Faber's Misread This One Badly, 'first Battle Of Bull Run'...

[Toto deVeer]

I was shocked by a a remark of Marc Faber's in his recent

in the US. He's a brilliant economist, in my view. He's a renegade...something to respect. But this time he's got it badly wrong.

What Faber stated was that "I think the Democrats have, sadly enough, another shot at keeping the majority" (see video 2:30 in). Oops!

This week the incumbents (who just happen to be majority Democrats) are going to get a pasting. Well, not just a pasting, but they are going to get the worst political beating since the American Civil War. The whole political party might eventually disappear, like the Whigs did, if they do not change radically.

This is not a Republican thing, nor is it a Democrat thing. It's an incumbent thing. To me this is the peaceful analogue to the First Battle of Bull Run. It's the first stage of a political movement that I call 'Anti-Federalist', not unlike the sentiment that led to the American Civil War. In fact, a precursor to the American civil war was the financial crisis of 1857. The civil war started in 1860. The crisis of 1857 had many, many parallels to the current situation. An excellent read is 'The History of the Commercial Crisis, 1857-58, and the Stock Exchange Panic of 1859' (193 pp, published London - 1859 [download here]). This is the best historical template for the current situation we are witnessing, a first-hand account of financial fraud gone rampant, commodity price spikes, followed by collapse. Sound familiar?

Here's the future political meme:

Anti-Incumbent == Anti-Federalist == Anti-Globalist.

We all should be cheering this development. Those politicians that don't get it are in for a rude awakening...with huge impact on the US, Europe and the world.

Whilst everyone, including myself, tends to think of the two party system as two sides of the same coin, political turning points arrive in history where politicians become a hostage of the people. One of these times was the fall of the Berlin Wall. We are witnessing another now, this time in the United States. It's emerging in the UK. Mervyn King gets it. I think the coalition gets it; well, at least they're floating some good policies, and monitoring public view. The British public know that something is badly broken, but conditions have not yet reached such an abject level, unlike the United States...and this is what the Coalition must be prepared for...it's coming.

The present state of mind of the US public is evident. I quote a recent, earthy and honest post by Bruce Krasting, an on-the-ground summary of his situation in Westchester -- New York, concerning the local incumbent, Hall:

"As you can see this is a tight race with a slight bias to Hall as a result of his 52/43 advantage in Westchester County. Well I can tell you that many of my neighbors are Mad too and I don’t think that Hall will carry Westchester with the majority suggested. As a result Mr. Hall will lose his seat. This district was considered “safe” for the Democrats not so long ago. I think the loss by the Dems in NY’s19th is a bell weather for how many congressional races will go. There will be a surprising number of safe seats in the House that are going away to other candidates."

Krasting's remarks are about an election that is largely off the radar as far as the pundits are concerned. But there are lots more like this coming. That is for sure. Again, this is a sea change of attitude, not a Republican thing. The same will happen to the Republicans in two years, if they do not tow the line, and they know it.

I'm looking forward to next year when Ron Paul is, for the first time, made Chairman of the FED oversight committee (even if he is not Chairman, his influence will dominate). That should make Blackhawk Ben's remaining time interesting. He won't be nominated again, by the way. His days are numbered.

As for me, well I take the view that the days of central banking as it currently exists are numbered. Mervyn King knows this. Bernanke doesn't. Either the banks change, or they disappear. The FED is going to disappear. It's inevitable. The only question is: When?

And so, on this positive and optimistic note, we return to the UK with a video full of Geordie grit and steel; and a title that sums up the whole situation:

Ain't No Doubt, It's Plain to See (Jimmy Nail)...

Edited November 1, 2010 by Toto deVeer

[smeagold]

I hope your right. well written post btw

[Toto deVeer]

I hope your right. well written post btw

Thanks. Looking forward to interesting times, starting next year. Fingers crossed.

[gravity always wins]

Not sure what you are getting at but I don't see midterm elections changing anything but the colour of the party in power.

Karl Deninger one of the founders has left the tea party and says it has been hijacked by the Republicains and has now gone from discussing balanced budgets to blacks and gays. Its over before its even started.

BTW Republicans are bigger spenders than Democrats.

As for Ron Paul well he isn't in anyones club and the reds would rather have the blues in power than Ron and vice versa neither would let Ron take their power away.

[Toto deVeer]

Not sure what you are getting at but I don't see midterm elections changing anything but the colour of the party in power.

Karl Deninger one of the founders has left the tea party and says it has been hijacked by the Republicains and has now gone from discussing balanced budgets to blacks and gays. Its over before its even started.

BTW Republicans are bigger spenders than Democrats.

As for Ron Paul well he isn't in anyones club and the reds would rather have the blues in power than Ron and vice versa neither would let Ron take their power away.

I don't think Denninger gets it either. The whole underlying theme is complete dissatisfaction with government. For whatever reason. Denninger is a Fed supporter in that he supports fractional reserve banking. I don't think many people realize this; that's why he hates gold so much.

This is why I think the argument about this being only Red v Blue is a complete (perhaps deliberate) misdirection. It's about anti-incumbent, and TPTB are trying to direct the public away from this idea. I hope they don't succeed.

Why do I say this? Last year CSpanJunkie's Youtube account was pulled. He had about 2000 videos from CSpan (these are public domain paid by tax dollars). Many of these illustrated just how bad the Fed and Congress were. There were also public domain vids of protests at town hall meetings related to the healthcare bill. All removed from the internet. You can't even find these in the archives of CSpan. Think someone is trying to hide something?

[TwoWolves]

Not sure what you are getting at but I don't see midterm elections changing anything but the colour of the party in power.

Karl Deninger one of the founders has left the tea party and says it has been hijacked by the Republicains and has now gone from discussing balanced budgets to blacks and gays. Its over before its even started.

BTW Republicans are bigger spenders than Democrats.

As for Ron Paul well he isn't in anyones club and the reds would rather have the blues in power than Ron and vice versa neither would let Ron take their power away.

Agreed.

Good OP by the way but I don't think we have seen the writing on the wall yet.

Many of the American people have started to see that the crux of their problem is Globalisation and they want a government that will take these problems on rather than just cling to power and placate vested interests. I don't think however there are any contenders… yet.

[Toto deVeer]

Agreed.

Good OP by the way but I don't think we have seen the writing on the wall yet.

Many of the American people have started to see that the crux of their problem is Globalisation and they want a government that will take these problems on rather than just cling to power and placate vested interests. I don't think however there are any contenders… yet.

Every time these sorts of problems have come up in US history, the result has been a struggle between states rights and the federal government. The first great conflict was the American Civil War.

Each time the Federal government has won out. But this time there is really no more power to be had by the Federal Government. That's why I think that this will swing the other way.

The end of the Fed may coincide with the establishment of state banks, just like the one that exists in North Dakota. ND, by the way, is doing fine. They are one of the few states that are weathering the situation well.

Were California to take the same direction they could solve their budget problems almost overnight.

This may be the outcome; fifty state banks against the Federal Reserve.

[Executive Sadman]

isnt there two houses of govt or something? Ie despite clinton and the democrats winning one house in 92, 96, the republicans controlled the other house continously since 1986 until recently? Things like the repealling of the Glass steagal under clintons watch was actually driven by a republican majority.

Bit like here local/councillor elections the tories always clean up - people seem to vote partisan in general elections, but prefer conservatives when its in their own back yard.

[Toto deVeer]

isnt there two houses of govt or something? Ie despite clinton and the democrats winning one house in 92, 96, the republicans controlled the other house continously since 1986 until recently? Things like the repealling of the Glass steagal under clintons watch was actually driven by a republican majority.

Bit like here local/councillor elections the tories always clean up - people seem to vote partisan in general elections, but prefer conservatives when its in their own back yard.

You have the House and the Senate that make up the Congress. Then there is the executive branch that is the President.

The Congress proposes legislation and the President has to approve it.

At the last election the House, Senate and Presidency were won by the Democrats on the theme 'Change you can believe in'.

For this reason the Democrats have been able to pass any legislation and spend anything they wanted.

This mid-term election is an anti-encumbant election. The odds are that the Republicans will take over the House and possibly the Senate.

What this means is that it will be difficult to get any legislation through, at all. And there will be much tougher oversight, because the new Congress will be in the oversight position.

A large number of the Republican candidates in this election are not traditional Republican politicians and have no political experience. Yet people are voting for them.

This is not a Red v Blue thing at all. The Republicans have been willing to step outside their own party. In fact many of the Republicans who will occupy office next term were not even expected to win in the Republican primaries. Yet the people voted for them.

For this reason I do not expect you will see Congress voting along party lines in the new year. The parties are becoming too fragmented. This is what the political pundits are missing.

I suppose this is the closest thing the US could have to a hung Parliament type of scenario.

[Executive Sadman]

You have the House and the Senate that make up the Congress. Then there is the executive branch that is the President.

The Congress proposes legislation and the President has to approve it.

At the last election the House, Senate and Presidency were won by the Democrats on the theme 'Change you can believe in'.

For this reason the Democrats have been able to pass any legislation and spend anything they wanted.

This mid-term election is an anti-encumbant election. The odds are that the Republicans will take over the House and possibly the Senate.

What this means is that it will be difficult to get any legislation through, at all. And there will be much tougher oversight, because the new Congress will be in the oversight position.

A large number of the Republican candidates in this election are not traditional Republican politicians and have no political experience. Yet people are voting for them.

This is not a Red v Blue thing at all. The Republicans have been willing to step outside their own party. In fact many of the Republicans who will occupy office next term were not even expected to win in the Republican primaries. Yet the people voted for them.

For this reason I do not expect you will see Congress voting along party lines in the new year. The parties are becoming too fragmented. This is what the political pundits are missing.

I suppose this is the closest thing the US could have to a hung Parliament type of scenario.

Thanks for clarifying

[Toto deVeer]

From an analysis of data from Real Clear Politics by Mish. and paraphrased succinctly below:

Congressional Elections

----------------------------

House

Incumbents booted out: 64

Result : Big majority change of leadership (Anti-Fed Reserve stance coming).

Senate

Incumbents booted out: 5

Result : Hung (Loss of Democratic party majority)

Gubernatorial Elections

--------------------------

Incumbents booted out: 9

Result: Big majority change of leadership (Anti-Federalist stance coming),

Mish has carefully hedged his bets. I believe that the swings could easily be even larger, and that the Senate has a strong probability of changing leadership too.

These anti-incumbent moves are in favour of the Republicans.

It has been said that the Republicans have co-opted the Tea Party movement. Yet during the Republican party primaries, 70 Tea Party candidates beat the incumbent Republican party nominees. This is a clear signal that leads to only one conclusion:

The Republicans didn't co-opt the Tea Party; the Tea Party co-opted the Republicans. This is what I believe is going to be the shock that reverberates through the political power centres of the US.

This will be the end of the FIRE economy, and confirms the concept of peak credit. China's prospects will dim. Look for prosecutions, jail time, and the break up of TBTF. If I were a Wall Street CEO, I'd find the mob's plastic surgeon, grow a beard, and locate a nice warm cave on a remote South Pacific Island, where even the natives couldn't find me.

The even bigger impact will be at the state level. where the anit-Federalist movement is gaining strength. These new governors will work on that mandate. There's also going to be big cuts coming at state government level. Governor Christie of New Jersey is the model for what is to come.

Now, the US is on borrowed time. The people gave Obama's "change you can believe in" about one year. He failed. If this new group fails, then there will be a revolution there, for sure. It won't be a pretty sight.

I don't think Faber gets it. Cameron does...and Clegg. And so does King. We shall see.

As stated in the OP, the best template for what is happening today is the lead up to the American Civil War. That time line was:

1857: Financial fraud leading to a financial collapse.

1859: Collapse of the share markets.

1860: First shots fired at Fort Sumter, states try to succeed from the union. Civil War.

Hmmm...does history repeat, or just rhyme?

Edited November 2, 2010 by Toto deVeer