Where did this “election-years-are-always-bountiful” nonsense get started? I’ve seen the analyses that show outperformance during election years, but how does that translate to Bernanke making it rain dollar-dollar bills?
If anything, I’d say markets outperform in election years because the Executive Branch has an incentive to reign in the extremists and curb check their agencies.
Look at the EPA. Some twat who also happens to be the regulator of Texas gets caught making like a nutbag, trying to argue that the best way to protect the environment is to give out the Brazen Bull treatment at random to energy companies – BAM! his ass gets fired less than a week later.
You think that kind of vigilant self-governance would be present otherwise? Hah! That guy would have got invited to the White House for steak dinners if this story came out off an election cycle.
Instead, he watches as his career is set on fire right in front of his eyes. It’s entertaining, because he seems like a real piece of shit, but I don’t translate that to anything other than what it is.
Election years are impossible for politicians to make dumb in. That’s why they’re so profitable. Once every four years progress is attainable, especially right now in this jobless recovery, because every project that can be imagined is getting green lighted. But, even without all the pipelines and approvals coming from agencies, just having them out of the way is useful. They can’t afford a scandal, and the rest of us are glad to be rid of them.
But don’t go thinking that translates to a guarantee of panacea. Why would Bernanke care if Obama gets elected or not? Would he gain something from it?
You are assuming, among other things, that:
1) The next administration would somehow inhibit Bernanke’s control of policy
2) An Obama administration would be more beneficial to Bernanke’s policy
3) Loose money will foster a more positive environment for politicians
3) Bernanke even wants to print more
Why does Bernanke care if a Republican becomes president? His term isn’t even up until 2014, and there is no established practice of removing him from office. Moreover, Mitt Romney is not exactly a gold bug, and unless Bernanke starts ushering in Weimar Republicesque hyperinflation, there’s no reason to think that Mitt Romney will do anything to affect Bernanke at all.
Bernanke’s biggest critics have been coming from the House of Representatives. The House has been such a vocal opponent, Bernanke has even gone to the unprecedented lengths to send emissaries to the House to try and win support. The House is where Bernanke’s problems rest, and the House’s demographics are unlikely to dramatically change this election. If you believe printing money is good for incumbents, how exactly does printing help Bernanke get rid of his biggest adversaries?
Besides, Bernanke has been harping repeatedly on the need for government to get its affairs in order. He fears more than anyone what would happen if demand for treasuries was impaired; the man is using treasuries to try and stabilize the economy, for Christ’s sake! What happens if they become relatively illiquid next to today’s standards?
How does Obama winning reelection aid that end? The US Government would still be check mated, and any progress on balancing the budget would still be virtually impossible. An Obama victory does not somehow favor the likelihood of more stimulus or reform getting through the chambers, anymore than a Romney victory would. Bernanke would have to somehow return the house to democratic control, while also orchestrating a supermajority in the Senate. That would get him stimulus. It would also crack any faith in the US budget, as a Democratic supermajority would unquestionably spend like mad. Or he could try for the opposite, running for a Republican supermajority. That *might get him a balanced budget. But both ends are unlikely to play out well, and he doesn’t have that fine level of control.
There is no reason Bernanke should care who is President of the United States.
And how can you be so sure that cheap money is even in the best interest of Obama/Democrats/Republicans/Independents/Kittens…etc? Gas prices are near $4 a gallon as a national average. Do you think the price of goods and services somehow just get a pass in elections? Like printing money will somehow overcome the fact that it costs >$50 to fill up a midsized sedan, rather than make things worse?
My point is, the advantage of election years is political submission, not implicit guarantees of inflation. The argument that the Fed will wipe the ass of markets in an election year is a cop out. Why would you think any of the candidates even wants inflation right now? Our employment issue “looks” better than it did. I daresay, most politicians would like to see gasoline prices plummet a good 25% from here to help things along.
In fact, I know they would, because I’ve been paying attention to the calls for more regulation of “those damn oil speculators”. I think Obama would be as furious as any Republican if Bernanke started QE3, because it would probably spark a gas crisis.
And then Bernanke would have every politician in American calling for his head, not just some House Republicans.