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One of the new variables the market has had to contend with is that the US economy went into a cyclical downturn in one form and hopes to emerge in quite different fashion. Whether or not you agree with the politics of the transformation, the changes are substantial and come with a price tag to match. For instance, the flavor of the week in Washington is health care reform. Previous administrations have attempted to reform health care coverage but the stunningly large cost has ultimatley scuttled earlier attempts. President Obama has not been deterred as yet, and offers the potential for large tax hikes on upper-income tax payers to cover the cost. That is not the only structural change the US economy faces in the near-term. Cap-and-trade carbon credits are another hurdle industry and individuals will have to finance along with other sweeping proposals. My fear is that the increased government share of GDP will cause the US economy to grow more slowly in the future, like those in Europe, quite frankly. That will make it more difficult to to fund the deficits produced by the recession much less higher structural costs going forward. What is really frightening is that all this reform is happening just as government spending is ready to explode as the leading edge of the post-WWII baby boom retires…The saving grace for the US is that the rest of the world is aging more rapidly, but that is small consolation. All this injects a good deal of uncertainty into financial markets and argues for smaller equity returns and higher interest rates in the future which will likely result in the dollar maintaining a risk premium for years to come.