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October 29, 2012

Mitt Romney Needs to Talk About the Economy

By Spear's

Romney’s economic policy still has no solid details on what should be his strong suit, the issue that should be dominating this election, but isn’t yet

The third and last presidential debate was widely perceived as a win for Obama, which is normal for the incumbent on the issue of the debate, namely foreign policy. Romney did, however, belatedly blurt out two economic policy announcements: he would increase spending on the military, but cut all unnecessary Federal spending, beginning with Obamacare on Day One.

But is that enough? Romney’s economic policy still has no solid details on what should be his strong suit, the issue that should be dominating this election, but isn’t yet…

With ten days to go, Obama must now be seen to deal successfully with whatever Hurricane Sandy throws at the sixty million voters in its way: a fumble here and Obama the C-in-C could look like Bumbler Dubya over Hurricane Katrina’s devastation of New Orleans. On the announcements front, Q3 US GDP came in at a disappointing 2% for economists; and then the employment figures come out at the end of the week, with four days to go, and that’s it.

So, with the polling overall at 47% each but with Obama ahead in the key swing state of Ohio with its 17 electoral college seats, and probably in Florida with 25 and a large pro-Obama Hispanic element, Romney is beginning to struggle and must make clear policy statements every day, so that the voters know more about what a Romney vote actually means; Romney must regain momentum and not let it slip.

Meanwhile, the global slowdown is negatively affecting US exports and manufacturing output, as it is now with Germany as well, and the US recovery appeared (to me at least) to be stuttering and not gaining definite traction, despite the fact that the banks and corporates are stuffed full of cash.

There is no liquidity problem at all, which makes Bernanke’s QE3 and QE3+ all the more questionable; and then Sir Mervyn King confirmed what everyone over here knows already: QE is not having any positive effect on aggregate demand and therefore the real economy.

Bernanke’s QE3 is of course paying for the ongoing Federal deficit and artificially inflating and keeping the stock markets at all time highs – just as the Fiscal Cliff on 1 January 2013 fast approaches the White House winner on 6th November, like that iceberg in 1912 that put paid to the Titanic. It pays to heed warnings!

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And as for those who called the end of the UK’s double-dip recession with the news that Q3 GDP rose by1%, they would be well-advised to get ready for the triple-dip soon. The UK economy is still 4% smaller than in 2008, and the see-saw with the whole EU and BRICs on the other end, with Uncle Sam with one foot either side of the central hinge, is more likely to tip UK growth downhill rather than giving it a helping hand to haul itself up!

So Governor King’s warning that these difficult times would continue for a long time and negatively affect the long-term intergenerational economic balance struck exactly the right note – the note that Romney has so far failed to communicate to the US electorate, along with his clearly-defined solutions.

Both candidates can be accused of allowing the US electorate to sleepwalk past 6 November, rather like the French, who woke up to wonder why they had ever voted for a fool called Flanby.

Read more by Stephen Hill

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