Wednesday, November 12, 2008

It's the Debt ... Stupid!

It's the Debt, Stupid

By Victor Davis Hanson
Real Clear
Published October 16, 2008

Who caused the American financial panic and the wild swings in our financial system -- and what are we going to do about it in the long term after the markets settle down?

Republicans point to Fannie Mae and Freddie Mac. Politically wired executives at Fannie and Freddie cooked the books. They received mega-bonuses and took cover through campaign gifts to their Democratic supporters in Congress. Then almost everyone involved justified their scams by claiming that, as good liberals, they only wanted to help the poor buy homes.

Democrats counter that Republicans always pushed for more deregulation and, as good conservatives, kept quiet about multimillion-dollar CEO bonuses paid out from shaky Wall Street firms and passed off as good for business -- rather than symptoms of suicidal greed.
Those in the present Bush administration blame the Clintonites for seeding the disaster; those in the last administration blame the present one for harvesting it.

Long ago, John McCain warned about the antics of Freddie and Fannie, and later charged that Barack Obama and some of his advisers received too much money from these agencies for looking the other way. Obama has countered that McCain was a reckless deregulator and that some on his staff were lobbyists for Wall Street firms.

The blame game goes on and on. But so far no one seems willing to tell the American people the truth: It is not just "they," but we, the people, who have recklessly borrowed to spend what we haven't yet earned.

Take energy. In recent years, we've borrowed trillions of dollars overseas to buy oil from foreign producers. Wind and solar may sound like neat and easy solutions. But for decades to come, Americans must drill more oil and natural gas of our own for transportation and heating; we must build more coal and nuclear power plants to power the electric grid; and we must conserve. Otherwise, we'll go broke before clean alternate fuels become accessible and affordable.

Our energy challenges do not just concern independence, natural security and global warming. They involve basic financial solvency as well. Yet so far, none of our public officials have warned us that the energy crisis is largely a money matter: We're borrowing too much to buy what we won't or can't produce at home.

Second, as a nation of debtors, we are renting money from Asia to buy its exports with our credit cards. Given our talents and natural wealth, we could easily consume more than others in the world and still balance the books. But Americans cannot charge all that we desire on unlimited credit. Surely one of our presidential candidates can warn the American people to save a little more, use our credit cards a little less and pay off what we already owe.

Third, the government can only hand out more entitlements by borrowing even more to pay for them. Raising taxes on anyone in a recession is insane. But even crazier is cutting them further at a time of skyrocketing national debt without commensurate reductions in spending.
So who will tell the people that we can't raise -- or reduce -- taxes and that we can't borrow for any more new programs until we first cut expenses and begin paying off the trillions we've already borrowed?

In a hugely productive economy that creates each year some $13 trillion of goods and services, the government has the resources to make real headway in paying down our $10 trillion national debt in relatively short order -- if we have leaders brave enough to quit promising to spend a few more hundred billion here and there that we simply don't have.

Fourth, will some candidate explain to the wheeler-dealer public that most real estate is not going to double or triple in value every few years? Instead, houses should once again be seen as homes to live in, rather than investments to get rich from.

If 70 percent of the American people scrimp to buy a home, we can't endanger their financial solvency by waiving the rules for others, who can't or won't pay the mortgage debts they freely incurred. It's time to tell the public that you must budget to buy a house, see it as a place to raise a family and pay the mortgage you took on. And if that's not possible, then keep renting.

The problems on Wall Street, our energy woes, the election-year fight over taxes versus more programs, and the housing crash have one common denominator: massive debt. They are simply the collective reflections of our own spendthrift habits of buying things with borrowed money that we now either can't or don't want to pay back.

In this year's presidential race, the honest candidate who stops promising endless bailouts and has the guts to lead us out of debt could well end up winning.

Victor Davis Hanson is a classicist and historian at the Hoover Institution, Stanford University, and author, most recently, of "A War Like No Other: How the Athenians and Spartans Fought the Peloponnesian War." You can reach him by e-mailing

White House to Detroit: Let Me Repeat, No TARP Funds

November 12, 2008, 1:30 pm

White House to Detroit: Let Me Repeat, No TARP Funds

Henry J. Pulizzi reports on the White House.
Wall Street Journal

The White House said it will work with Congress to help the U.S. auto sector, but continued to reject the possible use of Treasury Department rescue funds for Detroit.

“We don’t think that that was Congress’s intent,” White House spokeswoman Dana Perino said of the $700 billion Troubled Asset Relief Program, which top Democrats would like to open for the auto makers.

Perino also said the auto makers’ plight won’t be a blight on President George W. Bush’s legacy. “People can blame the president of the U.S. for a lot of things and a lot of things land on his desk, but the state of the auto makers right now is not the president of the U.S.’s fault,” she said.

Government help for the car makers will be in focus during next week’s lame-duck session of Congress, with lawmakers looking to expand the TARP or extend some other form of federal aid. President-elect Barack Obama also is pushing for more help for Detroit, including an acceleration of the $25 billion in loans already authorized for factory retooling.

Perino said the White House would listen to ideas to amend the legislation granting those loans, or speed the funds’ release. She reiterated the administration’s view that the money should go only to “viable” firms.

“I think everyone can agree that you wouldn’t want taxpayer dollars going to something that would not be a long-time concern or something that could actually succeed in the future,” she said.

With concerns that General Motors Corp. will need to file for bankruptcy without government help, Perino shed no light on the question of whether any of Detroit’s Big Three automakers is too big to fail. “The president of the U.S. believes that companies are responsible for finding solutions. However, this is an industry, as I’ve said before, that’s very important to the American people,” she said. “Congress and the administration and the companies have an obligation to put their best minds toward trying to figure out what we can do to the greatest extent possible to try to keep these companies viable. And if we can do that, we certainly will.”

Monday, November 10, 2008

Fed Defies Transparency Aim in Refusal to Disclose

By Mark Pittman, Bob Ivry and Alison Fitzgerald

Nov. 10 (Bloomberg) -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

``The collateral is not being adequately disclosed, and that's a big problem,'' said Dan Fuss, vice chairman of Boston- based Loomis Sayles & Co., where he co-manages $17 billion in bonds. ``In a liquid market, this wouldn't matter, but we're not. The market is very nervous and very thin.''
Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.

``It's your money; it's not the Fed's money,'' said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. ``Of course there should be transparency.''

Treasury, Fed, Obama

Federal Reserve spokeswoman Michelle Smith declined to comment on the loans or the Bloomberg lawsuit. Treasury spokeswoman Michele Davis didn't respond to a phone call and an e-mail seeking comment.

President-elect Barack Obama's economic adviser, Jason Furman, also didn't respond to an e-mail and a phone call seeking comment from Obama. In a Sept. 22 campaign speech, Obama promised to ``make our government open and transparent so that anyone can ensure that our business is the people's business.''

The Fed's lending is significant because the central bank has stepped into a rescue role that was also the purpose of the $700 billion Troubled Asset Relief Program, or TARP, bailout plan -- without safeguards put into the TARP legislation by Congress.

Total Fed lending topped $2 trillion for the first time last week and has risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds.

Sept. 14 Decision

Before Sept. 14, the Fed accepted mostly top-rated government and asset-backed securities as collateral. After that date, the central bank widened standards to accept other kinds of securities, some with lower ratings. The Fed collects interest on all its loans.

The plan to purchase distressed securities through TARP called for buying at the ``lowest price that the secretary (of the Treasury) determines to be consistent with the purposes of this Act,'' according to the Emergency Economic Stabilization Act of 2008, the law that covers TARP.

The legislation didn't require any specific method for the purchases beyond saying mechanisms such as auctions or reverse auctions should be used ``when appropriate.'' In a reverse auction, bidders offer to sell securities at successively lower prices, helping to ensure that the Fed would pay less. The measure also included a five-member oversight board that includes Paulson and Bernanke.

At a Sept. 23 Senate Banking Committee hearing in Washington, Paulson called for transparency in the purchase of distressed assets under the TARP program.

`We Need Transparency'

``We need oversight,'' Paulson told lawmakers. ``We need protection. We need transparency. I want it. We all want it.''

At a joint House-Senate hearing the next day, Bernanke also stressed the importance of openness in the program. ``Transparency is a big issue,'' he said.

The Fed lent cash and government bonds to banks, which gave the Fed collateral in the form of equities and debt, including subprime and structured securities such as collateralized debt obligations, according to the Fed Web site. The borrowers have included the now-bankrupt Lehman Brothers Holdings Inc., Citigroup Inc. and JPMorgan Chase & Co.

Banks oppose any release of information because it might signal weakness and spur short-selling or a run by depositors, said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a Washington trade group.

Frank Backs Fed

``You have to balance the need for transparency with protecting the public interest,'' Talbott said. ``Taxpayers have a right to know where their tax dollars are going, but one piece of information standing alone could undermine public confidence in the system.''

The nation's biggest banks, Citigroup, Bank of America Corp., JPMorgan Chase, Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley, declined to comment on whether they have borrowed money from the Fed. They received $120 billion in capital from the TARP, which was signed into law Oct. 3.

In an interview Nov. 6, House Financial Services Committee Chairman Barney Frank said the Fed's disclosure is sufficient and that the risk the central bank is taking on is appropriate in the current economic climate. Frank said he has discussed the program with Timothy F. Geithner, president and chief executive officer of the Federal Reserve Bank of New York and a possible candidate to succeed Paulson as Treasury secretary.

``I talk to Geithner and he was pretty sure that they're OK,'' said Frank, a Massachusetts Democrat. ``If the risk is that the Fed takes a little bit of a haircut, well that's regrettable.'' Such losses would be acceptable, he said, if the program helps revive the economy.

`Unclog the Market'

Frank said the Fed shouldn't reveal the assets it holds or how it values them because of ``delicacy with respect to pricing.'' He said such disclosure would ``give people clues to what your pricing is and what they might be able to sell us and what your estimates are.'' He wouldn't say why he thought that information would be problematic.

Revealing how the Fed values collateral could help thaw frozen credit markets, said Ron D'Vari, chief executive officer of NewOak Capital LLC in New York and the former head of structured finance at BlackRock Inc.

``I'd love to hear the methodology, how the Fed priced the assets,'' D'Vari said. ``That would unclog the market very quickly.''

TARP's $700 billion so far is being used to buy preferred shares in banks to shore up their capital. The program was originally intended to hold banks' troubled assets while markets were frozen.

AIG Lending

The Bloomberg lawsuit argues that the collateral lists ``are central to understanding and assessing the government's response to the most cataclysmic financial crisis in America since the Great Depression.''

The Fed has lent at least $81 billion to American International Group Inc., the world's largest insurer, so that it can pay obligations to banks. AIG today said it received an expanded government rescue package valued at more than $150 billion.

The central bank is also responsible for losses on a $26.8 billion portfolio guaranteed after Bear Stearns Cos. was bought by JPMorgan.

``As a taxpayer, it is absolutely important that we know how they're lending money and who they're lending it to,'' said Lucy Dalglish, executive director of the Arlington, Virginia- based Reporters Committee for Freedom of the Press.

Ratings Cuts

Ultimately, the Fed will have to remove some securities held as collateral from some programs because the central bank's rules call for instruments rated below investment grade to be taken back by the borrower and marked down in value. Losses on those assets could then be written off, partly through the capital recently injected into those banks by the Treasury.

Moody's Investors Service alone has cut its ratings on 926 mortgage-backed securities worth $42 billion to junk from investment grade since Sept. 14, making them ineligible for collateral on some Fed loans.

The Fed's collateral ``absolutely should be made public,'' said Mark Cuban, an activist investor, the owner of the Dallas Mavericks professional basketball team and the creator of the Web site, which focuses on the secrecy shrouding the Fed's moves.

The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

Sunday, November 9, 2008

Newest National Debt Statistics posted October 2008

Per, the newest National Debt statistics are in.

As of November 6, 2008:

Publicly held:
Intragovernmental holdings:

Interest Payment October 2008:

Interest Payments Fiscal Year to Date:

Gifts to reduce the public debt September 2008:

Gifts to reduce the public debt FY 2008:

Gifts to reduce the public debt FY 2007:

Viewpoint from Concord: Are you ready pay more in taxes?

By Chris Nevins
November 07, 2008 6:00 AM - Portsmouth, New Hampshire

And so it is over. The historic election of 2008 has made its mark and change is in the air. While welcomed by many, this change is also feared by others.

My guess is that the emotion of the day may be overdone on both sides of the political spectrum and that our futures may not be as exciting or problematic as some suspect. Our nation has weathered many storms during our brief history and shared in many victories as well. The earth continues to rotate and we will all continue to rotate with it. The American journey continues on its way and I am pleased to be a participant in that journey.

But of course, this does not mean we have time only to smell the flowers. There is a lot of serious work ahead of us. And just what is that work? Our primary focus should be to get our fiscal house in order. In a recent letter to the editor, my Democratic counterpart talked about our national debt as if it were just eight years in the making. It was not. This nation has been in and out of debt for much of its existence. During most of that time wars were the culprit causing that debt but now it is a much different issue.

The major cause of our total debt and yearly deficits are our entitlement programs; Social Security, Medicare and Medicaid. These entitlements total more than 53 percent of our federal budget. This mandatory part of our budget cannot be reduced or increased by Congress without a major change to our laws. Other mandatory items include federal and military retirements, veteran benefits and certain welfare related programs. After interest on our debt is paid (about 9 percent of the budget) we have everything else which is 38 percent of the budget. This 38 percent is what can be adjusted by 13 appropriation bills every budget year. It includes military spending of just over 4 percent.

He stated that our national debt is more than $10.5 trillion and that is correct. However, $10.5 trillion represents $6 trillion we owe the public (including foreign countries) for buying our treasury bonds and nearly $5 trillion in Intra Governmental holdings, (money that the federal government has taken from the so called Social Security "trust" fund to spend on other things besides Social Security). IOUs are then left behind for future generations to pay. What a great deal! But let's be brutally honest. This figure only represents what we owe bondholders.

If we consider what we have promised present and future mandatory entitlement beneficiaries our real debt is more than $50 trillion. Were these promises made in just the last eight years? Which promises shall we break to get out of this debt?

Why should a state representative be talking about federal problems? Because I have observed that contrary to the statement that past Republican governors have created a problem that needs to be solved, it is in this administration where the problems are just beginning. Concord is starting to catch the "federal disease" and spending beyond its means. While warnings of growing debt were ignored by the majority, it wasn't until the end of the session that an attempt to rectify it came into play. Now that the reality of a recession is upon us the specter of not only major cuts but more borrowing seems to loom ahead of us. Will this mean more shifting of our spending today to tomorrow's generation? Would that be the moral thing for us to do?

"We must set priorities" is only an empty cliché unless we specifically identify what we need to pay for in our New Hampshire budget, not just what we would like to. Identifying a priority would mean not ordering "surf and turf" at our local restaurant but rather "surf or turf." More realistically we are probably looking at ordering meatloaf. So yes, indeed the election is over and change is in the air. But what will that change look like in Concord the next two years? Will we make the hard decisions to cut spending? Will we raise more fees and taxes on you or can you smell a broad-based tax in your future? Are you ready pay more in taxes but have less control on how it is spent?

Stay tuned as the next legislative session starts in January. We shall soon know.

Chris Nevins is chairman of the Hampton Republican Party chairman and a state representative from Hampton recently re-elected.

Romney: Obama must be 'educator-in-chief'

Former presidential candidate Mitt Romney offers his advice to Barack Obama, and his views on labor unions, federal bailouts, Detroit, protectionism, and America's debts.

November 7, 2008: 9:47 AM ET
Fortune Magazine

NEW YORK (Fortune) -- Mitt Romney, former Massachusetts governor and co-founder of private equity firm Bain Capital, is often mentioned as a GOP contender for 2012. He spoke with Fortune's Jia Lynn Yang.

Any management advice for the next president? How does he rally a depressed nation to meet the challenges we face?

He should forget entirely about reelection and focus solely on helping the nation at a critical time. He should dismiss the people who helped him win the election and bring in people who are above politics and above party. He should surround himself with statesmen and economists, businesspeople and leaders. In some ways it would be beneficial if our presidency consisted of only one term. That way the President would think about his legacy and the future of the country rather than reelection and partisanship.

How likely do you think that's going to happen?

In his second term, President Clinton made an effort to govern more from the center than from the extreme wing of his party, and by doing so, found greater support and greater political success. Perhaps it's a paradox, the less political the agenda, the more political success one enjoys. But now is not the time for partisanship opportunism.

The unions have helped Barack Obama. They will hope to be paid back. I'm particularly concerned that organized labor would call on Barack Obama to pass the card check program. This removes from American workers the right to the secret ballot in deciding whether or not to accept a union. This legislation would do more to harm America's long-term competitiveness than almost anything I can imagine. It would be a partisan payback for organized labor but it would come with devastating consequences for the nation.

Do you have any concerns that the massive government intervention on Wall Street will have unintended consequences?

"The bailout of Wall Street" was a terrible choice of words. No one wants to bail out anything, especially Wall Street. The objective of the legislation, however, had a much broader purpose: to stabilize our financial system, to keep it from complete collapse. Sometimes that broad purpose may require saving individual companies, as with AIG (AIG, Fortune 500). But we just can't have government running around the nation looking to bail out companies in trouble.

Given your Michigan roots and what your father accomplished turning around the American Motors Corporation in the 1950s, what do you think is the future of the auto industry?

Right now, the auto industry is on life support, and its prospects look extremely dim. But they don't need to be. The industry could be turned around. There is no inherent reason why America can't build and sell cars to Americans at least as well as the transplants are doing. Any effort to help the auto industry has to be made as part of a comprehensive strategy. Before the government issues loans to the auto industry, as has been authorized by Congress, it should insist on seeing credible and independent strategies that will return the companies to long-term sustainability. Government should not finance ongoing losses and declining market shares.

What concerns you the most about the economy right now? Any dangers lurking in the global economy that we didn't hear much about during the campaigns?

Far too little attention was paid to America's long-term competitive position during the campaign. I see four major economic strategies at play in the world today: the first is ours. It combines freedom and free enterprise.

The second is China's. It combines free enterprise with authoritarianism.

The third is Russia's. No longer is Russia's plan for dominance based upon industrial capacity but rather upon controlling energy throughout the world. Hence Russia's cozy relationship with Iran and Venezuela as well as its belligerent entry into Georgia. Russia's strategy is based on energy and authoritarianism.

The fourth strategy is represented by radical violent jihad. The intent of the jihadists is to cause the collapse of the other three, such that the "hidden Imam" or the Caliphate remains the last man standing.

The real challenge for America is how to strengthen our competitive position so that our economy outperforms those of the other three. If we're successful, freedom will be preserved for the world. If we're unsuccessful, the results are unthinkable.

When you talk about making America more competitive, what do you have in mind?

First, America must substantially improve our education system. We've fallen behind, particularly in areas of math and science.

Second, we're going to have to remedy our disproportionate health care cost disadvantage. America spends far more than any other nation as a percent of GDP on health care. This effectively is an enormous tax on the economy and on our businesses.

Third, our national debt is excessive and our entitlement obligations pass a massive burden onto the next generation.

Fourth, tax and regulatory policies weigh down our ability to compete. Specifically, our products carry an embedded tax which makes American goods less competitive abroad and at home.

Fifth, America's apparent retrenchment from the concept of open, free and fair trade could put us further behind other nations that are aggressively seeking trade relations around the world.
Sixth, our lack of an effective energy policy drains our economy by approximately half a trillion dollars a year.

And, finally, the blow that Wall Street has taken may make us less competitive in financing entrepreneurship.

There's strong populist sentiment against free trade deals. Given that, how does an American president move forward on this?

I can only hope the President abandons the populist current, which seems to be growing in our country. An effort to block foreign trade will only hurt America. Ultimately products in this country would become uncompetitive. Look what happened to the Soviet Union. Its cars, its watches, its goods became a joke.

The only way to remain the leading economy in the world is to be successful on a level playing field around the world. Some individuals, at the behest of special interests, seek to prevent trade with other nations by imposing America's labor requirements and other peculiarities. That is a disguised form of protectionism.

Do Americans need to save more and adjust to a lower standard of living? In other words, should be buying houses we can actually afford?

I think a President has to be an educator- in-chief as well as a commander-in-chief. The American people need to understand the challenges we face. And the American people need to understand that they, like the nation, need to live within their means. Both have been spending more than they have been taking in. It puts the nation at risk. And it puts families at risk.

There's a period of adjustment that's occurring right now as American families deleverage and employers deleverage. It's time for the government to finally address our severe debt burden, before it leads to even more severe consequences. I'm referring not only to our annual deficit and national debt but also to our obligations under entitlement programs like Social Security.

What Obama's Spending Plans Mean for Your Portfolio

By Alyce Lomax and Dayana Yochim
The Motley Fool
November 7, 2008

You know things are dire when the National Debt Clock can't keep up with government spending. But that's what happened in October, when the counter on the corner of 44th Street and Sixth Avenue near Times Square maxed out at $10 trillion.

Welcome to office, President-elect Obama! Hope you don't mind picking up the tab!
Maxed-out America is due for a debt diet At least part of the problem will be remedied in 2009: A new debt clock will be installed -- one with a counter that can tally dollar amounts up to one quadrillion -- that's a one with 15 zeros.

As for dealing with the hangover from the spending that got us here, well, that's now in the hands of newly elected Barack Obama. And man oh man, does he have his work cut out for him.
Here's a look at some of the ideas Sen. Obama discussed during his campaign in the area of government spending, fiscal policies, and the national debt -- and what we see as potential implications for investors.

The plan for growth and restraint Paying down the monstrous national debt while funding new and existing projects will require a deft balancing act. Obama has said he will handle the give-and-take by adhering to budget rules that demand new spending be paid for in one of two ways: through cuts to other programs, or with new revenue -- "new revenue" being a less hot-button way of saying "taxes."

One major spending initiative under an Obama administration focuses on getting businesses back into hiring mode. According to his campaign platform, we could see:
A $3,000 tax credit for each employee hired in 2009 and 2010.

Sweeteners for small businesses, such as allowing small businesses to expense as much as $250,000 until the end of 2009.

Capital gains tax cuts on small-business investments.

Obama has also said he favors infrastructure projects -- roads, bridges, schools, and such -- to create work in an economy that is rapidly bleeding jobs. For investors, that bodes well for companies that have some relationship to infrastructure, such as construction and project-management companies like Fluor (NYSE: FLR) and KBR (NYSE: KBR).

Another major spending plan is a $25 billion "Jobs and Growth Fund." In addition, Obama has proposed a 90-day moratorium on foreclosures for "homeowners acting in good faith," as well as a $25 billion stimulus package for state governments -- to give them less reason to raise property taxes. States are also suffering from the housing crisis, since plunging home values translate into falling tax revenues; California recently admitted it was facing a big cash crunch and asked for federal assistance.

To free up cash for spending proposals, Obama has suggested reducing the number of troops in Iraq, raising taxes on high-income filers, doing away with corporate loopholes, and carefully vetting earmarks -- as well as demanding more transparency for them to begin with.

How Obama's policies might play out in your portfolio So far, there are indications that some stock sectors may do well under Obama's spending proposals. In addition to infrastructure, alternative energy is certainly another area that may benefit from Obama's being in office. Companies like solar concerns First Solar (Nasdaq: FSLR) and SunPower (Nasdaq: SPWRA) could benefit from government funding of alternative-energy research.

A Democratic presidency is typically good for unions, and that means automakers such as General Motors (NYSE: GM), Chrysler, and Ford may luck out despite their recent dire straits. The Big Three are instrumental to Detroit, are heavily unionized, and represent a huge chunk of jobs -- in other words, voters -- with health-care benefits. The chances of getting some financial love from the government look good -- although expecting that to translate to long-term stock performance certainly isn't a given.

The flip side, of course, is that businesses heavily targeted by unions may not fare as well in the next four years. Sorry, Wal-Mart, Whole Foods Market (Nasdaq: WFMI), and Starbucks (Nasdaq: SBUX) -- your attempts to avoid unionization may become increasingly difficult.
Of course, as history tells us, it will be interesting to see how campaign promises translate into policy reality, and how that will affect investors' strategies. However, the Fool will be here tracking the environment and gauging the best ways investors can make money in their portfolios.

National Debt Clock