The Dow Jones Industrial Average closed at 8691.25 on that day, and Obama led John McCain in the national polls by about 11%.

The next day, October 24th, the market plunged to an intraday low of 7882.51 as it shuddered in anticipation of Obama’s socialist redistribution of wealth policies and the economic depression they would cause.

Since then, John McCain has finally begun to communicate to the American people the fact that Obama’s “tax cut” would actually take money from the middle class and give it in the form of a welfare check to people who don’t pay income taxes at all.

Americans don’t want to return to the welfare state of Lyndon Johnson and Jimmy Carter.

As a result, the polls have narrowed to only a 3 point lead for Obama as of October 30th.

While McCain was climbing in the polls, investors began to take heart that he could actually win this election, and the Dow Jones Industrial Average climbed to 9,180.69 as of yesterday’s close.

The lesson: As Barack Obama’s poll numbers decline, the stock market rises.

What’s bad for Obama is good for America.

The stock market is a discounting mechanism, which is a fancy way of saying that it anticipates the future prospects for the economy and the companies that comprise it.

What is the stock market telling us today about the future?

The Dow Jones Industrial Average closed today at 8691.25, which is 38.64% below its all-time closing high of 14,164.53 on October 9, 2007.

The conventional wisdom (which is almost always wrong) is that the stock market is down because of the credit crisis. But the worst of the credit crisis has passed. The 3-month LIBOR rate has dropped from its high of 4.81875%, reached on October 10, 2008, to 3.54% today.

We continue to believe that the federal bailout was a mistake, but the federal government has bailed out the banks and strengthened their balance sheets with direct investments. Banks are once again lending to one another.

Why haven’t stocks rebounded to any significant degree?

The stock market typically anticipates economic conditions nine months forward. The economic experts are predicting that the recession will have reached bottom by then, yet the market fails to recover.

Perhaps the market is looking at the prospect of a Barack Obama Presidency combined with overwhelming Democrat majorities in the House and Senate and is recoiling at the prospect.

With Obama in the White House and Democrats in control of Congress, there would be nothing to stop the implementation of the Democrats’ radical leftist agenda.

Here’s their economic agenda:

• A higher personal income tax, business income tax, dividend tax, capital gains tax, death tax, Social Security tax, and Medicare tax.
• No secret ballots for workers when they vote on whether or not they want to join a union.
• A mandate for small businesses to provide health insurance to their employees or pay a fine.
• Strict controls on the use of energy and on the types of energy used.
• Redistribution of wealth.

Redistribution of wealth.

Punish success and reward failure.

Take money from people who pay taxes and give it to people who don’t.

Give a $1,000 “tax refund” to the 40% of American workers who don’t pay income taxes.

A welfare check written against your account.

Obama let that one slip. We have Joe the Plumber to thank for the revelation.

Obama has tried to hold it in, but the truth keeps leaking out.

Joe Biden says it’s our patriotic duty to pay higher taxes.

Higher taxes and redistribution of wealth. Those concepts defeated Jimmy Carter, Walter Mondale, Michael Dukakis, Al Gore and John Kerry.

Americans don’t like socialism. Oops. We’re not allowed to call Barack Obama a socialist because some genius at a Kansas newspaper says that’s a racist slur.

Do you suppose he has ever heard of Karl Marx and Vladimir Lenin? The two white Europeans who fathered socialism and Communism?

Never mind. We’ll just call it Obamanomics.

Obamanomics. Take from the middle class and give to Barack Obama’s voters.

He doesn’t like his full name: Barack Hussein Obama (BHO). He thinks Hussein makes him sound like a Muslim. The names Barack and Obama sound Irish?

We’ll just call him Bear Market Obama (BMO).

January 26, 2010 Update: We published this editorial sixteen months ago on September 26, 2008. Today, Fox News published an article regarding a possible cover-up by the Federal Reserve System and the U.S. Treasury Department relating to the bail out of AIG and, through the back door, Goldman Sachs and other big banks. Our editorial seems to have been prescient.

December 12, 2009 Update: We published this article on September 26, 2008, more than a year ago. Today, The Wall Street Journal published an article detailing the fact that Goldman Sachs played a much larger role than previously had been disclosed in fueling the mortgage bets that felled AIG and required its multi-billion rescue by the U.S. taxpayers. Goldman Sachs itself received $14 billion from the U.S. Treasury to guarantee its losses from the AIG trades. We think our article below was dead on the mark and that history has proved it to be so.

Wall Street Can Wait

September 26, 2008

Treasury Secretary Hank Paulson is the former CEO of Goldman Sachs.

He didn’t have a problem letting Bear Stearns go down the tubes.

He sat and watched while Lehman Brothers went belly-up.

It wasn’t until the short sellers got around to attacking Goldman Sachs that he decided there was a crisis of potentially catastrophic proportions and that the taxpayers needed to ante up $700 billion to save his old buddies on The Street.

We’ll let you decide if that was a coincidence.

He concocted a plan that would put unprecedented amounts of power and money into the hands of…himself, and demanded that no changes be made to the scheme.

Then Senator Chris Dodd (D-CT) and Congressman Barney Frank (D-MA) stood up in front of the cameras and lectured us on the need to implement this plan immediately and not to worry because they would safeguard the interests of the taxpayers.

They neglected to remind us of the role they played in creating this disaster and of the fact that they both were bought and paid for long ago by Fannie Mae and Freddie Mac.

It turns out that an element of those “taxpayer safeguards” included the Democrats trying to write into this legislation that, upon payback (if ever that were to occur), 20% of the $700 billion would go to radical left wing groups such as ACORN. In case you haven’t heard, ACORN has been accused of voter registration fraud.

Does anyone remember the parable about the fox and the chicken coop?

The House Republicans stood up and said: “One moment please. Before you abuse America’s taxpayers again in an effort to clean up the mess that you created, we’d like to make some changes to your plan”.

Their thought is that instead of the taxpayers bailing out Goldman Sachs et. al, the banks should buy insurance from the government for their bad loans and other assets. The government would charge a premium on the insurance based upon the value placed on the assets by the banks.

Assets valued at 20% of face value would require a higher premium than those valued at 50%. The banks would therefore have a real incentive to accurately determine the asset values and the taxpayers would have a significantly lower contingent liability.

“No, no, no”, Secretary Paulson screamed (and reportedly begged), “we must act now. The sky is falling!”

We disagree.

The sky is not falling, unless you’re a Wall Street tycoon.

We don’t have to rush this through. It’s more important to hear and analyze all reasonable approaches and to consider thoughtfully the legislation.

Some claim that if the deal is not reached by Sunday evening, September 28, 2008, before the Asian markets open, those markets will crash, followed by Russia and Europe.

So what?

What could be better for America than the economic prostration of China, Russia and Europe, who support or ignore our enemies around the world?

China increases its military budget every year in an attempt to confront American power in Asia.

Russia is conducting gunboat diplomacy in our hemisphere.

European officials react with glee at our economic difficulties and cheer for the day when our influence will (in their opinion) wane.

If those countries go down they won’t be able to buy our debt?

Here’s a radical idea: The U.S. Government should reduce its spending (beginning with this bailout) and balance its budget. Our need to borrow money from other countries would hence abate.

If we don’t implement the bailout now, some companies won’t be able to borrow money next week to meet payroll and the American people will suffer!

Here’s another radical idea: Instead of spending $700 billion to bail out Wall Street, make money available to the banks to lend temporarily to creditworthy businesses to make payroll.

How much would that cost? $1 billion? $10 billion? $100 billion?

It would be a tiny fraction of the Paulson plan and the government actually would get paid back.

Warren Buffet says that if we don’t implement this plan now we will suffer an economic Pearl Harbor!

Here’s a news flash. Warren Buffet is not a saint.

While he is an enormously successful businessman and a magnanimous philanthropist, he’s also an opportunistic investor. He admits that and his shareholders rightly celebrate it.

He invested $5 billion in Goldman Sachs recently on the premise (among other things) that Goldman would be able to offload its bad assets onto the taxpayers. The price at which he invested was determined in part by that expectation. Of course he wants this deal to go through.

We believe that the deal should be amended to make it less onerous to the taxpayers and more oriented to the free market.

That will take time.

Wall Street can wait.