The incessant parade of bad advice, partisan quackery and general ignorance about the way markets work is fascinating to watch. I used to find it annoying, but now I simply use it as a way to make money. Just find the dumbest of the group, and take the other side of their trades.

The latest idiocy coming out of the usual collection of misfits, dolts and cheerleaders is that the last 20% leg down in the market is pretty much all President Obama’s fault. Now before I explain — yet again — why this is so foolish, I have to point out that just about everyone who is saying this has been pretty much wrong about, well, pretty much everything.

This collection of seers, pundits and talking heads have a track record that would make the 1927-1933 group of Pompous Prognosticators blush with pride. Their sterling track record includes:

• Failing to recognize the importance of the Housing Boom;

• Not understanding the impact of ultra cheap credit;

• Failing to notice the economy weakening appreciably in 2008;

• Missing all of the warning signs of distress in firms as varied as Bear Stearns, AIG, Lehman, Citigroup, Freddie Mac, Wachovia, Countrywide and WAMU;

• Utterly missing the most telegraphed recession in history;

• Believing the sub-prime problems would be contained;

• Expecting the rest of the globe would decouple form the US economy;

• Believing that deregulation was the path to prosperity;

And many more.

That this pool of idiots missed all of the above merely suggests that are grossly incompetent as market and/or economic observers. That they now want to blame Obama for what happened only compounds their awful track record, and reveals them as nothing more than shameless partisans.

Using their own logic, let’s have a look at what occurred at this point in history — March 5, 2001 –  during George W. Bush’s first term in office: From election day in 2000 to today, March 5th, here’s how the market behaved:

>

Nasdaq November 4, 2000 – March 5, 2001

That’s off about 33%.

To really prove the point, let’s see the same chart from when George Bush started leading in the polls in early September:

>

Nasdaq September 1, 2000 – March 5, 2001

>

Down about 50%.

By the idiot squad’s reasoning, the 2000 tech wreck was all George Bush’s fault. Funny, I don’t recall hearing any of that from them in 2000-01.

I am not an Obama cheerleader. For the record, I found his selection of Larry Summers to be awful, and his choice of Tim Geithner as Treasury Secretary ill-advised. But to hold him responsible for a market collapse on day 41 of his Presidency — following 8 years of gross negligence and ruinous incompetency under the Bush regime — is simply too much stupidity for any damaged nation to bear.

>

>

Previously:
Markets Are Rorschach Inkbot Tests (March 2, 2009)

http://www.ritholtz.com/blog/2009/03/markets-are-rorschach-inkbot-tests/

Experts, Crashes, Media, Skepticism (February 19th, 2009)

http://www.ritholtz.com/blog/2009/02/experts-crashes/

1927-1933 Chart of Pompous Prognosticators (November 2006)

http://www.ritholtz.com/blog/2006/11/1927-1933-chart-of-pompous-prognosticators/

Category: Bailouts, Economy, Financial Press, Markets, Psychology, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

82 Responses to “Was the ’00-03 Crash Bush’s Fault? ’09 Obama’s?”

  1. Scott F says:

    Since you were too polite, I’ll say it:

    Fuck James Cramer

    and while you are at it, Fuck Larry Kudlow

  2. Patrick Neid says:

    “By the idiot squad’s reasoning, the 2000 tech wreck was all George Bush’s fault. Funny, I don’t recall hearing any of that from them in 2000-01.”

    Your memory is starting to fail you. Bush was blamed via Enron, as a starter, for the policies of the 90′s. Not to be outdone he was further blamed for 9/11 contributing to further stock declines.

    As to Obama, he deserves every bit he now starting to get because of his moronic cabinet choices and the stupidity of the countless plans they have been putting forth. Everyday, him and his minions scream depression and Armageddon unless they get their central planning policies. You get what you vote for.

    See you at the bottom.

  3. Scott F says:

    I recall Bush being painted for his association with big GOP campaign contributor Kenny boy Lay, but there was no fingers pointed at W for the collapse of Enron.

    And blaming Bush for the policies of the ’90s is also a non starter.

  4. Bruce in Tn says:

    Well, my first comment was eaten, so I’ll briefly rephrase it…

    First, Barry, silly premise. What gets you on these tangents? Have you been thinking along these lines all night?

    Second, econ0mic historians say that the reason we are an economic superpower is productivity. That back in 1900, we were just another member of the choir, and as year after year went by, we were just a little more productive than everyone else, and in time, this produced a world beater..

    Now government taxes of all sorts are being proposed to pay for our silly bailouts. I note today an internal audit of GM says we’ve probably wasted the money heretofore, and if AIG, C, and some others were audited I suspect the same would be true.

    What if we are headed toward European socialist democracy with VAT taxes, more pension taxes, cradle to grave government care, and the costs that go with all this increase in government and bailout costs? We already do social security stupidly, we don’t set aside payments for each individual, we promise payments based on the taxes of those still working…we will see our productivity decrease since government costs will massively increase.

    Back in the choir…government will become the leader, not the individual..Like Sweden?…we are all Swedish soon…

  5. Anon says:

    And I recall hearing something about a National Security briefing a month ahead of 9/11: Bin laden determined to strike in US.

    Bush immediate response was to give a speech outlawing stem cell research.

  6. Bruce,

    you silly goose, don’t you know? Government knows Best. Mind your p’s and q’s, or you won’t be having any gruel.

  7. Concerned American says:

    There is not a nickel’s worth difference in Republicans and Democrats.
    - They both want your money and want to give it to someone else.
    - They are only interested in what benefits them not the country as a whole.
    - They have no conscience.
    - Most are incompetent

    The TWO AND ONLY TWO parties have been established to make you, Sheeple, think you have a choice.

    No one cares about fixing anything. They only care to find someone else to blame in the other party.

    It really doesn’t matter how we got here at this point. I put most blame on the total failure of the Bush Administration. I am not sure what we expect when we elect people who have never had a real job, never had to find employment nor prove them self, never had to buy medical insurance etc. Exactly what had Bush accomplished in his life except buying the Governorship of Texas and doing nothing there?

    So we are surprised? We will be surprised next time too? How stupid is that?

  8. ben22 says:

    Barry,

    My guess is half of the crazies blaming Obama don’t really believe that, they just want to blame someone else to further take focus of their own mistakes and horrible calls.

    Example: Cramer

    Also,

    You know I was thinking the other night about Cramer, we all remember his the Fed, knows nothing rant “heard round the world” and I remember correctly that was about him wanted the Fed to cut rates, as if cutting rates would have stopped any of this. Cramer always seems to find a way to back out of something when he makes a bad call, never his fault, always someone else. He should be in govt. he would fit in perfectly.

  9. ben22 says:

    @Mark Hoffer,

    thanks much for the fractal economics link you had on another thread. There was some really good information there.

  10. ben22 says:

    Little OT,

    but just wrapped up, as I’m sure a lot of you did, watching the GE CFO on CNBC interview.

    A few observations:

    1. I honestly don’t think he or Immelt knows what is actually going on at GE. For example, Immelt said on an interview posted here at TBP that they had 60 billion in cash, this was just a few weeks ago.

    2. The CFO made statement after statement that people were lying about them and that they were ok, GE capital was o.k. This seems almost too perfect a set up for GE to be wiped out now.

    3. I’m not quoting exactly but he also said something along the lines of “there would have be more bad news for us to need….” Was he serious, there has to be more bad news in order for us to be in trouble? Well buddy, I bet you there will be bad news and I’m just as certain there will be as I’m that the sun will come up in the East. tom. morning.

    I completely expected this to be a bs interview considering where the interview was done so it will be fun to see how it plays out. Someone made some large option bets on GE going a lot lower from here.

    AT, maybe you will be right and GE would cause capitulation.

  11. jjterl0 says:

    Barry….I can understand where you are coming from, but objectively, Obama’s policies are in fact having an impact on market participants and market action today.

    While he has had only 42 days on the job – he should be held accountable. The direction he is moving this country in IS truly a cause for concern.

    Obama’s coddling of unions, class warfare, unwillingness to nationalize the banks (like you have suggested), willingness to spend trillions on EVERY campaign issue, and the general movement towards socialism has had an impact on credit/equity markets.

    I agree that Obama inherited a miserable situation and others are to blame for past sins. But I also challenge your assertion that Obama can not be held accountable. He won the election – he needs to stop campaigning and lead. This country needs leadership – he is still campaigning.

  12. ben22,

    no problem, and you’re welcome. glad you found it of interest, it’s a subject I’ve long liked. I find it too bad that it gets relegated, by most in that field of study, to the eddies..

    http://www.thefreedictionary.com/Relegated
    http://www.thefreedictionary.com/eddy

  13. ben22 says:

    Since a lot of people were talking about zero sum game yesterday got me thinking about a quote from one of my fav. movies:

    “It’s not a question of enough, pal. It’s a zero sum game, somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one perception to another.” – Gordon Gekko

  14. grumpyoldvet says:

    ben22..

    No one expected a hard hitting truthfiul interview by Michelle & Joe about their employer. If they did so they’d be out on the street selling coffee from a wagon. Michelle is a hack & Joe is a guy who gets his advice by reading the Wall St Journal’s editorial page & The New York Post…his social commentary by listening to Howard Stern.

  15. Boomer108 says:

    Barry, I love your site, it is one of the most content-rich, expansive sites in the financial blogosphere. And this crowd who comments is terrific.

    However, my least favorite thing here are these partisan debates. We know you think Bush is an idiot, and that lots of other people are idiots, too. Personally, I find those types of critiques not particularly constructive. It’s easy to be critical. It’s much harder to be constructive, make predictions, and make suggestions. Let’s have more of that!!

    As I think about my own investment strategy currently, I find myself continuously considering the fact that it is now clear that this government will print/tax/spend their way out of the fix, with I believe fantastically deleterious consequences. If Rush Limbaugh had presented continued bailouts, and a $3.6T budget, my views would have been exactly the same!

  16. Marcus Aurelius says:

    Let’s not forget the (R) Congress fucktards. Teri Schiavo and endless other inane bullshit (gay marriage threatens the foundations of our country, the war on Xmas, naming everything they could after Ronald Reagan, etc.). And they’re still at it – now they’re trying to push a Bill declaring we have won a victory in Iraq. We are living the results of their twisted priorities.

  17. Ethel-to-Tilly says:

    There’s an incredible amount of negative bullshit going on in the world that the market is reacting to that never makes the news in the US – hey – we have to talk about Chandra Levy! It’s partisan know-nothings who are trying to pin the market drop on Obama while ignoring all the other negative stuff that is actually going on.

  18. Bruce N Tennessee says:

    Labor costs up 5.7%…?? 5.7%?

  19. ol’ gov,

    that’s expectable and all, though that cat from GE, seemingly, pegged the needle, more than once, on the Voice Stress Analyzer..

    I still can’t believe he’s the CFO, is that really true?

    If that koffee klatch was meant to ‘inspire confidence’… maybe they’re looking to create their own ‘capitulation’, and ‘go private’??

  20. CNBC Sucks says:

    As a registered Republican, I revoke your GOP book-burning discount card, Republican Ritholtz. May you never enter the eternal kingdom of our party’s official God, Jesus Christ.

    All kidding aside, if you did not see it last night, Jon Stewart took on CNBC and the entire U.S. financial system last night, http://www.thedailyshow.com/full-episodes/index.jhtml?episodeId=220250. Some of you might not agree with Stewart, but you aren’t the only ones who vote. I have tried my best to get a rise on Daily Kos about CNBC, but few people even care about CNBC or the stock market on Kos. I thought Kossacks were all a bunch of young, liberal punks, but a lot are just pissed off Xers, and there are more on people’s minds than just the stock market, even if their life savings might be tied to it.

    There is a part of the Dow Jones Industrial Average that is political capital. When CNBC chose to wage war on behalf of the False Prophet Index against President Obama so early in his administration, it made a strategic mistake. I am leaving the S&P 500 and NASDAQ (NASDAQ is largely California Democrat anyway) out of this, but CNBC has made it CNBC and the DJIA versus President Obama, the Democrats, and regular people. All bets are off on how far down the Dow Jones False Prophet Index will go, because Americans are finally being made aware of how utterly meaningless it is, and how much we all have sacrificed to worship it.

  21. NovBear says:

    Boomer108,

    I totally disagree with your characterisation of this post and others like it as a “partisan debate”. On the contrary, these posts are supposed to constantly remind people to filter out those who try to marry politics and the market. With so many new people paying attention to the market, I think “The Big Picture” serve as a beacon of objectivity and one of the few ways a neophyte can get the truth about the danger of painting the market with a partisan brush.

  22. grumpyoldvet says:

    OT but germane to the current economic reality. Went to my physician yesterday for a checkup & when I walked in it was eerily empty. Now my doc is part of a 12 member medical group. But the waiting is usually quite crowded and there are several women doing clerical work today only 3. My appointment was at 1:15 and as I got there a bit early I settled in to read a book. Surprisingly I got called within 5 minutes & when the doc came into the examination office I asked what was going with the lack of patients. He smiled and said this has been going on since the begining of the New Year, in spite of many people having the flu here in the Northeast. Said many appointments are being cancelled and as a matter of fact he had only 2 patients for the day, usually at least 20 or so.

    Same with a friend who is dental tech. Her business is whitening and cleaning. Said business was off almost 60% as compared to last year.

    It’s starting to bite.

  23. Bruce N Tennessee says:

    Salt mine opens in 4 minutes..one last comment.

    “Was the 00-03 and ’09″…..? NO!

    They were caused by the one who has always been in charge…Mr. Business Cycle.

    Yes, there were distortions along the way (1% Greenspan comes to mind, etc)…but Mr. Business Cycle wins again…it is not Mr. Business Circle, Mr. Business Vacuum, or Mr. Business Linearity…it is a cycle.

    Now is the Winter of our Discontent…

  24. albnyc says:

    So Barry, are you saying that the pyschology re: Obama’s policy orientation has had no effect on the market? There was a while there, based on rhetoric, cabinet choices, etc. that the prevailing “wisdom” was that the administration would be centrist, or at least moderate. Now that policy is beginning to be implemented — through the stimulus, economic and environmental directives — that view has been shown as false. Seems to me that the market has weakened in response to that new “reality.” As you have said many times as bad data has been released…”who is surprised by these numbers?” I, unlike Rush and others of his ilk, do not want to see the President fail. If he does, we all do. However, Obama and his has not been uplifting or reassuring to the markets.

  25. Marcus Aurelius says:

    NovBear and Boomer108:

    The market is only a small part of the economy, and the economy is only a small part of our culture/society. That said, we stand on the brink of societal meltdown on a global scale due, primarily, to economic policies and decisions of the past 30 years, or more.

    Where can you turn for information nowadays that does not examine the nexus of politics and the economy? How can you examine and assess our economic problems without recognizing the political causes and ramifications?

    “Partisan” arguments got you down? Perhaps you stand on the wrong side of the arguments. Where were you when our “leaders” were taking us down the path to poverty? Were you cheerleading or raising red flags? Now, you don’t want to talk about it.

  26. Greg0658 says:

    music over sports
    a guy picks a team to play on for a generation (20 years) .. or maybe a lifetime
    investment .. thats where we are … to the death (maybe)
    constant crave’g over peer pressure

  27. Marcus Aurelius says:

    albnyc:

    You should check out the on-line clip of the Jon Stewart piece referred to by CNBCSucks, above. I have a feeling you’re not going to like it, but you should watch it.

    http://www.thedailyshow.com/full-episodes/index.jhtml?episodeId=220250

  28. eric davis says:

    When things start falling apart, people fall back to their religion. Be it Christian, Muslum, Republican, freemarkateer, liberal or Libertarian.

    to paraphrase Marx.

    I’ve heard a redux of the CRA argument… even Kudlow gave up on that.

  29. ben22 says:

    @NovBear,

    When the GDP equation is dominated by government spending, then yes, the market and government might not be married, but to say they aren’t having a bigger impact than normal right now seems like an odd argument to me.

  30. montyhigh says:

    I admit I haven’t read any other comments, but I think Denninger is right. The lack of any real “change” in Washington, while the pre-existing embezzlers just keep on embezzling, is Obama’s responsibility and the latest market plunge is on him because investors just don’t trust American markets any more.

    http://market-ticker.denninger.net/archives/850-Politicians,-Meet-Reality.html

  31. ancientone says:

    Dear Bruce N Tennessee,

    Mr. Business Cycle is caused by the lowering and raising of interest rates by the Fed. This slowdown is an entirely different kind of animal, with the economy tanking as the Fed lowered interest rates…and it didn’t even begin to slow the fall. Interesting times ahead.

  32. farmera1 says:

    I feel very uneasy about this country. The blind adherence l to ideaologies instead of dealing with facts, whether they be science, political, economic or intelligence (where are those WMDs anyway), does not bode well for solving problems and will inevitably lead to self destruction. When the lead off speakers of a major political gathering consist of Rush, Ann Coulter and some 13 year old kid, you have to wonder where the minds of the people are.

    If people don’t wake up and start using their minds instead of their emotions, this country is heading down a one way path to …… (I wish I knew but I can’t see it being a place I want to be).

  33. CNBC Sucks says:

    I used to be like Boomer108, wanting to be oblivious to partisan debates, hating all the unpleasantness of politics. That’s why I was a Republican for so long. I was a top-tier MBA and the world was my oyster, because we live in a free market, and my success is only determined by what I do with my life. Then, I realized the whole world revolves around the partisan debates in Washington, and that my Republican Party does everything with only one ultimate goal in mind: minimize taxes for the wealthy. Everything from the price of our bread or IBM stock to whether we go to war or whether we risk giving our children the opportunity to live comfortably when they are our age revolves around what happens in Washington, and my GOP has a single-minded purpose: minimize taxes for the wealthy. All of their actions are based on that singular goal, even to set up diversionary culture-war campaigns on issues such as abortion and school prayer just to create a smokescreen.

    If America had not gotten the last election right, the world would not have ended. It would have just passed us by. The rest of the world has been working feverishly to make itself “America-resistant”.

    Keep up the good work, Republican Ritholtz.

  34. bonghiteric says:

    @grumpyoldvet,
    Completely agree your assessment of MCC and Kernan. However, as a 20 year listener of the Stern show, (my handle, bhe, is borrowed from the name of an occasional caller) there is absolutely no similarity between Kernan and Stern’s social views-None.

  35. NovBear says:

    Ben22,

    Ah, but I didn’t make that argument. From a trading/investment perspective you need to separate politics and the market. I never said that you should separate government and the market. Like I said, painting the markets with a partisan brush will remove one’s objectivity and greatly increase the likelyhood of one ending up in the poorhouse.

  36. Bruce N Tennessee says:

    @ Ancientone..

    Yes, I agree…this cycle was distorted, and is still being distorted…but an equilibrium is occuring..

    I am one of those who likes Barry’s site quite a bit, mainly due to fact that people are generally open to civil discourse and I know Barry has political overtones when he posts some topics, but Barry is Barry…

    Some wonder if you dream in color or not…with Barry, I wonder if he dreams of Democrats and Republicans at night…(and which ones cause him nightmares?)….

  37. ardano says:

    Dear Barry:

    Taking the other side of your point, does not mean I’m defending Bush, or Obama. As a political intel guy down here, I would say the decline in stock prices, post Obama, really does reflect the realization that Democrat control of the House, Senate and White House is problematic.

    Near as I can figure, the WH, House and Senate are truly committed to raising taxes on people who they define as “rich.” This will have a chilling effect on small businessmen in America.

    Higher taxes also await hedge funds and private equity funds. Heck, some legislators want to tax financial transactions. In addition, there is a sense that the new Administration is still finding its way. This is not true of the leadership in the House and Senate. Here, its business as usual, which is to say business as it was before the Republican contract with America.

    Here’s an example. The Congress approved a massive omnibus spending bill. It was weighed-down with earmarks worth billions to key Congressional Democrats. To his credit, Senator McCain tried to pull the earmarks. He made a speech on the Senate floor raising the issue. Correct me if I’m wrong, but “candidate” Obama ran against earmarks and politics as usual in Washington. Do you know what the Obama response to this was? (Paraphrasing…) “The omnibus spending bill represents business from the previous year…legislation that came before the new Administration…therefore Obama will not veto it.

    What kind of crap is that? Really, its sickening. If Obama is going to lead this country effectively, he will have to take-on his own party, and their entrenched lobbyists, rather than continuing to blame Bush for everything. At some point the problems of the nation are not inherited, they are his to solve.

    Bush, Paulson, et al were properly criticized for putting band aids on problems rather than dealing with root causes. So far this Administration is doing the same thing. Whether its GM, AIG or Citi, the approach has been the same.

    Just so we’re clear on this, a lot of the selling in equities has been by foreign investors who are starting to figure out that all the spending that’s being proposed is going to take the form of Treasury debt. Who’s going to buy all that debt?

    Wake-up Team Obama, move to the middle, its not as bad as you think…

  38. DoctoRx says:

    This piece compared apples to oranges. From election day 2000 till March 5 2001, the Dow was only down about 5%. The NASDAQ was continuing a long descent from a crazy bubble peak. Plus, it was just being recognized that the U.S. was going into a recession that began during the election recount craziness.

    Also, I agree w Boomer108. I don’t think that the many valid points made here are enhanced by so frequently calling other commentators idiots.

  39. albnyc says:

    Marcus:

    Not sure what you are expecting me to disagree with.

    FWIW, I loathe CNBC and agree totally with the sentiments expressed by Nocera and Stewart, and many of the commenters here about the state and genesis of our broken economy. But to say that what’s emanated from the administration has had no impact on the MARKET, I think is disingenuous.

  40. CNBC Sucks says:

    You CANNOT separate politics from the stock market. Let me take the Libertarian argument here: Without the Fed reflating the bejeezus out of the Dow and propping up the capitalist free market catastrophes of Wall Street by soiling our nation’s collective balance sheet, your Dow Jones False Prophet Index would be at 1,143.32.

    I just did the calculations.

  41. Gawdfather says:

    I don’t think it is the ideological content that is pissing the markets off, but the lack of specifics; i.e. it is the uncertainty, stupid, not the politics.

    Of course the most recent drop is not all Obama’s fault. But I believe there is a big difference in between the current period (by that, I mean August through now) and the period Barry uses to compare (01-03).

    Ever since August, the markets have been totally affected by what is happening, not in New York, Hong Kong, or London, but Washington. Fannie and Freddie, Lehman, TARP, TARP II, Stimulus, mortgage program, auto bailout. Not since the 30s, methnks, have the markets been so focused on and reactive to Washington.

    So Obama’s first moves have not gone over well, and I think it is undeniable they have affected the downward pressure, to a degree (just watching the market reaction to Geithner’s TALF rollout shows that; the day of and days following).

    But it is the uncertainty that is killing any confidence, which will continue until there is something tangible from DC that the markets like (suspending mark to market, finality from stress tests, etc.). That, imo, is the reason the much discussed bear rally, which seems overdue, thanks to the massively oversold conditions in the markets, has not materialized yet;vbecause of the lack of a catalyst from the markets’ focus, Washington, DC.

  42. grumpyoldvet says:

    Mark..

    You Da Man…

    bonghiteric…

    Well, I don’t listen to Stern but did for a while in that my partner always had it on his radio. It just reminded me of adolescent college boy nonsense.

  43. Mannwich says:

    Many of us were predicting this very down leg since the November lows hit. This would have happened if Jesus himself had taken over as our president. People need to grow up and wake up.

  44. Bruce N Tennessee says:

    @Mannwich:

    Good morning. Do you think the GM audit means we are through giving them money?

  45. Mannwich says:

    @Bruce: That appears to be where we’re headed. Am guessing we’ll go down a similar path with the zombie banks. Make the cursory attempt to “save” them while building up political will before the inevitable occurs, outright nationalization.

  46. Jesus would never have taken the job. It involves lying, and He’s all about truth, even if many of His followers refuse to acknowledge them.

    The problem with the markets is that politicians, first the out-going Bush administration, and now the Obama administration, are having to clean up for the monetary mischief of the economists (Greenspan, mostly).

    In the process, they have collectivized and bastardized practically the entire residential real estate market, and several others. They (and yes, I say “they” referring to both administrations) have seen no statist interference with markets that they didn’t like, from the rescue of AIG to the dollars plowed into failing car companies, to the conservatorship of Fannie and Freddie. A goodly portion of our economy has been relieved of any notion that it might be subject to the vicissitudes of the market.

    That presents a problem when considering what to do with your money (if you still have any): What will the government do next? If you once thought a contract was sacrosanct, look no further than the mortgage market to realize a contract is only what the government says it is, and nothing more. I used to tell people at real estate closings that the mortgage basically says “if you don’t pay, you don’t stay.” Now I tell them that’s what it used to mean, and that nowadays I haven’t really a clue.

    Say I’m sitting on a bundle of cash. I think GE is looking pretty good now, at a decades low. But why should I invest? What if the government nationalizes GE and wipes out the shareholders, like they did w/ Fannie and Freddie and effectively, AIG? GE is certainly more important to the American empire, operating in many militarily and economically strategic industries, than is say, AIG. Why would anyone with half a brain invest in GE under those circumstances?

    I think the uncertainty associated with a government that shoots from the hip (both administrations) and formulates plans on the fly is the real problem with this festering malaise. The uncertainty is feeding on itself, causing further declines, that in turn fuel more uncertainty.

    If the new administration wanted to do something reasonably good for the markets and economy, it would come out and say something along these lines:

    “That’s it, we’re done. We’ve rescued everybody we’re gonna rescue; we will now return to providing the functions for which a government is necessary (defense, communications infrastructure, social safety nets, etc.). There will be no more protection from government for market outcomes we don’t desire. Along those lines, we won’t institute any more short sale rules, or other attempts at market-bending madness. We won’t go nativist in our labor policies or protectionist in our international relations. Now, go forth and (legally) create as much value for yourselves as your gifts and desires allow.”

    Then watch GE pop.

  47. leftback says:

    @ben22: GE capital = AIG FP. Potentially bottomless black hole. Expect govt bailouts.

  48. ben22 says:

    @NovBear,

    I get it, thanks for clearing me up.

  49. bman says:

    @farmera1: wow you mean you’re starting to see behind the Smoke and Mirrors? Let me give you a hint, The republican party is finally going to get a long deserved rest alongside the federalists on the scrap heap of history. The longer they listen to the siren songs of oxy popping primate posturing radio hosts and take it as God’s good word, the sooner they’ll end up in the ditch, and sometimes when you’re driving on a snowy road it’s better if you let the speeding maniac pass, because the sooner he gets in the ditch the better it is for everone else.

  50. ben22 says:

    @leftback,

    But they said GE Capital was going to be profitable! LOL.

    I wish I had saved the internal analyst review of AIG from last spring that was sent to me by a fairly high ranking executive there so that I could post it here. It hyped up FP there so hard and made some sort of unreal estimate for year end stock price of around 75 or so.

  51. Greg0658 says:

    Mark E Hoffer hypothesizes at 8:42 am

    ol’ gov … good one
    only what’dya do now .. after loan’g them money for years and years to become a super .. hope ya got your payout

    I say let them future “wanna be supers” borrow from regular banks with required return on investment with interest … SEC can go outta biz that way .. and the rating houses

    and your local bank if it sees the investments are become’g at risk of outsource deterioration (from a local pov) they can decide “no cash for you”

    nasty game .. someone should blow a whistle .. claim game over ………… not a chance huh
    literally its the financial capital of the world against the rest of us …………… or is it for us
    :-)

  52. glenn_in_MA says:

    Barry, Thank you, thank you, thank you from the bottom of my heart for continuing to be the voice of reason and logic during this mess.

  53. batmando says:

    ben22 Says:
    March 5th, 2009 at 7:57 am
    @Mark Hoffer,
    thanks much for the fractal economics link you had on another thread.

    ben22 –
    Missed that posting and you give no reference to which other thread nor re-post the link in your post. Would like to view the site. Frustrating. Would appreciate you or MEH re-posting link in this thread. Thx.

  54. glenn_in_MA says:

    Okay…can’t help myself today.

    Patrick Neid Says:
    “Your memory is starting to fail you. Bush was blamed via Enron, as a starter, for the policies of the 90’s. Not to be outdone he was further blamed for 9/11 contributing to further stock declines.”

    I have a vivid memory of 2001 (that tends to happen when you lose your shirt)…and I don’t remember any blame being thrown Bush’s way for any of that while it was happening. I was a Bush supporter back then…and eventually turned into a mega-basher of the worst President this country has ever had. Funny thing though, I still don’t blame him for what happened in 2001-2002 because I call it like I see it…and I don’t believe in rewriting history!

  55. ben22 says:

    @batmando,

    Sorry, I bookmarked the link at home but I’m not on that computer right now. maybe if Mark sees your request he can get it to you if not when I get home from work tonight I’ll try to put it up here somewhere.

    Sorry, if you want to just scroll through the comments from all the threads yesterday it should take you long as his name is in Blue and so it stands out from most of the others.

  56. ben22 says:

    meant it shouldn’t take you long..

  57. Fredex says:

    Obama has transitioned from Office of the President Elect to Office of Figuring out How to be President. He wanted the job. He’s got the job. I wish him well.

    I’m not going to spend four years drilling holes in the boat because I don’t like the Captain. Bush derangement syndrome was and is a dead end. I voted for McCain. I don’t regret that.

  58. EAR says:

    Thank you, Barry!

    By the way, I recall you saying that you are an independent.

    As a fellow indie I understand your predicament.

    When you use a rational and fact-based perspective that is in opposition to a belief that is distorted by partisanship and ideology you are painted with the broad brush that is used to on everyone who opposes beliefs that are peddled by the partisan and ideological.

    Contradicting ideology is like sticking your hand in the garbage disposal. Doing so publicly is like switching it “ON.”

    Along with credit and debt, American de-leveraging of the mind is necessary as well.

    More knowledgeable people must expose this “argument” for what it is, another specious and artificial “idea” for the disingenuous. This garbage about correlating Obama and the DOW is amateur and it is totally counterproductive. Unless, of course, if you make money saying it. Then its personally productive at the expense of reality and the greater good. Wait a minute, I sense a pattern here…

  59. moonmullins says:

    Boomer – well said.

  60. Hal says:

    interesting:

    Obama is coming in billed as the turn around specialist in many ways–so far he has not instilled confidence in many ways.

    Bush inherited a steriod economy caused by the printing of money for first, the 96 election and then y2k (check out growth in money supply back then and see why clinton added jobs and balanced budget-and while you are there go see which administration thought up and designed FEMA in 98)

    He-Bush- was like a deer caught in headlights.

    Slight of hand is common in government on either side of the aisle.

  61. SS says:

    Barry,

    It would be helpful to all concerned, a lot of us and perhaps even Obama, if you could detail your objections to Summers and Geitner. If it is the repeal of Glass Stegal and the Commodities Regulation Act that you detail below, I don’t know who you would have in their place. No mainstream economists opposed these measures at the time, though a few people had reservations about leaving the commodities exchanges and derivatives unregulated. Their reservations, furthermore, did not amount to a plan or even a serious effort politically to reign in the “free market” ideology of the day. I did object to the Glass Segal repeal, am an economist, and got early retirement, read marginalization, for my efforts. I am enjoying retirement thank you.

    If there were alternatives please let us know because Obama will have need of them if these guys have not learned anything and fail again. As to your being independent and the 60/40 split, while I like you, it would be less than helpful if I didn’t encourage you to “grow up.” I used to vote socialist worker in my youth even though their candidates were horrible because I didn’t like the mainstream parties. I fortunately grew up. They’re all we got. Oh, and by the way try 80/20 if not 90/10. The Democrats, even Summers, would never have let things go so far out of kilt.

    SS

  62. CNBC Sucks says:

    Fredex, you did not need to disclose you voted for McCain.

    It is better to remain silent and be thought a fool than to speak out and remove all doubt.

  63. Tom K says:

    Barry,

    Didn’t you do several posts + charts comparing stock market returns, gdp growth, etc. by party/presidential term?? Such comparisons seem to be just as idiotic as blaming economic/market performance on a brand new president, but the statistical clock starts running the second a new president takes office. [BR: Those posts were my criticisms of such foolish analyses. They are similarly foolish to the above idiots]

    Now I’m not a fan of George Bush by any stretch of the imagination, but all the figures the MSM likes to cite regarding the “Bush Economy” includes the “Clinton recession”, right? Whether we’re talking about job growth, gdp growth, deficits, etc, the clock started running as the start of the Clinton recession. Somehow that little observation never seems to get mentioned by the MSM (or noted on charts posted by bloggers).

    You said: “By the idiot squad’s reasoning, the 2000 tech wreck was all George Bush’s fault. Funny, I don’t recall hearing any of that from them in 2000-01.”

    Well here’s something to refresh your memory:

    http://www.newsweek.com/id/80253
    Thanks Ever So Much, President Poor-Mouth
    Bush Pays The Price For An Unusual Decision To Speak Ill Of The Economy.
    “Until last week, confidence in the economy remained high by historical standards, and for good reason. Despite a plunging Nasdaq and signs of weakness in manufacturing, the fundamentals–low inflation, strong job growth, strong productivity–have stayed sound. But confidence in the future of the economy has been falling sharply since the beginning of the year. Why? What conditioned the public to be so bearish this year when we’ve weathered bigger market corrections before?… Bush himself could hardly open his mouth in his first weeks in office without talking about a “sputtering” economy whose growth has “stalled.””

  64. donna says:

    Totally agree on Summers and Geithner. Terrible choices, indeed. And may cost us dearly.

    And what’s wrong with Sweden? They have one of the highest standards of living in the world AND handled their financial crisis successfully — look it up.

  65. Bob A says:

    Depends on whether you mean the crash before 9/11 or the crash resulting from 9/11.

    I for one hold Bush responsible for 9/11 because he and his entire crew were asleep at the switch.

  66. impermanence says:

    “That this pool of idiots missed all of the above merely suggests that are grossly incompetent as market and/or economic observers.”

    Barry, these are people who, in many cases, have walked away with hundreds of millions of dollars in their pockets. Do you really think these people didn’t know what was going on? If you plead collective ignorance, then they can only be called “idiots,” but damn rich idiots. This is the same scam that has been going on throughout history. Don’t be so naive.

  67. Bruce in Tn says:

    donna:

    Sorry, the Swedish model isn’t for me…and I imagine it wouldn’t be for you…what you keep after taxes isn’t that great..yeah, you may get health care…but most of what you make goes to let the government care for you…not my cup of tea, and never ever would be..

  68. robertf says:

    Hal, you wrote:

    “Bush inherited a steriod economy caused by the printing of money for first, the 96 election and then y2k …He-Bush- was like a deer caught in headlights. ”

    In fact, Bush inherited a $236B budget surplus from Clinton. He immediately cut taxes on the very wealthy, giving the top 1% $630B over three years. And he opened the throttle on spending. The result was completely predictable: he turned the Clinton surplus into a $156B deficit in one year–a swing of $392 billion. He produced deficits every year thereafter.

    The 2001 “recession” was not even a recession in the technical sense–two consecutive quarters of negative GDP. The second and fourth quarters of 2001 were negative but overall, it was the mildest recession since WWII.

    Bush did not inherit a mess. He created one with his massive spending increases (greater as a % of GDP than even Lyndon Johnson’s) and his massive tax giveaways to the super rich–his “base” as he calls them. He ran up $5 trillion in national debt and what we got was the collapse we are living through now.

    What a way to wreck a country.

  69. Che Stadium says:

    @Brice in TN 5:56

    Perhaps Donna is endorsing the private accounts in the public pension system.

  70. 12jc says:

    So Obama has nothing to do with any of the recent market weakness. I suppose you think the price action of AMGN, CELG, BIIB, and GILD, to name a few, coming right after Obamas budget was released was just a coincidence?

  71. robertf says:

    12jc:

    Economies have momentum like aircraft carriers that move them for years. We are witnessing the collapse of the biggest financial bubble in the history of the world. 12 days after Obama took office, the World Economic Forum reported that the crash had already wiped out 40%–that’s right–40% of the world’s wealth. Obama’s budget is a gnat on an elephant compared to that. Indeed, it is woefully insufficient to reverse the accelerating downward momentum.

  72. dunnage says:

    Hell, it was that damn Clinton.

  73. JohnLloydScharf says:

    The Obama Nation Today:

    Jan.20,2009-Mar.05,2009 = -1643.53(-19.85%) Obama Presidency
    Jan.26, 2009-Jan.21,2009= -2359.49(-22.29%) Bush Presidency

    Barry Ritholz is manufacturing myth. The first two months of the Bush Presidency were a raise in the Stock Market. There was a rise of 119.24 from January 21, 2001 to March 9, 2001 or 1.13% increase.

    This deification of Obama and historical revisionism needs to stop.

  74. batmando Says: March 5th, 2009 at 10:58 am

    batmando,

    sorry, just saw that.

    this: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=%22fractal+economics%22

    should be it..
    ~~
    Che,

    that’d be nice, if she even knew about them..

    here: “In 2000, Sweden established mandatory private accounts covering all employed and self-employed persons as part of its retirement income system.

    The Swedish private accounts are add-ons to a generous social security program. The Swedish system requires a contribution rate of 2.5 percent of wages as an add-on to a social security system that requires a contribution of 16 percent—a total contribution rate of 18.5 percent.

    The Swedish private accounts are operating in a country with very low poverty. While private accounts may be especially risky for people with low incomes, the poverty rate for Sweden’s elderly was 0.8 percent in 1995 (Smeeding 2001). ..”

    is AARP’s slanted take on their deal..
    http://www.aarp.org/research/legis-polit/ssreform/private_accounts_in_sweden.html

  75. Greg0658 says:

    Mark looks like folks may get the Swedish model here (second required savings account) you pointed to in the AARP piece. After catching a statement at the House Finance Cmte on 3/3/09 I researched the no opt out 401K .. found on Cspan

    but no opt out is False (see pdf quote) again False (I think) TimmyG didn’t refute the Congressman well

    http://www.c-span.org/Watch/watch.aspx?MediaId=HP-A-15974
    1:20pmET or 42m15s into the pod segment
    asked by R-TX Sam Johnson

    quote from Dept of Labor pdf file on 2010 Budget
    “Establishes Automatic Workplace Pensions and Makes the Saver’s Credit Refundable
    Currently, 75 million working Americans roughly half the workforce lack employer-based retirement plans. The President’s 2010 Budget lays the groundwork for future establishment of a system of automatic workplace pensions, to operate along side Social Security, that is expected to dramatically increase both the number of Americans who save for retirement and the overall amount of personal savings for individuals. Under this proposal, employees will be automatically enrolled in workplace pension plans. Employers who do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IrA account that is compatible with existing direct-deposit payroll systems. Employees may opt-out if they choose. Experts estimate that this program will increase the savings participation rate for low and middleincome workers from its current 15 percent level to around 80 percent. In addition, the Budget proposes to expand retirement savings incentives for working families by modifying the existing Saver’s Credit to provide a 50-percent match on the first $1,000 of retirement savings for families that earn less than $65,000. The credit would be fully refundable to ensure that savings inncentives are fair to all workers.”

  76. Greg0658 says:

    I hope that Cspan link continues to work .. its ID changed from 2 days ago

    and I wanna add … this bird doggin my government is hard work and takin alot of my free time
    another reason the economy is tanking … we’re all desk potatoe’g .. try’g to figure out what the f**k is goin on

  77. billporsche says:

    Gentlemen,
    We have achieved everything that we have through Capitalism. The incentive to achieve for one’s benefit
    has proven itself. Any hint that we are going to add an additional S to USA (United Socialist States of America) will cause investors to seek another place to invest. Until the ideology changes the market will continue reflect and discount the fear of that failed ideology. However, on the bright side look at the potential new song title ; Back to the USSA !

  78. Greg,

    yes, of course, opt-out is false, just like SocSec ‘Trust Fund’, yon’ PTB are tres’ worried that their ruse is running thin, and that The Peep are fixin’ to take their change (from their ‘dollatrs’ invested), and stay home, away from ‘the Street’..

    and, of course, we’ll hear much more about how We’ve been Irresponsible, haven’t saved enough, haven’t paid enough Taxes, need to ‘share the struggle’..

    it’s all too predictable, same scams, different artists..

  79. Greg0658 says:

    billporsche Says: March 6th, 2009 at 5:28 am
    Gentlemen …. dadadadada

    Soc’ism was my time in the Army .. Cap’ism was my time at my dads little sheet metal shop (and now my own graphics shop) .. and you are drumin for Fas’ism (I mean crony cap’ism) (but we don’t call it that ’round here)

  80. Greg0658 says:

    full disclosure .. a union sheet metal shop (that he owned) and I moonlighted in my graphics business with my excess cash (graphics my original calling)

    why mention this . cause it opens lots of lines of thought … that we need now …. crony unionism (but whats a dad to do but offer a job to his son) …. cross currents in my ‘isms exist everywhere and it is not cut and dried anywhere …. one job per man per family (but I have a business to fall back on now that my hvac job turned to truck docks builds) …. if my memory is correct (and it usually is) I voted against every pay raise at the open air vote aye na meetings (course if they are gonna sign the package take it) (didn’t see it then . but hind site the white collars would go for package if we would put more up into savings) you see where this is line is going (to outsource our jobs with our own promised future payback savings) …. and the open air aye na . NOT in favor of this coming down the pipe Card Check stuff . I wonder is a secret vote existed on pay raises if more people would have sided with my logic that we are getting to expensive for the grandmas

    I meant all this and I am not going to proof it … THIS STUFF IS NOT MY JOB

  81. jmay says:

    I know I’m late to the party here, but FWIW’s Barry’s determination to bat down idiocy where it rises is not a distraction, but rather one of the reasons I read this blog.

    It’s become all too clear that allowing stupidity to be spewed forth unchecked, and hoping it will just go away, is not the correct strategy. You must punch it in the face. Stephen Colbert’s utter dismantling of George Bush while the President sat 10 feet away was one of the greatest moments of the last four years.

  82. [...] on Obama, as did the speak-first-think-later pundits like James Cramer. I noted at the time the blame was misplaced. I doubt any credit for the rally will be forthcoming; consistency is not the strength of partisans [...]