World slipping into Great Depression-like economic problems warns former IMF Chief Economist

Twilight Zone
You are about to enter a nightmare where something invisible called ‘credit’ runs the world and money is printed out of thin air – where financial markets rise frantically based on a simple whisper or innuendo or plunge on the latest fears – where men manipulate wealth and your perception of it – You are about to enter that gray foreboding unregulated region of space we most commonly refer to as The Twilight Zone.
June 2015ECONOMIC NEWS The global economy is “slowly slipping” into Great Depression-like problems of 1930s, RBI Governor Raghuram Rajan has warned, asking central banks from across the world to define “rules of the game” to find a solution. Rajan, who is among the few to have predicted the 2008 financial crisis, said the problem was a “broader” one and for the entire world — not just for industrial countries or emerging markets. The former IMF Chief Economist, who has earlier warned against competitive monetary policy easing by central banks globally, said the situation is different in India on this front and RBI remains more focused on bringing down the lending rates to spur investments. “We need rules of the game in order to effect a better solution. I think it is time to start debating what should the global rules of the game be on what is allowed in terms of central bank action,” he said at a London Business School (LBS) conference here last evening.
“I am not going to venture a guess as to how we establish new rules of the game. It has to be international discussion, international consensus built over time after much research and action,” the Reserve Bank of India Governor said. “But I do worry that we are slowly slipping into the kind of problems that we had in the thirties in attempts to activate growth. And, I think it’s a problem for the world. It’s not just a problem for the industrial countries or emerging markets, now it’s a broader game,” he observed. The Great Depression refers to a period of severe global economic downturn in the 1930s, which had affected almost all countries across the world. It started in 1929 and continued till late 1930s and still remains the longest and most widespread period of the global economic depression. Asked specifically about interest rate cuts from an Indian perspective, Rajan said: “I try to shut out market reactions as far as I can. We (India) are still in a situation where we have to spur investment and I am worried more about that.
“So I shut out the asset price reaction and think more about — is this going to bring bank lending rates down and therefore channel cheaper credit into firms and then they will invest. However, the issue gets much more complicated for other markets.” The RBI Governor was addressing the ‘Perspectives’ conference organised by AQR Asset Management Institute at the LBS campus on the topic – ‘The Central Banker Perspective.’ Rajan highlighted the tremendous pressure for growth which in turn creates enormous pressure on central banks to take action. He stressed that seven years on from the economic crisis of 2008, the central banks have done a lot during as well as post-crisis. Way back in 2005, Rajan during his tenure at IMF wrote a research paper on “Has Financial Development Made the World Riskier,” where he had warned that the developments in financial sector has made the world “much better off.”
But this development has also led to emergence of a whole range of new kinds of intermediaries and “under some conditions, economies may be more exposed to financial-sector- induced turmoil than in the past,” he wrote. Speaking here at LBS event, Rajan said: “The question is are we now moving into a territory in trying to produce growth out of nowhere or we are in fact shifting growth from each other, rather than creating growth. “Of course, there is past history of this during the Great Depression when we got into competitive devaluation,” he warned. The global GDP is estimated to have fallen by over 15 percent in the first four years of the Great Depression, which is said to have begun in the US with a ‘Black Tuesday’ stock market crash on October 29, 1929. 
The global trade is estimated to have more than halved during that period, while almost all countries had to suffer decline in tax revenues, corporate profits and personal income, while unemployment had hit the roof with widespread impact on industries as well as agriculture. Rajan also highlighted the need for countries to work together on capital flows. “We have to become more aware of the spill-over effects of our actions and the rules of the game that we have — of what is allowed and what is not allowed — needs to be revisited,” he said. –Money Controls
Posted in Age of Decadence, Austerity, Bank Run, Banking Crisis, Bankruptcy, Boom and Bust Cycles, Civil Unrest, Class Division, Currency - Economic warfare, Economic Collapse, Fiat Money Printing Fiasco, Financial Market plung, Financial market turmoil, Flashpoint for war, Geopolitical Crisis, Greed and Corruption, Hierarchal Control, Hoarding Gold, Hoarding Resources, New World Order, Political Corruption, Political turmoil, Social Meltdown, Squandered Resources, The Pyramid Model, Troubled Banks, Unsustainable Debt Burden, Widening gap between rich and poor | Leave a comment

Out of ammunition: the world is defenseless against the next financial crisis, warns BIS

Economic Storm
June 2015ECONOMIC CRISISThe world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises, the Bank of International Settlements has warned. The so-called central bank of central banks launched a scathing critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies. These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates. Claudio Borio, head of the organization’s monetary and economic department, said: “Persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties.
“Rather than just reflecting the current weakness, they may in part have contributed to it by fuelling costly financial booms and busts and delaying adjustment. The result is too much debt, too little growth and too low interest rates. “In short, low rates beget lower rates.” The BIS warned that interest rates have now been so low for so long that central banks are unequipped to fight the next crises. “In some jurisdictions, monetary policy is already testing its outer limits, to the point of stretching the boundaries of the unthinkable,” the BIS said. Policymakers in the eurozone, Denmark, Sweden and Switzerland have taken their interest rates below zero in an attempt to support their economies, contributing to a decline in bond yields.

Bond Yields

The decline of bond yields into negative territory is the “most unusual development” of the last year. Extraordinarily low interest rates are not a “new equilibrium” said Jaime Caruana, general manager of the BIS, rejecting the theory of so-called “secular stagnation” which some economists blame for the continued decline in global lending rates. “True, there may be secular forces that put downward pressure on equilibrium interest rates … [but] we argue that the current configuration of very low rates is neither inevitable, nor does it represent a new equilibrium,” he said. Mr Caruana said that interest rate hikes “should be welcomed”, as global economies have started to grow at close to their historical averages, and a slump in oil prices has provided the global economy with a boost.
The BIS report described the threat of a new bust in advanced economies as a “main risk”, with many reaching the top of the economic cycle.  The economies worst hit by the last crisis are now suffering the costs of persistent ultra-low rates, the organization said, which could “inflict serious damage on the financial system”, sapping banks and weakening their balance sheets and their ability to lend. And the continued misallocation of resources during busts prompted by central banks’ rock-bottom interest rates has also hammered productivity growth, the BIS said, as a prolonged reliance on debt had been used in its place.
This problem is compounded as the world’s populations continue to age, the organization warned, making debt burdens harder to bear. Yet politicians have relied too much on temporary growth boosts by using debt, rather than making painful choices, said the BIS. Mr Caruana said that during booms, workers and capital are shifted to slow-growing sectors, with a “long-lasting negative” impact on productivity growth. “Misallocated labor needs to move from these sectors to other parts of the economy,” he said. The BIS said that the current turmoil in Greece typified the kind of “toxic mix” of private and public debt being used as a solution to economic problems, rather than making the proper commitment “to badly needed” structural reforms. –Telegraph
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Not just Greece: Puerto Rico days away from debt default of $72 billion, Governor says “debt unpayable”

Puerto Rico
June 2015PUERTO RICO The U.S. territory of Puerto Rico is just days away from a historic economic collapse after the commonwealth’s governor said the island cannot pay its $U.S. 72 billion ($93 billion) in debts. Governor Alejandro Garcia Padilla, who took office two years ago, said on Monday that the government’s attempts to slash expenditures and restructure its debt have failed.  An analysis by former World Bank and International Monetary Fund officials “for the first time acknowledges the true extent of the problem.” With several massive payments looming in the coming weeks, Mr. Padilla scheduled a media conference to address the situation.  On the weekend, Mr .Padilla told The New York Times that the government’s finances were “in a death spiral” and that “the debt is not payable.”
The inability of the U.S. territory to repay its debt, combined with the financial crisis in Greece, would have far-reaching implications for financial markets. Morningstar, an investment research firm based in Chicago, estimated in 2013 that as much as 80 per cent of Puerto Rico’s debt has found its way into muni-bond funds, and 180 mutual funds in the U.S. and elsewhere have at least 5 per cent of their portfolios in Puerto Rican bonds. Puerto Rico, which became a territory of the US in 1898 after a war with Spain, cannot legally file for bankruptcy, as U.S. cities such as Detroit have done when faced with similar fiscal crises. The island’s constitution, however, states that Puerto Rico must make its debt payments before it pays for any other government services, leaving the island in a fiscal limbo if it cannot make its payments.
Since taking office, Mr. Padilla has worked with the island’s development bank to restructure the debts owed by different government agencies. But that was a tall task for an island that began borrowing large sums of money in the 1970s to boost a lagging economy. Municipal bonds are already exempt from state and local taxes, and Puerto Rican bonds enjoyed the added benefit of being exempt from federal taxes as well. That “triple-tax-free” status made the territory’s bonds incredibly popular to investors. From 2000 to 2012, the government’s public debt nearly tripled from $US24 billion ($31 billion) to $US70 billion ($91 billion), according to the Centre for a New Economy in Puerto Rico. That left the island’s governments inundated by debt payments. Combined with thousands of Puerto Ricans leaving the island for the US every year and a constantly sputtering economy, credit agencies lowered Puerto Rico’s bond rating to near-junk status and warned of a full fiscal collapse.
Mr. Padilla responded by trying to cut everything, from basic government services to cell phone use by his employees. David Chafey, chairman of the board of the Government Development Bank of Puerto Rico, announced his resignation last week. Mr. Padilla is expected to ask Puerto Rico’s creditors, and its residents, to “share the sacrifices” needed to get the island back on firm legal ground. –SMH
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U.S stock market loses $900 billion in value, as Dow plunges 350 Points – worst drop of 2015

Wall Street
June 2015ECONOMIC NEWSU.S. equity markets posted their biggest selloff of the year Monday amid the ongoing crisis in Greece as investors weigh the possibility of the nation’s exit from the eurozone. The Dow Jones Industrial Average plunged 350 points, or 1.95% to 17596. The S&P 500 shed 43.9 points, or 2.09% to 2057, while the Nasdaq Composite dropped 122 points, or 2.4% to 4958. Both the Dow and S&P 500 slipped into negative territory year-to-date with Monday’s selloff. All ten S&P 500 sectors were in the red led by a steep drop in banks and brokers. Greece’s financial system teetered on the brink of collapse, hurtling Monday toward a potential exit from the eurozone after weeks of negotiations between the nation and its creditors failed to yield any result.
Fears that Greece’s troubles could spread through the global financial system shook markets on Monday, driving U.S. stocks to their worst day of the year. U.S. stock markets lost $900 billion of value in a single day because of panic around Greece’s impending default on a $1.8 billion loan to the IMF tomorrow. Investors fled from stocks in Europe and the U.S. and retreated to the safety of government bonds.

Stock Markets Plunge

The closures came after reforms-for-financial aid talks between Greece and its creditors broke down and the European Central Bank capped emergency funding to Greek banks on Sunday. Greek Prime Minister Alexis Tsipras has also called a referendum on July 5, in which Greeks will vote on whether to accept the rescue package previous offered by Athens’ international bailout supervisors, which is contingent on austerity measures. “In the absence of a sudden dramatic turn of events towards reconciliation between the Greek government and its creditors, it is difficult to see how it will be able to repay the European Central Bank on July 20, whatever the outcome of the coming weekend’s referendum,” said Chris Scicluna, head of economic research at Daiwa Capital Markets Europe, in a research note on Monday.
The developments in Greece wreaked havoc on global markets, with stock markets in France and Germany falling over 4 percent. Japan’s Nikkei closed down 2.9 percent. The Shanghai Composite also closed 3.3 percent lower despite initial attempts at gains following the central bank’s rate cut over the weekend. –NASDAQ, NBC
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Greece Meltdown: banks close amidst fears of a financial collapse

Banks
June 2015GREECE Greek Prime Minister Alexis Tsipras announced on Sunday that the nation’s banks and stock market would be closed on Monday amid fears of financial collapse. Greece is also set to impose capital controls that will limit the amount of funds that citizens can transfer or withdraw from its financial institutions. Tsipras made the address hours after the European Central Bank stated it would not increase the levels of emergency credit, known as emergency liquidity assistance that it provides to Greek banks in order for the institutions to keep running. The prime minister blamed the ECB for forcing Greece to impose the measures, which are intended to prevent a bank run by Greeks from draining the country’s remaining funds.
No information was given as to the specifics of the controls or the limits that may be placed on ATMs, which have already seen long lines of people seeking to take out their cash. Over 1 billion euros have been withdrawn from the Greek banking system since Friday night, Agence France-Presse reported. “I would withdraw money today, anyway. Now I will withdraw more to be safe for the next few days. I am certain that ATMs will run out of money, it has already happened at some places,” one man in line at an Athens ATM told HuffPost Greece. “Yes. I am scared of bankruptcy, of the ruthless devaluation of currency and the general isolation of the country once it exits the EU,” another woman said.
Tuesday is the deadline for Greece to pay off a 1.6 billion euro debt to the IMF, something the nation currently does not have the money to do. The nation and its creditors have been negotiating for months to extend the bailout program and release a 7.2 billion euro tranche of its funds that would allow the Greeks to pay off forthcoming debts. Disagreements over creditors’ demands for strict austerity cuts to Greece’s public spending and economic reforms have resulted in continual breakdowns in the talks. If Greece cannot make Tuesday’s payment then it will default, which could have potentially disastrous effects on its economy and put it on a path to exit the eurozone.
U.S. President Barack Obama and German Chancellor Angela Merkel discussed the crisis on Sunday, with the White House saying that the two leaders agreed it was “critically important” to keep Greece in the euro, Reuters reported. EU chief executive Jean-Claude Juncker announced that there would be a news conference on Monday to discuss the crisis, as officials from creditor organizations insisted that a deal may still be salvageable before the deadline hits. –HP
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Russian forces ‘practiced invasion of Norway, Finland, Denmark and Sweden’ – tension mounts in Europe

A WW3 scenario
June 2015 EUROPERussian forces rehearsed the invasion of Norway, Finland, Sweden and Denmark during a military exercise involving 33,000 troops, according to a new study of Baltic security. The man oeuvres, which took place in March, assumed that a Western-backed uprising against President Vladimir Putin was taking place in Moscow. Under the scenario posited by the exercise, Russia responded by launching a simulated assault on four regional neighbors. Some troops practiced attacking Norway with the aim of seizing an area in the north of the country. Other Russian forces rehearsed the capture of the Aland Islands from Finland. More units drilled how to seize Gotland Island from Sweden and Bornholm Island from Denmark.  These Baltic territories lie across vital shipping lanes, making them key military objectives. The capture of these islands would allow Russia to seal off the Baltic and isolate Estonia, Latvia and Lithuania.
“If carried out successfully, control of those territories would make it all but impossible for NATO allies to reinforce the Baltic States,” wrote Edward Lucas, the senior vice-president of the Centre for European Policy Analysis and the author of the report. Of the countries targeted by this Russian exercise, Denmark and Norway are members of NATO, while Finland and Sweden are officially neutral. Mr. Lucas argues that all four should enhance their military cooperation with other vulnerable states, particularly Estonia, Latvia, Lithuania and Poland. Russia is carrying out a regular series of military exercises near the borders of NATO countries, involving land, sea and air forces. NATO has responded with drills of its own, including “BALTOPS 2015”, an exercise in the Baltic earlier this month involving 49 warships from 14 NAT0 countries.
Significantly, Finland and Sweden chose to join these maneuvers as NATO “partner” countries. The Kremlin’s military maneuvers betray a preoccupation with achieving dominance of the Baltic – and a willingness to use nuclear weapons. In June last year, Russian jets simulated a nuclear attack on Bornholm, timed to coincide with an annual festival on the Danish island involving the country’s entire political leadership and 90,000 guests. “Had the attack actually taken place, Denmark would have been decapitated,” writes Mr. Lucas. In addition, Russian bombers routinely probe the air defenses of NATO countries, forcing the alliance to scramble jet fighters in response. The presence of Russian intruders, who switch off the “transponder” devices that aircraft use to detect one another, has led to a series of near-misses with civil airliners. –Telegraph
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Greeks drain ATMs as Prime Minister Alexis Tsipras calls referendum to decide country’s fate

ATMs
June 2015GREECE Greece’s banks may need an injection of fresh emergency funds to operate on Monday as people rushed to pull out money after Prime Minister Alexis Tsipras called a referendum that could decide his country’s fate in the euro. Two senior Greek retail bank executives said as many as 500 of the country’s more than 7000 ATMs had run out of cash as of Saturday morning, and that some lenders may not be able to open on Monday unless there was an emergency liquidity injection from the Bank of Greece. An official with Greece’s Capital Markets Commission, the markets’ regulator, also warned that the Athens Stock Exchange may be unable to operate on Monday without a cash injection into the banking system. A Greek central bank spokesman said it was making efforts to supply money.
The European Central Bank’s governing council was expected to hold a conference call on Sunday to review the banks’ liquidity condition, said a Greek official, who asked not to be named in line with policy. The Frankfurt-based central bank said in a Twitter post that it’s closely monitoring developments and would review the situation “in due course.”  Some banks were placing limits in daily cash transactions. Yiota Kardogianni, a manager at a branch of Piraeus Bank SA, said cash withdrawals were limited at 3000 euros ($4375) daily and ATM withdrawals at 600 euros. Alpha Bank AE had set a daily limit of 5000 euros for most of its branches since last week.
“I’m here to take my mother’s pension out before the machine runs out of cash,” said Erato Spyropoulou, who was standing in a line of about eight people at one of National Bank of Greece SA’s ATMs. “It’s very worrying what’s happening because people don’t know what they’re being asked to vote for. It’s the last nail in Greece’s coffin.” Euro-area finance ministers rejected Greece’s request for a one-month extension of its aid program, which expires Tuesday, shutting down any last chance for a financial stopgap until the referendum is held. After withdrawing more than 30 billion euros as the anti-austerity Coalition of the Radical Left, or Syriza, took power, depositors are now reacting to the latest twist in the five-month standoff with European leaders and creditors. One banker said 110 million euros had been withdrawn from his institution as of 11.30 am Athens time on Saturday.
The European Central Bank has been reviewing liquidity conditions at Greek banks daily in the past week. Banking officials in Athens said they were expecting a shortage of euro notes by as early as Saturday evening. They asked not to be named because of the sensitivity of the matter. Greek bank deposits by businesses and households fell to 129.9 billion euros in May from 133.7 billion euros the month before, according to data released by Bank of Greece on its website on Thursday. –SMH
China another warning sign of growing economic risks: Chinese stock markets crashed on Friday, June 26th, posting their biggest daily decline in seven years. The Shanghai Composite and the Shenzhen Composite tumbled 7.4% and 8.2%, respectively. More than two thousand stocks fell 10%, the maximum daily loss allowed by regulators. The ChiNext Board also experienced the largest daily loss since its inception. The ChiNext board is a NASDAQ-style board of the Shenzhen Stock Exchange focusing on innovative and fast-growing companies. On Friday, nearly 400 stocks fell on the ChiNext Board, with the ChiNext Index plunging. The post Stock Market Crash: Chinese Economic Collapse Feared After Stocks Plunge 7.4% appeared first on Profit Confidential. –The Jutia Group
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This is it: Greece is probably going to default on Tuesday

Greece Bank Run
June 2015GREECE It looks like Greece is going to default. In Saturday, Greek Finance Minister Yanis Varoufakis left a meeting of eurozone finance ministers after failing to get an agreement to extend the current bailout deal until after a referendum next week. Late Friday, Greek Prime Minister Alexi Tsipras made a surprise announcement of a referendum to be held in Greece next Sunday, July 5, to vote on the reforms proposed to Greece by its creditors as part of a possible bailout extension. The most imminent money owed by Greece to creditors is €1.6 billion owed to the International Monetary Fund on Tuesday, a payment it looks like Greece will now miss. The question now, it appears, is what happens next and whether this missed payment sets the table for a “Grexit,” which would see Greece leave the EU.
According to Reuters, Varoufakis told journalists as he left the meeting that, “It’s a sad day for Europe.” Eurogroup ministers said they would meet without Greece later on Saturday evening to discuss how to handle the fallout from an expected Greek debt default on Tuesday, according to Reuters. A report from Reuters said, “With most Greek banks closed for the weekend, there was no sign of panic on the streets of Athens. Government officials said there was no plan to impose capital controls that would limit withdrawals.” Ahead of Tsipras’ announcement, a poll of Greek citizens indicated that 57% of the 1,000 people polled showed they want Greece to reach a deal; 29% of respondents indicated they preferred a break with creditors.
The Financial Times, however, reported that a phone conference was scheduled for Sunday morning between the European Central Bank and the Bank of Greece to discuss implementing capital controls — or limiting the ability for money in Greek banks to be withdrawn. According to the FT, one option would be for Greece to declare a bank holiday between now and the July 5 referendum. Varoufakis, however, has told Reuters that banks should remain open between now and then. Since Tsipras was voted into power in late January, it’s been a long road of headline after headline on whether or not Greece would make its payments or find some middle ground with its creditors. And while we’ve certainly heard that negotiations between Greece and its European creditors have broken down before, this time looks different. –Business Insider
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Greece on the brink of default after talks with creditors break down

Greece 4
June 2015 ATHENS Greece’s long-running standoff with its European creditors appeared headed on Saturday for an abrupt — and potentially cataclysmic — ending as the continent’s finance ministers rejected an emergency Greek request to help the cash-starved country meet a Tuesday deadline for paying back its debts. The development, just hours after Greece’s prime minister stunned the continent with plans to hold a nationwide referendum on Europe’s latest proposals, makes it increasingly likely that Greece will default — and could soon crash out of the euro zone altogether.
Reflecting the newly dire outlook, people formed lines at ATMs across Greece, seizing on perhaps their last chance to withdraw their savings. Some went away empty-handed after the machines ran dry. With speculation mounting that the banks may lack the funds to reopen Monday morning, European officials huddled behind closed doors to plot out how to contain the damage of a Greek financial meltdown. The Greek finance minister was pointedly excluded from those talks, which ended with a statement from the other 18 euro-zone countries urging Greek authorities to implement capital controls.
The statement also highlighted the safeguards that have been implemented to keep debt contagion from spreading to other vulnerable economies, suggesting that if Greece is forced to abandon the euro, the collateral damage may be limited. But because no country has left the euro zone in its 16-year history, no one knows just how extensive the impact may be. The collapse of negotiations on Saturday was the most ominous turn in a process that has been poisoned from the start by bitter mistrust between Greece’s radical leftist government and the austerity-minded heavyweights who set policy in Europe.
Although both sides have repeatedly expressed a determination to keep Greece inside the common currency — and to avoid at all costs an uncontrollable and potentially disastrous default — that shared aspiration has not been enough to bridge the substantial divide. As has become customary, each on Saturday blamed the other for the breakdown. But with Greece sliding toward default and a possible break with the euro zone, there is no guarantee that the offer will remain viable by the time of the referendum, even if Greece does vote “yes.” The European Central Bank, the European Commission and the IMF have together provided Greece with $264 billion in bailouts over the past five years as the country has reckoned with sky-high debts. After years of withering austerity policies imposed by European paymasters as a condition of those deals, Greece in January rejected the medicine and elected Syriza, a radical leftist party that promised to tear up the old agreements and start anew. –Washington Post
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Poll: 72% of Americans fear economic crash coming, concern ‘highest ever’

Economic Collapse
June 2015ECONOMY The ever-expanding Republican presidential field, which threatens to splinter over social issues as dark horses grab hot-button topics for attention, is being urged to stick to the economy where the real pot of voter gold sits. “Concern over the economy is the highest I’ve ever seen,” top GOP pollster Ed Goeas told the moderate Republican Ripon Society. He said 72 percent are worried about an economic downturn. “Republicans need to get into the game on better turf and that means talking in specifics about how we will bring the economy back and help create the jobs that go with real recovery,” added pollster David Winston.
According to Winston, the economy was the top voter concern in 45 of 46 primaries and caucuses. The only exception was the 2008 Iowa caucus when illegal immigration trumped the economy, 33 percent to 26 percent. Typically, during both elections, issues like immigration and abortion were minor blips. And social issues don’t dominate southern contests. In 2012, for example, the states of Michigan, Ohio, Oklahoma, Maryland and Wisconsin had the highest concerns about abortion, well above that among the voters of South Carolina, Florida, Georgia, and Alabama.
Winston also said that winning the economy as an issue propelled that candidate to victory. “So in 2012, if the candidate was winning the economy, they were the winner in 19 out of 20 primaries/caucuses. In 2008, if the candidate was winning the economy, they won 25 out of 26,” he added in an analysis for Secrets. For example, in 2012, former House Speaker Newt Gingrich won the economy as the issue in South Carolina where he pulled off his upset victory. And Goeas said keeping the focus on the economy, and not pandering to voter groups, is the key. “The middle class is our target. The middle class is, by definition, 70 percent of the electorate,” he told a private Ripon conference. “When we talk about the African American vote and when we talk about the Hispanic vote, the key to winning these votes is not approaching them as Hispanics or African Americans, but rather approaching them as middle class voters – as hardworking taxpayers,” he added in a video released later to Secrets. –Washington Examiner
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