Obama and the Faltering Economy

by jwright
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I'm not an expert on the economy by any means , and by the looks of what's happening today in the markets here and abroad, it appears that no one fits that description.
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However, on November 1, three days before the presidential election, NEWS Corporation chairman Ruppert Murdoch was quoted in Australian.news.com saying Barack Obama 'could worsen crisis.'
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Since the election, the market has lost 14% of it's value. That on top of what it lost in the few weeks before the election when the $700-billion (70% of a trillion, or about 26% of our 2008 federal budget of $2.6-trillion.) bailout legislation passed by Congress.
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Being retired and living on a shoestring, I'm not an investor, but if I were, I'd be converting any investment holdings to cash in a heartbeat.
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Looking over the ''new hires'' that pres-elect Obama has in the fold thus far, it appears to be "Clinton II", and we all should remember what was happening to the market at the end of Clinton's tenure; it wasn't pretty then. Why should it be different today or tomorrow with mqny of the same folks getting ready to run the show again?
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With Obama's constant pushing for another ''stimulus'' package, when the first one didn't work, and his penchant for ''saving" the Detroit auto industry' (read: the UAW pensioners etal) along with his seeming eagerness to spend tax money that doesn't exist, save for the printing presses, it's obvious to me why the market is skittish, saying the least. We saw it coming near the end of the campaign. As candidate Obama's stock (polls) began to rise, the market dropped. With the exception of a couple of recent spikes, it really hasn't stopped.

Quoting Murdoch again, "To some extent it is beyond the power of politicians. You are going to find that the politicians are very limited in what they can do: they can make it worse but they can't stop it."
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Noted economist Lawrence Kudlow wrote recently:
In a few weeks Barack Obama will inherit the mantle of the capitalist system. What will he do with this responsibility? That’s the question being asked everywhere.
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Since the election, and up until President Bush’s important G-20 speech, stock markets sold off nearly 15 percent. Investors want to know if economic rewards will be encouraged or penalized. Will trade remain open and free? Will we maintain competitive businesses that can compete worldwide? Or will we resort to the protection of ailing or failed businesses?Will the U.S. lurch toward the semi-socialism of Old Europe? Or will we stay with free-market capitalism? Will we expand the nanny-state economy? Or will we keep the door wide open to entrepreneurial spirit and gales of creative destruction?
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Investors want to know which way President-elect Obama is going to go. Might he reach back to the Democratic pro-growth supply-side policies of John F. Kennedy’s tax cuts, free trade, and strong dollar? Will he opt for Bill Clinton’s free-trade and strong-dollar policies, or even his capital-gains tax cut? Or will he fall back to the hopeless government tinkering of Jimmy Carter or the welfare-statism of Lyndon Johnson?
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I’m keeping an open mind on Mr. Obama during this post-election honeymoon period. After all, he stole the tax-cut issue from Sen. McCain during the election. And surely he knows the conservative red states that joined his campaign for change didn’t vote for a leftward lurch to socialism lite.
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Mr. Obama has a huge opportunity and an outsized responsibility to mend and revive the economy. It may be too much to ask, but perhaps he will give President Bush’s marvelous speech a close read. There is much wisdom there. And there is no iron-clad reason why a Democrat can’t adopt the economic-growth model that has worked so well and so long for this country.

— Larry Kudlow, NRO’s Economics Editor, is host of CNBC’s Kudlow & Company and author of the daily web blog, Kudlow’s Money Politic$.

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