Markets say Obama's policies will extend recession

The WSJ:

What's worrying about the plunge in equities since January 2, and especially in the last week since Mr. Obama released his radical budget, is that it has come amid the unveiling of the President's policy agenda. Equity prices have reacted to those proposals by signaling that they expect a much deeper and longer recession.

Comments

[John East]

I think nearly everyone assumes that our politicians are acting to solve the crisis as best they can. This is a mistake, US politicians, like most politicians everywhee, are following their own agenda.

You might say that solving the financial crisis is in Obama's best interest, but solving it in 3 years time will serve him much better than solving it today. Following this strategy he will also be free to pursue almost any "radical" programme in the face of the growing panic, and there are billion dollar earning opportunities for Obama, his pals, and those who funded his election from all the various bailout schemes.

[Curly]

It's like, they are getting ready for Red Nose Day, but the joke is on us.

http://curly15.wordpress.com/2009/03/06/printing-money-is-not-the-answer/

Printing money has never been the answer!

[PeterMG]

US politicians are following their own agenda and to hell with everything else. Obama was seen as the great hope but the things he really wants to do such as health and environment are like icing on the cake, and at the moment his cake has sunk and needs some more baking.

One the one hand the infrastructure projects they are investing in will keep people in work and some manufacturing going, but the danger is that this will not move their agenda along, and the diversion of effort to fixing the economy may delay the promised reforms.

His healthcare reforms are well overdue, but he needs a strong corporate sector to help achieve this. American healthcare is a disgrace from an affordability & availability perspective, at the same time as being a shining light from a technical and achievement point of view.

On the environment he is only paying lip service to please his supporters. He is making the fatal mistake of wasting millions if not billions on climate research that will achieve nothing productive other than perpetuating a scam, whilst half that money to the automotive world to be spent on greater fuel efficiency would return real world savings and a technology leap for the US that would feed into Europe and Asia in no time at all.

I think the general term is “No joined up thinking” I don’t hold up any hope that the US is going to power the world out of the current crisis as they have in the past. I think the US people will have to endure much worse before they see any light. We in Europe won’t fair any better, with the EU stuck in its time warp. Meanwhile Gordon needs it all to happen tomorrow to have any change of even being Labour leader at the next election, let alone win it.

[Current]

Bishop Hill should be wary of this sort of thinking.

The markets responded positively to the interest rate cuts and earlier stimulus packages.

The reality is that the markets respond to two things:
* What benefits them
* What benefits the economy

They rose on earlier stimulus packages and rate cuts simply because those benefited the big companies that make up the big indices. They have fallen on the news of this one because of what it will do to the public finances and general economy. Leftists may look at this the other way around, they are wrong, as anyone who studies the details can tell.

The problem is though that pointing to the number alone doesn't prove very much.

[James]

Well what do "the markets" know? They're the ones that got us into this horrible mess, so they can shut the [****] up and let the elected officials get on with saving the country from ruination.

BH says: mind your language please.

[Bishop Hill]

James

I've done a series of postings where I try to find the causes of the credit crunch. If you know the causes, I'm all ears.