A few unexpected events have taken place in the last 48 hours – ripples across the surface of an otherwise eerily still pond…
First, all hell began breaking loose in Iraq as the hot new terror group ISIS began taking major cities in the north – cities that were once held up as a model of the Iraqi people governing themselves and seeing to their own security. Half a million civilians were forced to escape the city of Mosul, literally wading across the Tigris river, as ISIS moved in and took control. There were reports of Iraqi military forces pulling off their uniforms and melting away into the crowd as they lost control over the situation. The country’s prime minister declared a state of emergency and is begging the US to support his government and troops. No f***ing way. Americans have spoken – we don’t give a damn about the rest of the world after the adventures of the last decade.
Second, last night the Republican establishment was shocked when the House Majority Leader, Eric Cantor, was upset in his own election and lost his seat to a Tea Party challenger. Cantor had outspent his rival, college economics professor and free market deregulationista David Brat, by a factor of twenty ($5 million to $122,000 according to the Center for Responsive Politics). Cantor was a moderate and was part of the wing of the GOP that had shown an interest in working with the President rather than tying up government – he was probably next in line to succeed House Speaker Boehner. That’s all out the window now. The extreme wing of the party is not dead, as many had believed, and this now drags up all of the old fiscal battles we thought had been put to bed with the 2012 elections. This is being called an “apocalyptic moment” for the Republican party, as there’s no way the ideology that upset Cantor can win in a national contest.
Both of these events could portend future trends that would not be especially palatable to the markets. We’ll see if either of these ripples attracts any attention from the sedated investor class…
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