catallaxy files

catallaxy in technical exile

The market value of government inaction

with 38 comments

Is the quality of government so low that nothing is better than something?

It appears that Wall Street thinks so:

NEW YORK (Reuters) – U.S. stocks rallied on Tuesday, pushing the Dow Jones industrial average to a fresh all-time high as investors bet midterm elections would leave Congress gridlocked, maintaining the status quo for doing business.

If the election results in political gridlock, as many on Wall Street anticipate, analysts say that could be a near-term positive for stocks as there would likely be fewer government policy initiatives.

Something that will come as no surprise to many libertarians! 

ps. Hello all. Jason has invited me to post here occasionally on topics where my interests overlap with the Catallaxy milieu. Expect irregular postings.

Written by Admin

November 8, 2006 at 8:58 am

Posted in Uncategorized

38 Responses

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  1. Only thing is they may not have figured out that the tax cuts need to be voted back in as they have an expiry date.

    Having John Conyers and the other idiot form NY as committee chariman is not my idea of a perfect form of gridlock.


    November 8, 2006 at 10:13 am

  2. anyway don’t counts those chooks just yet, Edney. Something real strange was happening in those genics polls very very late.


    November 8, 2006 at 10:15 am

  3. Is this not the saddest indictment of a pathetic administration.

    A big government ‘conservative’ been brought to boot by Democrats

    Bring Back EP at LP

    November 8, 2006 at 10:21 am

  4. The article notes that there is still plenty of time to get a house back in that will be able to re do the tax cuts. I think they are 2010.

    I actually think the analysis is classic post-fact justification of market moves. I just found the justification interesting.

    There is another one explaining the fall in the US dollar in terms of the uncertaintly related to a split result.

    Steve Edney

    November 8, 2006 at 10:26 am

  5. I think it’s a classic example of the truism that stability is what works best for business. It doesn’t really matter too much (within reasonable limits) what taxes and regulations are in place. What matters is that once businesses take them into account in planning, they don’t have to change or hedge against changes.


    November 8, 2006 at 2:53 pm

  6. The market may take a different view once the full details sink home, Democrat govt for 2008.

    FF, businesses get very worried when big spending govts are elected, it is a sure sign that taxes will increase


    November 8, 2006 at 3:07 pm

  7. Rog,

    It difficult to see the Dems will spend any more than Bush. The only difference is whether they will try to fund it with taxes rather than debt. The GOP can hardly claim to be fiscally responsible. Clinton is the only one to run a surplus in the last 30 years.

    Steve Edney

    November 8, 2006 at 3:28 pm

  8. Steve the deficit is not very big these days. last reported at around 250-300 million. This isn’t a problem and if the economy continues to grow everything will be fine as far as being able to finance it. The US is on very sound footing as far a domestic fiances go.

    If you’re concerned about this I suggest you cast a wider eye towards Japan and nearly all the EU (ex UK) for a better angle on what can be afforded and what can’t.


    November 8, 2006 at 4:02 pm

  9. The tax cuts were affordable. The spending was the problem.

    But I do recall how the Dems thought the Prez was being too stingy in supporting a less generous prescription drug benefit, which in the not too distant future will dwarf most ohers spending.

    As for… are the Dems bigger spenders than the GOP. If I know my dems as I know my dems the answer is… you bet they are.


    November 8, 2006 at 4:06 pm

  10. JC, I’m not really concerned at all just stating what the situation has been in recent times.Clinton may well have spent more with a friendly house.

    However don’t you mean billion not million?

    Steve Edney

    November 8, 2006 at 4:10 pm

  11. jc, do you remember how republicans shut down the federal government to force Clinton get a balanced budget? Any idea why they do not do this to Bush?


    November 8, 2006 at 4:34 pm

  12. Sorry Steve…. Meant billion.

    These days a billion or a million…. its only numbers when it comes to the US budget.


    Clinton’s success is much due to having a Republican Congress that cared about spending. I honestly don’t know what’s happened to this lot.

    Well actually I do. I think the war in Iraq trumps all. My feeling is that Bush wanted to close down that criticism to prosecute the war without distractions….. If he had been stingy, the Dems would have used that club as well.


    It’s not really true they held down spending in those days by any great deal. They had lots of money coming in from an economy thundering along. The only time they showed any discipline was in 94 to 96. After that they were all in huge money grab.

    The threat to close down government and the result of that showed the GOP that when it comes to redistribution policies the Americans are up there with the best of them. That was the turning point as far as the Congress was concerned. You spend up and buy your way in.

    The trouble with that policy is that everyone expects the Dems to behave irresponsibly. That’s a given. But no one expects the GOP to be so rotten and dishonest. Like it or lump the GOP will always have a higher hurdle than the Dems. That’s just life.


    November 8, 2006 at 4:55 pm

  13. In my view, that government shudown was an opportunistic move to shame and ridicule Clinton. It backfired badly in 1998 midterm elections.


    November 8, 2006 at 5:11 pm

  14. As Boris says, shutting down the government backfired enormously on the Republicans. It was the end of Gingrich’s presidential ambitions. Frankly, all those Republicans who broke their term-limitation pledges should have rung alarm bells.

    Never mind that these guys are now getting politically euthenased, a fiscally responsible Democrat Congress (and after 2008, potentially a President as well) will put the Republicans into a tailspin about what they are actually for. The fiscal misers who spent liike drunken sailors, the homophobes dipping into the collection tray for crystal meth and rimjobs – it’s time for these guys to start over, an awesome prospect in terms of intellectual heavy-lifting. Old whores like Bill Kristol and Grover Norquist should recognise that their game is up, go buy a farm and work it until they die. They don’t have to apologise, they just have to give no more interviews and politick no more.

    Andrew Elder

    November 8, 2006 at 5:35 pm

  15. What do you have against Billy Crystal’s comedy career, Andrew? I thought he did alright hosting the Oscars [JOKE]

    Jason Soon

    November 8, 2006 at 5:42 pm

  16. Really good to see you posting here, Steve… another great addition to the Catallaxy corporation Jason 😉


    November 8, 2006 at 6:26 pm

  17. There are a couple of disturbing aspects to this election, the GOP stuffed up but do the Dems have anything better to offer eg the GOP has been criticised for not having an exist strategy on Iraq but where is the dems exit strategy?

    This midterm vote may not be a plus at all for Dems but a protest vote against the GOP.

    Its also a victory for the insurgency in Iraq.

    If GWB digs in and does business as usual without listening and responding to the voter you might well get a Dem president and govt in 2008 neither with any real policy except they are anti GOP.


    November 8, 2006 at 7:30 pm

  18. I do not see at all why dem victory now increases the chances of dem president in 2008. If anything, if GOP retained control of both houses and presidency, they would eventually be blamed for everything that goes wrong (and things do go wrong all the time to some degree), and voters would vote for change. Now it’s a mixed bag and who knows? A lot will depend on who actually runs.


    November 8, 2006 at 9:07 pm

  19. Rog

    Great points. All true.

    Open field for 08, however one thing is now clsoe to 80% probability, Hillary will not be the next prez. i also don’t think McCain is either. This will make the GOP desperate and will do a lot of sould searching.

    MY guess. Giuliani or Bloomberg for prez in 08.
    And the reason is that only needs to look at how Anrie did in California. A mild Republican easily took it out.

    I now feel good about 08 for a GOP victory.


    November 8, 2006 at 9:51 pm

  20. Some interesting analysis on Arnie from Steve Sailer.

    In the LA Times exit poll, illegal immigration was listed as the most important issue by Schwarzenegger voters. I doubt if Schwarzenegger will do much about it …

    According to the national exit poll, Schwarzenegger won 60% of the white vote, 59% of the Asian vote, an above average 26% of the black vote (California blacks are a little more conservative than nationally, but that’s still good), but only 34% of the Hispanic vote. California Hispanics are a little to the left of the national Hispanic voter, so that’s not too bad for Schwarzenegger, but not very good either, especially considering he’s running as a liberal Republican. In California, the white-Hispanic gap was 26 points (60-34), compared to nationally in the House races where it is now 22 points (51-29 at last count). So, Schwarzenegger won big in California despite losing in a landslide among Hispanics. For the last decade, the media has promoted the implicit myth that Hispanics in California cast Magic Ballots, worth far more than other voters’ ballots. In truth, they (still) count every vote the same.

    The Asian figure is very good for a Republican these days.

    We’ll see if Schwarzenegger can stay interested in his job for the next four years until he is term-limited out. I would guess he’d run for Senator after that, being constitutionally unable to run for President, and probably not a likely candidate for Secretary-General, Pope, Dalai Lama, Galactic Overlord or other jobs suitable to his ego. Half the time I think that having a steroid-powered bodybuilder-action hero as governor of the biggest state is a sign that it won’t take 500 years for the America of “Idiocracy” to arrive. And the other half of the time, I think that Schwarzenegger really is something special.

    Jason Soon

    November 8, 2006 at 10:12 pm

  21. Jase

    Watch Giuliani from now on. He was the east coast version of Arnie and ex-NYC mayor which is close enough to running a big state. The annnaul budget is about as big as the Australian governments. Amercians also love to vote in former governors as Presidents. They hate senators in comparison.

    Negatives? Of course there are with the abortion issue and the sillly view on gays some people have in the GOP. However if he can been seen to give them victory they’ll go with him despite protestation.

    He can win the primaries in all the big blue states without much trouble I think.

    This loss may also help them get more of a libertarian bent than previously.

    Yep, i feel good about the GOP in 08.


    November 8, 2006 at 10:52 pm

  22. JC I wanted to add to my comment 18 that GOP should run McCain or Juliani, but it won’t. If it will (and I trust you on this) then they have retained a portion of sanity.

    I think democrats have bigger problems choosing someone reasonable, so they can only win if republicans screw up big time.

    BTW Juliani is no Schwartzneger. He is not a movie star and a very different type of character. The only thing they have in common is that they are moderate republicans.


    November 8, 2006 at 11:24 pm

  23. Boiris
    Could be wrong, but McCain is a very dislikable individual. people really dislike intensly at close range. This will ge out more.

    Bloomberg is alos a goer.

    I think it’s time for a north easterner who’s articulate for a change.

    I think it could be rudi.


    November 8, 2006 at 11:46 pm

  24. There are probs with Giuliani baggage, he married his cousin.

    Its going to be interesting to see what policies a Dem led govt will bring about, it’s easy to be negative. First they will have to act as a unit not as a bunch of GWB haters and GWB still has veto over any bills.

    My quick reading was that domestic issues prevailed, immigration being a major contributor but Iraq did not help.


    November 9, 2006 at 5:18 am

  25. Reps will have to decide if they are a proactive faith based values driven party or small govt free market. Issues such as gay marriage, abortion, stem cell research have marginalised GWB. Budget cuts to services can be tolerated but not to fund an enless war.


    November 9, 2006 at 5:47 am

  26. “a proactive faith based values driven party or small govt free market.[party]”

    Rog, can’t they be both?

    Rococo Liberal

    November 9, 2006 at 7:23 am

  27. Giuliani is not a goer – the big end of town haven’t forgotten his fascist tendencies at public prosecuter. Evryone who pleaded not guilty and spent 5 years of their lives defending themselves got off. In one case, the judge threw out the changes saying that the actions of the accused weren’t even a crime. not that this helped those who had plea bargained.

    Sinclair Davidson

    November 9, 2006 at 7:43 am

  28. I notice the Repiblicans coming out and saying they need to return to their efficient small government philosophy. Well, Duh!

    Sinclair Davidson

    November 9, 2006 at 7:44 am

  29. Is there nothing that anyone can do to get rid of this ridiculous constitutional restriction that stops Arnie from running, JC?

    Arnie is a closet libertarian. Check out this youtube

    Jason Soon

    November 9, 2006 at 7:49 am

  30. the Republicans turned out to be democrats in other clothes.

    give them a rest until they discover that a big Government conservative is a contradiction in terms.

    JC supporting liberals like Guilly or Blooms?

    They would not get very far in the primaries nor will McCain who is a chip off the old block!

    They will go for some mad nut if history is anything to go by.

    Bring Back CL's Blog

    November 9, 2006 at 8:09 am

  31. Na Jase. Only an amendment would do it and it’s probably too late. Couldn’t imagine it happening in 2 years.

    Rog. I think Rudi married his third cousin. Hey, everyone carries baggage.


    November 9, 2006 at 10:32 am

  32. geezus! What’s this cousin marriage stuff???

    Jason Soon

    November 9, 2006 at 10:36 am

  33. Dunno

    He married his 2rd or 3nd cousin from Long Island. Maintains he didn’t know they were related. No kids though and quick divorce.

    His divorce from his second wife was comical. She wouldn’t leave Gracey mansion and looked like at one stage that she would get the Mayor’s mansion and he would have to move out.

    The 911 happened and all was forgiven.


    November 9, 2006 at 10:57 am

  34. Its looking serious now, both houses lost and Rumsfeld was the first Dem demand met. GWB will have to fight 2 wars now.


    November 9, 2006 at 3:07 pm

  35. rog

    November 9, 2006 at 5:50 pm

  36. the SMH is so excited they’re already fantasising about President Hilary Clinton

    Jason Soon

    November 9, 2006 at 9:44 pm

  37. This comment was left under Jason link

    “Oh gawd, I hope not. It would be nice for a real Democrat to run and win. Preferably one not beholden to the Israeli lobby and the MIC.

    The Palestinians would be even worse off.

    Posted by: Justaguy at November 9, 2006 01:40 PM ”

    You know the left really seem to have a problem with Jews. I mean is this the first thing that would come to mind in even thinking about a Hillary Prez?


    November 9, 2006 at 11:55 pm

  38. “JC supporting liberals like Guilly or Blooms?”

    Simple. JC wants a republican to win.


    November 10, 2006 at 12:34 am

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