Midterm Manny Mondays: So Who Wins on Tuesday & What are the Ramifications (if any) on the Market and Economy?

I realize that most of us want to stay away from political discussions on this board, but I don't think we can ignore this week's mid-term elections and the potential effects the outcome of them might have on our markets and economy (and country) going forward. The bottom line is it seems that from a perception standpoint, there are a lot of market players waiting to see how the elections will play out before determining how to position themselves. Trading and what little is left of true "investing" is all about playing what many of us think the Fed and government will do to keep this thing aloft.

So, what I'd like to do is have a little fun with this and run an informal poll on how each of us think the elections will shake out and the potential effects on things after Tuesday's results are in.

Nate Silver over at his political elections forecasting blog at the NY Times is calling for some very significant gains by the GOP in both the House, where he has them taking over the majority by a wide, and Senate, where he has them coming very close. Take a look:

Five Thirty Eight, Nate Silver's Political Calculus

First of all, what do you think the final tally will be on Tuesday after all the results are in? And, second, what effects, if any will they have the markets and economy in the short and long term? If the GOP takes over at least the House, will the plug be pulled on Bernanke's QE-4-eva strategy? If so, will the plug also be pulled on our markets and the remains of our sluggish economic recovery? Or, as some people tend to believe, would the GOP retaking at least the House, be good for the markets, if not the economy, because it will hamper their ability get anything done at all over the next two years, thereby freezing everything in place for the president and his agenda? Or will something completely different and entirely unexpected happen?

I'll go first:

House:
GOP - 224
DEM - 211

Senate - DEM - 53
GOP - 47

I say that if the GOP does indeed at least retake the House, the market in the short term sells the news, coinciding with the Fed's announcement of more QE, but that drop will probably be bought again, taking us to new year highs (a little "Santa Rally", if you will), and causing more pain for those bears and bulls alike who aren't very nimble in their approach. Longer term, I see the market then selling off in a big way in Q1 or Q2 in 2011, in the face of slowing economic activity, a continually slowing housing market (and declining prices), not to mention the ongoing foreclosure fiasco with a very unclear end game that could well cause yet another banking crisis, and our political leaders' inability to do more to continually support asset prices. As a result, any remaining confidence that the recovery is real will likely start to erode in a big way, leading to some interesting political wrangling by both parties, while an aghast, and increasingly frustrated populace looks on.

What say ye?

On a lighter note, for your football peeps, here are a few pics from our journey to Lambeau Field last Sunday: