Reading 'the times' of Election 2008

by Yasmin Amer

After reading the articles about the two possible blowout scenarios for both McCain and Obama, I remembered the speech by CNN Political Analyst Bill Schneider when he came to UNC last spring. It was about “reading the times” during presidential election periods. He noted that all past presidential candidates won based on how well they were able to fill a void that the American voters had at that specific time—whatever it was that the past administration couldn’t fulfill.

Schneider used John Kerry as an example by saying that he read the times wrong. Kerry wanted to win by presenting himself as an active leader. Well…whether you agree with his politics or not, George Bush is considered a pretty active leader (despite his veto record) by many people. Kerry didn’t offer anything outstanding or different to voters and therefore, he did not succeed. The fact that a candidate is from the party opposite of an unpopular incumbent’s party is a boost, but it’s still not enough.

So in reading the time for this election, it’s pretty clear what people want from a president: a better economy. In comparison, I’ve actually heard very little about other usually significant issues like education, stem cell research, or healthcare because the dragging economy has overshadowed everything else. Both candidates are offering plans for the economy, and it stems into more specific issues like tax cuts, unemployment, and high gas prices.

McCain’s Twist on Past Plans

To many voters, McCain hasn’t really offered any economic plans that stood out as being different from the past administration’s plans. One new idea is the gas tax holiday, but that doesn’t seem to be winning over too many people. The tax holiday isn’t a huge step to permanently fixing the economy or keeping us away from a recession. In fact, it might give people a false sense of financial security, and therefore the sudden increase in oil prices might come as an even worse shock. He also differs from Bush in that he is trying to also gain more environmentalist and liberal votes by being a little less open to the idea of drilling in certain places like Alaska. Still, he is careful not to lose any major conservative support by advocating the general idea of drilling for oil in the US.

Obama Embraces Change

Obama offers a new set of economic plans. Just the fact that they are different from the Bush administration’s economic policies is enough reason to get people interested. This includes middle and lower class tax cuts and an expansion in some federal programs (like healthcare.)
Check out this NPR podcast if you want to hear it in more detail.

A Prediction

Many political analysts agree that this is perhaps one of the, if not the most, unsuccessful Republican administration in US history—meaning that it’s just a bad time to be a republican candidate. The opinion polls seem to agree. I’ve seen Obama jump from 12% behind McCain to the latest 28% in sample national polls in about a week. See the latest at polls here.

This actually came as a shock to me because I thought for sure the Republican Party had won over a lot of moderates by advocating offshore drilling. Even though environmentalists are strongly against this, I feel that a lot more people are thinking with their pocket books at the moment than worrying about environmental setbacks. So the fact that this didn’t hurt Obama could be a good sign for democrats.

In a nutshell, which scenario do I see as more likely??? I’m going to go with the Obama blowout scenario. I feel that his “interpretation of the times” is better aligned with the needs of many American voters. But this could very easily change. As many of you have already witnessed, this is a pretty nasty battle. Anything seems to be fair game and the candidates can be scorned for just about anything they do or say. The latest comes from Fox News about Obama’s “Terrorist Fist Jab”:
It’s also interesting how candidates are using newer resources to expand their appeal to new voters. Here’s an example of McCain trying to appeal to younger voters on SNL.

And that's jus the tip.

Any thoughts? Comment below.

* Yasmin Amer is an aspiring broadcast journalist who specializes in Arab and Middle Eastern affairs

The World of Derivatives: Understanding Stock Options

by Ali-Asad

If you haven’t heard, the economy is in the clutches of a ‘credit crunch’; financial institutions aren’t lending out money because they’re scared. Over the last several years, these companies cut huge corners in order to make quick money. In order to magnify their gains, they borrowed a lot. Now, they’re finding out that most of that debt wasn’t as advertised, and so they got screwed. This impacts you and me because financial institutions serve as lubricants for the economy. Remember this: economies run on credit. If you are saving money and I have a bright idea, banks let us each get what we want; you want a safe place to keep your money plus compensation and I want access to funds to get my idea of the ground. These ideas, if successful, result in all the products, services and innovations you see everywhere and provide jobs and good pay. So, if banks are having trouble, the economy slows: production slows, jobs are lost and people get depressed.

But how did this crisis come about? Before that question can be answered, you need to understand what derivatives are. Derivatives are assets whose value derives on the value of some underlying asset. This underlying asset can be an interest rate, commodity price, stock price, currency exchange rate etc. basically anything whose value varies. Let’s take the example of stock options – they’re the one derivative you’re most likely to come across. A stock option is a contract that gives you the right, not the obligation, to buy or sell a stock at a certain price sometime in the future.

For example, say that Microsoft was trading today at $30. If I think Microsoft will be up at $40 by the end of the year, I could buy an option to buy Microsoft (MSFT) at $35 (the strike price). So, if what I forecast comes to pass, I could exercise the option (buy MSFT at $35) and sell them in the market at $40 making a $5 profit per share. But wait, who did I buy those MSFT shares from? Didn’t they just lose money buy selling at $35 when the price is now $40?

Yes they did; the one you bought that option from (the option writer) lost money. The option writer thought that MST was going to stay below $35. If MSFT stayed below $35, the option would become useless and worthless (you wouldn’t buy MSFT at $35 if its price was less than $35). What would the option writer have gained if MSFT went down below $30? The price of the option; the option writer gave you the right to buy MSFT from him but charged you a premium (the option prices) for that option…say $2. Now let’s see the potential outcomes.

For you:

IF MSFT >$37, you make money after cost of option (the cost of option makes it $35+$2)

If MSFT = $37, you break even (bought option for $2, and made $2 gain from option)

If MSFT <$37, as MSFT goes below $37 your option loses value you lose money) and at MSFT = $35 it becomes worthless.

For option writer

If MSFT > 37, they lose the difference between current price and $37. So, if price was now $40, they’d lose $3.

If MSFT = 37, they break even.

IF MSFT < 37, they start making money, and at MSFT = $35, they get to keep the entire cost of option $2.

Bottom line: you as the call buyer can at most lose $2 (price of option) if prices goe down, and stand to gain continuously as the price of MSFT goes up past the strike price of $35 + $2 option cost.

The option writer stands to gain at most $2 if the price goes down, and starts continuously losing as the price goes up.

The benefit of owning a MSFT stock option rather than just the stock is clear. Buying a stock option lets you set a defined floor for your maximum loss while allowing you to still benefit from a stock price increase. This protects you against a MSFT stock price decline where you stand to lose your entire investment.

This option described above is called a ‘call’ option; in finance, a call generally refers to the buying of an asset. Call options are one type of option. The other type is called a put option.

A put option gives the option holder the right not the obligation to sell shares at a certain price sometime in the future. In put options we stand to gain from a stock price decline. How? Take the MSFT example. MSFT is trading at $30 but I think in a year it might go down to $15, and so I buy a put option that gives me the right to sell the MSFT shares at $25. Let’s say the option costs me $2. What are the potential outcomes? In a year:

MSFT > $25 – My option is worthless: $-2

$23 < MST <$25 – As the price reaches $23, my option gains me $2.

MSFT < $23 – For every $1 MSFT goes below $23, I gain a 1$.

So, put options are the reverse of call options. You stand to gain from a stock price decline but if you’re wrong, and the stock price increases, you only lose a fixed amount.

Like all derivatives, options are useful because they allow you do protect yourself against unexpected price movements. This process of protection is called hedging. Stock options can be used in combination with holding/shorting (borrowing shares and selling them in the expectation of being able to buy them back at a lower price and make a profit) a stock. For example, buying a stock along with a put option will lower the price at which you start losing money but will also limit your profits when the price goes up – this is called a protective put. For further reading check out The Options Guide. If you're interested, you can even try out these strategies using Investopedia's Stock Market Simulator - a great place to hone your investing skills.

And that’s jus’ the tip.

The Dip: How Winners Quit

by Ali-Asad


You’ve heard the old adage - quitters never win. According to Seth Godin, author of The Dip: A Little Book That Teaches You When to Quit (and When to Stick),those old sayings are dead wrong. Indeed, Mr. Godin claims that successful are those who use quitting as a targeted tactic. So, how does quitting make you successful?

Whenever you start a career, project, hobby, etc. initially, you’ll always do well but after a certain point you’ll hit a dead end and things will either stay the same or get worse – this is ‘the dip’. Mr. Godin thinks that the worse thing you can do in the dip is quit. Successful people are those who stick through the dip and come out on the other end with something to show for it. Equally, successful people are those who visualize the dip even before they start the project and decide against commencing the endeavor. Why? Because they have seen the dip and realized that they wouldn’t be willing to suffer so much for so long. For example, imagine trying to start playing golf and you want to get pretty good to compete at your local country club. Mr. Godin contends that you should only commence this hobby if you are willing to go through the inevitable hours and weeks you’ll have to spend on practicing and improving your technique to get where you want to be. Otherwise, don’t bother with it. The worse thing you can do is start playing golf, and then quit because you’ll have wasted your time and effort. I’m not talking about playing golf for fun here; I’m talking about someone who really wants to become a good club player.

This sounds like common sense. And it is. But Mr. Godin describes this phenomenon very concisely in both graphical and visual form. ‘The Dip’ graphically represents the experience of a new endeavor quite accurately. Mr. Godin also uses other graphical forms to represent other types of experiences such as 'the cul-de-sac' (a dead end endeavor) or 'the cliff' (an endeavor that will come back to haunt you – think of smoking). These concepts allow a productive, goal-oriented approach to anything. Simply, decide the point at which you’ll quit before you even start. Mr Godin uses the example of good marathon runners; they don’t quit when they feel tired because they’ve already resolved their quitting point before. This earlier resolution allows them to not make panicked decisions in the heat of the moment.

Mr. Godin conceptual framework builds of earlier ideas. Robert Greene, in the Concise 48 Laws of Power,talks about the concentration of forces as crucial to obtaining power. This concentration comes from quitting all those dead end projects, or those projects which you usually leave halfway through. Both books are well worth their used selling prices.

And that’s just the tip.

Uncovering Identity

by Ali-Asad

What’s the first question you ask someone you’ve just met?

Where are you from?

Yeah, that’s a pretty popular question. Does the answer matter though?

I could say that I’m from Pakistan (got the passport), or that I’m from Oman (lived there for 11 years) or Kenya (lived there for the next 7 years) or why not England (after all, I was born there).

So, where am I from?

You choose.

But does it really matter?

I don’t think so. I mean, come on, why did you ask that question in the first place? I don’t really think anyone really cares where you’re from. What we all really want to know, and ask, is: who are you?

It’s as simple as that. Yet how many times have you asked a person you just met who they were? How about a best friend you’ve known your whole life; have you ever asked them who they were? Isn’t that what matters? Apparently identity doesn’t matter. Instead, categories matter.

Where are you from?

New York. Ah ok (so that’s why you talk so fast)

China. Ah ok (so that’s why you can’t speak English)

India. Ah ok (that’s why you’re studying all the time)

What do you do?

I’m an environmental activist. Ahh ok (so you’re a liberal nutjob)

I’m a banker. Ahhh ok (so you’re a capitalist pig)

I’m a writer. Ahhh ok (so you live in a box)

Identity matters. However, identity has been reduced to a collection of stereotypical subcategories within aspects of life. It’s as if all I need to do is obtain your location, your profession and your religion…and there – I’ve identified who you are. Recall the early days of online chatting where the stranger’s greeting was a/s/l? (Age/Sex/Location) I.e. who are you?

It makes absolutely no sense to ascertain a person’s identity based on factors out of their control.

I didn’t choose where I lived most of my life.

I didn’t choose the religion of my parents.

I didn’t choose the year I was born in.

I didn’t choose my gender.

Can the above be part of my identity? Yes, they can influence your identity. But they are not who you are. Your identity can really only consist of those characteristics that were within you power to determine. So, one of my examples above was incorrect. A person chooses their profession, so yes, that does become
part of identity.

But why does identity matter? It’s dangerous. Very dangerous.

According to Amin Malouf, a Lebanese writer, people align themselves with whichever affiliation of theirs is under attack. It’s a natural reaction. If someone is killed because they have a particular affiliation, and I have that same affiliation, what will stop me from also being killed? Immediately this person gets attached to the affiliation under attack. This idea summarizes one of the key points in Maalouf’s In the Name of Identity: Violence and the Need to Belong ; when people start associating themselves strongly with a particular affiliation, they become dangerous. Why?

Because anything that threatens or conflicts with this primary allegiance will automatically be branded as evil, wrong and necessary to fight against. These people quickly define those who they are in conflict with as ‘the other’. This separation into ‘us’ and ‘the other’ automatically creates a false dichotomy. ‘We’ are necessarily right, moral and fair while ‘the other’ is evil, less human and always, always wrong.

“You’re either with us or against us”

This mentality reduces ‘the other’ to a fundamentally non-human status. The concerns, desires and history of ‘the other’ don’t matter because they’ve been defined as inherently wrong. The fallacy in this reasoning is apparent: no group can be totally right or totally wrong. A claim to total righteousness is akin to saying that “God is on our side”. Rather, we need to strive to be on ‘God’s side’ – and let that search for truth define our identity; to be human is to be a seeker of truth.

Any thoughts?

Comment below.

The Lost Clinton Blowout

by Ali-Asad

It’s officially over. Hillary Clinton finally conceded less than a week after Barack Obama reached the magic number to clinch the nomination. In reality, Obama had the nomination in the bag many months ago. After the February 5th Super Tuesday states voted, Obama and Clinton were essentially tied. Then, Obama went on an 11 state winning streak and amassed a 100+ delegate lead; those hundred delegates ended up being his winning margin.

Towards the end of the campaign, as she was getting desperate, Hillary made the electability argument. Hillary claimed she was better positioned to defeat John McCain in November. She may have been right. Here, we’ll look at the Clinton blowout scenario that will never be. Then again, there’s always next time.

As usual, we’ll start at the 252 electoral votes that John Kerry managed to win against President Bush in 2004. How could Hilary have blown out McCain. Easily. Very easily is the answer.

Let’s start with Ohio (20) and Florida (27). Kerry narrowly lost Ohio but lost Florida to Bush by a significant margin. Ohio has been trending Democratic because of the corruption in the state Republican party. Also, Ohio has been hardest hit by the slowing economy and has led the nation in increasing anti-war sentiment. Clinton would take Ohio over McCain because of these advantages and her ability to connect with working class voters. In Florida, Clinton would nullify McCain’s appeal to older voters, and so would be a favorite in Florida. Clinton moves to 299 Electoral votes (EVs) – 270 needed to win. She’s already over the top.

Arkansas (6), West Virginia (5), New Mexico (5) and Iowa (7) would also go to Clinton. With their years in Arkansas, the Natural State is Clinton territory. The Democrats lost West Virginia in the last decades because of their inability to connect with working class voters who are culturally conservative. Hillary can connect with those voters and bring West Virginia back into the Democratic column. New Mexico is probably the most purple state in the Union. A popular governor, shifting demographics and a strong state party would deliver the state to Hillary. Like New Mexico, Iowa is an extremely purple state. But the exciting Democratic primary race and current political winds would be enough to switch Iowa to Democratic for Hillary. She has 322 EVs.

Another factor in the Hillary blowout would have been her ability to keep Republican target states safely blue. Michigan (17), Pennsylvania (21) and New Jersey (15) would have remained safely Democratic had Hillary been the nominee. With Obama as the nominee, Republican strategists will target all three and aim to switch at least one of those states to the Republican side.




Hillary would have won by bringing together the traditional Democratic coalition of women and blue-collar workers. Obama will seek to bring in more young, affluent and Independent voters. The current political atmosphere favors the Democrats tremendously. And for once, when picking a nominee, the Democrats went with their heart (hope - Obama) rather then their head (experience – Hillary).

And that's jus' the tip.

Comment below.

The Obama Blowout Scenario

by Ali-Asad

Last time we looked at the recipe for a McCain ‘blowout’ – A 50 Electoral Vote (EV) victory isn’t really a blowout. But under the current circumstances, it is. And it could happen. Easily.

How about the other scenario – an Obama blowout?

This scenario has everyone excited. Barack Obama has the potential to completely remake the electoral map by putting states into play that Democrats would never have considered. On the other hand, he’s weaker in traditionally Democratic states that have been trending Republican – hence his potential to get ‘blown out’. So, what would an Obama blowout look like? Firstly, you will definitely see blue in some interesting places. Let’s take a look;

We of course start with Kerry’s 252 EV performance against Bush back in 2004. How will Obama get past and beyond the 270 he needs to win?

The Southwest looks like potent pickings for Obama. Last time, we detailed how Arizona (10), Colorado (9), Nevada (5) and New Mexico (5) are all turning bluer and more progressive. McCain has represented Arizona in the Senate for over 30 years, and so we safely say that McCain will hang on to his home state. Otherwise, an effective party infrastructure, popular local politicians and favorable demographics will let Obama pick off Colorado, Nevada and New Mexico. Obama gains 19 from the Southwest, and with that he’s already won – 271 EVs.

The Atlantic South ranks up there with the Southwest on Obama’s hit-list. North Carolina (15) and Virginia (13) both present new opportunities for the Democrats. Just like the Southwest, the demographics of the states are trending more progressive and democratic. Also, North Carolina’s state party is strong while Virginia has some big-name, well-liked politicians representing the state. The trio of Tim Kaine (current governor), Jim Webb (current junior senator) and Mark Warner (former Governor and current candidate for senate) all hail from Virginia and would be on anyone’s shortlist for Vice-Present; they all suit Obama in terms of the change message. North Carolina will be harder to pull than Virginia. But Obama could easily do it. 28 EVs in the bank. Obama’s up to 299 EVs.

Iowa (7) looks, feels, smells and tastes like Obama country. He has built an awesomely powerful infrastructure in the state; this same infrastructure helped him win the primary that kickstarted his candidacy and will help him in against McCain. Iowans have never really been fond of McCain. Obama has this one. Obama’s past 300 – 306 EVs

Will Obama flip Ohio (20) back to the Democrats side? The white people of Ohio are probably more sick of the war and NAFTA than any other place in the country. If anyone will forgive Obama for not being a cultural conservative, it will be Ohians. This state will be close. But Obama has a better than even shot. Obama – 326 EVs.

If this wasn’t enough of a blowout, current analysis shows Obama may have a good chance in the very traditionally republican states of Missouri (11), Indiana (11) and South Carolina (8). This hope could be based on a record turnout amongst black people. But Obama’s appeal seems to reach everywhere with the young and affluent – those who the ‘hope’ message resonates with. These above three states would give Obama an almost 200 EV victory in November. But those states don’t lean Democratic enough to be part of the blowout scenario. But even without them, a blowout it is.




Obama: 326 McCain: 212


And that's jus' the tip.

Comment below.