The markets responded today to the passage of the stimulus plan, backed by the President and majorities in Congress, and the Obama Administration’s bank bailout plan with a complete lack of confidence, falling 5%. Many investors fear that President Obama and Congress are simply capitalizing on the current recession as a way to pass the largest spending bill in history under the disguise of “stimulus.” One investor today reminded me what the President’s Chief of Staff, Rohm Emanuel said in October, “Never let a good crises go to waste.” While President Obama campaigned on the platform of “Real Change,” investors apparently feel that it’s really ‘business as usual” in Washington DC, at best.
The question not being asked by the media is, “How are we going to pay for this?” The decline in the markets today is an indication that investors fear the spending bill will not result in significant short-term spending, but result in increased taxes, inflation, and dampened future economic activity.
President Obama has repeatedly called upon passage of the stimulus bill to prevent a “crisis from turning into a catastrophe.” He, and most in Congress, forget it was government intervention in the form of higher taxes that helped turn the severe recession of 1929-1931 into a depression and took the stock markets 25 years to recover.
