I swear, it is like Obama is reading my blog.
A week ago, I opined that Obama's lack of bipartisanship destroyed the market's confidence, and that he needs to cut corporate taxes in line with European/OECD rates and rethink his energy plan in order for the markets to rally and the economy recover. Today, addressing CEOs at the Business Roundtable, Obama put corporate tax cuts and energy plan redesign on the table. And the markets rallied.
Even better, Obama apparently linked cutting corporate taxes to closing loopholes and ending subsidies. Amen. One can only hope this does not turn out to be another example of his famous fake right, go left hoops tactic.
But really, the last couple of days has seen an epidemic outbreak of reason, tracking the current stock market rally. On Tuesday, Barney Frank announced the re-instatement of the uptick rule, which slows down a short-selling avalanche and so will give a lift to markets. On Wednesday, both Fed Chairman Bernanke and Warren Buffet urged "improvements" in mark to market accounting rules, which many argue triggered the current financial crisis and collapse of major investment banks by forcing valuable assets to be listed at zero market value when markets are not functioning.
Then the Europeans chimed in: "In Berlin Thursday, with German Chancellor Angela Merkel at his side, French President Nicolas Sarkozy explicitly rejected Mr. Obama's push for more global fiscal stimulus, declaring, 'the problem is not about spending more, but putting in place a system of regulation so that the economic and financial catastrophe that the world is seeing does not reproduce itself.'"
Since the mere mention of European technocrats can induce fits of boot licking and forelock tugging among American liberals, one can only hope Obama will listen closely to this advice. Hopefully, Sarkozy will also find time at the G-20 summit to explain to Obama the policy of green tax cuts that he and British Prime Minister Gordon Brown helped steer through the European Parliament this winter – the addition of which could seriously improve Obama's energy plan.
One can only hope that good sense is contagious, and these ideas all take root, as they should have months ago, sparing us all much unnecessary pain and loss. My expectation is that the degree to which these various great ideas are adopted or rejected, the markets and the economy will rise or fall.