A Melman Minute — October 3, 2012

Well, tonight's the night when the political wars really heat up. From 6:00 PM - 7:30 PM PDT (9:00 - 10:30 EDT; 8:00 - 9:30 CDT) President Obama and "wanna-be" Presidential Candidate Romney finally square off in a face-to-face debate with the subject being domestic matters. Two more debates are scheduled to take place on October 16 and 22.

Many political observers - myself included - believe this initial debate is absolutely crucial to the Romney effort, given that he has failed so far to ignite any real fire of enthusiasm among his followers and, most important of all, he has not yet connected with the 'undecided' voters. If he is to win the November election, he must demonstrate clearly that he is the better communicator and he owns a catalogue of superior ideas which will resolve America's domestic problems.

Given the tightness of the race with the latest polls showing Obama leading by a three percentage point margin, the focus of both contenders must be convincing those who are not already in one camp or the other that they are the man for the job. As one financial reporter, Janet Hook, put things in a WSJ article this morning, "Wednesday's presidential debate will give President Obama and Mitt Romney one of their last, best shots at winning over an ever-dwindling number of uncommitted voters…"

She also points out that while most debates don't actually motivate many voters, there have been two distinct occasions when debates have been critical in the campaigns, 1960 (Kennedy vs. Nixon) and 2000 (George W. Bush vs. Gore), when superior debate performance has been regarded as a very important factor in the subsequent Kennedy and Bush victories.

One of those interviewed for Hook's article, Jim Ford of Florida, raised what many regard as a key component of the debates when he noted, "…I hope there is something of substance in the debates…"

In an op-ed piece released this morning, Fox News commentator Fred Barnes simply stated that it was time for Romney to finally forget his game plan of "playing it safe" and should, "…make a forceful case that America's survival as a prosperous and respected nation is at stake…Mr. Romney needs to go where Mr. Obama cannot go. What's required are ideas, initiatives and policies commensurate with America's moment of peril. This means, first of all, embracing the conservative reform agenda: entitlement reform, overhaul of the tax code, curbing on spending, an unhampered economy, regulatory relief, consumer-driven health care, a welfare state that doesn't promote dependency, a revitalized civil society." (Our emphasis)

Mr. Barnes notes that while adhering to such programs may be risky, at least Romney will appear to have big solutions for America's problems and, "…Mr. Obama, with no serious alternatives, will be left behind."

It should make for a most interesting evening and I will report on my personal evaluations in our Melman Minute of this coming Friday.

Of the crucial debate items listed above, "regulatory relief" appears to me to be of vital importance going forward. The litany of 2,000+ page laws which have been enacted by the Obama Administration have created dire difficulties for many industries and commercial activities within America and many economists believe they have been instrumental in reducing economic efficiency. Interestingly enough, there is a real contrast showing up north of the US-Canadian border.

Canada's press media was filled with stories yesterday which generated headlines such as "Plan to cut red tape a 'game changer' and "Red tape removal won't put public at risk: Clement"

The headlines were generated by the announcement from Canadian Treasury Board President Tony Clement that measures were now being taken to sharply reduce government red tape for small businesses in Canada.

He stated that one of the goals was to reduce "…duplicative paperwork that retards the ability of small businesses to concentrate on what they do best…" He said one of the features of the new program was that, "…when any new regulation is created, at least one existing one must be eliminated…" One other key component of the government's strategy was that civil servants were to receive strong instruction that any new regulations must be viewed through the lens of how they would impact small businesses and also must determine whether the regulation they are proposing would not relate to laws already on the books and thereby cause duplication of effort.

One of Canada's business leaders, Laura Jones of the Canadian Federation of Independent Business, welcomed the new direction and stated, "…Red tape is an insidious drain on the entrepreneurial spirit."

Specific items covered included reducing the number of Canadian Customs forms for the shipment of goods from Canada to the USA to one from two and a reduction in the number and nature of accounts Revenue Canada now requires for, "…different issues such as tax filings and human resource deductions..."

Clement then added one more clarification, "…What we're trying to do here is change the culture in Ottawa."

One can only contrast these definitive measures - limited as they might be - with the ultra-vague assurances for a general paper work reduction which have come out of the Obama Administration.

This is one example where politics really can matter. Ergo, it is a reason why we will watch tonight's debate with heightened interest.

Please note on the accompanying chart that Crude Oil continues to trade within the wide range bounded approximately by $80 - $110 per barrel which has held for well over one year. Given that Crude Oil is a major component of visible price inflation, we will continue to watch this chart with great interest while awaiting a decisive breakout in either direction.

As of 10:00 AM PDT, financial markets in Canada and the USA are moving in opposite directions with Canada's TSX Index down by about 20 points while the Dow Industrials are ahead by almost 50. Precious metals are up on the session with gold higher by $5 to near $1,780 while silver has advanced about a nickel to $34.70. Base metals are close to unchanged on balance while mining share indexes are off by one percent so far today.

In other markets, Crude Oil continues to trade lower, off by almost $3.00 per barrel to just under the $90 mark; the US Dollar Index has gained 20 basis points and long term interest rates are slightly higher.

All quotes US$ unless otherwise noted.

Next Melman Minute scheduled for Friday, October 5 when our primary focus will be impressions gathered from watching the Obama-Romney debate.

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