The Efficient Market

I have been wondering whether it was only the credit crunch and bad mortgages that were pushing the market down so relentlessly these past weeks. George Newman of the Wall Street Journal suggests there is another factor: the upcoming election and its likely winner; the market is simply pricing in Barack Obama's victory. Newman asks some salient questions, including

- Have you thought of what a gradual doubling (and indexation) of the minimum wage, sailing through a veto-proof and filibuster-proof Congress, would do to inflation, unemployment and corporate profits? The market now has.

- Have you thought of how easily a Labor Department headed by a militant union boss would push through a "Transparency in Labor Relations" law that does away with secret ballots in strike votes, and what this would do to industrial peace? The market now has.

- Have you thought of how a Treasury Secretary George Soros would engineer the double taxation of the multinationals' world-wide profits, and what this would mean for investors (to say nothing of full-scale industrial flight from the U.S.)? The market now has.

- Have you thought of how an Attorney General Charles J. Ogletree would champion a trillion-dollar reparations-for-slavery project (whittled down, to be fair, to a mere $800-billion, over-10-years compromise), and what this would do to the economy? The market now has.

- Have you thought of what the virtual outlawing of arbitration -- exposing all industries to the fate of asbestos producers -- would do to corporate liability and legal bills? The market now has.

Read it all, Newman asks many more questions, some of them directed at John McCain (no stranger to populism himself), e.g. "If the rise in the price of oil from $70 to $140 was due to "greed" (the all-purpose explanation of the other side for every economic problem), was the fall from $140 to $70 due to a sudden outbreak of altruism?"

Of the two candidates, however, Obama is far more hostile to free markets, lower taxes and a friendly business climate. Since he is expected to win this election, the present Dow and S & P 500 indices could well be a a reasonable harbinger the costs of the upcoming assault on capitalism.