Referendum on Obama policy

[Mokele]

Liberal Agenda is defined as involvement in as many aspects of human behavior under Federal Control. Health Care, Welfare, SS and so on...

 

How do *ANY* of those 'control behavior'?

 

Seriously, try putting some thought into your posts. Or your opinions. Either would help.

[jackson33]

A 'Fiscal Conservative' believes today in an operation of government with the idea of smaller government, less taxes, less regulation, more efficient and under the limits of the Constitution. Liberal Agenda is defined as involvement in as many aspects of human behavior under Federal Control. Health Care, Welfare, SS and so on...

 

Mokele; These comments were ""generalizations"" on two political policies, diametrically opposed to each other...The issue WAS whether a person could be of one mind on either, and be of one for both....

 

On your redirection of the topic; Yes, liberal policy (opposed to conservative, not Republican) the ideology is designed around control of human behavior. Taxes have long been used or credits for perceived good or bad behavior. Buy this or that, receive a deduction or pay high taxes or the perception of good or bad for some predetermined reason (health/enviormental)...

 

Specifically on HC (Medicaid/Medicare), Welfare (any program), SS (Disability or unemployment) or any Federal program, there are limitations, requirements/regulations, as to who is eligible for what with books of rules and more important today who all IS eligible for participating.

[Mokele]

These comments were ""generalizations"" on two political policies,

 

"Generalizations" = "vague, unsubstantiated, unverified impressions based more on personal perception than actual data"

 

Conservative policy is generally "hard on crime" - how is that NOT control of human behavior? BOTH parties favor control of human behavior, because that's the fundamental precept of all society. The opposite of "control of human behavior" is called "anarchy".

 

And your arguments for the programs you cite as 'controlling' are beyond weak - no human being wanders around thinking "ok, so how do I become eligible for ____?" No, they act as they normally would, and the government helps them out if they need it. Nobody says, "I'm bored, I think I'll get hit by a bus so I can't work and am in constant pain so I can live off the government."

[bascule]

Yes, liberal policy (opposed to conservative, not Republican) the ideology is designed around control of human behavior.

 

Social control is more a tenet of totalitarianism, not liberalism. Conservatives can be totalitarians as well.

[waitforufo]

 

I'm not quite sure how conceding your point is a strawman argument, but if you say so...

 

The topic of this thread is "Referendum on Obama policy." The OP describes how markets have dropped since Obama seemed sure to win the election and have dropped more so after he did win.

 

So here is an AP story discussing how markets have performed under Obama.

 

http://www.google.com/hostednews/ap/article/ALeqM5gOxxrs1Wa0rtkIbYSaD6xS1UPllAD96QOBQ80

 

I think the article is fairly even handed but it does open with this gem…

 

The election of Barack Obama offered the promise of a new set of fixes for the financial crisis and the economy, a do-over that might help nurse the stock market back to health.

 

Since then, the market hasn't just gotten worse — it's turned in its worst performance ever for a new president.

 

So I'm just curious if you have any opinion other than Obama inherited a mess from Bush? For example, can you explain why his policies have not calmed markets? Do you think statements from his staff like “You don’t ever want a crisis to go to waste; it’s an opportunity to do important things that you would otherwise avoid. - Rahm Emanuel" are actually making things worse?

[bascule]

So I'm just curious if you have any opinion other than Obama inherited a mess from Bush?

 

For example, can you explain why his policies have not calmed markets?

 

Yes, Obama was not the cause of the mess, which was the argument presented in the OP. He inherited it from Bush. But beyond that, he's been in office for a little over a month and a half. The Dow has been falling steadily downward since October 2007... in other words some 10 times longer than Obama has been in office.

 

Perhaps it's a little bit premature to judge the effectiveness of his policies, hmm? Or would you like him to wave a magic wand and make the financial crisis go away?

 

Do you think statements from his staff like “You don’t ever want a crisis to go to waste; it’s an opportunity to do important things that you would otherwise avoid. - Rahm Emanuel" are actually making things worse?

 

No

[Mokele]

For example, can you explain why his policies have not calmed markets?

 

Have the stimulus checks even gotten to the states to spend yet? I've not paid a great deal of attention, but I don't actually think so. Expecting the stimulus to fix things before even being implemented is a bit like being disappointed because your computer didn't turn itself on and connect to the internet before you even opened the box.

 

Do you think statements from his staff like “You don’t ever want a crisis to go to waste; it’s an opportunity to do important things that you would otherwise avoid. - Rahm Emanuel" are actually making things worse?

 

No, and he's 100% right. During good times, we tend to not bother doing things that we probably should.

[waitforufo]

Have the stimulus checks even gotten to the states to spend yet? I've not paid a great deal of attention, but I don't actually think so. Expecting the stimulus to fix things before even being implemented is a bit like being disappointed because your computer didn't turn itself on and connect to the internet before you even opened the box.

 

In cases like this markets don't react after the fact. Knowing that the stimulus checks will arrive should be enough. Having seen the stimulus plan markets went down. This means they were not too impressed. Having said that, Obama's stimulus plan may be more simulative than the markets have predicted. This would mean greater traction at a later date.

 

If history is any guide however, the stimulus will not even kick in until the economy has recovered on its own. In such cases the stimulus will simply be inflationary. I do not mean this last comment to be a criticism of Obama. Many well intended stimulus packages under many former presidents have had such an effect.

[iNow]

So I'm just curious if you have any opinion other than Obama inherited a mess from Bush? For example, can you explain why his policies have not calmed markets?

Part of the issue is that statements from the White House have lacked certainty. They have relied on very fuzzy and vague statements such as, "We will use all of the powers of the Federal governement to blah blah blah." What the market wants to hear are specifics, detailed plans that can be measured and used as parameters (as sets of rules which will be held constant) for their own operations and investment decisions.

 

Something like, "To combat problem X, we will begin exercising option A on date N. This will have the effect of Y, at which time we will then move into Phase 2 of the plan and exercise option B in sectors F, G, and H. This will have the effect of Z, which will couple well with our implentation of T on Date S."

 

While I agree completely with the others here that this has been happening for a long time, and it's myopic to place the issues of the current market entirely at the feet of Obama after him only being in office for roughly 7 weeks, he has contributed to small pieces of the problem. He has contributed to the problems due to of his lack of detail, and his administration not providing enough context for each of their actions and plans. This results in uncertainty, and investors will continue to pull back their funds as a result.

 

Does that address your question? TBH, I really don't think Emmanuels comments about "this is an opportunity" have squat to do with the markets, but then again, those little twits on Wall Street often can be rather fickle, so who knows, eh?

[bascule]

In cases like this markets don't react after the fact. Knowing that the stimulus checks will arrive should be enough.

 

You think the market should react before the money is flowing? Isn't the point of the stimulus to get the money flowing again?

 

Having seen the stimulus plan markets went down. This means they were not too impressed.

 

That sounds an awful lot like a post hoc ergo propter hoc fallacy. Perhaps the markets went down due to reasons other than the stimulus.

[Mokele]

In cases like this markets don't react after the fact. Knowing that the stimulus checks will arrive should be enough. Having seen the stimulus plan markets went down. This means they were not too impressed. Having said that, Obama's stimulus plan may be more simulative than the markets have predicted. This would mean greater traction at a later date.

 

I disagree - the market reacts to how a small, highly biased, poorly representative portion of this and other countries *think* the stimulus plan will do.

 

The inability of that self-same group to effectively judge good vs bad investments is precisely what got us into this mess to begin with, so forgive me if I don't trust their judgement.

 

If history is any guide however, the stimulus will not even kick in until the economy has recovered on its own. In such cases the stimulus will simply be inflationary. I do not mean this last comment to be a criticism of Obama. Many well intended stimulus packages under many former presidents have had such an effect.

 

How is that actually determined? How do you know which rise in the graph is due to the stimulus, and which to other factors? I mean, it's not like you can run a controlled experiment. And doesn't that depend upon the exact nature of the economic downturn and nature and timing of the stimulus?

[iNow]

In cases like this markets don't react after the fact. Knowing that the stimulus checks will arrive should be enough.

 

You think the market should react before the money is flowing? Isn't the point of the stimulus to get the money flowing again?

 

I disagree - the market reacts to how a small, highly biased, poorly representative portion of this and other countries *think* the stimulus plan will do.

Well, to be fair, all three of you are correct. I personally quite agree with waitforufo's implication that the market is essentially a craps shoot. They gamble on what they think might make money in the future. He raises an interesting point that the reaction of a downward market raises the possibility that they were not happy with the plans put forward by the Obama administration. However, waitforufo also could have used the word "tend to" when referring to the markets to be more clear in his post if you want to be pedantic.

 

Bascule is also correct, in that much of the stimulus pertains to liquidity and the freeing up of currently frozen credit. He implicitly is demonstrating that without credit, more businesses falter in a systemic way, and more people get laid off, consequently the market continues it's downward self-reinforcing trend.

 

Finally, Mokele is ALSO right in that the market is often a biased and limited response from a relatively small handful of very powerful people, each with their own particular wants and interests. Further, he's spot on that many of the key "movers and shakers" have failed repeatedly at prognostication in the very recent past.

 

However, let me speculate a bit myself... There is another possibilty why the market went down after the policy announcements of the Obama administration, and it could have nothing to do with "what they think of it's potential impact."

 

What if they see that all of the places which formerly were strong money makers (aka oil and coal, and the countless other sectors that are shifting right now) changing... They see the stimulus ultimately directing funds into new niches, and it takes some time to sell holdings in the previous money makers (which will be increasingly marginalized under Obama) and buy new holdings in the new sectors.... Basically, the market could have gone down simply because people were pulling money from these areas that are being pushed aside, even though those areas were huge earners in the past.

 

Just a thought... The downward trend in the market could very simply be it resetting itself to adjust to the new path we're taking.

 

 

The inability of that self-same group to effectively judge good vs bad investments is precisely what got us into this mess to begin with, so forgive me if I don't trust their judgement.

Indeed. I happen to agree very much with the sentiment here, but I tend to check how intense I'll let myself get about this. The market overall really is a good indicator, because it serves as a representation of the aggregate of market activity. While there are clearly a few heavy hitters out there who have huge influence, the market overall is still a very natural selector.

 

 

Anyway, just to wrap up this post, in addition to my comments a few posts ago about the market wanting more details and context from the admistration, as I said earlier in the thread, I really think that part of it is that they fear the government simply doesn't have the balls to do enough. That's another source of concern to bear in mind, and it applies to the global response, not just what we do here in the US.

Edited March 10, 2009 by iNow

[waitforufo]

... the market is essentially a craps shoot. They gamble on what they think might make money in the future. He raises an interesting point that the reaction of a downward market raises the possibility that they were not happy with the plans put forward by the Obama administration.

 

If you wait until you know what the stimulus improves, the market has already reacted and there is no money to be made. Investors have to predict how the market will perform. For the recent past they have been predicting doom. Today was an exception do to a surprise from Citigroup. Hopefully such surprises will continue.

 

Bascule is also correct, in that much of the stimulus pertains to liquidity and the freeing up of currently frozen credit. He implicitly is demonstrating that without credit, more businesses falter in a systemic way, and more people get laid off, consequently the market continues it's downward self-reinforcing trend.

 

Unfortunately, investors don't see how the stimulus will correct this downward spiral. That’s why the market is going down.

 

Finally, Mokele is ALSO right in that the market is often a biased and limited response from a relatively small handful of very powerful people, each with their own particular wants and interests. Further, he's spot on that many of the key "movers and shakers" have failed repeatedly at prognostication in the very recent past.

 

I don't agree with this much. The vast majority of investment capitol is owned by institutions. The vast majority of those institutions take their investor fiduciary responsibilities seriously. Much of the problem we are having today had to do with AIG.

 

http://abcnews.go.com/Business/story?id=7045889&page=1

 

One bad apple can spoil a whole bunch.

 

However, let me speculate a bit myself... There is another possibilty why the market went down after the policy announcements of the Obama administration, and it could have nothing to do with "what they think of it's potential impact."

 

What if they see that all of the places which formerly were strong money makers (aka oil and coal, and the countless other sectors that are shifting right now) changing... They see the stimulus ultimately directing funds into new niches, and it takes some time to sell holdings in the previous money makers (which will be increasingly marginalized under Obama) and buy new holdings in the new sectors.... Basically, the market could have gone down simply because people were pulling money from these areas that are being pushed aside, even though those areas were huge earners in the past.

 

Just a thought... The downward trend in the market could very simply be it resetting itself to adjust to the new path we're taking.

 

I agree with much of the above. I see the new administration using a "good crisis" to reorder the economy to their liking. In the process they are destroying a lot of wealth. Wealth owned by middle class people. People like my 77 year old mother. I think that is tragic.

 

Indeed. I happen to agree very much with the sentiment here, but I tend to check how intense I'll let myself get about this. The market overall really is a good indicator, because it serves as a representation of the aggregate of market activity. While there are clearly a few heavy hitters out there who have huge influence, the market overall is still a very natural selector.

 

I could not agree with the above more.

[bascule]

Unfortunately, investors don't see how the stimulus will correct this downward spiral. That’s why the market is going down.

 

The Dow is up 379 points today, or 5.8%. By your specious reasoning does that mean the stimulus is working like a charm?

[ecoli]

The Dow is up 379 points today, or 5.8%. By your specious reasoning does that mean the stimulus is working like a charm?

I sneezed particularly hard today, it probably got caught on the updraft.

---

Merged post follows:

Consecutive posts merged

What if they see that all of the places which formerly were strong money makers (aka oil and coal, and the countless other sectors that are shifting right now) changing... They see the stimulus ultimately directing funds into new niches, and it takes some time to sell holdings in the previous money makers (which will be increasingly marginalized under Obama) and buy new holdings in the new sectors.... Basically, the market could have gone down simply because people were pulling money from these areas that are being pushed aside, even though those areas were huge earners in the past.

Good post. The above is the very definition of how sectoral shifts can cause business cycles and how govt investment (direct or by changing patterns indirectly) causes sectoral shifts.

 

Its the classic problem of coordination by a central planner.

[iNow]

It's not as much of a problem if you happen to agree with the new direction.

[waitforufo]

However, let me speculate a bit myself... There is another possibilty why the market went down after the policy announcements of the Obama administration, and it could have nothing to do with "what they think of it's potential impact."

 

What if they see that all of the places which formerly were strong money makers (aka oil and coal, and the countless other sectors that are shifting right now) changing... They see the stimulus ultimately directing funds into new niches, and it takes some time to sell holdings in the previous money makers (which will be increasingly marginalized under Obama) and buy new holdings in the new sectors.... Basically, the market could have gone down simply because people were pulling money from these areas that are being pushed aside, even though those areas were huge earners in the past.

 

Just a thought... The downward trend in the market could very simply be it resetting itself to adjust to the new path we're taking.

 

You do appreciate that this speculation on your part is in large measure in line with the opinion of jackson33. The difference is that you have no problem with the new direction or the wealth destruction that goes along with it.

[bascule]

You do appreciate that this speculation on your part is in large measure in line with the opinion of jackson33. The difference is that you have no problem with the new direction or the wealth destruction that goes along with it.

 

Something tells me the energy companies are still going to do just fine. More than that, some of that stimulus money might be headed their way if they sink it into alternative energy projects.

 

There's no "wealth destruction" going on here.

[jackson33]

To refresh your memory, the point of this thread was this portion of the first post, no insinuations, no agenda, just the simple fact the Rich have pulled out of the markets...It would be my opinion, Obama has shown no Company/Corporation or the investor (here/ worldwide) any reason to get back in or promote confidence, referring to recent comments by Obama advocates and/or voters who are the elite rich...Jack Welch, Warren Buffet, Jim Cramer the head of Intel and many others.

 

So much of the discussion on todays economy is based on the premise, everything Obama has planned is acceptable by some majority. In my little world, markets are the precursor to what will be in 6-12 months and thats not looking so good.

 

Alienating that 2-5 or whatever percentage you personally consider the elite rich, out of touch, no nothing Corporate World, may not be such a good thing.

 

To the other ramblings...

 

The trending direction of the Equity markets or for that matter any market (commodity, money etc) or those involved is not determined by the days news or market activity. Mutual Funds which are long range by nature and involve most all 401's, or the many retirement funds, including Unions Retirement Funds are managed by people looking at various time lines down the road. That may be a few minutes for any day trader, but the majority is based on a couple months to several years and adjustments are made monthly based on their observation of a future. Hedge Funds unfortunately are primarily funded by the elite rich and do make money, based on the perceived future economy in either direction and since mid-2007 have made fortunes. Everything, regardless of political influence has indicated since Oct. 2007, that these perceptions were going down hill and I'll offer one viewpoint made then. Your welcome to compare the dire comments, with the then factors but all those factors would be greatly appreciated today...

 

http://www.americanprogress.org/issues/2006/12/economic_review.html

 

What caused the original downturn I will speculate on in the interest of opposing dialog...

 

http://nwrepublican.blogspot.com/2008/10/hud-says-illegal-aliens-hold-5-million.html

 

In October of 2008, HUD made this announcement, which no doubt had been known for many years, but certainly back to June of 2007 when GWB made his big move for 'Immigration Reform', which would have been very difficult for any Republican to make. EXCEPT the business community with 3-4% unemployment rates was in need of workers and many of which already knowingly using that workforce...for whatever reason. That is the estimated 12-20 million, illegals could NOT be replaced by the 3-4% unemployed, if they would even take those jobs. Note; I realize things have changed today.

 

Paulson replaced John Snow as Secretary of the Treasury, who left under less than some agreed to reason in July 2006. Paulson was with Goldman Sach's in 1974 and CEO 12/1994 to 6/1998, had intimate relations with the Chinese Elite (Wikipedia Paulson Bio), visiting there country over 70 times and maintained those relationships.

 

Back on topic...By Nov. 2006, it was obvious (vote over) Congress was going to be under Democratic Control. Mergers/Acquisitions and Restructuring, which had been strong (reason for market increases) and peaked in 2006 and early 2007, virtually coming to an end by 2008. Even Sirius Radio, near bankruptcy with XM Radio which was bankrupt took over a year for the Democratic Congress to approve. http://investor.sirius.com/ReleaseDetail.cfm?ReleaseID=230306.

 

Yes the markets started a decline in Oct. 2007, from the record high, and no Obama was not then the cause. Congress was left of center, at least their leaders Polosi/Reid and from the time anyone considered Obama the only person on the planet left of Reid at the time, had a potential chance of becoming President, the Markets, Investors and Business themselves were cutting back, which became exaggerated as the potential increased to pending and finally taking office. I'll add he was directing media and some policy long before taking office Dec 2008 and Jan 2009.

 

What he has failed to do IMO, is offer any reason, rhetoric or action, to cause all those 'Elite Rich' otherwise known as investors to join back in or invest in the future, to say nothing of the small business owner, which still controls the major job markets. In fact he is going the wrong direction, placing the Worlds largest employer in danger under 'card check'. Wal Mart employs over a million in the US, deals with most manufacturers and is today credited with saving each family 2k dollars, just shopping their stores.

 

From the investor viewpoint; What is now deflation, reduced housing prices, will turn to massive inflation, as artificial bottoms are placed in markets and cost of operations, from labor to taxes and massive debt or increased money supply will generate massive inflation. In case your going to argue Bush did, he also had a massively increasing GDP to work with...

[bascule]

What he has failed to do IMO, is offer any reason, rhetoric or action, to cause all those 'Elite Rich' otherwise known as investors to join back in or invest in the future, to say nothing of the small business owner, which still controls the major job markets

 

How would you suggest Obama get the "elite rich" investors to start sinking money into the stock market again?

 

From the investor viewpoint; What is now deflation, reduced housing prices, will turn to massive inflation, as artificial bottoms are placed in markets and cost of operations, from labor to taxes and massive debt or increased money supply will generate massive inflation. In case your going to argue Bush did, he also had a massively increasing GDP to work with...

 

You know, some might argue that when you have a "massively increasing GDP to work with" is a great time to cut down on spending and try to balance the budget. Kind of like Clinton did, remember? When times are tough, it makes a lot more sense to turn to more desperate measures like using inflation to boost the economy. Kind of like FDR did, remember?

[ecoli]

How would you suggest Obama get the "elite rich" investors to start sinking money into the stock market again?

one way (theoretically) would be to decrease their tax burden.

 

 

You know, some might argue that when you have a "massively increasing GDP to work with" is a great time to cut down on spending and try to balance the budget. Kind of like Clinton did, remember?

When times are tough, it makes a lot more sense to turn to more desperate measures like using inflation to boost the economy. Kind of like FDR did, remember?

You know I'm skeptical about clinton's attempts to balance the budget. And even more skeptical about FDR's 'stimulatory' policies.

 

See my other post in the other thread about using 'desperate measures' during times of crises.

 

Also, what about the argument that using lose monetary policy to stimulate investments causes new bubbles by promoting investment into unsustainable areas?

[waitforufo]

You people crack me up with your opinions about who invests in the stock market. Comments such as "elite rich" and "small, highly biased, poorly representative portion of this and other countries." You act like the only investors that matter in this country are the Rockefellers, Kennedys, DuPonts, and Morgans. If this were ever true, which it is not, such a notion vanished with the creation of the 401k. You can thank Jimmy Carter and the Democratic controlled House and Senate back in 1978 for that one.

 

Real wealth is being destroyed. Ask anyone with a 401k. Ask any retired person. Institutional investors are pulling out of the market. This is for two reasons. First, we are in a housing correction which hit banks and PMI insurers very hard, particularly the crooks and AIG. Second, the markets don't like what they are seeing coming out of our government. They are not just looking at the bank bail out or the stimulus package (which they don't like). They don't like cap-and-trade, socialized medicine, or foreign trade policy.

 

Where are investors putting their money? Well, not in the US. If they were, the companies they were investing in would be going up. Indexes like the S&P 500 would be neutral.

 

Still don't think real wealth is being destroyed, wait until the government looks at tax returns this year. Instead of taxable income from dividends, and capitol gains, they are going to see tax deductions for capitol losses. Much less tax revenue. Much bigger deficits.

 

I know, don't worry, we will soon be riding the electric bus in a green world with free health care. I hope the views from atop the big rock candy mountain are beautiful.

[bascule]

Second, the markets don't like what they are seeing coming out of our government. They are not just looking at the bank bail out or the stimulus package (which they don't like). They don't like cap-and-trade, socialized medicine, or foreign trade policy.

 

So you can read the mind of "the markets"?

[jackson33]

How would you suggest Obama get the "elite rich" investors to start sinking money into the stock market again?

 

You know, some might argue that when you have a "massively increasing GDP to work with" is a great time to cut down on spending and try to balance the budget. Kind of like Clinton did, remember? When times are tough, it makes a lot more sense to turn to more desperate measures like using inflation to boost the economy. Kind of like FDR did, remember?

 

INSTILL CONFIDENCE...He is the leader of this country,all the people, not the Democratic Party. I have no idea how many President's have used that line when going against the voters that got them elected (base).

 

IMO, Obama will have to suffer some real defeats from Congress or more likely some World Powers, before he realizes some of his advisor's are not concerned about a second term, if in fact he is...China, Brazil and a few other markets are already showing signs of increased activity and to the upside. The G-20 meeting April 2nd will determine a great deal of what others are doing, much of which is not in the Obama outline...

 

The GDP in 1929 and 1939 were was the same. near 1-T (up and downs through the years) and Clinton was held to the Republican Congress, which was fiscally responsible in those days. Clinton did increase GDP and I've already condemned the Rep Congress under Bush and he not using the VETO.

 

ecoli; He (Obama/Congress) wouldn't have to reduce taxes, but simply extend the current rate (brackets) say another 10 years. I would bet a 2000 point gain in the DOW and more important a 4-500 point increase in the S&P 500 with in one week...remember confidence.

 

waitforufo; I hope you noted, my mention of "401's and other retirement funds" and "Mutual Funds" which are most all held by the less than elite.

On this, some in Congress are suggesting taking 401's away from personal control or managers, placing them under IRS and giving them an inflationary increase each year. Don't think it has a chance of being enacted, but even the talk of such nonsense has many worried.

 

According to Jim Cramer, think about Oct. of 2008, money was going to T-Bills/Bonds. This would include Corporate 'cash on hand' which is still quite high in most cases and requires reporting each quarter.

 

No one in the markets with half a brain, other than those that short the markets, will pay any 'Capital Gains' for 2008. All I had to do was sell one Stock last September and still ended up with a carry over loss. Dividends and

Interest will be down at least 50% over 2007 on rates paid alone. Most sellers of real estate, homes, farms to business were from distress and will have a carry over for years. I expect 2009 Federal Revenues to be down 10-15 in total (where 2008 tax money hits the books) and I expect the reason Obama will retroactively (Jan. 2009) increase taxes on everyone (Clinton 2000 rates/brackets).

[waitforufo]

So you can read the mind of "the markets"?

 

 

I can read this. Reading the market past is rather simple. If I could read its future my life would be much improved.