[StBernard] Obama Down, Stocks Up (And Vice Versa)

[Westley Annis]

Obama Down, Stocks Up (And Vice Versa)
Rich Karlgaard

I am totally convinced we are reliving the 1970s. Barack Obama is the new
Jimmy Carter. Global warming is the new global cooling. "Sustainability" is
the new Small Is Beautiful. Cycling is the new jogging. Two constants: The
CIA is under assault. Dollar devaluation is coming.

More echoes: The Dow dropped 48% in 1973-74, in line with 2008-2009's crash
of 55%. Stocks have climbed impressively off the March 9 bottom. Likewise,
stocks rose 38% in 1975 (though Gerald Ford, not Carter, was president) and
24% in 1976. 

During the late 1970s, inflation roared back, finishing the decade at an
annual rate of 13%. With crazily mounting deficits, we are likely to see
something of a repeat, starting next year or in 2011. I say "something" of a
repeat, because the actual CPI numbers might not go as high as the 1970
figures even though the underlying dollar devaluation could be worse. Much
depends on unemployment, unused production capacity around the world and
(maybe most importantly) government policy.

American government policy is the great unknown now. With Obama's signature
issues hanging in the balance, market and economic predictions are very much
clouded. One theory, which I expressed on Thursday's Kudlow Report, is that
stocks have rallied of late because President Obama's signature issues, all
of them anti-growth--union card check, cap and trade, and nationalized
health care--are in trouble.

But ObamaCare isn't as dead as it looks to the pundits. Earlier this week,
the man who on July 16 let it be known that the Emperor's New Health Care
Plan would add a trillion dollars to the deficit over 10 years, was summoned
to the White House for a little chat  with Rahm and the boys. Will Douglas
Elmendorf bend to the Chicago-style pressure? We'll see. I wouldn't bet
against it.

In fact, Intrade bettors  are giving ObamaCare a near 50-50 chance of
passing this year. The betting trend over the last two weeks is surprisingly
up for ObamaCare. The oddity is that bettors and opinion polls are moving in
opposite directions. Bettors are warming to ObamaCare while polls are
cooling. Maybe Intrade bettors know something about Chicago-style politics. 

Switching subjects ... Earlier this week, I spent a night at the Cal Alumni
Camp's Lair of the Bear, Camp Gold. My wife is a UC Davis grad. For the sake
of our marriage, I agree to hold my nose and spend one night at this
wretched place. (I bleed cardinal, if you don't get the joke.)

The guest lecturer on Sunday night was Daniel Kammen, an energy professor at
UC Berkeley. I knew this lecture would be fun, and it was. For an hour,
Professor Kammen swigged a Corona beer bottle and issued dire climate change
warnings . "enjoy your camping now, people, because the Sierra forests will
be burned up by 2050 ... the Greenland ice cap will be melted ... oceans
will rise 21 feet ..." and so on. 

Oh, and the politics. Like a drunk swerving down the road hitting mailboxes,
Professor Kammen dented selfish Republicans and ignorant red-staters as
often as he could. I counted a dozen disses. The professor is still hot
about Ronald Reagan removing Jimmy Carter's solar panels on the White House
roof. Even Canadians were torched by the professor's scorn. "Canadians must
give up their tar sands and go back to making beer or whatever," he said.

As I said, it was terrific theater, and much fun. Al Gore now has a serious
rival in the stand-up comedian game.