#40 Mitt Romney and a puddle of brown gravy

In post #13, on March 16, I wrote about the Dow Jones Utilities average possibly serving as an indicator of a stock market crash, particularly if it dropped below the 474 level. I was quoting an online technical analyst, but since that time the DJU moved up strongly to above the 520 level. Yet, the rest of the market plummeted, at one point recently to under 11,000 on the Dow Jones Industrial average. Well, now, in the last week or so the DJU has plunged to under 489.

This is NOT to say that it will continue to decline or that it will drop below 474. But IF it does, we can expect a further decline in the broader market, perhaps just in time for, or a short time after, the Democratic convention in late August and the Republican convention in early September. And, indeed, today's financial news indicates strong agreement that today's rally is to be shortlived. Last year I predicted that the Dow would drop below 10,000 in 2008. Unfortunately for all the pain that would cause good folk, I still think it's possible.

Not that the Democrats are hoping for a big stock market drop, but that kind of stock action could bode well for them, since the crash would possibly occur under a dubya administration and just before the election. If the DJUtilities Average closes below about 474, it will have broken down out of its technical pattern, and could test the 471 it hit in late August 2007. If it drops below that level, its next major test areas are in the 450 range, then the 420 range, and, going back to March 2006 and November/December 2005, the 390 range. I’m certainly not saying it will drop that far, just that the Utilities average appears right now to be testing a breakdown and has some serious technical downside risk.

On the other hand, it could just be blowing smoke.

NOT in the realm of blowing smoke, there's been some talk about John McCain choosing Mitt Romney as his VP candidate. On the one hand, Romney looks like a good possible choice. He's handsome; he claims to be a successful businessman who understands economics (a self-confessed weak point for McCain), a claim supported by his being a millionaire who spent a lot of his own money running for the Republican presidential nomination (in the hopes of becoming the VP candidate?); and finally--so the word goes--he could help McCain carry Michigan.

There's one other point: he's Mormon. He will certainly help carry the Mormon vote, and the two states with the heaviest percentage of Mormons, Utah and Idaho. There's just one problem. Well, there are at least five problems.

(1) Utah and Idaho are the two states most likely to vote Republican in November even were John McCain to choose for his vice president--to use a Monty Python line--"a puddle of brown gravy." Utah and Idaho aren't voting any color in November except Republican Red.

(2) Yes, Romney will likely bring the Mormon vote into the Republican camp. Oh...Wait.... Recent presidential elections have shown Mormons voting heavily Republican anyway. Advantage: "puddle of brown gravy," again.

(3) On the other side, Mormons, like Jews and Blacks and Muslims and Polka Dots and any other minority group, invoke a fear factor in some part of the public. There's a number of folk out there who just plain don't like some minority groups, and wouldn't consider voting for them. How large a number? No way really to know, since the folk who fear don't always 'fess up. That's why I've said over and over that polls this year showing Obama ahead of McCain may not be particularly accurate.

(4) Romney would help the GOP carry Michigan. Not so fast, brown gravyites! If the economy continues to stumble, if inflation continues to increase while jobs and income and the stock market and the auto industry decline, Michigan's electorate may not so readily vote Republican, even though Mitt's dad was former three-term Michigan governor George Romney, and Mitt was born in the state.

(5) Note, in fact, that no one is predicting a Mitt on the ticket would bring Massachusetts (where Mitt was governor) into the Republican camp. It won't, and neither would it by itsef likely bring Michigan.

On the surface, then, Mitt Romney may look like a good VP candidate for John McCain. Not so far under the surface, however, he isn't.

If I were a card-carrying Republican, I would still go for Tim Pawlenty, in his second term as governor of Minnesota. From a Republican point of view, he looks like an almost ideal complement to John McCain. His place on the Republican ticket would put Minnesota in play (as I believe Romney would not put Michigan in play); he has economic governing experience as a governor; he's nearly as young as Barack Obama (Pawlenty will be 48 in late November); and he has strongly conservative political and religious credentials.

Next post: the October (or September, or very early November) surprise.

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