Stock Dive Is Bookend Of Bush Economics

The headline from the world of politics and economics today seems fairly self-evident: in the wake of the House of Representative's failure to pass a bailout package for Wall Street, the Dow dropped by the largest point margin in any single day in history.

But that number told only half the story. Indeed, much of what transpired on Wall Street and in the halls of politics put a bookend on what now seems to the final - poor - chapter of the Bush administration's economic record.

On Monday, the Dow finished lower than when George W. Bush assumed the presidency: 10,587.59 on January 19, 2001 compared to 10,365.45 at its close on September 29, 2008.

NASDAQ, the American stock exchange, too, was lower now than it was when Bush took office: 2770.38 on January 19, 2001 compared to 1983.73 on September 29, 2008. The dollar exchange with the Euro was lower than when Bush was elected: 1.068 on January 19, 2001 compared to .695 on September 29, 2008.

Some things have risen, but not the good economic indicators. The Consumer Price Index was at 175 on January 19, 2001 and 219 by September 29, 2008. Unemployment, meanwhile, stood at 4.2 percent when Bush came into power. Today, it is at 6.1 percent.

"It's a striking phenomenon," said Robert Shapiro, undersecretary of commerce during the Clinton White House years. "The reckless negligence and mismanagement of the country's financial markets by the White House, the Treasury and the Fed over the last several years has now produced a crisis that has wiped out all of the increase in the market value of America's companies from five years of record corporate profits, strong productivity gains, and reasonable growth. Bush has now run the table on presidential failure."

UPDATE: Dean Baker, co-director of the Center for Economic and Policy Research, doesn't disagree with the idea that the economy's struggles are evidence of Bush's failure. He just doesn't think the DOW's fall is the proper measurement.

"I actually consider it a plus,' he said of the tumble. "he stock market was still in a bubble when Bush took office. there is no public interest in an over-valued stock market. We have about 20,000 real measures that we can use to show how bad the economy has performed under President
Bush, the Dow is not one of them.

Comments

[littlepitcher]

My best advice is: Sell no stocks, sell no property, during this unsettled market.
My gut instinct is that this was planned long in advance. The lame-duck year was the ideal time for Bush cronies, Rethugs, and Devilcrats to cash in on the working folks.
They can force real wages and dividends down, deflate real estate prices, and launder a bunch of money--drugs, Dow, and other rackets-- at working Americans' expense by buying up the distress sales, and then reinflate during the next administration, sell when prices return to 2007 levels, and make yet another bundle of rigged money.

Don't, please, please, don't give the fat cats what they want most--your equities.

[HoosierRadical]

This guy is a joke.

[QWERTY007]

Partisan B.S. is acceptable during normal times, but not when our way of life is threatened.
Personally, I want to know what and who caused this disaster. So far, I have seen actual video evidence, taken during congressional hearings, that clearly show Dems condeming oversight of Fannie and Freddie and yelling at regulators. Its beginning to look like the Dems in congress were actively promoting no interest loans despite the evidence that Fannie and Freddie were in financial trouble. There is also undeniable evidence that campaign money may have influenced the Dems to ignore regulation attempts. This is too important to our future to sweep under the rug. An independant investigation MUST be undertaken so avoid a repeat of this failure by our government.

[StarkRavingNakedEmperor]

HERD MENTALITY?? BEWARE! Even here among the Intelligencia, I see signs!:

Herd mentality rules during a financial crisis because people are wired to follow the crowd when times are uncertain, experts say.

Brain and behavior studies clearly show that when information is scarce and threats seem imminent, people often stop listening to their own logic and look to see what others are doing.

"People are afraid, and the reason they are afraid is there tremendous uncertainty right now in the markets," Gregory Berns, a neuroeconomist at Emory University in Atlanta who studies the biology of economic behavior, said in a telephone interview.

Berns puts people in magnetic resonance imaging or MRI scanners while he tests their responses to various scenarios, and studies patterns of their brain activation.

One clear pattern -- the brain's "fear center" lights up when people are uncertain.

"When people are presented with a situation where they don't have information or the information is ambiguous, we see activation of the amygdala and insula," Berns said in a telephone interview.

And PEOPLE BEGIN TO DOUBT THEIR OWN JUDGEMENT...

Read more or this story on REUTERS:
http://news.yahoo.com/s/nm/20080930/lf_nm_life/us_financial_psychology

[Questinia]

In other words we become like Republicans.

[boing007]

This is a lingering Depression and it has been building steam for about 20 years.

[Eres]

Apparently, the world agrees: http://news.bbc.co.uk/2/hi/in_depth/7644129.stm

[k1k2lee]

All of you who think this is just about a Wall St. "adjustment" and shareholders and the Dow - this is from the NY Times. This explains the real problems facing the economy - and how it directly impacts the middle class. Just because the stocks bounced a little, it did nothing about the real problem:
Strains worsened overnight in the credit markets, the plumbing of the economy that many businesses rely on to finance routine expenses like utilities and payroll. Banks sharply increased their lending rates on short-term loans, sending Libor, a globally watched benchmark rate, to its highest level ever. Several measures of anxiety in the market reached record highs. And new injections of money into the markets by central banks failed to dampen a hoarding mentality among financial institutions. “The money markets have completely broken down, with no trading taking place at all,” said Christoph Rieger, a fixed-income strategist at Dresdner Kleinwort in Frankfurt. “There is no market any more. Central banks are the only providers of cash to the market; no one else is lending.”

[IslandPress]

this comment is related and unrelated in the sense that there has many economic difficulty for many years and because of that there are some troubles with corporate accountability. And this seems to be a problem that we have and will always have to worry about: http://blog.islandpress.org/182/terry-tamminen-when-coal-makes-you-thirsty.

[AjazHaque]

Congress is Playing with Fire
Rejecting the bailout package by a vote of 228 to 205 the U.S. House of Representatives did more damage than good the bailout package was supposed to bring. The investors in U.S. Stock Markets saw $1.2 trillion wiped off their value, half a trillion more than the relief package is worth.

Republican and Democratic members of Congress played cat and mouse with each other waiting to cast their vote depending on which way the outcome goes. With the entire house up for re-election on November 4 and many Republicans in danger of losing their seats were just too scared to vote for the bill. Watching this development, as many as 95 Democrats joined 133 Republicans in rejecting the bill.

Millions of people around the world waited for the passage of the bill and the hoped for bounce in the markets, saw the worse market slide in decades instead. It seems as if nothing matters to Congress except for re-election.

It is imperative that the House of Representatives quit this dangerous game play and pass a financial bailout package that provides instant liquidity to financial institutions and prevent the domino effect of bank collapses. Another 100 U.S. banks are ready to fold if this measure fails or is delayed inordinately. Apparently Senators (Democratic and a majority of Republicans) have been ready for a few days to pass the bill but are waiting for the House to pass it first.

[Anciano]

Hear hear!
"If the plan proposed did not provide a comprehensive and enforceable mechanism for ending the casino mentality on Wall Street, most notably by nullifying or otherwise neutralizing the roughly $50 trillion of outstanding contracts for a particularly toxic financial instrument called a credit default swap ("CDS"), then I think the defeat of this package was, at least for now, almost certainly the better outcome.
http://community.nytimes.com/article/comments/2008/09/30/opinion/30tue1.html?permid=58#comment58
Any solution to this crisis must start from the hard core reality that Wall Street owes its existence to Main Street, and NOT the other way around.

[boing007]

Any solution to this crisis must start from the hard core reality that Wall Street owes its existence to Main Street, and NOT the other way around.

That's right. Main Street keeps Wall Street in business.

[Totto]

The Bush Presidency has been a disaster. A preventable terrorist attack (had he paid attention to his briefings), a war on a country that had nothing to do with that attack and had no weapons of mass destruction, a hurricane whose destructive and deadly effects might have been ameliorated had Bush wished to save the people of New Orleans, the near complete collapse of the American financial system due to irrational deregulation and lack of oversight, and the immense loss of prestige and power of the United States worldwide. Disaster capitalism is what he and his cohorts wanted and is what has made them rich. At the expense of over three hundred million American and the history of this great country.

[Anciano]

here's my short version:
Capsule summary of the last eight years:
1. Use character actor candidate with a talent for accents and mannerisms. Steal election.
2. Mismanage national security, allowing a predicted and rehearsed attacks on financial center and other targets to actually occur in the middle of a drill.
3. Use attack to immediately implement long-standing pre-packaged war plans and national security directives.
4. Pass tax dollars and national resources toward cronies, corporate donors and the wealthiest during the administration of the war, in the creation of tax policy and deregulation.5. Implement the “starve the beast” philosophy of no money for services to tax payers b/c of the expense of the war, lowered tax rates and deregulation.
6. Promote an economic policy that creates massive illusory wealth and staggering debt growth through deregulating financial controls and unwinding The New Deal.
7. Pick candidate who capitalizes on personal circumstances during a past foreign policy mistake to demonstrate heroism. Pick second candidate who appeals to the least informed voters and will distract from the first candidate’s connection to incumbents.
8. Commit future tax revenue to present cronies in an immediate, unalterable and crisis solution to the financial crisis created by deregulation and deliberate economic policies.
9. Optional step: Grant blanket pardons and sentence reductions on the last day of the administration.

[MatoSka]

This is an excellent list of the level of incompetency, neglect and mismanagement that has evolved in the Federal Government. I would only say that the Bailout is Bush's policy, not the collapse. The failure of the market to adjust itself to financial realities is their own. On the other hand, the continued political priority of Bush-Obama-McCain to maintain expansion continues a modern legacy of political leaders to circumvent the real checks and balances within the economy.
Those people who are panicky now and shaking at the prospect of having the bailout rejected should realize that the structure of the US economy has significantly changed. The presumption that this is a sound economy fails to recognize the great gap in income. It disregards the inability of American people to have health care that is less expensive than $700 billion. It ignores that the inflated housing prices has closed any opportunity for millions to own homes. It disregards the lack of government investment and the subsequent degrading of public infrastructure, such as public education and health, mass transportation, resource management and energy.
The expectation of many to maintain continued growth disregards the necessity for periodic crisis. Things do not just become better and better and better. There is a point where taking adrenaline for a deadly virus becomes self-defeating.

[MyNameIsJames]

I really hate to be crude but in this case it is SO appropriate. This financial debacle is George Bush's excretory present the the United States in the closing days of his miserable Presidency - i.e. Bush laid a hot fresh one on our shoes!

He will go down as the worst President with the exception of maybe Andrew Johnson.
After considering everything Bush has put the nation through (3 major failures - 9/11, Katrina, Financial System meltdown ) and a long term disaster, Iraq - Herbert Hoover & Richard Nixon come out looking pretty good.

[btanner]

Who's your daddy?! Certainly not Reagan, the daddy of deregulation. The Republican Party of Abe Lincoln's days are far, far gone. Their only similarity is the name.

[MyNameIsJames]

The Republicans of Lincoln's day were WAY too Liberal for the Republicans of today. In fact most of today's Republicans would be fighting for the Confederacy or be Confederate sympathizers.

[Belisarius]

New Flash:

Today, President Bush stated, as he has done every day for a week, that the sky is falling and will continue to fall until his bail out bill is passed.

Bush also officially declared that mortgage backed securities are WMDs and that we must find them and eliminate them by throwing every dollar in the treasury at them until they disappear.

Question from the press corp:

"Why would someone with less credibility than a used car salesman try to sell this pig?"

[scottowego]

Mr. Bush was on vacation most of the time leading up to 911. I wish he would just take a vacation now and move out of the whitehouse and out of our way.

[boing007]

scottowego

Mr. Bush was on vacation most of the time leading up to 911. I wish he would just take a vacation now and move out of the whitehouse and out of our way.

Dubya go home!

[OCMOMMA]

Remember when he was running for office, twice? The voters knew his record and still elected him. He bankrupted a baseball team, and an oil company, and virtually everything else he managed went out of business. Why are people surprised? Wake up! This is the real Bush legacy.

[RushLiberal]

It is called Market Adjustment - all of a Sudden everyone is remembering that Bush is President and the Markets Collapsed. Just like everything else Bush has managed - in the end it FAILS.