Wall Street's Worst Enemy is in the Oval Office

[alienlovechild 75]

The Obama heads are still waiting for a stimulus package that wasn't really a stimulus to economy. They don't care because they're drooling over the free health or free college tuition they think is coming.

The list is long. But the list of causes of the collapse of the financial system does not include the absence of universal health care, let alone of computerized medical records. Nor the absence of an industry-killing cap-and-trade carbon levy. Nor the lack of college graduates.

And yet with our financial house on fire, Obama makes clear both in his speech and his budget that the essence of his presidency will be the transformation of health care, education and energy. Four months after winning the election, six weeks after his swearing in, Obama has yet to unveil a plan to deal with the banking crisis.

What's going on? "You never want a serious crisis to go to waste," said Chief of Staff Rahm Emanuel. "This crisis provides the opportunity for us to do things that you could not do before."

Things. Now we know what they are. The markets' recent precipitous decline is a reaction not just to the absence of any plausible bank rescue plan, but also to the suspicion that Obama sees the continuing financial crisis as usefully creating the psychological conditions -- the sense of crisis bordering on fear-itself panic -- for enacting his "Big Bang" agenda to federalize and/or socialize health care, education and energy, the commanding heights of post-industrial society.

Clever politics, but intellectually dishonest to the core. Health, education and energy -- worthy and weighty as they may be -- are not the cause of our financial collapse. And they are not the cure. The fraudulent claim that they are both cause and cure is the rhetorical device by which an ambitious president intends to enact the most radical agenda of social transformation seen in our lifetime.[/b

]

[alienlovechild 75]

Double post.

Edited March 6, 2009 by alienlovechild

[moussy 0]

As you'll notice from the above chart. Obama just did in 30 days what took Bush 8 years to do!!

You can throw rocks in me if you want but your way of thinking is... not logical. And, it misses some very important points..

It all started because of short sidedness of those who runs corporations. And with help of government that did nothing to stop their games. Do you know anything about derivatives? About making money out of thin air? Go read about it and maybe you will have a more clear picture about dark reality.

It would be naive to think that Obama could in half year fix everything that has been in hidden destruction for decades. And it's not that smart to say that all those who went bankrupt or are on the edge of bankruptcy are because of Obama since it happens while he's in the Office. He inherited a very sh*tty situation, don't you think?

All you write about Dow Jones being over 9000 on election day and being 6500 now... Let's start saying that Dow had NO fundamental reasons to rise so much around election day, ok? It was headed down, it's obvious. And after it broke support of around 7200, it will drop even more. And it's not Obama's fault. It's MARKET.

I don't want to protect Obama, i don't care about politics. I just want to say that you can't blame one person for what has been done over years. Your point of view shows that you just read newspapers and don't think for yourself. Ok, now you can throw rocks, i am finished.

[NickD 203]

I liked Ross Perot's charts better than the ones the OP is showing, he used prettier colors and could use those to fine tune the color on my TV set.

[I AM NOT THAT GUY 5,715]

Obama's Radicalism Is Killing the Dow

A financial crisis is the worst time to change the foundations of American capitalism.

It's hard not to see the continued sell-off on Wall Street and the growing fear on Main Street as a product, at least in part, of the realization that our new president's policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis.

The illusion that Barack Obama will lead from the economic center has quickly come to an end. Instead of combining the best policies of past Democratic presidents -- John Kennedy on taxes, Bill Clinton on welfare reform and a balanced budget, for instance -- President Obama is returning to Jimmy Carter's higher taxes and Mr. Clinton's draconian defense drawdown.

Mr. Obama's $3.6 trillion budget blueprint, by his own admission, redefines the role of government in our economy and society. The budget more than doubles the national debt held by the public, adding more to the debt than all previous presidents -- from George Washington to George W. Bush -- combined. It reduces defense spending to a level not sustained since the dangerous days before World War II, while increasing nondefense spending (relative to GDP) to the highest level in U.S. history. And it would raise taxes to historically high levels (again, relative to GDP). And all of this before addressing the impending explosion in Social Security and Medicare costs.

To be fair, specific parts of the president's budget are admirable and deserve support: increased means-testing in agriculture and medical payments; permanent indexing of the alternative minimum tax and other tax reductions; recognizing the need for further financial rescue and likely losses thereon; and bringing spending into the budget that was previously in supplemental appropriations, such as funding for the wars in Iraq and Afghanistan.

The specific problems, however, far outweigh the positives. First are the quite optimistic forecasts, despite the higher taxes and government micromanagement that will harm the economy. The budget projects a much shallower recession and stronger recovery than private forecasters or the nonpartisan Congressional Budget Office are projecting. It implies a vast amount of additional spending and higher taxes, above and beyond even these record levels. For example, it calls for a down payment on universal health care, with the additional "resources" needed "TBD" (to be determined).

Mr. Obama has bravely said he will deal with the projected deficits in Medicare and Social Security. While reform of these programs is vital, the president has shown little interest in reining in the growth of real spending per beneficiary, and he has rejected increasing the retirement age. Instead, he's proposed additional taxes on earnings above the current payroll tax cap of $106,800 -- a bad policy that would raise marginal tax rates still further and barely dent the long-run deficit.

Increasing the top tax rates on earnings to 39.6% and on capital gains and dividends to 20% will reduce incentives for our most productive citizens and small businesses to work, save and invest -- with effective rates higher still because of restrictions on itemized deductions and raising the Social Security cap. As every economics student learns, high marginal rates distort economic decisions, the damage from which rises with the square of the rates (doubling the rates quadruples the harm). The president claims he is only hitting 2% of the population, but many more will at some point be in these brackets.

As for energy policy, the president's cap-and-trade plan for CO2 would ensnare a vast network of covered sources, opening up countless opportunities for political manipulation, bureaucracy, or worse. It would likely exacerbate volatility in energy prices, as permit prices soar in booms and collapse in busts. The European emissions trading system has been a dismal failure. A direct, transparent carbon tax would be far better.

Moreover, the president's energy proposals radically underestimate the time frame for bringing alternatives plausibly to scale. His own Energy Department estimates we will need a lot more oil and gas in the meantime, necessitating $11 trillion in capital investment to avoid permanently higher prices.

The president proposes a large defense drawdown to pay for exploding nondefense outlays -- similar to those of Presidents Carter and Clinton -- which were widely perceived by both Republicans and Democrats as having gone too far, leaving large holes in our military. We paid a high price for those mistakes and should not repeat them.

The president's proposed limitations on the value of itemized deductions for those in the top tax brackets would clobber itemized charitable contributions, half of which are by those at the top. This change effectively increases the cost to the donor by roughly 20% (to just over 72 cents from 60 cents per dollar donated). Estimates of the responsiveness of giving to after-tax prices range from a bit above to a little below proportionate, so reductions in giving will be large and permanent, even after the recession ends and the financial markets rebound.

A similar effect will exacerbate tax flight from states like California and New York, which rely on steeply progressive income taxes collecting a large fraction of revenue from a small fraction of their residents. This attack on decentralization permeates the budget -- e.g., killing the private fee-for-service Medicare option -- and will curtail the experimentation, innovation and competition that provide a road map to greater effectiveness.

The pervasive government subsidies and mandates -- in health, pharmaceuticals, energy and the like -- will do a poor job of picking winners and losers (ask the Japanese or Europeans) and will be difficult to unwind as recipients lobby for continuation and expansion. Expanding the scale and scope of government largess means that more and more of our best entrepreneurs, managers and workers will spend their time and talent chasing handouts subject to bureaucratic diktats, not the marketplace needs and wants of consumers.

Our competitors have lower corporate tax rates and tax only domestic earnings, yet the budget seeks to restrict deferral of taxes on overseas earnings, arguing it drives jobs overseas. But the academic research (most notably by Mihir Desai, C. Fritz Foley and James Hines Jr.) reveals the opposite: American firms' overseas investments strengthen their domestic operations and employee compensation.

New and expanded refundable tax credits would raise the fraction of taxpayers paying no income taxes to almost 50% from 38%. This is potentially the most pernicious feature of the president's budget, because it would cement a permanent voting majority with no stake in controlling the cost of general government.

From the poorly designed stimulus bill and vague new financial rescue plan, to the enormous expansion of government spending, taxes and debt somehow permanently strengthening economic growth, the assumptions underlying the president's economic program seem bereft of rigorous analysis and a careful reading of history.

Unfortunately, our history suggests new government programs, however noble the intent, more often wind up delivering less, more slowly, at far higher cost than projected, with potentially damaging unintended consequences. The most recent case, of course, was the government's meddling in the housing market to bring home ownership to low-income families, which became a prime cause of the current economic and financial disaster.

On the growth effects of a large expansion of government, the European social welfare states present a window on our potential future: standards of living permanently 30% lower than ours. Rounding off perceived rough edges of our economic system may well be called for, but a major, perhaps irreversible, step toward a European-style social welfare state with its concomitant long-run economic stagnation is not.

Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.

http://online.wsj.com/article/SB123629969453946717.html

[moussy 0]

Obama's Radicalism Is Killing the Dow

http://online.wsj.com/article/SB123629969453946717.html

He's not radical enough... he still tries to pump money to something that is not competitive and might very well die with all those money.. which would be wasted. Not enough of radicalism in early 2000th caused today's crisis..

[The_Dude 1,142]

[sj5 4]

More American will lose their houses and jobs.

Good luck to everyone!

Edited March 7, 2009 by VJ's Opportunist

[one...two...tree 2,762]

[dalegg 143]

Really this makes sense. Obama and friends made no secret that they despised the system the Republicans created. Change is what he promised. Kind of an overhall is really what he was talking about. A lot of the things that thrived under Republican rule are in the cross hairs of the Democrats. I think a period of douching out is to be expected really as corporations that don't work under the Obama plan get ran out if you will. Auto industries right now don't look like good bets because of an expected change in energy policy. Medical stocks don't look good right now because of an expected change in health insurance policy.

Only once we find out what companies will thrive under the new order will we know what is profitable. The problem we have right now is that our leader is not really making it clear what companies are good bets, so there is only fear and selling.

[one...two...tree 2,762]

Really this makes sense. Obama and friends made no secret that they despised the system the Republicans created. Change is what he promised. Kind of an overhall is really what he was talking about. A lot of the things that thrived under Republican rule are in the cross hairs of the Democrats. I think a period of douching out is to be expected really as corporations that don't work under the Obama plan get ran out if you will. Auto industries right now don't look like good bets because of an expected change in energy policy. Medical stocks don't look good right now because of an expected change in health insurance policy.

Only once we find out what companies will thrive under the new order will we know what is profitable. The problem we have right now is that our leader is not really making it clear what companies are good bets, so there is only fear and selling.

Companies that focus on ways for us to reduce our dependency on oil. The future is green.

[dalegg 143]

Really this makes sense. Obama and friends made no secret that they despised the system the Republicans created. Change is what he promised. Kind of an overhall is really what he was talking about. A lot of the things that thrived under Republican rule are in the cross hairs of the Democrats. I think a period of douching out is to be expected really as corporations that don't work under the Obama plan get ran out if you will. Auto industries right now don't look like good bets because of an expected change in energy policy. Medical stocks don't look good right now because of an expected change in health insurance policy.

Only once we find out what companies will thrive under the new order will we know what is profitable. The problem we have right now is that our leader is not really making it clear what companies are good bets, so there is only fear and selling.

Companies that focus on ways for us to reduce our dependency on oil. The future is green.

Its the best bet, but until the actual energy plan/bill gets through congress and is signed, nobody can actually bet on them. Until then we are in limbo. We only know what's bad.

Edited March 7, 2009 by dalegg

[one...two...tree 2,762]

Companies that focus on ways for us to reduce our dependency on oil. The future is green.

Its the best bet, but until the actual energy plan/bill gets through congress and is signed, nobody can actually bet on them. Until then we are in limbo. We only know what's bad.

I believe there were a lot of tax credits included in the Stimulus Bill which really encourage businesses and homeowners to invest in energy saving modifications. I really think that green industries will be a big part of getting us out of this Recession.

[spookyturtle 9,466]

Wall Street's worst enemy is Wall Street, a bunch of fickle, finicky, flip flopping, whining, cheating, thieving greedy bastar ds.

[Dr. Obvious 49]

Why do you hate our President?

I don't hate him. I'm just saying he is extremely dangerous for our economy and our country. Give it another month when the Dow is closing under 5,500 points. If you haven't noticed yet: we are in a depression.

The Dow Jones closed above 14,100 points under Bush II in October of 2007.

Dude, try a small dose of reality here. The Dow lost over 20% under Bush II, Nasdaq and S&P both lost over 40% under his presidency. And the depression, my friend, is something that Obama inherited from that disaster that preceeded him. It started back in late 2007. Obama wasn't even on the ticket let alone anywhere near becoming President at that point in time.

Ah, well, it is all clear to me now. This all started in early 2001 when an extremely bitter Al Gore was stewing over the lost election. He, with the help of a few masters of the dark arts, put a curse on Wall Street and the Bush Administration. What a powerful black magic! How could we have all been so blind?