Sagarin wrote:
Clinton was riding the coattails of a macroeconomic structural foundation cultivated long before he was in office, going back to when Volker broke the back of inflation, really. He enjoyed the unprecedented tailwinds of credit bubble one and the commensurate technology/productivity boom, not of his own making. Moreover, he was more centrist and shrewdly cut taxes on capital, and this is back when Congress was, IN FACT, fiscally conservative. Clinton understood the landscape, and he was not unfriendly to Wall Street, at the behest of his own constituency. Eventually, the jig was up and credit bubble I blew up, resulting in a reflationary wave that brought us credit bubble II. This has been decades in the making, and systemically, we are in a very different place than during the LTCM crisis or the Asian currecny crisis or the savings and loan crisis.
I don't need to write on this anymore. mez redux is doing an awfully good job here. Obama inherited an unbelieveably challenging situation, but what the market is plainly telling you is that we simply cannot devote what little credibility and debt availability we have left to anything BUT getting this nuclear waste of balance sheets once and for all. We are no longer in a position to borrow our way out of a crisis. Insurance on sovereign debt is telling you that, gold has been telling you that, debt and equity markets are telling you that. The extreme right hijacked the Republican party and now the extreme left is holding sway with the Democrats. And Obama, for all his gesturing about moving toward the center is doing anything but.
We need a government that understands belt-tightening every bit as much as its citizens now do. Obama does, IN FACT, own this problem now. Markets look ahead to policies of the future, not of the past. And the market is telling you that if we proceed along these lines of implementing a social bonanza instead of OR along with futiley attempting to put a band aid on the financial system, it's game over. I'm not sure we're not there. Continuing to borrow and misallocating capital, raising taxes on capital, productivity, and job creation, and ultimately printing money to monetize debt that we never could accommodate will put the final nail in the coffin.
1) I know how things were different for Clinton, which is why I said no need to mention all the things was necessary.
2) Funny though that Clinton's success according to you was due to stuff he inherited and yet the market condition today is in reaction to things Obama has done since the third week in January. I'm no Democrat apologist, but that logic just doesn't fly my brother. At least you do say some things that are against the Republicans -- I'll give you that.
3) I hope I don't have to remind anyone (you) that Bush pushed bailouts and McCain was all for them too. I am not 100% behind the way Obama is doing things either though. While I don't think the taxes he wants to raise on the wealthy down the road amount to all that much, sometimes it is the sentiment of actions that causes a negative reaction. The way things are to shape up if Obama gets everything he wants, it does appear that charitable giving will decrease, and that's not a good thing.
4) I do think though that Obama will surprise many and that once this crisis has passed completely (perhaps even by his second term), the government, under his direction, will relinquish a lot of the power they've had to acquire during this bad time. He'd be a fool not to, and I don't think he's a fool.