10.01.2008 0

The Markets Speak

  • On: 10/27/2008 12:43:33
  • In: Barack Obama
  • By William Warren

    As the stock market reels and shudders and Wall Street tumbles to and fro, one man has maintained—as the New York Times puts it—“a cool head and sound judgment”: Barack Obama. Also cool and sound is Mr. Obama’s lead in the polls, most of which show the Senator with a significant advantage over his rival John McCain.

    Given the headlines, it would appear as if most Americans—including Republicans—see an Obama Presidency as all but inevitable.

    This foreseen inevitability extends to the markets as well.

    Nevertheless, the markets continue to suffer and Wall Street continues to vertiginously plummet to unprecedented depths. With the near-guaranteed election of such a “cool and sound” leader, why won’t the markets just cheer up?

    Perhaps it could be that the markets really don’t want an Obama Presidency.

    That is the conclusion of Charles Gasparin’s piece published last week in the New York Post. As he states:

    “The country is headed for recession; the only question is: Just how low can the markets and economy go?

    “It could be a lot lower – it all depends on the policies of the next president.
    And, as it looks increasingly likely that Obama will be that man, the markets are casting a vote of ‘no confidence.’”

    Citing Obama’s “blind loyalty to policies that bring together the worst elements of Herbert Hoover and Jimmy Carter”, Gasparin argues that the markets are preparing for an administration with a proven track record of hostility towards traditional laissez-faire capitalist enterprise. Obama’s staggering tax hikes and massive spending increases do not bode well for an already suffering marketplace.

    As Gasparin continues:

    “I look at Obama’s record differently. From his days as a community activist, to his years in the Illinois Senate and now his brief time in the US Senate, he has shown little inclination to deviate from his party’s tax-and-spend orthodoxy.”

    Mr. Gasparin communicates a strong point and one that ALG New Bureau has steadfastly trumpeted. The more government keeps its hands off the economy, the more the economy is free to proliferate. If the market has too many government hurdles to overcome, it is likely to stumble, as it is now on account of government over-intervention.

    Based on Obama’s soaring poll numbers, it seems Americans have bought the false narrative that Republican-sponsored deregulation and this “hands off” attitude caused the financial meltdown. The truth is more complicated, as ALG News has reported, and in truth it is because of government’s loose dollar and easy credit policies that the nation finds itself in its current malaise.

    What could be less reassuring to the markets than the perceived inevitable election of the very party which played a large role in triggering the entire housing crisis? As ALG News Bureau highlighted last week, columnist and author Orson Scott Card had the following to say:

    “Instead, it was Senator Christopher Dodd and Congressman Barney Frank, both Democrats, who denied that there were any problems, who refused Bush administration requests to set up a regulatory agency to watch over Fannie Mae and Freddie Mac, and who were still pushing for these agencies to go even further in promoting sub-prime mortgage loans almost up to the minute they failed.”

    Despite the economic blood on the Democrats’ hands, the American people are being led to believe that Republicans, John McCain and the free-market ideology are to blame. Socialists and economic central planners want to convince the American people that even more Big Government policies are the solution and that capitalism has run its course.

    The markets, however, have not bought this false narrative.

    With every drop in the Dow Jones and every foreclosed home, the markets are telling us something: In particular, it’s telling the government to slow down its intervention. To pause to consider its moves to nationalize banking. And the mortgage industry. And now insurance companies.

    We are socializing risk. And the markets are telling us that they don’t like it.

    It’s about time we listened.

    William Warren is a contributing editor of ALG News Bureau.

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