However, the ideological impetus behind such regulation differs significantly. Obama believes in regulation in general, but he has no great objection to investment bankers themselves (many of whom are his ardent supporters).  But McCain, by contrast, despite being from the party of low regulation, has no great objection to regulation in general and displays a visceral dislike of investment bankers.

Both candidates would probably press the U.S. Federal Reserve to impose tighter leverage restrictions to deter further blowups of The Bear Stearns Cos. Inc. (BSC) type operations - even though such central bank initiatives ultimately would harm taxpayers. And Obama has seemed sympathetic to the argument that the 1999 repeal of the Glass-Steagall Act separating commercial and investment banking was a bad idea.

Either way, investments in U.S. securities may be somewhat safer for the retail investor, particularly the retail investor in mortgaged-backed securities, asset-backed commercial paper and other exotica, but the stocks of financial-services companies themselves are likely to be long-term dogs.

Finally, whichever candidate wins, interest rates are likely to rise. Neither candidate wants them to, but the policies of the past decade - keeping rates as low as possible and hoping that inflation doesn’t reappear - seems close to bankruptcy. At some point, the Fed will have to raise rates, and that will have a knockout effect on both stock prices and on the U.S. economy.

If there’s one prediction I can make from this analysis, it’s this: It looks very much to me like there will be a rough few years ahead in the United States, whichever candidate wins.

How fortunate that we can escape almost all of these difficulties by investing in emerging markets.
[Editor’s Note: Money Morning Contributing Editor Martin Hutchinson has personally interviewed the economic advisors for candidates McCain, Obama and John Edwards for our ongoing “Election 2008” series, and concluded that Obama and McCain would be the best candidates for investors. Hutchinson wrote about the “Potomac Primaries” in mid-February. For a full report on the “presidential profit plays” that was derived from Hutchinson’s research, please click here. The report is free of charge].

Source: Obama or McCain, U.S. May Suffer Either Way

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