Obama Election Crushes Stock Market, Threatens Global Economy

BARACK'S MARKET WIPEOUT

Talkers Vindicated: Obama's Election Panics Wall Street





*** UPDATE: MARKET FINALLY GETS TEMPORARY RELIEF RALLY, LET'S HOPE IT HOLDS! ***


The concept couldn't be simpler: an already-weakened economy is dealt a punishing body-blow by the election of America's first seemingly- socialist president. Faced with business conditions that are likely to deteriorate much further than expected, Wall Street throws in the towel and global markets collapse.

This is no mere economic theory, however: it's become reality, as investors ponder what higher taxes, increased regulation and unchecked labor union power will mean to suffering financial markets.

Call it Obama's market wipeout: since election day, the Dow Jones Industrial Average is down almost 1600 points. Your Radio Equalizer previously covered it here and here.

Based on the historical record, it's the worst post-election performance ever.

And while talk hosts such as Rush Limbaugh and Sean Hannity have recently taken heat for revealing the real cause of Wall Street's collapse (with the mainstream media firmly defending Obama), a new Wall Street Journal editorial backs up their point:

The substance of what Mr. Obama has promised for the economy is bearish for stocks. The threat of higher tax rates, especially on capital gains and dividends, now may be getting priced into the market. Add that to investor doubts about Democratic policies on unions, health care and trade -- and no wonder stocks are falling. Lower stock prices in turn reduce household net worth, thus slamming consumer confidence and contributing to what appears to be a consumer spending strike.

If Mr. Obama wants to reassure markets, he could announce that he won't be raising taxes for the foreseeable future. Unlike hundreds of billions in new government spending or more taxpayer cash for Detroit auto companies, this no-tax-hike declaration is a "stimulus" that would cost the U.S. Treasury nothing. In the current market, there won't be many capital gains and few companies will have surplus earnings to pay out in dividends. A higher tax rate on zero gains yields zero revenue, so what's the point of raising rates?

What markets want to see from Mr. Obama is a sense that the seriousness of this downturn is causing him to rethink the worst of his antigrowth policies.

In the week prior to the election, stocks surged, partly in the mistaken belief the polls were wrong regarding Obama's lead. Now, his election has taken away America's hope for a prosperous economic future. As a result, Wall Street no longer seems to know where the bottom may lie, with 8000 providing only a shaky Dow support level.

At US News & World Report, columnist James Pethokoukis believes Obama may very well turn into a one-term president, especially given his doomed economic policies:

Obama's election is often compared to that of Ronald Reagan's in 1980. Both gentlemen were voted in to fix an ailing economy. But the 1982 recession took a huge chunk out of the Gipper's popularity. He had just a 35 percent job approval rating at the start of 1983, just two months after Republicans lost 27 seats in the House in the midterm elections. But Reagan's presidency was saved by an amazing economic rebound. The economy surged at a 4.5 percent pace in 1983 and at a mind-blowing 7.2 percent clip in 1984 as unemployment dropped from a high of 10.8 percent in December 1982 to 7.2 percent in November 1984. The Long Boom was underway.

Reagan worked his magic with tax cuts. Obama is trying to do the same with government spending. But stimulus packages are only supposed to keep the recession from getting worse or morphing into a mini-depression. I don't think anyone expects that $500 billion in hot money to return America to prosperity. Only time (and the private sector) can do that, especially with a downturn caused by a credit crisisa and deflating asset bubble. And four years may not be enough time for the Obama presidency to traverse that long road or complete that steep climb.

It has taken over a week, but finally there are signs that elements of the media are willing to tell the truth about the market's recent brutal sell-off.

But don't expect the Obama-fanatical NBC or other partisan defenders to suddenly come clean on this point. They've just spent two years conditioning Americans to believe in Obama's empty promises and aren't about to accept such a major credibility hit so soon after the election.


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