Why Wall Street keeps giving Obama a thumbs down
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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