Liz Swain 4:24 p.m., May 24
Obama Wants to Freeze Spending; Wall Street Horrified
Media are reporting that President Obama will call for a three-year freeze in spending on many domestic initiatives. After that period, he will want such spending to rise no faster than inflation. Predictably, Wall Street is aghast, because much of the liquidity that has been supporting stocks, bonds and commodities would be taken away if Obama's initiative were to pass Congress. Generally, Wall Street talks a good conservative game, favoring tight budgets, free enterprise, free markets, etc. But particularly in times like the present, the financial community wants no such things. It wants loose money and loose fiscal policy as well -- liquidity, and lots of it (and trade barriers, too). Verily, markets have been supported by zero interest rates, bank bailouts and programs such as cash for clunkers. Wall Street wants even more of a goose from government, even as it may talk a completely different game. As I write (almost 11 p.m. Monday evening West Coast time), Dow Jones futures are down 70 points.