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(Apologies for not posting for several days. I was enjoying a 4-day ski vacation in Lake Tahoe.)
If Scott Brown wins his Massachusetts Senate seat in today's special election, I think this will mark a major tipping point in U.S. politics. (The first tipping point arguably came last year in March and April, when Obama's agenda first started running into difficulties. I remarked at the time that I thought he was far too liberal for the tastes of America's voters, that he would not find it possible to push through his agenda, and that this was a reason to be bullish on stocks, especially since they were so cheap.) Now we see the centerpiece of the liberal agenda running into a brick wall of resistance. As the WSJ editorial today points out, "The real message of Massachusetts is that Democrats have committed the classic political mistake of ideological overreach."
One of the drivers of the equity rally this past year has been the inability of the Obama administration to implement all of its far-left agenda. Going forward, one of the drivers of continued equity market gains could be the beginnings of an actual rightward shift in policies, not just a failure to move to the left. At the very least, Congress may now start operating as a divided house, and Divided Government is a thing devoutly to be wished at this point. A little less government would be a very good thing. We've come a long way in the past year, thank goodness.
UPDATE: With Brown's decisive win, this changes the political landscape to an enormous extent. I don't see how healthcare reform can pass in anything like its current form. Furthermore, I don't see how we could see any significant, hard-left measures pass between now and the November elections, when Democrats are sure to lose their commanding majority in Congress. We are now in a new era of Divided Government, and that is a Very Good Thing from the market's perspective. Obama, the One-Year Wonder, is now faced with the need to salvage his presidency. Will he choose the high road, and call for Congress to scrap the current healthcare proposal and start again from scratch, with true bi-partisan input? Or will he choose the low (Chicago) road, and go for broke? These are exciting times.
Tuesday, January 19, 2010
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10 comments:
Obama perhaps made two major mistakes: health care nd Afghanistan. It is nice to be ambitious, but it is even nicer to live within means.
I suspect health care is dead. Unfortunately, our exit from Iraqistan may take years yet.
And no one, Repub. or Dem., proposing cutting federal outlays in the Agriculture Department, or Department of Defense.
The only aspect about the USA I am negative about is our inability to balance the federal budget, or even rein in outlays much.
It may be that the system of government that revolves around geographic representation will ultimately spend itself into pauperdom.
Every Congressman wants more spending in their district. Rural congressman are actually very successful at plundering taxpayer dollars, more so than urbanites.
The right-wing shift? I hope for lowered deficits, but I am not holding my breath.
Mr. Grannis:
Fully agree with you that attempting to govern from the left , when in fact you face a center right socioeconomic situation, is a recipe for disaster.
This particular “attempt” to govern from the left is based on the tired socialist premise and rhetoric that economics and society is a zero sum game. That one group only gains at the expense of another group. That wealth needs distributed without regard to how wealth is created. That the redistribution premise starts with wealth redistribution before any wealth is even created. That labor and capital are opposed rather than work together to produce. That somehow government and society “thinks” and knows what is best for the masses. And of course the overarching class warfare argument.
Would love to see every last member of the current Administration and every last Czar on one side debating exactly two individuals: Walter E. Williams and Thomas Sowell. The InTrade would likely be 90+ Williams and Sowell.
ps. Can we create the POBFF (Poor Old Benjamin Farming Fund)? We can contribute until we are able to buy Benjamin a farm. Then Ben can farm and find out how it actually works. Then Ben can report back with first hand experience!
W.E. Heasley:
I run 200 acres in Thailand. Not one penny from the federal government in Thailand, or any government for that matter. Dirt roads. Septic tanks. Diesel generators. Tarp tents. You get the picture. We actually make money.
I see no reason why U.S. farmers should remain the economic weaklings of the universe, subsidized and bailed out decade after decade. In Montana, farmers amke more from Uncle Sam than consumers. They are farming taxpayer dollars.
Let me tell you how "farming really works" in the US: Subsidize risks and costs, privatize the gain.
Really, if you believe in free markets you do not have a leg, or even the most slender reed, to stand on when defending the US farming system. It is just not defensible.
But any outrage perpetrated long enough becomes a norm, no matter how decadent.
Benjamin:
Have sense of humor Ben.
Since you have experienced owning a farm in the USA, you surely understand. Its not the tax, it’s the over regulation related to size and scope of government, in the USA, increasing costs, hence the central planning decision for tax credits.
I'm with you Ben on the farm deal, but you can't argue the farm deal each and every time.
Trust me Ben.
The US ag sector is heavily subsidized, but it is massively subsidized in Europe. It's a real shame, and should be fixed. Everywhere.
Just as in the Revolution of 1776, the first shots of the Revolution of 2010 have been fired in Massachusetts!
The only problem with assuming the Obama agenda is to blame for the equity sell-off/rally is the Republicans have nothing to offer the people.
The Republicans will be holding the same rotten potato in 2 years time but the rich will have gotten richer and the poor poorer.
The Republicans have proven to be weak stewards of our country. They do not govern from the right. they govern from the right in the publics eye and from the left when it comes to their agenda.
The only difference between the left and the right is your vantage point.
If people would get a clue maybe we could save this country. Partisan politics is petty and leads to more of the same.
If the difference between Republican and Democrat policy preferences could be boiled down to one thing--business-friendly vs. business-unfriendly--that would be reason enough to believe that Obama has been an important factor in the equity volatility of the past year. Obama has been nothing if not business-unfriendly. Indeed, I would say that he has been very antagonistic to business. His huge spending ambitions equate directly to massive increases in tax burdens, and I feel strongly that a big tax increase would result in a weaker economy.
This is not petty stuff, this is deadly serious stuff.
Since 2001 we have allocated approximately $1T towards two wars. The total costs cold run into the several trillion dollar range. Is that not deadly serious and who led us into that one? And for what purpose?
How do you suppose we are going to pay for that? Yup you guessed it, higher taxes courtesy of the right.
For every tit on the left there is a tat on the right but petty politics can be blinding.
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