Armageddon?

Here is how Neil Cavuto kicked off his business show tonight putting today’s 600 plus sell off in perspective and it’s not pretty:

The Dow is one of the best leading indicators I know … when its rational. I just can’t determine if this is just plain panic or rational selling, or both. When it happens in one day or two … its panic. When it happens over a week …. oh brother. The question is … what is it telling us? Hard economic times 6 months down the road? I think that is very likely now. Companies overvalued? No, not this time, but some for sure. Politics? Oh, yeah.

This is a market that is run by and for capitalists. It has consistently rewarded people and institutions for investing in America’s free market. In return government would reward the risk takers by letting them keep more of the fruits of their investing. That, my friends, is all threatened now.

Democrats have been talking up socialism for months now, whether its been Representatives Maxine Waters and Maruice Hinchey threatening to nationalize the oil industry, or the Treasury today suggesting it may take an ownership psotion in banks … even healthy ones. That’s the kinda of stuff that sends shivers through investors, who, if they are not just risking the economic vagueries of the market but also the whims of government are reluctant to put money into a system or an industry that could be nationalized before their very eyes.

We seem to be entering an age where bad investments are rescued and bad debt forgiven, not between contract holders but by a government all too eager to spend taxpayer money in a futile attempt to control the markets, to protect the citizenry from the national economic order, even if it means turning a demand economy into a command economy. How much longer before now before we as citizens not only own an insurance company, mortgage companies, banks but also auto companies and airlines.

And one other thing. The Obama camp has promised that as soon as it is elected it intends to punish successful investors and the rest of the folks that make the capital markets work. Higher income, capital gains and dividends taxes. There are some who are saying now, maybe I will sit this administration out, rather than participate in a game tht could be increasingly investor unfriendly.

So why is the market crashing? Comrade, welcome to the new socialism.

Update: Here’s what James Pethokoukis has to say on the subject.

But is fear of a potential Obama presidency playing any role at all in the weakness? How many investors, I wonder, buy into the theory of economist Peter Morici, hardly a conservative mouthpiece, who says, “Obama’s tax and redistribute policies will not resurrect jobs, wages, or the price of stocks in American retirement accounts. Ordinary Americans who have to earn their livings outside the cosseted confines of Wall Street will be not much better off two years from now. In fact, Obama’s policies may make economic conditions worse.”

Now, it is an interesting economic experiment that we may be about to undertake: Do exactly the opposite of what we did as a nation the last time America was in deep economic trouble, coming out of the 1970s. It’s like we are going to replay the 1980s, but with Ted Kennedy as president.