As 2009 opened, three weeks before Barack Obama took office, the Dow Jones Industrial Average closed at 9034 on January 2, its highest level since the autumn panic. Yesterday the Dow fell another 4.24% to 6763, for an overall decline of 25% in two months and to its lowest level since 1997. The dismaying message here is that President Obama's policies have become part of the economy's problem.

Americans have welcomed the Obama era in the same spirit of hope the President campaigned on. But after five weeks in office, it's become clear that Mr. Obama's policies are slowing, if not stopping, what would otherwise be the normal process of economic recovery. From punishing business to squandering scarce national public resources, Team Obama is creating more uncertainty and less confidence -- and thus a longer period of recession or subpar growth.

The Democrats who now run Washington don't want to hear this, because they benefit from blaming all bad economic news on President Bush. And Mr. Obama has inherited an unusual recession deepened by credit problems, both of which will take time to climb out of. But it's also true that the economy has fallen far enough, and long enough, that much of the excess that led to recession is being worked off. Already 15 months old, the current recession will soon match the average length -- and average job loss -- of the last three postwar downturns. What goes down will come up -- unless destructive policies interfere with the sources of potential recovery.

And those sources have been forming for some time. The price of oil and other commodities have fallen by two-thirds since their 2008 summer peak, which has the effect of a major tax cut. The world is awash in liquidity, thanks to monetary ease by the Federal Reserve and other central banks. Monetary policy operates with a lag, but last year's easing will eventually stir economic activity.

Housing prices have fallen 27% from their Case-Shiller peak, or some two-thirds of the way back to their historical trend. While still high, credit spreads are far from their peaks during the panic, and corporate borrowers are again able to tap the credit markets. As equities were signaling with their late 2008 rally and January top, growth should under normal circumstances begin to appear in the second half of this year.

So what has happened in the last two months? The economy has received no great new outside shock. Exchange rates and other prices have been stable, and there are no security crises of note. The reality of a sharp recession has been known and built into stock prices since last year's fourth quarter.

What is new is the unveiling of Mr. Obama's agenda and his approach to governance. Every new President has a finite stock of capital -- financial and political -- to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his "stimulus" spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.

His Treasury has been making a similar mistake with its financial bailout plans. The banking system needs to work through its losses, and one necessary use of public capital is to assist in burning down those bad assets as fast as possible. Yet most of Team Obama's ministrations so far have gone toward triage and life support, rather than repair and recovery.

AIG yesterday received its fourth "rescue," including $70 billion in Troubled Asset Relief Program cash, without any clear business direction. (See here.) Citigroup's restructuring last week added not a dollar of new capital, and also no clear direction. Perhaps the imminent Treasury "stress tests" will clear the decks, but until they do the banks are all living in fear of becoming the next AIG. All of this squanders public money that could better go toward burning down bank debt.

The market has notably plunged since Mr. Obama introduced his budget last week, and that should be no surprise. The document was a declaration of hostility toward capitalists across the economy. Health-care stocks have dived on fears of new government mandates and price controls. Private lenders to students have been told they're no longer wanted. Anyone who uses carbon energy has been warned to expect a huge tax increase from cap and trade. And every risk-taker and investor now knows that another tax increase will slam the economy in 2011, unless Mr. Obama lets Speaker Nancy Pelosi impose one even earlier.

Meanwhile, Congress demands more bank lending even as it assails lenders and threatens to let judges rewrite mortgage contracts. The powers in Congress -- unrebuked by Mr. Obama -- are ridiculing and punishing the very capitalists who are essential to a sustainable recovery. The result has been a capital strike, and the return of the fear from last year that we could face a far deeper downturn. This is no way to nurture a wounded economy back to health.

Listening to Mr. Obama and his chief of staff, Rahm Emanuel, on the weekend, we couldn't help but wonder if they appreciate any of this. They seem preoccupied with going to the barricades against Republicans who wield little power, or picking a fight with Rush Limbaugh, as if this is the kind of economic leadership Americans want.

Perhaps they're reading the polls and figure they have two or three years before voters stop blaming Republicans and Mr. Bush for the economy. Even if that's right in the long run, in the meantime their assault on business and investors is delaying a recovery and ensuring that the expansion will be weaker than it should be when it finally does arrive.

http://online.wsj.com/article/SB123604419092515347.html

DH is what i would call a libertarian, he is socially liberal, believes in a strong military & is ALL about free enterprise and gov't out of his ass in doing so.

our diner parties are SO entertaining:)

Oh my, I bet they are! LOL

I'm actually curious about the Libertarians. I may be more along their lines than today's Republican.

Aren't you saying, plain, that Congress voted to give Bush the authority to bomb Iraq, not that Congress voted to allow Bush to bomb Iraq? To me it isn't the same thing.

I don't see the distinction. No matter how you slice it, Congress voted to use military force in Iraq. Using your argument, did the presidents manipulate congress into okaying military force in Korea or Vietnam? Because it was the exact same kind of informal declaration that allowed the invasion of Iraq.

It was a gross error on the part of Congress to give Bush free reign to make a decision like that - and Bush was very manipulative to get them to agree to it. And many people who did vote to give Bush that power were very sorry that they did.

I'm sure they are sorry. But regret is a totally different issue than "did Bush bomb Iraq on his own". Congress voted to bomb. And congress has access to the same intelligence that Bush does. They knew exactly what they were voting on.

Since the Congress is normally directly involved in any decision to declare war, I do not feel that America declared war on Iraq; George Bush declared war on Iraq.

If congress was not involved, how come there's a record of exactly who voted whether or not to use military force? No matter your personal feelings on this, congress approved the invasion....Bush did not act alone.

And the term "shock and awe" was used over and over and over, ad nausem, by Dubya. Before he coined the phrase, most Americans were relatively unfamiliar with it. The author is irrelevant. It was just a tool.

It was the name of the strategy developed when Clinton was president. If it had been named "Fat Boy", would you object to Bush saying it over and over?

So plain, you must be one of the people who believes that you shouldn't pay taxes, eh?

If you agree that they're a necessary evil, then why in the world would you support a policy that allows the wealthiest Americans to get big tax breaks?

I believe most of us should pay taxes (there are some fixed income situations I think should be tax exempt). And I don't believe in giving the wealthy tax breaks.....but they're in the highest bracket right now. How is that a tax break? Do you mean its a break from what they USED to pay?

If you say that it makes sense because it will benefit the economy for the rich folks to get richer, that has been proven to be totally ineffective in helping most Americans.

Furthermore, the proposed increase in taxes for the wealthiest Americans is a rate that is still less than what they paid under President Reagan.

The propaganda that is being put out that rich folks are being taken advantage of and gouged is B.S. And if you believe that taxes are necessary, then you should understand that the proposed tax increase for the top very small percentage of Americans is exactly what is fair to mainstream Americans. The rich folks have for some time now had practically a free ride.

We simply don't agree. Crippling tax rates will eventually drive the wealthy (and their businesses) overseas, further hurting our economy.

How many really wealthy folks do you know personally? Have you asked them how much they pay in taxes every year - the bottom line amount?

I don't know any really wealthy folks personally. But I still think its unjust and un-American to redistribute their wealth (even though I dont have to personally worry about it happening to me).

Hopefully Congress, and America, understands why the law was put into effect that doesn't allow a single person to make the decision to go to war and they won't make the same mistake again.

The powers and laws that you're talking about were built into the constitution. At no time in American history has a single person been allowed to make the decision to go to war.

DH is what i would call a libertarian, he is socially liberal, believes in a strong military & is ALL about free enterprise and gov't out of his ass in doing so.

I consider myself to be more libertarian than anything, in that the government should only be here for our protection (physically, and yes, in some cases.....economically). For the most part, I believe that society would flourish with waaaaaaaaay less government intrusion.

I'm actually curious about the Libertarians. I may be more along their lines than today's Republican.

That's cool and all, but with the two party system today, the government has ensured that no independant parties will ever have a viable candidate......so you pretty much have to do what I do: Register independant and vote on who you think will do the best for each race.

That's cool and all, but with the two party system today, the government has ensured that no independant parties will ever have a viable candidate......so you pretty much have to do what I do: Register independant and vote on who you think will do the best for each race.

Yeah, I know.

The government even runs the electoral process.

Your posts would indicate that Congress, by a vote, declared war on Iraq. That just isn't the truth. And you know that. I'll bet you've read several of Ron Paul's statements and perhaps those of other people who are concerned with the way our Constitution was tossed to the side when Congress gave Bush the ability to "shock and awe" the citizens of Iraq. And of course the whole world was shocked. And sure, it has happened many times in the past. That of course, does not make it right. And in fact, one would think that America would have learned from our ruinous participation in Vietnam and other places. And maybe most Americans have, but politicians still sell us down the river in these non-declared wars that we wage. And most importantly good people die tragically, for ill-gotten gains. We should be horrified, ashamed and angry.

plain: "It was the name of the strategy developed when Clinton was president. If it had been named "Fat Boy", would you object to Bush saying it over and over?"

You're effing kidding, right?

Your posts would indicate that Congress, by a vote, declared war on Iraq. That just isn't the truth. And you know that. I'll bet you've read several of Ron Paul's statements and perhaps those of other people who are concerned with the way our Constitution was tossed to the side when Congress gave Bush the ability to "shock and awe" the citizens of Iraq. And of course the whole world was shocked. And sure, it has happened many times in the past. That of course, does not make it right. And in fact, one would think that America would have learned from our ruinous participation in Vietnam and other places. And maybe most Americans have, but politicians still sell us down the river in these non-declared wars that we wage. And most importantly good people die tragically, for ill-gotten gains. We should be horrified, ashamed and angry.

BJean, whether you choose to acknowledge it or not, war is what keeps free people free. It's sad but true.

And without Congress' participation, their vote, their permission, deeply rooted in the Constitution, we would not have had the ability to go into Iraq. I know you simply want to label Bush as a rogue who went in there himself, but it just didn't happen that way. And you know it.

I know what I know Beth and that ain't it.

War kills. And it sure doesn't always make people free. That's a myth.

Edited April 15, 200917 yr by BJean

Your posts would indicate that Congress, by a vote, declared war on Iraq. That just isn't the truth. And you know that. I'll bet you've read several of Ron Paul's statements and perhaps those of other people who are concerned with the way our Constitution was tossed to the side when Congress gave Bush the ability to "shock and awe" the citizens of Iraq. And of course the whole world was shocked. And sure, it has happened many times in the past. That of course, does not make it right. And in fact, one would think that America would have learned from our ruinous participation in Vietnam and other places. And maybe most Americans have, but politicians still sell us down the river in these non-declared wars that we wage. And most importantly good people die tragically, for ill-gotten gains. We should be horrified, ashamed and angry.

We should be horrified, ashamed, and angry for plenty of things the government does that affects every single one of us. Your problem is your outrage, or lack there of, is dependent upon what side of the aisle it came from.

Are you saying that yours doesn't?

Are you saying that yours doesn't?

Hmmmm, yep, I could say that mine doesn't.

Hmmmm, yes, and so could I.

Hmmmm, yes, and so could I.

You could, but you would be dishonest.

BJean, I have watched you give the left pass after pass after pass and point fingers solely at the right. As for me, I blame ALL of them. I may have my beliefs, but the people in office now for the most part don't carry those same beliefs. In other words, my "representatives" don't exactly represent me or my stance. I choose a particular belief, but I do NOT support all those who carry the "proper label."

However, you do. And though we have been on a pretty good path lately, I have to say that discussing anything with you is getting to be particularly painful because you twist and turn the topic when you are confronted with facts that mess with your agenda.

I'm not saying it's bad to stick to a belief, but it makes it difficult to have respect for someone's viewpoint when the topic changes constantly because the facts you are presented with don't conform to what you believe. And then you start getting snitty and personal again.

Your posts would indicate that Congress, by a vote, declared war on Iraq. That just isn't the truth.

It is exactly the truth!! Ok, I'll make this extremely easy for you, BJean, since you are not getting my point: Google (or use your own favorite search engine) Public Law No. 107-243 and see what comes up. Or just click this anti-war link:

http://www.believersagainstthewar.com/HJ114_text.html

Be sure and read section 3, where it states that this law (public law No. 107-243) is consistant with the war powers act. Now, look up that law anywhere you want, and tell me how congress didn't vote to go to war with Iraq.

I'll bet you've read several of Ron Paul's statements and perhaps those of other people who are concerned with the way our Constitution was tossed to the side when Congress gave Bush the ability to "shock and awe" the citizens of Iraq.

It doesn't matter what Ron Paul or anybody else said. The constitution was certainly not tossed to the side. How could it have been? Congress voted. Period. That's how the constitution works, BJean.

plain: "It was the name of the strategy developed when Clinton was president. If it had been named "Fat Boy", would you object to Bush saying it over and over?"

You're effing kidding, right?

No, I'm serious. You've mentioned the term "shock and awe" in almost every post directed to me. I'm still trying to figure it out. Is your problem with the name of the strategy, or the fact that Bush decided to use said strategy? Please clarify.

Edited April 15, 200917 yr by plain

Regarding shock and awe, I don't know how I can make it any clearer, plain. The reason you keep seeing me use it in my posts is because you challenged me and continue to challenge me on it. I've explained myself as well as I can. I don't think you choose to make an effort to understand my point. As far as I'm concerned, we can give that a rest.

Congress dodged taking responsibility for the war in Iraq by giving Bush the power to go off and do it. You even cited stuff that indicated that. It's been done in the past, i.e., Vietnam. Congress did not decide that they thought it was right to declare war on Iraq. They decided to let Bush do it and take the heat for it. If you're talking about the Congress voting to extend the war and send more troops, commit more money, etc., they sure did do that.