Bush is even screwing over his own...

[Hendo]

After another titanic blowout day in the stock markets today, it dawned on me that something was seriously wrong with the Bush presidency.

Sure, he's made some foreign affairs blunders, like the Iraq war. Sure, he's got some folks who are strict adherents to the Constitution up in arms for the way he shreds our rights whenever it seems like it might help him expand his role as President.

Yes, he's pissed off everyone who isn't of his particular religious bent on things like Gay rights, global warming, evolution, and a host of other easily proven issues.

But we KNEW he was going to do those things, right? He's a Neo-con. And these Neo-Cons do a lot of things that drive REAL conservatives crazy... like making government bigger, more bloated and more wasteful. And treading on individual's rights. All the old "real" conservatives have pretty much jumped ship and are now calling themselves Libertarians (like Ron Paul).

No, all those things played just fine with his base. The one real sticky part of his Presidency?

Neo-Cons are supposed to be GOOD for business. All that crap about "tax cuts help the economy" and "Trickle Down" and "Laissez-faire" and "de-regulation of industry." All that Reagan Era feel-good mojo (or, as W's own father called it, "Voodoo Economics").

And yet... the dollar is unbelievably weak, historically. It's worth less then the CANADIAN dollar. Real wages are less then the were when he took office. Late last week, the jobless claims numbers came out at a 5-year high. And THAT took some doing, because the jobless claims rose like a bat out of hell when he first took office. They finally came down to a reasonable number... 5 years ago. Since then, they've been rising every since.

Due to a horrible Fed under his watch with both Bernacke and Greenspan making money too cheap, we've got a real estate bubble bursting and a mortgage crisis that looks like it's going to destroy one of the biggest mortgage writers in the business... Countrywide. Credit card deliquencies are at multi-year highs, as are car loan defaults.

These all point to a horrible economy. But the Neo-cons (like the late, not-so-great William F. Buckeley) wouldn't give two shits as long as BUSINESS was doing fine.

Well, guess what? The best indicators of how business and the overall economy are doing, the stock markets, are in a free-fall. How bad is it?

The Dow Jones Industrial Average was at 10,211.77 on March 10, 2000... just a few months after Bush took office and exactly 7 years ago today. The
S&P 500, the best and widest indicator of the overall markets, was at 1413.38. The QQQQ notes, which track the Nasdaq 100, were at 114.67 (split-adjusted).

Now, exactly 7 years later, the Dow is at 11740.15. The S&P is at 173.37. And the QQQQ's? They're at 41.26.

For those of you not good at math, that means the Dow is up a piddly 15% in 7 years. Which is kind of fake, anyway, because it's only 30 stocks, and underperforming stocks will be (and have been) replaced by better performing companies. And even with THAT kind of monkeying around with the results only netted a 15% return of 7 years... when the Dow has an AVERAGE return of 11% per year over the last 80 years.

The Nasdaq 100 is actually down 64% in that same 7 year time-span. However, THAT'S kind of a bad bogey, too... because the Nasdaq is tech-heavy, and took massive hits after the internet stocks went tits-up in late-March, early-April of 2000. Still, most analysts thought that they would have recovered MUCH more of those losses by now. They predicted that the new cycle of chips and computers would force most corporations to spend enough on rebuilding their tech infrastructure. That bet has been, sadly, wrong, with only a very few tech names like Google and Apple bucking the trend.

No, the real index to watch is the S&P 500. It's a broad-based index of stocks that encompasses both large and small companies, blue-chips and bio-pharm. The S&P 500, which has a long-term average of over 10% in gains per year, is DOWN 10% in 7 years.

In other words, the vast majority of people with money in the stock market of the last 7 years have LOST 10%. Your pension, IRA and 401k? It's stagnant or negative.

Which brings me back to my point... big business, which is well represented by the S&P 500, has been anemic for the last 7 years. And THIS is the true base of the Neo-Cons.

So... maybe all those conspiracy theorists are correct. Maybe this was never just about being President (and Vice-President). Maybe Bush and Cheney really AREN'T that stupid, and ARE that corrupt. Because the other numbers that catch my eye?

Oil is over 3 times higher than it was when Bush took office. And gasoline is nearly 4 times higher. The big oil companies that put Bush and Cheney in office are making unprecedented levels of profit; Exxon-Mobil is taking in billions in PROFIT every month. Not year, MONTH.

So maybe we really ought to look at who Bush represents as President. It's not looking like it's his base. It's sure as FUCK isn't you and me.

But someone's pretty happy with him right about now...

[Hendo]

The WSJ today backed up my economic views...

PAGE ONE

Stocks Tarnished
By 'Lost Decade'
U.S. Shares in Longest Funk Since 1970s;
Credit Crunch Could Prolong Weakness

By E.S. BROWNING

March 26, 2008
Over the past 200 years, the stock market's steady upward march occasionally has been disrupted for long stretches, most recently during the Great Depression and the inflation-plagued 1970s. The current market turmoil suggests that we may be in another lost decade.

The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.


A look at stocks during downturns
The Standard & Poor's 500-stock index, the basis for about half of the $1 trillion invested in U.S. index funds, finished at 1352.99 on Tuesday, below the 1362.80 it hit in April 1999. When dividends and inflation are factored into returns, the S&P 500 has risen an average of just 1.3% a year over the past 10 years, well below the historical norm, according to Morningstar Inc. For the past nine years, it has fallen 0.37% a year, and for the past eight, it is off 1.4% a year. In light of the current wobbly market, some economists and market analysts worry that the era of disappointing returns may not be over.

Until last fall, many investors had viewed the bursting of the tech-stock bubble as a nasty but short-term setback. The market had resumed its upward march, reaching new highs in October. Then the credit crisis began weighing on stocks, as did the possibility of a recession. By March 10, the S&P 500 was down 18.6% from its Oct. 9 record close, nearing the 20% decline that signals a bear market. It has rebounded since then amid the Federal Reserve's efforts to stabilize the financial system, but it remains 13.3% below its October record.

Conventional stock-market wisdom holds that if investors buy a broad range of stocks and hold them, they will do better than they would in other investments. But that rule hasn't held up for stocks bought in the late 1990s or 2000.

Over the past nine years, the S&P 500 is the worst-performing of nine different investment vehicles tracked by Morningstar, including commodities, real-estate investment trusts, gold and foreign stocks. Big U.S. stocks were outrun even by Treasury bonds, which historically perform much less well than stocks. Adjusted for inflation, Treasurys are up 4.7% a year over the past nine years, and up 5.8% a year since the March 2000 stock peak. An index of commodities has shown about twice the annual gains of bonds, as have real-estate investment trusts.

Righting the Ship

So far, the current decade hasn't featured the high inflation of the 1970s or the high unemployment of the 1930s. That makes some analysts and economists hopeful that the stock troubles won't be as bad or last as long as they did back then, despite the housing crisis and the breakdown in parts of the mortgage and lending businesses. Many of them hope that the Federal Reserve will do a better job of righting the ship than it did in those prior decades.

Finance professor Jeremy Siegel at the University of Pennsylvania's Wharton School has written about stock behavior back into the 19th century. During the past decade, he points out, the worst years were from 2000 through 2002, when stocks fell sharply. Although the S&P 500 has been inconsistent since then -- rising strongly in 2003, then registering single-digit gains in 2004, 2005 and 2007 -- he considers the bad times largely past. Other optimists agree.

The Pessimistic View

But Yale economist Robert Shiller, who predicted the market trouble in his 2000 book "Irrational Exuberance," warns that the market still hasn't shaken off its excesses. He and some other analysts think the latest volatility is a symptom of more trouble to come.

"I have to say that this isn't a great time to be in the stock market," says Prof. Shiller. "The housing crisis that we are going through is going to put a damper on the economy that is longer than a recession. I don't see the stock troubles ending as quickly as many people are imagining."

Historically, stocks rise about two years out of every three, for an average gain of 7% a year when controlled for inflation, according to Prof. Siegel. Stocks have shown gains for almost every 10-year period since 1925 -- 98.6% of the time, according to Ned Davis Research.

But when stock investing becomes a mania, as it did in the 1920s, the 1960s and the 1990s, it leads to prolonged periods of subpar performance, according to financial historian Richard Sylla of New York University's Stern School of Business.

Prof. Sylla has examined stock booms and busts back to 1800. He found periods of exceptional strength in the late 1810s and early 1820s, the 1840s, the 1860s and the early 1900s. Those periods were followed by lengthy weakness in the 1830s, the 1850s, the 1870s and before 1920. In a 2001 paper, he forecast a 10-year period of stock weakness.

"When you have extraordinary returns, as we did from 1982 through 1999, then usually the next 10 years aren't very good," says Prof. Sylla. His research suggests that exceptional booms steal gains from the future. When the booms end, returns become subpar, so that average returns over the longer term fall back to the 7% norm. Economists call this "reversion to the mean," the idea that exceptional performance can't last forever.

Bullish investors believed that the bad days were over late in 2002, when stocks rebounded following the technology-stock wreck, the Sept. 11 terrorist attacks and the collapse of Enron Corp.

The S&P 500 rose 26% in 2003, amid hopes for a quick victory in Iraq. In 2004, the S&P 500 rose only 9%. It was up 3% in 2005, 14% in 2006 and 3.5% in 2007. The index is down 7.9% so far this year. Those numbers are not adjusted for inflation, which would lower annual returns by a few percentage points.

The Dow Jones Industrial Average, which had fewer technology stocks than the S&P 500 and suffered less in the bear market from 2000 to 2002, has held up better, but not a lot better. It has risen less than 1% a year since January 2000.

Role of Individuals

Prof. Sylla expects to see stocks turn more lastingly upward some time in the next two years. The market's direction will depend partly on the individual investor. The 1990s stock bubble and the bear market that followed came at a time when more individuals were managing their own retirement savings through 401(k) accounts, individual retirement accounts and the like.

Individual investors helped create bubbles in the markets for technology stocks and for real estate. In recent years, investors have been putting far less money into U.S. stocks than they did during the stock-investing boom. In 2000, at the height of that boom, Americans added $260 billion to U.S.-stock mutual funds, according to the Investment Company Institute, a trade group. Last year, investors took more money out of those funds than they put in -- a net outflow of $46.4 billion.

America's shift toward self-managed retirement could soften some of the stock-market volatility. People appear to be much less likely to move money around in retirement accounts than in other investment accounts, according to economist John Ameriks at mutual-fund company Vanguard Group.

Many 401(k) participants leave their allocations alone for long periods of time, says Mr. Ameriks. If they set up their accounts to send money into stocks each month, those accounts tend to keep doing so through bull and bear markets alike. That may provide some support to stocks.

Some investment advisers say passive contributions like that actually make some sense. People whose retirement accounts have bought stocks each month, year in and year out, haven't done nearly as badly as those who bought in the late 1990s and stopped buying, Prof. Sylla says. While the S&P 500 is down since 1999, it is up since mid-2001, meaning that most stock purchased since then by retirement accounts shows a gain.

[schaefe]

My Statistics professor had a pretty interesting take on the whole market valuation process, and how the initial correction to the market was starting to develop in early 2000 but was temporarily arrested by the disruption caused by 9/11. The Fed's attempt to butress things up after that have drawn out and extended the correction process so that it is now incorporating the .com bubble AND the housing market bubble.

I wish I could be a little more technical about it, but I'm not doing so hot in that class...but it was a fascinating discussion....

[Sleeps]

I read your post this morning, Mark, and I noticed this on cnn.com today:

http://money.cnn.com/2008/04/01/news/companies/oil_hearing/index.htm?cnn=yes

[Edison]

It's 'trickle-down economics' at it's best. The trickle of laughing oil executives as we all scramble to keep from getting pissed on.

Oil companies have essentially owned this country for decades now and they've got American consumers by the short ones. What's more, they have zero incentive for changing their ways.

As long as we have corporate welfare Republicans running the government, and do things like vote oil tycoon families into the White house (duh!), the oil companies will never be held remotely accountable. Republicans loooove unregulated big business, and the ones who can love helping their rich friends get richer.

[Hendo]

Look, there's unregulated markets, and there's EIGHTEEN BILLION IN TAX BREAKS!!!!

That's NOT a Free Market Economy, and real Conservatives fucking HATE Bush and Company. The Neo-Cons are the exact opposite of real Conservatives. And here they thought it was the Democrats...