The Presidential Election was supposed to end all the “uncertainty” that held back business investment and the economy. Instead, one uncertainty was replaced with many more.
The Big Picture
Thousands are still without power three weeks after hurricane Sandy decimated the Atlantic coastline. Hundreds of homes have been lost, life for many turned upside down. The economy will take a hit near-term, but longer term will benefit from the cost of rebuilding. While we’re at it, let’s get real about our energy delivery system and place power lines underground. Think of the jobs this would create, to say nothing of ending the cycle of storms, downed lines and no service.
The southern strategy died November 6, 2012. When the Dixiecrats left the Democratic Party in a huff after President Lyndon Johnson signed the 1964 Civil Rights Act, they hijacked the Republican Party. The south had been solidly Democratic thanks to that party’s defense of slavery and “state’s rights”. Dixiecrats turned the party of Lincoln into the solid republican voting bloc that was essential to winning the White house. And to win that bloc, one only had to employ the strategy of dividing the populace along racial lines. President Obama didn’t need the southern states to win a second term. Continuing that divide and conquer strategy is a fool’s mission.
But that reality hasn’t stopped the filing of secession petitions from all 50 states. Does it surprise you that Texas leads the charge in wanting to secede? Austin and El Paso citizens want to secede from Texas for wanting to secede from the U.S. And so it goes. While signing the petition may give some a warm feeling, the cold hard fact is that Texas receives $61 billion annually from the federal government. How will they replace that money? The states most desirous of secession get the most government aid, are the least-educated, poorest per capita, and a dwindling, aging population. Granny, get the cat food.
Or jump in the car with Thelma and Louise as they hold hands and plunge over a cliff. Washington’s own sequel to Thelma and Louise is our very own fiscal cliff – the end of the Bush-era tax cuts, the end of the 2% reduction in payroll taxes, forced spending cuts and other draconian measures designed to reduce the deficit while at the same time increasing unemployment and throwing the economy back into a recession. This is the result of failure to strike a grand bargain back in the summer.
Fear not. A compromise will be struck at the eleventh hour to avoid such histrionics. One unexpected outcome of the election was the realization that the electorate isn’t as dumb as had been thought. Voters are aware and remember who’s responsible for what. The old okey-doke didn’t work. Crying wolf has played out. And overplaying one’s hand has consequences. Remember the $10 in spending cuts for every $1 in tax cuts offer that was rebuffed? That deal is now back to $1 for $1 with no leverage, no wiggle room.
And speaking of no wiggle room, what’s Wal-Mart going to do for Black Friday? There have been threats of nationwide strikes on the traditional start of the Christmas/Hanukkah/Kwanzaa shopping season. Management and Wall Street are concerned and paying attention. Retail sales already took a hit from Sandy, translating into weaker economic growth, and the upcoming shopping period is when many businesses are hoping to recover.
Recovery may elude General Patreaus and his reputation. The less said about this affair the better. But the timing is unfortunate as we are now preoccupied with a sex scandal involving the CIA, the FBI and the loss of service of a veteran public servant against the backdrop of renewed fighting in the Middle East.
Globally, how will our economy be affected by the Israeli attack on Gaza? Crude oil prices could reverse the recent slide on any disruption of oil out of the Middle East. Rising oil prices will act as a tax on consumers and headwind to corporations, just when it appeared the economy was gaining momentum. It’s crunch time, indeed.
I, Investor
In the midst of it all, we still have a healthy dose of economic data to digest. The holiday shortened week kicks off with October existing home sales and housing starts and permits numbers. Wednesday we’ll get weekly jobless claims data along with October leading economic indicator series and November University of Michigan sentiment survey. Markets are closed Thursday for the Thanksgiving holiday and Black Friday will see an early close for stocks and bonds.
The following week has October durable goods orders out on Tuesday, along with the September Shiller home price index and November consumer confidence reading. Wednesday, November 28th, has August new home sales and the Fed’s beige book on the docket. Thursday’s weekly jobless claims report is joined by pending home sales data, revisions to 3Q GDP and 3Q corporate profits. The week and month ends with October personal income and consumption data.
Enjoy your Thanksgiving but brace yourself. More shock waves could be on the way.
SHOCK WAVES
The Presidential Election was supposed to end all the “uncertainty” that held back business investment and the economy. Instead, one uncertainty was replaced with many more.
The Big Picture
Thousands are still without power three weeks after hurricane Sandy decimated the Atlantic coastline. Hundreds of homes have been lost, life for many turned upside down. The economy will take a hit near-term, but longer term will benefit from the cost of rebuilding. While we’re at it, let’s get real about our energy delivery system and place power lines underground. Think of the jobs this would create, to say nothing of ending the cycle of storms, downed lines and no service.
The southern strategy died November 6, 2012. When the Dixiecrats left the Democratic Party in a huff after President Lyndon Johnson signed the 1964 Civil Rights Act, they hijacked the Republican Party. The south had been solidly Democratic thanks to that party’s defense of slavery and “state’s rights”. Dixiecrats turned the party of Lincoln into the solid republican voting bloc that was essential to winning the White house. And to win that bloc, one only had to employ the strategy of dividing the populace along racial lines. President Obama didn’t need the southern states to win a second term. Continuing that divide and conquer strategy is a fool’s mission.
But that reality hasn’t stopped the filing of secession petitions from all 50 states. Does it surprise you that Texas leads the charge in wanting to secede? Austin and El Paso citizens want to secede from Texas for wanting to secede from the U.S. And so it goes. While signing the petition may give some a warm feeling, the cold hard fact is that Texas receives $61 billion annually from the federal government. How will they replace that money? The states most desirous of secession get the most government aid, are the least-educated, poorest per capita, and a dwindling, aging population. Granny, get the cat food.
Or jump in the car with Thelma and Louise as they hold hands and plunge over a cliff. Washington’s own sequel to Thelma and Louise is our very own fiscal cliff – the end of the Bush-era tax cuts, the end of the 2% reduction in payroll taxes, forced spending cuts and other draconian measures designed to reduce the deficit while at the same time increasing unemployment and throwing the economy back into a recession. This is the result of failure to strike a grand bargain back in the summer.
Fear not. A compromise will be struck at the eleventh hour to avoid such histrionics. One unexpected outcome of the election was the realization that the electorate isn’t as dumb as had been thought. Voters are aware and remember who’s responsible for what. The old okey-doke didn’t work. Crying wolf has played out. And overplaying one’s hand has consequences. Remember the $10 in spending cuts for every $1 in tax cuts offer that was rebuffed? That deal is now back to $1 for $1 with no leverage, no wiggle room.
And speaking of no wiggle room, what’s Wal-Mart going to do for Black Friday? There have been threats of nationwide strikes on the traditional start of the Christmas/Hanukkah/Kwanzaa shopping season. Management and Wall Street are concerned and paying attention. Retail sales already took a hit from Sandy, translating into weaker economic growth, and the upcoming shopping period is when many businesses are hoping to recover.
Recovery may elude General Patreaus and his reputation. The less said about this affair the better. But the timing is unfortunate as we are now preoccupied with a sex scandal involving the CIA, the FBI and the loss of service of a veteran public servant against the backdrop of renewed fighting in the Middle East.
Globally, how will our economy be affected by the Israeli attack on Gaza? Crude oil prices could reverse the recent slide on any disruption of oil out of the Middle East. Rising oil prices will act as a tax on consumers and headwind to corporations, just when it appeared the economy was gaining momentum. It’s crunch time, indeed.
I, Investor
In the midst of it all, we still have a healthy dose of economic data to digest. The holiday shortened week kicks off with October existing home sales and housing starts and permits numbers. Wednesday we’ll get weekly jobless claims data along with October leading economic indicator series and November University of Michigan sentiment survey. Markets are closed Thursday for the Thanksgiving holiday and Black Friday will see an early close for stocks and bonds.
The following week has October durable goods orders out on Tuesday, along with the September Shiller home price index and November consumer confidence reading. Wednesday, November 28th, has August new home sales and the Fed’s beige book on the docket. Thursday’s weekly jobless claims report is joined by pending home sales data, revisions to 3Q GDP and 3Q corporate profits. The week and month ends with October personal income and consumption data.
Enjoy your Thanksgiving but brace yourself. More shock waves could be on the way.