The four horsemen of Barack Obama: why markets are predicting apocalypse.(SPECIAL POST-ELECTION ISSUE)(Barack Obama's platforms)

ACCORDING to the University of Iowa's presidential-futures market, John McCain's prospects peaked on March 22, 2008. By that day it was clear he'd be the nominee, though he had not yet been officially nominated. The market implied that his odds of winning the White House were 55 percent.

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But then financial markets began their historic fall, which accelerated as the campaign wore on. When McCain's probability of winning was at its peak, the S&P 500 index stood at 1,329.54. By November 5, it had dropped 28.3 percent, to 952.77. The question: Did the tanking economy help Obama; did the economy tank as a reaction to the fact that Obama might become president; neither; or both?

Democratic partisans prefer the first explanation. Nobel Prize-winning economist Joseph Stiglitz, for example, recently wrote that "Barack Obama owes his victory in large measure to the prospect of the longest and deepest economic downturn in a quarter-century and perhaps since the Great Depression."

Stiglitz is right. The link between bad economic news and diminishing prospects for the presidential candidate who represents the incumbent party is older than sliced bread, and has been carefully documented by Yale economist Ray Fair. But Stiglitz is only half right, because the negative correlation between Obama's prospects and stock prices reflected an ominous feedback loop: As Obama's odds of winning rose, markets tanked; as they tanked, Obama's odds of winning rose.

Obama supporters will of course dispute this, but market movements after the election confirm that an "Obama Panic" took place in October and November. The day after the election, the S&P 500 dropped 5.2 percent, the worst reception ever for a winning candidate. It dropped another 5 percent the next day.

What explains the despair? A look at Obama's platform suggests that he plans four big changes that, if implemented, could have terrible economic consequences. Think of them as the Four Horsemen of Obamanomics.