November 13, 2008
Real world consequences of Obama's taxation policies
Jennifer Rubin points out how this trend is not being covered by the MSM:
No President-elect in the postwar era has been greeted with a more audible hiss from Wall Street. The Dow has lost 1,342 points, or about 14%, since the election, with the S&P 500 and Nasdaq hitting similar skids. The Dow fell another 4.7% yesterday. Much of this is due to hedge fund deleveraging, as well as dreadful corporate earnings reports and pessimism that the recession will be deeper than many had hoped. We also don’t want to read too much into short-term market moves. But there’s little doubt that uncertainty, and some fear, over Barack Obama’s economic agenda is also contributing to the downdraft.
ADDENDUM
Some commentators to this post are in denial that Obama's stated taxation policies could have any correlation with the market's downward trend since his election. To which I respond:
The country elects a president who promises to raise tax rates on capital gains, dividends, and income taxes as well as take off the $102,000 earnings cap on social security taxes...and you think there will be no adverse consequences in the financial markets?To argue otherwise is to believe that explicit wealth-reducing financial disincentives or, at a minimum, the uncertainty about such [prospective] disincentives has no impact on human behavior.
TomW's comment raises the additional adverse impact of "Employee Free Choice Act," where the prospect of greater unionization and forced mediation can only make companies less competitive in a global marketplace. Anybody compared lately the unprofitable performance of unionized car companies in Detroit with their profitable, non-unionized competitors elsewhere in America?
It is a long-time habit of the Left to ignore how incentives drive human behavior and changes in incentives modify existing human behavior. Which is why they think politicians and bureaucrats in far-away Washington, D.C. - most of whom, like Obama, have never had to manage anything or meet a payroll - can be better economic policy-makers than the entrepreneurial small business owners who run much of America's businesses. And why they perpetually ignore the intended and unintended consequences of the incentives created by their governmental actions.
To put it another way, who has the greater incentive to make better decisions for a business: The small business owner, who lives and breathes the business issues on a daily basis and whose personal wealth is directly invested in the business, or remote politicians and bureaucrats, who have nothing at risk and never have to live with the consequences of their actions?
Post hoc ergo propter hoc? This also in, the Obama election is causing the sun to rise later and later each day. At this rate we'll be in total darkness before end of his first term! Why won't the MSM report on this before it's too late?
Posted by: Russ at November 13, 2008 3:42 PMHow about a little more commentary on Bushie's socialization of the American economy while telling the taxpayers to shut up and eat it and a little less correlation without causation?
I suppose on Day One this suck-ass economy will be Barry's fault, right?
Posted by: Greg at November 13, 2008 3:52 PMGeez, guys:
The country elects a president who promises to raise tax rates on capital gains, dividends, and income taxes as well as take off the $102,000 earnings cap on social security taxes...and you think there will be no adverse consequences in the financial markets?
To argue otherwise is to believe that explicit wealth-reducing financial disincentives or, at a minimum, the uncertainty about such disincentives has no impact on human behavior.
Right. LOL.
Posted by: Donald B. Hawthorne at November 13, 2008 4:36 PMAll the money will be moving offshore, which is easier than ever.
Get prepared for Carter's second term.
so, when are we going to see the post on AR about how things are going better now, given the optimism and hope of our new president?
http://money.cnn.com/2008/11/13/markets/markets_newyork/index.htm?postversion=2008111316
Posted by: Pat Crowley at November 13, 2008 7:23 PM How much of that drop is legitimate economic conditions, and how much is pure petulance over Obama's election?
Sorry, but if Wall Streeters want to act like whiny yotches, they don't get my sympathy.
Bark up another tree Donald.
OldTimelefty
Of course the smart money is going to sell now and realize capital gains this year, before Obama raises the rates next year. Recall how when Clinton did it they assessed the higher rates retroactively to all sales occurring in the year during which the increase was enacted.
Of course the smart money is going to take the proceeds of those sales, and other money, and move it overseas where taxes will be more reasonable, and to shield future profits from U.S. taxation.
Of course the smart money is going to start moving operations overseas, to avoid the increased unionization under the threatened "Employee Free Choice Act" and the increasing statutory and regulatory "Francification" that'll be imposed upon our economy under Comrades Obama, Reid and Pelosi.
Of course the smart money is going to realize that the other smart money is going to do the same, so that the U.S. economy will underperform for the next several years, if not go into the tank.
Consider Jack "Smart Money" Welch's recent comments that the U.S. economy under Obama will resemble that basket-case Rhode Island.
The U.S. is in uncharted territory, as for the first time it's elected a Marxist as President - a closeted Marxist to be sure - but a Marxist nevertheless.
The smart money has to know this, and has to be taking appropriate steps to not stand still and await to be fleeced as Comrade Obama shears the sheep to "spread the wealth around."
The smart money didn't get to be smart money by being dumb.
Posted by: Tom W at November 14, 2008 12:41 AM