5 things to take from the New Hampshire primary

Mitt Romney has won by a substantial margin. What does this victory mean for the rest of the primary

"We made history," Mitt Romney told supporters last night as he celebrated his double digit win in the New Hampshire primary. It is certainly a rare feat for a non-incumbent Republican to win both Iowa and New Hampshire (he is the first to do so since 1976).

The victory cemented his frontrunner status, but what exactly does it mean for the rest of the race? Here are five facts we can take from this.

1. The inevitability is building

It was a foregone conclusion that Romney would perform well in this state, which neighbours his own, Massachusetts. He managed to scoop up 39 per cent of the vote in New Hampshire, despite never previously getting more than 25 points in opinion polls.

Exit polls suggested that support for Romney came from across the ideological spectrum, with 48 per cent of his support coming from "very conservative" voters, and 37 per cent from people identifying themselves as "moderate to liberal". This makes it difficult to identify a clear weak spot in his support. Republicans across the board appear to believe that Romney is the candidate most capable of beating Obama.

2. There is no clear rival

While winning the first two primaries will make Romney the candidate that undecided voters in South Carolina are most likely to tilt towards, it remains a deeply conservative state, and Romney remains a moderate conservative.

However, there is no clear conservative alternative. Rick Santorum surged in Iowa, but that failed to manifest in a repeat performance in New Hampshire, where he won less than 10 per cent of the vote (see below for full breakdown of the results). He and Newt Gingrich -- who invested a lot in this state -- were essentially tied in fourth place: New Hampshire rejected both of them.

Although either could still perform well in South Carolina, the fact that the Republican opposition to Romney is fractured will work in his favour.

The field is in disarray: Jon Huntsman trailed in third place despite staking most of his scant resources on the state. Despite limited funds, he has vowed to fight on.

3. Obama need not worry -- yet

Romney won by a large margin in New Hampshire. In his victory speech, he essentially ignored his Republican rivals and focused on criticism of Obama, all part of a plan to build a sense of inevitability around his campaign.

Yet Obama's re-election team can take comfort from the fact that reports suggest a relatively low turnout in New Hampshire. The final figures have yet to be collated but this cements the impression given by opinion polls leading up to the primary race that none of the candidates have managed to ignite much enthusiasm among Republican voters.

4. Attack lines are sharpening

The benefit of having five other candidates still vying for the status of lead rival is clear. But on the downside, it means that attacks on Romney are being refined and sharpened.

Potentially the most damaging of these relate to his time at Bain Capital. Newt Gingrich has accused Romney of presiding over the "looting" of companies during this time, and Rick Perry said these corporate restructuring firms were "vultures". Attack videos have labelled him as "ruthless" and intimated that he was esponsible for the loss of jobs. This did not translate into a reduced vote share for Romney in New Hampshire and it is not yet clear how it will play out over the primaries, but it is certainly possible that it will become more of an issue. If Romney makes it to the national contest, Democrats will attack him on this issue from the left.

Romney, then, did not emerge from New Hampshire unscathed, and the race will only get dirtier from here on in: it is in South Carolina that he will face his first crush of negative ads.

5. Ron Paul cannot be ignored

The libertarian Texan has long been dismissed as a crank, but this is the second poll in which he has finished with more than 20 per cent of the vote, coming second in New Hampshire and third in Iowa.

He is the only candidate who matches Romney in the breadth of his organisation across the country, and it is showing. Support for Paul amongst the young has surged because his non-interventionist stance on foreign policy taps into the strong anti-war mood.

Yet doubts remain over his ultimate electability: Romney's team have said they would welcome running against Paul. It remains unlikely that he will emerge victorious in any major contest, but such a strong showing means that the GOP will struggle to ignore him at the convention in Tampa.

The full results

Finally, here is a break down of the results in full:

results

Click here to enlarge the image.

Source: New York Times

 

 

 

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

Ralph Orlowski / Getty
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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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