President Obama wins re-election and within minutes of the official announcement the U.S. stock futures begin to sell off. By the time Americans around the country had time to digest what just happened the Dow Jones Industrial Average opened Wednesday down several hundred points as investors rushed to the exit.
When the closing bell rang the traders on the floor of the exchange were scratching their heads wondering if this is how it will be for the next four years. Investors at home were checking their 401k’s thinking the same thing. The overwhelming senses of emotions coming from anyone invested in the future of the U.S. economy were fear and uncertainty.
Fiscal Cliff is Real
The number one issue that relates to both emotions is the looming “fiscal cliff." If the government does not come to some type of resolution by the end of the calendar year it could literally push the economy over this imaginary cliff. I do see the odds of falling off the cliff much higher today than I did last week when Romney still had a fighting chance to become the country’s forty-fifth president. Obama appears to have no sense of urgency to confront the issue of the cliff and based on his past, he may want the country to fall.
Think about it. The result would be higher taxes on the Obama “rich people” and it will have more families relying on the government to survive. This sounds like socialism or a chapter out of a Robin Hood story. Basically stealing from the rich to give to the poor. All along the Democrats will garner more votes in the future because the growing number of Americans relying on the government will not want to risk losing the free handouts from Uncle Sam and the small portion that pay the majority of taxes.
More than the Fiscal Cliff
The media will be focused on the fiscal cliff as it is a catchy phrase and they can comprehend what it means to the economy. However, the real worry for the country should be the fact Obama will be in the White House for four more years regardless of what happens with the fiscal cliff.
A big reason stocks are falling is because there is that sense of fear in many Americans that range from those making minimum wage to the one percent. The fear is that things are not going to get any better in the next fours years. And why should anyone believe they will when in the last four years the economy has only improved slightly as unemployment has increased.
On top of the fear that is spreading throughout the country there is a lack of confidence. Examine the small business owner that does not have confidence that the economy will continue to grow in the next few years. Will that owner go out on a limb and hire new employees when they do not have confidence in the country or the economy? No.
What about the family that has two working parents supporting their children and is scraping by from week to week. Do you think they suddenly feel much better about the economy and will go out and spend more money in the coming years? No.
And then there is the one-percenters. If Obama gets his way he will increase the taxes on the wealthy so they pay what he refers to as their fair share. What he does not understand is that they contribute large amounts of money into the economy, many of them employee tens of thousands of Americans countrywide, and they also give large amounts to charity. Do you think they will be hiring and spending more in the coming years? No.
Fear, Uncertainty, Lack of Confidence
The fiscal cliff will be the headline for the next couple months. But what about the four years that will follow? They will not include fear, uncertainty, or the lack of confidence in Americans. But the reality is that the reason the stock market was down after the Obama victory has to do with the fear that is spreading.
My biggest concern is that fear begets fear and eventually it paralyzes the great economic machine called the United State of America. We as Americans need to believe in our country and continue to be the innovators and entrepreneurs of the future and not give in to the socialist ways the president has laid out for this great country.