It’s been in the news every day since Obama’s election, but has not been covered by the main stream media. As of Today, the Dow has dropped 2,400 points since Obama was elected. That’s one third of the total 7,500 points since the stock market peaked during Bush’s term. The Dow has dropped nearly 600 points (25% of the total 2,400 drop) since the day the stimulus was signed. So what is causing the stock market to drop? After all, if the stimulus, omnibus, budget, and other government programs proposed by Obama were sound financial and economic theory, then the stock market should gain ground after at least some of Obama’s announcements.
No, instead the stock market drops.
February 26th was almost a hallmark day for the Obama team. Stocks opened bullish with news that the new administration would inject another $250 Billion into the banks. Additionally, FED chairman Ben Bernanke promised that the administration would not look to nationalize banks. For the first time since taking office, the Dow was up 140 points and it seemed the market would reflect positive gains as a direct response to Obama’s policies and actions. Then Obama released his new budget, which promised to cut subsidies to private health care providers. Instantly, the stock market fell finally closing 88 points lower than the opening.
What does this mean? Well first of all, I had to rewrite this blog post. This post was originally going to commemorate Obama’s first victory with the stock market. More importantly, it shows that the investors in this country and the world do not have faith in our current President. You see the markets don’t reflect people’s feelings of the economy today, but their feelings of the future of the economy. They are betting against Obama. Please keep in mind that Obama needs to stimulate more than consumption if he wants to turn the economy around. More important than consumption, he needs to increase investment. We need to at least pause and take note of this. Who has more knowledge about finance and the economy? All the investors in the world or a lawyer turned politician for a few years before becoming President?
Below are several links about Obama’s stock market failures and almost success. In the meantime, I’m left to wonder when if at all Obama can bring confidence into the stock markets. Today the Dow fell another 119 points as the government became the largest stockholder in Citigroup. Bernanke, I thought we weren’t going to nationalize banks?
http://finance.yahoo.com/news/Wall-Street-slides-after-apf-14501283.html
http://finance.yahoo.com/news/Weak-health-care-stocks-drag-apf-14483774.html
http://finance.yahoo.com/news/USbank-shares-up-on-stress-rb-14479312.html
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2 comments
I was going to respond to your response in the "best politcis is less politics post" but i think it is equally appropriate here as well. I wanted to toss this idea at ya, cause I'm watching my stocks go down every day (tho it's like .15 up or .23 down - not a huge deal lol)as well after a big announcement. Of course the liberal in me sees this stock market reaction in a different way... =)
February 28, 2009 at 7:21 AMObama is redefining the way we do things in America. He is doing something I wish a leader would do for a long time... reinvent the American culture so that we're not a nation greedy, impulsive, self-indulgent people, but rather embrace a culture of shared responsibilty, forward thinking, and a sense of fair play. In order to reinvent a culture, you have to uproot the established culture. What we are seeing in the stock market is a fight to preserve an old, obsolette culture. It is REALLY hard to break habits... the stock market is going through a smoker's withdrawals. In time however, the market will climb back up so long as Obama remains consistent, steady, and applies steady pressure... he can't take his hands off the wheel for a single moment. After the withdrawal phase wears off (pending the success of Obama's moves) the markets will beging rising steadily.
It's not business as usual anymore... when the investors get used to the new rules investment will flourish once again =)
I guess we'll have to agree to disagree:) I genuinely hope that Obama is successful for the country's sake. I appreciate the honesty of your point of view. From where I sit, I see us going from rewarding greed to rewarding envy. Neither are good.
February 28, 2009 at 8:13 AMPost a Comment