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Is Wall Street Ready for Obama’s Fall?

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The stock market’s powerful bear rally, now five month’s old, has fed on false hopes and delusional thinking, but it is unlikely to survive the coming collapse of the Obama presidency. Mr. Obama’s once-overwhelming popularity, though ebbing, has so far survived the voters’ growing discontent with his policies. However, disapproval is mounting, even on the political left, and it’s going to reach critical mass once the president’s ill-conceived plan for a government takeover of the healthcare system has gone down in flames. He will become a lame-duck president after less than a year in office, leaving the country rudderless at a time when the economy and financial system are desperately in need of a firm hand or at least the appearance that someone is in command. Investors had better prepare for the inevitable darkening of America’s mood, since its effect on the stock market will not be pretty. It is often said that Wall Street abhors nothing so much as uncertainty, but this will be far worse – a plunge into despair or even chaos that will make the nation’s depressing wallow during the Carter years seem sunny in comparison.

 His Brazen Lie

Concerning Obamacare, its failure to gain traction goes much deeper than Hillarycare’s abortive flop in 1993, early in Clinton’s term. In the interim, healthcare costs have inflated so horrifically that Americans have become desperate for relief. For businesses and individuals alike, health care has become increasingly unaffordable, and all of us are paying much more each year for less coverage. That should have made socialized health care an easy sell. Instead, Obama chose to remake the system so radically and so ambitiously that almost no one believes him when he says that it won’t cost us – except for “the rich” — any more than we are paying now. Americans see Obama’s spin on this issue for what it is: a brazen lie. They also understand that he cannot possibly extract from “the rich” alone the trillions of dollars the government is spending in an already-failed attempt to avoid a ruinous debt deflation. 

 Fat Cats

As a result, it is predictable that many of Obama’s supporters on the left will abandon him. This seems likely to occur sooner rather than later now that stories have begun to emerge that make clear how it is mainly fat-cat bankers who have benefited from all of the would-be rescue packages.  Last week’s news that nine big banks paid out $33 billion in bonuses in 2008 when the banks were collapsing is going to galvanize Obama’s opposition in Congress, making his “cap-and-trade” energy tax dead-on-arrival, and rendering all of his other grandiose, statist schemes politically dead. This is going to throw the presidency – and the nation – into a state of uncertainty that Wall Street will not be able to abide. If the stock market is indeed looking ahead six months, the bear rally begun in March should be approaching its last hurrah.

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  • George August 17, 2009, 12:57 am

    The banks paid billions of dollars in bonuses in 2008. Ackerman believes this was Obama’s fault.

    &&&&&

    Can you identify the passage where I said this, George? If I did say it, it is certainly not what I had intended to imply. RA

  • Mark Kemper August 16, 2009, 1:46 pm

    The Republican game plan is much more dangerous than the Democrats’ — they only protect the very rich. Look who came out ahead: It was The Boys, as Rick calls them. Most decisions that were made as the economy was crashing under Dubbaya concerned how they would help Goldman Sachs and that black hole, Citibank. I am possibly more conservative then most Dixiecrat Republicans andthink a balanced budget should be part of the Constitution. In fact, the budget would be based on the previous year’s receipts, not what might be collected next year or ten years out. All of the rescues I saw under Dubbaya helped those making millions while the middle and working classes were laid off. This is the reason healthcare reform even had a chance. Rick said he paid $35K out-of-pocket. How does somebody who earns $35k a year get health care for his family? I have company insurance and had a annual physical. The doctor charged $776, was paid $308, and wrote off $467. Is this fair to the uninsured, and did the write-off reduce the tax bill for the doctor?

    The economic problems of this country will not be solved until we start making stuff again. All other activity is just moving money from one pocket to another.
    When the middle class disappears, all you have is the Latin America model: rich families and the dirt poor.

  • jt August 16, 2009, 3:56 am

    Just to tag team on the comment made, quite accurately, that in political terms, the Big O’Bamanation could very well be to the Demogognazis just a smooth-talking well-tanned foreign-born version of what Bush was to the Repugnahypocrites. The party system is in shambles….

    But the bigger problem for this country and for most of its citizens is that neither of those parties, nor the fact of their existence, IS the problem. Many here have touched on and expounded on the problem, yet many STILL think that there is a political solution…when there is NOT!! The parties are a side-show…a distraction…a puppet show. It’s the larger body equivalent of Hannity and Colmes. Most Americans seem to think that the “truth” lies somewhere in the middle of all the bluster coming out of the two of them. Similarly, many think that if they watch the “No Spin Zone” with O’Reilly, and then squirt an equal douchebag full of CNBC or the like down their throats, they’ve gotten all the political nutrition they need to make an “informed decision.” An informed decision about what???? Which of the two parties, which are simply two sides of the same coin (now anyway), to vote for next time?

    The truth is that the REAL truth and the REAL problem are elsewhere…WAY off the screen…right where they want to be. (After all, they also control the mainstream media exactly for that reason.) TPTB are NOT our elected officials– the WallSt Bankster Cartel own BOTH parties. Their control of the money supply (as in “we ain’t tellin’ you nothin’ about who we’re givin’ the money to you little pipsqueak idiots…who do you think you are??…We are the GREAT and MIGHTY OZ!!”) is a wire, one end of which is in their hands, the other around the minute but very sensitive cajones of our elected officials…you squawk, we pull…you squawk louder, we pull harder. Goldman Sachs, along with the Treasury, or I should say the Treasury Dept of Goldman Sachs, along with the Fed Res Banks and JPMorgain4Elites, etc., run this country. And until the Fed is removed like a cancer from this country, and GoldmanSachs and their CEO Treasury Secretaries are convicted, tried and hung out to dry, or just hung…nothing will change. jt

    &&&&

    Amen. RA

  • Rick Ackerman August 15, 2009, 4:26 pm

    Posted by Rick for Brad Alpert:

    I enjoyed your piece, but I see no reason to take it as more than
    wishful thinking. Obama is climbing the learning curve of a new
    president, perhaps more slowly due to his extreme ideology than would
    be best for him, but it is still not certain that the Republicans will
    gain congressional seats next year. While many see Obama’s health care
    push as selling snake oil, it is still not obvious the Democrats will
    fail in getting a bill this year. (How grim is that?)

    I agree that the stock market is not ready for Obama to become a lame
    duck. If only that were to happen!

    &&&&&

    The prospect of a health-bill-any-health-bill just to get the camel’s nose in the tent is grim indeed — scary, even. Medicare started with ostensibly small aspirations, and look at it now. RA

  • Charles Hill August 15, 2009, 11:40 am

    Hey Rick,
    Why isn’t anybody talking about the illegal imigrants that will receive free medical. This will only invite every sick and needy Mexican to every south American that needs health benefits to jump our border to get on the band wagon. This is the largest group that drains our economy and floods our emergency rooms from california across Texas and wherever else they may go.
    They show up pregnant to have there children born here and get free medicare and housing many live better than middle class Americans working everyday paying their taxes.

  • Keyser Soze August 15, 2009, 7:08 am

    I can’t understand why so many Americans seem to be opposed to health care reform when they have the most expensive and least effective health care system in the developed world. Sure, some vested interests will be hurt by reform, but what’s so bad about that if the majority benefit?

  • Hurshel August 11, 2009, 4:33 pm

    billwilson said: “Unfortunately the implosion of the Republicans into a minor party of angry, cranky, old white guys in the South is not helping. ”

    I see comments like this all the time from supposed conservatives who are merely mimicking leftist talking points. What exactly is wrong with whites who are old, angry and cranky? I’m white, middle-aged and pissed off as hell at what’s going on in this country. Is it wrong to be white? Old? What the hell are you talking about? What an utterly stupid comment.

    Demographic groups whose interests are aligned does not make those interests automatically suspect. If I say that the Democratic party is full of whining, ethnocentric, young, middle-aged and old black guys and gals, is that racist? If you think it is, then that thought ought to tell you a lot about yourself having made, as you did, the comment about angry, cranky and old white guys.

  • C.C. August 11, 2009, 3:43 pm

    The only ‘change’ we need is to simply eliminate the federal government from areas it doesn not belong, ‘healthcare’ being one of many. Basically, it is to bring to heel a government gone out of control – via BOTH corrupt parties. Unfortunately, even for those seemingly level-headed enough to understand, the concept of Freedom escapes them because the pervasive tentacles of government-everywhere-and-always, has clouded their thinking. Even well-meaning ‘conservatives’ have fallen into the trap of ‘smörgåsbord’ government – that of which one picks what he likes about government intrusion, but discards the remainder in favor of his righteous ideology. Unfortunately, due to circumstances surrounding the unchanging vices of human nature, freedom and government interference in the economy are incompatible.

    Over regulation by a 3rd party (government) into the contractual agreements among men and the litigious interference that follows, is what is at the core of most of our ailments in society – again, ‘healthcare’ being the issue-du-jour for the present.

    The rise and fall of empires… We have had a good run, but human nature without rigorous temperament of our desire to have someone else ‘Do Something’ about a situation, rather than rely on ourselves and our neighbors to close the circuit of interaction, has brought us to this state. Once the people have figured out that they can vote themselves largess… Well, you know the rest –

    C.C.

  • Patrick August 11, 2009, 12:07 pm

    necessary goods will increase in price…. cars, houses.. gsm’s will deflate

  • ben August 11, 2009, 6:22 am

    So far…Obama seems to have been getting his away and getting away with everything. He’s expanded the bailout of the banks. He’s taken over GM and robbed the bondholders. His cash for clunkers program, with car dealers destroying working cars that could have been resold or given away to the poor, is obscene and criminal. I don’t think Dems have the stomach to oppose the first black President, and Obama is not shy about sticking race in their face. Most Dems would instantly lose about 1/3 of their support if they went against the President…virtual political suicide.

    I’d put my money on Obama getting his way simply because thus far he always has. Here is a link for the odds on a federal health insurance plan by the end of this year. Currently the odds are a bit better than a 1 in 3 chance.

    http://www.intrade.com/jsp/intrade/common/c_cd.jsp?conDetailID=683800&z=1249971555575

  • jerry August 10, 2009, 11:31 pm

    Rick, I totally agree with you on this analysis. The Kook d’e-tat rising up because of Obama’s inability to show strength and take charge of the investment-banking crime syndicate will take him down. He is losing credibility among many supporters.

    What we see is a president traveling around the world, vacationing here and there with his family instead of taking on the real problems as seriously as FDR did when he was faced with his crises. Truman, as well, was overwhelmed and rolled up his sleeves.

    Bernanke has been allowed to become his own defacto president. He has repeatedly enriched the investment banking crime syndicate, yet the American people get thrown bones–continue to borrow and go further into deeper and deeper debt.

    http://eye-on-washington.blogspot.com

  • Chris T. August 10, 2009, 5:22 pm

    Like the posters above, I hope you are right. While no one wants any president to fail, these policies need to fail, so let’s keep hoping.

    Ross writes:
    “But then, when one looks past the obvious stark differences between Bush junior, and Obama, the two chief execs function more similarly than not.”

    And this is all the more true of the non-economic/non-monetary parts of both presidents’ policies.

    By now Obama has so thoroughly betrayed his promises to the left (Iraq withdrawal, Guantanamo, prosecutions of these prisoners, Patriot act policies, prosecution of the old admin. for abusing its power, transparency, you name it) that only the wishful thinking of these people is keeping them from wanting to see the total betrayal. As his domestic policies fail, not taking notice of this will become ever morre difficult for any but the most sycophantic.

    Like Roosevelt, Obama talked the left’s game, while playing for the ones that made him, which were the wealthy elite after all (just look at his source of funding). This president has so surely taken on the unitary-executive powers propagated by the previous White House, that saying “more similar than not” is a huge understatement.

  • Rich August 10, 2009, 2:54 pm

    Here’s another inconvenient fact:
    TRAN soared 21% versus 15% INDU since GE GS NBC, CNBC, MSNBC announced the New Bull Market, almost double the Dow since March 9, with CNW up 258%.
    Yes, transports lead recovery when there are real, not phantom earnings.
    Meanwhile, CSX and other transport companies warned Q3 earnings might be down double digits.
    Check out the Town Hall Meetings.
    Politicians caught in the O Zone…

  • billwilson August 10, 2009, 2:51 pm

    Of course we have to remember that it was Reagan with his sunny approach and “deficits don’t matter” approach that was the root cause of the current mess.

    I’m not sure anyone has the ability to negotiate a way out of the current mess. The viable options are limited to none, especially when one realizes that a political consensus would be required to push forward (currently impossible).

    Unfortunately the implosion of the Republicans into a minor party of angry, cranky, old white guys in the South is not helping. A viable conservative party would have actually had a fair bit of success negotiating a centrist approach with Obama (who is more than anything a pragmatist) . But that is not to be. Instead we have insane discourse about whether Obama was born in the country, or wants to kill off Grannies. It sure does not inspire confidence that the general population is not “clued in” enough to even participate in the discussion.

    Very sad really.

    &&&&&

    Interesting point about Reagan, who really was the father of Deficits Don’t Matter. Conservatives still think of his tenure in office as a victory for “Supply Side” spending and lower taxes, but it was really just the beginning of America’s 25-year fiscal blowout. It’s sad that such usually astute observers of the political scene as National Review were as ignorant as Greenspan of the economic forces that came to increasingly distort the economy. Perhaps it’s because the appallingly ignorant Kudlow was National Review’s unofficial “economist”. RA

  • Jim Turner August 10, 2009, 2:04 pm

    Wow, so now Obama is going to nationalize all the hospitals and healthcare providers?

    That bill changed fast.

    &&&&

    So then, you’ve read the whole thing, have you? RA

  • Rich August 10, 2009, 12:34 pm

    They don’t call it political economy for nothing.
    Back when we had private economy and Constitutional government anyway.
    Now with narcissistic Big Brother and Sister, political economy an oxymoron.
    Obamanation may make the Carter presidency look effective.
    Already the accurate Qinnipiac O polls et al put O the 10th lowest of the last 12 presidents.
    Krugman calls for yet more private economy crunching stimulus to avoid another lost decade. Many of US may prefer a lost decade to the stop and go government economy facing US the rest of our lives.
    Right now, buy SRS 12.28, SDS 45.77, SKF 29.14, DXD 39, TWM look good.
    Feel free to donate some good profits to ByeByeBoxer.com …

    Correction: Buy TWM under 33.85 and ZSL over 7.04.

  • Mercurian August 10, 2009, 12:29 pm

    Speaking (obliquely) of the Fed, I plan on attending my congressional rep’s town hall meeting in the next few days and giving her a little respite from the drubbing she may face on supporting Obamacare. I am going to ask why she is not a co-sponsor of the Audit the Fed bill; why she believes the most important player in the entire money game should get a pass on an audit when every mom and pop store in the country faces one every time they file a tax form; why she thinks private, unaccountable foreign bankers who control the Fed’s equity are better arbiters of public credit flows…you get the picture. I would encourage everyone to find out where their rep is going to be — look hard, many are in hiding — and make sure the audience leaves with an understanding of what the Fed really is and who it serves. That should help things along…

  • scott trettenero August 10, 2009, 11:38 am

    Obama is doing to the Dems exactly what Bush did to the Republicans. And that is to expose just how corrupt and fraudulent our political parties really are. Where do we go when neither “side” has our country’s best interest at heart? Yes, it is a time for some real change.

  • mario August 10, 2009, 9:26 am

    Hi Rick, Regarding the excerpt below…the rich WON”T PAY FOR IT? I find myself disagreeing and thinking you may have missed the proverbial point of it all…yes they will pay for it NOW THAT THEY ARE RICH. They’ve accomplished their raping and pillaging and now they’re fat with their cash and other assets, while the lower middle/middle income class strata of the country will suffer a lower quality, lower “normal” lifestyle for many years to come…that is the price, the pain, for what these evildoers have done…BUT THEY DON”T CARE. Now they, the rich already have lined their pockets, they got away with it and in fact they will continue getting away with it….so then, they’ll be glad to give some of it back in the form of various policies/taxes that are coming down the pike to pay for this mess…it won’t break them, they’ll pay…The HAVES are fine, the HAVENOTS have been royally ruined. The HAVES will pay to complete the liberal socialist direction…just a point of view…Cheers, Mario, http://www.mariocavolo.com

    “it won’t cost us – except for “the rich” — any more than we are paying now. Americans see Obama’s spin on this issue for what it is: a brazen lie. They also understand that he cannot possibly extract from “the rich” alone the trillions of dollars the government is spending in an already-failed attempt to avoid a ruinous debt deflation.”

    &&&&&

    Sorry, Mario, but I am not rich — only “rich” according to Obama’s proposed tax brackets — and medical coverage and care for me and my family of four cost me $35,000 out-of-pocket last year, a very hefty burden. This included one uncovered emergency room visit that turned out not to have been serious. On top of this sum, I cannot afford to carry, nor should I be asked to carry, the additional burden of Obama’s greatly expanded medical welfare system. RA

  • Tom Paine August 10, 2009, 3:49 am

    I can’t say I completely agree with you regarding “Obamacare”, but I don’t believe this is the change we need, and certainly nothing we can afford now that we’ve squandered the nation’s treasure on trying to police the world and bailing out the crooks on Wall Street, etc., etc.

    Whatever misgivings I have about ideological libertarianism, outside of Ron Paul’s “Campaign for Libery”, I see no hope for the kind of change we really need, i.e., breaking the grip of the banksters and Junkers on OUR government. I’ve signed the “Audit the Fed” petition and sent a donation, and I encourage others to at least consider joining in the Campaign.
    http://www.campaignforliberty.com/

  • Ross August 10, 2009, 3:13 am

    I don’t always agree with your analysis, but this time I do. President Obama’s Presidency deservedly seems destined for the sort of abject failure and ultimate repudiation that I thought would be reserved for his ghastly predecessor. But then, when one looks past the obvious stark differences between Bush junior, and Obama, the two chief execs function more similarly than not.


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