New York – Top Analyst: U.S. Stocks In An Obama Panic, Markets Fear His Policies

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    New York – Barack Obama has re mained cool and confident amid the financial melt down, even as John McCain at times has been embarrassing, lurching from one proposal to the next. But while the polls are reflecting Obama’s steady hand, the markets haven’t. In fact, they’re getting worse by the day as Obama’s lead widens.

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    Most investors know the devil is in the details – and the details of Obama’s economic plans are anything but reassuring.

    Of course, the market turmoil is first a reflection of grim reality – the bursting of the housing bubble and the billions upon billions in writedowns and losses that have forced upon the hugely leveraged financial firms companies that had cranked big profits during the bubble years.

    The resulting credit crunch is hitting Main Street harder than ever before. The country is headed for recession; the only question is: Just how low can the markets and economy go?

    It could be a lot lower – it all depends on the policies of the next president.

    And, as it looks increasingly likely that Obama will be that man, the markets are casting a vote of “no confidence.”

    To be fair, McCain hardly instills confidence among the Wall Streeters I speak to. Why has his campaign spent the last week focusing on Obama’s friendship with former terrorist William Ayers – when it should be hitting Obama’s blind loyalty to policies that bring together the worst elements of Herbert Hoover and Jimmy Carter?

    Recently, Obama said he wants to expedite loans to small businesses, so he seems to have a clue that they produce much of the country’s job growth. Yet his income-tax hike on upper brackets will hit vast numbers of small businesses – they’d face the highest rates they’ve seen in decades.

    Overall, his plan includes some of the most lethal tax increases imaginable, including a jump in the capital-gains rate. He’d expand government spending massively, with everything from new public-works projects to increases in foreign aid to a surge in Afghanistan – plus hand out a token $500 welfare check that he calls a tax cut to everyone else.

    This is clearly the wrong way to go in the wake of an economic meltdown – yet Obama, for all his talk of how willing he is to compromise, of how he’d bring people together, is sticking to his tax guns.

    I know at least one top Wall Street executive, an Obama supporter from the start of his campaign, who has recently urged Obama to rethink his tax plan – and that was before last week’s record losses on the Dow.

    But if Obama is rethinking, he’s not saying. As his running mate, Joe Biden tells us that it’s patriotic to pay higher taxes, Obama remains committed to squeezing businesses even if the recession grows.

    The closest evidence I could find of compromise from Obama on taxes came in a June interview with CNBC, when he said: “Some of those [tax hikes] you could possibly defer. But I think the basic principle of restoring fairness to our economy and encouraging bottom-up economic growth is important.”

    It’s easy to understand why so many of my colleagues in the media have fallen head over heels for Obama. He’s smart, ambitious and cool under pressure. But what is he really like under the surface?

    Some reckon that a President Obama won’t go through with his plans. They look at his (thin) record and see a wimp who’s never taken a firm stand on much of anything, much less enacting tax hikes during the worst economic crisis since the Great Depression.

    I look at Obama’s record differently. From his days as a community activist, to his years in the Illinois Senate and now his brief time in the US Senate, he has shown little inclination to deviate from his party’s tax-and-spend orthodoxy.

    And if he governs like a liberal ideologue – with a belief that the government that works best is the one that’s biggest and raises taxes the most – he won’t even have to work hard to get his way. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid won’t stop him – the Democratic majorities in Congress are only likely to grow.

    And the markets know this – even if pundits (even many of the financial ones) refuse to face it.

    No one can blame the faltering stock market solely on Obama’s tax plans or McCain’s own inanity on economic issues. But stock prices reflect current market conditions plus best guesses of what’s coming down the road. And I keep hearing nervous traders and investors talk about “a lack of leadership from Washington.”


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    31 Comments
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    chaim
    chaim
    15 years ago

    He is 100% right

    Mark Levin
    Mark Levin
    15 years ago

    This guy confuses me! He works for the Obama Network and he is talking like this about the messiah?

    Bottom line is this is a GLOBAL issue and IYH it will pass soon.

    Joe
    Joe
    15 years ago

    True Obama is going to be a disaster! I wish i knew where to hide from this guy he scares the heck out of me.

    Mark Levin
    Mark Levin
    15 years ago

    This is catch-22.

    In bad economics the trend is to vote the other way but in this case the rumblings are that they other way is whats causing some of this tumble. Also, the other way – ie the obamanation – is the most left candidate we have ever seen.

    Anonymous
    Anonymous
    15 years ago

    Oh, so now it’s Obama’s fault? I guess it has nothing to do with the bad policies of the last decade coming from both parties. What is Greenspan talkning about mistakes he made??? Doesn’t he know it’s Obama that’s causing this market to crash? Get a grip, guy!

    A Maven
    A Maven
    15 years ago

    Moshiach is coming! Think about it. Logically it makes no sense that people are going crazy over Obama or that he is leading in the polls. When it doesn’t make sense we have to remember who runs the world! This is Hashem’s plan to hasten the arrival of Moshiach tzidkenu as world war 3 breaks out once Obama is in office.

    Manny D.
    Manny D.
    15 years ago

    Just remember “Lev Sorim U’malochim Byad Hashem” Isn’t that comforting to know. We have to daven and do tshuvah and Hashem can steer Obama to be a Regan. If you don’t believe it then you have a Chisurin Emunah and you should work on believing it.

    Charlie Hall
    Charlie Hall
    15 years ago

    The Democrats have had essentially nothing to do with fiscal and monetary policy over the past eight years. Even during the brief periods when they controlled one or both housed of congress, they could not override Bush’s vetos regarding fiscal policy, and both monetary policy and the policing of the markets for transparency and fairness is up to the executive branch. If the Republican “prosperity” were real, the stock market would not be crashing and credit would not have dried up. But it was a house of cards built on borrowed money. Unfortunately for the Republicans, the cards fell two months too early.

    Lawrence M. Reisman
    Lawrence M. Reisman
    15 years ago

    To Joe the Plumber: at least half the Bush years were marked by recession. The growth in income under Clinton was far greater. To those who would tie higher taxes to economic recession, I would remind you that the Eisenhower years showed the most stable growth in income and employment with the next to no inflation. In those years, the highest income tax rate was 91% (as opposed to 35% today) and the capital gains rate was 25% (as opposed to 15% today).

    Lawrence M. Reisman
    Lawrence M. Reisman
    15 years ago

    Small mistake – the highest rate in the Eisenhower years was 88%, on incomes above $200,000. Translated into today’s dollars, thats about $3 million. The rates went down to 74% in 1964 as a result of the JFK tax cut, a move the Republicans initially opposed.

    YOLIi THE PLUMBER
    YOLIi THE PLUMBER
    15 years ago

    Lets make a chaptszem on Obama and solve the obama problem

    Lawrence M. Reisman
    Lawrence M. Reisman
    15 years ago

    Anonymous says that “It was the Democrats that created the subprime mortgage crisis by forcing banks to give mortgages to low-income and not-credit-worthy buyers.” Hardly. Subprime loans were mostly made by unregulated entities outside the banking system. The loans were then packaged into securities and sold to investors, and the sales proceeds were used to give more subprime mortgages. There were several investment banks such as Lehman and Bear Stearns that were borrowing from the money markets to further invest. The traditional mortgage route, in which a bank extended a mortgage loan and then sold the loan to Fannie or Freddie, played little part in the subprime mortgage debacle. In any case, when several states wanted to cut down on subprime lending by restricting it, the federal government (the Bush administration) stepped in and said that federal policy would pre-empt anything the states would do, so the states couldn’t do anything. Then the Bush administration didn’t do anything, either.

    Hungarian Macher
    Hungarian Macher
    15 years ago

    Listen everyone The oilem should not get worried .Eat the Gulash,Eat also the Cholomada, put some red paprika on it and it will be fine,Oilem dont worry about Obama es vet zein gut

    Anonymous
    Anonymous
    15 years ago

    The difference between now and the Eisenhower years is probably that the wealth gap today is much greater. Without the wealth gap, it becomes more like a flat tax and all Americans benefit more equally and there is less redistribution. As a result of the huge gap today and the fact that the large bulk of taxes are paid by a very small percentage of the country, raising tax rates significantly would have a disproportionate impact on those people.

    jay
    jay
    15 years ago

    Wow. This is a great article but try to explain it to hate-filled dems who don’t even care about issues but only about kicking republicans out…

    murray
    murray
    15 years ago

    We are in a catch-22 last couple weeks before election day. Obama is Bad for the stock market- the more ahead he gets in the polls, the worse the effect on stocks, the worse the market gets, the better Obama does in the polls, and on, and on

    Lawrence M. Reisman
    Lawrence M. Reisman
    15 years ago

    To Investor: You say that ” the Republicans tried to regulate Fannie Mae & Freddie Mac including McCain in his letter” You obviously mean the letter in favor of S 195, which was already a dead letter. However, S 195 would have allowed for less regulation of Freddie and Fannie. First of all, it would have abolished the Federal Home Loan Board and replaced it with a new supervisory body, giving the president the power to appoint an totally new body of non-regulators to regulate, as he has done with all his regulatory appointments since he became President. Second, it would have removed Freddie and Fannie from any kind of SEC supervison.

    To SEC: I think your understanding of economics is at least as bad as mine, if not worse. In the 1950s, we faced competition from a rebuilding Europe, which had, and still has higher tax rates than we do.

    To Say no to Obama: Did you say anything in your post? If so, I couldn’t figure out what it was.