Election 2012 and the Market

Here is a simple prediction: If President Obama wins re-election the market will respond negatively (for a brief moment, at least). If Romney wins the election, the market will show signs of optimism. This is based on the perception that Romney is good for the market, and Obama is bad for the market. How does this assertion measure up to actual polling data, and how might it shape the outcome of the election?

As for the actual outcome of the election, some observers might compare 2012 with the election of 1980. In both cases we have a Democrat with a bad economy running against a Republican promising deregulation and lower taxes. The Republican should win, right? The situation in 1980 is not a good comparison, because in 1980 President Jimmy Carter’s position was weakened by the Iran Hostage Crisis. Also, in 1980, a Gallup poll showed Reagan ahead at the end of the primaries with 58 percent of the vote. Recent polls do not show Romney with any lead whatsoever.

As for seasoned opinion, Rupert Murdoch is “doubtful” that Romney will beat Obama. According to an analysis of candidate fundraising by John Aloysius Farrell, Obama has more donors than Romney which translates into more campaign volunteers and more passion. “By the standards of the past, Obama is in the preferable position,” writes Farrell. Of course, the election is more than three months away. According to John Galt, writing for America’s Chronicle, “Today’s polls are bad long term predictors because they do not take into account events close to the election.”

Suppose we can predict a worsening economy by November, Obama’s numbers are bound to suffer; unless we adopt the cynicism of Oswald Spengler. “What is truth?” Spengler asked in his Decline of the West. “For the multitude, [the truth is] that which it continually reads and hears.” This is what Spengler calls “the public truth of the moment, which alone matters….” Spengler believed that democratic politics led to “an appalling caricature of freedom of thought” in which the “dictates of party leaders supports itself upon that of the Press. The competitors strive by means of money to detach … peoples … en masse from hostile allegiance and to bring them under their own mind-training.” According to Spengler, feudal obligations have been replaced by a regime that “shapes men’s souls with articles, telegrams and pictures….”

There is truth in Spengler’s words, which leave us wondering which party is more effectively shaping men’s souls. This answer should be obvious to the well-informed, though it will not be obvious to those who have been “shaped.”

Full article: Election 2012 and the Market (JR Nyquist | Financial Sense Online)


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