July 1, 2008, - 12:29 pm
Looking More & More Like Dole-Clinton ’96 Replay: Wall Street Addresses “President” Obama
By Debbie Schlussel
While I will reluctantly vote for John McCain in November, it sadly seems that the conventional wisdom–even among normally Republican constituencies–is that Barack Obama will be President and that John McCain is a weak, lackluster, Bob Dole-esque, throwaway candidate.
It’s looking more and more like everyone assumes he will lose. A look at the Wall Street Journal’s financial pages, today, will show you that. The paper’s “Marketbeat: Market Insight from WSJ.com” has an article about a letter of financial advice written to Barack Obama by highly influential Bond-fund king Bill Gross. Gross manages $128.8 billion in assets as head of Pimco Total Return.
Gross’ letter is addressed to “President” Obama (that’s a scary thought) and is posted on the Pimco site. He advises Prez Hussein Obama to double the deficit to stimulate the economy (I think that’s a cheap rip-off of “Reaganomics”–though Reagan also tried to cut spending while stimulating the economy with tax cuts).
Bond king Bill Gross called on presidential nominee Barack Obama to double the federal budget deficit to $1 trillion by fiscal 2011 if he became president.
“The economy will need an additional jolt of $500 billion or so of government spending real quick,” said Gross in a letter to “President” Obama posted on Pimco’s Web site. “It must replace both reduced residential investment and consumption whose decline has placed the U.S. economy near, if not in a recession.”
Gross noted that this year’s budget deficit should be about $500 billion. By doubling that to $1 trillion in three years, that would put the deficit at about 6% of gross domestic product, “a mere pittance by Japanese standards.” He said its deficit exceeded 10% at its peak a decade ago.
In taking shots at President Bush and the “mess” Obama would inherit as chief executive, Gross – a registered Republican – said, “Although your campaign slogan says, ‘Yes we can,’ I have my doubts.” While saying increased income taxes under an Obama administration would end “an eight-year lease extension on the ‘high life,'” he called on the presumptive Democratic presidential nominee to drop pretenses of Obama’s plans not adding to the budget deficit.
“While the Republicans will blame you for years and label you ‘Trillion Dollar Obama’ in future campaigns, there is in fact not much that you or any other President can do,” said Gross. “You’ve inherited an asset-based economy whose well has been pumped nearly dry with lower and lower interest rates and lender of last resort liquidity provisions that have managed to support Ponzi-style prosperity in recent years.”
Partially true, because we don’t produce anything. We are a consumer-based society that has shipped all of our jobs, companies, and products oversears. That’s the Ponzi scheme part of it.
As a result, “What you need now is fiscal spending and lots of it. No ordinary Starbucks will do, Mr. President, you need to step up for a six-pack of Red Bull.”
Gross noted that the spending will help push inflation higher still early next decade, with Treasury yields likely to continue rising into a potential second Obama term. “Your term will not go down in history as investor friendly,” he said.
If Obama is elected, that last part will be true. But Obama will be spending like a drunken sailor on the wrong things–more government social services, which will take away from (not contribute to) the economy, while contributing to the deficit and crushing the economy. And he’ll probably be a one-termer, things will be so bad.
But I don’t count McCain out . . . yet. He’s not Bob Dole. He’s more charismatic, though maybe not enough.
Debbie–
More negatives will be coming out on Obama (similar to recent scathing Boston Globe piece). Not sure why he is considered such a shoo-in.
Blacks, libs, and the young have always voted Dem. Exactly what more is he bringing to the table?
AND, Dole was a simply terrible candidate, possibly one of the worst of all time in connecting with voters. The comparison is not apt. There is little doubt that a strong Republican candidate could have won the 1996 election.
Red Ryder on July 1, 2008 at 2:00 pm