Streetwise

Lauren Rudd

Sunday, November 7, 2010

Some Thoughts on the Election

Although the recent election is viewed by many as a wake-up call for a change in policy and leadership, let’s remember that the Great Recession was an inevitable result of banks and other financial institutions irrationally gambling away billions of dollars of other people’s money. They then came to Uncle Sam (you and me), hat in hand, begging for assistance.

Enabling the aforementioned carnage was the systematic dismantling by Congress of the regulations enacted years ago to prevent a reoccurrence of the abuse by Wall Street that led to the Great Depression. What is lost sight of is that the dismantling occurred well before the current Administration.

However, that was not the sole reason for the ongoing economic dislocation. Years of continuing military conflicts, funded by unadulterated deficit spending, combined with a tax reduction program that was heavily weighted towards the wealthiest five percent of the nation, rang the death knell for anything approaching fiscal responsibility.

Furthermore, believing that the ultra-wealthy play a significant role in job creation and that by reducing their taxes you will reduce unemployment goes beyond voodoo economics and well into the realm of ignorance.

Nonetheless, was it not reasonable to expect Congress to act rationally and with due haste to repair the damage of its shortsightedness? Regretfully, such expectations were naïve and in error.

Instead of buckling down and trying to get the economy back on track with the necessary safeguards reinstated, Congress acted in a manner that was a cross between the high jinxes of intoxicated college students and the irascible feud between the Hatfields and McCoys.

In return, an angry electorate let its voice be known. Based on quotes from voters around the country, they did not really care who won, as long as it was not the people already in office. Unfortunately, the cure has every indication of being as bad as or worse than the disease.

A political agenda from the past, now additionally tainted by an outpouring of money from both large corporations and their lobbyists, has once again found residence within the House of Representatives and is knocking on the door of the Senate, not to mention the governor’s mansion in a number of states.

As many have drawn on the Scriptures during the campaign for justification of a position taken, let me offer up some words from Luke 22:34, "Forgive them; they know not what they do."

My home state of Florida is an excellent example of voter angst. Swept into office is a veto proof Republican majority in the State legislature and a Tea Party governor. Suddenly there is nothing to hinder the legislature’s previously stymied efforts to implement Arizona-like immigration laws, to end teacher tenure and reduce funding for education, severely restrict abortion, remove growth management and environmental controls, eliminate regulation of the insurance industry and abolish corporate taxes.

On a national level, Mitch McConnell, the senior Republican senator from Kentucky, (assisted by newly elected Kentucky Tea Party senator Rand Paul) has been quoted repeatedly as to what he believes is the most important task facing the Republican Party and the Senate over the next two years. Is it jobs, or the deficit, or the national debt? No, the highest priority is an all-out effort to ensure President Obama is a one-term president.

So how does all this affect you the individual investor? Could it be that now is the time to hunker down? Absolutely not, Wall Street will love what is taking place, particularly with regard to the proposed emasculation of the recently passed Dodd-Frank financial reform bill.