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The Crash: "Why has the market dropped so much?" everyone asks. What is it about the specter of our first socialist president and the end of capitalism as we know it that they don't understand?
The freeze-up of the financial system — and government's seeming inability to thaw it out — are a main concern, no doubt. But more people are also starting to look across the valley, as they say, at what's in store once this crisis passes.
And right now it looks like the U.S., which built the mightiest, most prosperous economy the world has ever known, is about to turn its back on the free-enterprise system that made it all possible.
It isn't only that the most anti-capitalist politician ever nominated by a major party is favored to take the White House. It's that he'll also have a filibuster-proof Congress led by politicians who are almost as liberal.
Throw in a media establishment dedicated to the implementation of a liberal agenda, and the smothering of dissent wherever it arises, and it's no wonder panic has set in.
What is that agenda? It starts with a tax system right out of Marx: A massive redistribution of income — from each according to his ability, to each according to his need — all in the name of "neighborliness," "patriotism," "fairness" and "justice."
It continues with a call for a new world order that turns its back on free trade, has no problem with government controlling the means of production, imposes global taxes to support continents where our interests are negligible, signs on to climate treaties that will sap billions more in U.S. productivity and wealth, and institutes an authoritarian health care system that will strip Americans' freedoms and run up costs.
All the while, it ensures that nothing — absolutely nothing — will be done to secure a sufficient, terror-proof supply of our economic lifeblood — oil — a resource we'll need much more of in the years ahead.
The businesses that create jobs and generate wealth are already discounting the future based on what they know about Obama's plans to raise income, capital gains, dividend and payroll taxes, and his various other economy-crippling policies. Which helps explain why world stock markets have been so topsy-turvy.
But don't take our word for it. One hundred economists, five Nobel winners among them, have signed a letter noting just that: "The prospect of such tax-rate increases in 2010 is already a drag on the economy," they wrote, noting that the potential of higher taxes in the next year or two is reducing hiring and investment.
It was "misguided tax hikes and protectionism, enacted when the U.S. economy was weak in the early 1930s," the economists remind us, that "greatly increased the severity of the Great Depression."
We can't afford to repeat these grave errors. Yet much of the electorate is determined to vote for the candidate most likely to make them. If he wins, what we consider to be a crisis in today's economy will be a routine affair in tomorrow's.
Saturday, October 11, 2008
A socialist tsunami?
Say what you will about Barack Obama, but it's a fact that he's the most liberal senator in Congress, and he has ties to the far left going back for many years. As we search for an explanation for the market's crash, it is perhaps not a coincidence that the downward plunge in stock prices has coincided with the upward surge in Obama's popularity. This comes from Investors Business Daily: "Investors' Real Fear: A Socialist Tsunami"
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10 comments:
Scott,
First let me start on what is perhaps a bit of a triviatlity.
I believe the Republican Senate of 2003-2006 should have eliminated the 60 vote cloture rule from the Senate rules and replaced it with a 51 vote and cloture rule.
Back in 1975 the Senate changed its cloture rule from 2/3rds of all Senators present and voting to 3/5ths of all Senators chosen and sworn. The rule change was initially made by majority vote, using the "nuclear option" or "constitutional option" before the Senate voted a second time with 2/3rds agreeing to the rule change.
There has never been a US Senate containing 60 Republican US Senators. But there has been US Senates with 60 Democrats.
The 60 vote cloture rule makes conservative legislation extremely difficult to obtain but it does have as much of an impact on liberal-left legislation. This is because the media will shine the spotlight on Republican use of the filibuster (use of 41 Senators to prevent 60 votes for cloture), but the media does not shine the spotlight on Democrat obstructionism.
A second point about your post.
If Obama wins the White House and the Democrats enjoy an increase in their majorities in Congress, it will be only the 3rd time in the post McGovern era when the Democrats have enjoyed control over the US House, US Senate and White House.
It is important to take a look back on what those other triple D governments were like and how the voters responded to them.
In 1976 President Gerald Ford was that year's John McCain, distrusted by conservatives. The Democrats had, as they do now, a majority of both the US Senate and US House. The Democrat nominee, Jimmy Carter, was the Barack Obama of his time, an unknown politician.
After 4 years of Triple D government, the US voted for the Reagan revolution in 1980, which included a net gain of 12 US Senate seats for the GOP's largest US Senate majority since the 1920s and a net gain of 33 US House seats.
Reagan and the new conservatives in Congress didn't accept the bi-partisan consensus the way that Nixon and Ford did and how McCain accepts the bi-partisan consensus of today. Far from destroying the US, triple D government actually shocked the American people into a response.
The irony was that Reagan's first action as president was to sign an executive order, reversing Richard Nixon's executive imposing wage and price controls, by ending the controls on oil and gas, ending the nearly decade old energy crisis.
In 1992 the President George H W Bush and a Democrat Congress were ineffective in governing the country. The American people responded, again, by changing the party that held the White House. Another triple D government began. The Democrats hoped to enact national health care. But Clinton's national health care plan never even received a vote on the floor of the US Senate or the US House.
In 1994 the American people elected the first Republican Congress in 40 years.
Again, triple D government shocked the American voter out of their doldrums.
It seems that the only time Democrat Congressmen are accountable to the American voters is when there is a Democrat in the White House.
Since we must end Democrat control over Congress in order for this country to be turned around, perhaps, once again, an Obama victory would be a blessing in disguise.
For example, how many Americans blame the Democrat controlled Congress for our current economic troubles? Not many, despite the fact that Congress arguably has more power over the US economy than does the President.
Thanks tory, that is an excellent observation and makes me feel much better! There is indeed reason to be optimistic at a time like this.
This IBD opinion piece trots out virtually every grossly exaggerated nightmare that a so-called conservative coould imagine and pretends that is the plan of the Obama administration. Scare yourselves silly if you want, but its not going to go down like that, and the world would be a better place if people like yourselves would make an effort to contribute positively instead of polarizing the issues before they've even materialized.
I will vote for Obama and a Democratic congress because we've now seen what the so-called conservatives do when they have a triple-R government. All the noble tenets of conservative philosophy have turned out to be empty words mouthed by hypocrites whose only real interest is their own political and material fortunes.
If we can eliminate the Karl Rove style poisoning of political dialog then we might be able to return to an America that can accomplish great things again. It is my fervent hope that the people who write and believe editorials like this one will be marginalized into insignificance by a majority willing to compromise and sacrifice a little bit for the common good. That is true liberalism and certainly nothing to be afraid of.
TC, your comments about the Democratic congress are disingenuous. It was six years of Republican dominated congress that damaged this country. The two most recent years of Democratic control have been at most ineffectual.
Roy,
It was six years of Republican dominated congress that damaged this country. The two most recent years of Democratic control have been at most ineffectual.
I disagree completely.
First, let's acknowledge that the economy and the stock market performed well under both Democrat President Bill Clinton and Republican President George W. Bush.
Perhaps the reason this is the case is the fact that the Republicans controlled Congress for most of those 2 administrations.
In 6 of Clinton's 8 years in the White House there was a Republican Congress (1995-2001). In 5 of those 6 years the stock market increased dramatically.
In 4 of Bush's 8 years in the White House there was a Republican Congress (2003-2006). The cumulative increase of the stock market from 2003 to 2006 was over 70 percent for the S&P 500.
Since the Democrats have held Congress since January 2007, the stock market has fallen by well over 20 percent and unemployment has increased from under 5 percent (the rate when the GOP handed control over Congress to the Democrats in January 2007) to 6.1 percent.
However, we currently have a Democrat Congress. The argument I make for an Obama victory is simple: Truth in advertising.
A McCain presidency would give Americans the impression that Republicans are "running the country" even though they are a minority in the US House and US Senate.
An Obama presidency at least has the value of clarity. The American people would know which party to give credit to if things go well and which party to lay blame on if things go poorly.
After 4 years of Carter and 2 years of Clinton, the American voters put an end to triple D government. Bush and the GOP in 2004 got their triple R government reelected.
We will see if Obama and the Democrats are given the boot the way they were in 1980 and 1994 or if they are given a "second act" as the Republicans were in 2004.
Let me clarify my point about the stock market under Bush.
When the Senate was split evenly between the parties from January 2001 thru May 2001, the stock market performed poorly.
After Senator Jim Jeffords, Republican from Vermont, handed control over the US Senate to the Democrats in May 2001 by becoming an independent allied with the Democrats, the stock market continued to perform poorly until the Republicans took back the US Senate as a result of the November 2002 elections in January 2003. A few months after the GOP took control over the US Senate in 2003, the stock market began its upward trend.
This trend reversed less than a year after the Democrats took control over Congress in 2007.
Coincidence? Perhaps. But I doubt it.
I do think investors are concerned about having their money taken from them by a Left-Wing government headed by Obama, Pelosi and Reid.
It would be nice to see a graphic displaying stock market action with the overlay of political control of the legislature.
The Dems controlled Congress from 1954 to 1995. The Repubs had it 1996-2006. The Dems have had it for the past two years. There are too many factors which explain the market and the economy to narrow it down to who has control of Congress.
Plus, the seeds of the current crisis go way back, as far back as 1968 when Freddie and Fannie started operating as government sponsored enterprises.
Part of the problem is that it takes a long time for policies (either good or bad) to actually impact in a manner that is measurable by the market over a reasonable time frame. So although the market reacts to rumor in real time it is not unusual for the fruits of sound policies to be reaped several years (and administrations and congressional control) later. Thus both political parties claim all successes a few failures.
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