“It’s the Economy, Stupid.”

In this week’s election, Democrats attempted to label Republicans as “the party of ‘no.’ ”  Instead, voters labeled Democrats as the party of no jobs, no growth and no clue.

As a political strategist for Bill Clinton, James Carville coined the now over-used phrase, “The economy, stupid.” (which more commonly appears as “It’s the economy, stupid.”).  By focusing on the economy, Bill Clinton won the 1992 presidential campaign, defeating President George H.W. Bush. barack-obama

More than 20 years later, it’s still the economy, stupid.  According to Bloomberg, “The economy was voters’ most pressing concern as they cast their ballots in the midterm election, with seven of 10 rating conditions poor, preliminary exit polls showed.”

Apparently, voters didn’t realize that 2% annual growth and a workforce participation rate of 62.7% represent an economic boom.

In a Gallup poll, climate change, the Democrats’ raison de vivre, ranked 14th out of 15 in a poll about issues that worry voters.  It finished just ahead of “race relations” and just behind “the quality of the environment” – two other big issues for Democrats.  Meanwhile, in the real world, the top voter worries were “the economy,” followed by “federal spending and the budget deficit.”

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Solving Our Problems By Executive Order

Why didn’t he think of this sooner?

President Obama announced during this week’s State of the Union address that he is going to bypass Congress and issue more executive orders during the last three years of his presidency.

You might think that sounds like a dictatorship. After all, our government was formed around a foundation of checks and balances, with Congress and the judicial branch of government keeping the President from acting on his own. He’s not a king, a tyrant or a despot. He’s president of a democratic republic, not a banana republic.Obama

But think about it. We’ve been waiting for years for Congress to handle tough issues like immigration reform, tax reform, Social Security reform, Medicare reform, trade reform and budget reform. Nothing ever happens. When Congress does handle tough issues, we end up with laws that run more than 2,000+ pages long, that no one understands and that bear little resemblance to their original intent.

Do we really want another Affordable Care Act or another Dodd-Frank Consumer Protection Act? Do we really want all of those milquetoast compromises? And what about the billions in pork that have to be added to even the most basic bill before Congress approves it?

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No, We Can’t

Someone had blunder’d:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do and die.

                                          From “The Charge of the Light       Brigade”

Take pity on the can.  It’s been kicked so far down the road, it could circle the globe a dozen times.  It’s been battered more than the New England Patriots’ starting lineup.  It’s been kicked harder than an Adam Vinatieri football.

And still it persists.

This week, Congress and President Obama reached a deal that reopens the government through January 15 and suspends the debt ceiling through February 7.  Calling it a deal, though, is an exaggeration.  One side, the Democrats, refused to negotiate.  The other side, the Republicans, asked for something it had no hope of getting.  So everyone agreed to kick the can three months down the road.free-the-fowl-games-photo-420-1196-FF11015_0

Beyond that, according to The Wall Street Journal, “The bill includes one minor change to the health law sought by Republicans, setting new procedures to verify the incomes of some people receiving government subsidies for health-insurance costs.  It also provides back pay for all federal workers who were furloughed during the government shutdown.”

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The Unnoticed Recovery

It seems that every day we hear about a stronger economy with real jobs, a recovered housing market and renewed manufacturing strength being just ahead.

We hear about it.  We just don’t see it.

The economy’s been growing for four years now, yet its growth has been so stunted, most of the country still thinks we’re in a recession.  The McClatchy-Marist Poll this week found that 54% of adult Americans think the U.S. in still in a recession, while only 38% think it’s not.

In an economy with a 7.6% unemployment rate (but really more than 14%), any sign of improvement is good news, so we can be thankful that the number of people who think we’re still in a recession is down from 63% in March and 75% in 2011.

Only 29% of those surveyed think their family finances will improve in the coming year, while 19% think they will worsen.  More than half think they will remain the same.

Lee M. Miringoff, Director of The Marist College Institute for Public Opinion, treats the poll results as good news and notes that “President Obama plans to refocus his second term agenda on the economy.”

Well, that should save the day.  Except that a separate poll finds that Americans have little faith in their political leaders.

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U.S. Without a Budget for Four Years and Counting

As of April 29, the U.S. government will have operated without a budget for four years.  Based on the budget he proposed this week, President Obama intends to keep the streak going.

Even the smallest mom-and-pop businesses develop a budget each year and stick to it.  Yet the world’s largest enterprise – the U.S. government – has operated without a budget for more than 1,400 days.  Of course, the mom-and-pop business wouldn’t spend $1.4 trillion more than it takes in every year, either, but that’s another matter.

Nitpickers would say that the government is operating with a budget; Congress just has not passed a budget resolution since 2009.  But it’s the job of Congress to pass and approve a budget – and it has not done so for four years.

As just one example of the absurdity of the Congressional budget process in recent years, consider that when President Obama proposed his budget for FY ’12, the Senate voted it down 97–0.  Every Senator in the President’s own party – even Senate Majority Leader Harry Reid — voted against the budget, even though many had praised it when it was proposed.

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Sequestration: The Crisis Du Jour

It’s crisis time again in Washington, D.C.  Having just barely avoided a swan dive off the fiscal cliff, the leaders of our country are now locked in battle over the pending sequestration.

“Locked” is the operative word here, as the deep freeze that’s hit New England this week is likely to thaw well before the freeze in progress over sequestration.

If nothing else, this standoff has added to our vocabulary.  “Sequestration,” as we’ve learned, is a procedure that triggers automatic spending cuts.  It also means “the seizure of property for creditors,” as in, “China will begin sequestering U.S. property if we can’t control our debt and pay our bills.”  That definition may be more appropriate in years to come, but for now, let’s concentrate on the immediate future.

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From Goldfinger to Groundhog Day

Tick.  Tick.  Tick.

It’s like that scene in “Goldfinger,” where the seconds are ticking down and James Bond is trying to defuse the bomb.  He succeeds, of course, just in time.

Of course, John Boehner is not James Bond and real life is far more complicated than the movies.

Tick.  Tick.  Tick.

The real problem is not a cliff, but a chasm.  The degree of separation between Democrats and Republicans in Congress has never been wider.

On one side, President Obama and his Democratic supporters are hell-bent on raising taxes on the wealthy, which may not do much to tame the deficit, but may achieve the goal of moving toward class equality.  Democrats believe that more spending is needed to stimulate the economy, even though spending is at an all-time high and the economy is still in dismal shape. read more

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Looking Over the Fiscal Cliff

You’ve heard plenty about the fiscal cliff.  But little attention has been paid to what’s beyond it.

What’s beyond it is another higher, steeper cliff.

The federal debt now exceeds $16 trillion and Congress will need to vote shortly to raise the debt ceiling in order to keep the government operating.  We’re running an annual budget deficit exceeding $1 trillion, so the debt will only get higher.

The longer we try to maintain the status quo, the more difficult it will be to bring the debt back in line.  We’re reaching the point where every dollar in the federal budget will be needed just to service our debt.  That means your taxes will no longer go toward building new highways, helping the poor or protecting the United States.  They will be needed to pay off the enormous debt that the President and Congress have incurred. read more

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The Good News: No More Election Ads

In the wake of Tuesday’s re-election of President Obama, the Dow Jones Industrial Average fell 434 points in two days, a drop of 3.3%.

That’s better than when he was first elected.  After a 305-point rally on Election Day 2008, the DJIA fell 486 points, or more than 5%, on the day after, which was the largest post-election drop ever.

In 2008, the housing bubble had burst and we were dealing with the biggest financial crisis since The Great Depression.  Today, we still have not recovered from the financial crisis, but face a “fiscal cliff” and continuing troubles in Europe. read more

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The Truth about High-Frequency Trading

We’ve been critical before about high-frequency trading.  While regulation sometimes makes matters worse, it’s encouraging that he U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing this week to discuss potential regulation of computerized trading.

While it is unlikely to take action anytime soon, testimony given at the hearing was enlightening.  Here are a few excerpts:

David Lauer, Market Structure and HFT Consultant, Better Markets, Inc.:

“The sophistication of your trading strategy is no longer a defining characteristic of its success, rather the number of microseconds that it takes your software to react to a piece of market data has become one of the most important factors of success in the HFT industry.” read more

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