I have been around a long time, but I have never before seen anything like what is going on now in terms of anxiety about a mid-term election. I just returned from a conference and all anyone was discussing was waiting for the election in the hope that Pelosi was out of power and Obama would be stopped from turning the country into another government controlled welfare state. Nobody seems interested to do any new deals until we see what the November outcome is. It was not only the people at the conference, but several capital markets players I also spoke to during the week who also said that is exactly what they are hearing and experiencing. It is not that people feel the Republicans have wonderful ideas and will solve the problems. It is far more the overwhelming hope that the Obama-Pelosi left wing agenda be stopped. As I wrote in my last blog, psychology matters a lot. It makes no difference what your politics are. What matters is the widespread perception that this administration is bad for business and bad for investors, and that is what is causing this period of putting everything on hold. Perception is reality. Like me, many people who started with nothing, and spent their careers working their butt off and risking everything to succeed, are deeply offended by a president who now vilifies our achievements, and wants to take our hard earned money and redistribute it to all those who did not do the things we had to do to get where we are. Many of us with incomes over $250,000 earned every single penny we have, we did not break any laws, we did not take any government money. We just worked hard and sacrificed to do it, and now we are very angry that the government in power is attacking our achievements. That was the overwhelming view I heard over and over at the conference, and this was not a group of tea party activists nor were they necessarily Republicans.

The other clearly discernable underlying issue which I keep hearing is a vague anxiety about the world we live in. The black swans are circling the lake and everyone seems very concerned they will land at any moment. There is no confidence that the administration is really serious about aggressively defending the country against terrorists, and winning in Afghanistan. There is real concern among friends of mine in a position to know what is really going on, that due to a weak approach on Iran by Obama, that Israel will be forced to attack Iran in the next 120 days or so. The bizarre behavior of the president of Iran at the UN this week just enhances that fear. While we feared the Soviet Union during the cold war, we knew the leaders were smart and rational. In Iran they are bizarre Muslim fanatics who are completely irrational religious extremists. That breeds a general feeling of anxiety. That is not what motivates investors to part with their money. It is not what motivates companies to hire and invest in new capital projects.

Are you prepared for the next Madoff like scandal which is coming? Madoff pretty much ended blind pool funds. When the next one hits soon, it will cause investors to never touch private fund raises. Having surveyed the fund raising market over the past several weeks, there is a very clear sense that investors want to control what they invest in. Family offices, and high net worth investors want to own it, not be passive. They want to drive to it. In short, they are being far more careful and risk averse. Madoff changed the game. The next one will destroy it.