Sunday, January 6, 2008

Iowa's Message to Investors

From the Wall Street Journal:

They say Wall Street sets prices by anticipating events, and there's no better example of that than the investor who were busy Friday factoring the results of the Iowa caucuses into their outlook.

Yes, it's early days. We haven't even picked nominees, let alone a president. There's more than a year to go until the new CEO of America Inc. takes office.

But it doesn't hurt to start sketching out the possibilities. The Iowa results sent tremors under the political establishment. They may eventually shake up the world of finance too.

A President Obama would obviously pursue slightly different policies from a President Clinton, and very different policies from a President Romney or President Huckabee.

But maybe the real significance of these results is something more basic. In a nutshell: I suspect they sharply increase the chance that the Democrats will capture the White House next November.

Why? Sen. Obama's victory in Iowa makes it more likely than before that he will be the Democratic nominee. And Sen. Obama, with his broad appeal to many independents, would probably be a stronger candidate in a general election than Sen. Clinton. Meanwhile the Republicans are in disarray. And Mitt Romney, who could be formidable in a general election, has suffered a serious setback in trying to get there.

So the chances have risen that Washington could see single party rule again, with Democrats in charge at both ends of Pennsylvania Avenue....MORE