Obama’s part in Wall Street plunge
For reasons due to both words and deeds, President Obama is far from blameless that the stock market has plunged 32 percent since Election Day, with over 80 percent of that taking place after the beginning of the year. Nor is he free of responsibility that, since the election, unemployment has climbed. In the three months before the election, the unemployment rate rose by 0.6 percentage points. During the three months measured since the election, it has gone up by more than twice that — 1.3 percentage points.
Mr. Obama initially promised economic benefits as soon as the markets saw that his programs would be enacted. Well, with overwhelming Democratic majorities in both houses, his program was passed — but the market plunged.
President Obama has also contributed to the surging unemployment rate and dropping stock market by continually exaggerating how bad things have been and bashing companies. By scaring people, Mr. Obama has created a self-fulfilling prophesy. Scared people change their spending behavior, and that increases unemployment just as much as the “stimulus” plan increases jobs.
The changes have shocked even some of Mr. Obama’s most devoted election supporters. Two weeks ago CNBC investment guru Jim Cramer called President Obama’s budget a “radical agenda,” adding, “This is the greatest wealth destruction I’ve seen by a president.”
There are several reasons that Mr. Obama’s actions have contributed to the recent unemployment rate increase and why this will cause even more increases in the near future. By moving money from places where it is currently being spent to places where the government wants it spent, the jobs also move. But it takes time for people to move between jobs. That is called unemployment.
If subsidies for alternative energy are increased, those companies will expand, pack up their cars and move to California. They may not even have the right sets of skills for the new governmentcreated jobs. Wherever these displaced workers end up, it will take some time, and during that time those workers will be unemployed. ployment. Even if you know that you want to get a job in the alternative energy industry, which job do you accept? It takes time to find the job that fits your interests. You may quit your current job to have the time to search full time for the new one. All those changes mean more unemployment.
But some of this impact has already been felt for months. Just the threats of the stimulus plan being passed caused companies to change investment and spending plans, and that created more unemployment even before the bill passed.
New proposed regulations have also caused all sorts of confusion for businesses, again changing business decisions even before the regulations go into effect. From the environment to price controls in credit markets to threats to abrogate private mortgage contracts, responsible businesses can’t wait for a program to go into effect before they respond.
Even if firms think that there is a small chance that the Cap and Trade proposal will be passed, the expected impact will be so huge that many investment projects that already are underway will no longer be profitable. Fortunes of some companies will be destroyed and others buoyed (though overall we will be poorer), but jobs will surely be moved around.
Democrats feel a long pent-up desire to do something, but sometimes the best thing to do is nothing. So far, all that Mr. Obama’s actions have done is erase billions of dollars in America’s retirement savings. Why add the misery of additional unemployment?