The Political Fray - Political Forum
Go Back   Political Fray > The Political Fray > Economics

Economics For discussion about economics, financial markets, investing, stock markets, finance, and economic theory


Reply
 
LinkBack Thread Tools Display Modes
Old March 7th, 2009, 12:57 PM   #1
Founding Father
 
Joined: Jan 2013
From: Delaware
Posts: 316

Why doesn't the market have confidence in Obama?

It seems like nearly every time President Obama speaks or a new bill is announced, the markets seem to plummet. There just doesn't seem to be any confidence in him. Do you think it's because hes a new president or because we have never seen an economic situation quite like ours?
omej is offline  
Old March 7th, 2009, 04:09 PM   #2
Retired Moderator
 
The Parakeet's Avatar
 
Joined: Jan 2009
Posts: 639

I think the problem is the content of the speeches. All of his speeches have mentioned massive spending. Any half-way intelligent person knows that that just means higher taxes and a higher deficit. It doesn't help that he actually announced his tax hikes recently too.
The Parakeet is offline  
Old March 8th, 2009, 12:03 PM   #3
Representative
 
Glee's Avatar
 
Joined: Mar 2009
From: North Carolina
Posts: 159

I'd have to agree with The Parakeet. In the same speech he'll talk about how he's working his way to resolve the economic crisis, then almost in the same breath talk about new programs what will require a crazy amount of money. It's the wishy-washiness of it. The people in Wallstreet know money better than anyone, and know that you can't have one without the other. Trust me, I would love for Universal Health Care. The new environmental policies I don't mind either (even if I don't agree with the Global Warming Theory entirely). But not this Presidency. Now isn't the time. You can't cut coal production for more costly energy programs. We can't afford it. We don't have the money to create a new medical system right now. They are nice ideas, but we are not the prosperous nation that we are feed constantly. We're in trouble and we need to conserve our money and use it wisely to climb out of this big whole we are in. And when the President makes a speech talking about baling out another company, those guys at Wallstreet start sweating.

I don't know much about the economy to I was a bit iffy on posting on this one, but these are my opinions.
Glee is offline  
Old March 8th, 2009, 12:16 PM   #4
myp
Founding Father
 
myp's Avatar
 
Joined: Jan 2009
From: US
Posts: 5,841

Going along with the Parakeet and Glee, it really has to do with what Obama is proposing. It certainly isn't because he is a new president because historically some president's have had very positive effects on the markets when they have talked. It is all about the content of their speeches and what they are proposing. What Obama is proposing in many cases is socialism and nationalization, both which are polar opposites of capitalism and what is good for the companies. The companies know that these policies along with taxes and regulations will hurt their businesses and hence confidence goes down and so does the stock price. Obama needs to realize that regulations and taxes only create more deadweight losses and in the end not only the successful, but also the failing both end up getting hurt because of it.

People need to take a closer look at this crisis and understand that it was government that really escalated the problem and it is government that will make it worse with socialism and nationalization. It is time to return to free market captialism and what our founding fathers believed in because if we don't we will only face an even worse crisis a couple decades down the road due to this artifical growth and propping up what should be failing.
myp is offline  
Old March 8th, 2009, 12:30 PM   #5
Representative
 
Glee's Avatar
 
Joined: Mar 2009
From: North Carolina
Posts: 159

Quote:
Originally Posted by myp View Post
Going along with the Parakeet and Glee, it really has to do with what Obama is proposing. It certainly isn't because he is a new president because historically some president's have had very positive effects on the markets when they have talked. It is all about the content of their speeches and what they are proposing. What Obama is proposing in many cases is socialism and nationalization, both which are polar opposites of capitalism and what is good for the companies. The companies know that these policies along with taxes and regulations will hurt their businesses and hence confidence goes down and so does the stock price. Obama needs to realize that regulations and taxes only create more deadweight losses and in the end not only the successful, but also the failing both end up getting hurt because of it.

People need to take a closer look at this crisis and understand that it was government that really escalated the problem and it is government that will make it worse with socialism and nationalization. It is time to return to free market captialism and what our founding fathers believed in because if we don't we will only face an even worse crisis a couple decades down the road due to this artifical growth and propping up what should be failing.
Anyone up for moving to Canada? lol >.<
Glee is offline  
Old March 8th, 2009, 12:32 PM   #6
myp
Founding Father
 
myp's Avatar
 
Joined: Jan 2009
From: US
Posts: 5,841

Quote:
Originally Posted by Glee View Post
Anyone up for moving to Canada? lol >.<
No, because they are even more socialist than us . The only reason they aren't in as big a crisis as us is because they aren't nearly as much in debt and the root of the problem emerged here. Their policies do hurt though- especially the taxes, the wait times for healthcare, etc. and it will all definitely be very bad for them in the long run.

Last edited by myp; March 8th, 2009 at 12:35 PM. Reason: added more
myp is offline  
Old March 8th, 2009, 07:34 PM   #7
Representative
 
Glee's Avatar
 
Joined: Mar 2009
From: North Carolina
Posts: 159

Quote:
Originally Posted by myp View Post
No, because they are even more socialist than us . The only reason they aren't in as big a crisis as us is because they aren't nearly as much in debt and the root of the problem emerged here. Their policies do hurt though- especially the taxes, the wait times for healthcare, etc. and it will all definitely be very bad for them in the long run.
That wardrobe leading to Narnia is looking more promising by the moment.
Glee is offline  
Old March 8th, 2009, 09:43 PM   #8
Retired Moderator
 
The Parakeet's Avatar
 
Joined: Jan 2009
Posts: 639

I hear the property taxes in Narnia are awful though.
The Parakeet is offline  
Old March 15th, 2009, 11:58 PM   #9
Representative
 
Joined: Mar 2009
From: Florida, USA
Posts: 422

I think the spending plans are the right thing to do. The goal is to get people working and have general prosperity, not to revive the stock market. Americans have become so focused on getting rich at any cost that they think that is the only measure of a successful economy.

Frankly, we could use a little more socialism. We are the only developed country that doesn't provide medical care for all it's people. There are many developing countries that are ahead of us in this respect. I was treated on the national health system in Malaysia, and in England, but in the US a simple emergency room visit cost over $3000.
curious is offline  
Old March 16th, 2009, 10:25 AM   #10
Intern
 
Digital_shubhi's Avatar
 
Joined: Mar 2009
Posts: 13

May be the reason is that he is a new President. And it may take some time for people to get full confidence in him. But i think as people of the country selected him and they should must have confidence in him as the thought that he will be the best for country! But as the time will pass they will get more confidence in him.
Digital_shubhi is offline  
Old March 16th, 2009, 12:23 PM   #11
Intern
 
Joined: Mar 2009
Posts: 13

I think that people are just comfortable with their fears. They'd rather be assured in their knowledge of a failing economy than to have hope and take a chance to make the economy better.

It's easy to just talk about what you should do, but people most times are just plain scared of change.
BrightMind is offline  
Old March 16th, 2009, 01:21 PM   #12
Retired Moderator
 
The Parakeet's Avatar
 
Joined: Jan 2009
Posts: 639

Well it's the old "scared animal spirits" things that Keynes talked about. People are quick to panic when it comes to the stock market. It made for some great buys though, and a 15% on my small investment in a trading week.

Other than that, people just don't trust the president on the economy. He looks like an idiot when it comes to a number of his plans. His tax revenue next year to cut the deficit in half depends on a fully recovered economy, while his spending plans expect that we'll still be in a recession. He just looks unrealistic. The financial sector sees this and loses confidence.

It also doesn't help when big figures, like Warren Buffet, come out and say that we're in rough shape. The big boys of the economy have been talking and overshadowing Obama a bit.
The Parakeet is offline  
Old March 17th, 2009, 05:01 PM   #13
Representative
 
Joined: Jan 2009
Posts: 140

People are scared because they dont know if we are past the bubble, and if you didnt notice folks we have more daytraders then ever before because it has never been safe to be in the market ever since the internet bubble started. As a former daytrader I fully understand that buy and hold will probably not come back for a long time.

The next bull market will hit with the bang of a huge explosion that will make the internet craze look like nothing and it will be lead by the nano tech stocks. If I were looking to get in early I would start researching nanotechnology companies now.
pingpong12 is offline  
Old March 21st, 2009, 10:39 PM   #14
Representative
 
Sparks's Avatar
 
Joined: Mar 2009
From: Currently in the Philippines
Posts: 118

No Better, No Worse

There is a great amount of admiration for Obama on a number of levels, but as a leader in terms of economics, I don't think he will be quite so successful. I am happy to have an articulate black president in office. But to expect a Democrat to lead us out of the quagmire that both parties got us into is akin to parting the red sea.

I would have expected an old school Republican (fiscal conservative) to be the good choice for that, but most of those are long gone courtesy of the BAC influence and neo-con influence that turned the Republican party into a party of greedy back slappers. Just my humble opinion of course.
Sparks is offline  
Old March 22nd, 2009, 12:09 AM   #15
Representative
 
Joined: Mar 2009
From: Florida, USA
Posts: 422

A free market was what all the deregulation was about, and look where we ended up. A totally free market only works if there are rules which make it equitable and protections against greed. A totally free market system would say it is OK for pharmaceutical companies to deliberately put defective drugs into the marketplace because eventually the market will figure out that they are not a good company and punish them by not buying their products. A lot of people might die, but the market would be free.

All the economic theory I studied in graduate school was based on the premise that a free market had rational participants with equal and open access to information. That is what regulation of the markets is supposed to assure (well, not the rational part). By degregulating, previous administrations made the markets less free, by making information harder to get and understand.
curious is offline  
Old March 22nd, 2009, 11:41 PM   #16
Retired Moderator
 
The Parakeet's Avatar
 
Joined: Jan 2009
Posts: 639

Technically there is only a small group that would support complete free market domination. They're called anachro capitalists and most of them are just angsty young men who are angry at "the man" for holding them back.
The Parakeet is offline  
Old March 25th, 2009, 06:19 PM   #17
myp
Founding Father
 
myp's Avatar
 
Joined: Jan 2009
From: US
Posts: 5,841

Quote:
Originally Posted by curious View Post
A free market was what all the deregulation was about, and look where we ended up.
Where did we end up? Are you suggesting that this crisis is the work of free markets? If so, you are gravely mistaken. The government, namely the Federal Reserve and Fannie and Freddie, played a huge part in this crisis and they simply inflated the bubble to levels it would have never reached had we been in a free market environment.

As for the example about the pharmacy, the free market argument is that consumers are part of the market too and that they would demand good meds. It all boils down to the laws of supply and demand, which tell us that a market equilibrium can be reached which is suitable for both consumer and producer.
myp is offline  
Old March 25th, 2009, 10:11 PM   #18
Retired Moderator
 
The Parakeet's Avatar
 
Joined: Jan 2009
Posts: 639

It was a strange mix of interference and deregulation. You can't argue that the deregulation of credit default swaps and loose regulations on solvency didn't create a very dangerous situation. If they had been required to hold the necessary capital by regulation, then this wouldn't have been as big of a deal.

Government policies just helped create the bubble because they decided that everyone deserved to be in a house. The profitable market in MBS greatly expanded the bubble though. If they weren't able to slap a credit default swap on it, make it AAA, sell it, and pocket the finder's fee, I'm not so sure that it would have bubbled as bad.

It took two to tango on this one.

As far as the pharmacy example goes, that's not a very good argument. We've seen what happens in an unregulated market. It works in theory, but theory doesn't work in practice. People don't have perfect information. Just look at all the scandals that took place in the late 1800s and early 1900s. You had tons of snake oil salesmen and people selling rotting meat. The market should have been able to fix this, but it just didn't know. Even with all of our regulation and information efforts, you still have people buying worthless medicine based on flashy advertising. We either need to guarantee perfect information for all consumers (through an unprecedented regulatory program) or have government laws forcing good behavior.

Last edited by The Parakeet; March 25th, 2009 at 10:14 PM.
The Parakeet is offline  
Old March 25th, 2009, 11:16 PM   #19
Representative
 
Joined: Mar 2009
From: Florida, USA
Posts: 422

It's the socialist coutnries, the Sweden's and the Norway's, that are going to come out ahead in all of this, because they won't have done as much financial damage to their workers. And the ones we don't think of as socialist, such as Switzerland and Germany, who also have strong economic cushions.
curious is offline  
Old March 25th, 2009, 11:48 PM   #20
Retired Moderator
 
The Parakeet's Avatar
 
Joined: Jan 2009
Posts: 639

It also helped that they didn't get as heavily leveraged in the MBS situation. They had a lot of regulation in place. They were still on thin ice though. I'm not sure about how socialist Iceland was, but they won't come out of this ahead (after their system went bankrupt).
The Parakeet is offline  
Reply

  Political Fray > The Political Fray > Economics

Tags
confidence , market , obama



Thread Tools
Display Modes


Similar Threads
Thread Thread Starter Forum Replies Last Post
Iran!! Says enough doesn't it?? amirex111 Current Events 7 June 18th, 2012 12:27 PM
confidence is collapsing?? george Economics 9 November 13th, 2011 06:08 PM
The Regime doesn't like this Brn2bfree Government and Politics 1 August 14th, 2011 11:05 AM
Black market cigarette market grows in NY after further increase in taxes myp Current Events 2 April 7th, 2011 09:24 PM
God doesn't makes sense connermt Religion 64 November 7th, 2010 04:37 PM


Facebook Twitter RSS Feed



Copyright © 2009-2013 Political Fray. All rights reserved.