Barack Obama may indeed be the intellectual that most of the media have said he is.  But how would we know?  Education is not in itself a path to becoming an intellectual.  What I find most interesting is his utter lack of curiosity as relates to economic theory, and good old fashioned American history.   When President Elect Obama talks about the economy, and in particular the credit crisis, he never rounds out the rhetoric  with historical comparisons.   One can only assume that he doesn't have a solid grasp on what is happening today, because he doesn't have any context with which to place the situation.
During the late twenties when the country was heading in to the Great Depression, many small investors were leveraged to the hilt.  This is what led to the stock market crash. When margin calls were made, investors were forced to sell sound stocks to raise liquidity.  Today, it is the banks themselves that are leveraged.  It would be nice to know what Mr. Obama feels are the parallels between now and then. 
Obama's choice of former Clinton staffers should not be surprising.  From the early days of his campaign, he spoke of tax increases back to the level of the Clinton years.  It is apparent that his only frame of reference for economic policy is the Clinton years.  What I find even more amazing is how many pundits and investors are going along with this. The modest tax increases under the Clinton administration were tempered by increases in preoductivity, and if you recall, a huge jump in technology spending to battle the Y2K bug.  Couple this with a Republican controlled congress, and you can say that there is no comparision between then and now. But it gets worse, much worse.  The falling economy today is related to the housing crisis, high energy costs at the onset of the crisis, and a lack of confidence.  This was certainly not the case in the nineties. 
If we look at the current situation through the lens of history, we come to the conclusion that in the early stages of his administration (at least the prepatory stages) Obama is making the wrong decisions at almost every turn. 
The Clinton/Rubin policy of easy money and credit is a dead issue.  It will take every spare dime Washington can muster just to keep the banks afloat.  Should the Obama administration take the path of least resistance (inflation) things will get even worse.  Those who have managed to stay employed, will find their dollars don't go as far, thus further eroding the economy.
The only logical conclusion is that this economy is going to get much worse under Obama.
History tells us that the correct path is to increase productivity.   This allows prices to fall, wages to stabilize and employment to rise.  But how do we do this?  It is actually easy.  The Congress and the last three presidents have slowly increased regulation of business in areas not directly related to public safety.  Taxes have also slowly increased short the Bush tax cuts.  To increase producivity and supply (I'm a big believer in Say's Law) we just need to take some of the burden off of business.
If Obama were even a casual student of economic policy, and American history this would be immediately apparent to him. The entire world is replete with examples of how to fix a struggling economy. Coolidge,  Kennedy, Reagan all faced faltering economies, and relieved business of regulatory burdens and high tax rates, and the economy rebounded.  But we also have a wealth of historical evidence to light the path of destruction of the economy. Hoover and Roosevelt both increased taxes and regulations and tried to stimulate the economy with "infrastructure" projects.  This did not work. Post World War II England chose a similar route, while De Gaulle and Adenaur refused to follow suit and France and Germany recovered.
While most of the media and virtually all Democrats are fawning over the brilliance of Barack Obama, the truth is, he's fairly poorly educated when it comes to the issues that matter today. 
We don't need a crystal ball to see in to the future.
Higher taxes, more regulation and restricted trade are the recipe for econmic disaster during a down turn, and even more so during a down turn caused by a liquidity crisis.  There is no hope of a recovery until 2011.  At that point, the Democrats will lose control of congress and the breaks will be applied.  But the damage will have been done, and we'll need to wait until a new president takes office in 2013 to begin a turnaround.    Our only hope is that Obama becomes paralyzed with fear, and does nothing.  Economies tend to right themselves when left to do so.  During the Great Depression, the famous quote was, "The only thing we have to fear, is fear itself."  Today, the only hope we have is fear.

With the big three automakers now on Capital Hill with hands out, I got to thinking a little more about the 700 billion bank bailout.  If it weren't so sad, it would be funny watching congress complain about the direction of the bailout, that they approved.  The proposed bailout over GM, Ford and Chrysler is even worse, if that's possible.  These companies could all actually benefit long-term from bankruptcy and a restructuring of their contracts and debt.

But then I realized there is a silver lining to these bailouts.  Democrats control congress, and Democrats like to spend money even more than Republicans.  Congress does a terrible job of spending our money on programs that either don't work very well, or are not needed in the first place.  At least the bailout money goes to the private sector.  This money was going to be spent by congress on something stupid.  Let's not kid ourselves. The 700 billion was going to be spent. At least now it won't be spent on midnight basketball, or grants to ACORN, the ACLU or some other absolutely nonsensical program that essentially fights against the needs and desires of most of America. 
From an economic stand point, these bailouts will probably due more harm than good. But the reality is, the money is better spent by drunken wall street "tycoons" and executive managers who have no idea what business even is, than congress.  I still don't like them, and I still think our congress is a ship of fools, but at least they'll have 700 billion dollars less of our money to make government bigger.

Is another Great Depression imminent?