It has been a horrific two weeks on Wall Street.
Forget the numbers for a moment. On Oct. 29, a Monday, a hurricane described as apocalyptic descended on the financial center, halting trading for two days. A shutdown of that duration had not occurred at that point for 124 years due to weather. The last unscheduled stop was after the Sept. 11, 2001, terrorist attack that shut down markets for four days.
It turned out not to be a reaffirmation of the president's economic acumen. As shown clearly in the first presidential debate, the election was a contest between a businessman who knew his stuff and a populist president who sounded confused and defensive.
To be fair, stocks had been in a one-month slump triggered by third quarter corporate reports that were flat or disappointing. Also to be fair, recent economic data, employment figures notwithstanding, gave the background to this scene a faintly positive tone. Things were getting better, but the stock market, as usual, was out of sync. Certainly, it would catch up.
If that's the case, catching up has been ugly. The Dow Jones industrial average closed at 13,107 on the Friday before the hurricane arrived and closed at 12,811 on Thursday of this week. More discouraging, the blue-chip board stood at 13,437 the last day of September, just before corporate reporting season.
Let's face it: President Barack Obama has a habit of making enemies -- or at least declaring them so. As an ardent populist, on the heels of the financial crisis it was "fat cat bankers" who first incurred his wrath. On the heels of the BP oil spill in the Gulf of Mexico, oil companies were soon on his list. With a touch more diplomacy, China has been in his sights almost from Day 1, and with the help of billionaire Warren Buffett the rich were added to his list, as well. The U.S. Chamber of Commerce has all but written off the Obama presidency and token gestures to woo that group have not been very successful.
The U.S. needs banks. They are not the enemy. The U.S. burns a lot of oil, so making it harder on U.S. oil companies only means investors should put their money into foreign oil companies. The wealthy, like it or not, are a powerful group. Alienating them is not always wise.
What the United States needs to do at this point is write off a few of these liabilities. The rich will not balance the books, anyway, and even though they also will not create jobs out of the goodness of their hearts or fund soup kitchens for one dime past their own advantage, they are still not the enemy. Consider the rich a redistribution program that keeps the makers of luxury cars, yachts and diamond bracelets in business. Then leave it at that. (What's a National Football League quarterback without a diamond ring and a luxury sports car, anyway?)
Who was against taxing the rich? Self-serving Republicans, of course, but one would suspect fiberglass handlers at Lazzara Yachts and welders at Tesla Motors had on opinion about a president who was taking a swipe at their customers.
Spending money to stimulate the economy is well and good -- and short term. A cut in payroll taxes is well and good -- but not good enough. Low interest rates are certainly a valid response in tough times, but cash-hoarding corporations have ignored the temptation to borrow, anyway.
Fairly soon, one can hope, President Obama will run out of superficial enemies. The sooner the better, actually. As the therapists say, let the client vent for as long as it takes, then the therapy begins. Let's hope four years of venting is enough and the president realizes history judges populists on national prosperity, just like everyone else.
In international markets Friday, the Nikkei 225 index in Japan gave up 0.9 percent and the Shanghai composite index in China lost 0.12 percent. The Hang Seng index in Hong Kong shed 0.85 percent and the Sensex in India dropped 0.86 percent.
The S&P/ASX 200 in Australia lost 0.49 percent.
In midday trading in Europe, the FTSE 100 index in Britain dropped 1.02 percent while the DAX 30 in Germany slumped 1.94 percent. The CAC 40 in France fell 0.86 percent and the Stoxx Europe 600 lost 0.98 percent.
|Additional Analysis: Economic Outlook Stories|
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