Sunday, December 18, 2016

The House + The Senate + The Presidency = Disaster

Yeah, sure, the Republicans have a nutjob and a suitably batshit crazy cabinet en route to inauguration, confirmation and so on. And, yes, the Republicans will control the House of Representatives and they'll control the Senate to boot. That's what's called a "unified Republican government."

It's not the first time the Repugs have achieved a unified government. Since 1900 there've been three previous unified Republican governments. And how did those turn out? According to Wall Streeter, Alex Palumbo, if the past holds true this time, disaster lies ahead.

The ONLY 3 PERIODS of extended unified Republican governments going back to 1900 ALL DIRECTLY led to banking crises….Arguably the 3 worst in US History. To be clear, I am defining ‘extended’ unified governments as anytime they control the House, Senate and White house for at least 4 years. This does not include short 2 year stints since it’s hard to screw things up that quick (FYI there was only 1 period of that anyway, 1953-1955). You can look up the periods yourself here and more detail here.

The list of Unified Republican Government crises include the Panic of 1907, The Great Depression, and the Financial Crisis of 2007-2008. Interestingly, the record of extended Republican control of Congress has also only led to crises. There have only been 4 periods of extended Republican control of Congress (3 of which overlap with the periods of full unified control just mentioned). However, the 4th period (I KID YOU NOT) ended in the 2000 DotCom Bust where the Republicans controlled the House and Senate from 1995-2001.

There's a word for this in High German, Gerfukt. What will the Gullibillies do when they realize they've been had?


Toby said...

Most of them will never realize it because they have Jesus.

Owen Gray said...

Santayana was most definitely right.

Toby said...

Questions, Mound. Does a unified Republican government mean that the banks get their way? Who gains the most by a unified Republican government?

rumleyfips said...

His cabinet is all 1% financial elite, locked into Wall Street and the big investment banks. At least 3 of them are ex-Goldman Sacks. This of course was deplorable when Clinton was linked to Goldman Sacks.

The Mound of Sound said...

Rumley, in the constant struggle between capital and labour, Trump's background and his cabinet picks suggests that the future is looking good for a continuation of capital's dominance. Obama did little to shift the balance back to labour and the new gang will be much less inclined to fret of the plight of the little guy who is, after all, their lawful prey. I expect the casino of the Bush/Cheney days that was partially shuttered after the 2007-8 meltdown will have the gaming tables back in business in no time.

Trump will be under pressure to show real prosperity growth in short order and I expect he'll do it as others did before him - he'll inflate a bubble. Even Bill Clinton knew the blessings a bubble bestows on government. So much notional wealth was generated during the Dot.Com bubble that tax revenues flowed into Washington sufficient to offset the deficit and even renew a long-interrupted reduction in government debt. Of course, as the government's bounty came from a bubble it was a windfall based on sheer sleight of hand which would, and did, end as quickly as the bubble burst.

I'm not sure that Trump will get away with it. America's foreign creditors have had it with these shenanigans and may not tolerate a return to Casino Capitalism. If they begin to back away from America's debt market, Washington would have to begin paying higher interest on its bonds and those are wheels that, once set in motion, can bring genuinely unpredictable consequences.

As the Magic 8-Ball would say, "ask again later."

The Mound of Sound said...

Toby - who gains most? Who always gains from high income tax cuts and wholesale deregulation? That ain't folks like you and me.

As for ordinary blue and white collar America, it'll be all bread and circuses. That's been the fall back option since the days of Rome and the coliseum.

The Mound of Sound said...

Yes, Owen, I'm sure you're right.