Salient to Investors:

Amity Shlaes at the Bush Institute writes:

2013 may see a market drop similar to the 1937 one after the re-election of FDR in 1936, when industrial production plummeted by 34.5 percent and the Dow dropped by half. Parallels  include:

  • A pre-election spree that breached norms and set records.
  • Budget-cutting afterward.
  • Fearsome attack on the status quo.
  • Fallout from first-term legislation.

Markets don’t believe the step back is permanent. Expansionists tend to revert to expanding government, as FDR did, most drastically, in World War II.

Benjamin Anderson at Chase National Bank in the 1930s said a government that plays God, or at least plays powerhouse, can spook markets and employers, whatever the decade.

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