Obama's Threats On Tax Inversions Could Trigger Bear Market

by JASmius



That couldn't possibly be anything but a coincidence - could it?:

Bear markets usually develop because of a fundamental change in the economy, but sometimes the carless remarks of a president or other government action can provide the spark for a deep selloff.

In 1962, President Kennedy was angered by a 3.5% increase in steel prices. In a speech he noted the increase showed "utter contempt for the interests of 185 million Americans." Government contracts were awarded only to steel companies that didn't raise prices and the attorney general, the president's brother, launched an investigation into the industry. The price hikes were quickly rolled back.

But the president's "victory" over big steel led to a 24.5% sell off in the Dow Jones Industrial Average. The Dow had been in a broad trading range near all-time highs for about a year prior to the president's speech and Kennedy provided the spark for a downside breakout.

Kennedy's comments are just one example of how political actions affect the stock market. Changes in tariffs contributed to the 1929 crash and Secretary of the Treasury James Baker's comments about a weak dollar came just one day before the October 1987 crash.

If the mere words of a POTUS can panic the markets, that alone is prima facie evidence that the federal government is too big, wields too much power, and has vastly exceeded its constitutionally-imposed limitations.

The pertinent question in the current context is why Barack Obama would want to spark a stock market selloff (at best) or collapse (at worst).  Stock valuations have been inflated by the Fed's printing binge and the illusion it has created of an "economic recovery".  That illusion, in turn, combined with the reality of the ongoing, inescapable economic depression that afflicts "main street", fuels the classist economic resentments that Leftists always seek to encourage when a society is in its "democratic" transition to permanent socialist oligarchy.  The process seems to be all in place and functioning quite effectively.  So why would O overturn the proverbial applecart now?

Answer: a perception, or insecurity, that his window of opportunity for "fundamental transformation" is limited, and that he'd be better off "sealing the deal" in the next two years, by any means necessary.  Next, recall what put him in power in the first place: the biggest financial panic in eighty years, which made possible "things you can't otherwise do".  And lastly, consider how the media would spin another financial collapse ("FDR-izing" The One) versus how they vilified President Bush ("the 21st century Herbert Hoover") six years ago.

There are many paths by which his presidency-for-life can be clinched, law and Constitution be damned, but they're all pretty much mutually-reinforcing.  So why not dance once more with "the one that brung ya"?  It's not like he has to worry about it not working on the LIVs and NIVs.  And if the Right rises up in insurrectionary rebellion, Gadsden flags flying, in a Second American Revolution, well, that would be an "opportunity," too.