We are a country of "AND's" voting for "OR's."

In a Coke Zero advertisement we watch a man emphatically dismiss "OR" and choose "AND..." to complete all his desires. The marketing behind this is pure genius, tapping into our sense of unfulfilled entitlement through a can of soda. The government has been governing in much the same manner, dismissing the need to choose and fulfilling our expectations of happiness through deficit spending AND... (wait for it...) money printing.

Everyone has been waiting for the election to solve our problems. We finally have a resolution! Obama remains President, the House remains Republican, and the Senate remains Democrat without a filibuster-proof majority. YEAH! ...Wait a second...o crap.

I love listening to the pundits spin it the morning after the election. The Democrats spin it as the Republicans now have to work with the President and the Republicans spin it as a messaging problem rather than a policy problem. Great, not much "hope" for the next four years.

But really, why should we expect our politicians to choose compromise when the voters choose partisan politicians? Moderates are a dying breed in the Senate, which is really a shame since Senators are the people who can usually broker some type of solution. (It is much more difficult to foster compromise in the House for multiple structural reasons.) If there was a message sent by the voters, it was party first, country second. We are a country of "AND's" voting for "OR's."

So do we go over the "fiscal cliff?" Looks pretty likely, in my view. Even after the lame duck session, the House likely remains opposed to tax increases. The fiscal cliff is simply a convenient maneuver to raise taxes without actually voting for it in the new session, while cutting some spending. The Senate can be filibustered from here to the next election. Maybe the President tries again to work with the House, but he will likely strike a harder line because of his re-election and his failure at brokering a debt ceiling deal last year.

Will Bernanke return the favor to the President now that his job seems more assured? Quite possibly, but at what expense? Good chance the US dollar slips more as money printing continues, pushing the country further along my Sagflation theme of fundamental deflationary forces offset by inflationary monetary policies. Sure, we can balance on the wire between these two forces for some time, but I fear the canyon is getting deeper and the winds stronger. We may see a very sudden spike in price volatility if the QE strategy begins to shake.

I remain largely in cash with a sizable position short the market. No need to change now since not much changed in the world yesterday, in my view.