Imagine my surprise, after the first week in several years
in which I had no access to newspapers, television, or the
Internet, to be re-plugged into the web on Tuesday, digging back
through the news of early August, and wondering if
Harold Camping was just a couple of months
early.
In terms of finance, the stock market had its worst day in
years on Monday — its sixth worst percentage loss ever —on the
heels of losing 7.2% in the prior week. And that week was before
ratings agency Standard and Poors (“S&P”) downgraded U.S. debt,
on which more in a moment.
During the past several days, the yield on a U.S.
government 10-year note has plummeted to about 2.2%, roughly
equaling its panic levels reached briefly during the heart of the
financial crisis in 2008.
Imagine my surprise to read that after the market closed
last Friday, S&P downgraded U.S. sovereign debt for the first
time in our nation’s history. Some argue that S&P wanted to
make a political statement, and that its comments about political
brinksmanship during the debt ceiling debate were a shot at
Republicans. But make no mistake: This first-ever downgrade of U.S.
debt happened on President Obama’s watch. S&P has done more
damage to Barack Obama’s re-election chances than any other person
or single event has.
It’s not just my opinion: Since the debt downgrade,
betting odds on Obama’s re-election have dropped from about 56% to
50.5%, by far his lowest betting odds during his first, and
increasingly likely to be his only, term.
During this week’s Black Monday, the market’s first
opportunity to react to the downgrade, investors in American stocks
lost a trillion dollars, more than seven percent of our GDP for the
entire year. Think about that for a second.
In the early afternoon on Monday, President Obama decided
to lead from behind again, offering another
uninspiring, formulaic press conference. Perhaps
telling Obama what investors think of him, the market proceeded to
fall another 200 points. As the National Post’s (Canada)
Matt Gurney put it, “His speech might have been a futile gesture,
but it was still a bad futile gesture.”
Yes, imagine my surprise to miss just one week of trading
and find stocks — and Obama’s re-election chances — fully 10%
lower and U.S. debt no longer AAA-rated by S&P.
But that wasn’t the only shock upon returning to my
plugged-in high-tech news-junkie everyday life. Imagine my
surprise, anger and sadness to learn of the shooting down of a U.S.
military helicopter in Afghanistan, ending the lives of 30
Americans including members of “SEAL Team Six,” the group of
warriors who brought justice to Osama bin Laden. President Obama
mentioned this tragedy at the end of his Monday “vanity press
conference,” sounding as detached and robotic as we’ve come to
expect from him lately.
How strange a change in a man who won election in large
part due to soaring rhetoric: his words fail him now even in the
presence of his teleprompter, and even on a subject that should
instill genuine passion in a Commander in Chief. Ah, were he only
that in spirit and character, instead of continuing to lead from
behind, blaming everyone but himself for everything that befalls
his presidency. Perhaps a new slogan for a Republican challenger:
“Barack Obama: he just wasn’t as shovel-ready as we
thought.”
And imagine my surprise to see pictures of riots, fire
bombings, looting, beatings, and general
mayhem in cities and towns across England.
It’s Rodney King, British style, on a massive scale. Nile
Gardiner, one of Britain’s best columnists (though he is based in
Washington, D.C.),
makes the point that “If British shopkeepers
had the right to bear arms, vicious thugs would think twice before
looting.” No doubt. After all, as Gardiner continues, “Britain’s
gun laws are among the most draconian in the world, yet the nation
has some of the highest levels of violent crime and burglary in the
West, and there is no shortage of gun crime in major cities such as
London and Manchester.” It’s unlikely that gun rights will stage a
real revival in Britain, but here’s hoping…
Tuesday, checking news from my thin fog of jet lag, was
not without shocks of its own, both pleasant and not so pleasant:
On the bright side, the results in the Wisconsin recall elections
are, despite the brave face the unions are putting on, a disaster
for the left. They went “all in” to beat Republican state senators
and only beat two out of six —
and those two had serious vulnerabilities —
incinerating millions of dollars of union members’ dues money in
the process.
And earlier in the day, the Federal Reserve Board
announced that it would keep short-term interest rates near zero
for two years. It’s an unprecedented statement by the Fed, not only
because it substantially limits its range of action but also
because
three voting members of the Board dissented from
the action, something which hasn’t happened in 19 years.
Imagine my surprise to hear Ben Bernanke imply that Barack
Obama’s economic policies will continue to be so ineffective (or
counter-productive) that the Fed is writing off any chance of
substantial economic growth until well after the next presidential
election. When you look at it that way, The
Bernanke’s move makes sense: There’s no reason to
suggest the job-and-growth-creating entrepreneurial class will or
should take any risk, start or expand any business, or hire anyone,
until this president and his tax cheat treasury secretary, are
gainfully unemployed, trying for the first time in their
unproductive lives to make a living in the private sector they
understand so little about.
Imagine my surprise to hear Al “Rent Seeker” Gore’s
expletive-laden
tirade against those who are skeptical of human
impact on climate — which is to say those who threaten the value
of Gore’s large stakes in “green” technology companies whose
success requires a gullible and spendthrift government willing to
funnel taxpayer money down the Gore rat hole. Sorry, Al, nobody’s
buying that “the very existence of our civilization is threatened”;
we’ve figured out that it’s your portfolio that’s threatened. OK, I
really wasn’t surprised by any of this, but it’s so much fun to
hear Gore say “bulls—t” that I had to mention it.
Wednesday was no cup of tea in the markets either, as
stocks plummeted almost 3% in the last 90 minutes of trading,
erasing nearly another $700 billion in wealth, following rumors of
liquidity problems at French bank Société Générale, with gold
spiking up to over $1800 an ounce. (On Thursday, the Chicago
Mercantile Exchange raised margins on gold futures. That combined
with a moderately strong stock market knocked gold down about $50
from late Wednesday’s highs, but it remains well over $1700
suggesting investors remain extremely fearful of owning either
dollars or euros… as they should.) And if all that rollercoaster
wasn’t enough, the market then rallied more than 400 points, almost
4% in the Dow, on Thursday, even though it gave up 135 points in
the last 15 minutes of trading.
Wednesday brought news of Republican
appointees to the “Super Committee”
designated to hash out an agreement on how to reduce
America’s long-term debt. While the absence of Paul Ryan from the
GOP appointees was noted
by some, the Republican team looks solid while the Democrat
senators (the Dems haven’t yet appointed their three from the
House) look, well, like Democrat senators.
Really, what serious person would put Patty “PTA member”
Murray, who is in charge of getting Democrats elected to the Senate
and whose experience before politics was teaching preschool and
being a left-wing activist, on a committee that has to deal with
the real world’s biggest current problems? Not only is Murray on
the committee, she is its co-chair, showing even before the
committee’s work starts that Senate Majority Leader Harry Reid is
all politics, all the time, even during some of the nation’s most
dire financial turmoil. And John “I served in Vietnam” Kerry?
Puhleeze… Twenty-seven years on the finance committee supporting
higher taxes doesn’t make him anything but pompous and fiscally
brain-dead. Max Baucus is the least bad of the three Democrat
Senators on the committee. ‘Nuf said.
If the Democrats’ Senate picks are bad, Nancy Pelosi’s
House selections for the committee are worse: James Clyburn (SC) is
not an expert on economics, though he did secure a $3 million
earmark for a kids’ golf program after the golf facility renamed
itself the “James
E. Clyburn Golf Center.” Putting him on the
committee is like asking a bacon addict to become
kosher.
Rep. Xavier Becerra (CA), Vice Chair of the Democratic
Caucus, is no wiser, as he
demonstrated on a recent Sunday show holding
up a dollar bill and a savings bond and saying they were
essentially identical. Perhaps he doesn’t realize that to get the
dollar to pay the bondholder, government has to tax somebody. And
he’s going to try to sort out our national debt? This is a guy who
says that the top 1% of earners should pay more than 40% of income
taxes, and who believes that the Social Security Trust Fund
actually has money in it. Just what sort of “compromise” can be had
with a man who thinks that way? None at all.
And lastly, Chris Van Hollen, the far-left Maryland
Democrat perhaps best noted for heading the Democratic
Congressional Campaign Committee during the Democrats’ disastrous
2010 election performance. As far as I can tell, Van Hollen has
spent his entire adult life in government. In other words, he has
never created a job except for bureaucrats.
Meanwhile, with the possible exception of Rep. Fred Upton
(MI), the Republican appointees look something like a fiscal
all-star team, including former OMB director Senator Rob Portman
(OH) and former Club for Growth president Senator Pat Toomey (PA).
Against this crew, Democrats are punching outside their weight
class, or at least they would be if their goal were really to come
up with good policy. But it isn’t. The real work of the Committee’s
Democrats will be to continue the politics of Mediscare as their
party sees its Campaigner in Chief “becom(ing)
Jimmy Carter right before our eyes.”
And finally, imagine my total lack of surprise to learn
that while the financial world crumbles around him, President Obama
is leaving next week for his third annual summer vacation in
hoity-toity Martha’s Vineyard. When even USA Today
describes the trip as “awkward”
in the current environment, one knows that in a bit of reverse
political alchemy Obama’s ear has transformed from gold to
tin.
It’s been a truly remarkable week of news, the shock of
which was, for me, magnified by having been blissfully ignorant of
riots, ratings, and rates (while traveling with my family in the
Zululand region of South Africa). Part of me wishes I still didn’t
know that the world — other than perhaps Wisconsin — has become a
poorer and more dangerous place in the last few weeks, and not only
because Patty Murray is co-chairing the “Super
Committee.”
