A New Age Dawns?
October 11, 2008 12:41 pm American Politics, Economics and FinanceYour correspondent received the following from a friend.
In a recent interview Spike Lee said that “You can divide history. BB Before Barack. AB After Barack.” Well the fat lady hasn’t sung, but she is clearing her throat, as McCain’s chances dwindle and the New Age is about to dawn. This realization is slowly dawning and is being factored into future planning. One place that this has become apparent recently is in the US stock market as one notes in the graph below.
Some would argue that correlation does not imply causation but the contrary view is slowly percolating, see this and this, through the financial community based on discussions I have had. Given that Democratic policies are primarily responsible for this financial crisis, a point noted in leftist UK newspaper The Independent, a decrease in stock prices, if they were solely because of the financial crisis, should have led to decrease in the fortunes of Obama but that is not the case.
The concern in the market is the upcoming Republican wipeout in the Congress and Senate (which your correspondent predicted in a post in February 2008, the relevant part of which has disappeared, for which your correspondent blames Bush) will leave Democrats controlling the Congress, Senate and Presidency with the latter office held by an individual with very limited experience, who historically has gravitated toward individuals with radical views and along with the desire to implement these views. The difference between Obama’s experience and Palin’s is that latter would take a primarily hands off view to things and would not implement any grand policy initiatives. On the other hand, Obama’s head is full of ideas that he would like to implement but he has no historical experience in implementing much. Given the current financial crisis one can foresee Obama implementing this century’s version of the New Deal especially when policies such as coordinated interest rate cuts have failed. Does anybody really believe that Obama will examine alternatives that are likely to further free-market capitalism?
The original New Deal, under FDR, took a recession, made it into a Great Depression and prolonged it by 7 years according to a study by UCLA economists, as well as stoking virulent racism. None of the New Deal policies led to the end to the Great Depression which continued with decreasing effect until US entered WW2. Obama’s views are certainly sympathetic to policies such as New Deal and he would have no difficulties getting it through Congress, with current approval rating of just 9% according to a survey by Rasmussen Reports, and the Senate. The combination of compliant legislative bodies, inexperienced socialist crusader as President and financial problems on Wall Street is the perfect storm that led to stock market drops “far worse than any week during the Great Crash of October and November 1929, or the Black Monday crash of October 1987″ according to Financial Time of London.
Oct 14, 2008
Update: Today Politico asked if “Democrat’s plan: New Deal 2.0?” and goes on to state “Democrats are dusting off their New Deal history books and openly discussing the idea of re-engineering Depression-era agencies for the 21st century.”
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Arran Gold
Reality Strikes | Barrel Strength :
Date: October 18, 2008 @ 6:02 AM
[...] European socialist model. The stock market is already starting to adjust to this reality, as was noted earlier. Will the combination of acute economic problems and Democrat policies lead to replication of [...]