Posted on 01/20/2010 2:57:33 AM PST by TigerLikesRooster
Consequences of the Mass. Election
Submitted by Bruce Krasting on 01/19/2010 23:43 -0500
I was watching the election results from Mass. with some people who know history better than I. None of us could come up with a historical parallel to the development that took place this evening. This one is going to go down as one of those ‘water shed’ events that you hear about.
The TV guys are all talking about what this could mean to the health care legislation. At this point, I could care less. I thought it was dead before and I think it is deader now. What I care about is what this means for some of the other significant issues that we face.
In my opinion the vote in Mass was a vote against the status quo. It was a loud enough vote for everyone in D.C. to hear. If there was any doubt that Americans are sick of the "same old, same old", this was it. The message was clear to me, “If you want to keep your job as an elected official you have to do things differently.” This will force changes across the board. Some things outside of health care that I think may be impacted:
-The days where the Fed and Mr. Bernanke get to establish broad economic policy without taking into consideration the mood of the public is over. This is not to suggest that the Fed is going to jack up rates anytime soon. But to me it means that the possibility of QE2 is done. There was a time when you might have said, “The American people don’t understand their monetary policy and have know idea how much debt has been created in their name”. Well that was then and this is now. Americans do understand how much debt there is. They are shocked, dismayed and angered. They’re a lot of everyday citizens who are well aware that the Fed printed 2 trillion in the last year or so. The vote in Natick Mass showed their dislike and distrust of Fed policy. While I don’t think this will result in Bernanke failing to get a second term in the upcoming vote, it just got a bit more uncertain. In many ways this election will tie Ben’s hands.
-There is has been some discussion on a second stimulus bill. Those like me who see weakness before this year is over were pushing for that. Some big voices in the public and private sector are going to be disappointed. There will be no second stimulus bill. Not in 2010 at least. There is no stomach for that any longer. There are many Congressmen and Senators who are up for reelection in ten months. They are not going to stick there neck out for something the White House wants and they know the people don’t. I doubt the administration will even ask for a stimulus bill after this shellacking.
-I read the election result as being dollar positive. Somewhere inside this vote tonight is a call for fiscal conservatism. We are going to hear rhetoric to that effect in the coming months and we will see legislative steps that at least give lip service to the idea that we aught to tighten our belt a few notches. To the extent that I am right by calling this dollar positive, you have to also think that it is a gold negative development. For those that love the yellow metal and hate the dollar take heart. Any positive impact to dollar will be short lived. The inability to put a second stimulus together will show up in all of our numbers by midyear. At that point it will be more clearly understood that the US is broke and there really aren’t any viable options that don’t entail a lot time and pain.
-Tim Geithner’s ship went down in Massachusetts. I am convinced that he now must go. The Administration will have to make changes after this vote. They have to show that they are being responsive. The beating the WH took tonight was biblical. So will their response be. It will take a month, but changes and heads will roll.
-I am sure that all the stock pundits are going to read this evening’s results good for the broad market averages. I have been skeptical of this for a while. But not any longer. The stock market looks six months ahead. It will soon be sensing the next economic slowdown soon. I would not say the market is a screaming short. It is not, yet. It just got closer however.
-I can see how some health care companies might see a pop in their stocks for a few days. This group I would short. The absence of a health care deal is actually bad for them in my opinion. Give that a week at best.
-There will be no fix on Social Security this year. Mr. Goss who runs that shop has said that the issues facing SS have to take a back burner to finding a fix to health care. Well, we have not found that elusive solution. And now it is farther away then ever. Mr. Goss will have to wait at least another year. That will prove to be a devastating delay.
-There will be no significant steps to address the problems at the mortgage Agencies; Fannie, Freddie and FHA. The reason is simple. If you wanted to address the problems with these dogs you have to owe up to the fact that it is a $500 billion dollar sinkhole. Who would want to put that bad news on the table after getting your ass kicked in a crucial election? The answer to that is that no one in Washington would. And no one will. Having said that, I would not be at all surprised to see an effort to cut the outrageously rich compensation packages for the big shots at Fannie and Freddie. There may have been some belief that these two companies were in the private sector where salaries have no caps. But now there will be those in Congress that want/need an election edge. What could be a better edge than to beat up on a bunch of fat cat D.C. bankers?
-We have several states that are on the edge of a fiscal crisis. I thought that there would be some form of Federal assistance for them this year. That may still come, but it is now much less likely. You can’t just help NY and Cali. Those States will simply have to cut their deficits the old fashioned way, by cutting expenses. There is no way the folks in Texas are going to let Federal dollars be used to bail out TBTF States. And no one in Congress is going to stand up to that.
-If you were a TBTF institution you just hated this vote. This is bad for the Citi’s and BoA’s, but it just downright terrible for the likes of GS. The more successful you are, the more crap that you will have to take. Washington knows that Americans hate their banks. Now Washington is going to take sides with the people and lean on the TBTFs even harder.
-The bailout mentality is over. If GM needed a handout today, they would not get it. If a company runs into difficulty in the future they will just go down. There is no will left for the bailout thinking. If you are a legislator and you support a bailout, you will lose you right to vote in Washington. The voters will take you out back and shoot you on Election Day.
Ping!
Hopefully not just replaced with another hack from Goldman Sachs.
“Consequences of the Mass. Election”
One of the “consequences” that should come out of this election is that the RNC needs to quit pandering to the leftward lunacy.
Fixed!
And it would be my thorough pleasure to be a part of the spectacular effort to scourge the RINO weasel.
Very nice but of course “Tea Partier” instead of “Teabagger” would be better.
I did that as a big ole' EFF YOU to the radical left. Kinda like how we adopted the song Yankee Doodle, when the British meant to mock us with it.
We have a long tradition of laughing at those who mock us, in Revolutionary America. :)
I say leave your image as-is.
And then we dangle our ***** in his mouth.
later
Well he was right about gold and the dollar. Anybody that bought precious metals on Monday Jan 11 on Cramer’s advice the previous Friday just got their pockets picked. I am quite certain that Cramer’s mob doesn’t have a prayer of seeing $1150 gold and $18.60 silver again until mid-February at the very earliest.
That said, I’ll be looking for a short-term bottom just before the end of the month as has been the pattern in six of the last seven months.
oops I pinged bam instead of blam here re gold
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.