Nov 06 2010

Historic, Wave Election Supports 21stCenturyWaves.com Forecasts

Last Tuesday American voters presented Republicans with control of the U.S. House of Representatives and Democrats with the loss of 60 seats, with 9 other races still too close to call (Wall Street Journal, 11/6/2010). This dwarfed the Republican wave elections of 1946 and 1994 and conjured up images of the political realignment of 1894 as suggested here pre-election based on long wave economic and political trends.

This is significant beyond just the fortunes of U.S. party politics because it indicates the increased likelihood that we are reliving major elements of the financial Panic of 1893/Great 1890s Recession scenario that promptly triggered one of the most ebullient decades in American history — the Peary/Panama/T. Roosevelt Maslow Window (~1901-13).

And thus a similar transformative, golden age of prosperity, exploration,and technology (i.e., a Maslow Window) by 2015 is increasingly indicated.

A good summary of our pre-election scenarios is in: “Michael Barone Comments on the 1894 Political Scenario of 21stCenturyWaves.com”

Checking Our Pre-Election Expectations versus the Results —

1) The current economic/political framework resembles 1893 – 1913 (the Cleveland/Roosevelt era) more than 1949 – 1969 (the Eisenhower/JFK era).
Although no financial panic/great recession pair occurred between 1949 and 1969, the historic Panic of 2008 signaled that we are returning to the dominant pattern of the last 200+ years where financial panics — e.g., the Panic of 1893 — lead stunning Maslow Windows by 6 to 10 years.

2) The Political realignment of 2008 should continue through 2010.
Grover Cleveland was elected president in 1893, the year of the financial panic. The Great 1890s Recession was a double dip that continued until 1899. Like 2010, the election of 1894 was a realigning election featuring a Republican landslide (Democrats lost 125 seats). Thus the political realignment of 2008 has continued.

3) Political trends are more associated with the drive for prosperity than any particular party or candidate.
Like the election of 1894, the recent election was driven by economic issues, and was less in favor of Republicans than it was against Democrats. Exit polls revealed voter concerns were focused on job creation, federal spending, the budget deficit, and taxes. This is consistent with both short-term trends resulting from our great recession, and the pattern of the last 200+ years when the drive for prosperity becomes paramount as we approach a Maslow Window.

Three Key Near-Term Issues and Trends

1) Will the Cleveland-Obama electoral parallel continue?
Both Cleveland and Obama were elected near a financial panic. In their midterm elections, both presidents experienced major public rebukes to their economic policies. For Cleveland, the election of 1894 set the stage for his defeat two years later.

Former pollster for Bill Clinton, Douglas Schoen, recently (WSJ, 11/4/10) characterized Obama’s “historic choice” as,

He can become marginalized and largely irrelevant — as was Jimmy Carter in much of his last two years in office. Or he can return to the promise of his campaign when he offered to eschew partisanship and pursue the centrist agenda that the American people elected him to advance.

Schoen recognizes that, from the voters’ perspective, the drive for prosperity trumps any particular candidate or party.

2) Will the current political realignment continue beyond 2010?
The Wall Street Journal (11/1/10; N. King, Jr.) anticipates a “historic era” in U.S. politics and sees parallels with the 1890s.

Financial panic in 1893 set the stage for a series of sharp swings in the 1890s. Republicans won a landslide in 1894, picking up 135 seats, but then lost 48 seats two years later , despite Republican William McKinley’s triumph in the presidential race.

The Journal is suggesting that change will continue, and is hinting that unless he changes course — which is not yet indicated by the president’s recent, post-election statements — Mr. Obama risks defeat in 2012.

3) Will the Great Boom of 2015 Materialize?
Opinion polls and the success of Tea Party candidates in 2010 suggest it’s the front-burner issue. And macroeconomic data and historical trends over the last 200+ years point to the central role of a major economic boom in triggering a new Apollo-style Space Age by 2015.

Three possible economic scenarios for the U.S. and the world over the next few years are being discussed. Based on the “nominal” forecast model of 21stCenturyWaves.com, here are the 3 scenarios from high probability to low:

1. MOST PROBABLE: Recovery from the (possible double dip) great recession followed by the Great Boom of 2015 which triggers a new global Space Age,

2. POSSIBLE: Major inflation triggered by the Fed’s new $ 600 B quantitative easing “Hail Mary pass” (WSJ, 11/4/10) policy,
and
3) LEAST LIKELY: A Japan-style deflationary decade of economic stagnation.

More discussion of these is coming.

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