Main Street

Let’s Cast Some Ballots (and a Few Aspersions)

By David Stockman  |  November 6, 2018

Today is the first Tuesday following the first Monday in November – Election Day.

In 2018, in these United States of America, that also means it’s time for the “Vengeance Vote.”

The Donald, preternatural carnival barker, is back in his element, on the campaign trail, amid the rousing MAGA action…

The Democrats, predisposed to angst, rue the fate of the republic, out from ivory towers, high on GOTV emotionalism…

It’s this year’s edition of “The Most Important Election of This (or Any Other) Time.”

And, even with all the sturm und drang – perhaps because of it – duopoly’s winning streak will continue.

That’s good for Imperial Washington, of course. The Warfare State and the Welfare State should be safe.

And it’s good for Wall Street, too. The groupthink that makes for Bubble Finance should survive.

So, what do the numbers say?

Polls-of-polls and predictions markets point to an outcome that will allow both “red” and “blue” to claim “victory.”

Democrats will take the House. Republicans will hold the Senate.

The Donald will be the Donald, but with even more enemies to imagine.

Markets are steady this morning – really steady.

The S&P 500 Index is up 0.32% the Dow Jones Industrial Average is up 0.34%, the Nasdaq Composite is up 0.30%, and the Russell 2000 Index is up 0.31% at this very moment…

The yield on the 10-year U.S. Treasury note is creeping higher, touching 3.21% as it continues to climb off historic lows.

And the “fear gauge” – though it, too, is readjusting to “normal” – has a relatively peaceful, easy reading.

That’s despite the fact that the S&P 500 is still trading below its 200-day moving average and the yield on the 10-year has risen by more than 33% in 2018.

It’s like Monty Python: No one expects the Mother of All Yield Shocks.

And you sure as shit don’t campaign on it.

Here’s why: It’ll expose the fact that our financial/economic/political/social/moral bankruptcy is bipartisan.

Let’s just keep it to brass tacks: It’s been more than 25 years since any net equity at all was raised on Wall Street. And a capital market that raises no capital is hardly a capital market.

Monetary central planning reduced Wall Street to a venue for churning, liquidating, and inflating – for trading in speculative securities, not investing in productive assets.

During the 21st century, there’s been no increase in real net business investment.

You can’t grow a real economy when the real investment rate is flat… for nearly a quarter century.

That’s a striking indictment of Bubble Finance, of course.

But it’s also about a duopoly. It’s the duopoly’s Warfare State. The duopoly owns the Welfare State. The duopoly populates the Deep State.

And the duopoly doesn’t care about Main Street.

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR