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Author Topic: Dow Jones now below 7000.  (Read 6901 times)
Wall St. Wiz
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« Reply #25 on: March 02, 2009, 05:54:41 pm »
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I am not going to let Republicans pin this on us.

This is starting to sound familiar here.  You guys cannot escape this.  The Democrat party has run Congress since the 06 elections.  We now have a Democrat president with huge majorities in both houses of congress.  You guys run the show now. 

Try as you might, you cannot run away from this.  Governing is a lot harder then running, ain't it?
« Last Edit: March 02, 2009, 05:57:54 pm by Wall St. Wiz »Logged

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« Reply #26 on: March 02, 2009, 06:15:55 pm »
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The economy has never really been "good" since 2001, although it wasn't always apparent at the time. First of all, look at the history of monthly job growth:



There are three hills there-- the leftmost represents the "seven fat years" under Ronald Reagan. The middle represents the Clinton years. The final represents the expanding economy of 2001-2007. Notice the final hill is much smaller. That's because job growth in the 2001-07 recovery was constantly anemic. Note that the chart uses absolute numbers too, so the hills should be getting progressively bigger in time due to a larger population. It's even clearer here:



The only reason the unemployment rate wasn't much higher was that the workforce participation rate dropped by about 2% between 2000 and 2005.

And what was the job growth of 2001-2007 based on? It was based on the housing market. Even before the credit crunch broke, Greenspan & Co. knew that the economy was hugely dependent on housing:



Not only jobs, but the entire economy was chugging along based on housing and the consumption boom that resulted from equity extraction from housing-



What's worse, the entire world was chugging along based on American and European consumption boom that resulted from the housing bubble.

This is why the bursting of the housing bubble has been so much more severe, than say, the bursting of the dotcom bubble. The dotcom bubble was a bubble in business investment and the stock market. The real economy was growing strongly in the 1990s, the dotcom bubble was just on top of that. In the 2000s, the real economy was stagnating, but housing was the only thing lifting it up.

Bush was dealt a bad hand. Greenspan, Robert Rubin, Larry Summers, etc. al had sat on their hands while a dotcom bubble built up, and trade deficit imbalances and lack of savings became a problem. The bursting of that bubble should have resulted in a deep recession, and possibly Bush's defeat for re-election in 2004. But it would have correct the imbalances. Instead, only the NASDAQ corrected and Greenspan built another bubble on top of the original one, that Bush rather cluelessly benefitted from. The result is that Obama has been dealt a catastrophic hand-- but unfortunately for him, he wanted the job and it's his responsibility to respond now. If he doesn't do well he'll be justly blamed.
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« Reply #27 on: March 03, 2009, 03:27:24 am »
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Closed below seven, I won a bet...

and my mom lost retirement.
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« Reply #28 on: March 03, 2009, 09:34:15 am »
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and my mom lost retirement.
Sad

It's up by 80 points at the starting bell today though!
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J. J.
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« Reply #29 on: March 03, 2009, 12:15:01 pm »
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and my mom lost retirement.
Sad

It's up by 80 points at the starting bell today though!

Now down by 19 points, off yesterday's close.
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J. J.

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« Reply #30 on: March 03, 2009, 01:56:15 pm »
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Some of this stuff is deep-rooted and can't be pinned on anyone in particular. But it seems to me like both Bush and Greenspan messed up in the early years of this millennium, believing that 9/11 was causing an economic down-turn and stimulating the economy when it should really have been reined in.

In retrospect, those Bush tax-cuts sure were stupid. As was the low interest rate.

Clearly, the Bush administration must take a lot of blame for the current situation, but the Democrats didn't really do anything about it either when they had the chance.
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« Reply #31 on: March 03, 2009, 03:48:28 pm »
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Some of this stuff is deep-rooted and can't be pinned on anyone in particular. But it seems to me like both Bush and Greenspan messed up in the early years of this millennium, believing that 9/11 was causing an economic down-turn and stimulating the economy when it should really have been reined in.

In retrospect, those Bush tax-cuts sure were stupid. As was the low interest rate.

Clearly, the Bush administration must take a lot of blame for the current situation, but the Democrats didn't really do anything about it either when they had the chance.

The thing is, will Obama make it worse?
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J. J.

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The trouble is, in a democracy the whores are us." - P. J. O'Rourke

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« Reply #32 on: March 03, 2009, 04:14:57 pm »
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Some of this stuff is deep-rooted and can't be pinned on anyone in particular. But it seems to me like both Bush and Greenspan messed up in the early years of this millennium, believing that 9/11 was causing an economic down-turn and stimulating the economy when it should really have been reined in.

In retrospect, those Bush tax-cuts sure were stupid. As was the low interest rate.

Clearly, the Bush administration must take a lot of blame for the current situation, but the Democrats didn't really do anything about it either when they had the chance.

The thing is, will Obama make it worse?

Most economists say that what he has done already will be enough to lead us back into slow growth for Q3 2009.

As for the underlying issues that caused the crisis, we will have to see what new regulations rise from this collapse, what is done to secure the foundations of the banks and the rest of the economy, etc. There is more work to be done after the recovery, but getting us to that point is the top priority. We can worry about how to prevent future collapses when we get out of this one.
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« Reply #33 on: March 03, 2009, 06:26:14 pm »
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Many Democrats here seem to take the whole crisis and then push the blame to other people. Obama is not responsible for the crisis, true, but the response to it now is 100% Obama's responsiblity and if signs of a recovery don't come or if a recovery comes but brings inflation with it, it will be 100% Obama's fault.
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« Reply #34 on: March 04, 2009, 09:35:25 am »
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I personally don't care who caused it but I do care about how it'll be fixed and how to prevent something like this from happening again.

+104 at opening bell. Smiley
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J. J.
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« Reply #35 on: March 04, 2009, 04:38:01 pm »
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I personally don't care who caused it but I do care about how it'll be fixed and how to prevent something like this from happening again.

+104 at opening bell. Smiley

In increase, but only 80-120 points off the low.
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J. J.

"Actually, .. now that you mention it...." 
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"Every government are parliaments of whores.
The trouble is, in a democracy the whores are us." - P. J. O'Rourke

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« Reply #36 on: March 05, 2009, 02:20:42 pm »
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I personally don't care who caused it but I do care about how it'll be fixed and how to prevent something like this from happening again.

+104 at opening bell. Smiley

In increase, but only 80-120 points off the low.

Now down 232, 233, 234, April 1997.  I'll wait to the close. 

I'm starting to feel in a vulture mood.  Smiley
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J. J.

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The trouble is, in a democracy the whores are us." - P. J. O'Rourke

"Wa sala, wa lala."

(Zulu for, "You snooze, you lose.")
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« Reply #37 on: March 05, 2009, 03:29:11 pm »
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So is it like a rule now that every good day in the market needs to be followed by bad economic news making it plunge again?
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Sam Spade
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« Reply #38 on: March 05, 2009, 03:36:29 pm »
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So is it like a rule now that every good day in the market needs to be followed by bad economic news making it plunge again?

Actually the good day yesterday was based on some rumor that China was going to do another stimulus.

Talk about a nothingburger (as if that would help any OR as if China has unlimited funds to stimulate things anyway).  Of course, it was denied today.

So, the markets resume the pattern.  You see - "bad" is the pattern, "good" is the interrupting of the pattern.  And will be for a while henceforth yet.

There is a bear market rally due at some point in the future, but we're not there yet.
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« Reply #39 on: March 05, 2009, 03:41:42 pm »
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Someone sneezed... The market will fall another 500 points.  Oh wait, someone created a real life Krusty the Clown and it got added to the S&P 500.  Up 800.
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Sam Spade
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« Reply #40 on: March 05, 2009, 03:43:39 pm »
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Someone sneezed... The market will fall another 500 points.  Oh wait, someone created a real life Krusty the Clown and it got added to the S&P 500.  Up 800.

I don't get it.  Is this something akin to saying that the markets have no rational reason for movement.
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Brittain33
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« Reply #41 on: March 05, 2009, 03:45:06 pm »
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To be fair, there were some real and substantive disastrous headlines for GM (A DJIA component) going into today.
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« Reply #42 on: March 05, 2009, 03:47:21 pm »
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Many Democrats here seem to take the whole crisis and then push the blame to other people. Obama is not responsible for the crisis, true, but the response to it now is 100% Obama's responsiblity and if signs of a recovery don't come or if a recovery comes but brings inflation with it, it will be 100% Obama's fault.

I completely agree. I am just saying that it is annoying when people pin the blame on Obama for where the market is today. Clearly the next year or two will depend completely on him, but I would say that we won't see even the beginning of Obama's effect on the economy for at least a few more months (probably until summer).
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« Reply #43 on: March 05, 2009, 03:49:01 pm »
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To be fair, there were some real and substantive disastrous headlines for GM (A DJIA component) going into today.

The stock market pretty much assumes GM is bankrupt.  As well they should (since they are).
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J. J.
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« Reply #44 on: March 05, 2009, 04:06:23 pm »
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In the three days since this thread started, the market has dropped more than 400 points.
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J. J.

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« Reply #45 on: March 05, 2009, 04:06:51 pm »
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Is this change we can believe in, president obama?
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« Reply #46 on: March 05, 2009, 04:20:04 pm »
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the market now realize that Obma is NOT a pragmatist, rather he is an extreme liberal.  He could have very easily put together a stimulus plan that would have gotten 75 votes in the Senate - a majority of both parties.  A stimulus plan that would actually stimulate the economy.  Instead he chose to vastly increase the size of government...STRIKE ONE

then he released his budget:  tax increases, reduced mortgage deductions, and a carbon tax.  All three things are big no-nos during downturns.  The market HATED it....STRIKE TWO

Obama is in danger of becoming irrelevant.

He should go back to Congress, meet with a group of 12 moderate Dems and 12 moderate GOPs and AMEND the stimulus, and AMEND the budget, and AMEND the cramdown mortgage plan, and find the quickest way to shut down banks like Citigroup.

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« Reply #47 on: March 05, 2009, 04:24:01 pm »
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the market now realize that Obma is NOT a pragmatist, rather he is an extreme liberal.  He could have very easily put together a stimulus plan that would have gotten 75 votes in the Senate - a majority of both parties.  A stimulus plan that would actually stimulate the economy.  Instead he chose to vastly increase the size of government...STRIKE ONE

then he released his budget:  tax increases, reduced mortgage deductions, and a carbon tax.  All three things are big no-nos during downturns.  The market HATED it....STRIKE TWO

Obama is in danger of becoming irrelevant.

He should go back to Congress, meet with a group of 12 moderate Dems and 12 moderate GOPs and AMEND the stimulus, and AMEND the budget, and AMEND the cramdown mortgage plan, and find the quickest way to shut down banks like Citigroup.



The market isn't dropping because of Obama's plan, the market is dropping because of the utter disaster Obama inhereted from Bush.
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« Reply #48 on: March 05, 2009, 04:27:31 pm »
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the market now realize that Obma is NOT a pragmatist, rather he is an extreme liberal.  He could have very easily put together a stimulus plan that would have gotten 75 votes in the Senate - a majority of both parties.  A stimulus plan that would actually stimulate the economy.  Instead he chose to vastly increase the size of government...STRIKE ONE

then he released his budget:  tax increases, reduced mortgage deductions, and a carbon tax.  All three things are big no-nos during downturns.  The market HATED it....STRIKE TWO

Obama is in danger of becoming irrelevant.

Irrelevant?  He's wrecking our dear capitalism!  That's like saying Godzilla was irrelavant to Tokyo.  <wrings hands>
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« Reply #49 on: March 05, 2009, 04:35:25 pm »
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True, but Obama needs to step it up.

As I said before, we are not in a crisis mentality, although we should be. The attitude today is far more lax than was the attitude on September 12th, 2001, when Americans universally recognized that we were 'at war', even though the damage done to the finanical system by the housing cataclysm is far worse than the damage on Sept. 11th and the human toll, over the course of many years, may be comparable or higher as well.

Take the stimulus bill, for instance, the one bill that should have been least controversial at all. It was only supported in Pennsylvania by 47% of the people, according to one poll. Sherrod Brown, the gentleman from Ohio, had to fly back from a private event so that it could pass by the skin of its teeth. It was criticized and attacked from all corners.

One shudders to think what would have happened had the Republicans controlled Congress. We probably would not even have a stimulus bill to this very day. Nor would we have a budget- the Republicans of today would probably force another government shutdown than to pass an Obama budget.

Compare that to the Emergency Banking Act of March 1933, which passed on the very first day of Congress's special session known as the 'Hundred Days':

"On March 9, 1933 the Senate passed the “Emergency Banking Act” after very little debate. Reportedly, congress then passed it in 38 minutes without any of them actually getting a chance to read it. This gave the Secretary of the Treasury the power to compel every person and business in the country to relinquish their gold and accept paper currency in exchange at a much lower valued rate.

This also gave FDR unlimited power during times of war or a declared national emergency, such as the Great Depression. Those powers could not be taken away unless the President decided that the national emergency was over."

And this?

WASHINGTON (AP) — For five weeks, Treasury Secretary Timothy Geithner has battled the worst economic crisis in generations with no key deputies in place. That's made for a rocky debut for the man President Barack Obama put in charge of addressing the financial crisis.

With an awkward first television appearance, a bank rescue plan that lacked promised specifics and two restructured bailouts that raised taxpayer risk, Geithner has failed to calm financial markets desperate for answers.

Critics say part of the problem is that Geithner is flying solo: Not one of his top 17 deputies has been named, let alone confirmed. And without senior leadership, lower-level Treasury employees can't make decisions or represent the government in crucial conversations with banks and others.

As Geithner strives to address the financial crisis, advance Obama's agenda and work with foreign leaders to stave off economic disaster, he's assembled a 50-person "shadow cabinet" of would-be appointees. Those people have received hall passes and can advise Geithner, but they lack any authority.

"Everyone would think it's a travesty if the Defense Department didn't have a lot of their people in place, because you're in a crisis fighting a couple of wars," said Tony Fratto, who was a Treasury spokesman under President George W. Bush. "But Tim Geithner is fighting wars on a few fronts himself, and he doesn't have the generals there to help him."
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