Barack Obama’s Flying Circus

If Monty Python were a financial news agency, we could imagine the headline “Dow Exceeds 10,000 to Much Rejoicing.” The media devoted multiple column inches and minutes of airtime to that event last week, but few asked, “Why?” The short answer is currency devaluation. Barack Obama’s strategy of talking down the U.S. economy has produced its first dividend for his administration, a surging Dow supported by foreign investment. But, like agricultural commodities in the 1970s and commercial real estate in the 1980s, these gains are due solely to the weakness of our currency rather than the strength of our economy. A dollar with lower value makes buying American assets more attractive to foreigners. Each of those previous examples saw a short term increase in values followed by profit taking and a long-term decline. Sure the Dow is over 10K, but what’s the dollar worth?

Furthermore, the market bottomed out at 6,500 before beginning its recovery in March, when, as The Washington Times points out, “[T]he Obama administration stopped trying to talk down the economy.” Also, “The bottom line is obvious. Part of the increase in stock prices is illusory from the falling dollar. A lot of the remaining increase is simply a recovery from the Obama administration’s rhetoric talking down the market.” Unfortunately, if they’re not talking it down, they’re trying to beat it down with regulations.

That doesn’t mean that Team Obama won’t take credit for any improvement in the market or the economy as a whole. When the newest estimate of 3.5 percent economic growth in the third quarter was announced this week, Obama said the country has “come a long way” since his inauguration, and the new figures are “an affirmation that this recession is abating and the steps we’ve taken have made a difference.” The White House went further Friday, claiming that the $787 billion stimulus has “created or saved” at least 650,000 jobs, or one million if all spending is considered. Yet unemployment is 9.8 percent and rising, so most of those jobs must have been “saved” — which is a clever way of saying we’ll never know.


Leave a comment

Filed under Patriot Post

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s