The United States held elections last night, and nothing changed. Barack Obama remains president. The Democrats remain in control of the Senate with a non-filibuster-proof majority. The Republicans remain in control of the House of Representatives.
The national political dynamic has resulted in an extended immobilization of the government. With the House -- a body where party discipline is the norm -- under Republican control, passing legislation will be difficult and require compromise. Since the Senate is in Democratic hands, the probability of it overriding any unilateral administrative actions is small. Nevertheless, Obama does not have enough congressional support for dramatic new initiatives, and getting appointments through the Senate that Republicans oppose will be difficult.
There is a quote often attributed to Thomas Jefferson: "That government is best which governs the least because its people discipline themselves." I am not sure that the current political climate is what was meant by the people disciplining themselves, but it is clear that the people have imposed profound limits on this government. Its ability to continue what is already being done has not been curbed, but its ability to do much that is new has been blocked.
Perhaps the author has a point that the Democrats will not have quite as much free reign as I initially thought.
That provides a certain sense of relief.
But, elections for the House of Representatives will be coming up again in 2 years.
If we see the Republicans lose control of the House in November 2014, watch out!
The markets are not reacting to the election results with much confidence.
Consider this chart of Doctor Copper:
The 20 day MA has fallen below the 200 day MA and the 50 day MA is beginning to turn down.
Today's huge red candlestick is not reassuring for economic recovery.