Business Greg Valliere

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    As a long-time bond bull, my gratitude to the know-nothings in the Tea Party is profound. So what if they played a major role in taking a thousand points off the stock market in the wake of the U.S. debt downgrade?

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    The currency and bond market will get hit, gridlock will be the word in Washington and over a dozen people will be lining up to be the next US President.

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    Barring a major surprise, the Republicans will take the House on Tuesday night – our prediction is a gain of 55 net seats, far more than the 39-seat magic number – while falling just short of the 10 seats needed to take the Senate.

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    In Washington, the election outcome is a foregone conclusion – a solid GOP victory in the House, well in excess of the 39-seat magic number, with the Democrats narrowly retaining the Senate. Not only is this outcome conventional wisdom inside the Beltway, but it appears to be fully priced into the markets as well.

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    An eventual deal will be cut in the lame-duck session, extending the Bush tax cuts—for everyone—for another two years, says Greg Valliere, chief political strategist at the Potomac Research Group.

  • Barack Obama could have secured a bipartisan deal this week to extend the Bush tax cuts for everyone, and he could have gotten some business tax breaks thrown in as well. As I wrote last week, such a deal would have been tremendously positive – it would have provided a sense of predictability for the stock market and business executives.

  • President Barack Obama

    Stunning new polls – both public and internal – show that the Republicans may exceed New Gingrich’s 52-seat House gain in 1994, which would easily top the 39-seat magic number the GOP needs to capture the House. And the Senate, where the magic number is 10, is suddenly in play.

  • Propagandists have long believed that if you tell a lie big enough and keep repeating it, people will eventually come to believe it. And thus we see increasing numbers of Americans who believe President Obama is a Muslim, or at least not a Christian.

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    Negativity sells, so brace yourselves for a torrent of pre-election rhetoric designed to convince voters that things are sure to get even worse. The demagoguery is bi-partisan.

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    With the economy softening and Democrats terrified to be associated with tax hikes, the ground is shifting in Washington on the most important policy issue of the second half – whether the Bush tax cuts should be extended.

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    From now until Nov. 2, everything coming from Washington will be aimed at the crucial House and Senate elections, which have the potential to be a tsunami, like the one in 1994 that swept Newt Gingrich to power in the House.

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    After analyzing Washington for 35 years, it’s excusable to be a cynic. Actually, it’s mandatory. So let’s try out this extremely cynical premise: the Republicans are deliberately refusing to help unemployed workers or aid the states because they undoubtedly know this will hurt the economy further – and an ailing economy will help their prospects in November.