Archive for the 'America' Category


How special is special? The US-UK relationship

Tuesday, August 27th, 2019

Be honest. How many G7 summits do you remember? How many are little more than talking shops with the same old photos of largely the same old characters? Last year’s summit, for instance, was mostly memorable for that photo of a defensive obstinate Trump surrounded by an exasperated Merkel and others. And this year? We have the sight of Trump showing off his latest pet, our very own Prime Minister, laughing a little too keenly  at the President’s bon mots (or possibly at the fact that Trump was able to utter a coherent mot at all). Trump is backing our PM. Hurrah! The special relationship is alive and well.

Oh no! Not that hoary old chestnut. Every time a British PM comes within orbit of a US President this old dependable is wheeled out for another bout of worship.  There is something a little pathetic in the way the British political class utters this incantation, as if merely by saying it the clock could be turned back to a time when British and American leaders drafted charters for how the world should be run, as if they were equals in importance. Clearly, there has been a close military and intelligence alliance since WW2, of immense value to both parties on various occasions, most obviously during WW2 itself. If this was all that is meant, why the need to keep on mentioning it? Time perhaps for a closer look at what this oh-so-special relationship has consisted of over the years.

Churchill and WW2: It was he who first uttered the phrase in a speech in 1946, though his whole behaviour towards Roosevelt since 1940 made it obvious that he felt the Anglo-American alliance was the motor which saved the world from a new Dark Age. And, significantly, it was first said in the Fulton speech where Churchill warned of an Iron Curtain falling across Europe. Even then, there was an element of British self-delusion about how, despite how much they had in common, the US viewed the world very differently to Britain. It was “a special relationship between the British Commonwealth and Empire and the United States.” But the US did not have then (or earlier) any interest at all in preserving or helping Britain preserve its Empire. Indeed, it viewed it with some distaste.  If there was to be any Empire at all it would be a US one (à la Monroe doctrine) and in the US image. Not in the image of a romantic Victorian who imagined that having a US mother gave him a special insight or a particular entitlement. This much should, frankly, have been obvious since Woodrow Wilson. The brutal reality was shown by Roosevelt’s somewhat dismissive attitude towards Churchill by the end of the war, most notably at the Yalta and Teheran summits. Perhaps Churchill’s decision not to attend Roosevelt’s funeral in 1945 was a sign that he realised its one-sided nature.

A personal relationship?  Despite this and despite the hard-nosed calculations made by the US when extending credit to a bankrupt Britain at the end of the war, those few years and Churchill’s description of them have had a disproportionate influence on British politicians since. Not just in the assumption that, in Mrs Thatcher’s words in 1982: “The Anglo-American relationship has done more for the defence and future of freedom than any other alliance in the world.” but in the belief that a personal relationship with the US President is critical to Britain’s standing in the world. And yet in the post-war world there have only really been two UK leaders of whom that could properly be said: Thatcher and Blair. (Macmillan might also be included, if only to wonder what the Americans thought of Macmillan’s lofty and somewhat patronising claim that Britain would be Greece to America’s Rome.)

Thatcher’s relationship with Reagan was a factor (though much less important than the spin would have you believe) in the geopolitical changes which occurred while Reagan was President. And the reliance on it led Thatcher to underestimate the consequences for Britain and for the US of the changes which the Maggie/Ronnie partnership had unleashed. US focus on Europe was a result of its prolonged civil war in the 20th century and the threat which Soviet Communism posed to the US. Once those two ghosts had been laid to rest with victory in the Cold War, both Britain and Europe would be less important to the US than before.

As for Blair: well his relationship with Clinton and then Bush was certainly close but its consequences for Britain have been less happy. The neediness shown by others (Brown, May, Cameron) has on occasion been embarrassing. Only wily old Wilson managed to avoid entangling Britain in the US’s ill-fated Vietnam venture, one originally embarked on because the US’s oldest ally, France, persuaded the US that the Cold War was no time to be telling France that the time for its Empire had passed (as Ken Burn’s magisterial documentary makes clear). (The French then ignored their colossal mishandling of their colony and grandly proceeded to lecture the US about its mishandling of the war. It has not done the US-France relationship much harm.)

A mutual relationship?  How much help has the US really provided Britain? The Suez adventure was undermined by the withdrawal of US financial support, about as brutal a power play as one could imagine. There was no forgiveness of British war debts to the US, not even when British blood was being shed in America’s wars in Iraq and Afghanistan. US help to Britain in the Falklands was was not a foregone conclusion. There were plenty of voices arguing against or for a more conciliatory approach than Thatcher’s wish for total victory. The US invaded a British territory – Grenada – in 1983 with barely so much as a “please” beforehand. What did Britain’s help to the US in Iraq and Afghanistan do for Britain? When the IRA were bombing Northern Ireland and mainland Britain, Gerry Adams got the oxygen of publicity with his meetings with US Congressmen. Meanwhile the US extradited to its closest ally precisely zero alleged terrorists. Contrast this with the US determination to get an Extradition Treaty which enabled it to extradite British citizens to the US in controversial circumstances and to a criminal justice and penal system considerably more brutal than anything which would be tolerated here, even under the current Home Secretary.

None of this is exceptional. Powerful countries will use their power to extract the maximum benefit they can, even from their allies. Sentimentality is good for speeches but a poor guide to how countries will behave behind closed doors. The US has new interests – China and Asia, above all. It has an increasingly large Spanish-speaking population. It currently has a President with scant regard for existing international organisations. That President will be gone in a maximum of 5 years, maybe sooner, one reason why it would be wise to remember that a friendship with one leader is not the same as an enduring relationship with a country.  It would be foolish to assume that after Trump the US will revert to its previous geopolitical stance, even if the language may be politer.

In Brian Moore’s “The Lonely Passion of Judith Hearne”, Judith, a lonely alcoholic spinster visits a local family, the O’Neills, regularly, fondly imagining that they welcome her visits. They don’t. They have become a habit, one they endure for old times’ sake. She has some money put by. Perhaps they will benefit when she dies. The story does not end well. Poor Judith deluded herself that she was loved.

Sometimes the US seems to indulge Britain in the way the O’Neills indulged Judith. We so want to be America’s bestest friend; we so want that FTA; we so want to sell those pork pies and British sparkling wine; we don’t mention one of our biggest sectors – finance – which could do with better access to the US market; we so want to prove to the world, to ourselves, that there will be wonderful trade deals outside the EU; we are so grateful when the US omits to mention agriculture and the NHS when the UK press are paying attention. But when US trade negotiators have made it clear that both will be on the table during negotiations, when it is the US’s National Security Advisor who talks about trade, what do we think the US will really demand and get from Britain? The US can smell desperation, much as stale spirits can be smelt on an alcoholic’s breath.

By all means let’s treat the US as an important friendly ally. But isn’t it about time that we stopped deluding ourselves about our importance? Isn’t it about time we stopped assuming that the US will do us any favours that are not also in their own interests? Isn’t it about time for Britain to be realistic about its place in the world? Surely, only on this basis will it have a chance of being successful in the choice it is about to make?



With the Iowa betting markets now being opened a helpful primer on how its caucuses actually work

Wednesday, August 21st, 2019

Ladbrokes and Betfair have now got markets up on the first big hurdle in WH2020 – the Iowa Caucuses which are scheduled for February 3rd next year. Because of their historical importance and that so many Democrats are contenders this looks set to be a hugely significant day and a very big betting event.

The first thing to remember about them is that only a smallish proportion of Democrats and Republicans actually participate. This time for both parties it might reach 20% of their voters in the state. This is critical because what the remaining 80% think is totally irrelevant and has no impact on the outcome.

That makes polling extraordinarily challenging. Whilst maybe much larger proportions than 20% might tell pollsters they plan to attend their caucus the experience is that the actual turnout level is a lot smaller. Going out for a 7pm event on a freezing Iowan February evening is not something that has wide appeal.

The second thing as to what actually happens is well explained in the 2016 video above.

What we do know is the contenders with good ground organisation who have invested the time in the state tend to perform best. We also know there is the potential for Iowa to throw up big surprises.

Mike Smithson



Former White House Coms Director predicts Trump will quit WH2020 race by March

Monday, August 19th, 2019

Could it be that the President won’t be the nominee?

Over the weekend I’ve placed of bets at effectively about 10/1 that Trump will not be the Republican nominee at WH2020. I’ve done this by laying Trump on the Betfair 2020 nominee market. This has been prompted by two developments.

First there have been the public comments of former White House Coms Director, Anthony Scaramucci, who has been infuriating Trump over the last few days with a series of TV interviews. These have been widely covered. In response the President is pointing out that Scaramucci only served at the White House for 11 days before he got fired and knows, in the President’s word, nothing about what’s going on.

Scaramucci’s actual comment in an interview that is relevant to my bet is this:

“He’s gonna drop out of the race because it’s gonna become very clear. Okay, it’ll be March of 2020. He’ll likely drop out by March of 2020. It’s gonna become very clear that it’s impossible for him to win.

He’s got the self-worth in terms of his self-esteem of a small pigeon. It’s a very small pigeon. Okay,” Scaramucci continued about Trump. “And so you think this guy’s gonna look at those poll numbers and say — he’s not gonna be able to handle that humiliation.”

Scaramucci is basically saying that his reading of Trump is that such polling might lead to Trump not wanting to go  forward. The prospect of defeat is something that he would be unable to cope with.

This was followed by new polling from Fox News showing just that. It suggested that Trump was someway behind each of the leading contenders. These had Biden leading him by 11, Sanders by 9, Warren by 7 and Harris by 6.

My bet is simply that Trump has less than a 90% chance of being the nominee.

Mike Smithson



Elizabeth Warren soars ahead in the Democratic nomination betting after a poll puts her 11% ahead in Iowa

Friday, August 16th, 2019 chart of past three months on Betfair Exchange

In an earlier post this week Robert emphasised the importance of the Iowa caucuses in the selection of the Democratic nominee. This is all because the state is the first to decide and voters there tend to pay much greater attention to the contenders at this stage than those states where the primaries are much later in the calendar.

This week has been the Iowa State Fair and all the contenders have been there making sure that they are seen in what is a big public event.

At the start of her campaign in January senator Elizabeth Warren of Massachusetts made a big play of investing her early campaign money in setting up an operation in Iowa because the caucasuses historically have been so influential.

What happens here is quite extraordinary. People attend a caucus meeting in their local precinct. It might just be in somebody’s front room, and they discuss between themselves who they think would be the best nominee. Then they go into a process where supporters of the different candidates gather in different parts of the room and a little bit of horse trading takes place. After that voting takes place and the stats aggregated on a statewide basis. This year there is to be an online virtual caucus.

Iowans take very seriously their status as the first status to decide and the caucus meetings, I’m told, can be quite gripping. My guess is that what they’ll be looking next February for who is the best candidate capable of defeating Donald Trump.

The latest poll from Change Research is here.

Carrying out opinion polls in a caucus context like this can be extremely challenging because the key thing is to determine who are going to be caucus goers and most Democratic voters do not fit into that category.

Having good organisers across the state is key to success here and the top 4 in the polling have all invested heavily in their Iowa operation.

A recent development is that the national frontrunner, Joe Biden, is being increasingly scrutinised an other indications that his age might impact on his ability to be the nominee and President.

There is, however, a long way to go till February 3rd when the caucuses take place.

Mike Smithson


Trump and the inverted yield curve

Friday, August 16th, 2019

2 to 10 year yield spread

President Trump would seem to have an advantage over whoever the Democrats select as his 2020 challenger: since the Second World War, nine elected presidents have sought a second term, and seven of them succeeded.

The two exceptions were Jimmy Carter in 1980, and George H. W. Bush in 1992. In both cases, the US economy was performing badly in the lead-up to the election. US voters seem to be indulgent towards their incumbent presidents, but less so if jobs are being lost. In 1980, the Ronald Reagan was able to attack Carter with a memorable line: “A recession is when your neighbor loses his job. A depression is when you lose yours. And recovery is when Jimmy Carter loses his”. In 1992, Bill Clinton’s campaign was similarly focused on the recession then affecting the USA: “It’s the economy, stupid”.

As Trump is fond of telling us, so far the US economy has been doing well under his watch. Unemployment is historically low, and consumer spending has held up well. The long recovery and bull market which followed the 2008/9 financial crisis have continued into his term, boosted by historically low interest rates, tax cuts, and Trump’s sensible decision to make it more attractive for US companies to repatriate foreign profits.

But there is a warning sign flashing a very strong danger signal for the US economy. The graph shows the difference between the interest rates on ten-year and two-year Treasury bonds. Usually this is positive – you get more interest for locking your money away for a long period, but it has just gone negative. Historically this ‘inversion of the yield curve’ has been a very good indicator of impending recession: not only has it preceded all economic downturns since WWII, but also it hasn’t given any false signals, as can be seen on the graph above where recessions are shaded in grey.

What should worry Trump most is that in each case there has been a lag, of around 6 to 18 months, between the curve inverting and the US economy entering recession. If that correlation holds, voters could be casting their votes just as the economy worsens considerably. Given Trump’s dependence on support from blue-collar workers in the central industrial belt, that could cost him his second term.

Of course there is one easy thing he could do to help avoid this. Economists don’t know much, but they do know one big thing: there are no winners in trade wars, only losers. If Trump wants to be re-elected in 2020, he’d better get on the phone to President Li and do a deal to cancel the spiral of competitive tariffs which China and the US are imposing on each other, and which is damaging both economies.

The Democrats should also heed a lesson from history, and especially from Bill Clinton’s 1992 campaign. You don’t win elections by playing to your base and calling your would-be swing voters stupid or racist. You win elections by winning the argument on the economy, jobs, and health-care.

I don’t expect either side will take my advice, though!

Richard Nabavi


All Eyes on Iowa – the first state to decide

Sunday, August 11th, 2019

If you want to know who the Democratic nominee to be President will be, watch Iowa and New Hampshire. Why? Because it is extremely rare for the eventual candidate to fail to win one of those two two states.

How rare?

Well, let’s look at the history for a second:

2016 – Clinton won Iowa
2012 – Obama won both
2008 – Obama won Iowa
2004 – Kerry won both
2000 – Gore won both
1996 – Clinton won both
1992 – Clinton won neither!
1988 – Dukakis won NH
1984 – Mondale won Iowa
1980 – Carter won both
1976 – Carter won both

The record (for the record) is similar for the Republicans. Now, there’s a good reason for this. In Primaries, fields tend to narrow quickly as voters leave less successful candidates and move to more successful ones. So, if you look at national polling, Iowa winners tend to see eight percentage point bumps in the aftermath – which often leads to New Hampshire victory and then the nomination.

Iowa is a rural state. It’s a white state. It’s a small state. It’s a Christian state. It’s a farming state. It is – basically – not a lot like the rest of America, and it’s certainly not a lot like the Democratic base.

Winning in Iowa requires committed supporters, who are willing to brave the snow and the sub-zero temperatures to go to draughty halls and spend an evening at a caucus. It requires organisation, because in those community centres and churches, people need to be physically corralled.

So, then, who will shine in Iowa?

Well, the polls show a pretty tight race. Averaging the last month’s polls, you get the following:

Biden 22.8
Warren 19.3
Sanders 14.3
Harris 13.3
Buttigieg 11.8

Biden has a small lead over Warren, and then there are three other players all with a shout.

Who has the best organisation in the state? Well, that’s an easier one to answer. Elizabeth Warren does, having senior Clinton and Obama Iowa staffers running her operation. Her operation has also been in place longest, with staff on the ground from early in 2018. Pete Buttigieg has also been using his field topping second fund raising haul to put in place solid Iowa operation. Both candidates have around 100 field staff in place.

Harris and Biden trail with 60-65 staff, albeit with some impressive names on the roster. While Bernie Sanders seems to have been unable to recruit all the people he had in 2016.

All in, what does this tell you? Well, it suggests to me that both Harris and Sanders will struggle in Iowa relative to their national shares. There’s not a lot in Iowa for Kamala Harris: it doesn’t look very like California, and she’s not really a retail politician. And Bernie isn’t looking that hot either. Perhaps because his base skews younger, he struggles to get them out on cold nights in Iowa.

Pete Buttigieg looks like the candidate most likely to spring a surprise here. He’s relatively local, got a large and well organised campaign staff, lots of money, and he looks (demographically) like a typical Iowan. He’s not a favourite by any means, and you’d have to rate his chances below Biden or Warren, but he’s candidate I think has the most room to outperform expectations.

Which brings us to the front-runners: Biden & Warren. Biden has money and the national vote share. But I’d remember that he underperformed terribly in Iowa last time he stood there. Going into the Iowa caucuses, Biden was polling around 5% nationally, marginally ahead of former New Mexico Governor Bill Richardson. He got 1% in the caucuses, and his campaign ended soon after.

Which brings us to Elizabeth Warren. She has the organisation. She’s probably the single biggest beneficiary of any further drop off in Sanders vote. But a little warning too. Elizabeth Warren is a city girl. And Iowa is a rural state. She’s the favourite right now, but that doesn’t mean Iowans won’t find someone else more to their taste down the line.

And from a betting perspective, what does this mean? I think it means you have a tiny flutter on Buttigieg, and you sell Harris and Sanders. Biden looks a little cheap given his position in Iowa. While Warren is probably fairly priced right now. Keep an eye on those Iowa polls, mind. If Elizabeth Warren begins to solidify her position then the race may be closer to done than the national polls suggest.

Robert Smithson


Is Trump really just a 17% chance to be impeached?

Thursday, August 8th, 2019

Graphic – Recent YouGov polling on impeaching Trump

Impeachment is a legal procedure, with an indictment delivered by the House and a trial conducted by the Senate. But, assuming that there is a plausible yet arguable case for it, the procedure naturally resolves itself into a political process like any other.

To recap, impeachment is defined as the House passing one or more articles of impeachment, by a simple majority vote. The House has 435 voting members, of which 235 are Democrats. A strict party-line vote on impeachment would therefore pass. Any such articles of impeachment are likely to originate from the House Judiciary Committee, chaired by Democratic Congressman Jerry Nadler, and it is worth noting that the Committee is edging towards possibly recommending such articles this autumn:

Once a President is impeached, the trial by the Senate – with the Chief Justice of the Supreme Court presiding – requires a two-thirds majority for his conviction, and automatic removal from office. This is exceptionally unlikely given that 53 of the 100 Senators are Republicans, though, as with Nixon, it is possible that the mood of the Senate could change in light of any new information. But, for the purposes of this article, let us assume that Donald Trump’s impeachment would largely be “for show”, much like Bill Clinton’s.

The experience of the Clinton impeachment – an apparent electoral backlash against the Republicans for pursuing it – is one of the main reasons that the Democratic leadership (mostly in the form of Nancy Pelosi) has been keen to downplay the possibility. A second reason is to protect her members that represent swing districts [who, after all, are the ones who make up the majority]. Only one Democratic Congressman from a district won by Trump has come out for impeachment so far. Moderate (i.e. swing) voters are slightly against impeachment at present,  in line with the country as a whole.

At this juncture, it is worth noting that there may also be tactical arguments for impeachment. Not impeaching Trump could allow him to run in 2020 using lines such as: “Mueller cleared me, and the tragic Democrats didn’t even dare to impeach. NO COLLUSION!!!” But I think it is fair to say that the main motivation for impeaching Trump is simply the Democrats’ belief that he did indeed commit “high crimes and misdemeanors” – and, even worse, they might have allowed him to win the 2016 election.

Increasing Democratic internal pressure

Nancy Pelosi may not be able to withstand the pressure from within the Democratic Party for impeachment for much longer. In the wake of Robert Mueller’s testimony to Congress, in which he all but made clear that he would have recommended prosecution of Donald Trump, were he not the President, a procession of House Democrats went public with their desire to see a formal impeachment inquiry begin. The psychological barrier of 118 – “a majority of the majority” – has been breached. And that number can only realistically climb: this is a one-way ratchet, with every new tweet from Trump potentially converting more Democrats to the cause.

There is also electoral pressure on House Democrats to come out for impeachment in the shape of Congressional primaries: if you represent a very liberal district (just as Pelosi does) your primary electorate are likely to be highly pro-impeachment (perhaps 70%+), so you would need to be pretty sure of your personal appeal to go against that. It is for the same reason that the majority of the Democratic Presidential candidates have recommended impeachment – though none of the serious contenders want to focus on it. Such cues add further to the pressure on Pelosi.

5.7 – a good value bet

Turning to the betting, Republican (but anti-Trump) commentator Bill Kristol certainly noticed the stream of House Democrats:

It was this tweet – and notably his 50-50 prediction – that prompted me to check up on the Betfair market on impeachment, where you can still back impeachment at 5.7 (17.5%). In the interests of disclosure I should say that I already had a substantial pro-impeachment position with Betfair Sportsbook, which I had partially laid off on the Exchange. In the light of the developments I have chronicled above, I reversed my Exchange position so that I am currently very substantially pro-impeachment. It may not (yet) be 50-50, but I think it is more like 40-60 or so.

Finally, it is also always worth comparing US Betfair markets with their PredictIt equivalent. PredictIt is an academic research project that has a derogation to allow US “punters” to play, similarly to the Iowa Electronic Markets. However, there are two key limitations per market that may affect the pricing – each customer is limited to a $850 liability, and each market is limited to 5,000 customers. Bearing these caveats in mind, it’s still notable that the PredictIt impeachment market is currently at 26%, markedly higher than Betfair.

There are sound political reasons why the Democrats should not impeach Donald Trump. But that doesn’t necessarily mean they’ll be able to stop themselves. I think the 5.7 is an excellent value bet.

Tissue Price


Senator Elizabeth Warren becomes the fourth Democrat to occupy the WH2020 nomination favourite slot

Wednesday, August 7th, 2019

Since the Democratic WH2020 nomination betting opened there have now been four different contenders who have occupied the betting favourite slot on the Betfair exchange. First it was Senator Bernie Sanders, the 77 year old from Vermont, then ex-VP Jo Biden, 76,  who has had two stints there.  After her impressive performance in the first debate Senator Kamala Harris took over only to see her betting position decline sharply after a lacklustre second debate appearance last week

The latest favourite is Senator Elizabeth Warren who has performed consistently throughout the campaign who once again did well in the second debate.  A new Economist/YouGov poll finds Biden leading with 22%, followed by  Warren at 16%, with  Sanders at 13%, with Harris and Buttigieg at 8% each

Ahead of WH2016 there was a lot of speculation that Warren might enter the race to compete with Hillary Clinton. She wasn’t tempted but was the first major WH2020 contender to launch her campaign. She has an ability to think quickly on her feet and to make statements about herself that very much support her campaign with sounding boastful. That’s an important skill.

Warren represents Massachusetts which is next to New Hampshire where the first full primary will be held in early February.  Historically contenders from the neighbouring state  have performed well there.

Unfortunately there’s never been a moment when her betting odds have been long enough for me to be tempted and I feel I should be on her.

Mike Smithson