Tuesday, May 25, 2010

The Inevitable Consequences of Obama & Merkel Policies

Bailouts don't work. Stock markets, globally, are collapsing as they assess the full consequences of the leadership of Barrack Obama and Angela Merkel. Both these leaders think that politics trump economics and they are both wrong. One is a left wing idealogue and the other is a right wing idealogue, which just goes to show that bad policies transcend ideology. Even among commentators in the US revered as "conservative," bad economics is on display: Charles Krauthammer, Larry Kudlow, Peggy Noonan and Robert Samuelson all supported both the TARP and the Merkel-led Eurozone bailout policies. (Much-maligned Sarah Palin has been right all along).

Fear and ignorance are not good guides to economic policy. Free markets have no trouble recovering from bankruptcies and unemployment and they recover quickly if not impeded by foolish government policies. We are now awash in foolish government policies. So, the recovery process is thwarted thanks to Obama and Merkel (and others supporting their foolishness).

While today's markets will be tough, somewhere in here the stock markets will find regain their footings, although look for markets to be pretty volatile for a while. After all, government economic policies are pretty volatile. Eventually, even markets hobbled by Obama and Merkel will recover. It may be time, after today, to buy the stock market again.

I would be a buyer of US stocks today at the close of the market.