I’d like to give full credit to the August issue of “Esquire” magazine with Jeremy Renner on the cover for these words about our economy and what we can expect post November, 2012. The original article appeared on page 44, with the title “But, Soft! What Light Through Yonder Widow Breaks!”
The basic contention is that our economy is going to improve no matter what happens this election season. To wit:
“I am convinced that the markets are poised to soar in November, as soon as the uncertainty about the political direction of our country is settled. Regardless of who wins the presidency and whether either house changes hands, regardless of Europe’s woes, the unprecedented amount of cash sitting on corporate sidelines will be deployed and will set in motion a growth spurt unseen since Monica Lewinsky, the peace dividend and the Internet.”
The article goes on to quote Jimmy Lee, a Texan who is the founder of one of the first online brokerages and also the former chairman of the Texas teachers’ pension fund, as administrator of which he invested $100 billion. Another expert quoted was Mickey Gooch, founder and CEO of GFI, a brokerage that trades in credit default swaps (CDs).
Here was Gooch’s argument for the contention above:
“The uncertainty will be taken out of the market (regardless of who wins the presidential election). Investors may not like an Obama re-election, but at least they will know what to anticipate in the tax code and will deal with it. The Bush tax cuts not being renewed is already priced into the market.” Gooch’s only caveat is in regards to Europe blowing up, which he views as having only a 20% likelihood of occurring.
“The bottom line is that capital has been accumulating at corporations at a never-before-seen pace. Companies have been stuffing this cash in the mattress because they don’t trust the government. But that’s an unnatural state of affairs. Companies need to grow like sharks need to swim. Whatever happens in November, expect the American economy to surge to life.”