With only days passing since the presidential election. It would seem the rainbows, and unicorns that most John or Jill Public believed were to arrive are now morphing into shapes more in line with gargoyles under darkening skies.
Clarity has arrived, and what has become apparent is this: It’s not what Wall Street, businesses, and many others wanted, or expected. Never the less consequences either good or ill are going to be felt with such immediacy John and Jill will have no time in truly understanding why. After all, they’ve been told by the so-called “Smart crowd” in the financial media, cables shows, network news, print, and more that the government, or Federal Reserve can fix everything. All I’ll say is this: “Sure they can. Want to buy a bridge?”
First off this isn’t about who won or lost. Nor is it about if there’s an R, D, or I after their name. Personally I don’t care. I pay attention to what a person says, and what they do. Particularly what they do about the things they say. Period. That is what truly matters. All the rest is for parlor game aficionados.
Elections have consequences. I am amazed when people act as if elections are some soap opera to be viewed on television as if it wouldn’t or doesn’t affect them. Then the consequences begin to appear. Then it seems to get all too serious. However by then it’s too late. The dies (ballots) have been cast.
So far in less than 24hrs business, Wall St. and a whole lot of others that understand these implications have begun reacting both negatively, and immediately. Only John and Jill Public will be left wondering.
The clarion call heard round the country for many was “Tax the rich!” Yep, that’s right. Only one problem there. They have their money right along side John and Jill’s in the markets. They know how they’re going to move and protect theirs. Does anyone think John or Jill will know? Or could?
They’ve been instructed or taught bad things won’t happen now. The Federal Reserve has got ya back “Boo-Ya!” How’s that working out today alongside with Apple® shares now falling over 20% in 8 weeks losing nearly $180 BILLION dollars of market cap?
On Friday alone we witnessed one rather famous investment brokerage is near insolvency while shopping itself for someone – anyone – to throw them a lifeline or they’re history. Let alone all the John and Jill’s that were told “Apple’s a screaming buy here on a pull back…Load up!”
How’s that working out today? Is one to “Load up” again right here? Or does one need a bell like Pavlov’s dog to make investment moves? That’s right I forgot. It’s bells, whistles, and gongs today. Well it is on TV so it must be right…Right?
We also witnessed on Friday both sides of the political aisle make their cases or arguments for what they think should be done. It was near comical listening to talking heads trying to parse the demeanor or implications of this word said, or that word not said, and what it might mean. What part of “Your taxes are going up” does one not understand? Oh, right…revenues. I feel better already.
Those dreaded loopholes of the rich are going to be closed. Yay! Oh wait..dividends, and interest. Isn’t our money where their money is? In the markets? Yes it is. I wonder if John or Jill has looked at the market over the last couple of days? How’s that 401K doing?
People that pay attention are acting – have already acted – and will continue to act. These are the ones first to the exits. I fall into this group, and I believe many of you do also. We are the: React now – get safe – reassess from a safe vantage point. Most of John or Jill Public doesn’t. They fall more along the lines of remaining seated while wondering to themselves: “What’s going on? The movie’s not over yet.” Only to realize once they finally understand – it’s too late.
Don’t misunderstand me. I’m not saying it’s good, bad, or indifferent. Neither am I implying the current administration should or shouldn’t do exactly what it said it was going to do. No matter whom was elected I knew exactly what actions I would begin to take, what I would no longer contemplate, and others I would just put off in a wait and see type folder.
The difference in both myself, and most of you currently reading this is we understood these implications and have already begun making moves in our own lives and finances. My point here is this: Do you think the public at large has any real idea of the implications? Let alone with how to deal with what might be on the horizon? I’m not a doom and gloomer, but I remember 2008-09. For most it’s ancient history never to be repeated. After all we have the Federal Reserve and they got our back! ( I still have that bridge for anyone believing that.)
Here are just two small examples put into play nearly 24hrs after the elections. Remember all that talk about business uncertainty that was pooh-poohed as hogwash by most main stream economists and touted across television and print? All one heard was: “Unemployment’s going down, business are beginning to reinvest, the stock market is fairly valued, stocks for the long haul,” blah, blah, …blah.
It’s “free healthcare” for all working people. Ah..sorry, but no that’s not quite true. Some of the hardest working people (and many of them I know from decades in the food industry) restaurant employees woke to a shocker. Darden Restaurants the parent company of Olive Garden®, Red Lobster®, and Longhorn® restaurants announced Friday they will begin experimenting with lowering workers hours below 30 per week as to not face fines from the new healthcare mandates. Because the new tax, I mean mandate, I mean revenue enhancement would probably bankrupt them.
Here where I live a very well-known multiple location restaurant had an interview on a station I listen to where he explained at his 9 locations he had reduced his staff from 85’ish employees down to 60. On purpose. Choosing to have few customers that required less staff, rather than staying at his current – profitable levels.
How the election played out would mandate if he needed to reduce further and get his staff under 50 because the new law would impose fines that would be unworkable to his current structure, and put him out of business quickly if he just did nothing. So as he has been doing, he’s now just finishing. But John and Jill won’t understand why 2 of their favorite places are no longer there. Which is the issue.
Elections have consequences. They always have, they always will. Whether you’re the happiest voter on the planet because your team won or the saddest. If you’re reading this you should be reacting to what is now known. Not waiting to see if the time is right to do one thing or the other. That time has passed. The time is now to put your plans into action. No matter how you see the sun rising – or sky falling.
© 2012 Mark St.Cyr