The Obama Bear Market: “Never waste a good crisis”

As reported by Bloomberg, the Dow Jones Industrial Average has not only dropped by 53.4% since its high in October 2007 but by an astounding 31% since the inauguration of Barack Obama as U.S. President, with a $1.6 trillion loss in equity and contraction of the American economy by 6.2% since he took office.

AP has further just reported that unemployment has jumped to 8.1% in February after having increased to 7.1% in January and 5.9% in December.

Meanwhile, Obama has greatly expanded upon the gigantic Bush $700 billion bailout that Obama supported last fall (as did John McCain) with calls for trillions more in federal spending, taxes and debt. Moreover his proposal for the housing meltdown is more of the exact same measures that created the mortgage bubble in the first place, and that he has long supported!

And his advice for those in the economic crises his policies are fomenting is that buying shares now “is a potentially good deal.” Perhaps he will also recommend “eating cake” for those millions of Americans now out of work plus those whose savings have been wiped out by the stock market plunge?

Could Obama’s behavior simply be the kind of foolishness that Albert Einstein described?

Insanity: doing the same thing over and over again and expecting different results.

Or, could Obama be deceptively seeking to foment and finesse economic crises deliberately in order to undermine or even wreck the American capitalist system and usher in a collectivist agenda? Former Obama supporter Charles Krauthammer, in seeing through the Obama fog and spin, begins to answer the question in his new syndicated column, “Deception at Core of Obama Plans”:

Forget the pork. Forget the waste. Forget the 8,570 earmarks in a bill supported by a president who poses as the scourge of earmarks. Forget the “$2 trillion dollars in savings” that “we have already identified,” $1.6 trillion of which President Obama’s budget director later admits is the “savings” of not continuing the surge in Iraq until 2019—11 years after George Bush ended it, and eight years after even Bush would have had us out of Iraq completely.

Forget all of this. This is run-of-the-mill budget trickery. True, Obama’s tricks come festooned with strings of zeros tacked onto the end. But that’s a matter of scale, not principle.

All presidents do that. But few undertake the kind of brazen deception at the heart of Obama’s radically transformative economic plan . . . .

The markets’ recent precipitous decline is a reaction not just to the absence of any plausible bank rescue plan, but also to the suspicion that Obama sees the continuing financial crisis as usefully creating the psychological conditions—the sense of crisis bordering on fear-itself panic—for enacting his “Big Bang” agenda to federalize and/or socialize health care, education and energy, the commanding heights of post-industrial society.

Clever politics, but intellectually dishonest to the core. Health, education and energy—worthy and weighty as they may be—are not the cause of our financial collapse. And they are not the cure. The fraudulent claim that they are both cause and cure is the rhetorical device by which an ambitious president intends to enact the most radical agenda of social transformation seen in our lifetime.

Interestingly enough, Obama’s Secretary of State Hillary Clinton told a European Parliament audience in Brussels today to “never waste a good crisis” in pursuit of a “New Green Deal”:

Never waste a good crisis. . . . Don’t waste it when it can have a very positive impact on climate change and energy security. . . . This is a propitious time . . . we can actually begin to demonstrate our willingness to confront this.

And in keeping with Clinton’s recent comments, after the Obama election in November then White House Chief of Staff-designate Rahm Emanuel similarly stated the exact same viewpoint:

You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before.

In contrast and in keeping with what Independent Institute Senior Fellow Robert Higgs has warned against in his books, Crisis and Leviathan, Depression, War, and Cold War, and Neither Liberty Nor Safety, last October, Germany’s The Local reported on the perilous dangers of crisis mongering:

German Interior Minister Wolfgang Schäuble warned in a magazine interview that the global financial crisis could have political repercussions, noting that Adolf Hitler rose to power following the 1929 Wall Street crash.

“We learned from the worldwide economic crisis of the 1920s (1930s) that an
economic crisis can result in an incredible threat for all of society. The consequences of that depression was Adolf Hitler and, indirectly, World War II and Auschwitz,” Schäuble was quoted as saying in Der Spiegel‘s Monday edition.

The current crisis is a “historic break that will be recounted later in history books. This was also the case on September 11, 2001,” he said, referring to the terrorist attacks on the United States.

“We thought we were not as stupid as speculators in the 17th century who traded in Dutch tulip bulbs and annihilated everything,” he said. But, he added, “we have been just as stupid.”

David J. Theroux is Founder, President and Chief Executive Officer of the Independent Institute.
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