Dear Friends,
It seems to me that the markets have not been reacting to these stimulus bills very well. Every mention of them from the first bailout bill to the present stimulus bill have driven the markets lower. Today February 15, 2009, the market is extremely low… the DOW is below 8000. The house and Senate have passed the latest one and it is going to President Obama’s desk for a signature.
Look at the reaction of the market after the President signs the bill into law. If the markets go up it will be a good sign. If the markets go down, however, it will be a very bad sign. With the markets at such a low point to drive them lower will be hard. But the pork pie of a stimulus bill I’m afraid is just the right poison.
Politics aside, the markets react by their guts. People may want one or the other side to be true, but when they react with their personal fortunes, they are much more pragmatic. That pragmatism is manifested in the ups and downs of the market.
We are being told that the markets need and crave this stimulus bill. I don’t believe it. If someone said every time I met them that they loved popcorn and wished that they had some right now to eat. But when I do have popcorn they retch and pull away covering their noses and say no thanks and shudder when I offer it. I don’t believe that they really like popcorn. Just as the past, and I suspect future, reactions of the markets will belie their true attitude towards the stimulus.
Which brings us to the conclusion that why doesn’t the markets like the proposed stimulus? As I have alluded to in a previous paragraph, the stimulus is nothing but pork. Any stimulation of the economy will be only as long as the gobs of money are being printed, borrowed, plundered and spent. With almost no long term improvement of our economy’s fundamentals. But we, and our children, will be saddled with a giant bill that will certainly come due. Just as the huge cost projections for Medicaid and Social Security come due. That the Elite have done this is mind boggling. The USA’s economy will come crashing down with the service on the debt of just these three parts of our government exceeds 30% of GDP. How are we going to fund the rest of the governmental services? How punitive will the tax rate have to be to service this debt?
Hopefully this isn’t inevitable. But I believe that we are on the fast track to economic Armageddon with this stimulus. I can’t put it any more bluntly than to say “This stimulus will throw our economy into a new depression. And more stimulus will only serve to exasperate the problem.”- Hopefully the Elite will realize their errors and change course…
Hope springs eternal…
For the record President Obama signed the stimulus bill today. The Dow ended at 7,552.60, 297.81 lower. The Nasdaq ended at 1,470.66, 63.70 lower and the S&P 500 ended at 789.17, 37.67 lower. At midday however the Dow was in positive territory. The Markets tanked after Obama signed the bill.