I don't follow the market much, but I thought this article from BusinessWeek Online was interesting and informative. I still have a lot to learn, though.

Kerry: The Investor's Best Friend?

It seems the markets in the short run like dividend tax cuts, capital gains tax cuts, and tax tax cuts, but in the longer term the result, widening deficits, scares the shit out of it, primarily because of the long term effect on interest rates. Where this all comes out in the wash is anyone's guess, although I tend to agree with the conclusions expressed in the above article.

There is a fable that Democrats like to harp upon that deficits lead to higher long-term interest rate. This has not proven to be the case over our modern history. I liken this to the phantom called "inflation" that Alan Greenspan was fighting from June 1999 until mid 2000 when he kept raising interest rates, which exacerbated the stock market bubble and sent the economy into recession. Interest rates fell all through the 80s and early 90s. Those were the largest deficits in terms of percentage of GDP that the country has ever had. I would argue that running moderate deficits is good thing. Why is "running a surplus" so great. Think about that. What does that mean? It means the government over taxed us. Do we get it back? Of course not. They find something worthless to spend it on. Running deficits actually keeps the politicians from spending more money. That may sound funny but think about it. Did we get any tax refunds in the late 90s when we were running all those surpluses? Was social security secured? Was Medicare secured? Of course not. Where did the money go?

As for which candidate the market perfers, one candidate is pro-business, for lower taxes across the board, and for free trade. The other candidate is for higher taxes, more stifling regulations on business, more entitlement programs and depending on the hour of the day, either against or for free trade.. it depends on which group he is pandering to....

I didn't realize Greenspan was a Democrat.

Greenspan may advocate that deficits lead to higher long-term interest rates, but my point in bringing him up was that he also called the stock market top in 1996 and was fighting inflation when there was no sign of any in 1999. It wasn't Clinton's or Bush's recession... it was Greenspan's. He failed to take into account productivity increases and the ability to instantly check competitors prices via the internet. He disregarded that and went by what he learn in school 70 years ago. Of course, if you want to take his word as the ultimate truth, he also recently advocated that the tax cuts be made permanent. I'm sure someone named Laguy won't be agreeing with that. Your state is the model for over-taxation and wasting money.

When Democrats talk about deficits, their ultimate goal is not to reduce it, but to raise taxes so they can fund their worthless feelgood projects. The point I made is that modern history doesn't support this "higher long-term interest rates" theory.

The bottomline is that the less money you feed the Government monster, the better. There is no fiscal responsibility from 90% of politicians.

Greenspan (and also his friend O'Neill), also are against budget deficits because as soon as a consensus develops that they are okay, there is no fiscal discipline and Congress has no reason not to spend money. If one doesn't object to budget deficits, then he shouldn't complain when the government spends, spends, and spends, since it inevitably will if it is decided that deficits (and any semblance of fiscal discipline) don't matter. Just look at the Bush Administration budgets if you want to see an illustration of how disregard for the problem of deficits breeds huge increases in spending.

Sorry Aldaron, but I have to disagree with your last claim.

"There is no fiscal responsibility from 90% of politicians."

I would make that 99%+.

The real difference between Reps and Dems? The first talk fical conservatism, cut lots of breaks for their rich friends, and then stuff their fat faces when they think no one is looking. The second openingly admit to wanting to tax and spend, cut lots of breaks for their rich friends, and then stuff their fat faces in front of everyone.

No, I disagree. I'd say about 10% of politicians actually care about Govt spending, most of those being conservative Republicans. I'm not one that thinks all Politicians are evil. There are good people on both sides of the isle. I love Democrats like Senators Evan Byah, Joe Lieberman, and Zell Miller. Unfortunately that party is dominated by the Ted Kennedys, John Kerrys, and Nancy Pelosis.

The problem with the Republicans recently is that they have caved on spending increases because they didn't want the Democrats to use things like prescription drugs against them in an election year. However, if anyone thinks the Demcocrats want to reduce spending, you live in a dream world. They want to raise taxes and increase spending on everything.... except the military.

I stand by my assertion... deficits don't matter. In fact they are preferable to a surplus because it actually restricts spending. Do you honestly think having a surplus is going to cause politicians to think they need to be frugal? If we have a $500 billion deficit this year in a $10 1/2 trillion economy, that's less than 5%. How many of you out there have less than 5% debt?

Be wary of any investment advice in publications. For instance, beginning last fall, these wizards were saying "the market always does well in election years." A few pages before or after there were articles mentioning how the market began to go south in March 2000. Oops, guess they forgot.