Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Paul Ryan is No Sarah Palin, a Vice Presidential Candidate With Economic Heft

ElectionOracle / US Presidential Election 2012 Aug 16, 2012 - 12:53 PM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleMartin Hutchinson writes: Win or lose, the most recent vice-presidential choices never mattered much when it came to the economy.

From Joe Biden to Sarah Palin to John Edwards, none of them were ever known for their grasp of economic policy.

But Paul Ryan is different.

His selection as vice presidential nominee last weekend has significant implications for the economy if the Republican ticket wins Election 2012.

In fact, the selection tells us more about Mitt Romney than we knew before, since Ryan is committed to a group of policies difficult to implement but which would change the direction of U.S. fiscal policy.

If you're interested in an adult conversation about the dangers of the fiscal cliff, the selection of Paul Ryan ensures you are going to get one this fall.

As an investor, that means you need to position yourself to benefit from a GOP win, without damaging your wealth if the just about equal possibility occurs of losing to President Barack Obama and Vice-President Biden.

With Ryan now in the race, here's what you need to know about this up-and-comer from Wisconsin.

What Paul Ryan Brings to the Ticket

As head of the House Budget Committee, Paul Ryan has made two major economic proposals, both of which have been passed by the Republican-controlled House of Representatives.

One is to restructure Medicare, keeping it as it stands for those over 55, but transferring those below that age into a premium-support scheme that would leave individuals more fully in control of their healthcare costs.

The other is a budget that, apart from reforming entitlements, proposes to reduce top tax rates and pay for that reduction through means-testing the home mortgage, state income tax, medical insurance and charitable tax deductions.

From Mitt Romney's point of view, Ryan's Medicare proposal is the more dangerous issue in the campaign since the Ryan budget proposal is fairly close to Romney's own.

However, with his selection of Ryan we can assume that Romney is prepared to defend the principles of Ryan's Medicare plan, and that if he wins, something like the Ryan plan and his budget will be put forward to Congress.

Of course, being a sausage factory, what Congress actually gets enacted may bear little resemblance to the wholesome ingredients that go into the mixture!

One other key issue at stake in this election is monetary policy.

Like the other Republican candidates, Romney pledged not to re-nominate Ben Bernanke when his term expires in January 2014.

But the truth is, Ryan is much more seriously committed to reforming the current monetary policy and eliminating the huge costs it has inflicted on American savers and the pensions industry.

Given that the majority of Republicans are also committed to Bernanke-replacement and higher interest rates, we can be fairly confident that a Romney/Ryan victory would prove a watershed moment in U.S. monetary policy.

Election 2012: An Investor's Guide to Romney/Ryan

As investors, we can assume that if Romney wins, a serious effort will be made to cut public spending, possibly accompanied by a net tax increase, although with a slashing of tax deductions fairly similar to the 1986 tax legislation.

We can also assume that Obama's healthcare legislation will be revisited, with a greater emphasis on the private sector and an attack on cozy healthcare oligopolies in the hospital, pharmaceutical and insurance sectors.

Finally, we can assume that interest rates will rise.

With those outcomes we can certainly plan on what to do if the Romney/Ryan ticket wins the November election.

Investors should short the hospital and pharmaceutical sectors, whose profits will be squeezed, but go long the private insurance sector, whose role may well increase.

Because interest rates are likely to increase, investors should also short government bonds -- even though the deficit will finally be addressed.

A Romney/Ryan win will also be bad for the home builders because of the reduction in subsidies for housing and the likely attack on Fannie Mae and Freddie Mac will slow their recovery from the 2007-12 housing downturn. Builders at the high end like Toll Brothers (NYSE:TOL) look especially vulnerable.

However, as investors we cannot usefully do any of this before the election.

However, there is one thing investors can do before the election. They can buy the ProShares UltraShort 20+ years Treasury ETF (NYSE:TBT). This ETF takes a leveraged short position in long-term Treasury bond futures, so if interest rates rise (and bond prices decline) TBT benefits.

Whichever candidate wins, it looks like a good buy. If Romney/Ryan wins, interest rates will rise in 2013, and Treasury bond prices decline.

If Obama/Biden prevails, then less will be done to address the Federal budget deficit, while monetary policy will be kept very loose.

In that case, either inflation will surge or the market will start worrying seriously about the long-term U.S. budget position, or both. Again, that will be good for TBT, although the payoff may be delayed slightly longer.

Of course, the last major economic policy figure to run for the Vice Presidency was Jack Kemp in 1996, an author of the 1980s Kemp-Roth tax cuts. It's said Kemp has been a major formative influence on Ryan.

Whether Romney/Ryan faces the same fate as Dole/Kemp remains to be seen.

Either way, you can expect the debate to be one of two very different ideas.

Source :

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules