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The Obama Bubble
The American Thinker ^ | April 13, 2010 | William T. Alpert

Posted on 04/13/2010 3:01:13 AM PDT by Scanian

Why is there a remarkable stock market rally in the midst of the worst recession (depression) since 1930? While we hear explanations of every day's rise and fall of the indices (e.g., the "whatever" numbers were not as bad as expected, or they were better than anticipated), the obvious answer is that a few serious investors have studied their (arcane) National Income and Product Accounting.

The stock market is rising because extraordinarily high corporate profits are just around the corner. The late Michal Kalecki, an obscure Polish economist, formulated the explanation in the early 1930s, summarized in his Selected Essays on the Dynamics of the Capitalist Economy, 1933 to 1970 (Cambridge University Press, 1971). Kalecki's views were echoed much more vociferously by the late disciple of Joseph Schumpeter, Hyman P. Minsky, and a pioneer in modern business cycle theory who expounded the national income identity that corporate after-tax profits are equal to private investment plus the government deficit plus the trade surplus plus consumption from profit income less savings from wage income (the latter two terms are relatively minor today). (See Minsky's The Business Cycle and Public Policy, 1929 - 1980, Joint Economic Committee, Congress of the United States (GPO, 1980.)

(Excerpt) Read more at americanthinker.com ...


TOPICS: Business/Economy; Government
KEYWORDS: corporateprofits; economics; economy; market; obama; obamanomics; rally; stockmarket

1 posted on 04/13/2010 3:01:14 AM PDT by Scanian
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To: Scanian

The “rally” is not so great. The market was over 14,000 now it is 11,000. Big deal.


2 posted on 04/13/2010 3:25:27 AM PDT by screaminsunshine (i)
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To: Scanian
From the article:

When the markets come face-to-face with the inevitable end of huge deficits, the bubble -- the Obama bubble -- will burst, and the markets will crash again. This, of course, is a decision for political economy and is the topic for another essay.

The question is when. I look for Soros and others to crash the market again when the GOP takes back the House and Senate.

3 posted on 04/13/2010 3:53:24 AM PDT by Yo-Yo (Is the /sarc tag really necessary?)
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To: screaminsunshine

Exactly. The market is still off more than 20% from it’s 3 yr high. The market over corrected during the panic and has partially recovered.


4 posted on 04/13/2010 4:09:20 AM PDT by ilgipper
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To: screaminsunshine

Also, despite the closing numbers, trading volume is quite low. That is not good.

What is going on in the market is, I think, mostly being driven by DEFENSIVE RE-POSITIONING.

Big-time market movers now have got a glimpse of the Marxist agenda and the possibility that it can be enacted here. They are having to scramble to unload stuff that gets crushed in Commie economies and to bring profits as far forward as possible, before making money becomes totally illegal.

The pharmaceutical companies, for example, have been told outright that the government is going to take 90% of their profits in the next 10 years. You can bet they, and the people who invest in them, are busy re-positioning themselves to maximize short-term gains and minimize long-term losses.

There are rallies and then there are rallies. This is not a rally. It’s movement caused by the stir of killing off large swaths of the private sector and replacing it with Socialism. IOW, it’s defensive re-positioning, and that as only a stop-gap measure.


5 posted on 04/13/2010 4:11:48 AM PDT by fightinJAG (Sic semper tyrannis! Stop spending. Starve the beast.)
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To: Scanian; rabscuttle385; dennisw; TigerLikesRooster; FromLori

Happy Days Are Here Again!!!!


6 posted on 04/13/2010 4:47:44 AM PDT by Travis McGee (---www.EnemiesForeignAndDomestic.com---)
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To: screaminsunshine

hmmmm, 140000 a year before the election, and then boom, just in time to elect O.


7 posted on 04/13/2010 4:55:26 AM PDT by go-ken-go (i)
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To: fightinJAG

Less 401k money too as people lower their contributions to cover higher taxes and living expense. Unemployed do not pay in to 401k. Obama raising cap gains will cause less investment too.


8 posted on 04/13/2010 4:57:05 AM PDT by screaminsunshine (i)
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To: go-ken-go

Most people do not care about the Dow. The employment cuts have saved companies money. Socialism is not good for the economy. It stifles everything it touches.


9 posted on 04/13/2010 4:59:01 AM PDT by screaminsunshine (i)
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To: screaminsunshine

More people deciding to take “early” Social Security, too, which adds years of additional spending on entitlements.


10 posted on 04/13/2010 8:28:55 AM PDT by fightinJAG (Sic semper tyrannis! Stop spending. Starve the beast.)
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To: fightinJAG

I plan on it just to make sure I get at least one check. They have been scamming me for over 40 years.


11 posted on 04/13/2010 8:32:34 AM PDT by screaminsunshine (i)
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