Guest Post: The Political Black Swan

Tyler Durden's picture


Via Global Macro Monitor,

Fiscal cliff collides with a replay of the Bush v Gore 2000 fiasco.  Not good.

We noted in an earlier post today Governor Romney has moved ahead of President Obama on the Real Clear Politics electoral map for the first time of this presidential campaign.  The Governor has also opened a 7 point lead in the Gallup national tracking poll of likely voters.

We recognize that 19 days is an eternity in politics, but the underlying dynamics with states moving in and out of play and the tightening of polls in the battleground states has increased uncertainty,  at least in our opinion,  on who will be the next POTUS.

It appears to us that the momentum is in Governor Romney’s favor, but we do not have a good sense of the political dynamics on the ground in the states that really matter, such as Ohio, Nevada, and Colorado.

As traders we are always nervous and looking for potential disasters on the horizon.  We are becoming increasingly concerned the way this election is shaping up.   Imagine, for example,  if Governor Romney wins the popular vote and President Obama takes the electoral college, or vice versa.

We see the President’s probability of winning the election on Intrade remaining above 6o percent while Governor Romney opens a fairly significant lead in the daily Gallup tracking poll (see below).  WTF?

The Black Swan?   The fiscal cliff collides with a replay of the Bush v Gore 2000 election fiasco.  Total disaster.

The resulting political paralysis coming at such a critical time as the country edges toward the fiscal cliff would collapse confidence and suck markets into a black hole that nobody knows how they would look coming out the other side.   Recall the nonlinear dynamics of 2007-08 financial collapse.  Greece?  Wiemar?   Who the %#@& knows and let’s hope and pray we never do.

This isn’t our base case and the probability of such a scenario is relatively low.  But, we believe it is such a high impact event that everyone, including and especially the politicos in Washington,  should be aware, afraid, and have a contingency plan.

We’re always nervous but growing more so as November 6th approaches.  Stay tuned.

(click here if charts are not observable)

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Fri, 10/19/2012 - 12:39 | 2904508 hedgeless_horseman
Fri, 10/19/2012 - 12:41 | 2904524 takeaction
Fri, 10/19/2012 - 12:47 | 2904547 CPL
CPL's picture






You vote for either option and you are fucked.  Who doesn't get this yet?

Fri, 10/19/2012 - 12:50 | 2904558 krispkritter
krispkritter's picture

Obama's 'base' is going to vote for him because he's still 'black' and the checks are still showing up. Romney's 'base' is going to vote for him because he's a whiter shade of 'he's not Obama'. And the rest of us will vote for 'WTF!'...

Fri, 10/19/2012 - 13:05 | 2904624 Jake88
Jake88's picture

he's not as black as he used to be.

Fri, 10/19/2012 - 13:35 | 2904764 azzhatter
azzhatter's picture

keep obama in president

Fri, 10/19/2012 - 16:09 | 2905336 jamezelle
jamezelle's picture

I don't think anyone got the reference.

Fri, 10/19/2012 - 17:34 | 2905535 Centauri
Centauri's picture

Romney sucks...BAD

Fri, 10/19/2012 - 15:34 | 2905240 Bicycle Repairman
Bicycle Repairman's picture

"he's not as black as he used to be."

Romney?  He couldn't be whiter.

Fri, 10/19/2012 - 15:57 | 2905303 WhiskeyTangoFoxtrot
WhiskeyTangoFoxtrot's picture

I've never been black. WTF 2012!

Fri, 10/19/2012 - 16:06 | 2905328 pods
pods's picture


Fri, 10/19/2012 - 13:05 | 2904625 Pure Evil
Pure Evil's picture

Don't worry, be happy!

Everyone go back to sleep, when we all wake up on Nov. 7, we'll be back in Never, Never Land and that awful Capt. Hook will be gone.

Fri, 10/19/2012 - 13:05 | 2904626 SWRichmond
SWRichmond's picture

The fiscal cliff collides with a replay of the Bush v Gore 2000 election fiasco.  Total disaster.

Well, either a disaster, or the ensuing full-frontal totalitarianism pushes fence-sitters off the fence, bringing about the end of the totalitarianism.

Fri, 10/19/2012 - 13:39 | 2904789 blunderdog
blunderdog's picture

Obama's "base" is TINY.  A lot of folks voted for him because they bought into the "change" thingie.

Given that there's been NO CHANGE, there's a very strong chance his former supporters (fair-weather supporters at best) just don't turn out.

Fri, 10/19/2012 - 20:39 | 2905852 Nehweh Gahnin
Nehweh Gahnin's picture

While I wasn't sold on the "change" thingie, it sounded better than the alternative 4 years ago, and so I cast my (last) ballot.  It didn't matter, cuz I'm in one on those dark red states, but I felt good about it ... for about ten fucking minutes.  The only thing I object to in your comment is the "fair-weather" smack.  Otherwise, spot on.  Yeah, he ain't getting my vote this time.  Neither is the other scuzbag.  BOYCOTT THE VOTE, BITCHEZ!!!

Sat, 10/20/2012 - 12:58 | 2906474 blunderdog
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No offense is intended--hey, I voted for the guy myself.  But to be clear: he came out of NOWHERE.  He never had any kind of background that would earn him votes--one Senate term and a bunch of soundbites.  He won the last election solely because Dubya's administration had been so fuckin' awful people would've voted for *anything* different.

Sat, 10/20/2012 - 01:31 | 2906093 Jani
Jani's picture

With all the acronyms floating around ZH, did anybody else look at "TINY" and think "what the fuck does that stand for?" ---or is just 1:30 AM and I'm getting tired?

Fri, 10/19/2012 - 15:56 | 2905300 WhiskeyTangoFoxtrot
WhiskeyTangoFoxtrot's picture

Good to know I have your support!

Fri, 10/19/2012 - 13:11 | 2904662 aint no fortuna...
aint no fortunate son's picture

hopefully we here in the great and intellectual state of Florida will again get to be the deciders just like in 2000... and we've got the gene pool to make the right decision

Fri, 10/19/2012 - 14:22 | 2904952 aint no fortuna...
aint no fortunate son's picture

I've spent a lot of time in Maine, and I really like the people, but I think they may need to spend a little less time drinking and tipping cows... just sayin.

Fri, 10/19/2012 - 14:04 | 2904891 Winston Churchill
Winston Churchill's picture

Think someone pissed in the USA's gene pool a while ago.

Thwart natural selection and voila.........

Fri, 10/19/2012 - 14:39 | 2905023 Zap Powerz
Zap Powerz's picture

The urine you speak of was added by the federal government in the form of welfare.  Welfare enables the weak, feeble and inferior to survive and reproduce in above average numbers.

The only way to restore natural selection is to end entitlements.

Let me put it another way: the only way the human race progresses or moves forward is by ending entitlements.

Fri, 10/19/2012 - 15:38 | 2905256 Bicycle Repairman
Bicycle Repairman's picture

We could have granted welfare and stifled reproduction, but then where would all the soldiers and government supporting zombies come from?

Fri, 10/19/2012 - 15:46 | 2905275 DosZap
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We could have granted welfare and stifled reproduction, but then where would all the soldiers and government supporting zombies come from?


We did,and welfare has contributed to millions of out of wedlock kids(not near as many as have been murdered thru abortion though), there are your TAXPAYERS we do not have now,as whites, did /do it mostly for convienence.

But the Gov supporting zombies were not part of it(until they were Obamacized out of a job).

Fri, 10/19/2012 - 16:09 | 2905335 Bicycle Repairman
Bicycle Repairman's picture

"We did,and welfare has contributed to millions of out of wedlock kids"

I thought I said stifle reproduction.  Let me check .... yeah, I did.

Fri, 10/19/2012 - 17:16 | 2905513 DosZap
DosZap's picture

"We did,and welfare has contributed to millions of out of wedlock kids"

I thought I said stifle reproduction.  Let me check .... yeah, I did.

I guess you meant sarc/, I was refering to the zombies supporting the gov, and taxpayers welfare babies ain't.(maybe I misunderstood SUPPORT.

Fri, 10/19/2012 - 13:29 | 2904736 Pinktip
Fri, 10/19/2012 - 14:18 | 2904926 David449420
David449420's picture

Really great choice Americans have this election. Do you want a Socialist Police State or a Fascist Police State ?

Fri, 10/19/2012 - 14:55 | 2905092 Jethro
Jethro's picture

We get neither.  We'll have an Inverted Totalitarian state regardless of who wins.

Fri, 10/19/2012 - 15:02 | 2905126 Earth Ling
Earth Ling's picture

Here's what to do about the Two Parties, No Choice / Lesser of Two Evils crap we're faced with:

1.       Review the the map above and do the following:

2.       Compile a list of your progressive-leaning friends, family members, co-workers and acquaintances in solidly Red States

3.       Compile a list of your conservative or libertarian-leaning friends, family members, co-workers and acquaintances in solidly Blue States

4.       Contact your list of progressives in Red States and explain that they should vote for Jill Stein of the Green Party.  Their vote will do far more for our democracy if they vote for Jill Stein than if they vote for Obama in a state where he can't possibly win. 

5.       Similarly contact your list of conservatives in Blue States and explain why they should vote for Gary Johnson of the Libertarian Party. Their vote will do far more for our democracy if they vote for Gary Johnson than if they vote for Romney in a state where he can't possibly win. 


Fri, 10/19/2012 - 16:49 | 2905435 TraitorsHang
TraitorsHang's picture

This is going to replace my Ron Paul 2008 bumper sticker:

Fri, 10/19/2012 - 18:56 | 2905692 cynicalskeptic
cynicalskeptic's picture

well.... there's also a chance that the Mayans were right and with passage through the galaxy center and planet alignment we have a pole shift or who knows what we have an end to life as we know it and EVERYBODY (the fraction of humanity that survives that is...) ends up living at a subsistence level.... not really all that different from the endgame  in a total financial collapse


Fri, 10/19/2012 - 12:50 | 2904551 SeverinSlade
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People really aren't understanding how crucial the fiscal cliff will end up being.  If Romney loses to Obama, the Republicans have ZERO incentive to negotiate until the last minute.  The longer they hold out, the more concessions they can get from the Democrats.

If Romney wins, the same thing happens just in reverse.

There will be no resolution until there is blood on the streets (metaphorically speaking of course - bankers and politicians never feel genuine heat unless we are in total revolition mode).

Throw in what appears to be imminent war with Iran/Syria, and shit is about to get real.

Fri, 10/19/2012 - 13:07 | 2904644 Pure Evil
Pure Evil's picture

With jumbo jets to anywhere and mega-yahts at their disposal, I doubt the bankers and politicians will ever feel genuine heat again.

Fri, 10/19/2012 - 13:17 | 2904693 CrashisOptimistic
CrashisOptimistic's picture

No, you don't understand.

There is no resolution to the fiscal cliff for reasons that are NOT POLITICAL.

If you relax the tax increases and spending cuts, the debt goes up and failure to act likely triggers downgrades.  Also, and this is important, a "compromise" of 1/2 . . . let 1/2 the tax increases happen and 1/2 the spending cuts happen WILL drive GDP negative.

If you don't relax the increases and cuts, then you get the full cliff and an even more negative GDP hit.

What's happening is people are failing to understand "tipping point".  When you're past it, as we are, THERE IS NO SOLUTION.

Fri, 10/19/2012 - 14:07 | 2904901 Winston Churchill
Winston Churchill's picture

Afraid we passed the tipping point lasr August(2011).

All downhill from here.

Fri, 10/19/2012 - 14:38 | 2905013 Sorynn
Sorynn's picture

I keep trying to tell friends that in a fiat currency, fractional reserve system aggregate debt must always increase.  With the private sector deleveraging, the public sector can induce austerity and start the defaults or run up the debt till the currency collapses. 

Then they look at me with intellectual drool and say something ingenius like, "That's why you have to vote for Romney."


Fri, 10/19/2012 - 14:40 | 2905029 Zap Powerz
Zap Powerz's picture


Fri, 10/19/2012 - 12:50 | 2904557 kaiserhoff
kaiserhoff's picture

Historicly, the Republican candidate will gain 5-7 points in the month before the election, as polls get a better focus on likely voters.

Also, the first debate outcome was huge, not because Romney won, but because the media aren't smart enough or flexible enough to handle more than one momentum change between the conventions and the election.  They are herding animals. 

Fri, 10/19/2012 - 13:05 | 2904623 LMAOLORI
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The media could handle the change they just choose not to they have become the propaganda wing of the White House


Fri, 10/19/2012 - 14:56 | 2905095 DosZap
DosZap's picture

These figures do not include the new #'s after the second debate.

Whatever the outcome, we must be rid of Obama.


Fri, 10/19/2012 - 20:25 | 2905833 kaiserhoff
kaiserhoff's picture

Pray tell, what do you have against the Monkey-in-Chief?

Fri, 10/19/2012 - 12:41 | 2904517 Atlantis Consigliore
Atlantis Consigliore's picture

Puts..........200 BP move in yield curve.

Fri, 10/19/2012 - 12:41 | 2904519 Shizzmoney
Shizzmoney's picture

Fiscal cliff collides with a replay of the Bush v Gore 2000 fiasco.

This election is no where CLOSE to what the shitstorm that was the 2000 election, was.

I mean, it COULD be, with the voter registration shenanegians.......but that race was as close as any race in political history going into election night.

This race, Obama is clearly the favorite, and Romney is not even liked by his own party. 

Gore v Bush was really Left v Right in every sense of the term.  It WAS the start of the new age of polarization that we live in today.

Fri, 10/19/2012 - 12:58 | 2904598 divide_by_zero
divide_by_zero's picture

Obama has alienated 53% of the country as Gallup shows(and their sampling still should favor O), probably will be a blowout for Romney in popular vote on the scale of Reagan's Carter win, electoral will be closer though.

Fri, 10/19/2012 - 13:46 | 2904816 blunderdog
blunderdog's picture

That's a bold prediction.  I got two bits says you're WAY wrong. 

It's virtually impossible to generate a major popular-vote discrepancy these days--the parties are too similar.

Fri, 10/19/2012 - 14:06 | 2904897 NotApplicable
NotApplicable's picture

Well, here's another pundit spinning the fearful Bush vs. Gore reprisal meme, yet I've never seen this much apathy toward a POTUS election in all of my life.

So, just who comprises the "Global Macro Monitor?" Looks like some guy named Gary.

So... agent provocateur, or just another useful idiot parroting elite memes?

Either way, it smells badly of another episode of directed history, as the whole meme fails to add up. As I've mentioned before. There are yards filled around here with every candidate's sign from their party EXCEPT POTUS. I have never, ever seen this happen before.

Fri, 10/19/2012 - 14:16 | 2904927 Winston Churchill
Winston Churchill's picture

After your comment the other day I rechecked my observations.

From Palm beach upto Stuart here in  south Florida;Dixie highway,US1 and A!A.

Three presidentional signs,lost count on the local,state, and congresscritter ones.

Is this West guy a new realty broker ? Or canned fish brand ?

Fri, 10/19/2012 - 20:02 | 2905794 GeezerGeek
GeezerGeek's picture

West is my congressman for another month or two. An unabashed conservative, he was driven out of the army when he cared more about the troops under his command than about the eardrums of an Iraqi prisoner. The perfumed princes at the Pentagon (hat tip to David Hackworth, RIP, for introducing me to the phrase) didn't much like that. He also had a habit of calling out his neighbor, Ditzy Wasserman-Schultz. The RINO-Republican establishment in Florida was so pissed at him that they redrew his district to eliminate some Republicans and add some Democrats. I live in part of the area that was removed from his district.

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