As the Obama Bear rages on, it is obvious that the vast majority of pundits, journalists, and other assorted “experts” are utterly clueless about what is going on. With every new daily drop in the stock market, we hear the same stale old voices rising to tell us why. It was a renewed request for bailout funds for some company in trouble, or the latest government economic report, or it’s those nasty short-sellers. But, I suspect that there is something else going on here…something much deeper and possibly profound.
A hint of what I am talking about was provided by Investors Business Daily. In a March 2, 2009 editorial entitled Capital On Strike, IBD observed the following:
Investors have walked away from investing, while businesses shut down factories and offices and slash jobs.
This is both highly significant and dangerous. Capital, bluntly put, has gone on strike. Those who own wealth are pushing it to the sidelines, as a young and inexperienced president tries to jam through the most sweeping economic changes in over 70 years.
The prospect of these changes becoming law has already radically altered our nation's economy. Entrepreneurs and CEOs who once created new products, new services, jobs and trillions in wealth for America's workers and retirees now find themselves vilified and punished for their success.
ABC News reported this week that many upper-income taxpayers already are planning to cut back on work and investments to stay under $250,000 in income — the point where Obama's punitive taxes kick in. No one wins from this, yet Obama seems oblivious.
Forget what the so-called experts are telling us. I believe the stock market is adjusting to the reality that an American president and one of the two major political parties have declared war on productive achievement. I had thought up until recently that the country might muddle through for awhile, with a recovery that struggles against the headwinds of expanding government. That may still happen, but that scenario is looking more and more likely to be too optimistic. The beginnings of accelerating economic and societal decline that is inevitable under current trends may not be 10 or 20 years down the road, but upon us now.
Back in October 2008, I wrote a post (The Obama Bear?) raising the specter of a possible Obama effect on the stock market. I wrote:
If this were Hillary Clinton we were talking about, I would draw some consolation from Fisher’s observations [that Democratic presidents are phonies and never meant most of what they said in their populist, anticapitalist campaigns. They could never get reelected if they really delivered on their campaign promises.]. But Barack Obama is a Left-wing ideologue who is committed, on principle, to his altruist-collectivist-Marxist dogma. He…embraces the vicious altruist notion that the needy and the poor hold a first mortgage on the lives and wealth of the productive, because they are needy and poor. It is hard to overestimate the devastating consequences that an Obama-with-a-large-congressional-democratic-majority presidency can inflict on America…or the stock market…even in only one term.
The very point in late September, 2008, at which candidate Obama pulled ahead of McCain in the polls following the eruption of the financial crisis into public view marked the beginning of the collapse in the stock market. Though the market had been in a bearish mode for nearly a year, the relentless collapse of the last five and a half months has confirmed beyond any doubt what I had suspected last October…this is an Obama bear market. The failures of financial firms and the incompetence of a clueless Bush Administration were merely supporting actors. The stock market is motivated by future expectations, and those expectations were validated by future events. Since the inauguration, the downward spiral has only accelerated as the democrats have unleashed a relentless barrage of statist rage against America’s businesses, its most productive and responsible citizens, and the remnants of capitalism.
IBD is wrong on one key point…Obama is not oblivious, and the market seems to grasp it. While he talks about laying the foundation for future economic growth, that is just window dressing meant to keep as many Americans as possible off guard. The Obama-led democrat socialist express is intent on turning America into a fiefdom ruled by the God of Need that I warned about a month ago, thus guaranteeing their hold on power. That is the tipping point reached by every democracy in history unconstrained by individual rights protections, where the parasites reach the 51% level of the electorate and can loot the productive 49% minority by simply electing politicians to do the dirty work. This is the path begun under Franklin D. Roosevelt and now reaching its climax. This is the path to poverty, dictatorship, and economic ruin, as every collectivist hellhole in history has proven. The latest example, as if we needed another, is Hugo Chavez’s Venezuela. The American reports that ten years after his ascension to power, Venezuela is on the verge of just such a collapse.
But reality is impervious to any socialist’s claims that this time, his gang will make it work. The great avenger’s arrival is seemingly being signaled by the stock market. In the above-referenced post, I stated that “despite occasional rallies, we may be in for a long, painful slog like the 1966 to 1982 dead-market doldrums…or perhaps far worse.” That was 4000 points ago. Events are racing ahead at a dizzying speed, and we appear to be on the path to something far worse.
For decades, the steady growth of taxes and government controls over the economy have added a heavier and heavier burden onto the shoulders of American producers. But they have always managed to lead the economy upward anyway. But the tremendous and unmatched productive ability of the American people may have reached a breaking point where they are unable…or unwilling…to step up to the plate, this time.
To be sure, the suffocating ooze of government economic interference always did act as a discouragement to productive achievement, leaving untold $trillions in wealth-producing ideas and investments stillborn. But today’s pullback by the country’s entrepreneurs, businessmen, and investors may be more than just discouragement. There may be a new cultural force emerging behind this capital strike.