The Dow plunged 313 points yesterday, but don’t believe news media reports that it was the nearness of the “fiscal cliff” that caused the selloff. What spooked investors is a bigger picture that recognizes the economically catastrophic implications of a second Obama term. To be clear, there is nothing Romney could have done to avoid the deflationary Depression that lies ahead. However, a Romney presidency might have at least served as a reality check on malfeasant fiscal practices, delaying the onslaught of hard times for perhaps long enough to allow Americans to put their financial houses in better order before austerity is imposed on us with the force of an earthquake, as it has been on Europe.
We’re not going to dwell on the choice Americans made on Tuesday. Suffice it to say, the election has substantiated conservatives’ worst fear – that, sooner or later, Big Government’s clients would come to outnumber those of us who pay for the criminal extravagances of their voracious welfare state. Actually, it turns out they needn’t have outnumbered us, since the quirks of the electoral college have enabled them to execute a coup even though they lacked a statistically significant majority.
Bread and Circuses
Now, with a $16+ trillion federal deficit that is growing by more than a trillion dollars per year, the nation’s descent toward insolvency can only accelerate, further widening the gap between tax revenues and outlays. Soaking the rich, even by taxing them at 100%, would not begin to arrest the decline, but just try to tell that to those who voted for Obama. Bread and circuses will be their reward, and far be it from us to predict that they will feel unsatisfied. Rather, the opposite should hold true, since it will not have cost the 47% a dime.
As far as the stock market is concerned, we were quite surprised to find some bullish opportunities in the dozen or so charts reviewed in real time during a “Hidden Pivot Analysis” session held Wednesday morning at Rick’s Picks. Amazon, Priceline and Facebook, among others, look promising, suggesting these companies, and presumably a few others, may be able to buck a depressionary tide, perhaps by focusing on nickel-and-dime sources of revenue. If you’re interested in the details, as well as the reasons for our bearish outlook on the broad averages, a recording of the session is publicly available. [4]