Not the TARP 1 and 2 interregnum of 2008. Not the debt-ceiling disaster of 2011. Just a repulsive decline that could last for some time -- until the Super Bowl, most likely -- because Republicans in the House just don't want to play ball with this president. Yes, anything can happen, even at the eleventh hour, but it's not likely because of the lack of real ball-playing.
And, yes, I am saying playing ball with the president is the reason, and not spending restraint, because, empirically, President George W. Bush presided over the greatest spend period with no tax in the history of the U.S., with the possible exception of World War II. These same Republicans, who insist on no new taxes and some spending cuts, sure didn't want spending cuts from 2000 to 2008.
But now they care.
Frankly, this debate doesn't seem at all like it is about the budget, or about the economy, or about the people of the U.S. I think it is about a group of politicians that believe they were sent to Washington to blow up Washington as we know it if not shut the whole thing down.
The combination of the Tea Party people and the Norquist no-tax-increase people (and their intersection) are truly too much for President Obama or Speaker Boehner to handle. I don't think either leader understood the game plan, which is nothing short of rebellion.
We can try to figure out when they are going to agree to something, and that something is possible once taxes go up. But, ask yourself, is there a groundswell right now for a deal? Do you hear people complaining about their paychecks being reduced? Their first paycheck won't be cut back for anything other than the Social Security payroll break. The government hasn't sent around any new tables.
But the second paycheck might include the real increases and those who are paid by the month will possibly see their new wages.
Only then can the president take it to the districts that are "safe" Republican and "safe" Tea Party. Otherwise, it would seem that the president has met his match here.
There are people in the Democratic Party that thought these Tea Party/Norquists supporters would somehow decide that the defense budget was more important than the pledge. That sure hasn't happened. I am incredulous because it was the defense budget that a Republican-led Washington spent an extra $4 trillion on. You would think those same Republicans would be afraid to cut that Defense budget.
But these are not the same republicans. They might as well be secessionists from those Republicans and from the Democrats -- which is why I have been pessimistic for anything serious to occur until the Super Bowl.
This isn't TARP 1 and 2, and it isn't the debt ceiling -- it's the interim between when Saddam Hussein invaded Kuwait and was then made to leave.
Things had to really go badly in this country and we had to start realizing that the opposition wasn't there to reason before a show of force occurred. The difference here, of course, is that there are Americans on both sides and the Norquist Republicans and Tea Party members represent legitimate interests and have a legitimate constituency. But when it comes to intransigence, they are very the same.
That period was punctuated by slides like last week, coupled with short covering rallies until resolution. The group that did the worst? Retail. The groups that did the best? Health care, soft drinks and packaged goods.
This time, our market is much more international. There are enough companies more beholden to the expanding economy in Asia or the potential turn in Europe so it won't be as severe a downturn. And there is always hope for a mini deal -- or, alternatively, hope that we go over the fiscal cliff, we have three to four down quarters and then we are well on our way to a smaller deficit.
My bottom line is this: Things aren't good short term, but you can't be out of the market if they create a small deal because that will cause the market to rebound quickly. And longer-term, going off the cliff will lead to a more balance budget, which will help the back half of 2013 even as it hurts the first half very much. So, call me in the short-to-intermediate-term pain to intermediate-to-long-term gain.
And be careful of retail.