Thanks to massive QE to infinity on the part of Ben Bernanke and the Federal Reserve (i.e. virtual money printing), the Stock Market was propped up a bit up until the election. Almost certainly many were hoping for a Romney win and thought he would be better for the economy. But now that the election is over, the truth is coming out. The euphoria is gone. The election is over and we are no longer distracted from looking at how bad the economy still is.
Reuters just reported last night that Energizer will cut more than 1500 workers, about ten percent of their work force. The S&P index had its steepest decline of the year in the last two days. It was the biggest drop in the two days following a presidential election since 1896 (because Bloomberg’s records don’t go back any farther). McDonald’s has reported its first monthly slump in sales since 2003.
How much of this is a direct response to some people feeling differently about the economy now that they know that Obama remains the President is hard to precisely measure. The Energizer cuts and the McDonald’s slump were both going to be reported no matter who won. The S&P slide is probably partly a direct reaction to Obama’s re-election. Maybe it is all a response to that news.
But probably much of this would still happen if Romney had been elected. While expectations about the future play a role in some of this news, much of it simply amounts to a realization that the economy is still really bad. I would argue that in fact, we have been back in a recession.
The media has been doing everything it can to convince voters that the economy is recovering. But, even with some surprising job numbers, the fact is that it isn’t recovering. We are going to see more unemployment and more bad news from companies. Whether or not the Federal Reserve can make the stock market look like it is viable by dumping new money into it, I don’t know. But it won’t be real wealth. It won’t do anything to help the real economy to recover.
If the economy only gets that bad, that will be good news. What we really have to resist is Obama’s attempts to “fix” it. As Rahm Emanuel said, you never want to let a crisis go to waste. The last time Obama had a supermajority, he “stimulated” the economy with almost a trillion dollars in pork spending. He promised that unemployment would stay under eight percent with the “stimulus” spending, but would reach nine percent without it. It reached ten percent after the stimulus was passed.
What Obama will do, with the help of the media, is assume that people will forget all about it. He will propose some other statist, debt-and-spend, or tax-and-spend solution. He will use the bully pulpit to berate the House of Representatives into passing bills that can only add to the debt and hurt the economy worse. This is the perversity of it. Obama will use his continual damaging of the economy to try to get the government to damage the economy more.
The media is already treating Obama as if he has a mandate. One would think he has a supermajority in Congress behind him the way they write about him. But he has neither. What he has is a record of failing the American people on promises he made, leaving them with nothing but more debt. The GOP in Congress needs to be wise but bold in “campaigning” against him for the next four years.