The following is a rant. Proceed at your own risk. Nobody’s going to bail you out if you do.
As I pointed out yesterday, Pres. Obama was saying,
What I’m looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. You know, it bobs up and down day to day. And if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong.
Yes, I know the Dow’s up 140 points as I write this post.
Unfortunately, the long-term strategy is EXACTLY where Obama’s wrong. The unprecedented amount of government spending, coupled with the resulting inflation, and the proposed tax hikes for high earners has financial experts really really worried, for good reason.
Let’s pause for a moment and notice that:
1. Government spending will rise to 4.6% of GDP, regardless of optimistic projections that it’ll decrease in years to come. It won’t decrease. History teaches us that once a government entity gets a budget raise, it perpetuates it.
Additionally, the 4.6% projection does not include the effect of any “temporary” bailouts, stimulus, or omnibus that might rise fully formed like Athena from the head of Zeus or Congress, as the current ones have.
While Athena sprang fully armed, the US government will be sending nearly $1 billion to Gaza, which supposedly will be channeled through the UN – an entity that time and time again works against the national interests of the US. Whatever Athena springs from that will be armed…against our side.
2. The proposed tax increases on the highest earners so they “pay their share” is punitive and unjust, and the financial markets recognize that fact. Has it ever occurred to the Democrats that the reason the highest earners in this country earn their pay is because they hold demanding jobs that require personal sacrifice and a unique set of skills, the highest level of skills in the world, skills that the world-wide market has tested and shown to be productive in life-saving industries, such as biotech? May I ask you to listen to TigerHawk again? Or do the legislators think those salaries come from the spendulus?
In view of this, is anyone still thinking that we’re in the middle of a “bobs up and down day to day” situation??
Then go read James Pethokoukis’s post, Barack Obama, Jim Cramer, the Stock Market and Glengarry Glen Ross: Money quote (all puns fully intended):
And that, my friends, is how the financial markets work. They don’t care about hope. They don’t care about change. They don’t care about charm. They want results. They want economic growth. They want governments that can pay their debts. And if they think policies of high taxes or runaway spending means slow growth or default, they will brutally punish a country’s stocks, bonds and currency.
Go read the whole thing.
We’re in deep deep trouble. This is only the start.