Market Wisdom and the Discounting of the Democrats
The Market slide continues. The MSM has successfully hidden a lot of the truth of Obama and his socialist, that is, Democratic Party fellow travelers. But, the markets don’t lie and the truth is slowly leaking out. Unfortunately, while a lie will travel half way around the world while the truth is just saddling up. And, one week till the election is just too short a time for the truth to truly resonate.
What is being discounted? Foremost is the slow accretion of policies that have diverged from the simple message of Reagan of low taxes and low regulation.
First, the markets are discounting the fundamental deceit of socialism. The whole premise of socialism is using the coercive power of government to take from what are deemed less deserving groups and giving what is taken to what are deemed more deserving groups. What is deemed more or less deserving is entirely left to the whim of the self-made philosopher kings of Obama and his party stalwarts.
But, in making those distinctions, some how a lot of cash manages to remain in the pockets of those philosopher kings. Like Franklin Raines recent multi-million dollar condo purchase. Like Obama’s 1.5 million dollar mansion with some discounting courtesy Rezko and a sweet heart mortgage. Like Michele’s job promotion and a doubling her salary to $300,000 per annum. Like the hundreds of thousands of dollars of campaign cash to each of the Democrat congressional leaders from Fannie Mae and Freddie Mac. Or, the special loans to Dodd, Senator from the great state of Countrywide. This is no different than the Communist Party leaders of the old USSR being whisked to work in their Zil limousines or spending their weekends in their country dachas.
This is crony capitalism. Or, for a party hacks like Obama, this is Chicago Machine party graft and favors. Obama mastered that system and is being richly rewarded.
Restraint in taxing and spending is dictated by maintaining a delicate symbiosis between the host that is the private sector and the parasite that is the government. It about fleecing your sheep to within an inch of their lives; yet keep your sheep alive to so as to have something to continue to fleece.
There was a very successful economic paradigm established by Reagan that the Democrats managed to destroy by their corruption. Now they are on the verge of seizing power trying to sell the proposition that the current economic crisis is a failure of free market economics. Only, the markets are not buying that the what has worked so well for the last thirty years is now suddenly decrepit and will be replace by a socialist economic paradigm that will, in spite of its abysmal record over the last century, all of a sudden perform in a manner that will completely belie its past performance.
The next issue is energy. This is tightly tied to the conceit of environmentalism and it current bandwagon of global warming. And, this will be one of the principal vehicles to burden our economy with regulations that will allow economic micro-management right down to the carbon footprint of the weed whacker in your garage. It will also create vast opportunities for graft and favors as business, large and small, will need to pay tribute to the cap-and-trade commissars that will stand astride all business and economic aspirations of all of our Joe-the-Plumbers.
Attempt after attempt has been made to come up with a rational energy policy that have been stymied by the very forces that now threaten to control the White House and both houses of Congress. In fact, if it weren’t political suicide, you’d have European style gas taxes and five, six, seven dollar per gallon gas years ago. In fact, for many of these same Democrats, the four-dollar per gallon gas of last summer was a dream come true.
All of this mess concerning energy comes down to down the line opposition to domestic offshore drilling; we couldn’t have oil derricks spoiling the view from all of the multi-million Malibu mansions of Barack’s Hollywood donors. No ANWR, oil shale or nuclear power. Detroit’s big three auto manufacturers were actually in the process of recovery until this latest energy crunch and four-dollar gas totally upended those plans. And, even before the mortgage crisis really hit, high priced energy, due to this purposeful inaction, was already starting to drag down our economy.
Third factor that the market is discounting is that the Democratic leadership about to take control is economically ignorant. As in rank ignorance. Both Obama and Biden never worked out side of a career that involved spending other people’s money. Obama’s career has been organizing vote fraud through his connections at ACORN. Or, working with his pal Ayers on the Chicago Annenberg Challenge to distribute $100 million in graft.
Biden graduated from law school in 1969 and was elected to the Senate in 1972; a man who has spent his entire adult life as a Senator. For the last 36 years, for essentially all his life, Biden has drawn a paycheck from the Senate; his only job. A community organizer with the honorific of “Senator.”
McCain has been in government employ for all of his life–Naval officer, congressman, senator. But, he has the decency to at least not presume to tell others how to live their lives or earn their livings. He has the decency, in private economic affairs, to keep his mouth shut and his hands to himself.
And, Palin; probably one of the few politicians on the Washington scene who isn’t a millionaire. Probably one of the few politicians who’s net worth is comfortably this side of $500,000. A politician, who with her husband, actually ran a business.
We have a whole Democratic hierarchy who simply has no clue as to what Joe-the-plumbers go through on a day to day basis to juggle business demands, payrolls, rent, taxes, and the like. Obama’s proposal to grant a $3000 tax credit two years running for every new job created amply demonstrates this vast void of economic understanding.
From my point of view, as a small businessman, a new employee will cost my business $50,000 to $70,000 per year. For my practice to hire a nurse will cost about $25 per hour. That works out to $1000 per week; or $50,000 per year. Then you add in medical benefits, Social Security, safe-harbor 401K contributions and you’re easily adding another $20,000. Barack’s proposed $3000 chickens–t check is not going to sway a single business to add a single job.
Or, again the ridicule heaped on Joe-the-Plumber, by Biden, for the temerity to have aspirations in excess of $250,000 again reflects a complete ignorance as to what it takes to run a business. Even in “small” business, $250,000 is not a lot of money. Between trucks, tools, inventory, shop facilities, employee wages and warehousing $250,000 gets eaten up very rapidly. Remember, business expenses have to be paid up front; you don’t maintain inventory on consignment.
Economic knowledge for the likes of Obama and Biden was having supply and demand concepts learned in Econ 101 deconstructed by some Marxist professor. For much of the claque that seems poised to run the White House and both Houses of Congress, intellectual discourse is the college dorm room bull sessions now continued in the Hamptons over white wine and brie. Indeed, what passes for profound intellectual insight, is really abject fear over getting knocked off the social A-list for uttering the truth that Adam Smith economics still matters. That, what Joe-the-Plumber says actually reflects the real truth about basic economic concepts so derided by many an ivory-towered intellectoid professor.
Then, we get into the intrusion of the outside world. After Russia’s invasion of Georgia this summer, we have two rogue powers–Russia and Iran–that have control of significant portions of known oil production from the Artic Circle to the Straits of Hormuz. One of those powers is already nuclear. The other, in the grips of an Islamic death cult, is perhaps only a year away.
What if Iran detonates a nuclear weapon over an American carrier task force in the Persian Gulf? What will Obama’s reaction be? Will he be prepared to mitigate the sudden rise in energy prices? Will he be willing to acknowledge an act of war as such? Will he be willing to then act in a manner appropriate to an act of war? The markets know, just as does the MSM, what the real response will be; except the market are not hiding the answer.
William F. Buckley, Jr. once remarked, to the effect, that he rather be ruled by the first one hundred names out of the Cambridge phone directory that by the Harvard faculty. In that vein, the markets are saying the same; that they rather be ruled by the likes of Sarah Palin and Joe-the-Plumber than by the Georgetown cocktail circuit.
In the end, the only way out of this crisis is the promotion of economic growth. You know, the boring mantra a low taxes, low regulation and free trade. It just hasn’t the sparkle to get you into the Getty digs like Barack last spring. This is one of those situation where the more you do, the worse it gets. In some respect, you get a perverse pleasure in the prospect that the guilty parties will have the full responsibility of this economic mess thrust upon them. And, Obama will have the unique opportunity to create a legacy that will double up on Carter and Hoover.