Yesterday's results were a bit surprising for those not paying close attention when Santorum finished second in what can be best described as a dead heat.  Paul finishing third was probably disappointing to some die-hard fans, but he had a good showing nonetheless and in line with previous polling data.

While I prefer to focus on more macro economic issues, I think it is worthwhile to at least briefly chat about the race.  So what does this mean for the GOP and the candidates?

First of all, it is probably very difficult to predict based on Iowa's results how the actual race will unfold.  Simply because America is a very diverse country and people's voting habits differ quite a bit based on their region.  For example the folks that came out for Santorum in western Iowa simply do not exist in New Hampshire.  Similarly the folks supporting Ron Paul do not exist in South Carolina, so forth and so on.  Although Iowa's influence is undeniable as it propels candidates into spotlights as confirmed by Bachmann's campaign suspension, it is important to remember that the last presidential cycle had zero predictive value (Huckabee won, McCain finished 4th).

Indeed, it would appear that there is a more interesting dynamic at play here and this was the same dynamic that played out during the debate cycle.  We saw an amazing number of people grab the spotlight only to flame out and be replaced by another bubble candidate.  If you recall, it was Bachmann who surged ahead at first, only to be squashed by Perry who crashed and burned in the debates only to be replaced by Cain.  Cain seemed to gain tangible momentum but the sexual scandals buried him and out came Gingrich.  Gingrich peaked too early and gave an opportunity for Santorum to take hold and finish in an impressive second place.  Why?  Because a fraction of the GOP is simply not content and not ready to accept Mitt Romney as their candidate.  They did not like him four years ago and they do not like him now.  Hard to blame them, it is very difficult to like Mitt Romney.  Romney personifies the stereotypical politician to the maximum and his track record as Govenor of Massachusetts leaves a ton to be desired.   Yet Romney's finish in Iowa suggests that a certain faction of the GOP base.  So it is clear that there are two distinct groups so far; Romney group and the non-Romney group.  The fact that it is Santorum at the moment is not relevant at all and in fact, Santorum will cease being an important candidate by the end of January (although he might do well in South Carolina).  

The question is, is there yet a third group whose leader at the moment is Ron Paul?  Possibly, but hard to tell.  Although Paul's performance in Iowa is commendable and he is poised to take second place in New Hampshire, it is a bit unclear as to what happens next.  He could very well finish dead last in South Carolina (provided Huntsman drops out by then).   There could be a very good explanation as to why Paul is polling so strongly in these states, but hovers around 10% on national polls.   Paul's support could be stemming from non-Republican voters who will gladly support him in open primary states for their own personal reasons.   They either want a candidate that truly represents their ideals, like ending wars and ending silly drug prohibitions or they want to sabotage the GOP by selecting what they perceive to be a weak candidate against Obama.  I am inclined to believe that Paul could easily take on Obama, but liberal voters have a tendency to talk big, but act small and will invariably hold their nose and vote for Obama despite all the war mongering, civil infractions and continued drug wars.

In other words, Paul's position and support is yet to be determined.  If indeed his base is real and represents a third faction within the GOP then we will have a very protracted and interesting primary season.  If not, then Romney will sail into the nomination relatively easily as the non-Romney camp splinters and shoots itself in the foot over and over.  Primarily because the non-Romney camp consists of a collection of candidates that have regional bases on support, but present no real threat to Romney on a national level.   As I see it the regional locales will be:  Huntsman in New Hampshire, Perry/Santorum in South Carolina and Gingrich in Florida. This spells good news for Romney.

This spells bad news for the rest of us as Romney represents more of the same status quo malaise that has dragged this country down into the pits.  Romney's potential victory over Obama represents very little as there is no substantial difference between the two men despite all the colorful rhetoric.
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"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” - M. Rothbard