I Am Very Tall

This is a cut-and-paste of an Op-Ed I found pasted at the Big Picture. It's sort of at the cross-section of economics and politics, with more emphasis on the economics. For those of you that whip out your "nerd-alert!" signs whenever you hear the word "inflation" or "%," this may not be for you, although I would still encourage you to read. Italics added by me:

Pricing in a Bush Presidency?
Wall Street Journal, July 9th 2000

Stocks sold off again today as the markets is pricing in the likely impact of a George W. Bush presidency.

Since Bush has emerged as the polling leader in March, stocks have been hit hard. The NASDAQ has fallen 37%, while the S&P500 and the Dow are both down 20%, placing equities squarely in bear market territory.

Various Wall Street strategists have expressed concern regarding how a new set of Bush monetary and overseas policies could impact equities.

"My biggest concern is that the promised Bush tax cuts will be in extremely expensive. That would create huge deficits and be extremely inflationary" said Peter Leslie, a trader on the CBOT floor." Governor Bush has promised to reduce captial gains and dividend taxes, and lower the marginal rates on the nation's biggest earners. He has not explained how these tax cuts will be funded.

Maverick Capital fund manager Henry Carlyle is more concerned with government spending than Tax cuts. The Dallas resident stated "I have followed Governor Bush in Texas, and fiscal discipline is not his strong suit." Cabot expects a big increase in federal spending and budget deficits that will have ramifications for both inflation and an interest rates.

Vanguard chief John Bogle is more concerned with a lax regulatory environment: "A return to the sort of crony capitalism that we've seen in the past would wreak havoc with investor confidence. We need a strong SEC to make sure companies are transparent, and report their accounting fully and fairly. We should not throw the individual investor to a wild and woolly free market that is totally lacking in supervision." The Vanguard chief has long been a proponent of a strong regulatory environment for the protection of individual investors. "I do not see that sort of regime under a President Bush."

Robert Rubin, the Treasury Secretary under Presdient Clinton who retired last year to join the Board of Citigroup, focused on the Federal Reserve. "The next president needs to make sure that the Federal Reserve fulfills its obligations as bank supervisor. I am concerned that Governor Bush, as President, would move away from strict regulation of markets for ideological reasons." Rubin, a Democrat, warned of negative repercussions for the housing and financial sectors. "[Since joining Citigroup], I have been looking into the issue of derivatives. This is another area that requires close scrutiny from both the Treasury Department and the Federal Reserve. I see Bush lacking expertise in this crucial area."

Goldman Sachs chief investment strategist Robert Hormat, was even blunter in his assessment of a Bush Presidency: "I am looking for a market crash as a reaction to the election of George W. Bush. Investors should brace themselves for losses of 50% or more -- and even worse in the Tech sector -- should he be elected."

Legendary legendary oil trader T. Boone Pickens is more optimistic. "We should expect several military conflicts in the Middle East under President Bush[!!!], and while this may not be great for the economy it will be terrific for my energy holdings." If Bush gets elected, Pickens plans on opening a new oil based hedge fund, and is forecasting 100% increase in the price of oil to $40. "I'm an Oil, George is an Oil man, and his VP Dick Cheney is an Oil man. I expect energy returns to significantly outperform equity markets over the next eight years" he said.