Thursday, September 22, 2011

Obama's Stock Market Weakness

The Dow fell 391 points today while the S&P 500 fell 37 points, 3%, to 1129.  The immediate reason was that yesterday the Fed announced a lukewarm as opposed to a hot easing whereby it is exchanging long term for short term securities.  Take this into account: Federal Reserve Bank Credit has increased over 300% in the past three years. That's the largest money supply increase in American history except when the Continental Congress destroyed the Continental, America's first currency, back in Revolutionary War days.  Given the massive easing, including QE2 earlier this year, one would think that Wall Street would be satisfied. But it isn't.  Dollar inflation isn't enough, and when the Fed announced a lukewarm response to the implosion of European socialism, the American markets crashed.  I've lost a chunk of change because I wasn't expecting QE2 to have had such a weak effect. Plus gold, following a record high within the past few weeks, is in a correction or consolidation mode.  But the strengthening dollar due to the Fed's relative conservatism means that cash has gone up in value, which reduces the losses in riskier assets.

The Obama administration deserves responsibility for recent stock market weakness.  The massive quantitative easing should have had more of an effect on the markets.  It still might. What's holding it back is that the left-wing Obama Democrats have sledge hammered America's economy--the health care bill, environmental regulation, and proposed tax increases frighten investors.  Perhaps Obama and Congressman Maurice Hinchey believe that subsidies to corrupt "green" businesses that quickly fail will somehow stimulate the economy.  Such are Democrats' and America's economics profession's superstitions.  Throwing away money will not stimulate the economy.  We are in for a generation of economic decline because of Obama, Bush and The New York Times.


Anonymous said...

Dow Jones on Jan 20, 2009:

Dow Jones on Sept 26 2009:

You are entitled to your opinion but not to facts.

Anonymous said...!

Where are you when you are needed to defend the liberty of citizens?

Mitchell Langbert said...

There is little doubt that Obama has done a great deal for Wall Street. Since assuming office the Federal Reserve Bank has planted massive amounts of reserves in the accounts of its chief member banks. That is why the stock market has gone up. But it tripled federal reserve bank credit, and the market is still down in inflation adjusted terms about 10% from 11 years ago. Bozo the Clown could be in the White House and do a better job on the stock market with a tripling of monetary reserves. There has not been an inflation like that in 200 years.

Worse, Mr. Obama has taken a sledge hammer to the welfare of Middle Class Americans. The unemployment rate tells us alot about Obama. In January 2009 unemployment was 7.2%. It is now 9.1%, and that's after tripling the money supply and spending a trillion dollars on a corrupt "stimulus" that failed.