This blog post originally appeared on RealMoney Silver on Oct. 27 at 7:35 a.m. EDT.
"Hyperbole is the currency of presidential campaigns, but this year the nation's future truly hangs in the balance." -- New York Times, Oct. 23, 2008As indicated in RealClearPolitics, Senator Obama appears well on his way to a comfortable win over Senator McCain. Moreover, large Democratic gains (even a filibuster-proof majority of 60 seats in the Senate and material House gains) seem inevitable, providing a likely exclamation point in the November 2008 election. Not surprisingly, the recent widening of the Democratic lead has coincided with the depth of our nation's economic problems over the last two months. Voters are now clamoring for change. They are mad as hell and don't want to take it anymore. The conventional view is that an Obama win next Tuesday will have a negative impact on U.S. equities, as the Democratic party is seen as the party of higher taxes for the wealthy, trade protectionism, etc. It was my view, as well, up until recently; I now disagree, however, as circumstances have changed and so has my investment conclusion.
"The fundamentals of our economy are strong." -- Senator McCain (September 2008)This is not a political endorsement, but speaking realistically, the severity of our financial crisis has been greeted by the Republican campaign with trivia and with a singular lack of understanding of the economy, while the Democratic campaign has responded with gravitas. While I am being overly simplistic, Senator McCain's campaign has been highlighted by continued clumsy and disorganized responses to our financial woes. (He did it again yesterday on "Meet the Press.") While Senator McCain focuses on earmarks and pork barrel spending (a relatively trivial factor compared to the scope of the world's financial crisis) and Governor Palin talks hockey moms and pit bulls, the Obama/Biden campaign (which in its infancy was full of vague uplifting rhetoric) has morphed into pragmatic and solution-oriented mode (e.g., the recent caucus with seasoned financial types such as Buffett, Rubin, Buckley, Summers and Volcker) in an attempt to put needed flesh on financial policy and much needed reform.