Posts Tagged ‘Jom Johnson’

Obama’s “New New Deal” Will Redistribute Wealth Of Shrinking Economy

November 14, 2008

The last couple weeks may well be a harbinger of things to come, as the people Obama promised to tax heavily continue to pull out of the market.  On November 4, the Dow closed at 9,625; today, it was at 8,497.  That means that the market has lost nearly 12% of its value since Obama became President-elect.  Hardly a measure of confidence.

The market spoke rather clearly on November 5:

NEW YORK, Nov 5 (Reuters) - Wall Street hardly delivered a
rousing welcome to President-elect Barack Obama on Wednesday,
dropping by the largest margin on record for a day following a U.S.
presidential contest.
 The slide more than wiped out the previous day's advance, the
largest Election Day rally ever for U.S. stocks.

Now, this wasn’t at all unexpected.  On October 24, I wrote an article titled, “Investors Ready For Dramatic Sell-Off If Democrats Win.”  A few days before that, I wrote an article pointing out that “Actual Job Creators Favor McCain 4-1 Over Obama,” which – among other things – points out that “74 percent of the executives say they fear that an Obama presidency would be disastrous for the country.”

The people who invest, and create job opportunities, and build the economy, don’t want to have their wealth redistributed.  Would you want your wealth redistributed?

Democratic apologists point out that Obama promises on a meager jump in the top federal tax rates from 36% to 39%.  But that “insignificant” 3% comes right out of peoples’ profits.  It sounds a lot worse when the reality is understood: when businesses that had been making an 11% profit are now reduced to an 8% profit.  Or an 8% profit reduced to a 5% profit.  And Obama promises to increase capital gains taxes and several other taxes that will impact upon businesses and the investment climate that supports business.  How hard are job creators willing to work to experience a diminishing return on their time, labor, and risk?

Time Magazine – a publication that has gushed over Obama for months – has a new gushing cover:

It should frighten you.  FDR was no “moderate.”  He presided over a terrible time for the country, and – while he was a popular figure because of what he tried to do – his actual economic administration has been widely recognized by economists to have been a failure.  Studies have demonstrated that the average depression lasted only four years; but for some reason the Great Depression dragged on and on and on under FDR’s governance.  By 1938, after more than four years of FDR, the effects of the Depression were actually much worse than they had been when he first took office.

As an example of the new realizations regarding the 1930s, UCLA economists argue:

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

Even the common man’s sense has largely been that World War II had more to do with getting us out of the Depression than FDR’s New Deal.  It certainly did get men who had been standing in bread lines put to “work.”  And as the nation coalesced together and began to pour resources into building weapons, factories that had been idled came back on line, and innovation increased to match the technological development of our enemies.  And certainly, the fact that, when hostilities ended, the United States alone was not reduced to rubble had a great deal to do with helping our economy surge forward.

But by that thinking, anyone who criticized President Bush’s wars in Afghanistan and Iraq is correct only insofar as we need an even BIGGER war.  For Obama to truly be like FDR, we need to have a devastating Depression that drags on for 12 years while incompetent liberals continue to tinker, and then we need slug it out in World War III against Russia and China.

So pardon me for looking at the “New New Deal” FDR-lookalike Barack Obama and shuddering down to the marrow of my bones.

We’re watching the market beginning to go down the slide.  It’s going to go down a lot more.  And fear over Barack Obama’s policies is going to have a lot to do with the lack of confidence that keeps investment from pouring back into the economy.

The picture is far more frightening than the story the media is telling: there are more than $700 trillion in derivatives in the global economy.  That’s far more than the total currencies of all the governments in the entire world.  As one writer puts it, “In other words, every dollar of insurance on bonds issued by some deadbeat governments and corporations is leveraged 200 times!”  We’ve got a time bomb waiting to explode.  And we put a lot of the people who created that time bomb in the first place in charge of fixing the mess they themselves created.  People like Obama’s National Finance Chair, Penny Pritzker, who was at the epicenter of the subprime loan scandal and once paid $460 million to stay out of jail.  People like Jim Johnson, Franklin Raines, and Jamie Gorelick, who pocketed over $300 million from Fannie and Freddie while juggling the books so they could get their bonuses.  People like Barney Frank, who claimed that nothing was wrong with Fannie and Freddie and the housing market they supervised, and repeatedly fought off President Bush’s efforts to regulate them at time when the crisis we are currently experiencing could have been averted.  People like Charles Schumer, who exemplified the sheer hypocrisy of the Democratic Party with his blaming others for what he himself did.  People like Joe Biden, whom two major studies said shared direct blame for the foreclosure disaster because of legislation he championed as the Senator from banking-capital Delaware.  And people like Barack Obama, who embraced more contributions from Fannie and Freddie – and from scandal-plagued finance institutions such as Lehman Brothers than anyone during his short time in the Senate.  Now all these people have been entrusted with fixing a mess of literally global proportions; a mess that they in large part created in the first place.

And Barack Obama wearing the “New New Deal” mantle of FDR’s Panama hat, glasses, and fancy cigarette is not going to make that time bomb go away.  In fact, it may be the very thing that brings the whole house of cards come crashing down.

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