Out of the Election and into the Frying Pan 19 comments
an article to
-
Font Size:
-
Print
- TweetThis
Barack Obama has won the presidency, and we wish him well — for his sake, the country's sake and for the world's. America, in addition to being (still) a crucial factor for global economic growth, remains a beacon of hope and inspiration for liberty. All of that is on the defensive when the U.S. stumbles, as it clearly has in recent years on a number of fronts, including the economy.
The interregnum is traditionally a period of relatively calm political transition, reflection and celebration. But the honeymoon for President-elect Obama is effectively over before it's even begun. Two wars, a hornet's nest of other foreign-relations issues and the onset of what promises to be a painful and perhaps lengthy economic contraction insure that Tuesday's history-making election will soon give way to the immense challenges that await. Make no mistake: the challenges are of a breadth and depth that are rarely waiting on the doorstep of new presidents. No doubt he'll be tested like few before him.
Some have compared Obama's start with the opening of the Lincoln and FDR presidencies. That's a bit much. Comparisons to the arrivals of Nixon and Carter are closer to the mark. Any way you slice it, Obama will have his hands full, and the odds are high that he'll have to make tough and unpopular decisions for the next few years.
The stakes are indeed high — higher than at any time in recent memory for a new government. The fact that the incoming president's resume is a bit light doesn't inspire. And so we must wait, somewhat anxiously, to see his decisions on a host of subjects. One topic that he can't afford to fumble is promoting growth, which is really the only solution to what ails America domestically speaking.
On the bright side, he's shown himself to be thoughtful, calm and — above all -- intelligent. With the circus of politicking over, one might reason that the sober realities of governing will push the new president to make informed choices that keep America firmly in the club of growth. Let's hope that his natural abilities and intellect carry the day in that regard. The alternative these days is too frightening to even consider.
Whatever path Obama takes, the economy will certainly be a high priority, and not necessarily for favorable reasons. Trouble continues to percolate, even if the stock market Tuesday chose to focus elsewhere. Ignored or not, the widely followed ISM factory index dropped to a 26-year low, we learned on Monday. The sharply bearish trend in manufacturing was confirmed a day later with the hefty fall in the Fed's industrial production index for September.
Now comes the word that the labor market continued to fall in October. Nonfarm private employment slumped 157,000 last month on a seasonally adjusted basis, according to ADP National Employment Report. On Friday we'll see the government's tally for October jobs, although everyone expects the update will once again post another negative number of some significance. Par for the course in 2008, a year that, so far, has shed jobs in each and every month.
Disturbing as the general economic trend is, it comes as no surprise. Our proprietary economic index has been warning of trouble for some time now, as we've discussed all year, including our official recession call back in March. Our only mistake was not making the call earlier or being sufficiently bearish.
There's no mistaking the trend now. The last of the optimists has gone silent with the hope that recession, somehow, could be avoided. It can't. As our chart below illustrates, economic contraction has begun, and the writing's been on the wall for some time now, as per the precipitous fall in our leading index of economic indicators for the U.S.
Unfortunately, we're still in the early stages of what threatens to be a prolonged correction. What's more, the "rebound" may be modest by historical standards, thereby exacerbating the pain that accompanies a generational unwinding of economic and financial excess. It doesn't help that the usual prescriptions — i.e., cheap money — won't work this time, as they have so often in the past. Even dropping interest rates to zero, which may be coming, won't do much to stimulate demand broadly speaking. Fiscal stimulus, as a result, may be the last, best hope to keep the economic slump from turning into something worse.
The government, in short, will be spending gads more money in the coming months (and years?), over and above the already extraordinary amounts spent this year. Fortunately, there's minimal risk of inflation at the moment, although that window of spending / borrowing opportunity won't be open forever. One only need invoke the words Medicare, Medicaid and Social Security to remind that Washington, as we wrote a while back, is on the hook for massive amounts of spending in the years ahead — money that it doesn't have.
Add to this mix a newly minted president-elect, fresh with hope and ambition, including his promise to lower taxes for most taxpayers below the rates that prevailed during the Reagan administration. There are also plans for expansion of America's healthcare system, and on and on.
Keep a close eye on the honeymoon that's now in progress. If you blink, you might miss it.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
Bush showed how quickly you can go from being a hero to being the scapegoat of every bump in the road. For his sake, and the sake of this nation, I pray that he can avoid the same pitfall.
This economic crisis isn't going to go away silently. Good luck, Mr. President-Elect.
During the election, the economy become the number one issue. Obama spoke of change, yet failed to define change until the PLUMMER asked his no famus question. Obama answered with the historical liberal democratic answer, TAX AND SPEND. In addition, Obama wants to steal your future and chidrens future, by taking you retirement accounts. He wants to add 1 trillion in new spending. I could continue about Obamas' ideas of change and his leadership style.
As I write this article the market is down 8% and the news media, for example, Tom Brokauw, commented on Friday before the election that Obama was an intellegent, compentent and experienced man. He is the right man for the job with a definative plan. Wednesday after the election Tom was concerned because he did not know who is Obama and what is his plan for the economy. Do you know who Obama is and what change means?
Obama can do alot to correct this financial crisis that has nothing to do with politics at all. Here are four things that can be done right now and the market will react positively. 1. Eleminate the Mark to Market rule. 2. Enforce the up-tick rule. 3. Enforce the naked short selling rule. 4. Call for a strong dollar policy.
Politically, he is in an advantagous position, he is a Democrate with a Democrate Congress. He should move quickly to remove the Sarbanies Oxley Act, place Hedge Funds under the oversight of the SEC and reinstate the underwriting guidlines that Fannie was required to follow pre late 90's. Like FDR, politically, Obama will never mak a move without recieveing politcal benefits. Is correcting bad regulation that replaced good regulation, CHANGE? These things should never have happend. Is POPULISM the leadership you want?
The question is not if the Reblicans will work with Obama, but if, the Democratic leadership will work with Obama. The election results show no mandate by the voters, voter turn-out continued to decline with exeception of the African American turn-out. African American turn-out has been increasing with-out Obama's campaign.
My idea of CHANGE are the ideas that Jefferson had in mind, the Declaration of independance, the American Constitution and the Bill of Rights that exresses in simple eliquance: INDIVIDUALISM. I think people forget. Real change means putting power back into the hands of the people, for example, a balanced budget admendent, line item veto and replacing the regressive tax code. Real change means remembering as George Washington was negotiating peace with England during the American Revolution, the first steam ship sailed the Ohio river. America's GREATEST contributions come from the individual. From the steam ship came the conbustable engine, of which, the government had nothing to do with.
Depression is my best take on outcomes. It might last for 5 or 10 years to unwind and start a new economic model...probably social oriented as government takes a greater role in our daily lives. Remember it started with a (Nationalization of Banking/Brokerage/Real Estate) big bang by this Republican Administration...Marvi...
On Nov 06 12:51 PM Glen! wrote:
> Mr. Obama has a massive role to step into. Hopefully he will be able
> to navigate the country through it without losing the faith of his
> fellow Americans like his predecessor did.
>
> Bush showed how quickly you can go from being a hero to being the
> scapegoat of every bump in the road. For his sake, and the sake
> of this nation, I pray that he can avoid the same pitfall.
>
> This economic crisis isn't going to go away silently. Good luck,
> Mr. President-Elect.
Best,
Frank Miller
is this article a political infomercial?
will B Hussein O.solve the US problems by voting 'present" - which is his most common voting response?
As for change, Biden is a 36 year good ol' boy in government and I think that says we should expect the same old same old .
That is, unless there is a national 'emergency' (actual or perceived) in which B Hussein O uses the presidential power to beome de facto dictator (only temporary you understand - until the 'crisis' is over)
But the good news is that I don't have to worry about putting gas in
my car or my mortgage payments anymore.
Lower taxes (for anyone who has a decent paying job)? check back in a year or two to see if that fairy tale came true.
Could it be that these shills know the whole thing is about to collapse and the recent "gains" were only because of the actions PPT took to try to prevent 60 Democratic seats in the Senate? Knowing this they want to assign blame anywhere other than on themselves? Likely so wouldn't you think?
It is going to get very bad very soon not because of Obama's election but because of what these Banksters have done to us. Perhaps you should use this time to make preparations to protect your family.
Individualism, economic freedom and entrepreneurship made America great. Big government, entitlement and the general ignorance of American history and constitutional government have made America soft.
As people begin to focus on Obama from a policy perspective, which by the way should have been done during the primaries and Presidential campaign, there will likely be many questions - in part because Obama was so vague and often offered conflicting statements. The only point of consistency was his plan to raise taxes and his view that government should be at the center of all things economic.
If he has his way, I expect the Mr. Market to catch a considerable cold.
I do not see Obama as thoughtful at all. I see him as ideological with very liberal tax and spend agenda. For example, he wants to raise taxes on capital because of his arbitrary sense of fairness even though he acknowledged that the empirical evidence did not support his view.
Let's hope he has no honeymoon given that he has had a free pass in the press for the last two years. Just maybe then, Obama will not wreck what is left of the economy.
Let's hope he is pragmatic. I am not holding my breath.
Voila! Balanced budget! A trifecta!
Judge the man on his deeds... And this hasn't been done so far! He was very vague and never gave us any real info on how he was going to "change" things. That said, we can't judge him just yet.
I second Mr. B!!!! Americans made America great, not the Presidents or the government. America has forgotten and that is just another problem to add to a long list...
I love Mr. B! Couldn't have said it better myself. Props.
On Nov 06 01:07 PM RiskAverseAlert wrote:
"...The aristocratic scum who led the world into its present vulnerability..."
There is only one party in America. The Corporate Party. GOP-DEM are simply Sunni and Shia arguing over silliness.
You don't get to be President Elect without making very big promises to wealthy corporate owning class scumbags.
All better now?
American leadership is just one aspect, no matter how huge is its impact, of the great American system.