The spoiled brat trade

Many people can recall at least one spoiled brat event in their childhood. Having been on both sides of the issue, I can recall being both a doer and receiver of spoiled brat-ness, if you will.

As the specter of losing, for instance, a game of Monopoly or perhaps Risk might be a more appropriate choice, becomes too imposing to ignore, the spoiled brat flips the board over, thus destroying the game for everyone. The lesson is driven home-the spoiled brat is only willing to play if he is going to win. Losing, as many in the current administration have averred, is not an option.

For many of us, being a spoiled brat was a phase. We eventually learned (in my case, the hard way, by having my cousins throw me into a creek behind their house) that being a spoiled brat meant that nobody would play with us.

Fortunately, in my case, I was not born with a silver spoon in my mouth, and never had the goods such that people would overlook my bratty behavior. Others are not so lucky.

The administration of George Bush the younger seems filled with spoiled brats. This shouldn't be surprising as political dominance tends to bring out the spoiled brat in all of us. Thus Lord Acton's dictum about power corrupting.

So I wonder what the current bunch of brats might do in the event the Democrats win control of one or more Houses of Congress. A die hard brat might choose the real world version of flipping over the Risk board, by launching an all out nuclear war. I hope that won't happen. But there are other options.

Might the Republicans, in an attempt to show those uppity voters their error, demonstrate how the financial world might look without their support? What a wonderful lesson to teach the naive voters- here's what a vote for a Democrat really means: a cheaper US$, a swooning stock market and rocketing oil prices.

A big win for the Democrats might provide excellent cover for a much needed, in my view, repricing of American assets, which is to argue that I don't agree with the catalyst, but I do agree with the result. To the extent the current matrix of prices (a.k.a. the termf of trade) is more a function of intervention than equilibrium seeking, one would need such cover to effect any change. This too would not be new. A change in commercial corporate governance is often used by major shareholders as cover for a "cleansing" of known bad positions that can be blamed on the old regime.

Such cover might also be looked on as something of a gift from our external financiers. While China, for instance, rightly fears the wrath of its population in the event they need to take a hit on their reserves, if they can blame the problems on the silly American notion of changing governmental control, they might just go along.

We will see what happens tomorrow at the polls. More importantly, for my financially minded readers, we will see how the markets react to the news. I can almost see the Risk pieces flying through the air.