It was the Economy, or was it?…

Over the past few days, I have wrestled with what all this means. Back in 1996 I switched to the Democratic Party, a big switch from my first election in 1964 when I voted Republican.

In 2003 after going into semi-retirement and decided to educate myself and look at bigger issues. Books by Robert Reich and Marina Mazzucato are a couple places where I started. Here is Reich’s analysis from yesterday. It seems on target. Now I just need to figure out how to cope with the next four years. I am starting this coping by joining the local Democratic organization. I feel I need to develop local acquaintances who share my concerns and back out of the things like X.

I will expand on the “or was it? thought in coming days.

First Here is what Robert Reich says:

 The real Lesson of the 2024 election:

On Tuesday, according to exit polls, Americans voted mainly on the economy — and their votes reflected their class and level of education.

While the economy has improved over the last two years according to standard economic measures, most Americans without college degrees — that’s the majority — have not felt it.

In fact, most Americans without college degrees have not felt much economic improvement for four decades, and their jobs have grown less secure. The real median wage of the bottom 90 percent is stuck nearly where it was in the early 1990s, even though the economy is more than twice as large.

Most of the economy’s gains have gone to the top.

This has caused many Americans to feel frustrated and angry. Trump gave voice to that anger. Harris did not.

The real lesson of the 2024 election is that Democrats must not just give voice to the anger but also explain how record inequality has corrupted our system, and pledge to limit the political power of big corporations and the super-rich.

The basic bargain used to be that if you worked hard and played by the rules, you’d do better and your children would do even better than you.

But since 1980, that bargain has become a sham. The middle class has shrunk.

Why? While Republicans steadily cut taxes on the wealthy, Democrats abandoned the working class.

Democrats embraced NAFTA and lowered tariffs on Chinese goods. They deregulated finance and allowed Wall Street to become a high-stakes gambling casino. They let big corporations gain enough market power to keep prices (and profit margins) high.

They let corporations bust unions (with negligible penalties) and slash payrolls. They bailed out Wall Street when its gambling addiction threatened to blow up the entire economy but never bailed out homeowners who lost everything.

They welcomed big money into their campaigns — and delivered quid pro quos that rigged the market in favor of big corporations and the wealthy.

Joe Biden redirected the Democratic Party back toward its working-class roots, but many of the changes he catalyzed — more vigorous antitrust enforcement, stronger enforcement of labor laws, and major investments in manufacturing, infrastructure, semiconductors, and non-fossil fuels — wouldn’t be evident for years, and he could not communicate effectively about them.

The Republican Party says it’s on the side of working people, but its policies will hurt ordinary workers even more. Trump’s tariffs will drive up prices. His expected retreat from vigorous antitrust enforcement will allow giant corporations to drive up prices further.

If Republicans gain control over the House as well as the Senate, as looks likely, they will extend Trump’s 2017 tax law and add additional tax cuts. As in 2017, these lower taxes will benefit mainly the wealthy and enlarge the national debt, which will give Republicans an excuse to cut Social Security, Medicare, and Medicaid — their objectives for decades.

Democrats must no longer do the bidding of big corporations and the wealthy. They must instead focus on winning back the working class.

They should demand paid family leave, Medicare for all, free public higher education, stronger unions, higher taxes on great wealth, and housing credits that will generate the biggest boom in residential home construction since World War II.

They should also demand that corporations share their profits with their workers. They should call for limits on CEO pay, eliminate all stock buybacks (as was the SEC rule before 1982), and reject corporate welfare (subsidies and tax credit to particular companies and industries unrelated to the common good).

Democrats need to tell Americans why their pay has been lousy for decades and their jobs less secure: not because of immigrants, liberals, people of color, the “deep state,” or any other Trump Republican bogeyman, but because of the power of large corporations and the rich to rig the market and siphon off most of the economy’s gains.

In doing this, Democrats need not turn their backs on democracy. Democracy goes hand-in-hand with a fair economy. Only by reducing the power of big money in our politics can America grow the middle class, reward hard work, and reaffirm the basic bargain at the heart of our system.

If the Trump Republicans gain control of the House, as seems likely, they will have complete control of the federal government. That means they will own whatever happens to the economy and will be responsible for whatever happens to America. Notwithstanding all their anti-establishment populist rhetoric, they will become the establishment.

The Democratic Party should use this inflection point to shift ground — from being the party of well-off college graduates, big corporations, “never-Tumpers” like Dick Cheney, and vacuous “centrism” — to an anti-establishment party ready to shake up the system on behalf of the vast majority of Americans.

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Next, my view on the Economic Direction Fermented by this election and how to deal with it…  by Donald Knepp  November 9, 2024

My first thought after seeing the election results and being a person involved in economics and trading was “A movement based on the Accumulation of Wealth can only be destroyed by a Destruction of Wealth. The markets are in Charge now, the Election is History”.

A few early readers of that sentence said I was being a neoliberal, way too cynical and angry, and not believing that Democracy could Fix Things. Maybe.

So, from an economic standpoint I believe the first thing for me will be to be clear eyed and cautiously ride the rapture wave that evolved on Wednesday, keeping in mind that this phase of the Trump transition is very dangerous as it is based on things that don’t work and could end abruptly.

So, we will be Bears at Heart and have analysis at hand to be strongly contrarian in our forecasts when the Crash signals appear.

___________________________   Insights   ________________________________

I don’t think it is very beneficial to try to find scape goats here.  This is just a broadening of the Republican thinking that started with Reagan in 1980, maybe adds two years to the saga before it all implodes.

The financial destruction of the bottom 70 % caused by the trickle down 1980’s Reagan policies has continued and has made many desperate. I do think the current issue of inflation was handled poorly by the Democrats. They failed to explain that a huge pile of money was thrown at the economy by the FED and the Administration during the pandemic to keep the economy from crashing and that weak congressional anti-trust action has allowed monopolistic companies to suck up that money by raising prices. In the end, ironically, the country is flocking to the same political group that created and refuses to regulate the problem areas.

I do think all the talk about “Elites” needs to be looked at in some depth. The Reagan Supply Side thinking was created to build Wealth Elites, and it has worked in spite of President Biden making some inroads into it by adding income to the bottom. The most amazing part of all this is that the majority of the people who make up the bottom 90% of the economy think that they will become part of the Elite under Trump. Think again about that.

The Democratic Elites are a much different issue. They are generally intellectual elites and invested way too much energy in talking about how stupid or weird Trump was. Back on September 29, 2016 I was one of the few that pointed out that Trump could beat Clinton, (check it out here). Trump and Deep Disruptive Change – Eureka Perspectives  Trump is smart and focused on his evil and immoral principles, and knows how to market them  

________________________ So, what do we do now? _____________________

 Why not just let things Play Out, adjusting the investment directions as they appear and keeping in mind…

The strong economic run of Joe Biden worked like a fine clock, it pulled in some crucial bills, the IRA and Chip Acts, etc.  This fine clock has drawn the markets up to a high but vulnerable level where any little Trump craziness like tariffs, dollar or interest rate problems, or climate based issues like flooding, fires, or wind could easily knock the underpinnings out from under the market.

And maybe most importantly, the Fed this time is going to take its time to let things unfold, the last thing they want to do is step in front of a burning train run by Trump.