The Bears Still Run Wall Street
By Armstrong Williams
Has anyone checked the Dow lately? I realize that consulting the Dow is the worst piece of advice a broker or financial planner would give to clients these days. When times are tough and the economy is on the mend, most analysts will tell you to take a vacation away from your stock portfolio until you have a good reason to look at it again.
But the NYSE closed recently once again under 10,000. In fact, it’s hovering around 9,700 and trending in the wrong direction. I had to chuckle last week when the Dow tipped up a few percentage points on news Congress had passed a sweeping financial services overhaul. Many in the media said that was because financial institutions such as banks would now have some sense of direction as to how their industry would be regulated. Yet like many policies of this administration, the security and sense of direction lasted about as long as a teen-induced sugar high.
The market is trying to tell us something folks! This economy is headed in the wrong direction. And no matter how hard he tries, Obama can no longer lay this at the doorstep of his predecessor. I know every morning the Administration has some intern who scours the papers just for the current mess du jour - more governing by victimization.
If such moves were part of a larger correction that many analysts say was needed, then I would be less apt to point a finger at the White House. But such market fixes should have taken place months ago. What we have here today is more tinkering by the federal fiat. If anyone outside Washington actually believed Congress’s steps through “overhaul” last week would yield any positive benefits, then forecasts for Q3 and Q4 of this year would be far better. And still, they are not.
However, Americans aren’t fooled; the real victims of this economic mess are the unemployed. Although unemployment figures hover around 10 percent, which has been seen as a sign of hope for those who are desperate to find one, unemployment benefits saw a recent increase. This indicates that companies are still laying off people, and those people are now becoming a burden to their government. Such contradicting information can sometimes be confusing in an already complicated market. We can’t just look at one indicator to determine the growth or decline of unemployment.
It has been noted that the US labor market has decreased by 652,000 jobs since May. This much may be due to corporate fears that the economic recovery doesn’t look so rosy. Not only are corporations, and the rest of the private sector, saving their money by not hiring, but they aren’t expending it in the market through other job creating means as well. Unfortunately, this trend is being seen around the world –especially in European countries.
Fueling private industry behavior is a crippled global economy –which President Obama has yet to really attack. But, if our President can’t handle things on the home front, how is he going to navigate our nation through the proverbial economic deep waters that wait abroad? By now it is clear, mainly through a decline in growth in China that global demand for manufactured goods is slowing down.
With both the global and domestic economy slowing down, Americans continue to be baffled by the Obama Administration’s lack of business savvy. There appears to be no effort to reduce spending while increasing revenues insight. The Congressional Budget Office recently warned that the US is on its way towards unsustainable levels of debt. In addition, some of the nation’s biggest expenses, including Social Security and healthcare entitlement programs, will see an increase in spending even with the healthcare reform legislation passing.
To be more specific, our private sector (the true job creators) is still reeling. It’s struggling under the crushing weight of impending fixed costs such as health care, higher wage pressures, more reporting requirements and fewer incentives for innovation. Even with the dollar rising against foreign currencies, such as the Euro, and China’s modest actions last month, the bears still run Wall Street.
It was just the other week, at the G20 meeting in Toronto that the world economic leaders displayed their concern for the direction of American economic fiscal policy. Many are worried that a revamping of fiscal policy would dampen growth and demand in a global marketplace. The concern is that with a struggling demand, there is the possibility that the global economy might be headed for another recession.
As usual, Present Obama supported the idea of stimulating economic growth while correcting deficits at a more opportunistic time. I believe the American people have seen this before. Yet, we have not really seen how the stimulus works. We have heard of one, one intended on creating some 3 million jobs. However, we are still living with the detriments of a stagnant job market which is showing little signs of hope and a lot of talk about a double dipping recession. Well, we have lived through it once with a stimulus; why, if we were headed back, would we want the same fiscal policy to be used again? All Americans have to show for their record breaking stimulus packages is a world of debt and little to nothing to show for it.
As I’ve said before in this column, an economist I am not. But I do know that one of the single largest indicators of the economic health of this nation is hemorrhaging. The Dow, and our nation’s critical private sector, needs help. The longer the White House views the private sector as some harem of fat cat capitalists, the more our workers will be out of long-term jobs.
