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Why Wall Street keeps giving Obama a thumbs down

Stock trader bemoans latest losses on Wall Street

Since President Obama took office, the Dow Jones industrial average has lost more than 1,600 points, shedding 20% of its value.

Of course it had been on a steady decline for months before -- dropping 3,738 points from May 2, 2008, to November 3, 2008.

Still, the post-inaugural slide hasn't stopped conservative commentators from resuming the drumbeat for trickle-down economics, the theory embraced by President Reagan that giving tax breaks to the wealthy will spur economic growth below.

Rush Limbaugh caused a stir recently when he said that he hopes Obama fails "if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundation." 

But Rush was just the flamboyant front for a series of more sober voices who in more polite terms are now making the same point.

Michael Boskin, who chaired the Council on Economic Advisors under the first President Bush, wrote in a Wall Street Journal piece this morning that "Obama's radicalism Is killing the Dow."

The complaint: Obama is using his popularity and mandate for change not just to right the ship of state but to move it in a new direction. "Our new president's policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis," Boskin wrote.

The fear: that Obamanomics will replace Reaganomics, that liberalism -- once derided by Reagan -- has made a comeback at the hands of the second Great Communicator in the last 30 years.

Former Clinton Labor Secretary Robert Reich seemed to suggest as much recently when he called Obama's $3.6-trillion budget blueprint a revolution. As he told The Times of London, Obama's budget represents the "biggest redistribution of income from the wealthy to the middle class and poor this nation has seen in more than 40 years." He added:

It is the boldest budget we have seen since the Reagan administration, and drives a nail in the coffin of Reaganomics. We can basically say goodbye to the philosophy espoused by Ronald Reagan and Margaret Thatcher.

This was enough to send the Journal's Daniel Henninger into a dither. In a recent column, Henninger faulted the Republican leadership for getting in a shouting match with Limbaugh instead of rising to defend Reagan. He wrote:

If the Democrats are willing to bet the entire U.S. economy on a 1931 theory known as the Keynesian multiplier, surely Republicans can excavate and relearn the core idea handed down to them by Ronald Reagan. That idea was known as economic growth.

But divining motive in anything Wall Street does is difficult, even with rose-colored glasses. Today the government issued a sobering jobs report -- 4.4 million Americans have lost their jobs since the recession began in December 2007 -- and the market posted gains. As the Daily Beast's Paul Kedrosky noted this morning, the only thing predictable about the markets is how unpredictable they are.

-- Johanna Neuman

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Photo: Getty Images

Comments () | Archives (8)

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The money people in America are selfish, and their lack of faith shows that. When they want something all is well. But, when something as simple asgiving their trust and support to their President, they jump ship like the rats that they are.

They fear being limited in how greedy they can be. Obama is the sheriff ready to clean things up. Not a good sign for the greedy.

Reagan was no economic thinker. He was fed his positions and he danced to his handlers tunes:

1. allowed companies to loot pension plans. This sudden treasure kicked off the 80's era of acquisition

2. Tariffed memory chips. Totally misunderstanding the nature of the IT industry, Reaganites put a tariff on memory chips, Thes chips are the easiest computer part to make and they are the cheapest. Specialized processors are where America still shines. This move slowed the growth of the internet and caused an IT recession.

3. Confiscating property. Ok , not economic, but still confiscating property without a trial or even reasonable evidence of wrongdoing by the property owner? Defend that Rush!

4. Savings and Loans. Part one of the current economic crash.

5. General dumbing down of Public Policy Administration. Made ignoring science and facts fashionable.

6. Taking credit for crash of USSR. This was already a fait accompli. Ronnie may have sped it up 12-18 months but at what cost? Billions. Was this part 2 of the current problems?

7. Deaing with terrorists part 1 - Bargaining with Iran for them to keep hostages untill inauguration day (yes, it happened and yes, I consider it treasonous)

8. Dealing with terrorists part 2 - shipping arms to Iran in exchange for keeping hostages until inauguration.

9 Dealing with drug dealers - the other half of the Iran Contra problem

10. Open violation of the law. Congress outlawed money to the contras (technically terrorists). Reagan sent it anyway but repubs impeached Clinton.

And people worship this loser? I just pulled these from memory. I'll bet there were many more.

Isn't it fascinating how the same people who brought us economic devestation, fraud,stock manipulation etc. are crying in their beer about a change in economic philosophy.It's about time the wealthy contributed a bit more to society instead of just simply feeding their greed.

Reagan bankrupted the Soviet Union because he and his cronies in the defense industry were able to spend more on the arms race. This is how our bankruptcy started. Bush 43 deregulated the banking industry to free up a trillions in "artificial" money in order to keep people from "suffering" during a time of war. Keep people happily buying gas guzzling SUVs and maxing out credit cards in the shopping mall and they won't notice the nation's future being completely ripped off.

Now that the bubble has burst the Republicans think we need to go back to the old ways? America has been run by greedy corporations begging for welfare for far too long. So they all and their families can go off and live somewhere nice in gated communities while the rest of us suffer from the effects of a rapidly collapsing environment?

No thanks. I'll stick with the new president and some policies that are finally targeted to protect real people who actually work for a living.

I get it that Obama inherited the mess...however, HE IS DOING NOTHING TO COMFORT THE MARKET believing that he is pro-business and not pro-socialist.

Have all been duped by Obama? I voted for him, but I start thinking that maybe I have been fooled BIG time

"biggest redistribution of income from the wealthy to the middle class and poor this nation has seen in more than 40 years."

It's about time this was a two-way street! The money's be flowing up for 40 years in the rich's class warfare against average middle-class Americans.

Pay your share!

Much of that income isn't even from working, so I'm sorry about your trust-fund returns, but we're going to tax you now.

And god knows corporations can't pay taxes in America.

Many on WALL STREET voted and financed his election, he told them he wanted to "RAISE THEIR TAXES, and was going to bring 'FUNDAMENTAL CHANGE" to America and the "WORLD" thats what they voted for thats what they are now getting. I guess the "STOCK MARKET" is not a happy.


VJ Machiavelli

Equality dictates that all persons make a fair income commiserate with their education, level of experience, etc. To achieve this in the United States we must first address CEO pay. Their pay is ridiculously high, but they are few in number, so once their pay is redistributed it will only add a few dollars each year to the rest of our incomes. Next we must address the income of federal and state employees. Those of us in the private sector receive Medicare at age 65 and full social security retirement at age 67. The typical government employee receives both their retirement medical benefit and pension at age 52 (15 years earlier than the rest of us). If we increase all government employee retirement dates to age 63 then we could use the savings to reduce the full retirement age of the private sector to age 63. A early and more equal retirement date for all would make for a fairer society.


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About the Columnist
A veteran foreign and national correspondent, Andrew Malcolm has served on the L.A. Times Editorial Board and was a Pulitzer finalist in 2004. He is the author of 10 nonfiction books and father of four. Read more.
President Obama
Republican Politics
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