While Republicans battled Democrats (and Democrats battled themselves) over healthcare, not much of anything else got done. Not reform of the financial system, not serious action on jobs (the $18 billion “jobs” bill that Congress did pass isn’t even a down payment), not climate change, not appropriations bills, not deficit reduction.
For investors the most important effect of the House’s vote last night to send a healthcare bill to President Barack Obama for signature (and simultaneously a package of amendments to the Senate) is that Congress will finally be able to move on to other legislation.
What other legislation?
My guess is that Congress isn’t about to tackle climate change. Democrats can read the polls: the issue is even more complex than healthcare and the public is deeply divided. If you’ve just tied your party into knots over healthcare, I don’t think climate change is the next thing you decide to tackle. (This just raises the stakes in legislation intended to get the Environmental Protection Agency to either slow down its regulations (the Jay Rockefeller, D-West Virginia approach) or to block the EPA from regulating at all (the Lisa Murkowski, R-Alaska approach.)
No, I think what we’re going to see is more on jobs. Senate Majority Leader Harry Reid has already moved to put the rest of the proposed $85 billion jobs bill that wasn’t covered in his $18 billion carve out on the road a vote. Democrats know that a large number of voters are angry that healthcare came before job care and for Democrats positioning for the November mid-term elections a job-creation effort that their candidates can run on is critical. (What will Republicans do? Depends on their calculations about whether it’s better to take ownership of a bi-partisan bill than to try to deny Democrats a success.)
And more on financial reform.
Voters would like to see bankers drawn and quartered and then impaled on stakes so while Democrats fear that a financial package could be criticized by Republicans as overly complex (more waving of a 2,000 page bill) and compromised (why should pay-day lenders be exempted), the topic itself is a political winner.
The effect on financial stocks will depend on who gets regulated in a final bill and by whom. Get ready for a new daily soap opera that asks:
“Will the Fed get to keep regulatory power over the big banks?”
“What kinds of derivative contracts won’t be regulated?”
And “How much of the shadow banking system—now larger than the regulated banking system—will remain unregulated?”
I can hardly contain my excitement.
“I can hardly contain my excitement.”
Oh boy, oh boy. Me too. We need to bring back public hangings in the town square. Everybody could bring the wife and kids, a picnic lunch and a jug of cider. Even Mr. Ruff (aka Sir Ruffian of Underfoot, Slayer of Dragons, Chaser of Cats), my dog, can barely contain his excitement. He just stretched and rolled over to the other side.
As the US moves toward socialism, private investment and savings will necessarily be more heavily taxed to pay for government. Make no mistake, the agenda of the current President is to re-distribute wealth. As most socialistic countries experience wildly fluctuating inflation, the President plans to pay off the public debt and his huge deficits with inflated dollars in the future. This too will be bad for investors. Unions, after years of decline have gained a savior in the President. Their resurgence will doom profits for many prosperous US companies, including banks, retailers, and yes, even technology companies. Our educational system will continue its decline vs. emerging Asia countries. Our Country, once the leader of the free World, socially and economically, will fall into the ranks of France, UK, Germany and other socialist countries. This will be bad for investors as the countries Jim touts, China and Brazil are the opposite of “stable.” Scared yet? We all should be. Socialism is NOT a great investment environment. Lots of instability to come, perhaps for years. What say, Mr. Jubak?
A healthy growing economy with more people and businesses working and paying taxes will go a long way towards reducing the public debt. Unemployed people loaded down with personal debt don’t give a damn about the public debt or the economy in China.
The U.S. was always “the worst” in terms of excessive pay/bonus. Considering the avg. hourly wage in China, as compared to the U.S., which is a communist society…it is a lot of money.
Jim,
Do you think that the fast grown public debt is not even close to be a agenda item?
Too bad … for all of us.
Maybe not relevant to the question of good investments vs. bad investments, but take a look at the recent WSJ article about banker pay in CHINA: the Chinese gov may considert reigning in the “excessive” salaries of their bankers, which on average are about 200k (american $) per year. Yes, that’s right 200k is excessive salary in China!