More on the Growing Threats of Populism - 01/21/10

"In fact, the Massachusetts Republican Senate win could conceivably result in administration policy initiatives that are much more punitive toward those who are seen as being privileged relative to the ("oppressed") masses (e.g., banks, brokerages and the wealthy)."

-- Doug Kass, The Edge (yesterday)

Yesterday's opening missive (see quote above), argued that Scott Brown's Senatorial victory could conceivably lead to a further populist backlash by the Obama administration, leading to ever more onerous and business-restricting legislation.

Indeed, according to media reports, the administration is considering giving bank regulators the power to limit the size of the nation's largest banks and the scope of their risk-taking activities.

I continue to believe that an angry subtext will result in a tidal wave of populism. This is another nontraditional headwind facing the domestic economy and our capital markets.

The resulting trend is valuation-deflating.