Opinions and observations expressed on this blog reflect the authors' individual experiences and should not be construed to be financial advice. None of the members of this blog are licensed financial advisors. Please consult your own licensed financial advisor if you wish to act on any recommendations here.

Sunday, November 7, 2010

Sometimes the interplay between politics and economics doesn't make sense:


When you think about it, Democrats did quite well in California (12%+ unemployment) and quite badly in my home state of Wisconsin (7.8% unemployment). Does that make much sense? Not really. Of course, I have argued that we are simply in an era of dramatic political volatility rather than any particular ideological movement one way or the other. If you look at Europe, center-right governments in Germany, France, and Italy are all on the verge of collapse or are at the very least deeply unpopular. The newly elected center-right government in the UK already has fallen behind Labour in recent polling.

At the same time, Japan has recently lurched right after electing its first clear center-left government in several decades. Some of the Latin American governments seem to be shifting right, though that certainly didn't hold in Brazil where the Worker's Party (which is effectively Socialist) won quite easily. Spain's socialist government is probably quite likely to lose when the next election happens there due to truly crippling unemployment rates and an economy very unlikely to right itself anytime soon.

We are simply at a time where it is advantageous not to be in power and this was even true in 2008 as well. There were parts of the Democrats' success, or alternatively the Republicans' weakness, that under most elections would have been quite stunning, but in an environment of extreme economic strife such things can happen. The same applied this year as well in reverse.

I suspect that 2012 will see a fairly large number of seats change hands again in the House. If we enter a protracted period of stagnation, or something that at least feels like it, don't be surprised if party control changes routinely. The interesting consequence of that is that we might see truly paralyzed decision making at a time when fairly decisive action is required.

No comments:

Post a Comment