serious illness and then go on to make a remarkable recovery. But, just because at the age of 35 or 40 years you recover completely, does not mean that if you were to go through the same ordeal at the age of 65, you would still bounce back in exactly the same fashion. America recovered from the trauma of Vietnam and went on to defeat the Soviet Union. But this is an older America facing challenges that are qualitatively different. And this time, in what amounts to a crucial difference, its leading challenger is not handicapped by a faith in a patently absurd economic system. The past, therefore, is not a reliable predictor of the future.

For a long time, this was a relative decline that began about 30 years ago when the Chinese economy commenced its trajectory of double digit growth. In a race, you may be far ahead of the pack but if someone at the back accelerates and runs faster than you, he begins to gain steadily on you. Of course, for a long time the Chinese were so far behind that the relative decline of the US did not matter because the absolute positions were still vastly different. In fact, even now, i.e. 30 years down the line, the Chinese economy is significantly behind that of the US. However, what has changed dramatically in recent years is that the relative decline has now turned into one of absolute decline.

Going back to the analogy of the race, you continue to be far ahead, but instead of running full speed ahead, you slow down. You spend too much time looking over your shoulder and, because you are tired, you often pause to catch your breath. And then, in just about the worst thing you can possibly do in distance running, you lose focus and forget what your basic mission is. Someone from the crowd has hit you with a stone and shouted out an obscenity. You are furious. You are the star athlete at the meet and for millions across the world, you are a legend in your lifetime. How dare someone do that to you!

You are so angry that all that you really want to do now is to find out who the culprit is so that you can grab him by the throat and punch him hard in the face.

Surely, this analogy needs no further explanation as to how it applies to America, China and to America’s war on terror.

When you enter a process of absolute decline, anecdotal evidence (as indeed, my gut feeling) suggests that you do not generally reach out for and grab that chance at redemption that may come your way.

So, what does this imply for the US presidential elections?

One of the catastrophic failures of the Bush administration has been the way it has conducted itself on the international stage (I’m assuming the economy does not tank any further). It is fair to say that America’s standing in the eyes of the world has suffered greatly in the aftermath of the war on terror, and with the two unseemly, unending wars on hand. The decline has been so precipitous that what was unimaginable even a few years back, has actually come to be true. In Western Europe, defended against Soviet expansion for so many years by American soldiers, more people think of the United States as the greatest threat to world peace than any other country. Clearly, under Bush, America has made too many enemies and the costs are now beginning to tell.

To a country faced with this surge in its unpopularity, and which is actually beginning to hurt from it, Barack Obama should represent hope in a real, tangible sense. Today, in country after country, across continents, across the world, he has become one of the most popular American politicians ever. I have no doubt that merely by electing Barack Obama as president, Americans will generate a groundswell of goodwill and sympathy for their country. Those who have traditionally regarded themselves as friends of America and who are troubled and disillusioned by the recent turn this country has taken, will find themselves confronting fresh evidence that American idealism and leadership is actually worth believing in once again. As for America’s implacable foes, they will surely continue to be as hostile as ever, but with a difference. Soon, they will find themselves preaching their poisoned message to an ever-dwindling crowd.

Of course, it can well be pointed out that right after 9/11, there was an upsurge in sympathy and support for the US from all over the world. It did not take very long thereafter for all of it to be frittered away and replaced by downright hostility. Yes, a bit of caution does seem sensible and warranted. All the same, keep in mind the evidence that Barack Obama will walk into the Whitehouse with an armoury of grey cells far in excess of what George Bush could ever command. There is an old saying “A fool and his money are soon parted.” Therefore, what Bush did with all that support and sympathy in the wake of 9/11 (and the ‘political capital’ he talked about during his second inauguration) was entirely predictable, almost like night following day.

With such credentials then, what makes it likely that Obama will lose rather than win? As I said at the beginning, America as a nation and as a superpower is in decline. One of the surest ways in which you ensure that the downhill journey you have begun continues uninterrupted is by rejecting the golden chance to mend your ways and to redeem yourself. This should not be hard to understand. If you are a drunkard drinking yourself to a slow death, it is highly unlikely that you would jump with joy just because someone you know has offered to take you to a rehab clinic. And so it is with America and its increasingly troubled equation with Barack Obama.

At the risk of oversimplifying, one of the reasons why the Roman empire declined is that it had emperors like Nero who “fiddled while Rome burned”. I may add that America is in decline because it has large numbers of people with the right to vote who prefer to fiddle even as the underpinnings of their great country continue to unravel. When a sizeable section of people with the right to vote believe that what matters most is your stance on abortion, gun control, gay marriage, school prayers, creationism vs. evolution etc. (or the race of the candidate), then what they will hold in their hands as they head towards the ballot box on election day, is a fiddle nominally called a ballot paper. It cannot be long, therefore, before America goes the way the Roman empire finally went.

Into the dust.


Ranjan Sreedharan

Now that the Democrats and the Republicans are both done with their national conventions, and Barack Obama and John McCain have been formally anointed as candidates for President by their respective parties, it is time to look ahead and make concrete predictions. Here is mine. Barack Obama will lose.

Having said as much, it is not that I am unaware of what the opinion polls have been saying ever since campaigning began. As a matter of fact, the polls have gone through a full circle. For a long time, it was Barack Obama who had the clear lead, though never decisive, peaking with what was, by all accounts, a well-received convention speech (the “post-convention bounce”). And then it was McCain’s turn to take the spotlight with the surprise nomination of Alaska governor Sarah Palin as his running mate. Palin’s convention speech literally set the house on fire and suddenly there was both energy and enthusiasm in the Republican campaign. White women who had enthusiastically supported Hillary Clinton were now literally to be seen deserting Obama in droves and flocking to the McCain-Palin ticket in what came to called the “Palin bounce”.

Since then, Palin’s lustre has dimmed somewhat and with the economic woes overtaking the nation, and with John McCain declaring that the economy was fundamentally strong on the very day that the storied Lehman Brothers went under (and just a week after Fannie Mae and Freddie Mac had to be bailed out by the federal government), Barack Obama has once again moved into the position of front-runner. Since then, with the stock market suffering serious erosion, and with Wall Street woes moving into the Main Street, he has actually consolidated his position, so much so that in some of the critical, so-called “swing” states which have traditionally voted Republican, he is actually ahead in the polls by a whisker.

Okay, so what are my conclusions? To begin with, I believe that despite all her recent troubles, Sarah Palin continues to be a smart choice who makes it more likely that Obama will lose. At the same time, my conclusion that Obama will lose predates Palin’s nomination because, to begin with, this is an election where a sizable (in terms of statistical impact, if not in absolute numbers) section of the mainstream voters (read the white voters) are actively in search of reasons to not vote for Obama. In fact, they appear to be in a quest for plausible reasons (not necessarily substantial one’s) to not vote for him because they do not want to appear as racist, as much in their own eyes as in the eyes of others around them.

The other factor at work here which is also the title of this article is what I shall call “the gambler’s prejudice”.

In making predictions about the future movement of prices in the stock market, analysts often make use of a tool called technical analysis (where you plot the price movements on a chart and draw conclusions based on the pattern) as also one called fundamental analysis. The movements in opinion poll ratings on account of a well received convention speech or the selection of a glamorous running mate are the equivalent of short term movements in the stock market that can be predicted by technical analysis. However, without getting distracted by the short term spikes, I believe there is a case for making predictions based on more long term and fundamental factors.

Imagine you are a gambler who has had a lucky and successful career so far but now have fallen on hard times. Increasingly, the bets are not coming off and the loss of money that began as a trickle has turned into a flood and you are on the verge of losing the shirt off your back. You had always possessed a great technique that enabled you to outsmart your opponents. But now, it seems they have finally cottoned on to you. So, these days at the table, more often than not, they win and you lose.

Now imagine further that two your friends come to have a word with you. The first one is indignant at the plight you have got yourself into.

“What have you done to yourself? Don’t you know gambling never did anyone any good? What made you think you could be different. Take my advice. You have to kick this habit at once and start rebuilding your life the hard way, brick-by-brick.”

The second one is more sympathetic. “You know, I’ve been watching you play for a very long time. You have always been very good. It’s just that in recent days, you have not updated your technique. I believe you only need to refine your technique and maybe, be a little less aggressive. I assure you, it’ll all come back to the good old days.”

So, whose advice do you take? Here is my conclusion.

Up to, and until the point you have actually lost the shirt off your back, your instinct will always be to go with your understanding friend No.2. But, if you have actually lost the shirt off your back, you will go with your indignant friend No. 1. However, even as you do so (because you have no other choice), you will all the while hate him and hate his guts in telling you so much to your face.

So, to sum up -- and just in case the analogy did not fall in place -- here it is. You are America now fallen on hard times and called upon to make hard choices. Your friend No.1 is Barack Obama and the friend No.2 is John McCain. For Barack Obama to win, America on the day of the election, must appear a gloomy place looking ahead to seriously bleak prospects. Anything less, and John McCain will be president.

Well, you may ask, with Wall Street and the banking sector on the verge of a meltdown and foreign policy in serious trouble with two unfinished, unending wars, isn’t America already in a deep hole? The answer to that is it’s not what you and I believe that matters but what the people of America believe to be true. And here is some news relevant to the point. Even in these bleak times, one out of every three American believes that Dubya is doing just fine. They approve of his Presidency. And then, there are many more who believe, that after the “surge”, America is well on course to “victory” in Iraq.

Other than making you wonder where these folks get their news from, it is also a pointer to a seldom realised truth about democracy. This is a political system that actually gives you the right to cherish your own delusions, the right to be in denial and the right to construct (and inhabit) alternative versions of reality.

That so many in America are so clearly unhinged also suggests that when this democracy gives way finally (in the none-too distant future) to a non-democracy as the leading superpower of the world, there really is no reason to fear the worst.

When communism in the erstwhile USSR collapsed, Francis Fukuyama talked about the ‘end of history’ with the liberal-democratic model having emerged for all times as the final resting place in the political evolution of the nation-states of the world. I believe there is now a serious case for the “reopening of history” and to start talking about the impending decline of the democratic powers and their substitution by enlightened autocracies, as in China, Singapore … hmmm… Russia etc.

That, however, will be the subject I propose to deal with in a future article, hopefully, before the Chinese have taken over.