“The people have spoken…the bastards.” – Dick Tuck, after losing a race in California to Richard Nixon
The big news this morning is that the Democrats have retaken the United States House of Representatives.
After 12 years of going straight, the Dems in the House are about to take up their sordid old trade of cracking safes and cracking heads.
The business of Congress was always simple enough – breaking budgets and breaching the dignity of civilized society. Now, at least in the House – the outcome in the Senate is still in doubt at 4AM EST this morning – the Democrats get to lead the way.
Here at the Daily Reckoning, we exercised our constitutional right not to get involved. So our hands are clean.
“But wait,” protests a friend. “Not voting is a political act too. You’re just affirming the status quo.”
“Not at all,” we reply. “It’s just that voting is a wussy way to change politicians. If a leader gets his people into something as ruinous and preposterous as the war in Iraq, he ought to face something more terrifying than an election.”
“The vote was a vote against the war,” say this morning’s reports. The war has cost as many as a million dead, and as much as $2 trillion in expense – to say nothing of the damage to America’s military power and her diplomatic position in the world.
We recall when the news of 9/11 spread around the globe. In our office in Paris, French friends and employees came up and told us how sorry they were…and how they supported us. “We all feel like Americans now,” they said.
In Britain, the Queen ordered the band to play the Star Spangled Banner. Guardsmen at Buckingham Palace wept upon hearing it.
Even Yasser Arafat rolled up his sleeve and gave blood.
The whole world stood with us then.
“In my lifetime, I have never experienced around the world and in Britain such loathing and contempt for America,” writes Gavin Esler in the Daily Mail. “It’s as if the only acceptable racism in 2006 is to be anti-American.
“At a local school in London, I gave a talk recently on world affairs to a group of clever kids ranging in age from 14 to 18.
“When I mentioned that I was concerned about a possible war with Iran over the Iranian nuclear program, more than half the pupils said they were more likely to believe the Iranians than the Americans. Can you believe it has really come to this?
“One opinion poll published yesterday found that Britons now believe George Bush poses a greater danger to world peace than either the Iranian fundamentalist leader Mahmoud Ahmadinejad or Kim Jong-il…”
Esler goes on to reflect on what a great job the Bush administration has done of greasing the “Axis of Evil” so it can roll on to wherever it is going. North Korea has managed to get a nuclear bomb, under the watchful gaze of the United States, while the American military has actually helped Iran achieve all of its most important foreign policy objectives. It removed Iran’s biggest rival in the region – Saddam Hussein – and neutralized its biggest enemy – Iraq. In destabilizing Iraq, the United States also helped to extend the Shia revolution and expand Islamic fundamentalism.
Mission Accomplished! The mullahs must be high-fiving each other.
But now the voters are fidgeting. Fifty-five percent of them tell pollsters their wages aren’t keeping up with inflation. And fifty-three percent say the war in Iraq isn’t worth fighting.
Meanwhile, this from the art market: David Geffen, of Hollywood fame and fortune, bought a Jackson Pollock painting for $140 million. This follows the near-purchase of a Picasso for – what was it? – $139 million…and the purchase of a Klimt for $135 million.
Everyone falls for something. While the cheap suits go for ARMs, Neg Ams, and I.O.s, the expensive suits plump for Picassos and Pollocks.
But the difference is, the rich are putting down real money.
“Big Bonuses Seen Again for Wall Street,” says the New York Times.
“Never in the history of Wall Street have so many earned so much in so little time,” adds a Bloomberg report.
“Goldman Sachs Group Inc. (NYSE: GS), Morgan Stanley (NYSE: MS), Merrill Lynch & Co. (NYSE: MER), Lehman Brothers Holdings Inc. (NYSE: LEH) and Bear Stearns Cos. (NYSE: BSC) are about to reward their 173,000 employees with $36 billion of bonuses. That’s a 30% increase from last year’s record, and it doesn’t include the billions more that will be paid by Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM), the three largest U.S. banks, as well as the hundreds of hedge funds and private-equity firms that constitute the financial industry.
“Enriched by the unprecedented value of takeovers, equity trading and credit derivatives, this year will be the best ever for the major brokerage firms,” said Brad Hintz, an analyst at New York-based Sanford C. Bernstein & Co.
“The average windfall for each individual at the five largest U.S. securities firms will be enough to buy a $165,000 Bentley Continental GT, the two-door coupe favored by Nikki Hilton and Cher. They’ll have plenty of change for a box of Romeo y Julieta cigars and a case of Pol Roger champagne – the stuff enjoyed by Winston Churchill, Britain’s prime minister in the 1940s and 1950s.”
And lest you think this phenomenon is limited to Wall Street, from the city of London comes similar news:
“Expectations have been bolstered by a study predicting that the average bonus would rise 18.2% this year,” writes The Business. “And that 4,200 City employees – working across London in banking, hedge funds, law firms, private equity and other up-market financial services – would receive a bonus worth at least $1.9 million…
“They also believe that a handful of City traders will earn more than $50 million and possibly as much as $100 million.”
So London property is soaring. The art auction houses are making a fortune. The best restaurants are full. And the rich are congratulating each other on what geniuses they are.
But elections are not decided by rich geniuses. They’re decided by the plebes…the lumps…the hoi polloi…the masses. It’s the average man who decides who misgoverns a democracy. And the average American is by definition dumber, poorer and more ignorant than 150 million others.
His mortgage is being reset just as his house has stopped rising in price. He owes more than ever, and he has less disposable income than he had thirty years ago. And if he doesn’t catch a break pretty soon, he’s going to go sour.
And now come the election results. The Republicans are being punished. But getting voted out of office – with a million dollar pension – doesn’t seem like the just reward for the damage done. A firing squad would be more like it.