Michael Boskin is killing the DOW

Michael Boskin’s fear, expressed recently in the Wall Street Journal, is stated eloquently in his very first sentence:

“It’s hard not to see the continued sell-off on Wall Street and the growing fear on Main Street as a product, at least in part, of the realization that our new president’s policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis.”

Yet we have no choice in the midst of the crisis, brought on by years of deregulation and under-regulation on Wall Street and throughout the financial industries, other than to radically re-engineer the economy. To do otherwise, to maintain the status quo, to remain on the same path is the equivalent of burying our heads in the sand and hoping it goes away.  Hope is a good thing, but hope won’t solve this crisis.

Mr. Boskin, who chaired the Council of Economic Advisers under President George H.W. Bush, throws around terms such as “European social welfare states” and “pernicious feature of the president’s budget” as though our only salvation is in privatizing retirement accounts, inflammatory rhetoric, and continuing to let the foxes guard the hen-house. Well, I don’t know about Mr. Boskin, he’s obviously wealthier than I am, but my privatized retirement account – started when the first Bush was elected President – isn’t going to remotely cover my retirement. I trace the trouble back to the very policies Boskin champions, and evidently so do many of the people who voted for changes as the crisis accelerated alarmingly in autumn of 2008

Obama’s not “killing the Dow.” If anything is it’s the greed of “financial professionals” who foisted off fallacious forecasts of the viability of “financial instruments” to investors, and the result: rampant foreclosures, a credit crisis, the need to give hundreds of billions of dollars to our largest banks, insurance companies, and even car manufacturers (turns out they need consumer credit, Mr. Boskin – do they make up part of the DJIA?) the potential that the FDIC insurance fund will run short of cash, and the perfectly reasonable loss of confidence in our financial system that all those contributing factors caused.

Furthermore, the sacred DOW/DJIA isn’t what’s under assault, it’s just how we measure that assault. Those numbers are merely a symptom of the problems in the preceding paragraph, and they’ve been tumbling for a year already. Boskin’s evident bias in favor of the wealthy echoes throughout his opinion piece. That it appears in the WSJ, the virtual bible for the perpetrators of credit default swaps and derivative voodoo, contributes to the problem.

Nowhere does Mr. Boskin consider that the cost of the War in Iraq might be a significant factor influencing the administration’s budget. The closest he comes is to concede in an off-hand way that “bringing spending into the budget that was previously in supplemental appropriations, such as funding for the wars in Iraq and Afghanistan,” is admirable. After which he goes right back on the attack, deriding the efforts to control the downward momentum that the economy has developed.

The wealthy are not at risk, it’s those of us who have never earned a six-digit income who won’t be able to retire and live the American Dream comfortably.

Obama’s not killing the DOW. Investors are skittish. Any news about GM, or AIG, or the Unemployment Rate, or retail sales being weak, or below forecasts, causes them to react. Knowledgeable traders with years of experience are killing the DOW, Mr. Boskin, as they react to the aftershocks of the policies you seek to perpetuate. Disingenuous fear-mongering in opinion pieces such as yours, undermining the confidence of the very people we need to trust the system if your precious DJIA (and incidentally my retirement account) – fear mongering is killing their confidence.

digg this story!