Election day, so what?

Republicans may take over the House. Gridlock.

Government stimulus no more. The economy sinks some more. So says some of the economists on the left.

The heavy lifting would be on the Fed's shoulders. And tomorrow, the widely expected QE2 will be announced. Asset purchase should help, mostly via the wealth effect (lower risk premium, higher asset prices, HOPEFULLY more spending from those who have), and inflationary expections (higher inflation in the future makes businesses and consumers more likely to spend today).

Value investor Jeremy Grantham lists 18 points why QE2 is a bad idea. He is generally against the Fed's meddling.

On the right, economist/columnist Paul Krugman has been sure that only more spending will restore the American economy (see for example a good analysis). But I think he is too sure to be believable.

The American people are fed up. They're looking for solutions to improve lives. No one has a clue what the solution or solutions are. We're in a deep hole, and the hole is getting deeper. No clarity should be expected out of the mid-term election and the Fed action. Get used to the muddiness. But I like the view here.