Why Do Unified Republican Governments Always Lead to Crisis?

While I believe the purpose of these types of headlines and tweets are to illicit positive emotions, readers would be well advised to look up the DISASTROUS history of extended periods of unified Republican governments. 

In fact, the ONLY 3 PERIODS of extended unified Republican governments going back to 1900 ALL DIRECTLY led to banking crises....Arguably the 3 worst in US History. To be clear, I am defining 'extended' unified governments as anytime they control the House, Senate and White house for at least 4 years. This does not include short 2 year stints since it's hard to screw things up that quick (FYI there was only 1 period of that anyway, 1953-1955). You can look up the periods yourself here and more detail here.

The list of Unified Republican Government crises include the Panic of 1907, The Great Depression, and the Financial Crisis of 2007-2008. Interestingly, the record of extended Republican control of Congress has also only led to crises. There have only been 4 periods of extended Republican control of Congress (3 of which overlap with the periods of full unified control just mentioned). However, the 4th period (I KID YOU NOT) ended in the 2000 DotCom Bust where the Republicans controlled the House and Senate from 1995-2001.

In short, full Republican control has NO history of making America great...let alone AGAIN. Don't feel like checking out that history yourself? Here's what you'll find....

Technically Republicans took control in 1895 but this graph does not start there. And While I mentioned the Panic of 1907......I will just brush off the Panic of 1901. Markets fell over 43% before bottoming after both events. How they were not thrown out until 1911 is anyone's guess.

Then we have the Great Depression fuelled by the unsustainable laissez-faire polices of the roaring 20's.

Only led to the greatest market decline in history and total social devastation.....Is that the type of "Great" we want to make again? 

Oh and then we have the Financial Crisis of 2007-2008. 

This case meets the minimum for "extended" by getting to 4 years (although technically they almost had 6 full years as only 1 independent tipped the senate democrat in 2001). Again lax regulations created the housing bubble which popped in 2006 and lead to our famous bank failures and financial crisis. (Case Shiller housing price index)

While the Republicans managed to get kicked out of Congress in 2007 the coming disaster was already well in motion by then.

While that wraps up the History of the 3 worst banking crises in American History...or um....I mean the History of the "Unified Republican Government". It would not be complete without completing it with the final piece to the history of the extended Republican control of Congress....which is only complete with the DotCom Bust of 2000.

There we have it folks! The disastrous history which has accompanied EVERY extended Unified Republican Government (or control of congress) since 1900. Think I'm missing a period that didn't end in disaster? Check for yourself. I'm not.

GDP Estimates 2012 Vs. 2008 and More Economic Consensus Groupthink

The Wall Street Journal recently released it's December Survey of Economists. This is where you generally get to hear about the current consensus groupthink. In the survey, 54 economists gave their projections for GDP in 2012 (among many other things). I decided to compare this years projections for the year ahead to what these great minds saw coming in December 2007 (the month the last recession started). Does anything about this strike anyone else as quite similar........

Now just maybe if they would have added a negative sign to their 2008 forecasts they would have been pretty spot on (considering GDP for the year finished down -2.5%). The December 2007 survey included 51 "economists"....yet not 1 came up with a negative GDP projection. Here we are now in 2011, with the European situation, the rest of the developed world including the US and Japan soaked in debt, and China trying to build ghost cities until someone rises from the dead, and not one of the 54 "economists" is willing to project anything lower then 1.3%? Interesting......

What else do they have to say?

With the unemployment rate right now at 8.6% (due to massive labor force shrinkage) the consensus is things will essentially stay as is. Funny, anyone know what the unemployment rate was in December of 2007? 5.0%. And what was the consensus for the end of 2008? 5.1%. In reality it tuned out to be 9.9% and yet not one of the economists predicted anything above 5.6%. Nice work guys.

Some more on unemployment....

Yikes, they can't predict one year ahead and now their being asked about the unemployment situation 3 years out? Anyone know how I can get in touch with James F. Smith from Parsec Financial Management who made that 5.0% projection? Because I would gladly pull a Mitt Romney on him and bet him $10,000 that's not gonna happen!

Alright, What about Treasury Rates?

Looks like they are calling for rates to rise from the current level of 1.85% to 2.75% (we can be sure this is due to their more optimistic view of the overall economy and not worries of the US ever expanding debt situation). In Dec of 2008 when it was 4.1% consensus said it would move up slightly to 4.28% (the yield ended 2008 down to 2.25%)

So what about their views on the probability of a recession in the US in the next 12 months?

23% and nobody puts the odds at higher then 40%? What about the Eurozone? Surely they must realize the Eurozone is already in a recession -- After all, the OECD already declared as much (and they are never the first to spot anything)

Really? You can't even get them to admit "yes" on a Eurozone recession which is clearly already happening? Well, what should we expect.......this is what they thought in July 2008 (7 months after the last US recession already started).

Ok so maybe we should interpret anything in the 50% range as their version of certainty LOL!

Will at least one member leave the Eurozone? 48%? Guess that should mean it's pretty near certain!

That may be about the biggest dispersion of views you will see on a subject from these groupthinkers.

Ah the joys of "economist" forecasts!