Obama and the Market

Well, glad to see the stock markets are having a nice, rational reaction to the election of Barack Obama. I have too much going on for a proper post today, but I thought I would check in to note the situation in the market again this week. After a 320-point rally on the Dow on the day before the election, we are now down broadly close to 10% as of early Thursday afternoon over just the two days since the historic election. And from the levels we were at the day of the election -- Dow 9600 or so -- this is a pretty sick drop.

It's not just Obama, although ultimately, as I mentioned the other day, there is ample empirical historical data to show that the few economic policies he has admitted to espousing thus far are not friendly to economic recovery. But it's also the Congress, which, although stopping short of the Democratic supermajority of 60, still picked up seats in both houses, including more importantly an official majority of 54 senators vs. 44 Republicans and two independents. The combination of both an Obama president and a solidly Democratic Congress understandably has the markets spooked, as anyone with an understanding of history and a deep concern about the financial markets should be. And this is not to say that Obama's approach is therefore wrong, but just that we now have leadership across the board in this country that firmly and publicly believes that there are more important things in America right now than propping up the stock market and the economy at large. That's just the way it is.

I do think there is hope right now with the markets tumbling anew following the election. I am thinking, now that Obama has officially won, we have a window here -- in particular if stocks remain weak and low like they are currently -- for Obama to get talked into coming out publicly with a statement that now in fact is not the best time to be raising taxes. In my mind there is nothing wrong with a president having as a goal of his tenure to raise taxes on the rich and on businesses in an attempt to redistribute that income to those who need it, but also to recognize that there may be a better and a worse time to enact such a policy. In fact, that's what I would want any president to do, to be ready, willing and able to adjust his desired policies to the fact of the times.

If Obama would just come out and let the people of America, and the people of the world, know that he is not automatically going balls-out on raising taxes, this could help the stock market, the psyche of the people of this country, and therefore actually help the economy as a whole. It would be the right move and the right decision. And it would not be a bad sign that the man is backing down from his stated goals. It would be a good sign in my view, less because I think raising taxes is a bad idea right now, but more because for a change it would be nice to have a leader in this country who is not going to turn a blind eye to the problems going on and who is willing to be flexible where necessary in the best interests of the country.