Saturday, January 28, 2012

Send in the clowns

OK, it is not a strange at this point to hear the words circus and Republican primaries in the same sentence.

There was Herman Cain in his clown shoes, Rick Perry and jokes about his misstatements, Newt Gingrich and his amazing human canon ball act (I read that on an editorial online – I cannot do better) and Mitt Romney and his high wire juggling. Of course, as of writing this, with the exception of Romney and Gingrich, the others seem to have fallen by the wayside. In theory, Ron Paul is still in the race, but where is he? Santorum announced earlier today that he has no plans to end his campaign, but… he was going back home to Pennsylvania to do his taxes this weekend… In the middle of a campaign… are you serious? Well, I guess, if your campaign isn’t going anywhere, you might as well go home and do your taxes!

Unless… that was a sly reference to Romney – and his tax woes!

If there was any time this primary season Romney seemed off script, it was on the tax issue. First there was the refusal to release his return – he dropped the ball on that one. Then there was the faux pas of earning “little in speaking fees,” all little of $300,000 plus – another ball down. And then, there was the issue of paying taxes at the rate of 14% - man overboard, I should say! Of course, Gingrich got the best of that deal heading into the South Carolina primaries. He clearly came off smelling likes roses. He looked good in the debates and obviously did well at the polls.

The stars seemed to all align themselves just perfectly for the Newt! Romney’s fumble… and then the clowning performance of Juan Williams (Fox) and John King (CNN) just served to wind up the former House speaker. Williams’ charge of racism and King’s bringing up the ex-wife’s charges against Gingrich were clearly not objective and the debates offered him the perfect platform to blast them from. The former speaker realizing that lambasting the media scored points with the audience pushed his advantage the rest of the evening.

The entertainment value aside, this is the weakest slate presented by the Republican Party in my memory. I realize that the rise of the Tea Party and the din of partisan politics have made this all but inevitable, but I still think the party can offer better choices -- candidates who might have made for much more serious contenders come November. While not my personal choice, I think, certain high profile leaders from Florida and New Jersey would have been much more winnable choices on the Republican ballot. While there is much to be said about the party discipline of Republican voters, I cannot think of any among the present crop garnering a clear majority of unquestioned support from within the ranks of their own party. Throw a third party candidate into this mix and it could be even worse for Republicans.

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More Greek Drama

It’s choppy seas for the dollar this week as foreign-exchange markets focus on U.S. employment data, a European Union meeting and details of a Greek bond restructuring. Likely to rock the boat is January U.S. non-farm payrolls out Feb. 3, especially since it comes in the wake of the flaccid GDP numbers on Friday.

Expect to see a weak jobs number that could send the dollar lower as it increases the likelihood of a new round of bond buying by the Federal Reserve. That, in effect, pumps more dollars into the market, sending it lower against the other currencies. A strong payroll figure should hold the Fed from any such move firming the dollar.

But, the dollar is headed lower nevertheless… Last week the Federal Open Markets Committee reiterated its intention to continue boosting the economy with low interest rates for the next few years. Now, that should money scurrying out to places like India, China and even Europe where they are offering a better rate of return. The FOMC announced that it anticipates economic conditions are likely to warrant exceptionally low levels for the federal funds target rate at least through late 2014. The Fed had earlier suggested that it would keep rates low until mid-2013.

Long-term Europe does not look so hot. The market is still waiting to find some resolution to the continent’s sovereign debt crisis. European Union leaders meet in Brussels on Monday to take the next steps towards creating a permanent bailout mechanism and enforcing greater fiscal discipline among members. The party pooper might as yet be Greece, which is in negotiations with its creditors reach a deal to reduce its privately held debt. How the Greeks restructure their debt could signal how the other southern European move to resolve their liquidity problems. Clearly, I am not seeing an early resolution to that problem; at least not this week.


What are the odds of that!

So, last year at the AP Reading, we played putput golf at one of those kitschy golf centers in Daytona Beach. Somehow, I managed to trap the ball on a cylindrical totem pole on a steep incline on the 8th hole. No! It is not a testament to my skill since I very smartly brought up the rear in our six-some. However, how does one manage to trap the ball on so impossible a spot? I had been thinking about the occurrence (probably far more than it merited), because when I came back to the hotel I wrote about it… Months later as I am clearing up the random thoughts that I am given to confiding to my computer and I have come across this one. I am not sure how much clarity in this train of thought was induced by the half dozen G&Ts I consumed before I put fingers to keyboard…

According to Bayes' theorem, the probability of event A (trapping the ball on the totem) given event B (finding a totem on a green) depends not only on the relationship between A and B (i.e., finding a totem on a green) but on the absolute probability (trapping the ball on the totem) of A not concerning B (i.e., trapping the ball on the totem in general), and the absolute probability of B not concerning A (i.e. the probability of finding a totem on a green). Thus, if 95% of the putts sucked so much as to trap the balls on the totem, this could be due to 5% false positives, 5% false negatives (good putts), or a random mix of false positives and false negatives. Using Bayes' theorem allows one to calculate the exact probability of trapping the ball on the totem, given a consistently bad putt for each case, because the probability of B (finding a totem on a green) will be different for each of these cases. It is worth noting that if 5% of bad putts result in a trapped ball, then the probability that an individual traps the ball on the totem is rather small, since the probability of totem actually showing up on a putting green is closer to 1%. The probability of a totem on a green is then five times more likely than the probability of trapping the ball on the totem itself. Answering your question, it is entirely possible!

Clearly, I have far too much time on my hands….!