Monday morning and it looks like the "Obama Rally" continues in the world equity markets. It's really quite interesting to go back and look at the point where Presidential Futures Trading on Intrade saw the election of Obama as a lock. Let's just say it's been an unabated slaughter from that point on. Now, to stop this slide, the incoming President and his minions are talking about how wonderful the Clinton years were in markets. They are saying, "Hey, don't worry... it'll be swell just like the reign of Billy."
Not so fast, sweetheart. The first two years of the Clinton administration were anything but vibrant for markets. It wasn't until, oh yeah, the Republicans swept to power in Bill's first midterm election, that markets perked up. The next four years were pretty solid until Bill got himself caught up in the scandal that would lead to his impeachment. During those four years he signed a lot of good Republican legislation into law including welfare reform and a cut in the cap gains tax. The elimination of the capital gains tax on the first half million dollars of profit from the sale of a couple's primary residence was jet fuel for the housing boom. Once Bill was in the impeachment wringer he sold his soul to the far left in the House of Representatives to keep his job. So, the last two years saw no good legislation signed by the President.
Now, which part of the eight years of Clinton does the landscape resemble as Obama takes the Presidency with solid Dem majorities in Congress? That's right, the moribund first two years-- with a dash of the far left influence of the Congressional Black Caucus for spice.
Lost in the Obamaites nostalgia for the Clinton years is another little thing: in the last year of Clinton's presidency the NASDAQ started a crash that would be the biggest since 1929. It eventually lost 89% of its value. That crash started the second week of March 2000. When did it end? When the Bush 2003 tax rate cuts were passed by congress. By the way, those start to expire in little more than a year. President-elect Obama has not signaled that he will extend any of them. That would constitute the biggest tax rate hike in US history. On top of his promised capital gains rate hikes and his "tax-the-rich" schemes.
Any wonder why the "Obama Rally" is a race to the bottom?