A couple of thoughts for a pre-election Friday afternoon:
1. The End of . . . Clintonism: The all-but-inevitable historic pounding that the Democrats are about to suffer is, of course, a repudiation of Obama’s overreach specifically, of the Obama-Reid-Pelosi model of unified Democratic government, Obamacare, stimulus, etc. It also, I think, spells the end of the Clinton economic aura. Since Carter, Democrats had had the worst sort of reputation when it came to the economy, and for good reason: Everybody remembered the gas lines, ridiculous stagflation, etc. And then along came Clinton. Amazing man, Bill Clinton: He inherited a recovery from George H. W. Bush, handed off a recession to George W. Bush, and somehow, in the middle, made himself look like an economic genius, claiming credit for the booming growth of the 1990s and the nominal budget surplus.
In retrospect, it’s pretty obvious that just as every investor looks like a genius while he’s riding up the bubble — and the dot-com stock market was a big one — every politician looks like a genius when the bulls are on the rampage. Clinton’s Big Government ambitions — see Hillarycare — got nipped in the bud well and early, and the Gingrich-Armey monkey-wrench gang kept the Clinton machinery in check. But subtract the bubble and the whole decade looks a lot less impressive, and the Democrats’ campaign paeans to the Clinton economy do not sound as impressive in 2010 as they did in 2000. Americans are starting to internalize the meaning of bubbles, and to re-evaluate.
2. Revenge of the Rubes: As of this morning, the DJIA is down 18.25 percent from where it was three years ago. NASDAQ is down 10.61 percent. Wall Street is a gloomier place. But: Commodities prices are hitting record highs, especially farm products. Cotton is at a record high. Wheat prices are up. Rice is rising so fast that the Chinese are enacting controls on futures trading. Part of this is regular old demand, particularly in China. Part of it is that the specter of the Fed engaging in more “quantitative easing” — debasing the dollar to prop up securities — is directing money from cash to commodities. (And: Guess which country in the world is a great big giant exporter of a lot of this stuff?) In other words, after a few years of bailouts and free-money economics for the benefit of Wall Street, brought to you by Barack Obama (D., Goldman Sachs) the result is likely to be a significant wealth-and-power shift from the financial world to the farming-and-mining world. (My cotton-growing friends in West Texas are a happy bunch just now.) Meaning that Lamborghini will sell fewer of these to second-year investment bankers and more of these to third-generation commodities producers.
That’s one possible outcome, anyway. The future is unknowable and is largely what we make of it — something to keep in mind Tuesday.