And to answer this question we need to look at the politics inside the United States (Note: I’m not siding with anyone here, this post is purely financial). As you may already know, in almost exactly 2 months from now, there is an election in the US. The economy is the hottest issue.

The economy, in short, means jobs. The Obama administration is trying its best to focus on the good news, while republicans are focusing on the bad news. This is very natural and part of the politics game. Everyone reads every report coming out differently (whether it’s generally good, like today’s job numbers, or bad, like the housing numbers late last month).

Democrats insist that we the economy is healing, while republicans say that the economy is heading for a double dip. The feds are somewhere between, claiming that the economy is healing, but moderately, and it may or may not need assistance.

Hmmm…

People are being bombarded with propaganda from both camps, and I’m sure that they are confused. Wall Street people, on the other hand, are not confused. They do not like Obama, and Obama does not like them, so we know who they’re voting for. But again, Wall Street people are a minute percentage of the US population, and probably most of them do not vote.

So in order for the Democrats to win, they have to gain the mainstream population by injecting more money into the economy (and therefore increasing the debt), while all it takes for the republicans to win is for the democrats to fail as stimulating the economy (or at least fail in the eyes of the people). Printing more money, further devaluing the dollar, and increasing the debt are not easy steps, but may be necessary for the democrats to win, or else they might risk losing both the house and the senate.

I’m not sure if democrats still have more time to stimulate the economy, and I’m not sure that the republicans would like to win if the economy is that bad.

Whatever it is, it’ll be an exciting race, and expect the markets to experience huge swings until November…