Watching the intricate multi-media coverage of the US election the past few days one could almost get the impression that the outcome was important in some big way. If only this were the case. Sadly the Republican wins last night are likely to portend as little of the needed change and reform in the next two years as the massive democratic sweep offered over the last two. Neither party seems willing to admit erroneous policies and start fresh. Both seem bent on maintaining the status quo interests of big banks and big oil and to hell with everything else. I am naturally a long-term optimist for humanity, but I have to say, it can seem pretty hopeless some days.
Watching the red and blue political experts’ debate is like watching a bunch of long always portfolio managers in the money business talk about their strategies. In the end, outcomes have very little to do with them, and everything to do with the market cycle they are riding. When markets are up they look smart and when market cycles’ are down they look dumb. They are really just strapped to the ride and aren't offering any meaningful leadership or strategy.
In the political process it seems both sides are bought by lobbyist and special interest groups. Those that can pay the big
bribes bucks are necessarily those that are looking to maintain their power, market share and business model. In this way they are very effective in holding back meaningful progress.
In the end, 'it’s the economy stupid'. The Republicans allowed the real economy to be decimated and stripped of equity during their 8 year watch leading up to Obama. Obama inherited a debacle and was not able to implement meaningful reforms in his first two years, and more than that, half way through his term, he does not seem to have the ability (guts or inclination) to do so. Meanwhile QE smoke and mirrors aside, no one yet has been able to breathe any real life into this economic recovery. Billions of campaign spending the past few months has been just another expensive diversion.
So far the Republican wave reborn last night seems to be mostly talking about overturning bank and health care reforms. The bank reforms were already pathetically weak and watered down so seeing them overturned now, will be an embarrassment to all concerned.
Meanwhile the State bailouts have already begun and there is no solution to mounting deficits anywhere in sight. See Meredith Whitney in the Wall Street Journal today: State Bailouts? They've already begun:
“Beyond debt subsidies, general federal government transfers to states now stand at the highest levels on record. Traditionally, state revenues were primarily comprised of sales, personal and corporate income taxes. Over the years, however, federal government transfers have subsidized business-as-usual state spending not covered by state tax collections. Today, more than 28% of state funding comes from federal government transfers, the highest contribution on record.
These transfers have made states dependent on federal assistance. New York, for example, spent in excess of 250% of its tax receipts over the last decade. The largest 15 states by GDP spent on average over 220% of their tax receipts. Clearly, states have been spending at unsustainable levels without facing immediate consequences due to federal transfer payments and other temporary factors.
At the same time, local governments now rely on state government transfers for 33% of their funding…”
Ok on an optimistic note, in the realm of needed first steps, maybe Ron Paul and company will be able to force an audit of the Fed now after the election and maybe we can get some meaningful disclosure on bailouts and banks. See Bernanke faces more scrutiny after Republican gains.
Paul seems like a reasonable and decent man with some moral fiber. These basic attributes make one unusual today it seems. But really when are we going to see the FASB rules reinstated so we can see what toxic debt banks are actually hiding on their balance sheets today? We really do need to stop the fraudulent games and get back to basic principles of fair disclosure and accounting. Everyone who is against that motion in either party should just be ousted right up front.