San Diego Housing Bubble News and Analysis

CNN had an article cover these exact questions. The summary is that taxes will not be raised. Democrats want to keep the economy good so they can make a run for the white house in 2008. So don't expect any drastic change. In the past, when you have opposite parties in the legislative and executive branches economy tend to do very well, especially the stock market. Just like the Republican control of the legislative when Clinton was in power. The reason economy do well in this condition is that no major laws will come out since they will veto each other. Wall Street loves it when there's no major shock.

I think the economy is heading for a recession no matter what, primarily due to the housing crash. So regardless of what policies change under the Democrats it will have minimal effect on the economy in the next two years.

Probably in two years Rush and all his chronies will be blaming the Democrats for the recession.

These are my thoughts exactly. Being the cynical libertarian whack job that I am, I am kinda glad the dems took congress. This way, there will be gridlock, and nothing will get done. And that is a good thing :)

answer's here

The name of the party is the Democratic party, not the Democrat party. All the right-wing media types like to say the "Democrat Party" because it sounds like the "rat party". They started this a few years ago and now even the man in the street (or posting on a housing bubble blog) uses the wrong term.

DemocratIC party, say it with me one time. DemocratIC majority.

DemocratIC party

Ha, that's funny. My brother-in-law was complaining about the exact same thing this morning. Was it a news piece somewhere?

I'd never noticed, but I don't listen to right-wing media types much (but I guess a lot of lefties do?). I suspect it might also have something to do with the general decay in the use of the English language (hell, I think I'm getting pretty bad myself).

Hey socalarm, I liked the idea of returning Texas to Mexico. I'm going to write my senators about that. Strangely though, nowhere in that manifesto was the forced confiscation of large SUV's for economy cars! I guess the Democratic party has gone soft.

Josh

No, it has nothing to do with general decay of the language. Every single time you hear a representative of the GOP refer to the Democratic party, they'll call it the Democrat party. It's possibly a Karl Rove invention, but it is definitely GOP policy. For example, our president even uses the wrong name for the party. Just yesterday when asked about the election, President Bush said:

"It's clear the Democrat Party had a good night".

http://www.truthout.org/docs_2006/110906...

Okay now, that's the exact same quote my brother-in-law referenced. Is this a topic somewhere?

Democrats are good for increasing the price of gold since they, like the compassionate conservates before them, like to spend money and inflate the currency.

It's not a topic anywhere as far as I know, it's just something I've noticed. In this interview with Rush Limbaugh, he says "Democrat Party" twice:

"...than the Democrat Party does and liberalism."

"...in the victory of the Democrat Party..."

http://mediamatters.org/items/200611090005

Every single GOP mouthpiece calls it "The Democrat Party". It's deliberate misuse, designed to give a subliminal negative connotation.

The effects of the Democratic controlled congress will be minimal.

Lacking enough of a majority to override vetos, and having only a small majority in the Senate, the only significant changes they will be able to create will be those with significant public support. At present, I see those as decreased military presence in Iraq, increased minimum wage, and increased scrutiny of Big Pharma.

Generally, divided governments are good for the economy. Almost perversely they encourage fiscal responsibility, as both tax cuts and spending increases will be limited. Decreased military spending will help the economy, a lot. I don't believe in trickle down economics, nor do I believe in trickle up. A minimum wage increase will have a small effect in redistributing wealth from the very richest americans to the very poorest. In states like California and others, the minimum or market minimum wage are higher than any potential increase.

As for housing, there may be less scrutiny on Freddie Mac and Fannie Mae and their lenient lending policies. This may lead to more of a slow release than popping of the housing bubble. Or, it could artificially prop it up, leading to a sudden collapse. Or, market forces may just overwhelm any small efforts.

In short, don't expect major changes in the next two years, as Bush still has veto power, and moderate Democrats like Casey and Lieberman in the Senate would have to be willing to support any legislation even to get it on Bush's desk.

Wow, everybody skipped over:

Donald Rumsfield, sacrificial offering.

My question is... why didn't he do it before. He probably wouldn't have lost the senate. But, maybe it's part of the master plan for victory in 2008 after they let the economy go bunk.

The Democratics in congress will:

- not raise taxes because they will be too busy raising Social Security contributions which everyone knows are not taxes
- make huge defense cuts with what is left going to Alcee Hastings and Florida because Nancy is mad at Jane
- rename No Child Left Behind, increase funding and dispose of the accountability requirements which will make the program hugely popular with educators and administrators
- do a phased withdrawal, er redeployment, from Iraq ending in October 2008 - probably with Republic support.

and a lament: why did I not take my father's advice and sell my Pfizer last week?

You should have sold your Pfizer a while ago... their main cash cow patents expire soon and their pipeline isn't exactly bursting with new potential blockbusters. Amgen and Novartis are much stronger plays in the industry right now (especially since Novartis is European, so it benefits if the dollar falls).

Here are two articles from marketwatch.com

estate tax change likely.

< What to expect if the Democrats win>

http://biz.yahoo.com/weekend/elex_1.htm

From Barrons 11/13/06

"It's likely that Democrats will tread carefully over the next two years because, in the run-up to '08, they certainly don't want to be blamed for any economic slowdown.

Analysts pretty much agree on what sectors will win or lose with Democrats in control of the legislative branch. Pharmaceutical companies are high on the list of losers, since Congress may seek price concessions for drugs used in government programs like Medicaid. Merck's shares (MRK) fell 7.2% from the close of Tuesday's trading through Friday morning; Pfizer (PFE) was down 6.6%; Johnson & Johnson (JNJ) was off 4.6%. (To see how the hit to pharma stocks may present buying opportunities, see The Trader.) Restaurants, meanwhile, will be squeezed by legislation raising the minimum wage.

Oil companies will be hurt by the elimination of tax benefits or the imposition of a windfall-profit tax. Defense outfits could be wounded by a pullback in Iraq. On the other hand, alternative-energy producers might benefit from legislation to reduce U.S. oil dependency and to cut greenhouse-gas emissions; property and casualty insurers could benefit from an extension of the Terrorism Risk Insurance Act, which Democrats generally support; and mortgage lenders Fannie Mae (FNM)and Freddie Mac (FRE) could get regulatory relief.

As for a tax hike, forget about it. The lame-duck-in-chief in the White House wouldn't approve, and the Democrats' majority is too slight to override George W's veto."

Yesterday, I read somewhere, that some Democrats were whispering about intervening to prop up housing prices if housing prices continue to decline. But now I can't find that story! And how would they do this anyway?
Robert Rubin is the Democrat who's talking about raising taxes. But he's not elected to anything. Besides, he's filthy rich, so why would he care if the Democrats raised income taxes? On the other hand, I don't see how the Democrats could raise income taxes on the middle class, since so much of the middle class is drowning in debt. It would be a really mean thing do to. No, the Dems will wait until 2008 when they have a Democrat president to really get their agenda going.

I just hope we raise interest rates, save the dollar from its death, encourage savings and discourage debt. I also hope the ridiculous housing market crashes, but thats just me.