Market Performance – Who is telling the truth?
Posted by cann0nba11 on February 19, 2009
Team Obama still enjoys referring to and reminding anyone that will listen about the “past eight years” under President Bush. Many Americans repeat it ad nauseum as their defense for voting President Obama into office. Sadly, this lie is alive and well, and if Republicans don’t get really loud in an obnoxious public manner to correct this fallacy we can look forward to another loss in 2012.
Liberals tend to ignore facts, but I think they can handle pictures. I created the chart below to show US stock market performance over the past twenty years. In the chart below, red (top line) is the NASDAQ, blue (middle line) is the Dow Jones Industrial Average, and green (bottom line) is the S&P 500.
Let’s look at what happened during various stages of this chart:
- February 2000: The peak of the “dot-com” boom. Crazy stock valuations, lots of paper millionaires. Cats and dogs living together.
- July 2000: The beginning of the “dot-com” bust. Investors realize they were punch drunk and millions of little people (the hard working ones that enabled companies to grow) get shafted out of stock bonuses and options while executives cash out big time.
- October 2001: The bottom of the market thanks to the effect of the 9-11 attacks. Over the next six years our economy would recovery, some would even say “thrive.” Something not noted above is the decrease in unemployment, which dipped toward 4% (“We have basically full employment in this country” said Geraldo Rivera on June 14, 2007).
- October 2007: Our most recent market peak, the beginning of the housing bubble burst (FannieMae, CountryWide, et al).
- May 2008: Washington offers $168B “stimulus” in effort to revive economy. Wall Street could not care less.
- September 2008: The US Government takes control of mortgage companies Fannie Mae and Freddie Mac (a $200B promise).
A rational thinker could glean from the image above that the George Bush economy did quite well, even when considering 9-11. The early years of the Clinton administration saw relatively modest growth (prior to the boom); after the bust correction the market under Bush grew at a more significant rate. You could even say the market thrived under Bush. Did you hear that in the press? Did you hear that during the campaign? ::crickets::
So lets look at a related Liberal talking point: “Clinton presided over the best economy, evah.” Here’s a nice comparison of media treatment of economic conditions under both Clinton and Bush. Bill Clinton can’t take credit for the dot-com boom (even though Al Gore’s verbal blunder makes people think that he takes credit for it). Clinton did work diligently to eliminate debt, so much so that the Office of Management and Budget projected a surplus of $5Trillion over the next 10 years, enough to pay off the entire Federal debt and fund Social Security, the state pension scheme, for several more decades. (How about a do-over on that?). Clinton also let office with the US more exposed than ever before to the international economy.
While the dot-com boom during the Clinton years made many people rich, many people also lost money during this highly irrational and volatile market. The following Bush presidency brought a level of stability back to the markets. Unfortunately, seeds planted during the Carter administration and watered during the Clinton administration came to bear fruit about 18 months ago and we are now in the throes of a horrible market with stability nowhere in sight. To me it seems that every action President Obama takes toward improving market conditions is met with a not-so-equal and opposite reaction by Wall Street. As Joe Biden said, the presidency is no time for on-the-job training, and I’m tired of my portfolio and kids college fund being used as part of a financial experiment.