Is It Any Wonder The Market Continues To Sink?
[Via IBDeditorials.com] Last Oct. 13, in trying to explain why the market had sold off 30% in six weeks, we acknowledged that the freeze-up of the financial system was a big concern. But we cited three other factors as well:
• The imminent election of “the most anti-capitalist politician ever nominated by a major party.”
• The possibility of “a filibuster-proof Congress led by politicians who are almost as liberal.”
• A “media establishment dedicated to the implementation of a liberal agenda, and the smothering of dissent wherever it arises.”
No wonder, we said then, that panic had set in.
Today, as the market continues to sell off and we plumb 12-year lows, we wish we had a different explanation. But it still looks, as we said four months ago, “like the U.S., which built the mightiest, most prosperous economy the world has ever known, is about to turn its back on the free-enterprise system that made it all possible.”
How else would you explain all that’s happened in a few short weeks? How else would you expect the stock market, where millions cast daily votes and which is still the best indicator of what the future holds, to act when:
• Newsweek, a prominent national newsweekly, blares from its cover “We Are All Socialists Now,” without a hint of recognition that socialism in its various forms has been repudiated by history — as communism’s collapse in the USSR, Eastern Europe and China attest.
Even so, a $787 billion “stimulus,” along with a $700 billion bank bailout, $75 billion to refinance bad mortgages, $50 billion for the automakers, and as much as $2 trillion in loans from the Fed and the Treasury are hardly confidence-builders for our free-enterprise system.
• Talk of “nationalizing” U.S.’ troubled major banks comes not just from tarnished Democratic Sen. Chris Dodd, chairman of the Senate Finance Committee, but also from Republicans like Sen. Lindsey Graham of South Carolina and former Fed chief Alan Greenspan.
To be sure, bank shares have plunged along with home prices, and many have inadequate capital. But is nationalization really the only solution for an industry whose main product — loans to consumers and businesses — has expanded by over 5% annually so far this year?
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