Wall Street & The War Party
The New York Times asks the question this afternoon--"why did the stock market crash today?"
Speculation focused on fears about the direction of the economy, though it remained unclear why anxieties that have been around for months would suddenly take hold.
I have another theory--Wall Street doesn't like war, and last night as the chants of "USA, USA" rumbled through the RNC convention hall, while Sarah Palin assured the crowd that John McCain was willing to "fight for you" against all enemies, I think it occurred to the big investors that these martial warriors might actually capture the White House. For two days Lieberman, Thompson, Guiliani and Palin have made it clear that the Republican Party is the War Party. As any investor can tell you, eight years of war have helped few firms except Halliburton and Exxon. If you put all of your money in an S & P 500 index Fund on the day of George Bush's Inauguration, you would be down about 12% after almost 8 years. This is why Obama and the Democrats have actually raised more money from the financial industry than the Republicans.
The market doesn't like the War Party any more and they were scared silly by the pit bull with lipstick.
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Unlike Sarah Palin's resume and Ron Fournier's analysis, markets don't lie. Here's a letter I just shot off to the AP/McCain guy - has anyone noticed that Palin has 2, maybe 3 years of full-time job experience in the past 15 years?
Dear Mr. Fournier,
There are a number of issues with your analysis. I will focus on a couple of them.
It seems the analysis should focus on what Ms. Palin actually has done (vs. what she and the McCain campaign touts her as having done), rather than truncating that story by digressing into the supposed shortcomings of the Democratic resumes. A more thorough, ahem, vetting of the facts would better serve your piece.
For example, you say that Obama's resume is just "a bit longer than Palin's". By any objective standard it much more than that. Let's leave aside Obama for the moment and ask a non-relative question about Palin: Hpw many years has she actually held a full-time job?
The Governor is a full time job. Oil and Gas Commission probably is not, though obviously comes with some responsibility - I've worked with enough state boards in California to know that. Probably not a full-time job though, if you look at the short terms that people on the commission have served - but that could be *your* research assignment!
What about Mayor and city council? Isn't that part time, considering the size (broadly speaking) of the city? I can't imagine such a small population would be able to support mayor's full time salary, let alone those of its city council.
So, 2 maybe 3 years of full-time paid work in the past fifteen years. I'm asking just two things Mr. Fournier: 1) Tell me if I am correct. 2) Tell the country.
Philip
2 years _Governor, state of Alaska: Dec 2006-Present.
1 year? _Chair, Oil and Gas Conservation Commission: 2003-2004.
part time? _Mayor, Wasilla, Alaska (population: 9,780): 1996-2002.
part time? _City Council, Wasilla, Alaska: 1992-1996.
_University of Idaho; television sports and family fishing business.
_Miss Wasilla: 1984
September 4, 2008 7:54 PM | Reply | Permalink
Unlike Sarah Palin's resume and Ron Fournier's analysis, markets don't lie. Here's a letter I just shot off to the AP/McCain guy - has anyone noticed that Palin has 2, maybe 3 years of full-time job experience in the past 15 years?
Dear Mr. Fournier,
There are a number of issues with your analysis. I will focus on a couple of them.
It seems the analysis should focus on what Ms. Palin actually has done (vs. what she and the McCain campaign touts her as having done), rather than truncating that story by digressing into the supposed shortcomings of the Democratic resumes. A more thorough, ahem, vetting of the facts would better serve your piece.
For example, you say that Obama's resume is just "a bit longer than Palin's". By any objective standard it much more than that. Let's leave aside Obama for the moment and ask a non-relative question about Palin: Hpw many years has she actually held a full-time job?
The Governor is a full time job. Oil and Gas Commission probably is not, though obviously comes with some responsibility - I've worked with enough state boards in California to know that. Probably not a full-time job though, if you look at the short terms that people on the commission have served - but that could be *your* research assignment!
What about Mayor and city council? Isn't that part time, considering the size (broadly speaking) of the city? I can't imagine such a small population would be able to support mayor's full time salary, let alone those of its city council.
So, 2 maybe 3 years of full-time paid work in the past fifteen years. I'm asking just two things Mr. Fournier: 1) Tell me if I am correct. 2) Tell the country.
Philip
2 years _Governor, state of Alaska: Dec 2006-Present.
1 year? _Chair, Oil and Gas Conservation Commission: 2003-2004.
part time? _Mayor, Wasilla, Alaska (population: 9,780): 1996-2002.
part time? _City Council, Wasilla, Alaska: 1992-1996.
_University of Idaho; television sports and family fishing business.
_Miss Wasilla: 1984
September 4, 2008 7:56 PM | Reply | Permalink
Another example of that dumb-azz Biden. Obambi is probably thinking about now....gosh may be I'm not as perceptive nor Harvard-smart as my SAT scores would suggest:
"Biden said he was “impressed” by Palin’s speech, adding “I thought she had a great night.”
But while Biden was critical of the media’s coverage of Palin, he too has taken heat for his choice of words to describe the Alaska governor, most notably for joking that one of the differences between him and his GOP rival is that “she’s good-looking.” Biden did not address the incident during the interview, but felt compelled to say, “No one has to wonder about there being a sexist bone in my body.”
September 4, 2008 8:21 PM | Reply | Permalink
Is this the 1928 election?
September 4, 2008 9:11 PM | Reply | Permalink
Bluebell-Let's hope you are not correct.
September 4, 2008 9:14 PM | Reply | Permalink
Sarah spoke:
The bear awoke!
September 4, 2008 10:15 PM | Reply | Permalink
HERE THE COUNTER INSURGENT ATTACK AD FROM THE OBAMA CAMPAIGN:
"Community organizing is how ordinary people respond to out-of-touch politicians and their failed policies.
And it’s no surprise that, after eight years of George Bush, millions of people have found that by coming together in their local communities they can change the course of history. That promise is what our campaign has been about from the beginning.
Throughout our history, ordinary people have made good on America’s promise by organizing for change from the bottom up. Community organizing is the foundation of the civil rights movement, the women’s suffrage movement, labor rights, and the 40-hour workweek. And it’s happening today in church basements and community centers and living rooms across America."
I’m Barack Obama, and I CERTAINLY DO APPROVE OF THIS AD THAT BITES BOTH PALIN AND MCCAIN IN THE RED STATE AZZ……
September 4, 2008 9:33 PM | Reply | Permalink
On the economic meltdown today, link below:
The near 350-point slide in the Dow also came on the heels of the growing recognition that the signs of a cooling global economy are reflected the falling oil price. Others have commented that last night's GOP jamboree speech fest has investors somewhat jittery about a Republican victory in November.
http://www.kitco.com/ind/nadler/sep042008B.html
September 4, 2008 10:06 PM | Reply | Permalink
In the John McCain love-fest were any of his children by his first marriage (the one that he cheated on with Cindy) featured?
Does he even acknowledge those children?
September 4, 2008 10:09 PM | Reply | Permalink
Don’t mean to rag on Joe again but here is some more stuff from the V.P. genius:
"On ABC Thursday morning, Mr. Biden said he was still looking for her (Palin's) specific views. “The bottom line here is the phrase middle class was not mentioned once. The economic plight, the hole the Republicans have dug so deeply the last eight years was not mentioned. No specific plans about how were going to get out of that hole was mentioned.” He also said, “They don’t want to defend the past and they don’t have any clear picture for what they’re going to do for the future.”
And he expressed some professional admiration for some of her “zingers” directed mostly at Mr. Obama. “I thought ‘Whoa,’ ” Mr. Biden said. “They’re good, funny lines, but I’m glad they’re not about me.”
YOUR V.P. RUNNING MATE SAYS HE'S GLAD THE ATTACKS WEREN'T ABOUT HIM BUT INSTEAD MORE ABOUT HIS POLITICAL PARTNER, OBAMA....
September 4, 2008 10:09 PM | Reply | Permalink
Sarah spoke:
The bear awoke!
September 4, 2008 10:13 PM | Reply | Permalink
. . . Wall Street doesn't like war . . . .
The Iraq War began on March 20, 2003 on which date the S&P500 closed at 875.67. It closed today at 1236.83 -- up over 41% and more if dividends were included.
What Wall Street doesn't like is the collapse of bubbles, the last two having been created by Alan Greenspan, whom Clinton twice reappointed.
September 4, 2008 11:25 PM | Reply | Permalink
We might note, as well, that President Bush announced the "Surge Strategy" in an address to the nation on January 10, 2007 on which date the S&P500 closed at 1414.85 or 14% higher than today.
September 4, 2008 11:43 PM | Reply | Permalink
Well, as the guy said in the same NYTimes article:
September 4, 2008 11:52 PM | Reply | Permalink
Somebody's always happy.
Different strokes for different folks.
September 5, 2008 12:20 AM | Reply | Permalink
Ellen, is there a reason that you chose to use the lowest point of that index as your starting comparison point?
Would you be so kind as to provide the data for the index as of Sept 5, 2001?
Or Jan 20, 2001?
thanks!
September 5, 2008 8:43 AM | Reply | Permalink
I didn't select the lowest data point, kenga; I selected the closing price on the day the Iraq War started.
I leave it to you 1) to read more closely than you have thus far to determine why I would choose to make that selection and 2) to locate whatever market prices you believe germane -- on your own.
September 5, 2008 9:04 AM | Reply | Permalink
Hi, Ellen.
So is your point is that Wall Street DOES like war?
Do those market returns you cited compare favorably with any five-year period during the Clinton presidency?
Seems to me the markets like peaceful prosperity even better.
-- ARG
September 5, 2008 10:31 AM | Reply | Permalink
The S&P 500 is too large to count, but there's a lot of companies with DoD contracts in the Dow Jones average.
September 5, 2008 11:06 AM | Reply | Permalink
Thanks for clarifying.
It's true, but I find it interestingly coincidental how that falls neatly within the deepest dip in the 10-year history, which has the effect of showing the 41% gain you mentioned.
If we plug in October 5, 2001 - the last close prior to the invasion of Afghanistan - ostensibly the beginning of TWOT, we see it closed at 1,071.38.
When compared to the recent close you mentioned, 1236.83 we see a gain instead, of 13.3% over a nearly 7 year period.
It was already on its way down from an earlier high, as the tech bubble was deflating(cursed irrational exuberance!)
And that same 10 year view of the index shows that it's again declining from a similar high from a different bubble.
I've lost track of my original train of thought - I think I misunderstood you to be suggesting the 41% gain in that period to be correlated with the Iraq conflict - i.e. the markets -like- war.
And in looking into it(for that Oct5-2001 data) thought that the longer view makes your point about bubbles more obvious and convincing.
To me, there is little doubt that some parts of the index and other indices have been making money hand over fist as a result of the military actions in Afghanistan and Iraq(I refuse to call them wars until Congress issues a declaration).
I'm not so sure about "the market" writ large.
September 5, 2008 5:27 PM | Reply | Permalink
The wars created a bull market 2003-2007 which was particularly good for the banks, big oil and of course the military contractors, and many people got very, very rich by raiding the US Treasury. All "good things" must come to an end, and the piper must be paid, but it's not the wars' fault. They are making the rich even richer, even as the bubbles burst and the per capita national debt climbs over $30,000.
September 5, 2008 12:55 AM | Reply | Permalink
Re: The wars created a bull market 2003-2007 which was particularly good for the banks, big oil and of course the military contractors, and many people got very, very rich by raiding the US Treasury.
The war had nothing to do with the anemic growth we saw in 2003-07. Such as it was, that was the result of Alan Greenspan's super-low rates and the housing bubble. Arguably the economy of those years might have been even better had we not been hemorrhaging money into the war effort.
September 5, 2008 7:41 PM | Reply | Permalink
As a general rule, the market always falls in an election year until the probable victor is known. It really doesn't like insecurity and while the renewed enthusiasm among the Republican base and the fact that Gov. Palin didn't fall on her face may have been factors because the November result might have suddenly seemed less certain; If you combine that with continually bad economic numbers, hedge funds' worry over future taxation, plus maybe an effort among some hedge funds to take advantage of Republican stock traders' inattention to trigger programmed sell orders, I'd probably throw my hat into those rings before the abstract concept of war.
IMHO.
September 5, 2008 12:58 AM | Reply | Permalink
Well, even though you generally can't say anything about a one day market move, Taplin has a point here. Down 3% in one day is huge.
But... this is also the 4th down day in a row and it probably isn't election related. The big issue this week has been the falling oil prices. For a long while people have said that "When the dollar strengthens, oil prices will fall, inflation will drop and stocks will begin their recovery." That was an argument based on us really finding a bottom globally and about future growth.
Oil prices have tanked. But it's all about demand destruction. And, oil is still expensive when compared to historical averages. The market panicked because oil went down for the wrong reasons. Bullish investors were waiting for oil to drop as a sign of decreasing inflation and a stronger dollar. They got oil prices dropping as a result of a drop in global demand and that has them fearing deflation -- the ultimate market correction.
And, in the end, Taplin should know better than to attribute a day's or even a week's market performance to a political convention.
September 5, 2008 1:35 AM | Reply | Permalink
Hi Destor - I suspect Mr. Taplin is snarking on Larry Kudlow and Bob Kramer, or more specifically, their assertions that the market's 1% drop the day after Obama's acceptance speech reflects a concern about an Obama presidency.
Some of us are eagerly awaiting their analysis of
Gov. Palin's acceptance speech and the corresponding 3% decline.
September 5, 2008 8:57 AM | Reply | Permalink
I can confirm this. My 401, aside from contributions, is right where it was eight years ago. And it is largely made up of very highly distributed index funds. For eight years it has been up and down like a yo-yo. Pretty much in sync with all the knee jerk management of our economy and the crazy political climate.
Bush has given us eight wasted years. This pretty much alters my retirement plans.
Bush and republicans have failed the country in every way possible. This is just another factually supported manifestation of that fact.
September 5, 2008 3:32 AM | Reply | Permalink
You're exactly right that your 401(k) is like a YOYO.
Because, for retirement, You're On Your Own.
And that's the Republican way.
-- ARG
September 5, 2008 10:39 AM | Reply | Permalink