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Friday, March 06, 2009

How much blame can President Obama take for the stock slide?

It's always hard to tease out all the reasons for the stock market going down. But Business Week asks the question of how much blame the Obama administration deserves for the slide that has been going on since he took office. Clearly, the market was heading south since before the election for reasons that have nothing to do with Barack Obama. But the president in office, however much he may or may not deserve it, always gets the credit or blame for how the economy does while he is in office. But has the Obama administration done anything to ameliorate the slide or has his performance exacerbated the fallout on Wall Street? And Business Week clearly comes to the latter conclusion. They identify several elements to the slide. First there were unreasonable expectations that no political messiah, no matter how gifted, could have lived up to. But they have just bungled any approach to easing the financial crisis. President Obama promised us that Secretary Geithner would present a detailed plan on February 10, but then Geithner gave a poor presentation of an unsubstantial program and people lost confidence that there was any coherent strategy coming from this administration on how to deal with the credit crunch. And that created great uncertainty about what the government was planning.
A lack of details from Geithner disturbed investors, says Quincy Krosby, chief investment strategist at the Hartford (HIG). "Markets need certainty," she says. "The market has been sitting here waiting, waiting, waiting. That allows rumors and conspiracy theories to dominate."

Jerry Webman, chief economist at OppenheimerFunds (OPY), defends the Administration. "I would like to see Administration people more visible" on the issue, he says. But, "the problem is: What do we expect them to say? 'This is a big complicated problem and we don't know where we're going to get the money to solve it'? That would be the truth," Webman says, but it wouldn't make market participants very happy.
We might be uncertain as to what they're going to do for the financial crisis, but they've been very frank about all their plans for rebuilding the economy in other areas. And the market has responded to some of those plans.
The impact of Obama's proposals are easy to see in particular segments of the market. In a speech to Congress on Feb. 24, Obama pledged a "substantial down payment" on health-care reform. David Chalupnick, head of equities at First American Funds, points out that, since then, stocks in the Dow Jones U.S. Health Care Providers Index (IHF) are down 16%. Health-care stocks had been a relative safe haven in the market, because medical spending tends to hold up even in recessions.

Investors aren't just expressing their political beliefs that taxes and regulations are bad for the economy. They're also making a practical calculation that they will hurt corporate bottom lines in the future. "What you're doing is lowering the profitability of these firms," says Bill Larkin of Cabot Money Management.
I think the uncertainty is one of the deepest problems. If you have a business and you're thinking of expanding, how can you base decisions projecting energy costs, government regulations, health care for your employees, tax rates, etc.?

That's why a Democrat who supported Obama like Jim Cramer has now earned a place on the Obama enemies list by ranting about how the Obama administration is harming our economy.
But Obama has undeniably made things worse by creating an atmosphere of fear and panic rather than an atmosphere of calm and hope. He's done it by pushing a huge amount of change at a very perilous moment, by seeking to demonize the entire banking system and by raising taxes for those making more than $250,000 at the exact time when we need them to spend and build new businesses, and by revoking deductions for funds to charity that help eliminate the excess supply of homes.

We had a banking crisis coming into this regime, but now every area is in crisis. Each day is worse than the previous one for this miserable economy and while Obama's champions cite the stimulus plan, it's really just a hodgepodge of old Democratic pork and will not create nearly as many manufacturing or service jobs as we hoped. China's stimulus plan is the model; ours is the parody.
President Obama might pooh pooh the importance of the steady drop of the stock market when he said,
"You know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong."
But he can't ignore the causes of that free fall or the effect that that has. This isn't like 1929 when only a small percentage of the public was invested in the stock market. Now the great majority of Americans are part of the investor class. And they're seeing their savings for retirement fade away as well as perhaps the money that they'd invested to save for their kids' college or that new house. Peter Wehner puts it well,
The market is plunging, not gyrating. And to compare it to a tracking poll in politics is foolish and somewhat callous. What we are witnessing are trillions of dollars of people’s savings evaporating. It is causing enormous fear in a lot of people, especially those nearing or in retirement, who are watching their life savings disappear. To cavalierly dismiss this concern, as Obama does, is a sign that he is already at the point of employing unserious arguments to explain a crisis he has, so far, not only been unable to reverse, but has made worse.

It’s amazing how quickly a formidable political figure, in the midst of a crisis he (so far) seems unable to confront, can go tone deaf. And, of course, the next step when you’re at sea is to attack Rush Limbaugh. Gosh, and to think we were told that we were through with petty politics and childish ways.
And while this uncertainty continues, as Gerald Seib points out, consumer confidence will keep falling and the economy will continue to falter.
Indeed, Mr. McInturff notes that in a January Journal/NBC poll, equal percentages of Americans cited the decline in the stock market and the broader slowdown in the economy as a factor having "a great deal" of impact on them. In other words, people were as likely to feel hurt by the stock market's decline as by the overall economic decline.

There's an explanation for that finding, of course, which is that stocks have become steadily more important in the real economic condition of average Americans. The spread of 401(k)s and individual retirement accounts means market conditions penetrate tens of millions more homes now, which is one of the most significant changes in the structure of the economy in the past generation.

Figures compiled by the Investment Company Institute, the national association of investment firms, tell the tale. The institute conducts an annual survey of American households to gauge stock ownership. It found that the number of American households owning mutual funds -- the most common vehicle for holding stocks -- more than doubled between 1987 and 2007, to 55.3 million households from 22.5 million. The percentage of households owning mutual funds during that period rose to 47.7% from 25.1%.

Put another way, a drop in the stock market now has a real -- not just a psychological -- impact on the well-being of half of America's households.

The effects are demonstrable. A new Journal/NBC poll, released this week, found that the Americans most likely to have stock investments -- those with family incomes above $50,000 -- also are markedly more likely to say they are very dissatisfied with the economy. In other times, that distinction might have gone to those on the lowest income rungs.
Obama has been losing the right of center analysts like David Brooks and Christopher Buckley who supported him over McCain and Palin. Now he's losing left of center supporters like Jim Cramer and Stuart Taylor. Taylor is particularly devastating in his column about Obama's contributions to our economic decline and the fuzzy numbers he's been using to try to pretend that his budget plan actually saves money.
As for the budget's $2 trillion in projected net "savings," Obama's budget director, Peter Orszag, admitted in testimony on Tuesday under questioning by Rep. Paul Ryan, R-Wis., that $1.6 trillion comes from phantom cuts of the money that would be needed to sustain the troop surge in Iraq for another decade -- money that nobody ever intended to spend.

Other supposed savings -- especially from Medicare -- seem unlikely to materialize absent benefit cuts, which Obama has not proposed. And the cost of any health care legislation -- to be drafted largely by a Congress that is allergic to the kind of cost-cutting necessary to make universal care sustainable -- is likely to be two or three times the $634 billion over 10 years that Obama has budgeted.

Meanwhile, "politics trumps economics" in Obama's housing program, says Washington Post columnist Robert Samuelson. It targets tax credits narrowly on first-time homebuyers with weak credit ratings while creating few incentives for the more affluent and credit-worthy people who have the collective buying power to revive the housing market. Obama also supports a "cram-down" proposal -- authorizing bankruptcy judges to unilaterally cut distressed homeowners' payments -- that would be hopelessly unadministrable at best and might drive up mortgage rates.
Taylor issues a final plea that many of us would endorse - that Obama would ponder these wise words from Margaret Thatcher.
And I hope that the president ponders well Margaret Thatcher's wise warning against some collectivist conceits, in a 1980 speech quoted by Wehner: "The illusion that government can be a universal provider, and yet society still stay free and prosperous.... The illusion that every loss can be covered by a subsidy. The illusion that we can break the link between reward and effort, and still get the reward."

50 comments:

Bill B. said...

Amazing, isn't it? The same folks who were insisting that nine-eleven couldn't possibly be Bush's fault because he had only been in office for nine months when it happened, even though he was specifically warned in advance, now call Obama a failure because he hasn't fixed the entire world economy in 44 days.

Fewer GOP echo chamber talking points, and more independent thinking needed around here.

Tacitus Voltaire said...

"The illusion that government can be a universal provider, and yet society still stay free and prosperous.... The illusion that every loss can be covered by a subsidy. The illusion that we can break the link between reward and effort, and still get the reward."

i wonder who the idiots who would believe the above would be.

republicans love to create the straw man "liberal" and create all sorts of stupid opinions for this straw man that they can then sound sage and practical by disparaging. in fact, president obama is doing as many practical things, as quickly as he can manage, to see to it that our economic system does not collapse from the consequences of the stupid and short sighted actions of a few 'masters of the universe'

who are supposed, by strict conservative economic theory, to always act in the interest of all if left unrestricted. do you still believe that???

if you want to criticize the president, i would suggest that you propose practical alternatives instead of restricting yourselves to copping attitudes

Bachbone said...

"Magic Mouth" Obama and his advisors were all over TV shortly after the election telling us and the whole world how much better off everything was going to be, and not so subtly suggesting Bush ought to leave office early and let them take over, because they were ready to "hit the ground running." They held daily news conferences, gave weekly radio speeches, designed their own "Office of the President-Elect" medallion and their own Obama logo. We've been promised that salvation was coming since Obama was elected months ago, and lest it be forgotten, the "Bush economic policies," which have been criticized here for years, were supported in very large measure by Obama and his Democrat party. The Bush TARP bailout got candidate Obama's stamp of aproval, remember?

Prof. Peter Morici, Univ. of Maryland, an expert on economic policy and international economics, on TV a couple of nights ago, said (paraphrasing), "The difference between Paulson's and Geithner's policies is like the difference between Goldman Sach's 6th and 7th floors." In essence, those economic policies have done nothing and in concert with Obama's socialist tax, health, labor and educational policies will only worsen things.

At best, these people don't have the foggiest notion what they are doing. At worst, they know exactly what they are doing, as evidenced by Geithner calmly testifying before a congressional committee how Obama and company intend to remake the country into the United Socialist States of America. While GOP committee members meekly blather on into the wind.

Perhaps if Lord Obama would focus on fixing our economic problems and not on remaking the country into a socialist paradise, he wouldn't need to worry about being the world's savior.

Tacitus Voltaire said...

apparantly, the whole point of this lenghty post is to determine whether obama can be blamed. i search in vain for alternative suggestions as to how to get us out of this mess.

is there some sort of 'solution by blame' theory in the conservative econimic camp these days that has superceeded the keynsian 'supply side' theory?

Bill B. said...

someone claims "as evidenced by Geithner calmly testifying before a congressional committee how Obama and company intend to remake the country into the United Socialist States of America."

I must have missed that. I wonder if you are, yet again, inventing some false notion, ascribing it to those who have different opinions to you, and then getting all self-righteous about it.

That's the main occupation of regressives here. But America already voted on that. You're in the wrong, you're out of power, your ideas put us in a mess. Have thee grace to shut up while democrats fix your problems.

Pat Patterson said...

Back to the original non sequitur that Bill B posted I know that I and tfhr said that there was plenty of blame to go around from both administrations. While Bill B, et al were claiming ad naseum that it was entirely Bush's fault and that he lied. I think even just until very recently Jaw Bone was still going on about losing the war in Iraq and how it was all Bush's fault, etc. The only assumption I can make is that the left has become so enervated that they can try to dish it out but they certainly cannot take it.

"Specifically warned in advance" do you mean like prophetic dreams or the goat entrails TV studied for months? Neither the 9/11 Commission or the Iraq Study Group made that claim even in the footnotes of some of the unhinged staffers.

Chris M. said...

The Democrats should show us that they can fix a problem before asking all nonDemocrats to renounce their rights as citizens.

Hank said...

Regarding the actual topic, the stock slide...

According to BusinessWeek....

BusinessWeek interviewed a wide array of investment professionals, and many said the first six weeks of the Obama Administration have soured their outlook on the stock market.

mwalimu_d said...

Amazing, isn't it? The same people who blamed Bush for everything under the sun are now trying to pretend Democrats are not in power. Bill - your side screwed up. Deal with it.

Fewer Obamanoids, and more critical thinkers desperately needed here.

Anthony said...

Bill -- I do not think it is all Obama's fault.

However, the stock market isnot really an indicator of where the economy is now. It is really an indicator where people think the economy is GOING to be.

Much of the drop in the market is do to the free market working the way it is supposed to. The market had to drop thanks to all the bad debt, once the government could no longer manipulate the debt markets.

But part of the drop since Obama's election, even a majority of the drop, is probably due to investor concern about Obama's policies in the future. If investors (which includes most of usthese days) think that Obama's policies will harm the economy long term, then the market goes down, even though no actual harm has occured yet.

I think also a big part of it is uncertainty. There is NO Treasury team in place. One day they say massive tax increases, the next no tax increases. No one knows where Obama wants to go, but the indiciations are not good.

Ken Ashford said...

Anthony writes:

"But part of the drop since Obama's election, even a majority of the drop, is probably due to investor concern about Obama's policies in the future. If investors (which includes most of usthese days) think that Obama's policies will harm the economy long term, then the market goes down, even though no actual harm has occured yet."

Two points:

(1) While most of us have 401(k)s, we're not "investors". We rarely make investing decisions relating to our retirement accounts on a day-to-day basis. Those decisions are still, for the most part, made by Wall Street types who manage our accounts -- the same types who are largely responsible for getting us in this mess. And some of them still trade on the short term, rather than long term. So it's not necessarily true that the daily ups and downs of the stock market reflect the long term outlooks of typical Americans.

(2) You are correct, I believe, in stating that market downturns are driven by "uncertainty". Unfortunately, at times you seem to equate "uncertainty" with pessimism or dissatisfaction. They are not the same thing.

The reality is that Obama can do nothing to create certainty; NOBODY can say for sure when, or even IF, his policies will turn the ecomony around. However, I respectfully suggest that his efforts are probably creating LESS uncertainty (and therefore, LESS of a downturn) than the Republican alternative (which, to date, is little more than doing nothing).

Rhiner said...

Only someone uninterested in the cause-and-effect relationship between economic policy and market performance would fabricate the fantasy that Obama is responsible for the economic declines we're seeing now.

Regardless, here's a broader perspective on market performance than what Ms. Newmark provides in her blog article:

Dow Jones Index from 01-Mar-08 to 19-Jan-09: -33%

Dow Jones Index from 20-Jan-09 to 03-Mar-09: -18%

The fact is the drop is slowing under Obama.

(I thank "nojust19" for doing the market research.)

Ken Ashford said...

Also, on a day-to-day basis, the Dow goes down because the economic news is, well, bad.

Today, for example, the Dow is down on news of February job losses. A few days ago, it went down on news that AIG still required more bailout money.

Do you find those "events" listed Betsy's graph above? No, of course not. Because that would take away from the meme that "it's Obama's fault".

Both of those events -- and many others -- are traceable NOT to Obama or his policies. They are merely continued fallout from the financial crisis that originated long before Obama's inuguration, and long before his election.

Michael said...

The stock market reflects expectations about the future, and it is dropping because hope for the future of the private economy is being extinguished by the Obama administration. Note the approximate value of the S&P 500 on the following dates: Obama sews up nomination (Jan/Feb '08), 1400; last time McCain/Palin led in polls, 1200; Election Day, 1000; Inauguration Day, 800; today, 667 and dropping. The stock market is as good a proxy as there is for the future wealth and well-being of the Country, and its current level reflects the collective judgment of knowledgeable people regarding the impact of hyper-large government liberalism on our future welfare.

DaveS said...

The same folks who were insisting that nine-eleven couldn't possibly be Bush's fault because he had only been in office for nine months when it happened, even though he was specifically [having actually read the PDB, LOL @ "specifically" --DaveS] warned in advance, now call Obama a failure because he hasn't fixed the entire world economy in 44 days. --Bill B

The stock market hangs on every word of the President, the head of the Federal Reserve, and the Sec. of Treasury, and responds very quickly--in realtime, even--to the things those people say. I think drawing an analogy to a covert terrorist operation that was planned for years and of which we had no specific knowledge (contra your ill-informed assertion) is juvenile and superficial, to put it in the most polite terms possible.

You are clearly not the type who actually invests his money, attentively at least. If you were, you would understand why people are inclined to disinvest after hearing the type of rhetoric we've gotten from the White House. This isn't some ideological speculation on why the market moves; its very real:

When any company is a potential candidate for nationalization, people are less likely to invest anywhere. When any company could become the "Bogeyman of the Week" for the WH press secretary, people are less likely to invest. When some whimsical tax could be imposed on profitable companies who need to "share the sacrifice", people are less likely to invest even on the most profitable companies. When the government talks about spending TRILLIONS of dollars on ideologically motivated pet projects, people are less likely to invest even in traditionally "safe" bonds and other similar securities which could become worthless. When the head of the FDIC is scaremongering about the fund becoming insolvent and bank runs, people are even less likely to feel comfortable putting their own money in US banks.

You need to snap out of this Obama as Messiah alternate universe... a LOT of people need to snap out of it... so that we can fix the problem.

Anthony said...

Ken --

To respond,

(i) even within 401(k)s there is some control. If people start moving movney out of stock funds into bond funds or moneymarkets, they are still having an effect on the market. But I take your point.

(ii) I argue that two things are going on here (1) investors are concerned that the obama team is not clear in what they are going to do (uncertainty) and (2) what they have seen (the stimulus bill for example) they do not like.

I understand no one can say with certainty whether the stimulus bill or any of the proposals thrown out there will help the economy. I think you can say though that the market wants to at least see something coherent. That is the certainty, that there is some sort of coherent program. And I am not sure there is -- there is only Geithner at Treasury right no, no deputies or others.

DaveS said...

@Rhiner: Did you SERIOUSLY just say that -12%/month under Obama was slower than -3.1%/month?!?

Good God, is this what we're up against?

Steve in Colorado said...

Math-challenged Rhiner says the drop is slowing under Obama. Using his own figures, from 1-March-08 to 19-Jan-09 the Dow fell 33% or approximately 0.72%/week during that time. From 20-Jan-09 to 3-Mar-09 the Dow fell 18% or approximately 3%/week. Some slowdown.

Clyde said...

I take it you weren't a math major, Rhiner.

The drop of 33% under the Bush administration took place over a period of 325 days, an average loss rate of a little under 0.1% per day.

The drop of 18% under the Obama administration took place over a period of 42 days, which is an average rate of 0.43% per day, a rate four times as fast as the average loss in the period you chose for the Bush administration data. And the market continues to plummet through today. As of yesterday, the market was down 20% since Obama took office, giving him his own personal bear market. The market's decline is NOT slowing, it is accelerating.

Telford said...

Rhiner, besides the bad math others have already corrected, the difference between January 20 and now isn't that a lot of unexpectedly bad data has arrived. Everyone expected the data to be awful, and that was already reflected in stock prices. The difference is the new information of how poorly this administration is doing -- not just on the economy but on appointments, foreign diplomacy, and relationship with Congress. It forms a pattern which can't help but depress expectations for the future and thus current stock prices.

Greg Toombs said...

Prior to the Obama administration we've been treading water in a sea of debt and beginning to drown from prior deficit spending and TARP, etc.

Then Obama and his crack team of experts announce a monster 'stimulus' package containing little immediate stimulus, puny and illusory tax cuts, but does include vast amounts of pork for his Democrat-connected and would commit us to borrowing of hundreds of billions of dollars.

And TARP 2, more borrowed money.

Then comes the Omnibus spending bill containing 9,000 earmarks and even more fantastic amounts of debt, in fact $1 Trillion this year and more than $500 Billion every year into the future (even under the rosiest of rosiest economic growth projections?

Do you think this also might have anything to do with the negative outlook as expressed by the stock market and business laying off hundreds of thousands or employees?

Can't anyone here play this game?

Ken Ashford said...

Responding to DaveS:

"When any company is a potential candidate for nationalization, people are less likely to invest anywhere."

Even assuming this is true, it's not Obama's fault. Obama has repeatedly spoken against nationalization. If Wall Street investors don't believe Obama on this point, that's fine, but they can't turn around and BLAME Obama for the "nationalization" threat.

And besides, if a company gets itself in such a position that it COULD be nationalized, perhaps the company itself has to bear some of the blame. Hmmmm?

"When any company could become the 'Bogeyman of the Week' for the WH press secretary, people are less likely to invest."

Do you seriously think that the press secretary is why nobody wants to invest in, say, AIG, Citibank, or other troubled companies? Seriously?

When speaking of the "Bogeyman of the Week", has the press secretary EVER said anything that investors didn't already realize?

"When some whimsical tax could be imposed on profitable companies who need to 'share the sacrifice', people are less likely to invest even on the most profitable companies."

So people will choose to simply invest in.... the unprofitable companies who have a lower tax burden? Or do people think they will get a better rate of return by not investing at all?

Look -- even in bear markets, people will still invest in "the most profitable companies" regardless of the tax rate. Why? Because they are the most profitable!

"When the government talks about spending TRILLIONS of dollars on ideologically motivated pet projects, people are less likely to invest even in traditionally 'safe' bonds and other similar securities which could become worthless."

So if you could magically transport yourself back to the year 2000, and you had the opportunity to invest in Halliburton or some other contractors who have worked in Iraq, you wouldn't?

"When the head of the FDIC is scaremongering about the fund becoming insolvent and bank runs, people are even less likely to feel comfortable putting their own money in US banks."

(1) You exaggerate what was said (and how does THAT help peoples' comfort)?

(2) The FDIC has nothing to do with Obama; its an independent federal agency

Ken Ashford said...

"Note the approximate value of the S&P 500 on the following dates: Obama sews up nomination (Jan/Feb '08), 1400; last time McCain/Palin led in polls, 1200; Election Day, 1000; Inauguration Day, 800; today, 667 and dropping."

Today, the market closed UP 32.50 percent.

And that's on a day when we learned that unemployment rates were the lowest in decades.

Will (some) commentors here credit Obama and his policies?

Tick, tick, tick.....

Bachbone said...

I have no doubt Bill B. "missed" any and all of "Magic Mouth" Obama's and his cabinet members' comments about socialist policies, because Bill B. cherry picks what he chooses to admit into his version of reality. Well, if Bill Clinton, Franklin Raines, Chris Dodd, Barney Frank, Maxine Waters, ACORN and a few other leftists were in my corner, I'd want to exclude them from my reality, too.

After election cycle comments here from Bill B. and his myriad of alter egos (who/which never "shut up" about Bush being responsible for everything from soup being too hot to nuts having too much salt), and had the "good grace" to post scurrilous lies about McCain and his wife, Palin and her family, and even went so far as to post anti-Semitic comments about our host, which is about as ungraceful as one can get, he finally gets to the Left's usual last refuge: Shut up the opposition!

Sorry, Bill B. Obama hasn't shut down free speech yet. I know it's on his list, though.

Basspastor said...

Obamabots have reason for Hope.

Obama hasn't been at this long and they believe his leadership and policy prescriptions will work given time and for now time is on their side.

I am not an Obamabot and I am not impressed with his leadership or policy prescriptions. Unlike Limbaugh I do not wish failure upon Obama, but that doesn't exactly mean I am rooting for him either. I think there are legitimate reasons to doubt that the Obamabots Hope will be realised.

Greg Toombs said...

'Today, the market closed UP 32.50 percent.'

Jeez, Ken. You've made a pretty serious error there, one that calls into question your entire premise.

Why don't you see if you can figure it out and get back to us with a better try.

Hint: the Dow closed up 32.50 points, an increase of 0.49%. The S&P closed at 683.38 - up 0.83 (0.12%)

OK, I'll concede Obama credit for that, along with the blame for the rest.

Bill B. said...

Bachboneless claims "I have no doubt Bill B. "missed" any and all of "Magic Mouth" Obama's and his cabinet members' comments about socialist policies, because Bill B. cherry picks what he chooses to admit into his version of reality."

The actual explanation is that you made them up, and lied about it.

Betsy Newmark said...

Bachbone,

I can't remember Bill B. every posting anything anti-Semitic about me. I wouldn't want people to think that he had.

--Betsy

Bachbone said...

The "actual explanation" is that links to evidence have been provided to Bill B. and his alter egos about numerous matters after he/they have made easily refuted statements, but since some were not from leftist sources he/they recognize as "legitimate," he/they simply claimed they were "cherry picked" and/or not valid by his/their standards. Typical tactic of the unprogressive Left.

It's rather like Obama who campaigns on totally eliminating "earmarks" from bills, then claims, when opponents complain about the pork in the bill, that there are none in his so-called stimulus bill simply because they are not called "earmarks," ergo don't meet his standards for an "earmark." It all depends on what the meaning of the word "earmarks" is. Clinton redux.

Tacitus Voltaire said...

history will record that when all sensible people in american were trying to figure out how to dig ourselves out of this hole, there was another group who offered nothing better than blame.

i propose that at least one of the people blaming all of our problems on obama here offer up at least one positive action we could take to solve our economic dilemna

Pat Patterson said...

I have to agree that the charge is groundless and hyperbolic. I believe that there were three commenters, Janet, me and don, who were the source of those scurrilous anti-Semitic remarks. I would add that unless Bachbone could show citations an apology would be in order.

Locomotive Breath said...

"The reality is that Obama can do nothing to create certainty"

Wrong. He's given every indication that he may start messing with things the government has not been messing with before. People won't invest until they know which way the dice are going to come up.

On the job training's no fun, is it?

Locomotive Breath said...

Perfect description of creating uncertainty.

As Banks Reel, Obama Pushes — Health Care?

What's going on? "You never want a serious crisis to go to waste," said Chief of Staff Rahm Emanuel. "This crisis provides the opportunity for us to do things that you could not do before."

Things. Now we know what they are. The markets' recent precipitous decline is a reaction not just to the absence of any plausible bank rescue plan, but also to the suspicion that Obama sees the continuing financial crisis as usefully creating the psychological conditions — the sense of crisis bordering on fear-itself panic — for enacting his "Big Bang" agenda to federalize and/or socialize health care, education and energy, the commanding heights of post-industrial society.

Skay said...

According to CNN Headline News the government is the only place showing increased hiring, increased benefits, and workers are almost never laid off.
As a matter of fact - it is doing great compaired to the privet sector.
The reporter pointed out that if there is a money problem they just raise taxes instead of letting people go.

They did not say where all of these new job hirings are.

We know Obama is promising to cut the military budget so there is probably not a big increase of personnel there.

Bill B. said...

Sue Kay enlightens us with "it is doing great compaired to the privet sector."


Yeah, and this is the first time you've been right - hedge funds are in real trouble.

Pat Patterson said...

Hmmm. vs never being right? Skay'g got my vote then!

Bill B. said...

The current bear market began long before President Obama was sworn in. The S&P 500 index has fallen by more than half, since its record high in October 2007. 80% of drop took place before the January inauguration.

The real reasons behind the sell-off are no secret: the bursting of the housing bubble, the unraveling of an unregulated multi-trillion-dollar financial house of cards built on greed, ignorance, and fraud.

There may be plenty more downside to come. In the Great Depression, World War II, the late-1970s era of stagflation, and the twin-recessions of the early-1980s, the P/E of S&P 500 companies fell to the 9 or less.

Right now, the P/E ratio of the bellwether index is around 12. Stocks could still fall another 50 percent before they would represent a true "buying opportunity." It takes time to clean up a mess as big as the one the GOP put the country in.

Does the GOP have any policy suggestions for improving things? Or is their only tactic to blame Obama, the one guy who might be able to bring us out of their mess?

Pat Patterson said...

In case anyone is wondering how come the last comment by Bill B bordered on the sensible relax. It wasn't his but stolen from a Huffington Post opinion piece by Michael Panzner with all the two syllable words left out.

http://www.huffingtonpost.com/michael-j-panzner/up-next-the-obama-bounce_b_172778.html

So Bill B seems to follow a pattern of plagarism then a succeeding comment of snark and so on. But I'll leave the Fisking to the rest of the commenters, as I'm sure that, like Lillian Hellman, Bill B is in danger of being charged with plagarism and that, "...Every word [he] writes is a lie including "and' and the "the"..."

Tacitus Voltaire said...

pat seems totaly unable to deal with the sensible explanation offered by bill. apparantly the fact that other people have said the same thing using different words, usually known as "having the same opinion but expressing it differently", or, at the worst, "paraphrasing", serves as an excuse for pat to ignore the obvious

presumably conservatives think that they are accomplishing something by hysterically displacing the blame for our problems away from themselves. what they think that is, i have no idea

the rest of us are trying to fix things. you all don't look very much like winners of any elections in the future by standing on the sidelines whining and blaming while the rest of us try to haul the car out of the ditch

Pat Patterson said...

TV-Did you bother to even follow the link because the "words" are not merely similar but the same in most of the comment? Are you know defending plagarism or revealing that you didn't bother to even check my comment for its accuracy? So now we are dealing with a plagarist and his handmaiden.

As to whining and complaining, quid pro quo!

Betsy Newmark said...

[Bill B. left this comment, but I deleted it by mistake - here it is]

Hi Pat -- you are right. I went looking for numbers and I simplified and summarized a post with the data on HuffPo. It succinctly said what you needed to hear.

If I was being paid or credited for posting, you could blame me for something. But since I am not being paid or credited, the worst you can do is accuse me of trying to educate you and other regressives. I accept that. Guilty as charged.

Tacitus Voltaire said...

TV-Did you bother to even follow the link

yes i did. as a matter of fact, why don't we quote the whole thing:

All of a sudden, our president is being blamed for the selloff in share prices.

Yesterday, for example, the Wall Street Journal published an editorial by Michael Boskin, former chairman of the Council of Economic Advisers under George H.W. Bush, claiming that "Obama's Radicalism Is Killing the Dow." In a Bloomberg News report, "Obama Bear Market' Punishes Investors as Dow Slumps," a money manager attributed the selloff to uncertainty stemming from the Administration's efforts to turn things around.

As usual, the alleged experts don't have any idea what they are talking about.

For one thing, the current bear market began long before Barack Obama assumed the reins of power. Since hitting its all-time high in October 2007, the S&P 500 index has fallen by more than half, with 80 percent of those losses occurring before the January inauguration.

More important, still, are the real reasons behind the sell-off. These include the bursting of history's biggest housing bubble, which triggered a shockwave of wealth destruction that has wreaked widespread havoc throughout the economy, as well as the unraveling of a multi-trillion-dollar financial house of cards built on greed, ignorance, and fraud.

Throw in the fact that stock prices had been supported by earnings and expectations about the future that had little basis in reality and it's not hard to see why the bears have been in control during the past year-and-a-half or so.

Indeed, on valuations alone, it is easy to make the case that there is plenty more downside to come. During the similarly turbulent times of the past, including the Great Depression, World War II, the late-1970s era of stagflation, and the twin-recessions of the early-1980s, the ratio of share prices to the aggregate earnings of companies included in the S&P 500 during the prior 12-months fell to the mid-to-upper single digits before another bull market began.

Right now, in contrast, the P/E ratio of the bellwether index is around 12. Assuming that we've seen the worst as far as the economy and corporate profits are concerned -- though there are lots of reasons to believe otherwise -- stocks could still fall another 50 percent before they would represent a true "buying opportunity."

To be sure, no market moves in a straight line. Even during the period from 1929 to 1932, when share prices lost 90 percent of their value, there were six double-digit-percentage countertrend moves along the way. These included a five-month, 52 percent rally in the wake of the Great Crash, as well as a nine-week, 29% gain in early-1932, amid the depths of the Depression.

In fact, an expanding array of technical and sentiment indicators suggests that a short-term bottom is likely at hand.

Bespoke Investment Group recently noted, for example, that a weekly poll by the American Association of Individual Investors (AAII) showed that investors "are now at their most bearish levels in the history of the survey." For contrarians, that is a bullish sign, indicating that pessimism -- and the selling that goes along with it -- is somewhat overdone, at least in the short run.

My own research on the deviation between stock prices and their longer-term moving averages, which can help gauge the "intensity" of a move, reveals that the differential has reached a level not seen since mid-November, after which the market jumped 19 percent in five days. Prior to that, the last time we saw such a rubber band-like divergence was during the 1930s -- before one of those rebounds I referred to earlier.

What this means, of course, is that when the stock market does have another one of its dead cat bounces, it likely won't be because of anything our president has done.

But that won't stop another group of "experts" from claiming otherwise.


now, pat, perhaps you could quit whining about stuff that nobody care about, and respond to the substance of the statement

Dr Weevil said...

So now it's not plagiarism if you're not paid for it? I wonder how far one of Betsy's students would get making that argument about a term paper. And Bill B. most certainly did claim 'credit' for it by putting his familiar name or pseudonym on the comment and failing to put any quotation marks around it. It is in fact plagiarism, and it is contemptible.

Pat Patterson said...

TV-Again I might ask if you can read carefully as you might have noticed that I referred to what Bill B plagarized as sensible, or at least bordering on the sensible. I can only echo Dr. Weevil and point out that Bill B's has neither apologized or as yet acknowledged the words that he stole. If anything he know admits searching for facts that he agrees with.

Or in honor of Dr. Weevil and borrowed from Cicero, "Cuiusvis hominus est errare, nullus nisi insipientis in errore perseverare."

Tacitus Voltaire said...

so what are the suggestions from the conservative side about what the president should do to stop the stock market slide?

Tacitus Voltaire said...

Newsweek Poll March 4-5, 2009

"We'd like your views about how much the federal government has spent so far to help certain groups affected by the financial crisis. What about federal spending to help [see below]? Do you think there has been too much, too little, or about the right amount?"

too much/too little/about right
Large banks and other financial institutions in danger of failing 68/8/21

U.S. auto companies in danger of going bankrupt 58/12/24

Homeowners facing foreclosure or who have already lost their homes to foreclosure 29/40/22

"Temporary nationalization is another way for the federal government to deal with large banks in danger of failing. This is where the government takes over a failing bank, cleans its balance sheets, and then quickly sells it off. In general, which do YOU think is the better way to deal with failing banks: government financial aid WITHOUT any government control of the bank, OR, nationalization, where the government takes temporary control?"

Aid Without Gov't Control 29%

Nationalization 56%

Neither/Other(vol.) 11%

"Which ONE of the following three statements best describes your opinion of the 800 billion dollar stimulus package recently signed into law by the President? It's the right amount of government spending to help turn the economy around. OR, It's a good start, but more spending will be needed for it to be effective. OR, It won't work and government should NOT be spending money for economic stimulus."

The Right Amount 15%
A Good Start 40%
Shouldn't Spend for Stimulus 37%

"Is it your impression that Republicans who have opposed Barack Obama's economic proposals have a plan of their own for turning the economy around, or not?"

Have a Plan 31%
Do Not 58%
Unsure 11%


lets summarize. americans generally, like the bailout for mortgage holders, but not the money for bankers and auto companies. a lot of americans would like to see the president go even farther with the banks and take control of them for the duration, at least, of the disaster. sixty five percent of americans are in favor of the stimulus, and most of these would like to see even more.

and most americans agree that the GOP has no clue about what to do

Tacitus Voltaire said...

oh, and i left out this very important measurement:

"How confident are you that, as President, Barack Obama will be able to turn around the economy? Are you very confident, somewhat confident, not too confident, or not at all confident?"

Very Confident 25%
Somewhat Confident 40%
Not Too Confident 16%
Not at All Confident 17%
Unsure 2%


so, maybe these crybabies on wall street should aquire some good old american steel in their spine, and realize that most americans have confidence in the president and think that we are, at least, on the right track

equitus said...

It was pretty clear that circumstances favored Obama winning it all once the primaries were sewed up. Right about when the collapse began. I'm not claiming that that event caused it, but one should think about that a moment.

Long-term investors are always looking ahead at what the market will bring. If they see storm clouds, they will start to pull out - in other words, they "discount" for things not going well. Many are arguing that the current fall is due to investors discounting for potential high unemployment and runaway inflation that previous incarnations of Obama's policies unleashed.

I would argue that before the inauguration, investors were reacting not just to weaknesses in the financial and mortgage sectors (which will usually find correction within a year or two on their own). They were also anticipating an impending 4 year term of a man whose record showed reckless ideologies regarding economics. I know I myself felt that dread as early as then. And in the first few weeks, it is now looking worse than anyone imagined.

Republican alternatives? The first order of business is to STOP THE MADNESS. Our future is being sold off at a fire sale for partisan purposes. My savings and investments will take a much longer time time rebound, and by then everything will be costing a lot, lot more.

How about these for an alternative proposal: Cut out all the spending proposals that DO NOT DIRECTLY ADDRESS economic stimulus. Allow real, verifiable transparency and commit to true independent oversight.

Bill B. You obviously plagiarized and got caught. At least give credit, man. Show a little class. You should either apologize and swear to never do it again, or invent yourself a new sock-puppet.

Skay said...

"Sue Kay"

Your assumption is wrong Bill B. -as usual.

My name is not Sue.

tfhr said...

Tacitus Voltaire,

You asked, "so what are the suggestions from the conservative side about what the president should do to stop the stock market slide?"

As others have pointed out, the market is not a measure of the economy as much as it a measure of where investors believe the economy is headed. With that in mind here are two measures that can help now.

1. Cut corporate tax rates to bring them to a level that matches or even undercuts some of our foreign competition. The oft cited 11% rate in Ireland is a perfect example and it means keeping and creating jobs that come with the creation of wealth.

2. Freeze pay roll taxes. There would be an immediate impact on the lives of everyday Americans and businesses. The spark to consumer confidence would be tremendous and the market would respond overnight. I can imagine those people near to retirement and heavily dependent on income generated through 401Ks and IRAs cannot have a turn around fast enough. A payroll tax freeze for even six months will give them HOPE and better yet, real change.

These suggestions might not be the panacea we all want to see but it would certainly change the direction of the market by helping companies, employees, consumers, and even a struggling administration that is beginning to see it's own numbers fall in the popularity contest of polls.

Finally, I would caution you on your use of polling data to determine the effectiveness of a given strategy concept or recent policy, as you have done in this thread. Doing the right thing may not make you popular but following the polls' lead does not make a leader and the President must lead.