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The Gridlock Myth
A number of market analysts have been celebrating the impending gridlock of the US government, brought about by the expected takeover of the House of Representatives, and possibly the Senate, by the Republican party. The expectation is that with a Democratic President in office for at least two, and possibly six more years, absolutely nothing will be achieved on the legislative front. The last time this happened was in 1994 when a Republican win left Bill Clinton twisting in the wind, heralding the onset of the greatest bull market of all time.
Think again. These days a little knowledge of history can be a dangerous thing. The last time we had gridlock, the federal deficit was a mere $4.8 trillion, the budget deficit was only $340 billion, and China was this far away place where you bought cheap custom made suits and ate spicy, but diuretic food. Our largest banks were relatively well capitalized and unleveraged. Ditto with consumers. Real estate was a bargain and on its way up. More importantly, the Internet was about to take off, the greatest productivity enhancing tool of all time.
Things are a little different this time. The national debt is at $13.6 trillion and rocketing. The budget deficit is $1.3 trillion. We are hopelessly tied up in two unwinnable wars that are bleeding us white. The big banks are de facto bankrupt, even though they refuse to admit it. Residential real estate appears to be a black hole that will extend for another decade. Consumers are chopping spending. China is eating our lunch. Worst of all, there is nothing on the horizon like the Internet to bail us out, as the money needed to create one, was instead spent on a gigantic paper chase over the last decade.
We are, in effect, trapped in a runaway Toyota, with the doors locked and broken, the accelerator stuck on the floor, careening towards a cliff at 100 miles per hour. This is not a great scenario to be stuck in. We have a host of major long term structural economic issues that gridlock assures will not be dealt with in any meaningful way. And guess what? Warning! The markets will figure out that gridlock is a disaster well before any analysts, commentators, strategists, or gurus do.
Be careful what you wish for. This is what lost decades are made of.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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No matter which of the nominated candidates we elect, this mess will not be straightened out by them any more.
Gridlock is preferable over more corrupt "fixes", which waste the last reserves we have and does nothing to improve the medium or long term outlook.
MHT is a fool. Gridlock would be infinitely preferable to what this Pelosi/Ried/Obama clusterfuck has wrought. I'm no fan of either party but the new congress will be under intense pressure to get a handle on the out of control spending. Spin 94 anyway you like but do I recall something about a balanced budget?
America won't have a lost decade. Once the food stamps and UE extentions are cut we will have a revolution.
We are the descendants of those who gave the king the finger, not people who worshiped an emperor as a living God.
Frankly, I don't see the John Adams and Benjamin Franklin for that.
We were Loyalists, employees of the Royal Navy in fact. Naval stores specialists. But those guys were damn smart.
What ??? Keith/Rachel, Bill Maher, Stewart/Colbert ???
And the Shays Rebellion farmer guys from Western Mass. are now TeaBagger Cult fool Kochsuckers.
Hey Mad,
If gridlock is such a problem, why don't we just castrate the current administration and elect 2/3 anti-Obama majorities in both the House and the Senate? The media (and possibly you) don't want this mentioned as a realistic possibility, but given the current sentiment in the electorate, this result isn't that far-fetched.
Not only that........it would be "unprecedented" (!)
as with Grin Bagel, I would be really interested in that link...thanks in anticipation
Its amusing how intimidated the current wussie generation is of China. Please name ONE technology or product that we rely on that comes from China? ( yeah yeah - they make Apple Ipods and Dell desktops - huh? )
So would you tell us again, Mr. MHFT, if you really believe this, why you recently gave over $30,000 to the Democratic Party? Vanity?
Unbelievable.
Fifteen years ago (1994) is a long time for a fiat currency, right about its half-life. The average life expectancy for fiat is about 37 years.
So we have 1933 (gold confiscation) to 1971 (Nixon closes the gold window) - 38 years; 1971 to 2008 (crisis in the markets) is 37 years. The USD is dying, that is the part you are not taking into account when talking about things.
In hopes that someone will please resend me the link to an article posted here that showed the connection of the Rothchilds to almost every Central Bank in the world . I have a researcher friend actively and successfully connecting the dots for the Rothchilds with the Rockefellers and the Nazi stolen money into the Daimler group of companies and would love to offer an additional resource direction. Zero Hedge, -Live long and Prosper!
After your 'researcher friend' has all the dots connected why don't the two of you sit down with a big, new box of crayons and color in all those pretty shapes!
And remember to try to stay inside the lines.
Junk
Done! Feel better now?
At least now we know where MadNameDropper stands; he wants the Pelosi/Reid train wreck to continue.
Or, to use his own metaphor, he wants to stay with the drivers that are steering the Toyota towards the cliff.
We had Republicans in control; things got worse. We put Democrats in charge of the White House, Senate and House. Things got still worse.
I'm pretty confident that MadSelfPromoter doesn't want to turn the nation over to Ron Paul and the Fed-Smashers. In that scenario, Wall Street and the paper-shuffling hedge funds get their wings clipped all the way to their avaricious little backbones.
Until the public grasps the full extent of bankster/politico perfidy, gridlock is our best alternative.
I'm beginning to thing MHFT is several people, given the schizophrenic investment sentiment.
Nah, he's just like the Mad Hatter. All those crazy people inside one big head.
ZZZZZzzzzzzzzzzzz.
Obama achieving nothing for the next two years is infinitely preferable to his administration achieving anything (more) for the next two years...thank you very much.
No more cowbell please, I am in fact fearing The Reaper. http://www.youtube.com/watch?v=_Mie9hhQTUM
I'd rather be poor and live in a broken down country with some semblance of personal liberty still intact than live through any more attempts at enlightened central planning.
And like with Toyota, if you bother to look beyond the hype you'll see that the problems were mostly the result of driver error. Although yeah, while we're on the analogy, I much prefer to be in an "old fashioned" car with a simpler, accessible engine and without mandatory, automated, electric everything...
BALANCE SHEET RECESSION.
Really. Look it up. Quantified and tagged by Dr. Richard Koo.
The Great Depression, Japan's Lost Decade with the end regions, plus what we got December 2007 to the present.
Not. Normal. Economic. Times.
This BALANCE SHEET RECESSION is also the one type of economic environment where the Keynesian prescription matches the basic need. National policy over the part two years held off a depression and kept unemployment within reach of acceptable performance.
Get back to normal economics, then the Chicago/Freidman system works just fine. Not now. No way.
Economics 101 ??? Not exactly. Standard undergrad/grad macroeconomics just about everywhere/worldwide -- yes, indeed. [ Holy Grail of Macroeconomics. ]
So....even more cowbell then?
We don't have 2 more years to solve the current crisis ... and neither Congress nor the President will solve it for us! They are all complicit in the massive fraud and only half of Congress is even up for election.
Even before the next Congress takes to the floor on January 3rd, the lame duck session between the election and the end of the year is the biggest danger of all ... they have nothing to lose in passing ANY laws to bail out the banksters, and can pass trillions more taxpayer dollars to the banks!
...and they probably will. Hopefully the fear of the pitchfork and (for Obama) the threat of impeachment will have at least some moderating influence.
The banks themselves need to be dissolved. I don't even care about the bankers themselves anymore.
The administration is stalling for the statute of limitations to expire on tens of thousands of rich people going to prison.
I'd hardly call that doing nothing. They are containment, pure unadulterated containment of fraud, and keeping the lights on at the Federal Reserve Bank of Complacent Treason..
hey oldman.. hire a someone to re-read your junk
#the federal deficit was a mere $4.8 trillion, the budget deficit was only $340 billion,
it was federal budget... not 'federal deficit'
alx
Back again, fuckwit?!
It was the national debt, not the 'federal budget'.
Go away ... you're wasting internet bandwidth with your childish junk posts!
Junk
I thought it was interesting.