Tuesday, May 13, 2008

Bob Barr Joins the 2008 Race

There are two ways of looking at Bob Barr’s accepting the Libertarian Party’s nomination to run for President, the first is that IF Bob Barr can successfully swing enough Conservative voters to the LP column, Barack Obama (the presumptive Democratic nominee) will cruise to an easy victory, the second is that Bob Barr will not garner any more votes than any other LP candidate normally does and will have pretty much no impact, especially considering the fact that most voters KNOW that voting for a “Third Party” candidate tends to benefit the candidate that voter likes least.

Of course, there IS a third way of looking at the Bob Barr candidacy and that is from an investor’s perspective.

We’ve had a quarter century of unprecedented prosperity largely due to our turning away from the “Big Government” Keynesian policies of the late 1960s and 1970s and embracing more market-based Supply-Side policies.

Wary investors are “shorting the American psche” right now. That is, investors are seeing that many Americans have come to take the prosperity that Supply Side policies have delivered for granted and are entering a cycle where they are growing less wary of big government and more demanding of governmental solutions.

Both Houses of Congress are now in the hands of Democrats. Liberal Keynesians now run the Democratic Party. Electing a John McCain may very well NOT do much, if anything to stop the spread of Keynesian policies...and the inevitable economic malaise that comes along with them.

So why not elect the most Liberal Democrat to preside over such a disaster?

Seriously, if we’re going to have a real economic downturn, isn’t it best to saddle a Liberal administration, with a largely Liberal Congress with that disaster?

But won’t the Liberal Keynesians just claim that it’s “the costs of the war” and other “inherited problems” that led to the downturn?

So what?

That never works. It didn’t work for G W Bush and he inherited a recession that began with the NADAQ implosion in the Spring of 2000...AND he inherited a radicalized Muslim menace that had been ignored over the previous decade...AND he inherited a slew of business scandals (Tyco, Worldcom, Enron, Arthur Anderson, etc) that broke in the summer of 2002.

When the people are hurting, they don’t look for nuance. When the economy tanks, the people running government AT THAT TIME take the blame...and the corresponding fall.

Well, shouldn’t people like yourself be fair about things? After all, YOU did continuously make the point over the past seven years that the current administration inherited many of those problems, you wouldn’t do the same going forward?

Of course, I’m going to be fair. BUT, the wars in Afghanistan and Iraq have NOT brought on any major economic dislocation and they HAD to be fought, as radicalized Islam NEEDED to be confronted!

The worst of the housing bubble will have occurred a full six months prior to the next administration’s taking office, whereas the NASDAQ collapse was in full effect, and just began taking down the DOW as the Bush administration took office.

I’m sorry, but if there’s going to be any major economic dislocation going forward it’s going to be BECAUSE of the Liberal Keynesians allowing the Bush tax cuts to sunset in 2009 and 2010, and their increasing government spending as tax revenues contract, as more higher income earners defer more of their incomes in various tax deferred vehicles.

In other words, IF there is going to be a major economic dislocation post-2009, it’ll be due virtually entirely to Keynesian policies and it will be incumbent upon fair-minded people to place the blame squarely where it belongs – on those failed Keynesian policies!

So, from an investor’s standpoint, (1) money can be made from “shorting” the American economy, just as surely as “buying” it and (2) if we are going to be saddled with Keynesian policies anyway, why not have a true Keynesian (like an Obama) in the WH when they fail and then heap all the scorn and blame on him and his fellow Liberal Democrats?

Why not, indeed?

In many ways, the investors viewpoint is the clearest. IF we are going to get a switch to a more Keynesian styled approach, then why have a John McCain in the WH to muddy the water and allow the media to erroneously blame the “Conservative” (even though he’s not) John McCain?

With a Barack Obama, already over-hyped and over-promising at the helm, and with both investors taking their money OUT of the market AND higher income earners deferring more of their income in tax deferred vehicles, he’ll be faced with both DECREASING job creation and DECREASING tax revenues, a veritable “double whammy.” Under those conditions, an already fragile economy (as the one we have now and will have through the rest of the year, even as job creation increases, though home foreclosures reach their peak in July 2008) may not be able to avoid being plunged into a severe downturn.

Under that scenario, midway through Obama’s first term, we would witness Carter-styled Stagflation, with near double digit unemployment, double digit interest rates and double digit inflation. At that point even the MSM would bail on the Liberals they once helped elect. THAT would spell doom for Keynesianism and for the Liberal Democrats who advanced it, perhaps opening up the Democratic Party for a takeover by the Conservative “Blue Dog” Democrats.

Could investors be insuring a Keynesian winner in 2008?


Seane-Anna said...

Hey, JMK! While it would be nice to see a liberal Dem president take the blame for disastrous Keynesian economic policies, I'm worried about all the other damage such a president could inflict, especially on the war front. I don't know if I want to take that risk with America's future.

JMK said...

No question Seane-Anna, but consider this, with McCain, we'd have a Keynesian-friendly GOP President, who could deflect a lot of the blame for the Democratic policies. The Dems control BOTH Houses of Congress and are poised to let the Bush tax cuts expire...which will be disastrous.

As Larry Kudlow (a great Supply Side economist at http://www.kudlowsmoneypolitics.blogspot.com/) says, “(McCain’s) cap-and-trade strategy unveiled this morning is very hard for conservatives to swallow. The whole cap-and-trade experience in Europe and elsewhere reveals that this is a huge government command-and-control operation that taxes, spends, and regulates on a grand scale. The “cap” part rolls back production to an extent that undermines economic growth. The European cap-and-trade plans are prohibitively expensive, and are themselves hostile to economic growth.”

Kudlow then asks, “One of my big concerns is the competitive disadvantage that cap-and-trade would put American industry versus industry from China, India, and other developing countries. If we put this new tax on our American companies, for the electricity and energy that they use, aren’t you going to see a migration of capital and jobs out of the United States to countries like China and India?”

I'm not looking forward to economic dislocation or a possible "Carter-redux Seane-Anna, but I see the storm brewing and if we're destined for it, at least let the blame fall where it belongs!

THAT may be the one saving grace (albeit a small one) of a Liberal Democratic (Obama) Presidency.

With Rangel (leading the Ways & Means Committee) the tax cuts ARE going to expire and that'll set the stage for more economic woe in short order.

I'm not rooting for it and I'm not looking forward to it, but bad policies beget bad results and the Liberal Dems are indeed advancing bad policies.

IF we're going to get a Democratic inspired economic meltdown, then I'd rather see the Liberal Dems get all the blame for it.

I'd love to see the GOP take back the House and be able to extend those tax cuts, but I don't see it in the cards....and tax hikes, coupled with social spending increases = economic disaster.

Rachel said...

What I'm worried about the new GI Bill - they're setting up both W (too late) and McCain for a fall by the Democratic congress. What do you think about that?

JMK said...

Absolutely right Rachel!

I wanted to post about that, but I've been working the past couple days and have had very limited time online....working again tomorrow (Thursday) too, but I'm off Friday.

The article I read, said in part, "The Defense Department is lobbying against legislation proposed by Sen. Jim Webb, D-Va., that would guarantee a full-ride scholarship for service members to any in-state public university. According to defense officials, the plan would hurt its ability to retain service members because the new GI education bill would require only three years before the full benefit kicks in. The Defense Department wants the commitment to be extended to at least six years."

As you note, BOTH Bush and McCain support the Defense Dept's position.

Ironically enough even the so-called "opponents" SUPPORT the "new GI Bill," they just want the Service commitment extended to six years....which seems like a fair deal for a "free ride" through College.

Still, IMAGE is everything and most people just look at headlines and listen to soundbites, which is how and why such issues get distorted.

Violence Worker said...

I would prefer a bona fide Conservative. That ain't gonna happen. Personally, I tend to think Barr's bid is as much an anomaly as Nader's with neither pulling enough to make a difference. In fact, I kind of see them a s negating each other's influence on the outcome.

BTW, Great site - adding you to the blog and my reader.


JMK said...

Thanks VW!

I don't see the LP pulling down a lot more votes with Barr than with any other Paleo-Libertarian (socially Conservative Libertarian) either.

The dilemma I'm facing, is while agree with Seane-Anna, that I don't want America to bear the pain of a true economic malaise, as we last did under Carter, I really don't see where that's going to be avoided.

THe Democrats control both Houses of Congress and are set to allow the Bush tax cuts to expire.

Those tax cuts ended what might have been a much deeper recession that began with the Tech Bubble Bust of Spring 2000...and they subsequently halved the deficit in three years!

INCREASED across the board income tax rate hikes, increases on Capital Gains Taxes and FICA taxes will result in those high income earners (those in the top 10%m who ALREADY pay 70% of he income taxes) to defer more of their earnings in various tax deferred vehicles, resulting in LOWER tax revenues!

Less purchasing by that group means less demand and less investment by that group means less jobs creation - DECREASING tax revenues, rising unemployment and inflation, coupled with rising interest rates, which rise along with inflation concerns = a Carter-Redux.

I really don't what, if ANYTHING, a John McCain could or WOULD do, except share the blame for a bad economy.

If we are going to have an economic blight then I'd orefer to see the Dems get all the blame...

WomanHonorThyself said...

I too would prefer a true Conservative my friend..sigh

JMK said...

I think many Conservatives would, Angel, BUT, the question is whether there are enough who'd opt to voice their displeasure with a Third party (LP) vote, or whether they'll rally around McCain over judges, and the belief that divided government is far better than monolithic Democratic control.

I think it'll be an interesting election because Obama's been badly wounded with his associations to Wright and Ayers, and his overall electability is in question since he's lost so many large states (NY, CA, TX, NJ, MA), while Obama has won a large number of states that had caucuses (that are more easily manipualted) than Primaries.

The quandry for me is that given the Dems are determined to let the tax cuts expire and that will WITHOUT QUESTION reduce tax revenues as higher income people defer more of their compensation/income in tax deferrd vehicles, reduce investment and jobs creation and that should lead to a severe economic downturn, what would a McCain be able or willing to do to avert that?

I tend to believe the answer is very little, and if that's the case, what a McCain win would do is merely "share the blame" for the coming economic "Carter-Redux."

Yes, there is another possibility. With the Conservative Blue Dog Democrat's ranks swelling to 48 and counting (that number could very well rise this November), McCain might be able to forge a Republican-Blue Dog alliance on certain issues and move the nation's agenda back center-right...that would seem to be the Conservative's ONLY hope at this point.

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