Glenn Reynolds looks at the market reaction to Obama’s electoral victory: it is quite simply “the biggest post-election drop in history”. One of Reynold’s readers notes, “I thought it was the oceans that were supposed to fall.”
Of course one can argue that since the market is extraordinarily volatile and because there’s no way to test the counterfactual conditional of whether the market and other economic indicators would have done better if John McCain had been elected, then we can reach no definite conclusions about the investor’s perceptions of the two candidates.
However we can go with the facts as they stand. We don’t alternate history, just history as it exists. And in the actual estimation of prediction markets a recession will happen and the likelihood that taxes will increase has jumped. Precisely why, I leave the readers to judge. There is a scene in the opera La Traviata when a woman dying of consumption realizes that even the return of her lover has not slowed her disease. History has not stopped for the One. As soon as the Historic Celebrations are over the next order of business is to ensure that you don’t become History.
The hard reality is that for most us, economic survival will depend on the quality of our own efforts rather than the occupant of the Oval Office. Maybe that’s the way it always was, though I’m sure some will be disappointed.
Tip Jar
Here in San Diego people voted for just about every bond and new tax measure on the ticket and we lean conservative here. It is truly unfathomable. Investors will need to scratch their collective heads to determine who the winners are going to be. But picking the losers should prove much easier. Just exactly how does one invest in labor unions and big government anyhow?
The Fast Money analysts point to the selling opportunity presented by the market rise of the past week. They also make the (disturbing) point first raised by Cramer that this market does not support the standard “buy and hold” model. It is a trading market. Secondly, it still seems to be a market that is no longer driven by “fundamentals”, such as earnings, but by psychology, such as the drop after Pelosi spoke, and by uncertainty about the TARP and future government interventions.
In other words, it’s not just Obama. It’s worse.
All I know is that the Obama victory was the final catalyst for me to sell some of the stocks I’m less enthusiastic about first thing this morning, and I took another hard look at my portfolio this afternoon. I’m thinking there will be some real bargain hunting in about 18 months or so.
There is no reason why an active market should be surprised by the election results. There was nothing secret about the election or its results. Only new information can move markets in a non-random way. I don’t think the drop means anymore than Tuesday’s rally did.
The market has been discounting an Obama victory for weeks. Today’s drop is simply the punctuation mark, on the abysmal expectations of investors from an Obama reich. The elected emperor-without-clothing will have to overcome 48 years of indoctrination into radicalism if he is to prove the markets wrong.
I just got a promotion–too bad a raise didn’t come with it, but maybe that’s a good thing, all other things considered. I’m now the president of the previously non-existent First Federal Bank of Shoebox, which may in a few years become the First Federal Bank of Shoebox Buried in the Garden Somewhere Next to a Dead Cat. The cat, incidentally, is on record as having voted for our soon-to-be Greatest Messiah for All People Everywhere in at least three different states on five different ballots. Who says The Man From A.C.O.R.N. can’t pull off miracles? Still waiting on that receding oceans thingie, but I’m patient.
I’m also resigned to the fact that I’m a passenger here. At best, when everyone else realizes that we should have made a left turn at Albuquerqe I’ll be ahead of the curve. At worst, I’m not important enough to be mercifully shot in the back of the head, so I have reeducation to look forward to–good thing I already like cheap popskull vodka. [i]Vperyod, Tovarischchi! Pobyeda Blizka!![/i] Damn. Now I really need a drink….
“Here in San Diego people voted for just about every bond and new tax measure on the ticket and we lean conservative here. It is truly unfathomable.”
That’s interesting Annoy Mouse. Same thing happened in and around Wichita, Kansas, and we more-than-lean conservative. At the same time, a right-wing aggressive tax-cutter was elected to the county commission.
Well now they have their President,that big eared buffoon isn’t mine. I plan on just using cash from now on to get things fixed. I mean I might as well pay my local mechanice with cash so atleast he doesn’t have to pay taxes.I’m going all John Gault on the Dems and so should all conservatives. See how well things go when we just kick back and sit this one out. Screw them!
“…a market that is no longer driven by “fundamentals”
There is no way to know right now. What is loose in the market is the truth that it has been, largely, a market of lies for some time, finished off with the past Summer’s lie that oil would be $200/bbl by January. The lying is not yet flushed out of the system; the flushing having barely begun. It’s been Drexel Burnham and Enron on steroids, except this scam was wired in the big domed building in the District instead of a few trading floors in lower Manhattan or Houston. This market cannot be driven by “fundamentals” because there is no reliable measuring possible.
You can trade in a bear market bottom; just don’t forget you are trading in a bear market bottom.
All summer I read the joking references to “If Hilary wins, sell stocks; buy guns and canned goods” Then a chart came out that matched the stock market to Obama’s InTrade victory percentage (Obama higher, stocks lower). It suddenly struck me when the air went out of the market…it’s time to make a run for it.
I snoozed through ’87 but this one feels…transformative.
And why should we productive ones prop up the slackers?
This election was governed by one issue – the economic collapse. Everyone saw the problem coming for months, if not years. What triggered the collapse at the exact worst possible time for Republicans? I am not claiming some conspiracy or anything, but I am curious: if the collapse was a crime (and to a degree it was/is) we would be looking for motive and opportunity so we could identify the perp, so … who, if anyone, had motive and opportunity to trigger an economic meltdown 60 days before the election?
Glenmore,
The fact is that bad economic news in an election year is normally the death knell for the party in power. McCain seemed to stave this problem off until September or so when the market fell out of bed. Normally the party in power will do whatever it can to stave off the problem. Rob Peter to pay Paul, as it were.
In this case, in the end the economy fell on McCain’s head so hard that there was nothing his party in the White House could do.
No, Obama will kill a lot of business and economic lives.
If you make anything for the military, or rely on electricity (Obama wants rates to skyrocket) or depend on cheap energy (Obama will make $10 a gallon gas a reality) or are involved in the auto or manufacturing business, Obama will do his best to make you unemployed.
Simply put, Obama thinks “White Man’s Greed” creates “a world in need” and that the way to a proper society is to make “greedy” “White men” poor and “needy” people who are not White rich. He has no idea how markets work, how wealth is created, or the value of making things instead of just lawyering everything to death.
He’s a total disaster. The market won’t get better. By the time Obama is through, paper currency will be worthless. Like German marks in the hyperinflation. He’s that stupid.
But why the support of the financiers and intelligentia for Sen. Obama?
Rent-seeking.
Is not this what the sub-prime mess is all about: arranging government policies and subsidies to work for you and your friends?
Via Wikipedia: “In economics, rent seeking occurs when an individual, organization or firm seeks to make money by manipulating the economic and/or legal environment rather than by trade and production of wealth.”
I.e., let’s spread the wealth.
Glenmore, Utopia;
Could the election itself have triggered the melt down? A final straw on a system stressed to the max? In that way, it seems like some conspiracy but it was just a natural outcome of the election.
That said, I am starting to lean towards conspiracy. First, take the donations. Credit cards didn’t need to match donors, prepaid cards, etc. Soros can only do so much with his war chest. I suspect foreign manipulation. Of course, all of that is pure speculation. I have no proof and I wouldn’t even know how to find it.
The lying is not yet flushed out of the system – 3Case
Every other day, the odd debate erupts over the “shape” of the recovery – “V”, “U” or “L”. The time required for the “lies to shake out” probably precludes a “V”-shaped recovery. The optimists are hoping for a “U”-shape but the very real possibility exists that it will be a prolonged “L”-shaped recovery – on the order of years. The wild card is TARP (and it’s successors under Obama, TARP II, etc) and the grumbling that the money is not rescuing “troubled assets,” at least not the mortgage-backed kind.
I’m troubled by the pessimism I’m hearing here. Let’s keep in mind some good news:
—The Senate is not filibuster-proof, and the worst-case scenario of conservative implosion has not occurred.
—By every indication, Obama is likely to be too ineffective to be dangerous, too unwilling to give up his popularity to pursue controversial policy goals.
—An African-American was elected president. The myth that a black man can’t make it in white America is shattered. Alot of race-grievance peddlers woke up Wednesday morning with alot less justification for their rhetoric.
—Alot of chaff was removed from the Republican party, i.e. moderate Senators and Congressmen. McCain got precisely jack in NV and NM from years of pandering to illegal immigrants, a lesson that can’t be ignored. The survivors might actually start listening to the wise men on afternoon AM radio and appeal to the conservative base.
—Looking at the big picture: Moore’s law is alive and well, and a technological is looking singularity unstoppable. Humanity is on the verge of evolving past the point of traditional politics and economics. Like the citizens of Galt’s Gulch, opting out of the collective is being facilitated by technologies that would’ve been science fiction a generation ago.
Keep in mind that an Obama win was priced into the market at quite high a probability. Meaning much of the adjustment happened earlier, and this is just the adjustment from “80% Obama” to “100% Obama”. For that, it’s a big drop, but the real information to be revealed will be over the coming weeks and months as tax pans etc shape up. Watch the markets when bills are introduced and passed to judge the market’s take on it.
You guys shouldn’t be selling your stocks. Obama will need to tax them in order to redistribute the wealth and give that black lady her free gas and mortgage payment. What, you’re not team players for a better America?
Right now the stock market is buy (a little) on hope and sell (a lot) on nerves.
Slade, did you mention the lack of uptick requirement for shorting?
I always thought that was bureaucratic nonsense. Now think I was wrong. The uptick
insured that there was a real buyer for the shares being shorted. Lack of said requirement may well have enabled some bear raiding. Joe Kennedy used to bear raid with non-existence shares. Maybe some others are doing the same with non-existent buyers?
The problem is that we’re a fundamentally wealthy country. So where do we put it? If we hold cash, it may be confiscated or inflated to worthlessness. If we hold government bonds, we may yet see defaults because of underfunded pensions. We could put it overseas, but face expropriation.
We’ve seen real estate go to a bubble, and that won’t be an option until the “flip-this-house” inflation has been burned off. Values of securitized assets have been destroyed by the lack of reliable risk ratings from the ratings firms. Corporate bonds aren’t viable as long as there’s a liquidity crunch on working capital.
Where else can you go but equities? And that’s the only thing keeping them up, against a relentless battering by Democrats.
They claimed to want to raise taxes on capital gains, corporate earnings, and dividends — and, when that didn’t do the job, they said they’d eviscerate 401K’s.
We’ve had a steady drumbeat of anti-equity news for months. But what’s the alternative?
Gold is the alternative. Because paper money is worthless when Obama is done printing it like toilet paper. Yes, he’s that stupid. He’s a lawyer like Nixon. Recall Wage-Price controls? Get ready for the bad sequel.
That gold will be the alternative is scary. It’s non-productive. Non interest earning. Merely sits there. It’s the last resort, when you want to avoid being taken of everything.
An interesting blog post at http://www.amptoons.com/blog/archives/2008/10/29/of-course/ seems to be confirmed by several comments here. Now begin the denials, please.
Since last night’s Obama win, I’ve been dealing with a strange mixture of emotions which I’ve tried to analyse. It’s occured to me that this jumble of queasy, anxious feelings is somehow, eerily familiar. I’ve felt like this before.
This year will officially be my twentieth living in Los Angeles CA (longer than I ever imagined I’d be here). In those twenty years there have been two occasions that have produced a similar sense of disquiet in me.
To wit: The Riots of 1992 and the day the verdict was delivered in the the original O.J. Simpson trial.
It’s got something to do with betrayal of trust. That is, you’re presented with a situation, a certain set of facts; you form your opinions about it, and at some point you trust that your view of the situation, your mindset, is roughly in line with the consenesus view, and that any decisisons made about the situation will be comprehensible, will make logical, moral sense to you.
However, with both the riots and the OJ trial, there was a sudden, shocking, frankly sickening moment when a good many of us realized that the reigning mindset of the moment, the view point of those actually making decisions, a uniquely African-American mindset, simply didn’t reckon reality the same way we did.
To my mindset, OJ, though a superficially charming, funny, friendly presence in the world of minor celebrity (I was actually a fan of the silly but very funny Naked Gun movies), had apparently let his ego get the better of him, murdered two people, and sadly had to pay the price by going to prison.
However, as we all know, to the the mindset of the largely black jury, OJ’s value as a symbol of black success, of black lovabilty, was so important it overrode the value of the two lives he snuffed out.
Does anyone else remember how they felt that day? Perhaps I was paying a little more attention than many, as the whole saga took place essentially in my back yard. What I remember is the nauseous, disoriented feeling that hit me (and everyone else I knew) when I realized that, to the jury’s mindset, the African American jury that I trusted to render a morally sensical decision, the lives of two rich, attractive white people simply didn’t mean as much as O.J. Simpson’s symbolism of Black Success, of Black Arrival.
Belmont Clubbers, did America just hand that mindset the keys to the Oval Office, and trust it to protect the Constitution?
Is this what good ol’ bumbling Joe Biden was trying to warn us about a few weeks back with that singularly strange premonition/reverie/press conference he held? Where he warned not only that our new President would be tested, but that Obama’s response to the test (his uniquely African-American response) would be something the majority of Americans might find hard to swallow?
I find myself wondering how many moments of O.J. Simpson-esque moral dislocation we have in store for us over the next 4 years.
At the risk of turning this thread into a financial group therapy session…in re #21 & #22, I have been mulling it over for quite awhile. Surely a mix of assets is the answer, but what mix?
I am still into equities. Like most I’ve sold at losses and will be stretching that for the next few years to avoid paying any capital gains taxes. Which brings up the question: what *will* the government do now that all that capital gains money is drying up–oh that’s right, run a trillion-dollar deficit.
I’ve bought blue chips at high dividend yields, preferring those which have a good chance of holding up through the downturn. I have also been looking into converting into yen in the short- to mid-term. But really the lesson I’m drawing is that if one really wants to hold onto one’s money, there is no set answer other than vigilance and active management.
Also let’s not forget day trading. There’s lots of money to be made from these volatile world markets. Of course if those gains are denominated in some fiat currency that’s just going to be inflated away I suppose positive true ground speed will be difficult to maintain.
Glenmore wrote “…who, if anyone, had motive and opportunity to trigger an economic meltdown 60 days before the election?”
I too was amazed when Sen. Charles Shumer [D.NY] was able to write one single letter, leak it to the press, and take down a bank [Indymac Bankcorp] last summer.
The current flood of dollars is harmless because it’s being hoarded not spent.
$ money is a ticket in line to say what the US economy does next, presumably something for you. The Fed prints or destroys tickets so that there is a match of the number of tickets to the number of things the US economy can do at once, by buying back or selling debt respectively.
At the moment it’s creating new tickets because nobody is spending theirs and the economy needs more active tickets.
The danger is that Congress won’t realize that when people start using their tickets again, the Fed has to soak up these extra dollars by selling the debt they’re been buying back; Congress is not free to spend these dollars on new programs. It’s not a trillion free dollars.
It’s very interesting for me to read the thoughts of many people in this forum and elsewhere who talk about “the media” and it’s role in promoting Obama. Much of this talk is imbued with a certain feeling that seems to suggest that “the media” or the MSM is just this sort of independent “fourth estate”, filled with ideological people. Some even like to point to surveys that claim that reporters are for decidedly more left-wing in their viewpoint than most citizens.
I think this is a really silly view.
Media is big business. That’s all it is. And that’s all that motivates it. All the high-minded talk by journalists about their duties and obligations doesn’t change the fact that they work for businesses and that most of them are little more than copywriters trying to sell something for their bosses. Ultimately, their bosses have only two goals: 1) sustain the attention of people longer in order to sell more advertising, and 2) push the agendas that the owners of that media outlet may have, which frequently are not purely ideological in my opinion. Reporters and even editors have very little freedom.
To suggest that Obama was assisted by the media is to suggest that the wealthiest and most powerful were staunchly behind the Obama candidacy. I’m not entirely moved by the idea that they are just randomly silly “limousine liberals”; powerful business people direct their resources to furthering their power.
Had America’s power elite not wanted Obama to be president, he would not have been president. We’re not talking about the actions/decisions made by a bunch of low wage earning reporters and editors. All the coverage of Obama was carefully guided by the most powerful sectors in our society. So I suppose the real question is what do they feel they are getting out of this.
cellac
For me it was the eyes, Obama’s eyes in his acceptance speech. When I looked into O’s eyes, I saw no-one I knew, have known. Dead.
There was an icy hint of agression; a look into the future, but an empty look.
I was afraid.
But I believe that Protagonist‘s view is correct – the genius of the American constitution will win out, not the O’tomaton we saw on stage.
ADE
A few weeks ago I was watching a bit of “Nova” on PBS that was about parallel universes. According to this theory, any thing that can happen does happen. So there is a Universe somewhere where McCain won and the stock marker went up (and perhaps another where it went down — I didn’t watch the whole show so I don’t know the whole theory).
A day or so after seeing that show I almost got hit by a truck. Now normally in that situation I say, “Thank God I did not get hit by that truck.” But on this occasion I said, “Gee, I’m glad I do not live in the parallel universe where I got hit by that truck.”
I think this demonstrates how insidious postmodernism is.
“All the coverage of Obama was carefully guided by the most powerful sectors in our society.”
That is almost as silly a flip of logic, IMO, as the denial of a fourth estate filled with ideologues.
So at what level do you see the good ol’ boys networking for Obama,at the ownership level or at the level where the work gets done? I don’t think the directive works that way, or I must have missed that memo. It is an interesting question although I think the answer is more a mater of a web than a top down command structure. Maybe a web ring?
cellec: at the risk of being called a racist, you put forth some very real descriptions of emotive thought. The problem is not one of race, but one of attitude. How else could a decidedly white Father Phegler be allowed to preach hate speech in a predominately middle class church (trinity baptist). Race is an excuse, used by many antagonists, it is not a reason.
@slade: I’ve always thought the “V” amd “U” theories to be folly. I see those promoting such ideas to be ignorant of market history and still riddled with the adrenal effects of Greenspan’s last bubble.
Some variant of an “L” is possible, though I believe the “head and shoulders” chart theory of bear market bottoms; saw a “Chartology” segment on CNBC where they had it clearly demonstrated for the last 4-5 bear markets, all on the screen at once. What is different, and worrisome, now is the level of government interference (and it’s correlative “rentseeking”) in the market. I do not believe that has been in the mix previously.
Wow, commiserations for that HD what got hit by the truck in one of the alternative universii. That kind of thinking is hindu I think in origin, but taken to inverted extremes.
But then I still don’t understand the origin of the term “postmodernism” much less the concepts therein.
RE “the media:” If McCain had won, and the market had responded with a 300 point drop, you can bet your Chevrolet that the pundits would be attributing the drop to McCain’s election.
But, since the drop followed Obama’s election, the ambiguity of the drop’s causality will be emphasized.
Post hoc ergo propter what!?
The Economist has an interesting article about bias in the media.
http://www.economist.com/finance/displayStory.cfm?source=hptextfeature&story_id=12510893
The question posed by the study reported in the article is whether bias is a supply-side or demand-side phenomenon. If accurate reporting is desired by the readers, how can bias survive in a competitive market? The study explored the idea that a competing desire of readers is confirmation of beliefs they already hold. From their correlations of media bias, subscription sales, and voting patterns, they concluded that the biases of the various publications were quite sensitive to the subscribers’ own biases and that changes in editorial and reporting policy would reduce income for the publication. They also found that different publications under the same ownership tailored their policy positions to the readership-market of the specific publication.
So the wealth of alternatives available results in our, more and more, reading or watching what we already believe. It may be more of a demand-side market than it seems.
Jim
3Case: the “U” and “V” theories. Quite possibly of dubious real-world value, but then, we have to remember, this IS statistics. But the topological approach to trend analysis sounds too much like boutique niche chartology to keep a couple graduate students in thesis paper for a few years.
What just galls me is that the Obama administration, and by designed default, Obama himself, will get credit for “fixing” the “Republican” financial crisis – if, as it appears at present, the Smart Guys go in and do their magic – Summers, etc – the backbench looks pretty good too. Barney Frank, Chris Dodd, Chris Cox, Franklin Raines, Jamie Gorelick, Rangel, Pelosi, and Reid will become footnotes discarded into the Dustbin of History.
Dave RE the uptick Rule. I only know what I have read, which is mixed, but suggests that an academic was “found” to make the case for repeal of the rule. It looks to me like it should be reinstated but I see it as a secondary current that gets promoted into the spotlight when the primary currents go beserk.
I expect 2009 to be worse. I put my faith not in Obama but in his financial team. Rahm Emmanuel will be one to watch. A “postmodern” Hitman if rumor is correct.
cellac – agree and understand completely. The feeling of betrayal and the disgust at the entitlement. Get prepared for being called a racist for the next four years if you comment on it.
(You’ll note that OJ and Johnnie Cochran totally believed once he was acquitted that he’d be free to go back to his old life, playing golf at the Riviera Country Club and being invited to Hollywood parties. There *was* a backlash, however, and it was unspoken. White America looked at that verdict and unanimously agreed to shun him, just like LIzzie Borden had been shunned.
I also date the demise of Affirmative Action to that verdict, in that white America declined to let blacks go to the head of the line any more if they were going to stupidly disregard the law.
I think here will be a backlash against the demands for reparation and entitlement again that we’re seeing as a result of this election. It just will be hard to shun the President of the United States.)
Does anyone have a sense of whether or not Hispanics are also expecting their share of free largesse and line-cutting?
The most interesting thing I’ve seen in recent days is a rather breathless paper claiming that Obama uses covert hypnotic techniques in his speeches. I’m not knowledgable on the topic and not a tinfoil hatter, so let me just put it this way —
If you read the paper and analyze Obama speeches according to the paper, he appears to be doing all of the things the paper are claiming he is doing.
If you search for “covert hypnosis” on youtube, you will find a plethora of videos showing various people allegedly successfully using these techniques to do stunning things, like getting shopkeepers to accept blank paper in place of money.
If Obama were to be using these techniques, then the media would be the most succeptable, as they are the ones who have spent the most time watching the candidate work the crowds.
I’d appreciate any informed opinion on this subject.
Anyway, the link is:
http://www.pennypresslv.com/Obama%27s_Use_of_Hidden_Hypnosis_techniques_in_His_Speeches.pdf
I was working for a fellow yesterday; a self made man, works with his hands, no debt. He was wondering whether to purchase the necessary raw materials this fall to process for sale next year.
He is experiencing what he calls ‘demand destruction’. Good customers don’t want any product. Not less, any.
He figures that the Fed and governments all over the world will print money like mad and drive demand up, crazy up for a short while, then hyper inflation will take off.
There is no long term. All anyone can do right now is try to ride the waves.
He is going to buy silver and gold. Cash becomes worthless in inflationary times.
He asked a good question; How would McCain do any better? The only thing I could say is that McCain is a free trader.
Is someone was sensible and had balls, they would stop printing money tomorrow. Force the Feds to spend only tax revenues, no borrowing. Things would get real tough for a short while, all the bad debt would be written off, hard times. Then in a comparatively short time things would gradually get better. |___/
What I think we will see is —/|_____
Derek
Violetta standing in front of the mirror singing Addio del Passato (“So closes my sad story”), all artifice and pretence stripped away; utterly bereft of hope but lit with inner truth is one of the most potent moments in the operatic tradition.
Wadeusaf @ 32
How else could a decidedly white Father Phegler be allowed to preach hate speech in a predominately middle class church (trinity baptist).
There is always a need for the Capo!
>>Cash becomes worthless in inflationary times.
Cash becomes worth less in inflationary times.
Please, words matter.
Cellac-
I agree that the eyes of Obama are the eyes of a man who, without remorse, is willing to see millions sent to their death. There is an opaqueness in those eyes that betrays no empathy or sympathy.
Very scary indeed.
Small silver lining:
Now EVERYTHING can be blamed on the president-elect.
I’ve already perfected a booming “That damn fool!” with just the right intonation.
My hunch is that things will get much worse than expected.
I frequent a couple of gold web sites and there are writers who’ve been accurate in their assessment of our economy for years. Yes, one must be careful of becoming a member of the choir at such sites. But a few of their contributors have been big picture right so far.
No big debt, some cash, and some gold – that’s my ticket. And I think there are some good stocks out there – they make things that are always needed. I do think that one needs to be choosy now – riding the indexes down is not smart.
I’m the only person I know who has bought bullion as insurance.
And if I’m wrong? Maybe I’be blown 10%. If I’m right that tough times are coming – I hope to be fine, and maybe even come out ahead some.
Seems like a reasonable price to pay for insurance to me. Don’t go apeshit over this, but be at least minimally prepared.
And one last thought. If the shit does hit the fan, I doubt that there will be a call to lifeboats – they will have already pushed away.
I hear the term “loyal opposition”, but that shouldn’t be the accurate description. A better term would be “honorable opposition”. Loyalty goes to the Constitution, not to the President. One can respect the office of the Presidency while being contemptuous of its occupant.
President-Elect Obama should not be demonized. Given his pattern of behavior, demonization isn’t necessary. It is more important to be coldly accurate. Every bluff should be called. Whenever a basic liberty is threatened, push back. At the very least, bear witness.
Don’t be afraid to call Mr. Obama a racist when he clearly and unequivocally acts as a racist. If he acts in a racist manner, call him on it. True opposition against racism opposes all forms of racism.
I want Mr. Obama to be physically safe not because I like him but rather because he can only be defeated politically when he is physically safe. The Honorable Opposition poses Mr. Obama the least physical danger precisely because those in the Honorable Opposition won’t be disappointed in him.
The key to undermining the danger Mr. Obama presents to American liberty is to puncture his myth. I think the mythological Obama is the most glaring weakness of Mr. Obama, for once the myth is broken his power is broken too.
Mr. Obama relies upon a myth of a man dedicated to social justice, a man who seeks to remedy injustice, a man who will fundamentally change America. He runs into two roadblocks. Firstly, different people have different ideas of what a just society is, and different ideas of what constitutes injustice. Secondly, there may be glaring injustices that are hideous by any measure that would require Mr. Obama to confront members of his own power base if he has any chance of resolving anything.
When Obama supporters face a choice between taking a stand against an unequivocal injustice that requires remedy or rallying behind their leader no matter how immoral his policies, what choice will they make? Let’s wait and see.
All of your are talking about economics. Add something else to your recipes.
Now that we have Obama, how are players like Putin going to react? Is this not a golden opportunity to resurrect the Russian Empire or the Soviet Union. Will China choose the present to present its bill for all the cheap money and imports we’ve had access too? Every other tinpot in the world with a border dispute or other outstanding business that re-arranges jello is about to pop out of the woodwork. And they’re (some of them anyway) going to do it together.
If any of this is true…what’s Obama going to do? He’s a product of the Chicago machine, so maybe he’s tougher than he looks. Or does he revert to professor-leftie-sheep mode and let whoever, have whatever? Or, perhaps worst, does he start out as a sheep, and half way through being shorn, deside he’s had enough. The last possibility is what usually produces the truly memorable disaster.
Besides a bad economy, or maybe as part of it, how do you folks view the possibilities for a really big war?
Let’s ask these people how that “Hope & Change thing” is already working out:
http://www.wthr.com/global/story.asp?s=9299280
“Thanks for your support. Now go away and we’ll call you again when we need you.”
“Besides a bad economy, or maybe as part of it, how do you folks view the possibilities for a really big war?”
I think there’s a least a 50/50 shot in the next 4-8 years we end up seeing a war on the scale of the 1991 Gulf War in terms of the size of the forces involved, probably significantly bigger.
Nature may not necessarily abhor a vacuum, but man-made geopolitical forces most certainly do. There’s going to be one heck of a gaping whole created as the U.S. economy shrinks and an Obama downsized military physically withdraws from the Middle East and elsewhere.
Iran, Pakistan, China, Russia, Venezuela, Saudi Arabia, Syria and many other nations have hegemonic impulses to some degree. It’s only a matter of time before one or all of them try to militarily assert themselves as far as I’m concerned.
Talk about scary Obama eyes; Read this & check out the pictures…Obama the narcisscist;
http://www.faithfreedom.org/obama.html
Surprisingly, I expect my personal economic position to improve under Obama as the rest of the economy falls into Carteresque stagflation.
One of his big supporters is the Chicago-based electric conglomerate, Exelon. Bill Ayers’ father was a previous CEO of its predecessor. Obama’s hostility to coal means that nuclear power will be the only real alternative; even environmentalists are offering begrudging support. Exelon is the nation’s biggest operator of nuclear power plants and is actively seeking to continue expandation. Since I build nuclear power plants, I see increased demand for my services as experienced nuclear engineers are a bottleneck.
My rule of thumb is that government can never make an economy better – it can only make things worst. Stopping the bad policies is the best it can do.
Yes, Obama’s support came from rent-seekers and tax-eaters. It will get very bad before it gets better.
This bad economy isn’t just ours, take a look at the Russian stock exchanges and combine that with the current state of the rouble and rapidly falling oil prices and it is easy to see that Putin and Co. will need an extenal enemy to distract the proles from the disaser surrounding them. I think that he will move to finish Georgia and make moves into the old Empire.
The Chinese can happily spend the zillions of US dollars they are sitting on to power them through this crunch (maybe they will even look into selling things to their own people and set up a real internal economy).
I see the threats as Russian re-expansion and some Damned Foolish Thing in the Mid-East.
FoulHarold, the down-sizing of the military has already begun.
An army tempered in the fires of seven years of war, arguably the best trained, best equipped, most professional army ever fielded, will soon be voting with their feet, broken hearted at their country’s rejection.
“The greatest fear for a military officer is dedicating your life to a fight that ends up meaning nothing.”
Regarding post by Sleepless in Seattle (23): I clicked on the link and thank you for wasting my time. Supporting Obama because he “wants to spend money on schools” is like voting for a beauty queen who says she’s for “world peace.” Google for “There’s one born every minute” — you are one.
James Kielland (28), in reference to media bias, asks what the “most powerful…are getting out of this”? Recommend you read up on the economic rent arguments mentioned by other commenters. Read up on barriers to entry such as regulations. Big businesses are always glad to write the rules of the road for their industry. Prominent, recent example is Pickens’ supposedly benevolent proposal regarding wind power, which oh-so-coincidentally benefit his financial position in the natural gas market. The guy who gets squashed is the little guy (yes, “Joe the plumber”) and that’s exactly who is no longer buying anything. Like Annoy Mouse (1) asked, “Just exactly how does one invest in labor unions and big government anyhow?”
That is the main question folks are dealing with here, where to invest in confiscatory times? The racial element is relevant due to disparate views of a proper “social contract” for the U.S. — whether we are in a win-win (free trade) environment or a zero sum game? Everything I have seen indicates we are in a zero sum game now and it looks like an “L” curve to me. I had IBM stock in the 1970s that rarely moved up or down because antitrust action was ongoing. That, FYI, was also why they let Bill Gates patent DOS instead of IBM insisting on holding all patents…but that’s another story.
Bottom line is that if government (to paraphrase Reagan and others) taxes everything that moves and subsidizes everything that doesn’t, all of us “movers” are now trying to figure out how to stop and be subsidized.
My recommendation? Get in your Bible, concentrate on the relationships in your life (which is your real “quality of life” anyway) , maintain what you have and try do-it-yourself projects with friends/family.
Alexis said:
“I hear the term “loyal opposition”, but that shouldn’t be the accurate description. A better term would be “honorable opposition”. Loyalty goes to the Constitution, not to the President. One can respect the office of the Presidency while being contemptuous of its occupant. President-Elect Obama should not be demonized. Given his pattern of behavior, demonization isn’t necessary.”
These are wise words. We are patriots and not moonbats. We should not allow our thinking to be poisoned by “Obama Derangement Syndrome”. Early in his career, Obama was programmed to self destruct. Our role is to pickup the pieces after Obama goes away.
Whiskey said:
“Simply put, Obama thinks “White Man’s Greed” creates “a world in need” and that the way to a proper society is to make “greedy” “White men” poor and “needy” people who are not White rich. He has no idea how markets work, how wealth is created, or the value of making things instead of just lawyering everything to death.”
Even more simply put: “Obama is a crypto-Marxist.” In about a year, Obama’s ideology will become evident to almost everyone including the MSM. Things will get “interesting” then for Obama.
Mel Williams said:
“My hunch is that things will get much worse than expected.”
and the sun will rise in the morning..
Mel Williams also said:
“I frequent a couple of gold web sites and there are writers who’ve been accurate in their assessment of our economy for years.”
I also visit gold web sites (Kitco mainly) and have been impressed by their near complete disconnect from reality (Gold bugs live in their own little world). Within the last year, gold has dropped from a peak of $1000/ounce to a current value of about $730/ounce. Gold is almost as crappy an investment as the stock market. Now having said that, I do think gold will go up when Obama starts debasing the currency. That’s really the only way Obama can pay for all the socialism that he has promised and also the only way we can pay off all the debt that we owe the world (there are going to be a whole lot of very pissed-off people holding near worthless T-bills and corporate paper).
Protagonist said:
“I’m troubled by the pessimism I’m hearing here. Let’s keep in mind some good news”
I’m also trouble by the pessismism I’m hearing here but it accurately reflects our current situation. Let’s keep in mind some bad news:
Our political system has seriously malfunctioned and elected a crypto-Marxist as President.
The economy is in free-fall due to numerous stupidity/greed-based self inflicted wounds. The economic system is malfunctioning.
The Iranians are currently running thousands of uranium centrifuges. As soon as they can accumulated enough bomb grade material they will initiate what could be the worst war in human history (their leaders have been quite frank in expressing this intention). This war will not only take out most of the world’s cheap energy supply (the Persian Gulf oil fields) but also result in the deaths of millions of people.
China is the world’s largest nation. Their whole economy was based upon selling cheap consumer goods to the US. That market is now gone. China is just about to experience full-on economic water hammer. China’s leaders are totalitarian communists. What are China’s leaders going to do when 1,321,851,888 people realize they’re all going broke?
I could go on, but what’s the point?
Re: Cannoneer
Those are some heartbreaking comments. They remind me a lot of what I heard while in the military after the “Don’t Ask, Don’t Tell” policy was put into place early in the Clinton presidency. There were no major conflicts ongoing during that time though to which we had dedicated ourselves, so I’m sure the level of disillusionment being felt today by our service members is far greater.
PS- Apologies for the “whole” vs. “hole” goof in my previous post.
Google “Exelon obama”. Very interesting…
Blogrot: Do you not think that high increases in money supply along with double digit decreases in asset values point to something?
UK dropped their interest rates by 1% today.
What are the precursor signs of hyper inflation? What triggers the psychology that what $100 buys today will cost $125 in a month?
Derek
I have tried to shield myself from the MSM coverage of The Dawn of The Age of Entitlement.
Life goes on, I am busy at work, but even so I am despondent, asking myself how anything good can come out of a process so Messianic, and so unreasoning ?
And no wonder Cannoneer’s soldiers are so dejected. Far from home, at risk from enemy action at almost any time, and their votes did not even get counted ? I would have imagined they would have been counted first…
duty must be valued at even less than I had thought.
Eggplant: Gold prices decrease in a a demand downward cycle, commodity and all.
It will increase in inflationary times.
It’s all timing. If one decided to do what made sense over the last decade, one would have missed the opportunity to quadruple your money. Same with the tech bubble.
Derek
My gosh, Eggplant, but you are short sighted. You are absolutely right if your timeframe is 8 months, and absolutely wrong if your timeframe is years. Pull up a long term chart of gold – its bull run is still intact.
ADE writes:
“For me it was the eyes, Obama’s eyes in his acceptance speech. When I looked into O’s eyes, I saw no-one I knew, have known. Dead. There was an icy hint of agression; a look into the future, but an empty look.”
Pop-psychology time:
I noticed that look, also. There will be a psychological drama unfolding, which will be interesting to watch. Whom will the new president trust? Who will be his friends? Who will betray him? The Vera thing will be of little interest. The loneliness of the job and what it does to a man will be of great interest.
Shelby Steele calls Sen. Obama a ‘bargainer’:
“Bargaining is a mask that blacks can wear in the American mainstream, one that enables them to put whites at their ease. . . . Bargainers make the subliminal promise to whites not to shame them with America’s history of racism, on the condition that they will not hold the bargainer’s race against him. And whites love this bargain — and feel affection for the bargainer — because it gives them racial innocence in a society where whites live under constant threat of being stigmatized as racist.”
“This is how Mr. Obama has turned his blackness into his great political advantage, and also into a kind of personal charisma. Bargainers are conduits of white innocence, and they are as popular as the need for white innocence is strong. Mr. Obama’s extraordinary dash to the forefront of American politics is less a measure of the man than of the hunger in white America for racial innocence….”
“But now the floodlight of a presidential campaign has trained on this usually hidden corner of contemporary black life: a mindless indulgence in a rhetorical anti-Americanism as a way of bonding and of asserting one’s blackness. Yet Jeremiah Wright, splashed across America’s television screens, has shown us that there is no real difference between rhetorical hatred and real hatred.”
But let’s remember, Steele said that America would not elect Sen. Obama. But we did. But was it because he managed to convince us that he is, after all, a bargainer? Do his eyes betray a certain self-loathing for being that bargainer?
President Bush is nothing if not a regular, even-keeled guy. His eyes might have shown a wobbliness at times (particularly in the wobbly, lonely days prior to the Surge), but they usually have and still possess a twinkle. I loved watching his enthusiasm as he worked the Congress after a State of the Union address. Yes, he could get testy, but he seems to be a real gentleman.
Please don’t get me wrong – Exelon and new nukes are great things basically, but Obama looks poised to use the power of the federal government to advance the commercial interests of one particular company at the expense of its competitors.
Now that’s not good.
The founder of what is today Exelon was Samuel Insull, Thomas Alva Edison’s one-time personal secretary, whose image is immortalized as “Mr. Monopoly” from his scapegoating during the New Deal. Looks like the current management doesn’t want that to happen again – to them.
Derek said:
“It’s all timing. If one decided to do what made sense over the last decade, one would have missed the opportunity to quadruple your money. Same with the tech bubble.”
Timing is the difference between a skilled investor like George Soros and a clueless schlemiel like myself (Is it luck, skill or inside information?). I saw the Dot Com collapse coming but pulled out 6 months too early and missed most of the up swing. I also saw the sub-prime collapse coming but pulled out 2 years too early (thought it would happen in spring 2006 but instead it happened in fall 2007).
Now the $64,000 question: When does it hit bottom?
I expect President Obama to
restart advertising soon to “convince” the McCain voters to see matters His Way.
Mark quoted:
“This is how Mr. Obama has turned his blackness into his great political advantage, and also into a kind of personal charisma. Bargainers are conduits of white innocence, and they are as popular as the need for white innocence is strong. Mr. Obama’s extraordinary dash to the forefront of American politics is less a measure of the man than of the hunger in white America for racial innocence….”
Conservatives made a serious tactical error in not previously bringing forward minority Presidential candidates. If America had previously had a black President then the nation would have been vaccinated against race based demagoguery. This error will be accentuated if Obama’s Presidency proves to be as big a failure as many anticipate. In the future, any black man running for President must first answer the question: “Will you be another Obama?”
The haters at work are still hating. They’ve won and they are still demonizing Cheney. I despair.
Eggplant,
Now the $64,000 question: When does it hit bottom?
This is indeed the question. FWIW, here’s my view:
I think we’re in for, best case, a 2 year recession. IOW, we’ll see decreasing GDP in both 2009 and 2010. During these two years, we may see 1 or 2 quarters when GDP ticks up slightly, but not enough to overcome the other quarters of contraction.
Conventional wisdom is that equity markets head up 6-9 months before the end of a recession. So, if CW holds, we’d see an uptick in mid 2010, 18 months from now.
DJIA is trading at a Price to Earnings ratio of about 11. Median historical PE is about 15. But we’re going into a deep recession that could see corporate earnings contract by 5-10% annually. That would put the PE target in the range of 5-10. Let’s split the difference and say 7.5 This would mean the DJIA would bottom out just below 6000. It could go lower, of course.
This sounds very pessimistic, but I think there are (at least) two big shoes left to drop:
1. Consumer deleveraging. The ability to borrow against home equity to support increased consumer spending is over. There is little equity left to borrow against, and no debt availability even if there were. The market has probably priced in this loss of consumer capacity.
But I don’t think the market has priced in the fact that consumers not only can’t get more debt, but they now have to pay off the debt they have accumulated. This will necessarily cause a decrease in discretionary income, leading to a drop in consumer spending. I don’t think this has yet been priced into the market.
Retailers and consumer product companies are in tremendous pain. This pain will spread to investors once this fundamental consumer weakness is exposed.
2. Pension insolvency. Defined benefit pension plans are a trainwreck. There are about $1.6 trillion in pension liabilities (there is some controversy about the right number, since this is based on actuarial assumptions, but let’s run with this number. The sinking stock and bond market has whacked the fund assets to the point where they’re 90% funded. That’s a $160 billion shortfall.
But it doesn’t end there. As pension funds fall, their corporate sponsors have to make additional contributions to the plans. This further depresses earnings, putting more pressure on stock prices. That leads to further declines in funding ratios, leading to more contributions, etc.
If companies like GM start to file bankruptcy, this mess could land in the Pension Benefit Guarantee Corporation, another government-guaranteed financial entity. Another bailout could be needed, as well as a cut in benefits, leading to more erosion of consumer spending.
—–
So, while I believe the economy will flush all of this bad crap out of the system over time, we’ve still got a way to go. The biggest danger is still a deflationary spiral that shuts down big chunks of the economy, so the Fed still has to pump dollars into the economy to combat this possibility.
But eventually, these dollars have to get sucked back out or we will have a big inflationary spike. The market is predicting more inflation; the yield curve has really steepened in the last couple of weeks. This will further increase long-term borrowing costs, and hurting investment and economic growth. And so on.
This is going to be a pretty rough ride. Like most hangovers.
L3
BTW, if you want to see a cool graphic illustration of the steepening yield curve, check out this site:
http://stockcharts.com/charts/YieldCurve.html
On the right hand graph, click on the peak of the S&P500 (around mid-2007). The yield curve on the left hand graph snaps to that date. It’s pretty flat.
Next, click animate and watch the yield curve move.
Pretty nifty. In a sickening sort of way.
L3
This sounds very pessimistic, but I think there are (at least) two big shoes left to drop – Leo
I would add a “third” (maybe half a) shoe, which is potential “restructuring” of Detroit. Analysts are questioning the wisdom of a traditional bailout (would that we had not lived long enough for bailouts to become traditional) because it is throwing money at an inefficient business model.
The suggestion is to give that $25B to the workers to assist in job retraining and interim financial solvency while a special-purpose government entity “restructures” the automobile industry into a new workable business model – and presumably smaller industries. There’s the rub.
Restructuring Detroit.
[Even though Mika has been cranky lately, this is the rub of his repeated cartel complaints. Very interesting - another poker tell - to see if Detroit gets money or something more radical.]
Even money at this point that the decision-makers will not take that chance but the argument at least made it to the table. Which is a step forward. I predict a prolonged period of rhetorical posturing as the bullet is dodged for a politically more palatable incremental transition that allows Detroit management to “get wealthy and retire before their house of cards falters.”
“Much of this talk is imbued with a certain feeling that seems to suggest that “the media” or the MSM is just this sort of independent “fourth estate”, filled with ideological people.”
“I think this is a very silly view.”
I disagree and I have been a journalist for more than 30 years.
The default position of almost every mainstream publication is left. And it can’t be any other way because the wire services and hordes of youngish media studies graduates are almost all that way. And they think it’s mainstream, as in middle of the road.
And yes there is still a split between the journalistic and business sides of major publication, to a degree, though not as much as when I started.
That just showed us that we’re in more trouble than we believed we were in. We have a lot to overcome, and guarantee it won’t get done under the elitist illuminati.