The beginning of this month saw a paradigm shift among voting tendencies of the American people. As the economic epicenter of the global and world leader in policy, any changes in the American markets certainly feel a powerful ripple overseas. As we saw in the economic meltdown, the world economy is an ecosystem. When the most powerful presence in the world trade system suddenly taking a hit, in what began with the housing crisis and quickly spread to major flaws in the financial sector, the entire rest of the world soon found itself in an equally critical free fall. With the Dow Jones dropping and stocks reaching record lows, shareholders not only in the United States but far and wide soon felt the effects of money tightening, or in worst cases disappearing entirely. Conversely, a healthy United States makes for a generally healthy world, not to say the US is immune from financial crisis elsewhere.So when the Democrats, under whose leadership the past two years the stock market has returned to relative recovery (though whether it is truly attributable to the Obama administration is open for debate), lost control of the House and additional seats in the Senate, much of the world has begun to wonder, are we headed back down a slippery slope? The opinion here is that a slow but steady trend upwards, at least for the next two years, should be in store. Traditionally, the market has done very well under political gridlock. Losing control of the House effectively limits the Democrats power, and the Republicans still don’t have the muscle to push anything through, meaning for 24 months we can expect very little policy changes. While change may be what the world needs on a social scale in some aspects, from a shareholder’s perspective, change is the most dangerous word in the dictionary. The stock market relies almost entirely on forecasted predictions of what will most likely happen in the future. Change brings about a lack of certainty which results in a loss of confidence in trading. When traders are in doubt, there is no doubt that negative consequences will soon be bearing (pun intended) down on global markets.
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on Thursday, November 18th, 2010 at 8:10 pm and is filed under Forecasts.
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