Belmont Club

Just thinking about tomorrow

Glenn Reynolds looks at the market reaction to Obama’s electoral victory: it is quite simply “the biggest post-election drop in history”. One of Reynold’s readers notes, “I thought it was the oceans that were supposed to fall.”

Of course one can argue that since the market is extraordinarily volatile and because there’s no way to test the counterfactual conditional of whether the market and other economic indicators would have done better if John McCain had been elected, then we can reach no definite conclusions about the investor’s perceptions of the two candidates.

However we can go with the facts as they stand. We don’t alternate history, just history as it exists. And in the actual estimation of prediction markets a recession will happen and the likelihood that taxes will increase has jumped. Precisely why, I leave the readers to judge. There is a scene in the opera La Traviata when a woman dying of consumption realizes that even the return of her lover has not slowed her disease. History has not stopped for the One. As soon as the Historic Celebrations are over the next order of business is to ensure that you don’t become History.

The hard reality is that for most us, economic survival will depend on the quality of our own efforts rather than the occupant of the Oval Office. Maybe that’s the way it always was, though I’m sure some will be disappointed.

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