Ryan Lizza in the New Yorker has an excellent piece on the decline of party insider influence and its effect on the nominee selection process. He makes the point far better than I have that the loss of central control has the net effect of producing nominees that cater to extremes within the party bases rather than to broad ideological coalitions.
As we both understand by now, I indeed have less faith in you in some sort of organic (market like as you like to say) sorting out of the country's direction by the electorate. You may be disgusted by Obama and the accomplishments of the 111 congress, but you don't seem particularly happy with its successor, not to mention the presidents likely opponents
I don't have a prediction on the 2012 election either, but I do believe it will have consequences, and some of those potential consequences strike me as disastrous in ways in which I'll wager we are likely to agree upon.
BTW, is there any reason to believe that the any of the current Republican alternatives will be more fiscally responsible than the current occupant of the White House?