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When Liberals Lose Their Own Money

The cause of yesterday's massive stock market plunge remains a mystery and Congress is preparing to hold hearings to find out ....something. I'm glad Congress is trying to determine what happened but, after watching the dim witted line of questioning during last week's Goldman Sachs hearings, there may not be much to get excited about. But the volatility in this nation's capital markets is something to be very concerned about and when it threatens to destroy individual wealth in a matter of minutes even liberals show concern about viable markets and private sector wealth. Yesterday's panic was a vivid illustration of Samuel Johnson's famous phrase that nothing focuses the mind like a hanging. That's probably what was on uber liberal Robert Reich's mind today. Reich, a liberal's liberal if there ever was one, said something today at the HuffPo that was spot on:

Regardless of why it happened ( the crash), it's further evidence that the nation's and the world's capital markets have become a vast out-of-control casino in which fortunes can be made or lost in an instant -- which would be fine except for the fact that most of us have put our life savings there.

What? Is Mr. Reich admitting that our economic future, our retirements and savings (and his), depend upon the profitability and the share price of Exxon? Proctor & Gamble? General Electric? Halliburton?? This was one of those rare moments when a liberal admits the vital importance of a healthy and robust private sector that is the foundation of everyone's life savings. Hopefully the New York Stock Exchange, the SEC and, more importantly, the companies whose shares are listed on these exchanges and trade publicly, will work to make sure violent price swings like this do not occur again. But the lesson to take away from Reich's statement is his admission that private sector corporations are the linchpin of the American economy (hopefully President Obama was listening). If Reich is so concerned about the safety of his life savings (savings that he admits are invested in these companies) then why does he and his fellow travelers promote policies that drain wealth from these companies? It is this enigma (or fool's hypocrisy) that has defined the debate between liberalism and conservatism for decades.

Ann Coulter was excoriated when she offered up the fact that liberal's public policy positions contradicted the way they conduct their own private financial affairs. Liberal politicians (with a few exceptions) don't routinely spend more than they earn when it comes to their family finances. So why do they promote public policy that it so at odds with their own personal financial behavior? The scenes from Greece are a vivid example of what happens when citizens finally become convinced they have been ruined financially and the promises of their government are meaningless. The U S is a long way from the problems Greece is experiencing for only two reasons: we possess the most powerful millitary in the world and our currency maintains reserve currency status. It would be much more comforting if the U S could add fiscal responsibility to that meager list of differences with the PIIGS.


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Comments (14)

I've been an avid stock mar... (Below threshold)
Lee Ward:

I've been an avid stock market investor for 30 years. Your claim that liberals think a vital, profitable private sector doesn't jive with reality. President Clinton presided over a stock market boom cycle. Democrats are good news for stock markets and 401Ks.

As in everything there is a balance to maintain. Are you suggesting that corporations pay no tax? Of course not, so the question becomes how much is the right amount.

Corporations are taxed and this effects their profits, but stock prices rise and fall relative to other companies. If all companies share the same tax burden, then the stock market price of the better performers will still rise proportionally versus the lower performers.

Stock market gains and 401K growth depends upon the price moving up from point A to point B. Smaller profits for Exxon will still move the price from A to B. In an admittedly overly simplistic example -- instead of a stock price moving from $120 a share to $140, the price moves from $100 a share to $120.

If all corporation share the same tax burden -- as they do now -- nothing changes if all corporations now have to pay 2% more in taxes. It's still a level playing field and stock prices still rise in proportion to a company's relative performance, but our nation benefits because corporations are working to the benefit of all Americans, not just those well off enough to own those stocks.

You can have your cake and eat it too. You can have higher taxes and still see the very same stock market gains and losses that you do now. It's all relative. The burden is the same for all companies, and the better performers still outperform the losers.

The only ones who will feel the direct effect are the highly paid wage earners - higher taxes and lower profits means CEO Ward earns $28 million a year instead of $30 million a year.

Why everyday Americans should give a damn about that is beyond me.

Well, in the parched desert... (Below threshold)
Tsar Nicholas II:

Well, in the parched desert of any liberal's mindnumb there always is room for a moment of clarity when it comes to their own dinero.

Well, shit, Lee. Why don't ... (Below threshold)

Well, shit, Lee. Why don't we have the government just take over all the corporations?

And let's just kill all the executives while we're at it and give their money to the government to do good works on our behalf.

Let's have the unions run the corporations.

Mmmm-mmmm-mmm. Are you fired up?

You have no idea about mone... (Below threshold)

You have no idea about money, do you , Lee?

You could have said that in 6 words.

1. Posted by Lee Ward | May... (Below threshold)

1. Posted by Lee Ward | May 7, 2010 8:25 PM

"I've been an avid stock market investor for 30 years. Your claim that liberals think a vital, profitable private sector doesn't jive with reality. President Clinton presided over a stock market boom cycle. Democrats are good news for stock markets and 401Ks."

Clinton presided over the dot com bust, which was a catastrophic. He also fell asleep during the Russian debt crisis of 1998.

The rest of your comment is a straw man argument and way off topic. As I have warned you before, if you can't stay on topic I will ban you even if you can't rise to the minimal level of useful idiot.

"You can have your cake and... (Below threshold)

"You can have your cake and eat it too. You can have higher taxes and still see the very same stock market gains and losses that you do now."

Not really. even in your stupid example, you already took my $20 a share to give it to some hoser loser whose only claim to money is that he did nothing to earn it.

Lee is right, the stock mar... (Below threshold)
Steve Crickmore:

Lee is right, the stock market has generally done ´'markedly' better under Democrat presidents than Republicans. I can't link to it, on this pc format, now but Forbes had an article on this a few years back by Dan Ackman. July 21, 2004 going back to World War 2 and 1927. George W. Bush and Obama have continued those trends.

Ya mean Robert Reich isn't ... (Below threshold)

Ya mean Robert Reich isn't planning on retiring and living off of his "Social Security"?

If it makes Bob Reich feel ... (Below threshold)

If it makes Bob Reich feel any better, I wasn't planning on it either - mainly because I have at least 22 years to go before I could have retired. As I don't expect Social Security to be there I will likely work until I fall over dead one day.

To the Administration officials and Congresses during the Carter, Reagan, Bush Sr, Clinton, Bush Jr, and Obama Administrations: THANKS FOR NOTHING, ASSHOLES.

Um, I fear that Reich is se... (Below threshold)

Um, I fear that Reich is setting the stage for the government to declare that the stock market is too risky for Americans to invest their retirement accounts in - so they will "exchange them" for "ultra-safe" T-bills for a "guaranteed retirement income".

This will happen about the same time the Treasury runs out of foreign buyers of T-bills (cough-cough).

Hey, they got away with it in Argentina...

Barry will come out next we... (Below threshold)

Barry will come out next week saying that he's seizing everyone's 401k in order to 'save' them.

Life Death, Boom Bust.<br /... (Below threshold)

Life Death, Boom Bust.
It the cycle of life and of markets.
We had recessions since the 1700. After everyone we put in safe guards and it still happens. There will always be Bubbles.
Tulips, Junk Bonds, Savings and Loans, Hedge Funds, DotCom,

However the real issue today is WE HVE NO MONEY!!!!!

What Robert Reich and all h... (Below threshold)

What Robert Reich and all his liberal taxsucker friends are worried about isn't losing their own money as much as it is the rest of us losing ours and blaming them for it. Torches and pitchforks will be the least of their worries and that's why Barry and company spend so much time demonizing their opposition, and anyone who shows any sign of being fiscally responsible.

The Fallacy that Lee and ma... (Below threshold)

The Fallacy that Lee and many people have is that companies are static entities.
The higher Taxes in a region the more likely a company will leave and establish offices somewhere else. When companies have high taxes they reduce the amount of people they employ to increase profit margins.

The other factor is that all markets are not equal. The cost of producing a good can be significantly lower overseas. This because the standards of living cost can be lower. In China you may pay someone 4 dollars an hour. With that money they can buy food and send money home. However they may not be as productive as Western worker with a higher salary however if taxes eat away at the profit margin they will move the jobs overseas.

So Americans give a dam because it American people are the ones losing their jobs. No jobs no 401K to invest.

Also it is not all the same Tax burden.
Your a wall street Firm.
You pay Corporate income Tax.
Then you have the cost to Implement 17A4 and keep current with.
Then the cost to Implement Sox which was over a billion dollars to most companies.
You have the same thing with manufacturing what are the cost with all EPA, OSHA and all other hidden regulations. Then you have Unions that increase cost by not allowing inefficient worker go costing company lost productivity.

The great part is with all those regulations in place we still have issues and the answer is more regulation which is more cost so companies go over seas and again American loose jobs.






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