Women and Minorities Give the Middle Class a Second Chance
It is difficult to focus this morning after getting home from last night’s Victory Celebration in Chicago. The markets beckon with streams of Red as apparently the Koch brothers, the CNBC crowd and their followers dump stocks this morning as they deal with the disbelief that money cannot buy an election.
Our macro market positions and views have not changed since the postings on the Eureka-Perspectives main page were made on September 30, 2012. We are short stocks, commodities, gold, and T-Bonds, and long the dollar.
From a political standpoint the fact that the problems affecting this economy are fiscal in nature and the fact that the Republican House has thwarted all efforts to deal with these issues has been the basis of our underlying negative premise on the markets for the past 18 months.
I will first say that the election last night reduces the chances of a Depression between now and 2017 by 40 percent, ie. if Romney had won I had the chances at 70 percent, now they are at 30 percent.
So we are not out of the woods. The portion of the population who kept this country alive last night will not have much impact on what Obama does now. It is up to him and it implores him to move outside the box with measures that keep Wall Street at bay, that keeps the Treasury from coddling the banks, and brings to the forefront an economist or group of economists who view the economy from the perspective of the middle class job creators.
Tax and economic policy has to focus on both increasing revenue through more balanced taxation and cutting expenditures on items that are not productive. Social Security age directives have to be brought in line with increasing life expectancy.
The Fed, which has viewed its job as filling the void in Congressional action on the economy, is becoming essentially powerless in my opinion. World bond investors are slowly going to take control of interest rates, and they won’t be lower.
Bottom line, there is a lot to be done, and only through having tough economists directing the issues and playing hardball will Obama get the job done. This is not the time to employ Clinton era economists who were successful in a different time.