Where are we today?

Nate Silver takes a look two months later

http://www.fivethirtyeight.com/2009/05/obama-bull-market.html

Looking at the stock market, of course, is a relatively asinine way to evaluate the performance of the economy, much less the performance of the Presidency. But I think conservatives may have done themselves a real disservice by making the market the benchmark for Obama's success back when the major indices were slumping in late February and early March.

The stock market can be a very entertaining measure to watch. However two more important numbers to watch are the actual unemployment rate which is currently setting at 14.8% and the 3 month bond rate is effectively 0.0%. The major the reason that the bond rate is important is that eliminates one of the major tools of the federal reserve to fight recessions, which is lowering interest rates. For a comparison the recession in early 1980's that many people like to compare to we were experienced 3 month bond rates at around 20%. They had been purposefully lifted to that hight to break inflation.

Those high rates were one of the major reasons for the recession of the early 80's. Essentially Volker said we have to get inflation under control even at the cost of a recession. Once inflation was tampered, and the recession got sufficiently severe the course was reversed and rates were lowered. The rates were lowered by about half down to below 10% wthin the year.

With zero % bond rates the choices are limited to do nothing, lower taxes, increase spending, or combination of both. Obama has settled on the combination of both. I am certain a large percentage of tax cuts will be used to pay off debt or save which on a micro level makes the most sense. However, such actions would have limited stimulative effect. One can argue that government spending can be less efficient than private spending. However, one only needs to witness what many of the financial institutions did with their bailout money to see that the private sector may use the money in a way that is going to stimulate a broad based economy. One last number is the average approval rating which is at 59%. Now one should not govern based on polling. But I think this is indicative that the general population is not equally represented by the stock market numbers. So can he recover? hmmm.


This was the answer I gave a friend that asked me of President Obama could recover from the stock market losses. I gotta say I am still satisfied with this anwers. I wonder if O' Reilly, Hannity, Limbaugh still stand by their version of reality.

A couple of interesting notes just to show how much of a blow hard these guys are. First and most importantly it is very interesting that Limbaugh particularly goes back to Obama owning the stock market as of Sep 15th. If memory informs me correctly isn't that the week that Lehman Brothers goes bust and the Market tanks? So the inevitable President elect is responsible for the market more so that the actually facts of the collapse. Secondly, you know the money managers of the world are the smartest people in the world and they knew Obama was going to win. It would be interesting to go back and listen to the right and see if they were convinced that Obama was going to win between Sep 15 and Nov 4th.

Okay this has really gotten them thinking. I just told you why Rush uses the timing he does to talk about the stock market performance. I took a look at some more info. From Sep 1 before our Financial crisis to election day the market on average was down 25 - 30%. Since Election day to present the Nasdaq is up 9%, S&P up 1.5%, and Dow is down 2.3%. Interesting.

One more thing to look at: