Just as people who move to New York from elsewhere become the most preening, arrogant New Yorkers, some of us who come to conservatism from liberalism are the most vituperative about our rejection of vast swathes of our former beliefs.
So I don’t give liberals a whole lot of credence on economics.
Still, it can be useful to see what they’re telling themselves.
Jeff Rosenberg shut down “Twin Cities Daily Liberal” to join “MNPublius” last week. Congrats to both Jeff and the MNPublii; one hopes the hire was accompanied by Aaron Landry being perp-walked from the MNPublius office as jeering onlookers pelt him with rocks and garbage.
But I digress.
Jeff’s a good guy, and he’s made the odd good point in his oeuvre – but Emperor’s Clothes-watchers should perk up at this bit from MNPub yesterday, titled “Under Obama, the stock market is stabilizing“.
Of course it’s “stabilizing”. As long as companies still produce things that people need to buy, some companies will retain some value, and that value will be reflected in the equity market for their stocks. Until this nation resorts to being a subsistence-farming economy with a barter currency system, companies will be worth something.
Yes, I know conservatives say the stock market is experiencing a catastrophic collapse under Obama, but they also said the fundamentals of the economy were strong under Bush.
And both are true. If the former were not true, the market would, tautologically, not be off 43% in the past year; if the latter weren’t fact, there’d be no talk of recovery, no matter who to thank. “Strong fundamentals” – a capable workforce, a currency capable of supporting commerce, management that can find and exploit opportunity – are the reason that 70-90% of us are not subsistence farmers, as our anscestors were 100-300 years ago, and why we’re unlikely to revert to that, even now.
You have to take conservative arguments with a grain of salt.
(Although not due to anything you’ll read here – but I digress. Ed.)
The truth is that, in Obama’s first six weeks, the market’s volatility has decreased, and though the declines of the Bush economy haven’t stopped, they haven’t become worse, either.
That’s because, short of complete monetary collapse and reversion to barter and subsistence farming – in short, as long as there’s a market out there – then there is a bottom. Where is that bottom? As a theoretical matter, when the market capitalization of publicly-traded companies is equal to their physical and financial assets; when the combined value of alll the hundreds of millions of shares of 3M stock, for example, is the same as the value of 3M’s buildings, computers, inventory and bank accounts – presuming that any of those things have worth at all (again with the “forestalling monetary collapse and not heading to the woods with your rifle and your bag of oat seeds”). The real bottom, presuming the fundamentals of the economy are strong enough to see us into a recovery, is somewhere north of that, depending on the potential investors see or, paradoxically, less than that for companies that have no future.
The trouble is that conservatives and the media like to use charts like this, which ignore even the recent past [courtesy of Media Matters]:
The trouble is that liberals use charts from Media Matters. Let’s break it down:
But the truth looks more like the chart below. Under Bush, the Dow Jones lost 6,000 points, or about 43 percent of its value, from its peak in 2007. That includes about 3,000 points lost since September 2008. Under Obama, the Dow has continued to slide, but it is only down about 1,000 points since its low during the Bush administration.
Which makes sense, until you get into the “why” of it all.
The first 3,000 was the impact of the collapse of the housing bubble. No question about it: it was a financial catastrophe. And while the Bush Administration and Congressional Republicans did try to beat back some of the governmental idiocy that subsidized the inflation of the bubble in the first place (the systematic socialization of risk and privatization of reward – read “distortion of the free market” – that allowed the bubble to grow and put Fanny Mae and Freddie Mac on the hook to clean up when it popped), there’s plenty of blame to go around; the failure of the Bush Administration to expend the political capitol needed to turn the idiocy back; the Dems complete ignorance of the issue going back to 1998, when the Clinton Administration started instituting the policies that led us to disaster, and so on.
That’s 3,000 points over a little over a year; figure about 250 points a month.
Which, by many accounts (and let’s be honest; if you put 100 economists into a room, you’ll get 175 theories) pretty much covered the correction from the housing bubble.
Then, from September – in the waning months of the Bush Administration, when it became pretty clear that Obama and his socialist, interventionist policies were going to hold sway, and when the (frankly) spendthrift Bush Administration did its level best under Henry Paulson to speed the transition to government funding of the whole mess, the market justifiably reacted – through January, the market shed another couple thousand points. That’s around 400 points a month, depending on where you demarcate your starting and finish lines.
And in the past 45 days, the market has reacted to Obama’s his full-throttle power-dive into a socialist command economy, his tax-hiking, and (I think it’s fair to say) indications of his administration’s incompetence, and burned through over 1,000 points, speeding to what may or may not (the coming weeks will tell us) be close to the Dow’s hard bottom.
You do the math; that’s a 401K-shredding 600-point-per-month pace.
So yes, Jeff – while “sloughing off all value to the point where the market is down to not much above asset value” is a form of “stabilization” (in the same sense that a crashing airplane doesn’t get much below ground level, provided the ground below the plane doesn’t open beneath it and swallow the plane up whole), Obama has “stabilized” the market.
By your leave, we’ve had enough of this kind of “stability”; we’d like him to stop before he “stabilizes” healthcare, home values, Americans’ net worth, and our foreign policy.
By your leave.
CORRECTION: TC Daily Liberal, not MN Liberal Report. To be fair, Twin Cities leftyblogs sorta run together after a while. MNBlue, MNSpeak, MN Liberal Report, Daily Liberal, Powerliberal, PowerMonkey, Daily Monkey, MNObserver, MNObsessive, MNCompulsive…who’da thunk “branding” was the one thing Mark Gisleson (“Norwegianity”) would excel at?