I do not pretend to speak for the other voters.  I was fortunate to be traveling during much of October so I missed most of the trash and noise masquerading as campaign information.  I truly do not care about college pranks, high school indiscretions, or even disagreements on some interpretations of constitutional intentions. I don’t care if you have made a bad loan or business decision in your life, if you were divorced, if you served in Viet Nam, what you read or what you don’t read.  I don’t care if someone in your family cured cancer, won the Nobel Prize or was convicted of rape.

I don’t care what position you played on the high school or college football team. I don’t believe any candidate hates children, the elderly, baseball, women, or poor people.  I don’t care what your religion is or isn’t, how often you go to church, or whether you teach Sunday school.

I don’t care if you smoked pot in college or got a DUI 20 years ago.

What I do care is that:

You will vote against the Union Card Check Bill.

You will vote against Cap and Trade.

You will vote to repeal the Health Care Bill.

You will vote for sane regulation rather than government micromanagement of industry and the economy.

You recognize that no group of elites understands the economy as much as all of the American consumers and producers do.

You respect the citizens who know better how to run their lives and their families than anybody in Washington.

You will think long and hard before your send Americans to die on foreign soil, or interfere in the affairs of other nations.

You recognize that we are a nation of laws; not a nation of ideologies.

Sometimes optimism and contrarianism can complement each other.   Here is a thought.

The health care bill is so unpopular and causing such outrage that other damaging proposals like the Union Card Check bill and Cap and Trade may have no opportunity at all.

By staking all their value on the health care bill which is years away from being effective, and filled with provisions that may not pass Constitutional muster, they risk having it overturned by the new Congress if the Democrats lose substantial representation.

The Democrats may have pushed too far which will erode their power.  A year ago the Republicans were badly whipped, and the Democrats talked about a 50 year reign. Now polls have the Democrats down substantially. The promise of a new era of bipartisanship has ended with the most radical bill yet passed in the Senate with not a single Republican vote.  The promise of transparency has become just another hollow and unfulfilled promise.

The independents that elected Obama have no party loyalty and will turn much quicker than the committed party members.

All of this may be factored into market expectations. The net effect of overreaching arrogance may a far shorter reign than the administration expected.

If the Democrats had been more inclusive and centered they could have gotten more Republican support and we would have possibly ended up doing more damage to the economy than their extreme tactics have caused.

One of my  colleagues in the steel business has closed his business. Like our business his was started by his father in 1955. Ours was started in 1956.  He had about the same number of employees (70)  a year ago as we did. As he stated in his press release he was “unable to get small enough fast enough”.

They had a good reputation and were smart and experienced.  He was unable to get financing to stay open. The decision was difficult and painful and unfortunately inevitable.

There are other examples of strong reputable companies that had to sell under arduously similar circumstances.  There will be more to come.

This is why I see unemployment climbing.  During the first wave of unemployment the large publicly traded companies reacted quickly to the market turndown.  But those of us who are not responsive to a publicly traded share price reacted slower; we took a wait and see attitude. A year later this is what we see:

There is no private construction on the market. Bids and backlogs are lower than ever.  Those few who are left are bidding without a profit; just to keep from further layoffs. No profits mean no taxes which means bigger deficits.

Everyone is waiting to see what will be the results of Cap and Trade, Card Check and Health Care Reform, and how it will affect them.  Capital purchases and new hiring are dead. At a time when the economy needs certainty more than anything this administration has sought the most untested , radical and massive changes we have ever seen.  And now he wishes to hold public hearing on how to stimulate job creation.  This president is clueless and the fact that his cabinet has fewer members from the private sector than any in history only makes him even more clueless.

Those of us who took a wait and see approach will generate another wave of layoffs. It will not be the thousands from a single large plant that makes national headlines.  It will be a dozen here and a few there as the small businesses across America face the reality.  Some will throw in the towel and just close; some will be forced to close or sell at bargain prices because of a lack of credit, others will finally get small enough to survive.

Either way private wealth  (and the taxes it generated) will be destroyed and unemployment will continue to climb.

One of the most intriguing concepts of economics is the concept of “moral hazard.”  It is a corollary to a more obvious principle that everything has a cost. An understanding of it is critical for those whose world view is a never-ending series of crisis that demand a government solution.

Insurance, for example, encourages the risk it is designed to protect us from.  Seat belts may make us more reckless drivers.  I may be more inclined to eat the high fat burger with cheese if I think I am protected by Lipitor.  Free health care may make us less healthy and more obese.

But nowhere is the cost of moral hazard more significant and more obvious than in our financial system.

We insure bank depositors to bring stability to our financial system, but such insurance means that the depositors are freed from the responsibility of even caring about the bank’s stability.  It also increases the bank’s proclivity for risk taking. They get to pocket profits and get bailed out of losses. We privatize the profits and socialize the risk.

FDIC protection started out at $10,000, and soon went to $40,000. Jimmy Carter raised it to $100,000 and some partially faulted this move with creating the savings and loan fiasco about ten years later.  In the midst of our recent crisis the limit was raised to $250,000 to avoid another bank run.  Given our historical correlation of increasing FDIC protection limits with worsening crisis, I wonder if in our effort to avert the current crisis whether we have simply sown the seeds of the next one.

Those who fault the absence of regulation for our current crisis should look further at the moral hazard created by the very protections embodied in our current regulations.

Regulations written in response to our last crisis do not seem to protect us from the next one.  Rules written as a result of the dot.com bubble did not protect us from the ensuing housing bubble.  In fact our regulators and our government was more of a willing participant via Fannie Mae and Freddie Mac.

In the absence of FDIC insurance perhaps the consumer and society would be better served by an “independent” rating such as the AM Best rating service is for life insurance companies or an equivalent of Moody’s or S&P for small banks.  I do stress the independence which had been seriously compromised in the past.

There will never be enough regulators to counter the number of people who seek loopholes, ply lobbyists, create new products or who otherwise seek to game the system.

Even if we were able to staff enough bureaucracies to squeeze excess risk and abuse out of our financial system, it would likely restrict growth so severely that we may long for the days of a few bubbles and the ensuing market correction.

Facing record deficits this administration needs economics growth desperately. The union card check bill, the budget deficit, the uncertainty of cap and trade, higher taxes on the wealthy and private businesses, and the cost of the health care proposals severely threaten business growth.

But the biggest hindrance may be both an increase in moral hazard that increases the likelihood of the next bubble, and overly restrictive regulations that retard the growth we need to recover from the last one.