More market bull from CNBC's Ratigan and company

Dylan Ratigan and his colleagues on the CNBC financial program "On the Street" asked a day after the election of Barack Obama: What can Obama do to stem the financial tide (downward)? We will better refer to this downward "financial tide" as the negative domino effect of the deregulated financial markts stemming from the Clinton period through the current Bush period.


Beneath the image of the august, all-knowing group, a graphic read:

"Breaking News! Obama Honeymoon Over, 12th Largest Point Drop in Dow"

What is the implicit statement of cause and effect being made here? Obama's election causes a one-day market decline? Not one of the experts on Ratigan's panel even mentioned the name President Bush, whose policies remain in force and, who, let us recall, is still in office. Eerily, no one mentioned former Bill Clinton administration members Robert Rubin or Larry Summers, the former a "financial guy" with Goldman Sachs, the latter an esteemed academic and economist, both of whom helped dismantle the Glass-Steagall Act, Depression-era legislation which until 1999 (see further down) helped stabilize the banking system, ridding it of the corrupt practices incubated in "modern" legislation they helped foster: the Gramm-Leach-Bliley Financial Modernization Act of 1999 which deregulated the financial world and created the casino world of corrupt Derivatives Markets, Credit Default Swaps, and Collateralized Debt Obligations. Welcome to collapsing markets, particularly you poor folks and struggling middle class folks with shaky loans spinning off of those heady financial instruments.

To reassert: The Gramm-Leach-Bliley Act resulted in a catastrophic deregulation of the Financial Services industry. To his credit Obama had criticized the Gramm-Leach-Bliley Act of 1999 before the dramatic decline of the market:

  
"By the time the Glass-Steagall Act was repealed in 1999, the $300 million
lobbying effort that drove deregulation was more about facilitating mergers
than creating an efficient regulatory framework.... The regulatory environment
failed to keep pace." (Cheyenne Hopkins,"Regulatory Revamp Newest Plank In
Obama's Platform," American Banker, 3/28/08)

While we should be worried that Obama is being consulted by Robert Rubin and Larry Summers among others, the suggestion that the market is already "punishing" Obama "policies" is absurd, as those policies are not yet manifest. All the speculation is abstract as it comes during an immature moment in Obama's not-yet-acted-out presidential term. The president-elect has yet to install a cabinet or formulate specific strategies to tie in with his platform. No official, in-office policy stated, yet he's being punished (skilfully manipulated?) by financial pundits already. Phew! Let the rhetoric commence. We suppose you must say something when you get paid to be a Talking Head, even if it formulates to empty rhetoric.