Say Anything Blog

It was the worst market showing in history for an inauguration day:

Financial stocks, many of them falling by double digit percentages, led a huge drop on Wall Street Tuesday that left the major indexes down more than 4 percent and the Dow Jones industrials down 332 points. Although traders on the floor of the New York Stock Exchange paused to watch the inauguration ceremony and Obama’s remarks, the transition of power didn’t erase investors’ intensifying concerns about struggling banks and their impact on the overall economy.

The market’s angst, which began with multibillion losses reported last week by Bank of America Corp. and Citigroup Inc., intensified after the Royal Bank of Scotland’s forecast that its losses for 2008 could top $41.3 billion.

The collapse in bank stocks was swift Tuesday: State Street Corp. plunged 59 percent, Citigroup fell 20 percent and Bank of America lost 29 percent. Royal Bank of Scotland fell 69 percent in New York trading.

The shrinking value of bank stocks means the financial industry accounts for less than 10 percent of the Standard & Poor’s 500 index for the first time since 1992. At the end of 2006, banks made up 22 percent of the stock market benchmark.

And the market’s retreat Tuesday means Wall Street has eaten through most of the advance it made from Nov. 20 through Jan. 6. The S&P 500, which had been up as much as 24 percent, is now up only 7 percent from its November low. . . .

The Dow’s showing was its worst ever for an Inauguration Day.

Of course, stocks go up and down ever day.  Today’s poor showing coinciding with Obama’s inauguration might just be a coincidence, but there is one thing nobody can deny: A big reason why there isn’t a lot of confidence in America’s economy right now is because nobody knows what Obam’s economic policies are going to be.

He talks tax cuts, and yet when details emerge from his people about the “cuts” they look more like tax hikes for those already paying the most in taxes and IRS-signed welfare checks in the mail for people who pay little or nothing in taxes.  Obama’s “economic stimulus” spending might create a lot of government jobs, but the make-work programs he’s apparently going to invent aren’t going to last forever.  Eventually all that government spending is going to fall as a burden on the private sector businesses that actually create most of the jobs and prosperity in our country.

What’s more, Obama is also promising to “roll back” the Bush tax cuts.  And even if he doesn’t actively terminate the Bush tax cuts (he’s been wishy washy on it) he’ll certainly let them expire in 2010.  Obama and the liberals claim that wouldn’t be a tax hike, but we’d all be paying more in taxes.  Particularly on investment income, meaning that as we approach the terminus for those tax cuts Americans are going to be curtailing their investments and pulling money out of the market.

Which is hardly what our economy needs right now.

And from a regulatory perspective, Obama is talking about everything from taxing ranchers for their livestock’s farts emissions to forcing American businesses to buy “carbon credits” from the government before they can produce anything.  Meaning that Obama is not only talking about massive new regulatory burdens on our economy, but also a system through which the government can actually control who produces what and how much of it they can produce.

Which would be the single largest expansion of government, and loss of freedom, this country has ever seen.

So you want to know why the markets are weak?  That’s.