Reply Tue 3 Mar, 2009 02:47 pm
Wall Street Journal:

As the Dow keeps dropping, the President is running out of people to blame.


As 2009 opened, three weeks before Barack Obama took office, the Dow Jones Industrial Average closed at 9034 on January 2, its highest level since the autumn panic. Yesterday the Dow fell another 4.24% to 6763, for an overall decline of 25% in two months and to its lowest level since 1997. The dismaying message here is that President Obama's policies have become part of the economy's problem.

Americans have welcomed the Obama era in the same spirit of hope the President campaigned on. But after five weeks in office, it's become clear that Mr. Obama's policies are slowing, if not stopping, what would otherwise be the normal process of economic recovery. From punishing business to squandering scarce national public resources, Team Obama is creating more uncertainty and less confidence -- and thus a longer period of recession or subpar growth.

The Democrats who now run Washington don't want to hear this, because they benefit from blaming all bad economic news on President Bush. And Mr. Obama has inherited an unusual recession deepened by credit problems, both of which will take time to climb out of. But it's also true that the economy has fallen far enough, and long enough, that much of the excess that led to recession is being worked off. Already 15 months old, the current recession will soon match the average length -- and average job loss -- of the last three postwar downturns. What goes down will come up -- unless destructive policies interfere with the sources of potential recovery.

And those sources have been forming for some time. The price of oil and other commodities have fallen by two-thirds since their 2008 summer peak, which has the effect of a major tax cut. The world is awash in liquidity, thanks to monetary ease by the Federal Reserve and other central banks. Monetary policy operates with a lag, but last year's easing will eventually stir economic activity.

Housing prices have fallen 27% from their Case-Shiller peak, or some two-thirds of the way back to their historical trend. While still high, credit spreads are far from their peaks during the panic, and corporate borrowers are again able to tap the credit markets. As equities were signaling with their late 2008 rally and January top, growth should under normal circumstances begin to appear in the second half of this year.

So what has happened in the last two months? The economy has received no great new outside shock. Exchange rates and other prices have been stable, and there are no security crises of note. The reality of a sharp recession has been known and built into stock prices since last year's fourth quarter.

What is new is the unveiling of Mr. Obama's agenda and his approach to governance. Every new President has a finite stock of capital -- financial and political -- to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his "stimulus" spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.

His Treasury has been making a similar mistake with its financial bailout plans. The banking system needs to work through its losses, and one necessary use of public capital is to assist in burning down those bad assets as fast as possible. Yet most of Team Obama's ministrations so far have gone toward triage and life support, rather than repair and recovery.

AIG yesterday received its fourth "rescue," including $70 billion in Troubled Asset Relief Program cash, without any clear business direction. (See here.) Citigroup's restructuring last week added not a dollar of new capital, and also no clear direction. Perhaps the imminent Treasury "stress tests" will clear the decks, but until they do the banks are all living in fear of becoming the next AIG. All of this squanders public money that could better go toward burning down bank debt.

The market has notably plunged since Mr. Obama introduced his budget last week, and that should be no surprise. The document was a declaration of hostility toward capitalists across the economy. Health-care stocks have dived on fears of new government mandates and price controls. Private lenders to students have been told they're no longer wanted. Anyone who uses carbon energy has been warned to expect a huge tax increase from cap and trade. And every risk-taker and investor now knows that another tax increase will slam the economy in 2011, unless Mr. Obama lets Speaker Nancy Pelosi impose one even earlier.

Meanwhile, Congress demands more bank lending even as it assails lenders and threatens to let judges rewrite mortgage contracts. The powers in Congress -- unrebuked by Mr. Obama -- are ridiculing and punishing the very capitalists who are essential to a sustainable recovery. The result has been a capital strike, and the return of the fear from last year that we could face a far deeper downturn. This is no way to nurture a wounded economy back to health.

Listening to Mr. Obama and his chief of staff, Rahm Emanuel, on the weekend, we couldn't help but wonder if they appreciate any of this. They seem preoccupied with going to the barricades against Republicans who wield little power, or picking a fight with Rush Limbaugh, as if this is the kind of economic leadership Americans want.

Perhaps they're reading the polls and figure they have two or three years before voters stop blaming Republicans and Mr. Bush for the economy. Even if that's right in the long run, in the meantime their assault on business and investors is delaying a recovery and ensuring that the expansion will be weaker than it should be when it finally does arrive.
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Reply Tue 3 Mar, 2009 04:33 pm
Tags: Politics, Gungasnakkke, Bbb Emulator, Newspaper Articles, Copy And Paste

One thing about libtards, you can tell when you've gotten to them....
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Finn dAbuzz
Reply Tue 3 Mar, 2009 06:32 pm
The hardcore Left couldn't care less that the Market has expressed it's fear of Obama economic policy by tanking.

In their ideal world, the government, not the marketplace controls our economy.

But, if you happen to have your retirement hopes tied up in the Market (as a huge number of Americans do) the DOW falling below 7000 is not only scary, it may mean you have to work beyond 65.

Notwithstanding Leftist notions, the Market is a autonomous system and not the device of a a greedy few

It didn't respond to calls for patriotism after 9/11 and it doesn't givve a **** about how trancendent Obama might be.

That's why it and not the government should control our economy.

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Reply Tue 3 Mar, 2009 08:06 pm
Here's a guy who nails it absolutely solid:


March 3, 2009
Repudiate Obama’s Carbon Regulation Plans to Start Economic Recovery

by Bill Levinson
Banking problems and “toxic assets” are major contributors to the ongoing decline in the stock market, but it is quite likely that investors took them into account last year. The 800 pound gorilla in the living room that nobody seems to want to talk about consists of Barack Obama’s agenda (per his State of the Union Address) to impose taxes on all fossil fuels, or require users of fossil fuels to buy carbon offset credits from the modern counterparts of medieval indulgence peddlers.

As long as this agenda continues to menace the United States, investors are rightly reluctant to invest in American manufacturing, transportation, and other energy-intensive sectors. If, however, enough Senators (including Democrats from coal-producing and manufacturing states) pledged to vote against and filibuster Obama’s cap-and-trade agenda, it would restore investor confidence, break the downward momentum of the stock market, and set the stage for an economic recovery.

The stock market’s decline is obviously being driven by the fact that most Americans recognize that their new President (B.A. in political science, graduate degree in law, career as a “community organizer”) is totally incompetent in the fields of economics, business, and manufacturing. It is well known that it is far better to be thought a fool than to open one’s mouth and remove all doubt, which Obama’s State of the Union speech did quite effectively. The stock market took a nose dive the next day because investors realized that this individual is totally clueless as to how the economy really works. Obama’s previous pledge to create five million “green” jobs reinforces this observation because most people know that economically viable jobs tend to create themselves. Henry Ford, for example, did not need a dime of Federal money to create an entire business sector, associated spin-off industries, and millions of well-paying jobs. Bill Gates did not need government mandates or assistance to create an entire new industry either.

Obama’s infatuation with “renewable” and “green” energy therefore underscores his total lack of competence, and Wall Street knows it. A solar or wind home system delivers after-tax income because electricity must be paid for with after-tax dollars. We researched such systems for our own home, and a solar system would need 30 years to pay for itself even with a 30 percent tax credit from the government. (Performance would admittedly be better in the Southwest, where there is more solar energy.) If someone could develop an economically viable solar system in the near future, they would do it because the resulting profits would be enormous. Wind turbines do somewhat better, but you need a place to put one. The fact that power companies and factories are not buying more of them, however, shows that they apparently cannot pass a Net Present Value analysis. In other words, Obama’s energy agenda is the product of fanciful wishful thinking as opposed to reality, and it is hardly surprising that no investor wants any part of American manufacturing until Congress puts this to rest for good.

Carbon taxes or cap-and-trade mandates would not even deliver the purported benefit of fewer greenhouse gases. Corporations could simply opt out of compliance by moving their smokestacks, all their carbon dioxide, and the high-wage jobs that go with the smokestacks to places like China that would be more than delighted to provide cheap energy. California has already turned itself into a business world pariah, and no entrepreneur in his right mind would invest money in that state. Obama’s energy policies would simply do for (or to) the entire country what California has already done to itself while knifing the blue collar workers and union members who helped elect him.

Kimberley Strassel’s “If the Cap Fits: Why our CEOs are warming to Kyoto” describes the Climate Action Partnership, whose membership pretty much speaks for itself. Many if not most of USCAP’s for-profit members need government support for their continued survival, while others are non-producers that need outside money to pay their employees and directors.

There was a time when the financial press understood that companies exist to make money. And it happens that the cap-and-trade climate program these 10 jolly green giants are now calling for is a regulatory device designed to financially reward companies that reduce CO2 emissions, and punish those that don’t.

Four of the affiliates"Duke, PG&E, FPL and PNM Resources"are utilities that have made big bets on wind, hydroelectric and nuclear power. So a Kyoto program would reward them for simply enacting their business plan, and simultaneously sock it to their competitors. Duke also owns Cinergy, which relies heavily on dirty, CO2-emitting coal plants. But Cinergy will soon have to replace those plants with cleaner equipment. Under a Kyoto, it’ll get paid for its trouble.

DuPont has been plunging into biofuels, the use of which would soar under a cap. Somebody has to cobble together all these complex trading deals, so say hello to Lehman Brothers. Caterpillar has invested heavily in new engines that generate “clean energy.” British Petroleum is mostly doing public penance for its dirty oil habit, but also gets a plug for its own biofuels venture.

Finally, there’s General Electric, whose CEO Jeffrey Immelt these days spends as much time in Washington as Connecticut. GE makes all the solar equipment and wind turbines (at $2 million a pop) that utilities would have to buy under a climate regime. GE’s revenue from environmental products long ago passed the $10 billion mark, and it doesn’t take much “ecomagination” to see why Mr. Immelt is leading the pack of climate profiteers.

We were not particularly sorry when Lehman Brothers went out of business, because it is clear that a company that needs government regulations to force people to buy its product (carbon caps) is a corporate welfare parasite that leeches off society while contributing little or nothing in return. Meanwhile, if General Electric was up to the job of developing economically viable solar panels and wind turbines, it would not need government mandates to compel people and businesses to buy them. Its membership in USCAP suggests that it is not up to the job, as reinforced by the 80 percent drop in its stock price from a high of about $40.

Here is a list of the U.S. Climate Action Partnership’s remaining members (noting that Lehman Brothers went bankrupt). Some appear well-managed, but the reader should also recognize the prominent losers: General Motors (on life support from the American taxpayer), Chrysler LLC (another basket case), and General Electric. Non-producers include the Environmental Defense Fund and the Pew Center on Global Climate Change.

There is an old saying, “Dance with the one that brought you.” Barack Obama must decide quickly whether he is on the side of the blue collar workers and unions that played a major role in his election, or on the side of the Climate Action Partnership, the modern counterparts of medieval indulgence peddlers, people who make millions of dollars from books and movies about global warming while their own carbon footprints are big enough for King Kong and Godzilla put together, and similar climate profiteers. If he does not side with the American worker and American investor very quickly, then Congress needs to make it clear that it will not support his incompetent and irresponsible energy policies.
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Reply Tue 3 Mar, 2009 08:09 pm
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Reply Fri 6 Mar, 2009 01:58 pm
The DOW knows all.

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