The Wall Street Journal‘s editorial board writes this morning that the Bush recession has ended, that the market should be on it’s way to recovery. Housing prices have fallen 27%, the planet is awash in capital what with every government lowering their interest rates, stocks were priced for the recession last year, after the damage was assessed. So why hasn’t the economy begun recovering;
So what has happened in the last two months? The economy has received no great new outside shock. Exchange rates and other prices have been stable, and there are no security crises of note. The reality of a sharp recession has been known and built into stock prices since last year’s fourth quarter.
What is new is the unveiling of Mr. Obama’s agenda and his approach to governance. Every new President has a finite stock of capital — financial and political — to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his “stimulus” spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.
His Treasury has been making a similar mistake with its financial bailout plans. The banking system needs to work through its losses, and one necessary use of public capital is to assist in burning down those bad assets as fast as possible. Yet most of Team Obama’s ministrations so far have gone toward triage and life support, rather than repair and recovery.
Instead of “investing” our tax money in the private sector where jobs are created, where tax revenue is generated, where our wealth lives, the Democrats, with the president in their van, are making threatening gestures at the pharmaceutical industry, and the healthcare business, in general. They’re spending the money on grasshopper research and bee insurance while plotting to grab up the private student loan business.
Earlier, I wrote that the president’s press secretary dismissed investors as “a small audience” – even though over half of Americans are invested in stocks and mutual funds. Gibbs said that Obama is working for a “larger audience” – how much larger of an audience do investors need to be to merit the administration’s attention?
James Taranto in Best of the Web Today recounts a nearly Stalinesque atmosphere in the White House with feted artists and lavish parties on the taxpayer’s dime and chiildish dismissals of our concerns;
The Dow Jones Industrial Average is down more than 50% since its October 2007 peak, and some 30% just since Election Day*. The president’s response? As we noted yesterday, he dismisses this relentless decline as “fits and starts.”
WSJ’s editorial concludes;
Listening to Mr. Obama and his chief of staff, Rahm Emanuel, on the weekend, we couldn’t help but wonder if they appreciate any of this. They seem preoccupied with going to the barricades against Republicans who wield little power, or picking a fight with Rush Limbaugh, as if this is the kind of economic leadership Americans want.
Perhaps they’re reading the polls and figure they have two or three years before voters stop blaming Republicans and Mr. Bush for the economy. Even if that’s right in the long run, in the meantime their assault on business and investors is delaying a recovery and ensuring that the expansion will be weaker than it should be when it finally does arrive.
All for the sake of erasing the Bush legacy.
