How Low Can the Market Go? Obama's Plans Ride on the Answer
The financial news reports ask "How low can we go?"
The answer quite simply is that no one knows. The Dow dropped like a stone yesterday below 6800 and there is no indication the Dow or any of the other major stock indices will be bouncing back anytime soon. While President Obama continues to ride high in the polls and garner the fawning reviews of the mainstream media, there is a growing sense that the economy is careening out of control and that the massive proposals for perpetual bailouts of failing firms, nationalized health care, cap and trade regulation, new tax hikes, and a $3.6 trillion budget are not helping matters.
Ben Stein writes:
You have been -- you are now -- bombarded every day with TV shows, radio news, and newspapers telling you of this government support plan and that government support plan and how they are going to rescue you. To which I can only say, when you hear the word "government," in your mind, substitute the words "Department of Motor Vehicles." When was the last time they rescued you? When was the last time they bailed you out of anything at all? ... [T]to expect that "government" is a fairy godmother who will rescue you from your problems over any long period is just fantasy.
To put it differently, both ordinary voters and the financial markets suspect the administration does not have a plan, or a clue, regarding what to do about reviving the economy. And what they do have to offer is counterproductive. As the Wall Street Journal reports:
"Investors finally understand this recession will be deeper and longer, and the recovery will be shallow," said Joe Battipaglia, chief market strategist for the private client group at Stifel Nicolas. "And the government doesn't have a sense of any solution that might instill confidence."
The Obama administration seems curiously obsessed with plans that are designed to burden investors, employers, and the very sectors of the economy that are hurting the most. It is hard to discern how a bevy of tax increases, cap and trade regulation, nationalized health care, an ongoing co-dependent relationship with two failing car companies, and "cram down" legislation designed to give bankruptcy courts power to rewrite mortgages will instill confidence or restore economic activity. Larry Kudlow calls this collectively a declaration of "war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds."