Turnout Determined the Winner in Iowa, But Not in the Way Everyone Expected

Donald TrumpI was wrong, and so were the polls.

On the eve of the Iowa caucuses, surveys indicated that Donald Trump was likely to finish about seven percentage points ahead of Sen. Ted Cruz. Instead Cruz pulled out a solid win, and Trump finished barely ahead of second-runner-up Sen. Marco Rubio.

Add it to the growing list of times pollsters have failed us over the last four years. (Side note: Wondering what that suddenly keeps happening? Check out my feature from the February issue of Reason, “Why Polls Don’t Work.”)

Conventional wisdom had it that the determining factor last night would be voter turnout—and it was, but not in the way people were predicting. It’s true that Trump supporters are concentrated among “irregular” voters like people who call themselves Republicans but are actually registered Democrats. It’s also true that Trump’s chances of winning Iowa turned on his ability to mobilize those supporters to show up and caucus for him.

But it turned out not to be true that record turnout necessarily meant good things for the reality star. What people overlooked, myself included, was that there are two ways to grow an electorate: from the ranks of demographic groups that vote in lower numbers, and from the outliers within demographic groups that vote in higher numbers.

Take evangelical Christians. According to Drake University, in 2008 they made up 57 percent of Iowa GOP caucusgoers—a majority. But fast-forwarding to last night, entrance polls found evangelicals making up 64 percent of the GOP electorate. That’s a big increase for a group that already had a tendency to show up.

Some 180,000 Iowans participated in the 2016 GOP caucuses, a record high by an enormous margin. But instead of most of that increase coming from less-educated, blue-collar, and moderate voters, a lot of it came from college graduates and evangelicals.

Not coincidentally, these are the same groups Cruz and Rubio do well with.

The Floridian won college-educated caucusgoers, those whose top issue is the economy and jobs, and those who value electability. The Texan won people with “some college,” those who prioritize that their candidate “shares my values,” and born-again or evangelical Christians. Cruz took a third of voters in the last category, more than any of his opponents by double digits. 

There are a couple of explanations for how Cruz pulled this off. One was his larger-than-life emphasis on faith and conservative values, especially important in a place like Iowa. In his victory speech last night, he made a point of thanking the state “for welcoming my father”—a Christian pastor—”to preach from the pulpits of your churches.” Cruz sought and received endorsements from a number of evangelical leaders. And as Scott Shackford wrote yesterday, he campaigned hard on his opposition to gay marriage:

This isn’t a new or sudden gesture for Cruz. He staked out territory in opposition of the Obergefell decision long before the Supreme Court ever ruled, calling for legislation or even a constitutional amendment guaranteeing that states have the authority to decide whether to recognize same-sex marriage. At a rally in Iowa on Sunday, Cruz brought out Duck Dynasty star Phil Robertson to call gay marriage “evil” and “wicked” and added “They want us to swallow it, you say. We have to run this bunch out of Washington, D.C. We have to rid the earth of them.” 

The other explanation is that Cruz’s meticulously targeted ground game made the difference. It’s been widely reported that his campaign, unlike Trump’s, has invested heavily in reaching persuadable voters. The businessman’s supporters might be passionate, the thinking went, but Cruz’s are organized. Wrote The New York Times on Saturday:

Mr. Cruz’s campaign boasts a chairman or chairwoman for each of Iowa’s 99 counties, captains in 1,537 of the state’s 1,681 precincts, and 10,000 people from this state and beyond who have volunteered to help in the final push. … [His supporters] were making more than 15,000 calls a day, with a refined list of exactly which voters they have identified as up for grabs. 

That bet paid off, much as a similar one did for Barack Obama in 2008 and 2012. As one consultant put it on Twitter:

But perhaps the most overlooked explanation for what happened in Iowa last night is that a lot of people really don’t like Donald Trump. Way back in July I made the case that his high unfavorables and penchant for saying outrageously inappropriate things would be the reality star’s undoing. It seems there was a stronger anti-Trump current in Iowa than the polls, for one reason or another, picked up on—strong enough to drive turnout to unprecedented heights and overwhelm any surge of Trump supporters that did materialize. Fully 70 percent of people who had never been to a caucus before cast their lot with someone other than Trump. Among late-breaking voters—those who only decided who they were supporting in the last few days—just 13 percent chose the real estate mogul.

Whether the same thing will happen in New Hampshire and on down the line remains to be seen. Almost nothing this cycle has played out how I thought it would this time last year. But it’s telling that Trump’s stock on the betting markets, which had been ticking up alarmingly over the last few months, plummeted last night. As of now, Rubio is seen as not just more likely than his competitors to be the Republican nominee, but as more likely than not.

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Georgetown Law School Won’t Let Students Campaign for Bernie Sanders

Bernie SandersGeorgetown University is wildly confused about its free speech obligations: the law school recently barred students from campaigning for Bernie Sanders on campus, citing misplaced concerns that doing so violates IRS law.

A group of Georgetown law students attempted to set up a table and distribute pro-Sanders literature, but an administrator quickly shut them down because their actions threatened the university’s tax-exempt status, she said.

The administrator is wrong. According to the Foundation for Individual Rights in Education, Georgetown’s tax-exempt status is not undermined by students engaging in political activity. Indeed, students have every right to express opinions and engage in speech—including and especially political speech:

 “Every campaign season, FIRE sees private colleges erroneously tell students that they can’t campaign for their candidate because it would threaten the school’s tax exemption,” said FIRE Senior Program Officer Marieke Tuthill Beck-Coon. “That’s just not correct. As the IRS has made clear, and as FIRE has emphasized repeatedly throughout the years, nonprofit restrictions on political campaigning apply to the institution itself, not to students or student groups.”

The College Fix’s Greg Piper writes that “you’d think a bunch of lawyers would understand this distinction,” and on that point, I disagree with him. I’ve found that law school students and administrators are frequently the most mixed-up people on campus, when it comes to free speech. [Related: Law Students Wrote This Unconstitutional, Ungrammatical Speech Code: ‘Do Not Comment Despairingly on Others’]

Despite what Georgetown administrators currently believe, a college campus is an excellent place to try to persuade other people to support (or oppose) a particular political candidate.

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An Escalator Of Optimism

Submitted by Salil Mehta via Statistical Ideas blog,

The current stock market level is disconcertingly well below not just the Wall Street forecasts for 2016 (made a couple months ago), but also below those made for 2015… or for even 2014!  One can see our recently tabulated list (the lengthiest available ever) of market calls, which was recently enjoyed by leaders such as billionaire Vinod Khosla, and economist Noah Smith.  One doesn’t need a Harvard PhD to grasp the chart below for 10 Wall Street soothsayers, consistently giving their views to Barron’s (and anyone else) in each of the past few years.

 

Even as we proved the flagrantly poor performance of these “forecasters” (not just relative to the market but -depressingly- even relative to a fair coin toss), it’s worth noting that the recent stock market level of just <1900 is below all 10 out of 10 2016 forecasts (e.g., Federated is the highest at 2500, or we would need a 32% rise in just 11 months remaining in 2016 to make that target!)  It is also below all 10 out of 10 2014 forecasts (e.g., Federated is again the highest at 2100, or we would need an 11% rise to make that 2014 target.)  In a period of increased suicides among economically stressed men (here, here), let’s not push bogus hope.

As for the most bull of bullish forecasters, it is intriguing that 5 of the 10 forecasters have always had and an upper-half forecast in each of the past 3 years.  They are sequenced here in approximate order of bullishness (most bullish first): Federated Investors, J.P. Morgan, Prudential, Bank of America, and Columbia.  It seems as if these most imaginative firms have much to learn about their prognostication errors and risk.

Assuming they will throw in the towel and bring their buoyant forecasts back to norm, this is not the first time strategists have done so quickly in the New Year.  Even as recently as 2014, we analyzed how year-end forecasts have ineptly come down in the first-month, even as their unknowing outlooks are disproportionately subject to final-month risk.  We will publish an article in an external publication later in February, concerning ideas about what investors can do now, given this wild gap, between optimism and intelligence.


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New Petition Seeks Appointment Of Special Prosecutor Over Hillary Clinton Email Coverup

With Hillary beating a self-proclaimed socialist running on a "raise taxes" platform in Iowa thanks to six coin tosses, one wonders if reality is sinking in among the great unwashed American citizenry that she may not be as 'trustworthy' as mainstream media proclaims her to be.

As the email controversy just won't go away, and with insiders confessing that FBI individuals will "revolt" should a case against Hillary not be brought over her "top secret" personal email server debacle, it appears "we the people" are taking matters into our own hands.

 

American's have the right to full disclosure regarding Hillary Clinton's distribution of Top Secret and Classified Emails on and illegal Email server. Our Government must ensuring voters are well informed during the 2016 Presidential electoral process. Stop the stonewalling on a likely cover-up that may prove a bigger scandal than Watergate. End the partisian equivocation, ensure a truly independent special prosecutor is appointed immediately .

"If men were angels, no government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself" – James Madison, 1788

*  *  *

As we previously noted, the implications are tough for The DoJ – if they indict they crush their own candidate's chances of the Presidency, if they do not – someone will leak the details and the FBI will revolt… The leaking of the Clinton emails has been compared to as the next “Watergate” by former U.S. Attorney Joe DiGenova this week, if current FBI investigations don’t proceed in an appropriate manner. The revelation comes after more emails from Hilary Clinton’s personal email have come to light.

“[The investigation has reached] a critical mass,” DiGenova told radio host Laura Ingraham when discussing the FBI’s still pending investigation. Though Clinton is still yet to be charged with any crime, DiGenova advised on Tuesday that changes may be on the horizon. The mishandling over the classified intelligence may lead to an imminent indictment, with DiGenova suggesting it may come to a head within 60 days.

“I believe that the evidence that the FBI is compiling will be so compelling that, unless [Lynch] agrees to the charges, there will be a massive revolt inside the FBI, which she will not be able to survive as an attorney general,” he said.

 

"The intelligence community will not stand for that. They will fight for indictment and they are already in the process of gearing themselves to basically revolt if she refuses to bring charges."

The FBI also is looking into Clinton's email setup, but has said nothing about the nature of its probe. Independent experts say it is highly unlikely that Clinton will be charged with wrongdoing, based on the limited details that have surfaced up to now and the lack of indications that she intended to break any laws.

"What I would hope comes out of all of this is a bit of humility" and an acknowledgement from Clinton that "I made some serious mistakes," said Bradley Moss, a Washington lawyer who regularly handles security clearance matters.

Legal questions aside, it's the potential political costs that are probably of more immediate concern for Clinton. She has struggled in surveys measuring her perceived trustworthiness and an active federal investigation, especially one buoyed by evidence that top secret material coursed through her account, could negate one of her main selling points for becoming commander in chief: Her national security resume.


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Chipotle Reports It Was Served With A Fresh Criminal Subpoena For Serving e.Coli Burritos

Everyone expected that Chipotle’s results would be bad, and they were with the company missing revenue expectations of $1.01 billion with $997.5 million in sales, on $2.17 in EPS. But what has drawn everyone’s attention in the company’s just announced quarter is that following the previously announced criminal investigation for serving e.Coli tainted food,on January 28 it received yet another, new criminal investigation, one which broadens the scope of the previous one.

On January 28, 2016, Chipotle was served with a subpoena broadening the scope of the previously-announced criminal investigation by the U.S. Attorney’s office for the Central District of California. The new subpoena requires us to produce documents and information related to company-wide food safety matters dating back to January 1, 2013, and supersedes the subpoena served in December 2015 that was limited to a single Chipotle restaurant in Simi Valley, California. We intend to fully cooperate in the investigation.

For now the stock appears to be doing its best to, well, hold it in…


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Crude Chaotic After API Reports Bigger Than Expected Inventory Build

Against expectations of a 3.75mm expectation (and following last week's massive build), API reports that crude inventories saw a very slightly bigger than expected 3.8mm build. WTI crude had plunged into the data and went entirely chaotic as it hit (swining in a 50c range) before settling lower.

 

Coming into this week's print, gasoline builds continue to stymie crude (which saw a huge build) but Cushing saw a draw…

 

And then API reported a slightly bigger than expected 4mm build…

 

Oil's reaction was chaotic…

 

And finally, don't forget that U.S. crude inventories are at levels last seen when President Herbert Hoover was battling the Great Depression.

 

Charts: Bloomberg


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The Global Economy Could Fall Farther and Faster Than Pundits Expect

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Systemic fragility doesn't respond to central bank jawboning or Keynesian claptrap; unlike those "policy tools," fragility is real.

The core narrative of central bank/cartel capitalism is centralized agencies have the power to limit downturns and extend credit-based "good times" almost indefinitely. The centralized power bag of tricks includes fiscal policies such as deficit spending to boost "aggregate demand" in downturns and monetary policies such as lowering interest rates to zero and buying assets, a.k.a. quantitative easing.

If we crawl under the barbed wire and escape the ideological Keynesian Concentration Camp, we find thinkers such as Ugo Bardi, John Michael Greer and Dimitry Orlov, whose work explores the dynamics of collapse, resilience and sustainability.

All three have added a great deal to my own (emerging) understanding of the many dynamics of collapse.

We can summarize the dynamics of collapse in many ways; here's one: collapse is latent fragility manifesting. A familiar (and tragic) health analogy offers an example: a middle-aged man doesn't appear ill, a bit thick around the middle perhaps, but neither he nor his intimates can see the fragility of his clogged arteries and blood-starved heart. Seemingly "out of the blue," the man has a massive heart attack and passes from this Earth, to the shock of everyone who knew him.

Financial collapse isn't "out of the blue," any more than a heart attack is "out of the blue." Actions and choices have consequences, and as resilience and redundancy are slowly stripped from complex systems, systemic fragility builds beneath the surface. At some difficult-to-predict point, a threshold is reached and the complex system fails.

In the financial realm, fragility builds as the system relies ever more heavily on marginal lenders, borrowers, buyers and investments for its "growth." The current "recovery" (smirk) is completely dependent on marginal lenders (China's shadow banking), borrowers (auto buyers taking subprime 7-year loans), buyers (corrupt Chinese officials buying $3 million homes in Vancouver B.C. with their ill-gotten gains) and investments (empty malls, empty factories, stock buy-backs, etc.).

The problem for "growth" based on the fragile margins is that the entire system becomes fragile as a direct result of this dependence on fragile margins. The current global real estate bubble is predicated on one condition: that the supply of corrupt Chinese officials fleeing China with ill-gotten millions to invest overseas is endless.

But no supply of corrupt officials, even in China, is truly endless, and markets based on this thin edge of corrupt capital will collapse once the corrupt capital dries up.

The same can be said of marginal oil production, marginal auto/truck buyers, marginal cafes, marginal malls, etc. When fragile (i.e. highly risky) shadow banking becomes a dominant force in credit, the system itself becomes fragile.

Conventional economists are entirely blind to system fragility. There is no ready Keynesian Cargo Cult econometric formula that measures systemic fragility, so it simply doesn't exist within conventional economics.

This is why financial panics and collapses always appear (like fatal heart attacks) to be "out of the blue" to conventional economics.

I propose that the Global Recession of 2016 will trace the Seneca Cliff as described by Ugo Bardi. This application may not align with Bardi's own work, and I want to make it clear this application is my own, not Bardi's. But I think a strong case can be made that the global financial/economic system is primed for a ride down the Seneca Cliff:

 

Recall that the global "recovery" 2009 – 2015 was entirely based on the expansion of debt taken on by marginal borrowers. Systemic fragility doesn't respond to central bank jawboning or Keynesian claptrap; unlike those "policy tools," fragility is real.


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Scott Brown and Kid Rock Endorse Donald Trump, Does Ted Cruz Wear Two Watches? P.M. Links

  • |||Fresh off his second-place finish in the Iowa caucus, Donald Trump has received the endorsement of former Massachusetts Sen. Scott Brown. Next stop: New Hampshire!
  • Kid Rick also endorsed Trump.
  • Important question: Does Ted Cruz wear two watches?
  • Everything you need to know about the Zika virus.
  • The Intercept caught and fired a serial fabulists who was writing false stories. The author made up sources for several of his stories, including one in which he claimed Charleston killer Dylann Roof had been dumped by a woman who left him for a black man. There’s now no evidence that story was true.
  • Elizabeth Banks will play Rita Repulsa in the new Power Rangers movie.

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First U.S. Zika Virus Transmission: Not by Mosquitoes but by Sex in Dallas

AedesAegyptiThe World Health Organization has declared the western hemisphere’s outbreak of Zika virus a global health emergency. So far the virus has spread to 20 different countries in the region, but there have been no reported cases of the disease being locally transmitted on the mainland of the United States. The Aedes species of mosquito – which also spread the dengue and chikungunya viruses – have been the main vector for the disease. The Centers for Disease Control has noted there have been reports that the virus can be spread through sexual contact.

Local Texas news media are now reporting that the Dallas County Health and Human Services department has confirmed today that a patient was infected after having sexual contact with an ill individual who returned from a country where the virus is known to be present.

This first case of U.S. zika transmission is not likely to be the last. After all, the Aedes aegypti and Aedes albopictus mosquitoes are now endemic in parts of the U.S.

AedesRange

Despite the current alarm, it should still be recalled that while the chikungunya virus has spread via the same mosquito vectors throughout the Caribbean since 2013, there have been very few cases of the disease being locally transmitted in the mainland United States. In addition, the last reported local outbreak of dengue fever in the U.S. occurred in South Texas in 2005. It is not inevitable that there will be a major zika outbreak in the U.S.

Virulence differs. For example, the CDC reports that there were just over 2,000 cases of West Nile virus in the lower 48 states in 2015. West Nile virus has been detected in far more mosquito species than has either zika or chikungunya virus.

One final note: If the person who is trying to seduce you has just returned from a tropical trip and is experiencing joint pain and fever, maybe you both should consider putting off sex until another time.

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Liberty Links 2/2/16

Below are links to some of the more interesting and important reads I came across today, but will not be publishing on in detail.

Clinton, Rubio, Cruz Receive Foreign Policy Advice From Same Consulting Firm (The Intercept)

Fearing Lean Times, U.S. Companies Tighten Purse Strings (More recessionary signals for the U.S. economy, Reuters)

Britain Approves Controversial Gene-editing Experiments (Associated Press)

The Fed Wants to Test How Banks Would Handle Negative Rates (Bloomberg)

Denmark Extends Border Control on Border with Germany (Reuters)

continue reading

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