Those with long memories will recall that the Global Financial Crisis started with a Republican in the White House. It is also a fact that irrespective of the socialist, centralist or conservative nature of the government, not one nation in the capitalist world has been immune to the Global Financial Crisis and no political view has been able to get a jump on the rest of us and drive their economy into substantial growth or full employment ahead of the rest of the world.
It is also true that the public has a short political memory. The Americans went to the poles in mid-term elections this week – well, some of them did – turnout for the elections was one of the lowest on record, reflection the public’s disenchantment with politics. The outcome was that the Republican Party now has a majority in both Congress and the House of Representatives, giving President Obama an uphill struggle to pass any controversial legislation in the remaining two years of his final term. For their part, Republican leaders have promised not to shutdown government again, a move that saw America move to the cusp of a sovereign default (see what I mean about the short public memory?). Obama has also promised to listen to the electorate and redouble his efforts to work with Republicans – he could hardly say that he intended to sulk in the White House for the remainder of his Presidency, could he?
In any event, investors have responded well to the Republican triumph with the S&P 500 and the Dow Jones Industrial average closing at fresh record highs. The US Dollar was also up strongly against the Yen hitting 114.65 to the Dollar, a level not seen for seven years. There has been a ripple effect on other stock markets with Asian stocks trading higher on the aftermath of the election outcome and positive economic data emerging in the USA. Preparations for the 2016 Presidential election will shortly start gearing up in earnest.