In this week's Barron's, the cover article was about the upcoming mid-term elections. The thesis was that the Republicans would likely maintain control of both houses (contrary to polls). This thesis was based on the balance of campaign funding, which of course, has been Republican-tilted of late. Thus, there is a high historical correlation in recent past years between Republicans having the most campaign funding and winning -- ergo, they will likely win again.

I say: not so fast.

Amazingly, upon the release of this article, right-leaning news outlets suddenly discovered their love of Barron's, and you had the bizarre spectacle of Fox and the AJC trumpeting a quirky, contrarian thesis of a largely editorial, niche financial publication.

(Notably, not once did any mainstream media outlet (right or left) cover any of Barrons' ominous articles on housing over the past summer...)

Anyway, I'll sum up with my two core criticisms of the Barron's article's argument:

1. The article admits that in a few key years (including '76, IIRC), control did change away from the party with the most funding. The authors suggest that the reason was popular economic hardship, but argue that there is no economic hardship now, so this will not happen again. I would suggest that it would be a mistake to assume this. In addition, the Iraq war could have a Vietnam-like effect against the incumbents this year, actually trumping the economy.
2. It should be pretty clear that the underlying pattern is one whereby the balance of funding will go increasingly toward the incumbent party, the longer they are in power -- until they suddenly aren't in power anymore. This final year they retain control, they will always have the most money -- but will lose anyway. Regardless of the underlying causes of the shift, this is almost how it has to happen (tendency to bet on the winning horse, which in this case tends to help them win). Thus, in that final year, any prediction based on funding dominance will be wrong.

I still suspect the dems will win. Any economic easing seen is really just gas price easing -- and I would be surprised if it could stay as low as it is now into the beginning of winter. However, the housing market collapse will continue put pressure on consumers, as will structural indebtedness, keeping the economy a significant factor. And of course, Iraq looms...