Obama winning the presidential election is the greatest thing going for the Republican party right now. In fact, the absolute BEST outcome possible for the Republicans is if they are not in power, or hold any majorities in any branch of government over the next 4 years. If anything, everyone who is wailing and moaning that Obama is going to destroy the country should be thanking him for taking power in the near future! Why? Please allow me to explain;

If you haven't been paying attention to the trend in the markets, everything is presently tanking.

This is not some minor recession. This is not a hiccup.

The economic downturn/recession/depression/meltdown (or whatever you want to call it) is going to be very, very bad and we haven't even come close to seeing the bottom yet.

Now before you jump into the very childish "it's all the (democrats/republicans) fault!!" argument, let's establish first off that this is a problem that started almost 40 years ago in the early 70's when we took our economy off the gold standard and moved away from the real economy... an economy based on goods produced or services rendered... to the FIRE economy... Finance Insurance Real Estate.

To sum it up very briefly, we outsourced and downsized much of the actual real economy and replaced it with the financialized economy, in which money trades hands to magically create more money with no actual goods or services rendered, or at best a very tenuous and obscure link between the two. In effect, a secondary economy whose main purpose is to ignore reality and is terribly complicated, thus allowing for the smoke and mirror show to go on for a long time.

So what happened? We transitioned to an economy based on massive bubbles that eventually burst. Only, just as one bubble is about to burst we've found something else to move to. If you'll remember back in 2000 to 2002, we had the tech bubble crash, which thankfully we already had the real estate bubble ready and waiting to take over. This is no accident, nor is it the "fault" of the democrats or the republicans as administrations from BOTH parties have carried on this time honoured tradition for decades.

But my friends, this time is different. You can ignore reality only for so long but sooner or later it's time to face the music. The economic upheaval we are seeing is just the start of the realization that you cannot exist on unsustainable bubble after bubble indefinitely. Ever since the mid-70's, average wages have actually fallen vs. inflation, but yet just about everyone owns a lot more stuff than you might have in the 70's.

Is this because of lazy poor people who made bad spending decisions?

Nope, in fact it's all part of the plan for the illusory economic success that was enjoyed in the 80's 90's and the last decade.

To make up for falling wages and the fact that much of the real economy had been outsourced, 2 critical things needed to happen:

1) A replacement for cash income was needed in abundance. Hello Visa and Mastercard!!!

2) The economy needed a new engine other than factories building things or engineers designing better bridges... so, welcome to the consumer nation! Approximately 70 % of GDP is based entirely on consumer spending. Instead of the factory producing the wealth of the nation, it was "created" in a shopping mall instead.

So while you may be bad-mouthing Cletus or Shaniqua for buying a new big screen TV on credit, they were actually doing the patriotic thing and boosting GDP while at the same time helping along the income replacement scheme called credit! In going out and buying these shiny baubles, whether it be a new DVD player or a nice shiny truck, all parties involved (except for the end buyer) can claim that they just "created" wealth! Isn't that a truly grand and magical thing now???

Anywho, it doesn't take a rocket scientist to see that this simply can't go on forever, although all of those puppets and pollyana's from the big investment houses and consulting companies are sputtering that no one saw it coming(this isn't true- this fellow did- http://www.rgemonitor.com/ and he was marginalized by "the experts" as a chicken little doctor doom.... who's laughing now hhhmm?)

But anywho, enough about the cause of the current and coming problems. Suffice it to say, that very bad times are coming.

So why is it a great thing that Obama will be in power and not a Republican?

Because for the next few years, the Republicans will be able to sit back and say

"Look, all of this trouble is because of the socialist policies of Obama rewarding lazy poor people slackers! If only you had given us the reigns of power we wouldn't be in this mess right now!!!"

Nevermind that this calamity was destined to happen long before the latest election. It has less to do with politics and more to do with the laws of physics, and since we see things unravelling so close to the handoff of power it's obvious that the Bush administration has been trying very hard to keep the boat floating long enough for them to get out of dodge.... that way, Bush could have said

"everything was fine while I was in office, the trouble didn't start until Obama got in!!!"

You may not agree with this, but lets be candid here. Imagine that the Fannie/Freddie fiaso and Lehman/AIG problems hadn't occurred for just a few more months, unfolding in Feb or March of 2009 instead. You can't deny that if that were to happen, there would be howls from the right wing media machine (it's called FOX news if you haven't seen it) that these defaults and meltdowns were clearly the fault of left wing economic policies.

I'm not being biased here, it's the truth, and Clinton did it to Bush junior. His administration knew full well the unsustainability of the tech/dot com bubble but they got lucky and things didn't start to fall apart until well after they got out. 

This is the same with Enron- Jeff Skilling saw which way the wind was blowing and got out before the big collapse, but he didn't get out early enough to be able to deflect the blame.

So, for all of you who moan and wail about evil Obama, what should you take away from this?

Have no fear. Very shortly, Obama will be inheritting a virtual no-win scenario that economically speaking has been building up for decades.

He will have to make very unpopular choices, many of which will inflict misery on folks and businesses.

He will have to raise taxes in some capacity. The truth is, even if a Republican got in they would have to raise taxes too, so be thankful it's left to a democrat who can be labeled an evil socialist thief (he has that label already and hasn't even been in office 1 day yet)

Could things turn out in Obama's favor?

Possibly, but the deck is stacked VERY heavily against him.

Geopolitically, the U.S is vastly over-extended and over-committed militarily and there are still several areas deemed key to U.S foreign policy that may require further resources (Eastern Europe, Pakistan right off the top of my head)

Dealing with these issues will force some unpopular decisions from the president regardless of which party they represent.

Economically, the engine of the U.S economy is stalled- that engine being consumer spending, with the average consumer cutting back big time on just about everything. Hence why Circuit city is going under, Best Buy may be joining them soon, and Ford and GM burned through 15 billion dollars in ONE QUARTER to keep their doors open.

This too is a conundrum to handle, with many of the proposed solutions fraut with the possibility of making things worse, while if he does nothing could be seen as another Hoover who was reviled by the majority of the nation for standing by while a deepening depression spread misery and unemployment to ever greater swaths of society.

So, sit back, relax and enjoy the show.

If anything, take a break from all the Obama bashing, because in a few months (maybe a year if we're lucky) when things are real bad, then you'll get your chance to scream to high hell about the injustice of it all.

Most of all, be thankful that the man who has to deal with this mess and make some very unpopular decisions is from the OTHER party, as this situation is going to be one hot potatoe!!!