Market Now Runs on Politics, Not Economics

Once upon a time, “if you wanted to get rich, you did it the Warren Buffett way,” writes Charles Krauthammer in the Washington Post. “You learned to read balance sheets.” That changed with the Bear Stearns rescue. Today, political maneuvering is what moves the markets, and that has profound implications. "Now lobbying is about life and death," he writes, and "political directives issued by newly empowered politicians" are a serious problem.

Lawmakers dictate that banks must lend, and automakers must produce hybrids. But banks need to shore up capital, and the much-hyped Chevy Volt would retail for $40,000. “Who but the rich and politically correct will choose that over a $12,000 gas-powered Hyundai?” asks Krauthammer. If the noted auto engineers on Capital Hill are calling the shots, Detroit will make “the Soviet Union look the model of efficiency.” (More bailout stories.)