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Consequences of the Mass. Election
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.
»
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The independent and centrist voters who supported Obama wanted a new Teddy Roosevelt. What they got was an ineffective FDR who has allowed two idiot Congressional leaders to destroy his presidency. Obama has a choice now: tell Reid-Pelosi to shut up and follow his lead or become a 3-year lame duck.
I disagree with most of your thoughts on Obama's choices going forwards. Obama, Reid and Pelosi are three birds of the same feather, and never stopped flocking together. Reid & Pelosi have been following Obama's lead from the start, and if anything, their forwardness has allow Obama to stand in the shadows while they handle the dirty work on his behalf.
I can't speak for the expectations of the American public, but Obama had FDR-esque policies in his sights from day one. Change was simply a catch-phrase designed to imply whatever the listener wanted to hear, while keeping Obama obligated to nothing. He openly discussed taxing the rich, "helping real working Americans," and instituting national health care- the sum of which blows past progressive politics and places him on the tipping point of socialist.
I do agree, however, that Obama needs to step back and decide which direction to take from this point forwards to ensure his remaining tenure isn't completely lost. Ironically, this seems remarkably similar to the position Bill Clinton was in back in early 1994, just before Hillary-Care failed and the Dems lost power in Congress.
What kind of "change" would we see if Obama started coming back to the center à la Billy Boy?
Good point regarding the similarities to Bubba in 1994. Unlike Clinton, however, Obama is tethered tightly to the liberal left and Clinton only pretended to be such when he needed to. So when he realized the '94 Congressional rout was all about the disaffected Center, he quickly moved there fast enough to save himself in the '96 elections.
Independents are a driving political force now.....much more so than in '94. They are generally centrists on social issues and conservative on fiscal issues. Events of the past year have the pro-Obama voters in that group feeling betrayed ( even though they shoulda' seen the radicalism coming ). You can bet the GOP theme will be about moving to center. The Dems are handcuffed.
I expect a bigger bloodbath for the Dems in November.
Obama became a lame duck on September 12th.
Totally agree with you gigeze787. President Obama needs to be a hell of a lot more assertive, shunning Pelosi and Reid, laying down his agenda for reform. But on the economy, which is what matters most, he needs to get rid of Geithner and Summers and replace them with guys like Michael Hudson (yeah, I am dreaming but hey, look at the crop out there!). At least put in Ken Rogoff who has served as Economic Counsellor and Director, Research Department of the International Monetary Fund, and knows a lot more about crafting balanced policies that take into account the needs of Main Street.
That assumes he is even capable of being more aggressive. The idea that he defered healthcare to Pelosi and Reid when he was (at the time) the most popular politician in a generation completely defies logic. He should have made that his own from the very beginning. Had he done so, then it would have been signed into law by the August recess. His deference is clearly an indication that he really has no idea how to lead. Nobody should be surprised by that either.
I actually see a small glimmer in this election's result.
Not a Dem' vs. 'Pub glimmer. I do not subscribe to that false paradigm.
Not a most folks are now very aware of the Fed's actions/monetary "policy." I am part of too many conversations each week where it is painfully obvious that folks still don't "get it."
No, the glimmer of hope I see is that 52% of those voters reached an incomplete state of dissatisfaction with the status quo. Although incomplete, this dissatisfaction still manifested itself in those people voting against status quo/incumbents/political machinism. This gives me a glimmer of hope that the sea change of widespread and well-informed dissatisfaction is much closer than I believed prior to last night.
Remember, there is strength in numbers.
Bruce,
Excellent article. I agree with you, everyone is focused on healthcare but the real story is Timmy G. His days are numbered so he is already preparing for his next job on Wall Street or "consulting" some hedge fund. Stimulus 2.0 looks all but a dead right now, but it depends on how the economic recovery unfolds. If it fizzles, the Dems will try cramming it through.
That's the point Leo, The cram down option is dead. It died last night in Boston.
That's the point Leo, The cram down option is dead. It died last night in Boston.
The stimulus fizzling is a foregone conclusion. Japan has great highways -- so much for those 'shovel-ready' projects.
It's an election in Massachussetts. Big F'n deal. People buried DC under a blizzard of faxes and phone calls against TARP and it didn't matter. They elected a black guy (!) as president and it didn't matter. The rhetoric may change a bit, but I suspect it will be BAU in Washington until people are physically replaced (in an election) or they are no longer able to write checks. Look at the states like Illinois. It is BAU until the credit card doesn't work anymore.
Where is Project Mayhem?
Good question. Should one look, he is no longer listed as part of the ZH team.
+1
Now is the perfect time to elect Republicans, so we have a Republican in the White House and in both houses in Congress. Then let's see how fast jobs do or don't get created. On a lighter note, someone should put the Cosmo centerfold in front of Sarah Palin and see if she knows who the man is!
You betcha! I think the Republican's track record on employment is pretty much self evident right now. Actors, alcoholics, weather girls and pin-up boys make shitty Politicians.
if you think there is difference between republican and democrat you are a fool. all theater for the sheeple. wake up world, our gov't was co-opted by the rich long ago.
your media is a lie. your gov't is a lie, in 2012 jesus is coming and there is no jesus fools. it will be a staged act as the global elites unleash biowarfare, famine, genocide, chaos...death and destruction on a massive scale. --- Idiots!
you can buy cheer or tide or vote republican or democrat they are both owned by procter & gamble.
Bruce Krasting takes an "it's all about me" approach to event analysis. He seems to think that the Mass election proves the issues that are important to him are also the pivotal issues in the election. Watershed, yes, Krastings' pet peeves, not so much.
I personally voted for Obama's implied populism. I will never vote for him again, because he turned tail and ran away from his promises (some real, some only implied, as I now realize). To me, his presidency looks too much like the one before him.
I would vote for a Democrat, if made in the image of Alan Grayson. I would vote for a Republican, if only in the mold of Ron Paul. Otherwise, I'll spend my energy getting ready for the meltdown, because our politics is broken.
+1000
Sorry you saw it that was. When I was writing it I was not thinking of me. I was thinking of us.
I would vote for a Democrat if it was Ron Paul.
+1
Here's what we want in Massachusetts:
A)Enough of the help to the TBTF and bankrupt
entities, whether it's through legislation, Treasury,
or manipulation of interest rates by the Fed
B)Enough of the "nice" legislation like health
care that we have lost the ability to afford due
to all the spending on A above.
C)Enough of Frank, Dodd, Pelosi, et al. We are well aware
of their central role in bankrupting the country.
D)Do we love Scott Brown? Is he the Republican messiah?
No....he was voted in by the Independent majority in
Massachusetts. Independents despise the epidemic corruption within BOTH parties.
Brown's been elected because he's not "owned" yet. The biggest error he can now make is to get carried away
with his own press and kowtow to the equally corrupt
Republicans. Look to Bernie Sanders, Scott, or be
replaced in two years. Good luck.
Bernie Sanders is nothing more than a free-lance Congressman-for-hire without political affiliation. He'll take money from ANYBODY!
Nothing is going to change for the better....
Until these occur.....
1) Banks separated from the securities business....banks have turned into hedge funds....they are supposed to be banks....
2) Tax structure change....
Eliminate individual/corp. taxes....
The US has to design tax structure to favor business in all sizes....
The US cannot continue to seek more from less....as this is certain demise....
Solution is clear....A 15% Consumption tax only...10% to the states....5% to the Fed....absolutely no other taxes of any kind....With this structure.....the US marches ahead in all types of manufacturing....
3) Removal of legal largesse....
The next phase is the age of business friendliness....not business destruction by lawyer ambulance chasers....
4) Removal of the FED lobbyist system....the power goes to the states who manage their affairs locally....and the population vote by internet on all project categories as to how taxes are expended....Wash. just becomes a focus of information.....and not power....the states hold the power....and the management responsibilities locally....
5) Education by internet.....basically no cost to students....
Education to the WILLING....
6) Health care....must exhibit pricing via the internet...and be subject to competition nationwide....states will vote how much they are willing to fund....if anything....
Completely disagree with no QE 2.0. The fact of the matter is it has to happen in order to prevent instant implosion. Besides, I would argue QE is one of the few things that can be done under the cover of ignorance in how monetary policy works.
Secondly, there will be a Stimulus II in the form of a state bail out. Tax revenue continues to decline and its the only option left.
Let's not get too excited about this vote. Cap and Trade or Carbon taxes will come in through EPA "regulations" as Executive Branch has usurped and will continue to usurp the Congress. Progessive agenda hasn't change and they will do whatever it takes to make the "right" decisions for the sheeple who don't really know how to run things (according to them). They have the power and will use it. It will mean higher taxes and more spending one way or another. Dollar is still toast and will be a lot lower in 6 months than it is today. Heath care "reform" will continue, even if not exactly as now. They just need to get the camel's nose in the tent...and they will.
groovyroovy
Spot on.
At the end of the day, this vote means nothing, in spite of what all the political pundits and MSM talking heads think.
The current ideologues in Congress are on a mission; they have the numbers; they have the battle plan. They won't be swayed by any "message" sent now- or in November.
And I don't have much faith in the electorate...yet.
I think this ( and the NJ and Virginia votes) were simply the American people telling Washington to wake up. The healthcare bill is pre September 18th politics, atavistic legislation that, while important to Obama and his party, is so out of tune with today's reality it boggles belief.
Piling new entitlements on top of existing ones while the existing ones are crumbling from the collapse in revenue confronting the government made me wonder if Obama and the Democrat leadership had any idea at all of the state of the US economy.
The American people want their jobs back and if that means Trade Wars so be it.
+1 well said
+1 well said
I suspect that the topic of conversation will soon shift from DC to the various states and localities and their massive shortfalls that will not be addressed this year as it was last with massive transfers to local governments under stimulus 2. This spring & summer will be the first time many citizens will have to come face to face with our fiscal realities and folks are gonna cry. From the projects to the board rooms the first real signs of belt tightening are coming and this will suck all of the O2 out of the air.
Of course the public mood souring by the nanosecond. What will public reaction be if mortgage securitization fails without the fed playing the role of the market? Will folks go for the standard line that "stability" is needed or will they say no and mean it? And what will happen when the reality sets in that taxes will have to go up and spending will have to go down, for years? There are many unanswered questions and I agree that vital time will be lost on a whole host of issues. The key will be in how rapidly the political class loses the capacity to act at all without total cynicism from a public that is rapidly losing faith that our social institutions and those of the two political parties who lead them can meet the challenges that lie ahead....
Would one be prosecuted for handing out flyers detailing outrageous salaries for local public employees? Would that be "inciting a riot"?
It has been true throughout human history that a term as sheriff sets one up for life....
Ha! I can see that. Openly armed politician.
Angry voters = Incumbant Pres In Trouble = Down Stock Market, Down $USD, Up Metals.
Watch out for Mr. O's hissy-fit, though...
Ponzi schemes fall apart, leaving chaos.
Chaos always looks like a lot of stuff from the old paradigm.
Until it doesn't.
Social Security is the prime example.
There is no escape.
I don't believe President Obama will be dissuaded from pursuing his radical socialist agenda. It's who he is and what he believes in.
Just about every other member of Congress who wants to have a job after the November elections probably didn't get much sleep last night.
The message of the election for the first time in a generation of a Republican Senator from Massachusetts filling Ted Kennedy's (the father of health care reform) vacant Senate seat is simple:
We, The People, hate your policies, we hate your politics, and we are revolting at the ballot box. Viva La Revolution!
+1
Obama will stick to his radical agenda, but Congress is going to be fearful in going that route.
We, The People, want our country back!
Wish I could find more of those Pt Eagles, Instant!
Kennedy was not in favor of Health Care Reform. He was in favor of Socialism, communism for the masses (but don't you plebes dare touch the fucking beachfront he doesn't even own with a windmill!) truth be told.
He wanted single payer government controlled (READ: Monomania for himself gone nuts) cradle to grave, forget about personal responsibility for his supporters.
I wish he were alive to have been thrown out on his ass.
What was disappointing was his homage to Ted 'Boyo' Kennedy.
Kennedy spent 30 years piling on national debt likely in the trillions for programs he couldn't or wouldn't raise taxes to pay for, where the people could have then said. "Hey! Wait a minute! I want something for nothing!! If you have to take my money to pay for these socialist programs giving you a bye, and give it to someone else, then you're outa here!!" Sparing us the trillions in unfunded liabilities and a saner approach to governance.
We'll see what he does, how long it takes to co-opt him. If he's truly one of us, "TheIndependents", we'll know soon enough if he's just one more dud. My cynicism is not on hold.
AS for ".... overestimating the public's understanding of the FED as the heart of darkness in this crisis..", you are being very generous to think that 1 in 100 people who vote (1 in 100,000,000 for those who don't vote)understand what the FED has done. I have yet to meet one of my associates who can tell me what the FED actually is supposed to do, and what they have done, and what it does, other than some iterating some lame-brained sound bites.
It's enough for me that thise vote was a bitch slap in the face of Dodd, Frank, Cox, TheBamster, Geithner, Bernanke, Rubin, Paulson, Kashkari,Friedman, Orszag, Gensler, and the rest of the Tribe.
Like it or not, the Swimmer is a God in Mass. Brown was simply letting everyone know that HE knows what the score is (i.e., a Republican taking over God's Democratic seat is an extraordinary turn of events), and whether one agrees with the old fart's policies/votes or not, Brown is getting a great job due to God assuming room temperature.
I wouldn't read too much into it -- it's just a way of showing the heavily Dem state that he gets it. No harm in giving the old goat a last hurrah even if he doesn't deserve it, and it generates something resembling warm feelings for those who might otherwise vote against him in the next general election simply because of the (R).
"-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."
INCORRECT - you are overestimating the public's understanding of the FED as the heart of darkness in this crisis
"But to me it means that the possibility of QE2 is done"
INCORRECT - without continued QE the game ends here and now, it won't happen.
"There will be no second stimulus bill."
INCORRECT - future stimulus will be positioned as "job creation initiatives" . The public will swallow it hook, line and sinker.
"I read the election result as being dollar positive"
INCORRECT - Uncle sugar knows the banks are insolvent, easing off the pedal of 0 interest and QE brings us back to square one and worse.
"Tim Geithner’s ship went down in Massachusetts."
CORRECT - Turbo Tax Tim will be offered as a sacrificial lamb to the masses at some point, this may have advanced the date of the sacrifice.
"I would not say the market is a screaming short. It is not, yet. It just got closer however."
CORRECT - Health Care "reform" failing will not be market positive.
"I can see how some health care companies might see a pop in their stocks for a few days. This group I would short."
CORRECT - They popped up in anticipation of the bill passing, they'll pop down in it's absence.
"There will be no fix on Social Security this year"
CORRECT - Brown or no Brown, they would have not been a "fix" in SS this year.
"There will be no significant steps to address the problems at the mortgage Agencies; Fannie, Freddie and FHA"
CORRECT - It's all about saving the banks, end of story.
"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. "
MAY BE - By the end of the day, what other choice do they have?
"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."
CORRECT - Sooner or later an "orderly" wind down of one of these TBTF is unavoidable. I vote for that toxic cess pool called City.
"The bailout mentality is over."
MAY BE - I'm not sure we're done with stealth bailouts yet
I agree with your sentiments Mr. Krasting. But...
Mr. Change will come to all the wrong conclusions from this election.
You see... Mr. Change turned into Mr. Slick less than 30 days after his election when he rolled out his economic team full of loser Rubinites.
Mr. Slick thought he could BS the public, lie about everything he campaigned on and do the opposite. He and his team of economic and political stooges (of which Rham Baby is the head political stooge) thought the Amerikan public were just too stupid to remember what Mr. Slick campaigned on.
Here is a clue White House bitches... we all have copies of Obullshit's "Blueprint for Change."
If you are going to lie out your ass so often people can't tell if it is your breath or whether you just farted... then maybe you should not put your bullshit the public plan in writing. You will hear another one of those disingenuous speeches about "I get it." Then Mr. Slick won't get it and screw the public some more.
Obama has done nothing but screw the public at every turn. But he and Summers will just come with another disingenuous deceptive plan. Remember, Mr. Slick and Fat Larry are smarter than us... just ask them.
Commiefornia only gets 78cents back on every buck it sends to DC. It needs that 22cents.
i agree that its dollar positive but disagree that its big bank negative. Whilst there may be fewer bail outs there will also be lighter regulation and I think that is marginally positive.
I think its going to far at this stage to proclaim the end to BB et al
Can all the fucking idiots please stay off the comments post with retarded comments like "lynch em" and boring polemics....
Spin spin spin. Coakley blew it! She ran the Hillary Clinton strategy: "it's just destined that I'm going to win so let's not get out there and feel the hunger".
This will be in the news for 3 days and then something else will appear.
Whether this is really a referendum depends on the precinct maps: if the eastern MA libs voted in a weirdo who thinks Obama was born out of wedlock, there's a problem. (Yes, he said that a year ago on a cable noise show.)
Brown knew that GOP is not popular either, therefore he labeled himself as "independent.: I hope this is the start of the coming"independent" movement, independent from status quo, wall street, military industrial complex.