The Election No one Wants to Win
Does it occur to anyone that no one really wants to win the 2012 election? Obama seems to feel he has to, but occasional slips portray someone who has accepted a one term Presidency as a real possibility. The Republicans cannot find a real candidate, just two retreads and a wild man (not talking about Newt). I would venture to say that the real reason that this is occurring is that we are seeing the end of the Republican and Democratic parties as we have seen them since the end of WW II. To my mind a new era and new politics will evolve out of the economic cleanout that is looming. The 72 year economic cycle that started in 2000 has five years left in the cleanout portion that should end by 2017. A number of things were tried by the politicians in the early stages, 2000 to 2008, to keep the cleanout at bay, the Iraq War, pleas to buy suv’s, creating a housing bubble. None of that worked to well.
The 2009 to 2012 period has been one where debate has been the identifying force. Stimulus was tried but on way too small a scale to launch the economy out of it stupor and for stimulus to work it would have had to have been much more evenly distributed to all areas of the economy, not just to the speculators. And so this brings us to today and the Fed meeting with the market commentators back with whispers of some type of QE 3. What everyone needs to keep in mind is that we are getting closer to the point ( 2017, within 5 years) where the central issue will be rising interest rates. Who wants to lend 30 year paper at 3 percent as this unwinds?
As to markets, the gold market with its recent blowoff is a little ahead of stocks. The 1416 level in the S&P should be the blowoff objective and is where I as a contrarian am going to move to a 100 percent short position. Conservative investors should use that level as one where cash is more valuable.