by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
September 27, 2019
A FRIDAY RANT AFTER A VERY LONG WEEK: It’s remarkable, in our opinion, to see many top Democrats lurch sharply to the left, in what appears to be pandering to activists, especially in Iowa. We offer as evidence not just the impeachment bandwagon — but what appears to be an all-out assault on Wall Street.
HIGHLY RECOMMENDED READING: This morning’s Washington Post reports that Joe Biden, slipping badly in Iowa and New Hampshire, may join the pack in proposing a steep new tax on Wall Street transactions. And with Elizabeth Warren and Bernie Sanders supporting a “wealth tax,” Biden may propose one as well. He already is calling for much higher individual and corporate tax rates.
NOT ONLY COULD THIS CAUSE WALL STREET to back away from supporting a challenger to Trump, it may prompt many financial firms to sit out the 2020 race or actively support Trump. What a lost opportunity — the Democrats had a good chance to win support from Wall Street, and now that’s in doubt.
ON ISSUE AFTER ISSUE, Democrats would pay for huge new programs by raiding what they consider is a Wall Street piggy bank. Apparently the way to please the activist base is to demonize Wall Street firms, which of course paid back every dime — with interest — from the emergency bailout a decade ago. That gets lost in the rhetoric, aimed at young activists who have been seduced by Warren and Sanders — and Biden apparently thinks he has to join the chorus. (The moderate Sen. Michael Bennett, an opponent of such ideas, will not qualify for next month’s debate.)
JUST AS MODERATES HAVE BEEN EXCLUDED from the Republican Party, a similar purge seems to be underway among the Democrats. Nancy Pelosi didn’t want to begin impeachment proceedings; she believes this could backfire, and we agree. But the party’s vocal left wing forced her hand, so she will speed up the process, hoping for a vote before Christmas.
THAT WILL BE A MONTH BEFORE THE IOWA caucuses, which Biden is in danger of losing. He can’t win by preaching a moderate message, so he will join other candidates in pandering to left wing activists, (who are unlikely to abandon Warren).
SO A DEPRESSING TREND WILL CONTINUE: The hollowing out of the American center, with roughly 30% on the left and 30% on the right leaving the vast middle disenfranchised. We thought a year ago that Michael Bloomberg would make a first-rate president, presiding over a pragmatic, centrist agenda. But that won’t happen — the primary system won’t allow it — and the sad truth is that Bloomberg couldn’t
possibly get nominated by either party, as the center collapses.
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