Right now the administration is running the political equivalent of the two minute offense in order to push $6 to $10 billion in new loan guarantees to companies that will create a few hundred jobs before the clock expires.
Economics won’t be a consideration in these decisions. Instead, the money will be awarded on the basis of who-knows-who, who’s-a-big-donor, with benefits going to the politically-well heeled. For example, a firm that employs former US Speaker of the House Nancy Pelosi’s brother in-law has a stake in one company that just received a $737 million dollar loan guarantee from the Department of Energy.
And while apologists are rushing to say that the Pelosi connection had nothing to do with the award, haven’t we heard this story before? Why should anyone trust anything coming out of Washington, DC today?
In fact, we shouldn’t. And proof is forthcoming.
In the Transparent Age American’s are quickly finding out that Mark’s Twain’s adage that Congress is the only distinct criminal class in this country is as true now as it was in Samuel Clemens’ Gilded Age.
But, make no mistake; this isn’t a left-right problem. It’s a national problem that greatly needs attention if we can ever hope to restore the trust citizens must have that our political system works for us, not against us.
What’s becoming increasing clear is that the government exercises too much power in the daily life of our Republic.
You can find evidence of this in two easy-to-understand stock market phenomena that defies the typical left-right bias.
The first evidence is what’s known as the Congressional Effect.
“Specifically, since 1965, 46 years of empirical data demonstrates,” write fund manager Eric Singer, who manages a fund based on the data, “that over long periods of time the stock market performs dramatically better on days when Congress is out of session as compared to days when Congress is in session.”
Singer says that since January 1st, 1965 to December 31st, 2010 the market has returned less than one percent when Congress is in session versus a 16.57 percent return when Congress isn’t working. The numbers get worse for the last decade too. Since 2001 to the end of 2010 the market has lost 7.58 percent annualized when in session versus a gain of 12.68 percent annualized when Congress is out of session.
Evidence also shows that our legislators enjoy a greater advantage when trading in the market by virtue of inside government information than even the corporate insiders they like to rail about.