• Steve H. Hanke
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Now What Mr. President?

Tyler Durden's picture




 

From Bill Buckler, author of The Privateer

Now What Mr. President?

There are two major differences between the 2012 Presidential election and its predecessor in 2008. The first one is the fact that there was no incumbent in 2008 while in 2012, Mr Obama is gunning for a second term. The other and MAJOR difference is the state of the markets in the run up to these two  elections. 2008 marked the first time in modern US history when the financial establishment literally lost control of the financial markets. So dire did the situation become that there were “bipartisan” meetings between the contending candidates while they were still competing for the Presidential prize. Both Mr Obama and Mr McCain had to approve the extraordinary measures taken by the Fed and the US Congress to deal with the crisis. Without that, the “fixes” could not have been credibly put in place.

In 2008, the Democratic convention took place over the four days of August 25 - 28. At that time, the weakness in global markets in general and in US markets in particular was not yet front page news. The Dow had certainly fallen from its all time highs set less than a year earlier, but the carnage of the global credit freeze was still in the future. In fact, over the four days of the convention, the Dow actually rose by 329 points or 2.9 percent from 11386 to 11715.

By the time Mr Obama was elected on November 4, 2008, the Dow had plummeted to 9625, its lowest level Since October 2003. By the time he was inaugurated on January 20, 2009, it had fallen to 7949, its lowest level since March 2003. A market meltdown of such magnitude during a US Presidential election year had not been seen since 1932 - and that one had bottomed in June - months before the election itself.

Six weeks after Mr Obama’s election in November 2008, the Fed came to the end point of their “conventional” monetary policy. On December 16, 2008, the Federal Open Market Committee (FOMC) lowered the Fed’s controlling Funds Rate to 0.00 - 0.25 percent. This is the only “constant” in the fiscal and monetary policy of the US government which has survived Mr Obama’s term as President. The Fed Funds Rate remains at 0.00 - 0.25 percent and the FOMC assures us that it will not budge until “mid 2015 at the earliest”. Thanks to this policy - and the addition of a number of “unconventional” monetary policies of which QE is merely the most obvious - US and world markets have recovered.

The 2008 elections were contested on the basis of rescuing the banks and financial markets while claiming that this was ESSENTIAL to save the economy. Four years later, the 2012 elections are being contested on the basis that the economy HAS been saved, but more needs to be done to ensure that it  STAYS saved. Wall Street, as one of the first recipients of the new “money” cascading from both the Fed and the Treasury, has been happy to buy this. Main Street does NOT buy it. The result is an election campaign in the context of a comparative calm on financial markets and a seething discontent in the electorate.

...

Since the 2012 election has an incumbent Democratic candidate, the “important” convention this year was the one that the Republicans held between August 27 - 30 in Tampa, Florida. Over the four days of this convention, the markets barely moved. The Dow closed at 13124 on August 27 and had slipped marginally to 13000 by August 30. On October 26, with the elections just over a week away, the Dow closed at 13107. On the surface, this seems to indicate that the US financial (and political) establishment has learned their lessons of 2008 very well and have made absolutely sure that there would be no market calamity to cloud the “real” issues of the campaign. The problem with this interpretation is that the Fed set off on its third round of “quantitative easing” six weeks ago and the new “money” has had no market effect.

The American people have waited for the “recovery” they have been promised for four years. They have seen the official government figures “measuring” this recovery and the rebound of the financial markets from their early 2009 lows. Neither of these things has convinced them that any REAL progress  had been made in getting the real economy back on its feet. This is the problem - for BOTH candidates.

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Sun, 10/28/2012 - 10:20 | 2925088 ReptilianSlaveMaster
ReptilianSlaveMaster's picture

Benny will bring the ink cartridges, I will bring the beer.. Let the party begin!

Sun, 10/28/2012 - 10:24 | 2925096 in4mayshun
in4mayshun's picture

It just doesn't seem right that ZH is hosting pop up advertisements for JP Morgan Chase....

Sun, 10/28/2012 - 10:32 | 2925113 Tyler Durden
Tyler Durden's picture

There was an RFP sent out to the Fed as well. No response so far...

Sun, 10/28/2012 - 10:43 | 2925130 kaiserhoff
kaiserhoff's picture

I doubt they have the cajones, but it could be fun.

Sun, 10/28/2012 - 11:08 | 2925156 kaiserhoff
kaiserhoff's picture

I could be wrong.  They have plenty of chutzpah.

(If you haven't read, Yiddish For Your Dog, both mean balls, but the latter carries much more snark and arrogance.)

Sun, 10/28/2012 - 11:17 | 2925185 disabledvet
disabledvet's picture

Bankers need friends too you know...

Sun, 10/28/2012 - 11:25 | 2925204 kaiserhoff
kaiserhoff's picture

Sure, but it's the same as chicks.  It looks better if you pretend not to buy them.

Sun, 10/28/2012 - 10:53 | 2925149 willwork4food
willwork4food's picture

Let's pretend party like it's 1929!

Sun, 10/28/2012 - 11:43 | 2925241 Uncle Remus
Uncle Remus's picture

Request For Print?

Sun, 10/28/2012 - 10:21 | 2925089 bubbleburster
bubbleburster's picture

Sort of off topic, I just caught this news.

 

http://www.cbc.ca/news/business/story/2012/10/26/rbc-libor-probe.html

Sun, 10/28/2012 - 10:22 | 2925092 kaiserhoff
kaiserhoff's picture

Peggy is past her prime, some would say past her expiration date, but she still nails it now and then.

http://online.wsj.com/article/SB1000142405297020453050457807923219450970...

 

 

Sun, 10/28/2012 - 10:58 | 2925128 kaiserhoff
kaiserhoff's picture

My favorite talking head comment.

"The split screen is not kind to Obama."

Sun, 10/28/2012 - 11:07 | 2925167 FMR Bankster
FMR Bankster's picture

The Obama flood wall is being breached everywhere. This morning the Minneapolis Star Tribune (the infamous RED STAR)know for it's left wing views had their poll with Obama up 47 to 44. The Des Moines Register endorsed Romney, their first endorsement of a Repubican for President in 40 YEARS. Polls in Michigan and Pennsylvanis show Obama up but with less than 50%. Romney 52%, Obama 47%.

Sun, 10/28/2012 - 12:01 | 2925290 Colonial Intent
Colonial Intent's picture

Romney 2012, putting the white back in the white house.

Sun, 10/28/2012 - 12:12 | 2925319 Offthebeach
Offthebeach's picture

"Peggy" Noonan, the white wine and cats Cougar, the Moreen Dowd of the WSJ, Obama Wet-My-Depends is trying to savage her gig.

Another demographic Obama's lost. The single, White women Depends Panther vote.
Obama getting tosses under the Lexus with Florida plates.

Is there any demographic that Obama has increased?

Sun, 10/28/2012 - 10:31 | 2925100 earleflorida
earleflorida's picture

what do you mean both candidates? this proplem is of Obama's making, period!-- and romney's to fix!

go romney!

Sun, 10/28/2012 - 11:33 | 2925219 JustACitizen
JustACitizen's picture

Geez - you can't be this limited. Do you mean Mitt "I've got 90% of all Wall St. Political Donations in 2012" Romney? You really think he's got your best interests in mind - or the nation as a whole even?

Listen - you and all of your friends are at best a microscopic side issue to both candidates and both parties are responsible for the bulk of the problem and the situation we are in. People like you - always waiting for the cavalry to save them from the gays, the flag burners, the feminazis, the blacks, the zombies, the this-the that - are and have been contributing to this situation as well.

Dude - the cavalry is not coming. The kleptocrats/oligarchs are in charge of your country, your state and possibly - your life.

Take care of yourself, your family and your friends, but put away any notions of the President and Congress improving the situation. My best wishes to you and yours.

 

Sun, 10/28/2012 - 10:28 | 2925101 Robslob
Robslob's picture

"Wall Street, as one of the first recipients of the new “money” cascading from both the Fed and the Treasury, has been happy to buy this. Main Street does NOT buy it."

Uh...wrong...mainstream is eating this up like hotcakes or else Obama would have been thrown out of office and bankers imprisoned for treason long ago...

SNAP cha-ching....!


Sun, 10/28/2012 - 10:44 | 2925133 odatruf
odatruf's picture

I'm not sure eating it up is right. I think they (we) are petrified about the situation and are willing to mimic and follow anyone who even hints at knowing what to do.

I'd argue that deep down we know they don't, but that would leave us without hope.

When I say us and we, I am speaking broadly. Clearly some, including many on here, are exceptions.

Sun, 10/28/2012 - 11:26 | 2925205 disabledvet
disabledvet's picture

what is interesting is how 2008 was a made to order "1929." (Senator Schumer stating just that btw) save that it hasn't been. What is the difference? hard to tell actually...outside of no arrests being made. A bait and switch? Clearly the US economy isn't 1929! I would argue the biggest "stand out" is the size of Government itself...and trying to argue that Wall Street will "pay for that" is patently false as to be a bad form of "sticking it to your constituents." There is a point where "the constituents stick it to you." (2010) and perhaps "con gusto." (2012) Clearly the big loser has been any of those for whom this Administration purports to represent...namely the Urban League. How do I heat that City? How do I power the grid? How to distribute that benefit check? How do I reform that Agency? These questions have always remained...unanswered...and now funded "by a trillion dollar deficit" that is eating away at the very....

Sun, 10/28/2012 - 10:29 | 2925103 Hedgetard55
Hedgetard55's picture

" Thanks to this policy - and the addition of a number of “unconventional” monetary policies of which QE is merely the most obvious - US and world markets have recovered."

 

Not priced in gold they haven't.

Sun, 10/28/2012 - 12:33 | 2925353 Offthebeach
Offthebeach's picture

We, Muppets, are about 5 million jobs short, each year. Or 15+ million job/ year inconvenience short. And still short for at least the next couple of years. Maybe, best case, 20-30 million job/years lost. Forever.
Trillions of dolars and tens of millions of families of housing savings, downpayments, mortgage payments and credit ruined. Lost. Forever.

Tens of millions of stagnent income, backward income for years and years to come.

Purchasing power and savings value of everyone, trashed.
Pensions, retirement, trashed.

Record doubling of food line, soup line food stamps, and for years to come.

Food riots all over the world.

Record enslavement of young to Professor Obama's fellow academic/ serf industry. For years to come.

Some freek'n recovery.

Sun, 10/28/2012 - 15:28 | 2925650 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Ah, I remember the days when the mere idea of "QE" by the Japanese was viewed as a dangerous science experiment with unknown consequences. Japanese real estate and equities are down 70% in the meantime. And the "concept" of QE is now normalized...

Sun, 10/28/2012 - 10:30 | 2925104 Extremetrader1
Extremetrader1's picture

I would love to see an electoral debate where the parties are held accountable for their actions and promises.  It would probably last 10 seconds as all that would be said is hello and goodbye.

 

Why not put a rational system in place whereby elected officials are held accountable to their promises.  In the real world, if you miss your targets and ignore milestones...you get fired!  Please clarify why elected officials cannot be charge for fraud for misdirection.

Sun, 10/28/2012 - 10:44 | 2925134 yoda585
yoda585's picture

"Why not put a rational system in place whereby elected officials are held accountable to their promises." That's a perfectly rational thought, except such a change would have to be made by the same ruling class that would then be held accountable. They don't have time to rule themselves more work; they're too busy trying to figure out how we can work more to serve them.

Sun, 10/28/2012 - 11:36 | 2925227 disabledvet
disabledvet's picture

you can't fault the political system for trying. how much do we pay these people for? it's ridiculous given the size and scope of the Special Interests arrayed against them. What folks here should be asking for...indeed what every Congressman should be demanding...is an immediate increase in the amount of money allowed to create staffing...at least as far as Government goes. It is ridiculous to think that somehow any wrongdoing at all can be investigated by the people you elect with only...five guys and subpoena power. Oh, and did i forget to mention no one has been arrested for say "blowing up the entirety of Ohio's economy?" And profiting from that? No? Ooops...must have slipped my mind again. Our current houses are WORTHLESS for a reason. The fact that "we must wait for new houses" before "value is restored" says an awful lot about how big a hole Wall Street had dug...is it for itself too this time?

Sun, 10/28/2012 - 12:04 | 2925306 Colonial Intent
Colonial Intent's picture

Thought Crime!

We have your address, drones en route.................

Sun, 10/28/2012 - 16:24 | 2925806 OneTinSoldier66
OneTinSoldier66's picture

Here, this might help...

 

http://www.youtube.com/stefbot

Sun, 10/28/2012 - 10:30 | 2925109 centerline
centerline's picture

Just watch... Eventually, more and more people are going to stop getting jacked by unsolvable social issues like race, gay rights, abortion, etc. and turn to focus on the economy, government spending, what politicians are really doing, and so forth.

Sun, 10/28/2012 - 11:54 | 2925275 Rainman
Rainman's picture

Good point, but all of these tail-chasing social issues are marketed by well paid pimps....thus will last forever. I'm still looking for a start-up team willing to lobby the valid grievances of straight middle aged white guys. No takers and no interest.

Sun, 10/28/2012 - 17:47 | 2925962 tsx500
tsx500's picture

yes , but by that time , it will be too late .

Sun, 10/28/2012 - 10:30 | 2925110 pauhana
pauhana's picture

Unfortunately, instead of watching the first debate, most Americans were enthalled with Honey Boo Boo.  Basically, this election is boiling down to who folks like best, regardless of the profound effect that person will have on our collective future.  And with all the negative ads, it is amazing that anyone still votes.

Sun, 10/28/2012 - 10:36 | 2925120 Caggge
Caggge's picture

Is this election coming down to who folks like the best or who folks hate the least? I can't really imagine anyone liking Willard.

Sun, 10/28/2012 - 10:31 | 2925112 Downtoolong
Downtoolong's picture

This is why I cast my vote early last week for Ron Paul. Call it a protest vote, wishful thinking, whatever. It’s my vote.

 

What sad commentary of our political process that I had to write him in on my ballot. How can someone with his congressional experience, and who’s ideology is so focused on the leading problem in our economy, not even be listed on the ballot? It just shows how corrupt, manipulated, and lame our political system really is.

 

I simply can’t vote for a candidate, Republican or Democrat, who chooses to ignore the abuse of our monetary system by Wall Street and crony capitalists at the expense of the middle class. I’m a better American than that.

 

Sun, 10/28/2012 - 10:39 | 2925124 duo
duo's picture

I love what RP said when asked about running third party - "why don't even have a second party, why do we need a third?"

Sun, 10/28/2012 - 10:40 | 2925126 Hubbs
Hubbs's picture

I here you loud and clear. As one who is determined to vote for neither Robomnies, how did you decide between Paul vs Johnston? 

Sun, 10/28/2012 - 10:37 | 2925121 Long-John-Silver
Long-John-Silver's picture

Every October 31 since 1936 a Seance has been held in an attempt to bring Harry Houdini across the death threshold so they could speak with him. They have a better chance of succeeding than we have of getting out of this Depression before a total collapse.

Sun, 10/28/2012 - 10:47 | 2925137 daz
daz's picture

the economy recovery will happen after the day zerohedge cleans the forum spam. hopefully this decade.

 

 

 

Sun, 10/28/2012 - 10:48 | 2925138 VonManstein
VonManstein's picture

gold bottom november. SPX tops out?

http://twitpic.com/b87nr3/full

Sun, 10/28/2012 - 10:48 | 2925140 papaswamp
papaswamp's picture

Off topic...Hot rumor in military circles is prez was in the room when Benghazi was live. Something to break Monday morning. Someone will be the fall guy.

Sun, 10/28/2012 - 10:56 | 2925153 d edwards
d edwards's picture

It's increasingly clear that BO WAS in the situation room watching the attack go down in real time-and did nothing but watch our people die.

Who's he going to pin it on?? Gutless bastard didn't want anything to upset the elections, but it already is and far worse than if he had taken action.

Sun, 10/28/2012 - 11:05 | 2925165 nmewn
nmewn's picture

He went to bed not even knowing Stevens and the others fate. He didn't authorize a Spectre gunship, an armed drone, F16's from Italy or anything...nothing.

Nothing.

Went to bed.

Our Commander in Chief.

Sun, 10/28/2012 - 11:10 | 2925173 francis_sawyer
francis_sawyer's picture

Come on man... He had an early tee time the next day...

Sun, 10/28/2012 - 11:14 | 2925181 nmewn
nmewn's picture

Yeah...and a fundraiser to attend in Nevada...he made sure he was well rested for that.

Its inexcusable.

As Biden would say..."This is a big fucking deal man." This isn't goin away...its dereliction of duty, if he were in the military he'd be court martialed.

Sun, 10/28/2012 - 11:38 | 2925231 Thulsa Doom
Thulsa Doom's picture

The early news shortly after the massacre indicated Obama went to bed, and yet since then it is never mentioned, even this morning on the Sunday shows. Perhaps that is the real reason for all the confusion for the past six weeks - they needed to somehow cover-up all the mistakes and lies made due to the fact the commander in chief was literally asleep at the switch, so no one made any decisions to send help because it would be their ass on the line and they were unwilling to do that for the sleeping president? I just find it strange that the fact Obama went to sleep has not been raised since shortly after September 11. I wouldn't be surprised if Obama uses sleeping pills to get his much needed rest for campaigning, and they couldn't wake him.

Sun, 10/28/2012 - 13:21 | 2925441 Things that go bump
Things that go bump's picture

It is rumored that he often does not attend meetings and that he spends a great deal of time watching sports.  

Sun, 10/28/2012 - 13:54 | 2925499 Offthebeach
Offthebeach's picture

He only choomed the pipe heavy , and vegged on the couch from age 13 until his second no-vote year in the Senate. He's been a real go get'er since then. Honest. Clean. 420 free. Just, tired. Stress you know?

Sun, 10/28/2012 - 11:31 | 2925217 The Navigator
The Navigator's picture

Is it the House or Senate that initiates Impeachment charges?

Sun, 10/28/2012 - 11:40 | 2925236 Uncle Remus
Uncle Remus's picture

Knesset.

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