Referendum on Obama policy

[jackson33]

So much of the discussion on todays economy is based on the premise, everything Obama has planned is acceptable by some majority. In my little world, markets are the precursor to what will be in 6-12 months and thats not looking so good.

 

http://moneycentral.msn.com/investor/charts/chartdl.aspx?PT=4&compsyms=&CA=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&CP=1&C5=11&C5D=1&C6=2008&C7=3&C7D=5&C8=2009&C9=0&CF=1&DB=1&DC=1&D7=&D6=&showchartbt=Redraw+chart&symbol=%24INDU&nocookie=1&SZ=0

 

Forget the DOW was at 14,000, when it became apparent Obama was going to defeat Ms. Clinton, but was down to 9625 (election day) as polls continually project him the next President or had dropped to 8228 by his nomination, or that it has 6594 as of today, isn't/shouldn't there be some concern???

 

Alienating that 2-5 or whatever percentage you personally consider the elite rich, out of touch, no nothing Corporate World, may not be such a good thing.

[iNow]

The DOW knows all.

 

 

Really, a perfect response to the points in the OP.

[Pangloss]

Alienating that 2-5 or whatever percentage you personally consider the elite rich, out of touch, no nothing Corporate World, may not be such a good thing.

 

Pandering to them won't win their support either. Just the opposite, in fact.

 

What actually generates good economics are sensible policies applied logically and consistently over time -- something the "elite" can bank on because it will continue to be in place later when it comes time to reap the rewards of the investment. When it comes time to invest, they're not actually interested in conservative agendas any more than they are liberal agendas.

[Mokele]

Well, I think that pretty conclusively wraps it up for this topic.

 

Tune in next week for more of this fine program, "Desperate Conservatives Grasping At Straws".

[bascule]

Forget the DOW was at 14,000, when it became apparent Obama was going to defeat Ms. Clinton, but was down to 9625 (election day) as polls continually project him the next President or had dropped to 8228 by his nomination, or that it has 6594 as of today, isn't/shouldn't there be some concern???

 

In other news, correlation implies causation.

 

I think the present state of the market reflects a decade or so of poor economic policies more than it does Obama becoming present.

 

"Clinton's recession" began several months after he left office. Obama has been in office for a month and a half now. Obama is not in a situation of his own creating.

 

If a couple years pass and the Dow is still where it's at now, then it's time to start blaming Obama.

 

It took 8 years of a Bush presidency for the sh*t to really hit the fan:

 

http://moneycentral.msn.com/investor/charts/chartdl.aspx?CA=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&C5=11&C5D=1&C6=2008&C7=3&C7D=5&C8=2009&C9=0&CF=1&DB=1&DC=1&showchartbt=Redraw+chart&symbol=%24INDU&nocookie=1&SZ=0&CP=0&PT=10

[Pangloss]

I was just reading a thread on a conservative board that followed an AP story about new lead removal regulations taking effect, and the poster had given it a subject line of "So this is change we can believe in?", and he ranted about the impact on small motorcycles/ATVs and the nanny state. I wasn't unsympathetic to his point (sometimes regulations do have to be tweaked over time), but the reason I mention it here is because the law in question in this case was actually passed by the Bush administration! The AP story didn't mention that so the guy who posted the rant didn't know, and just assumed it was a new Obama rule. This is the unfortunate consequence of letting Rush Limbaugh lead them around by the nose.

 

I think part of what we're seeing is that so many centrist conservatives (like myself) have abandoned the party for the time being, and while we may not harbor any illusions about Congress, we like Obama and his plan, and want to see it given a chance. But that's left a gaping hole in Republican party politics, because the moral majority has gone back to silent mode (as demonstrated by the low election turnout, James Dobson retirement, etc), which pretty much leaves only the automatic-Obama-opponents (Rush) manning the front office. It's a lot like what happened to the Democrats after they lost the middle and became dominated by the ABB (Anybody But Bush) crowd.

[jackson33]

In other news, correlation implies causation.

 

I think the present state of the market reflects a decade or so of poor economic policies more than it does Obama becoming present.

 

"Clinton's recession" began several months after he left office. Obama has been in office for a month and a half now. Obama is not in a situation of his own creating.

 

If a couple years pass and the Dow is still where it's at now, then it's time to start blaming Obama.

 

It took 8 years of a Bush presidency for the sh*t to really hit the fan:

 

http://moneycentral.msn.com/investor/charts/chartdl.aspx?CA=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&C5=11&C5D=1&C6=2008&C7=3&C7D=5&C8=2009&C9=0&CF=1&DB=1&DC=1&showchartbt=Redraw+chart&symbol=%24INDU&nocookie=1&SZ=0&CP=0&PT=10

 

No, Clinton's recession leading into Bush's administration began with the Tech Bubble...

 

http://moneycentral.msn.com/investor/charts/chartdl.aspx?D4=1&ViewType=0&D5=0&CP=0&PT=8&CE=0&D3=0&&ShowChtBt=Refresh+Chart&DateRangeForm=1&PeriodType=8&Symbol=%24COMPX&C9=2&DisplayForm=1&ComparisonsForm=1

 

Compare your delayed DOW to the NASDAQ, noting the DOW dropped occurred after 9/11....

 

As for economy policy, GDP grew from 2000 10T to 15T by year end 2008. Hardly reflecting failure...

 

I'll grant you policy generally requires time to evaluate and Obama's should be granted more time. I am illustrating only that the markets have not waited for a time and made a decision, which for lack of intelligent design, I AGREE with.

[bascule]

Compare your delayed DOW to the NASDAQ, noting the DOW dropped occurred after 9/11....

 

The Dow peaked around May 2001 and began a slow decline until 9/11, where it obviously declined quite sharply:

 

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1013806800000&chddm=104317&q=INDEXDJX:.DJI&ntsp=0

 

As for economy policy, GDP grew from 2000 10T to 15T by year end 2008. Hardly reflecting failure...

 

But look at what happened to the Dow starting around October 2007:

 

http://moneycentral.msn.com/investor/charts/chartdl.aspx?CA=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&C5=11&C5D=1&C6=2008&C7=3&C7D=5&C8=2009&C9=0&CF=1&DB=1&DC=1&showchartbt=Redraw+chart&symbol=%24INDU&nocookie=1&SZ=0&CP=0&PT=8

 

I'd call that miserable failure. It's also indicative a good portion of that growth was fueled by bad investments which didn't really start going sour until the beginning of 2008.

 

I'll grant you policy generally requires time to evaluate and Obama's should be granted more time. I am illustrating only that the markets have not waited for a time and made a decision, which for lack of intelligent design, I AGREE with.

 

I think the markets began making that decision on or about October 2007, not after Obama took office.

[iNow]

Bah! Who cares about reality when you can just make up your own "facts" to support the story you wish to tell?

[ecoli]

I think part of what we're seeing is that so many centrist conservatives (like myself) have abandoned the party for the time being, and while we may not harbor any illusions about Congress, we like Obama and his plan, and want to see it given a chance. But that's left a gaping hole in Republican party politics, because the moral majority has gone back to silent mode (as demonstrated by the low election turnout, James Dobson retirement, etc), which pretty much leaves only the automatic-Obama-opponents (Rush) manning the front office. It's a lot like what happened to the Democrats after they lost the middle and became dominated by the ABB (Anybody But Bush) crowd.

to be fair to conservatives, though, they really lost their way during the Bush years. Being anti-Obama is a cause they can really rally around. And, I think, is actually a good think to help create dissonance against Obama's unquestioning adoption of Keynesian policy (which even if you agree with, surely you can accept the proposition that debate about policy is a good thing)

[bascule]

And, I think, is actually a good think to help create dissonance against Obama's unquestioning adoption of Keynesian policy

 

It's certainly a welcome change to Friedman's economics, whose main practitioner (Greenspan) has now admitted are based on a model of the world which is fundamentally flawed.

[ecoli]

It's certainly a welcome change to Friedman's economics, whose main practitioner (Greenspan) has now admitted are based on a model of the world which is fundamentally flawed.

That's why I like the Austrian school a bit better than the monetarist. They believe that central planning is effective for monetary policy. I tend to disagree. Greenspan's inability to create sustainable economic growth by manipulating interest rates tends to serve that point, I think.

[Pangloss]

I definitely agree that debate about policy is a good thing.

 

I'm not sure that it IS "unquestioning adoption of Keynesian policy". What's really interesting to me about this whole process is that the policy makers seem to be aware of the potential pitfalls of this approach and genuinely want to strive to avoid them.

[bascule]

Greenspan's inability to create sustainable economic growth by manipulating interest rates tends to serve that point, I think.

 

You can read into it what you want (and it's clear you're reading into it the interpretation which supports your present disposition) but I'd rather go with Greenspan's post-mortem, which states that his own trust in the free market principles of companies acting in the best interests of their shareholders was flawed. I think that's a fairly unbiased opinion and one which is coming in 20/20 hindsight.

[Pangloss]

Is there a Door Number Three?

[ecoli]

You can read into it what you want (and it's clear you're reading into it the interpretation which supports your present disposition)

How is this any different then what you're doing?

 

but I'd rather go with Greenspan's post-mortem, which states that his own trust in the free market principles of companies acting in the best interests of their shareholders was flawed.

You do realize that Greenspans actions of manipulating interest rates isn't a free market principle. So greenspan statement is nonsensical. Just like Bush saying going to war for peace. or giving up free market principles to save them.

 

Companies acted in their best interests for short term profits. Would this have happened without government manipulations? It's hard to say, and economic theory clashes. There are such things as purely speculative bubbles but the Fed certainly supplied the credit to the housing market. Without that credit, I can't fathom how such a large housing bubble could have occurred.

 

I think that's a fairly unbiased opinion and one which is coming in 20/20 hindsight.

Sure it's an unbiased opinion, but a strange one coming from an economist.

 

How could free market capitalism have failed us when nothing in the last 50 years (or more) resembles free market capitalism?

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Is there a Door Number Three?

A Neeeew car!

[bascule]

How could free market capitalism have failed us when nothing in the last 50 years (or more) resembles free market capitalism?

 

So you're saying that assuming companies will act in the best interests of their shareholders (so the government needn't proactively act on their behalf) isn't a free market principle?

 

Or is your kool aid that the whole free market thing gets tainted by any sort of government intervention and instantly withers and dies? Companies will always act in the best interests of their shareholders only if the market is otherwise unencumbered by government intervention?

[ecoli]

So you're saying that assuming companies will act in the best interests of their shareholders (so the government needn't proactively act on their behalf) isn't a free market principle?

 

Why don't you read my post again.

 

I'm saying manipulating interest rates isn't a free market principle. Having a central planner of a financial system isn't a free market principle.

 

Or is your kool aid that the whole free market thing gets tainted by any sort of government intervention and instantly withers and dies?

yes... I also wear an orange robe and make human sacrifices to Adam Smith.

[bascule]

I'm saying manipulating interest rates isn't a free market principle. Having a central planner of a financial system isn't a free market principle.

 

Given Greenspan probably believes in those things just as much as he believes in Friedman's economic theories, why do you think he chose to blame the latter (specifically the free market aspect of it) in 20/20 hindsight?

[ecoli]

Given Greenspan probably believes in those things just as much as he believes in Friedman's economic theories, why do you think he chose to blame the latter (specifically the free market aspect of it) in 20/20 hindsight?

I have no idea, given that I haven't the opportunity to talk to the man. I believe that would be the first question I would ask him, however.

 

Specifically, how he can call supplying lots of credit (really almost capital injections) into the markets a "free" market action.

 

Of course, you have to be careful not to confuse Friedman's monetarist and Austrian "anarcho-capitilist" theories also.

 

And for the record, I'm not a blind follower of Austrian economics. I think there are plenty of flaws with the models and factors their assumptions ignore (like any model).

 

However, I do think that the central planning problem is one that no economic policy has been able to get around. Basically because no economic theory has proven itself very effective at making predictions. How, therefore, do we justify central planning of the economy, when we have little idea of what the result will be?

My policy recommendations, for our own economy at least, is to interfere as little as possible.

[bascule]

The DOW knows all.

 

Really, a perfect response to the points in the OP.

 

Holy crap, that's awesome.

 

(Just watched the beginning of the episode too)

[iNow]

Yeah... the part about CNBC being accurate had me laughing heartily.

[jackson33]

Pandering to them won't win their support either. Just the opposite, in fact.

 

What actually generates good economics are sensible policies applied logically and consistently over time -- something the "elite" can bank on because it will continue to be in place later when it comes time to reap the rewards of the investment. When it comes time to invest, they're not actually interested in conservative agendas any more than they are liberal agendas.

 

"whatever you consider consider the elite rich"...Tax policy under Obama and as it was the last hour, are people REPORTING adjusted income of 210k or more (2nd bracket low). Most in this category or the highest represent a good share of the business that employ up to 70% of Americans or have the potential to employ more (showing a profit). These people, whether on a farm you local independent grocer or the plumber you call, in most cases work just as hard as anyone, with added obligation of all self employed. I don't think pandering is required, but eliminating their incentive to FURTHER achieve will benefit no one.

 

NO SIR, investors are very much concerned with government policy. I'll agree the party is of no concern. For one thing their not going to invest in the first place, risking the total for the potential of reduced profits (Capital Gains). If a sector is seen being penalized (oil/natural gas) those stocks will be sold off, along with others that rely on then or the various funds/mutuals that specialize in the area.

 

http://blogs.abcnews.com/politicalpunch/2009/02/obamas-budget-a.html

 

Read through the increased targets under the proposed tax increases. Think you'll find there are plenty...to say nothing of what Corporation always do with added taxes or expenses, passing onto the consumer.

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The Dow peaked around May 2001 and began a slow decline until 9/11, where it obviously declined quite sharply:

 

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1013806800000&chddm=104317&q=INDEXDJX:.DJI&ntsp=0

 

 

 

But look at what happened to the Dow starting around October 2007:

 

http://moneycentral.msn.com/investor/charts/chartdl.aspx?CA=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&C5=11&C5D=1&C6=2008&C7=3&C7D=5&C8=2009&C9=0&CF=1&DB=1&DC=1&showchartbt=Redraw+chart&symbol=%24INDU&nocookie=1&SZ=0&CP=0&PT=8

 

I'd call that miserable failure. It's also indicative a good portion of that growth was fueled by bad investments which didn't really start going sour until the beginning of 2008.

 

I think the markets began making that decision on or about October 2007, not after Obama took office.

 

 

The mild recession GWB inherited was a result of the Tech Bubble, over speculation of Y2K and the collapse of an obvious bubble in the Nasdaq values, which lead to a drop in the DOW called 'in sympathy'. Yes the current down turn started the day Bush/Paulson their infamous panic declarations, but IMO no vote of confidence has been awarded the Obama Administration, who effectually have enhanced what Paulson advocated. The markets were not happy with Paulson and are showing no signs of embracing Obama policy.

 

You might want to consider who won Congress in 2006, before blaming to much on Bush policy. If your inclined to blame the previous Republican Congress(s) and the executives inability to VETO spending bills, I WOULD AGREE. However adding to this error with additional spending or increasing government (size) hardly seems a remedy.

[iNow]

You have yet to establish that the current stimulative actions are "adding to Bush's error." What else does your crystal ball say?

[ParanoiA]

The DOW knows all.

 

 

Really, a perfect response to the points in the OP.

 

Oh please, that was a funny bit but give me a break.

 

Are we really going to pretend there isn't class contention? The DOW represents confidence by investors, while Obama's approval rating isn't exclusive to investors, which are people with money investing to make more money - they're business minded. And no, 401K doesn't count. Technically it does, obviously, but us 401K champions aren't "businessmen", we're worker bees that chose a life of mediocrity in trade for the security of steady paychecks.

 

That said, I still don't think the DOW's low balling is a direct response to Obama's plans alone, but we'd be fools to think his socialistic ideas aren't going to make waves in the stock market.