Thursday, November 06, 2008

Did I stay at a Holiday Inn Express last night? (UPDATED)

No, I didn't.

And yet, here I am, a non-economist, willing to venture an answer to the following question:

What the heck is going on with the stock market?

To me, it's pretty simple. It doesn't take pie charts, six-sigma projects or any of that nonsense. It just takes the willingness to look at some facts that were left remarkably uncovered during the campaign:

-- Senator Obama ran as an anti-big business candidate. More income taxes, increased capital gains taxes, a "more of the same" energy policy that helped usher in $4/gal for gas this summer--EVERYTHING about Obama's economic policies will increase the operating costs of big business.

-- Senator Obama won.

-- big business AND ITS INVESTORS, lacking any indications that Obama's campaign rhetoric was "just words", are acting as the Dems have always told us they act: in their own economic interest.

Again, I must stress, Obama's entire plan relied on the wealthy acting selflessly, which is something that the left assures us they don't do. Do they have an answer for when their argument proves true?

Right now, if I was wealthy, I'd be doing the exact same thing that we're seeing: taking money out of the market that is MOST DEPENDENT on economic confidence.

Can this be recovered? Absolutely--but it requires Obama to take a significantly different approach to big business than he already has.

Let's review:

Will the moderately wealthy accept higher taxes? Yes.

Will big business accept a lot higher operating costs? No. They will find a way around it--either by releasing jobs, increasing the price of their goods, or maybe even just moving off shore.

So, here comes that reaction full circle, since NOTHING about the economy acts independently: will the moderately wealthy, ALREADY ACCEPTING HIGHER TAXES, leave more money at risk in a market where big business will be handicapped against helping smooth out any rough seas?

We're seeing the answer to that.

And the only person who can fix it is Barack Obama.

IF President-elect Obama wants to stop this market downturn, he needs to immediately adopt a more pro-business attitude. You know, the kind of attitude that helped Clinton during his tenure in the White House. Not a straight pro-business line, mind you--I wouldn't want poor Harry Reid's head to explode--just a MORE pro-business tact is all.

Failing that, the market will continue downward. Maybe not at 400-plus point daily rates, but definitely in the negative direction.

Will Obama act in the interest of all those people who have their economic futures tied to market fortunes? Well, that would require courage and the ability to understand that your plotted course is wrong. He hasn't shown either of those traits in the past.

I'm hopeful (LOOK--I'm one of them!) he can learn. Paging Mr. Buffet, Mr. Warren Buffet, the President-elect desperately needs a good dose of economic learnin'.


The stock market recovered a tad today. If I was a betting man, I wouldn't think this is a sign of things to come. Most of the narrative today from Wall Street was "bargain hunters" fueled the upturn. Here's the problem with that: "bargain hunters" aren't buying low just so that they have to sell lower. They are buying stocks in the hopes of a recovery, where they can turn a quick buck. But what happens if the market continues down? Well, the more often it does so, the smaller and smaller these little one day, "bargain"-fueled rallies become. Even as it stands now, it's not a new direction for the market; rather, it's just a speed bump on the high-grade hill down to the bottom of the mountain. My guess: next week, the market loses about 10%. That is, UNLESS Obama does something about it. You know, if he can keep from taking classless shots at former first ladies long enough to do the country some real good.

ADD TO MY LIST OF ANTI-BIG BUSINESS POSITIONS ESPOUSED BY OBAMA IN THE CAMPAIGN: his love for the labor movement. I think this may be the most detrimental of all his stances because it's impossible to plan for the hurt to stop. For example, I'm pretty sure when gas hits $4/gallon again, we the people will start raising a stink and something might actually be done. But the inequitable treatment of management in favor of labor? When does that spiral end? It will be up to the union to stop looking for more, More, MORE from management in order to keep things going. With the cards stacked so thoroughly in their favor, do you think they will resist? Management will keep being pushed to the wall until finally, they have no place to go. And when that happens, the result is anything but capitalism. Either the company dies or the company will be nationalized--but regardless, the loser is the free market.

Just like with all the rest of Obama's policies.


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