The View From Here . . .

By Bob Morgan, Jr.

At this writing, the Dow Jones Industrial Average has now fallen below 6800, with little apparent relief in sight for investors. Of course, this decline affects not just rich Wall Street fatcats, but university endowments and ordinary people attempting to fund their retirements through 401(k) plans. Not to mention Mom and Pop attempting to build a little nest egg.

The causes of the precipitous decline in the stock market are many and complex and certainly the retreat cannot now be exclusively blamed on the Barack Obama Administration, which has only been in office since January.

But certain disturbing patterns have appeared.

On November 4, 2008, Election Day, the Dow closed above the 9600 level. On January 20, 2009, Inauguration Day, the index closed just below 8000, losing 332 points that day. On February 10, 2009, the day the stimulus bill passed the Senate, the Dow stood at 7888. Since then, the market has shed an additional 1000 points.

Mr. Obama and his administration certainly have not been shy about blaming the Bush Administration for the current economic troubles. For example, in his address before Congress last week, the President declared, "We have lived through an era where too often, short-term gains were prized over long-term prosperity, where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market.. And all the while, critical debates and difficult decisions were put off for some other time on some other day."

These contentions will resonate with many voters. Nevertheless, Mr. Obama certainly runs the risk that at some point, and sooner rather than later, many people are going to start assigning blame to his Administration as well.

Mr. Obama's huge $787 billion stimulus bill was certainly susceptible to criticism both on account of its budget-busting size and because of the delays in getting amounts appropriated in the economy. Now, however, much of the president's budget seems directly hostile to the interests of business and investors.

For example, Mr. Obama's proposed tax increases, which become effective in 2011, may or may not kick in before the economy has righted itself. In any event, the rate increases directly hit at upper income investors and businesses and make new investment in business and indeed in stocks less likely. (Capital gains tax increases certainly do not help as well.) Additionally, many businesses as well as taxpayers of all classes will be hit, directly or indirectly, by new energy taxes. Potential new entitlements, especially in the health care areas, threaten to ratchet up deficits for decades to come, which will likely lead to increased inflation. And many of the claims by the Administration to deficit reduction are either specious (purported cuts made on the assumption that the Iraq war would otherwise go on indefinitely) or unrealistic (extremely high economic growth assumptions).

All of this is not going unnoticed on Wall Street, which is taking the measure of the Obama Administration as anti-business. Unless Mr. Obama and his troops start appearing considerably more conciliatory toward business and investors, they run the risk of having the current bleak situation on Wall Street labeled the Obama Market.