Posted on 03/06/2009 5:12:55 AM PST by Tolik
Why is Wall Street Worried?—Let us count the ways.
1) The proverbial Wall Street capitalists believe that, with new federal income tax rates, the removal of FICA ceilings, increases in capital gains rates, decreases in deductions, and simultaneous tax raises, not only will Obama remove incentives for innovation and productivity, but that he does not seem to care about - or perhaps appreciate - the consequences?
2) On the spending side, investors see too many subsidies and entitlements that may Europeanize the populace and erode incentives, while creating so much debt that in the next decade, should interest rates rise, the federal budget will be consumed with servicing borrowing and entitlement obligations. A redistributive economy in which government ensures an equality of result is Wall Street’s worst nightmare. Debt can only be paid back by floating more foreign debt, issuing more US bonds at home, raising taxes, or printing money—all bad options in the mind of the investor.
3) Too many are beginning to think Obama is, well, a naïf—and hence dangerous. He chest-thumps speeches Geithner cannot deliver. He says we are near the Great Depression—but then, after the stimulus package passes, suddenly hypes future growth rates to suggest that we will be out a recession, soon after all? Add in all the talk of high-tax, Al-Gorist cap-in-trade, wind and solar, socialized medicine in the midst of a financial crisis, and at best Obama comes across as confused and herky-jerky, and at worse, clueless on the economy—as if a Chicago organizer is organizing a multi-trillion-dollar economy. Talking about ‘gyrations’ and confusion about profits and earnings, and offering ad hoc advice about investing do not restore authority.
4) Given the amount of debt the US is incurring (and the decades needed to pay it off), given the loose talk about the ‘rich’, and given the rumors about nationalization, investors are unsure whether the United States will remain a safe haven for investment, or even offer a climate for profit-making, since it would either be taxed to the point of seizure, or its beneficiaries would be culturally and socially demonized. Ultimately perhaps some will accept that as the price of doing business in a socialist US, but for now it creates doubt. This is not a defense of Wall Street (a year ago Richard Fuld and Robert Rubin were our Zeuses on Olympus who strutted like gods), simply a warning that we are going from excess to stasis, and the cure will be as bad as or worse than the disease.
5) Uncertainty. Who is now our Commerce Secretary? Which cowards is the Attorney General talking about? What did Geithner mean about pernicious oil and gas companies? What is with this Solis, and card check? How hard is it to ensure a Richardson or Daschle is clean? In other words, market watchers see after five weeks chaos, and think there is no sure and steady paradigm in which they can make careful business decisions and anticipate with some surety future risk.
So the perfect storm forms, and millions of individuals come to millions of identical conclusions: “Cut your losses with these guys, and get your cash out before it gets worse” rather than “Wow, what bargains! I gotta get in before the window of profit opportunity closes.”
But is there an alternative?
Do Republicans offer an antithesis? Can they explain the Bush deficits and take responsibility for them, as well as the Republican congressional creepiness from 2002-06 (Craig, Stevens, Cunningham, Foley, etc)? And most importantly, will they offer counterproposals—a stimulus much smaller, mixtures of loan guarantees, tax cuts, and (some) public works alone, coupled with spending caps as soon as GDP growth returns? Can they articulate how the market corrected, say, in 1980-3, without our government going socialist? Can we get a plan not merely to balance the budget, but to pay off the debt? If not, legitimate criticisms of Obama fall on deaf ears without some positive alternative.
Obamania
The rants of Sec. Geithner about oil and gas companies and global warming were quite unusual. Does he grasp that the transition to his solar and wind nirvana requires some rather tough hombres working tonight on rigs in the Gulf, and some brave engineers driving a Jeep in a Libya or out in the Kuwaiti desert looking for more oil, or some poor fellow freezing out in the Arctic Circle so that Mr. Geithner can be driven in his government limo to the hearings? Solar panels do not power the President’s chopper—yet. And Hillary flew to the Middle East on fossil fuel engines not via clipper ship.
Meanwhile, note that the campaign flip-flop positions of supporting off-shore drilling, nuclear, shale oil, and coal, are now insidiously back to the original positions of ‘no—maybe’.
The Utopian Ranters
Energy Secretary Chu ranted that we warmed up the planet so Californians must pay the price by seeing their farms dry up and blow away. Attorney General finger pointed and labeled us “cowards.” So why the attack on oil companies by Geithner—and why these lectures about our supposed racism and environmental crimes? What deep psychological need does it fulfill for a Holder, our first African-American AG, to blast us as cowardly racists, or why does an elite like Geithner think fossil fuels are not the linchpin that our economy still for a bit hinges upon? They all need to go back to work, ensure the debt is paid down, and quiet down the Harvard Yard sermons.
The Worst of Both Worlds
There is much talk about Obama merely returning to the tax rates of the Clinton administration. But that is misleading for two unfortunate reasons: (1) Clinton did not tamper with FICA ceilings and other deductions in addition to the income tax hikes; (2) he had spending limits imposed by the post 1994-Congress, so at least his income tax increases led to a balanced budget. But Obama is not only raising taxes far higher in aggregate than did Clinton with the present trillion-some spending hikes, but ensuring that we will still end up with astronomical deficits. So we get the tax hikes of Clinton—but without the balanced budgets; and we get far higher deficits than under Bush—but sans the tax cuts.
Fear of Government–Part Two.
Last week I wrote of my encounters with municipal garbage trucks spewing garbage, and city bus drivers doing rolling stops into the cross walk, one hand with cigarette, one hand with cell phone—as a reflection of the old Roman worry “Who will police the police?”
In a world of government employees there is no real redress of grievances, but real difficulty of accountability (what government employee fines the government-employed bus driver for violating state law concerning driving while on a cell phone?). My latest example was Thursday afternoon.
As I drove out of the San Jose parking lot, of the six exit pay stations, only one was open. But at the window, a city tractor and a city pick-up were parked and idled blocking the exit. The drivers were both out and talking to the parking attendant about their “lost” ticket. After watching them all nonchalantly talk—joined by the other parking attendant with his booth closed on “break”—I got out and asked the four ‘what’s up’?
You know what followed—abuse, yelling, ‘how dare you question us!’, etc. A number of backed-up drivers like me now got out and were yelling back, and finally the city employees moved through and unblocked the exit while the idle attendant ran back to open a second station to handle the irate idling cars. Total elapsed time? 24 minutes of waiting. Imagine four employees blocking the only way out the San Jose parking lot, while cars line up, their drivers watching the four josh around and apparently laugh at the fee-paying customers.
I had nightmares that this is what the new 40% government GDP USA will look like by 2012—$20 trillion now in aggregate debt to ensure a nation of city-employees lounging around the toll booth, while cars line up and drivers cool their heels. No success, no failure, no stress, no calm—just endless existence.
I had nightmares that this is what the new 40% government GDP USA will look like by 2012—$20 trillion now in aggregate debt to ensure a nation of city-employees lounging around the toll booth, while cars line up and drivers cool their heels. No success, no failure, no stress, no calm—just endless existence.We are sooooooooooooo screwed.
We 'know' Nero fiddled while Rome burned. But in spite of Nero Rome lasted another 400 years (approx). I don't think we'll be so lucky.
(oh hell, I think I'll head down to the Soylent Green Plant tomorrow. I could use some cheering up)
[I think that if the GOP pushed hard for the Fair Tax we’d get a lot of press, a groundswell of support, and throw a harsh light on Obama’s ridiculous approach to budgeting]
I think you are right. I know some union democrats Obama voters who support a fair tax.
DJIA just slipped on another banana peel.
6,580.34
at
10:50am 03/06/2009
I'm reminded of something that Dame Thatcher once said (paraphrasing): "The problem with socialism is that sooner or later it runs out of Other People's Money."
The logic of socialism makes this inevitable. History is littered with evidence of the failure of socialism everywhere it's been tried. And I mean, everywhere — in the American experience, all the way back to the original settlement in New England in the 17th century; the Owens and Noyes experiments in Ohio and New York; and the experiments in Massachusetts, all in the 19th century. And of course the truly horrific failures in the Soviet Union and Nazi Germany in the 20th. How can we be so blind as not to see what the Obama agenda involves, to see what's coming?
We are speaking of the wrack and ruin of the single most productive engine of wealth creation on the planet. How can socialism succeed if there's no wealth creation going on? And how can there be wealth creation under socialism, since any increase in wealth is confiscated by the government at punitive tax rates (and thus is not available for future productive investment), and the wealth creators themselves demonized as greedy, unprincipled S.O.B.s?
Speaking of greedy, unprincipled S.O.B.s, I've gotten about 50% poorer in just the past six weeks, in part because my 401(k) has melted away.... The impending new tax load will make me even poorer. In more cynical moments, I wonder whether Obama is deliberately trying to "punish" white America, to give it what in his mind is a long-overdue comeuppance.... Certainly I get that impression listening to Eric Holder.
But no!!! This can't be so!!! Dontcha know this is our first "post-racial president?" /sarcasm
Thank you so much for your insights, Tolik, and for posting Hanson's excellent piece.
Bingo..Capitalism creates wealth both new and old invested..
Socialism(ists) uses that wealth up as a parasite.. like a parasitic bat..
Democracy is like an infestation of political bed bugs..
No democracy was ever yet democratic..
For it is Mob Rule.. by mobsters..
Democracy is a heinous concept.. a nasty word, a myth, even a lie..
It is being sold as fairness to all when it is a scam..
A scam by mobsters in a protection racket..
They protect you from themselves..
Only the naive are fooled by it..
A teacher long ago illustrated the point to the class by giving everyone the same grade on a major exam. He explained that is the way socialism works. The poor students were thrilled of course but the good students were upset.
He let the class discuss studying for the next test. And obviously none of the students saw any point to it.
And, IMHO, that was a great object lesson as to why socialism and communism are self-destructive and always doomed to fail.
Thank you so much for sharing your insights, dearest sister in Christ!
Thank you for sharing your insights, dear brother in Christ!
LOLOL, dear brother in Christ, but you sound like the second coming of Plato here! What you put your finger on (so to speak) is the very thing he worried about. And his conclusion was that, inevitably, democracy degenerates into Mob Rule.
Still we need to remember that the United States is not a democracy: It is a constitutional republic that conducts its business by democratic means (e.g., equal franchise, equal justice). What prevents the republic from degenerating into Mob Rule is the Constitution. If that "gives in" to the pressure of Obamanian rhetoric, then our Ship of State is sunk.
What a wonderful object lesson, dearest sister in Christ!
You were so very fortunate to have had this teacher! I mean, there seem to be two very important things lacking in public education and discourse nowadays: (1) common sense; (2) wisdom.
Oh, let me add a third: knowledge of actual history — which we are bound to repeat, if we don't remember it in the first place.
Thank you oh so very much for this truly outstanding essay/post!
Oh, let me add a third: knowledge of actual history — which we are bound to repeat, if we don't remember it in the first place.
Thank you so much for your encouragements and insights, dearest sister in Christ!
The electorate has changed. The Greatest Generation is almost gone, died or senile; and they have been replaced by Generations that were brainwashed by Marxist media and teachers and immigrants that believe the government should help the poor (unaware they are the government in this country).
Those of us who can wake up are awake, but we need a way to get our awareness out to the new public electorate in an American where information to the public is mostly controlled by the left. We need outlets via music and entertainment and video games as well as TV shows and movies. This generation gets their news from pop culture, not the news.
This electorate is going to go through a consciousness arousing by fire, I am afraid to say, as we will have to suffer the consequences of their brainwashed view that has elected this Marxist narcissist to our highest office along with many clones in the Congress.
I’ve been thinking about suggesting we put together a weekly news handout for FReepers to distribute in their towns and communities. I couldn’t do it, but I could help and could distribute in my neighborhood, if anyone would be willing to spearhead or edit the newsletter to free Americans.
Sadly, that does appear to be the case, dearest sister in Christ!
Ultimately, it seems that We the People are at fault here. Either we have not appreciated the sovereignty which the Constitution vests in us, so to defend it against usurpation; or we can claim we have not been "told" by our public "educators" that such sovereignty really exists, and that it is embodied in the Constitution.
In either case, We the People are ultimately to blame for the debacle now befalling us.
To me this is the best argument against "public education" there could possibly be.
Thank you so very much for writing, dearest sister in Christ!
Thanks, but its not me, its all Hanson. I’d love to be able to do his magic though.
Every time anything is pointed out about what is happening to our country under the Obama Administration. Somebody comes back with what Bush and the Republicans did.
VDH is correct:
“Do Republicans offer an antithesis? Can they explain the Bush deficits and take responsibility for them, as well as the Republican congressional creepiness from 2002-06 (Craig, Stevens, Cunningham, Foley, etc)? And most importantly, will they offer counterproposals—a stimulus much smaller, mixtures of loan guarantees, tax cuts, and (some) public works alone, coupled with spending caps as soon as GDP growth returns? Can they articulate how the market corrected, say, in 1980-3, without our government going socialist? Can we get a plan not merely to balance the budget, but to pay off the debt? If not, legitimate criticisms of Obama fall on deaf ears without some positive alternative.”
Thanks for the ping. Victor Davis Hanson is correct: more and more investors are going elsewhere.
I’ve been thinking about suggesting we put together a weekly news handout for FReepers to distribute in their towns and communities. I couldn’t do it, but I could help and could distribute in my neighborhood, if anyone would be willing to spearhead or edit the newsletter to free Americans.
You might be on to something.
You know what followed—abuse, yelling, ‘how dare you question us!’, etc.
I've done that sort of thing at various ticket and check out windows.
Got the same result, too.
Amen to that!
A number of low income working adults also get the equivalent of their FICA taxes back through Earned Income Rebate.
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