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After traversing one of the most difficult State of the Union speeches given during the current administration, President Barack Obama, despite an improving trajectory in the opinion polls, has a near impossible task ahead of him as he vainly attempts to right a ship that is decades off-course. Undoubtedly, the greatest challenge for the progressive liberal and the so-called champion of disenfranchised social groups is the Republican-controlled Congress, which is likely to shut-down further attempts at de-facto collectivization. Even from angles in which he is regarded as pioneering, such as nationalized healthcare and race relations, the actual end product has left much to be desired. But the single greatest threat to the future prosperity of the Democrat party, economic growth, is an element that can neither be controlled nor modulated with an appreciable degree of long-term success.
First on President Obama’s economic agenda is the pejoratively labeled “Robin Hood” tax, which seeks to resolve the growing wealth disparity by increasing the tax burden on the affluent. According to a report by anti-poverty charity Oxfam, the world’s richest one-percent will control over 50-percent of global wealth next year, thus laying the moral framework for the proposal. While his heart may be in the right place, the heightened liability towards financially successful individuals and institutions contradicts the President’s own words during the State of the Union address, in which he promised an “incentivization” program to bring jobs back from overseas locations and into domestic facilities. A higher tax profile could potentially negate any benefits gained through domestic production, thus inducing the very status quo that Obama promised he would change.
Second on the agenda is the continuation of the momentum built during the so-called “economic recovery.” While it is true that statistically and contextually modulated data, such as the government produced jobs report, have improved substantially, and while speculative financial instruments have rocketed to all-time highs, the base reality for millions of Americans have either stagnated or have fallen markedly behind. According to a study conducted by the Pew Research Center, the percentage of those who identified with a middle-class lifestyle fell from 53-percent in 2008 to 44-percent in 2014. Within the same time frame, those who felt that they were in the lower-class rose from 25-percent to an alarmingly high 40-percent. Another key statistic is the home-ownership rate, which was around 67-percent when Obama took office but has since fallen further to approximately 64-percent. If home-ownership represents the financial bedrock of the American Dream, shouldn’t this rate at the very least stabilize during a bull market? Without getting unnecessarily conspiratorial, it is interesting to note the dichotomy between the numbers. Economic data pulled from the government or big business suggests one thing, but studies targeting real people with real jobs and real obligations paint a completely different picture. And that disunion may be too big for any one politician, no matter how progressive, to solve.
In financial news, the U.S. equities sector on Thursday was up for the fourth straight session as the European Central Bank announced a massive stimulus program set to begin in March. The S&P 500 gained one-and-a-half percent to close at 2,063, while the Dow Jones added nearly 260 points to end the session at 17,813. The precious metals complex priced in the enthusiasm, with gold closing at 1,303 while silver is up to nearly 18-and-a-half. Palladium also had a strong day after suffering uncharacteristic volatility, closing on the ask at 780 dollars. In digital currencies, Coinbase, the popular bitcoin-wallet site, recently raised 75 million dollars in Series C funding, which helped move bitcoin prices up to 240 dollars at last count.
And that will do it for this edition. Thanks for watching and we’ll see you next week!