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The Minor Fall, The Major Lift

Oct
1
2008

It’s always hard to watch when politicians and business people collide – and they almost always collide – because their frames of reference are so, well, far apart. Wall Street punishes to the maximum, as my friend Andy Kessler likes to remind us. And it usually does so quickly. In Washington, well, punishment is often meted out slowly, sometimes years after the initial offense. And politicians reinvent themselves all the time – without any ticker to display a record.

But whenever there’s a collision, there are winners and losers; the windshield, the bug and all that. It’s always sort of fun to sort the sides out. And, just for today, we’re going to leave President George Bush out of this. At this stage, reciting the faults of this administration isn’t just beating a dead horse, it’s kicking a long-dead nag to the glue factory with steel-tipped boots.

So let’s get started.

Big losers: Anyone who espouses “pay-as-you-go” as a mantra for sound fiscal management regardless of the undertaking. Most people who know – really know – how financial markets work know that the idea that businesses live strictly within their means – that they never, ever, ever spend more than they bring in – is a lot of nonsense.

Overnight borrowing – in one way or another – keeps things humming along and has for a while. No one really pays as they go – that’s why you and I borrow money to buy houses and cars. And it’s about time we all recognized this as a fact of economic life.

Loser: John McCain. He was supposed to call the Republican Party rank and file to a deal; getting the folks who wanted to disassociate themselves from President Bush. McCain didn’t get the job done. And oh, yeah, he blew off David Letterman. That’s worse than picking a fight with Murphy Brown. And would someone please call Katie Couric up and ask America’s perkiest interviewer what Sarah Palin said – or didn’t say – to call forth a look that can only be described as thinly disguised disgust on Couric’s face?

Really Big Loser: Chris Cox, head of the Securities and Exchange Commission who’s had to acknowledged that lax regulation – again – by his agency contributed to Wall Street’s woes. If they’d been actually doing their jobs real disaster might have been avoided. Anyone working in Silicon Valley since the tech market crashed knows the commission hasn’t been up to its job in for the past 10 years but it was Cox – a big fan of minimal government regulation – to oversee it being proven without any ambiguity.

Sure to be Sore Losers: The TV business press. Covering the stock market as though it were a football game isn’t going to be as much fun – or as popular with shareholders – as covering a market that grows slowly. If you’re name is Jim Cramer you might wanna think about a new outlet for your energies.

Which brings us to winners.

Long-term Winner: The buy-and-hold crowd. That’s right, buying stock, holding on to it and watching it appreciate over oh, the life of your child, is coming back in a big way. Why do you think Warren Buffet’s on a shopping spree? A market where transactions are overseen by the government is one that will more more slowly, more deliberately. And yes, I do want to say I told you so.

Winning Politiician: Rep. Barney Frank gets big time points for his negotiating skills, so much so that’s probably a safe bet that he’ll be the next Senator from Massachusetts. Frank’s no diplomat – he’s got a hair-trigger temper, particularly at 2 a.m. which is when he once took my head off – but he’s determined, he’s smart and he’s been worried about the shadow banking system created on Wall Street since earlier this summer. He’ll lead the re-regulation of financial markets next year and it’ll be a set of hearings and investigations – and legislative drafting – worth watching.

Another winner: Barack Obama. A long career watching politics teaches that there are two things never worth second-guessing. One, the result of Supreme Court cases. Oral arguments are clues to what the justices may do but clues aren’t decisions. The other are the results – the final take away – that voters have of debates. On Friday, I thought it was tied. Today, it’s pretty clear that Obama’s stateliness and calm was more impressive than McCain’s short-hand Senate speak.

Possible huge winner: The U.S. Congress which, after eight years – and I’m being generous – of dithering, has finally grown a spine. They didn’t do everything the Bush Administration to fix the mess that’s Wall Street and they took their time about it. You might disagree with the outcome – this deal is taking way too long to get sorted out – but they’re moving. Which bodes well. The SEC isn’t the only thing that needs fixing (two words: health care) and now that Congress has got the hang of this decision-making stuff they’re supposed to do, well, we might actually have a government. You know, back and forth, balance of power and all that.

You get a sense Congress thinks so, too. Why? They’re pushing back. Go find the clip of Rep. Marcy Kaptur chastising a CNBC reporter as he accuse her of voting to bring down the U.S. economy: “You’re very anxious, I can hear your voice there,’ says Kaptur who gave one of the better speeches – as a Democrat – for why she voted against the Wall Street rescue plan. “For the sake of the country and even the sake of the markets I think you should operate prudently and with a little bit of calm in your voice today. What we want to do is be responsible not just for what happens on Wall Street but what happens to the American tax payer generations hence.”

Which is, in the end, what we pay them to do.

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