“I think he overestimates his ability to take people .. and, sort of, charm them into being nice,” Barney Frank, has famously said of Barack Obama. And while America’s Charmer-in-Chief has worked his magic with the Women from Maine and some of the Blue Dog Democrats, not so much with the Rump Republicans in the House.
And not so much, it would appear, with the Investor Class, both here and overseas. The Dow Jones industrials fell 4 percent yesterday, dropping below 7,000. The market barometer is now down a whopping 30 percent since Election Day, including an 18 percent drop over the past three weeks. That, even as President Obama’s plans to stimulate the economy, fix the banking system and bailout struggling homeowners have come into sharper focus.
One could view the slow-motion crash as a financial vote of no-confidence in the White House’s ability to effectively fix America’s economic mess and lead the rest of the world out of its tangle. (No confidence in the spending-heavy stimulus plan that treats 2009 as a wash. No confidence in the work-in-progress Geithner plan that seems intent on forcing banks to take losses. And certainly, one could argue, no confidence in a long-term economic plan will raise taxes by $2 trillion (including interest expenses and cap-and-trade costs) over the next decade as well as increasing government’s role in healthcare and energy.) Or maybe, to be fair, investors think nobody has any answers. To Wall Street, the Long Boom looks to have morphed into the Long Bust.
But who cares about Wall Street, right? Those are the folks, Obama says, who are pretty much responsible for this entire mess.
And they must be remarkably masochistic, as they heavily backed the man who demonizes them, Kevin D. Williamson writes in the latest dead-tree edition of National Review:
In 2006 and 2008, Wall Street poured money on Democrats. Big Wall Street firms that made major political contributions — including Citigroup, JPMorgan Chase, Morgan Stanley, UBS, and Lehman — gave the majority of their contributions to Democrats. The hedge funds followed suit, as they are inclined to do — they depend on the big Wall Street institutions to clear their trades. And it wasn’t just Wall Street: Democrats led in six of the ten big-business sectors tracked by the Center for Responsive Politics: law, health care, defense contractors, communications/electronics, finance/insurance/real estate, and the catch-all category that includes chemical firms, retailers, manufacturers, food processors, and other industrial operators. Republicans held on to agriculture — which is, not coincidentally, the industry in which they are the least interested in practicing capitalism: It’s not the philosophical commitment to free markets that opens up corporate checkbooks, but the promise of favorable exceptions to those principles.
Back to Pethokoukis:
But it’s not that simple. The plunging stock market is much more than a vote of no confidence. Consider the following: In dollar terms, we are talking about a loss of around $9 trillion in wealth, a good chunk of which has been borne by the retirement and savings plans of millions of Americans. An analysis by the Employee Benefit Research Institute found that the typical retirement portfolio of $50,000 to $100,000 lost 15 percent of its value in 2008. Investors in the $100,000 to $200,000 range suffered a loss of 21 percent. And folks with more than $200,000 lost more than a quarter of their savings, on average.
And while Wall Street burns, “Obama kicks up White House entertaining.”
Update: Coming Soon: “The Looming Fiscal Wipeout.”
More: Jim Geraghty asks, “Will ‘Obama-Resistant’ Be the Investing Adjective of 2009?”