Wall Street Optimistic About Obama

Our old friend Rush Limbaugh, two days after the election, proclaimed that "the Obama recession is in full swing." Parroting time-honored GOP talking points, he claimed that Wall Street was reacting to Obama's plans for increased taxes on rich folks by selling their assets before the Dems had a chance to gouge them.

This past week's action on Wall Street have greatly refuted the idea that stockholders are scared of Obama. On Friday, November 21st, Obama announced that New York Fed chair Timothy Geithner would be his pick to be Treasury Secretary, which, to remind you, has become an absurdly powerful position lately. The Dow responded to Geithner's nomination, which NBC News reported at 2:59pm Friday, by skyrocketing 500 points in the hour before the stock market closed. Take a look at that last link. It's obvious that Wall Street loved Obama's choice.

But maybe this was a one-time fluke. Obama has been pressing his luck by holding daily press conferences the three days before Thanksgiving. The Dow has gone up each of those days, plus this past Friday. It should go without saying that a 5 day winning streak on the Dow, in this economy, is nothing short of remarkable. The last time the Dow Jones Industrial Average went up this much, percentage-wise, five days in a row was 75 years ago.

Screw the "one President at a time" line that Obama's been spouting. Time to take over, Barry!

UPDATE: Today, the Dow went down 680 points. Obama, instead of holding another economics press conference, decided to announce his national security team today, including Hillary as his Secretary of State (more on this later). It's official; he's not allowed to talk about anything other than the economy.

Bailouts and Taxes

It's been an exciting/terrifying day and a half watching the stock market. Yesterday, the Dow plunged more than 500 points, and it started today down over 100. Much of this loss, and pretty much all of the worries over the next several days, center on AIG, which is the world's largest insurance company and one of the companies that make up the Dow Jones Industrial Average. Stocks have been staging comebacks today on hopes that the federal government will step in and spend tens of billions (or more) of taxpayer dollars to bail AIG out from losses incurred by bad investments by the company.

(note: In future postings, I will endeavor to summarize the whole sub-prime/Bear Stearns/Lehman/AIG mess, but for now, just know that the government might be justified in preventing AIG's going out of business because it would screw over a lot of banks.)

Given all the money being spent by the federal government to bail out Wall Street investors, isn't it reasonable to ask investors to pay more in capital gains taxes, as Obama has proposed for people making more than $250,000 a year? Wall Street wants to share the risks of their investments with taxpayers, so shouldn't they also share more of the rewards?