Bush’s Disasterous Economy: Adjusted for inflation, market has now officially gone BACKWARDS!

[Mugsy]

From this weeks "Mugsy's Rap Sheet" blog:

Last Tuesday, the DJIA (Dow Jones Industrial Average) fell a whopping 546 points before rebounding to close down 416.02 points (12,234.34 on Tuesday).

(...)

Now, plenty of people would like to tell you that… statistically… last weeks’ market plunge was not particularly significant. In terms of percentages, last week’s “4.4% drop doesn’t even rank in the Top 20 ”. Yes, but few (if any) of those other market plunges took place in such a weak economy struggling for years just to keep its head above water. Those other declines they refer to were typically one-time events, taking place during an otherwise healthy economy that quickly absorbed them. Not so this time around.

(...)

I wrote about this in some detail last October when the Dow, after six years of Bush’s economic policies, *finally* surpassed the 11700+ record high of the Clinton Administration...

(... ***************** ...)

On January 14, 2000, the Dow closed at a record high of 11,722.98. It took the Bush economy SIX YEARS to creep back up to that number, and adjusted for inflation (17% since 2000), the Dow had another 2,000 points to go. By comparison, the DJIA under Bush peaked at 12,514.98 on January 11th of this year, which, adjusted for inflation, was still 1,210 points shy of the 2000 record. On Bill Clinton’s last day in office, the DJIA closed at 10587.59. Adjusted for inflation, that would be 12,396 today. Last Friday’s close of 12,114 is not just a pathetic gain of just 392 points IN SIX YEARS, when adjusted for inflation, has actually lost ground (equivalent to 10,346 in year 2000 dollars, a NEGATIVE NET LOSS of 241 points). That’s not just anemic, that’s “Last Rites” sickly.

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(more)

[pitohui]

1. oh you won't have to "adjust for inflation" in a few days

the asian markets are already open and falling

[tblue]

2. Whoah! Let's see T*ny Sn*w spin this one!

[Edweird]

3. The white house is in denial.

How much longer can they lie about our "robust" economy? How much more will it take before the general citizenry wake up and realize just how completely the little tyrant has destroyed our country?

[kineneb]

4. and back to $3.00/gal gas here

economy officially sucks, sez kineneb...waiting for other, real estate, shoe (ARMs) to drop...

summer tourist season going to be real interesting, hmmm, anyone going to have money to go anywhere?

awaiting sound of thunking shoes...

[aint_no_life_nowhere]

5. Well, Bush still has the Mars program he can talk about

as all of his planet Earth endeavors are turning to shit.

[JHB]

16. He doesn't have a Mars program either...

Just some contracts handed out in the name of something that looks "visionary".

[ConsAreLiars]

6. "The market" reflects the investments of the rich, not normal people,

Despite their efforts at strangling the mases in order to enrich the elite, even the parasites are losing. Hence the corpulent media's willingness to let a bit of reality seep through and show a bit of discontent.

[Porcupine]

17. "normal people" have nothing to invest.

We will be shocked to discover in a few years that there are many people like me who have little savings and no retirement. I have had health problems that have shut me out of the workforce. Other people have had debt or job losses or are taking care of family.

Normal people are getting screwed.

[gravity]

7. There was a stock market bubble

The prices in 2000 weren't a real representation of the economy.

[Mugsy]

9. "Bubble" is irrelevant.

To use the argument that the market was in an "over-valued bubble" to suggest no comparison to today, then you must also dis-count the "housing bubble" under the Bush Administration that bolstered the economy after 9/11.

Pardon my ignorance, but I'd be willing to bet the Bush Administration would give its eye-teeth today for a "tech bubble" and the job growth that went with it like we had in '97-'99.

[gravity]

18. They are diffrerent markets

The housing money didn't bolstered the stock market like the tech boom.

I just think its inaccurate to base the state of the economy just off the stock market. While it's an important indicator, the prices can deviate from the intrinsic value of the companies which happened a lot during 2000.

A more accurate indicator is the GDP, since it represents the real output of the economy as a whole, and not just people's irrational expectations in certain markets. If you want to look a the wellbeing of the middle class, real wages, job creation, poverty rates, unemployment etc, are more accurate indicators, which is the real Bush administrations failure.

[Mugsy]

19. DOW best reflection of economy as a whole.

In fact, that is precisely how the stocks of the DJIA are chosen. The companies' whose fiscal health most directly reflect the state of the economy.

Just a few years back, Sears was dropped from the DJIA and for the first time a NASDAQ stock, Microsoft, was added to the Dow.

The Dow is *specifically* an indicator of the health of business (and by extension, the economy in general).

[lostinacause]

23. Ummm... no.

It is a measure of expectations. The total values of the shares are the value of the company. The value of the company is determined by the expected future revenues minus expenses. Within this context there are a number of institutional changes that can be made that will have a negligible effect on the economy but a reasonable effect on the stock price. It also only considers the value of large companies which also makes it an imperfect measure.

Also finance people focus on the DOW while economists focus on GDP.

[progressive_realist]

27. I wouldn't trust GDP either

GDP is adjusted for inflation. If the reported rates of inflation are kept artificially low, the reported "real" GDP is kept artificially high. The government has substantial incentives to do both.

[earth mom]

8. Tinfoil hat time...but...

saw this theory floated on another message board that * & Co are trying to devalue the dollar to the point that they will then bring out the AMERO as the savior of the U.S. economy and that it and the North American Union are the answer to all our problems-that "THEY" created mind you. :grr:

Frankly, I really wouldn't be surprised-pi$$ed off for sure-but not surprised. :tinfoilhat:

North American Union Timeline
http://www.vivelecanada.ca/staticpages/index.php/20060830133702539

[bonito]

13. That thought has passed my mind a few times

[lostinacause]

24. It's safe to say that you are wrong. Economies have become more integrated

lately so intentionally making things worse would say that integration is not working.

[Kolesar]

10. American investors have lost >15% due to currency devaluation vs. the Euro &other currencies

By some accounts, petroleum is "already valued in Euros", so the sustained high prices are a reflection of losing value in all that money we are sending out of the country for products, petroleum, or borrowing to finance the bush* debt.

[unblock]

11. if you don't incorporate dividends, adjusting for inflation is pointless

yes, the market under shrub has been anemic, but this is an incomplete analysis.

[Mugsy]

15. More info, please.

Since I'm not suggesting that INVESTORS are the sole losers as a result of the stagnating Dow under Bush, and more that it is an indicator of economic progress as a whole, I'm not sure how "dividends" would significantly impact the comparison.

More info, please.

[unblock]

26. simply that stock PRICE appreciation is not necessary for a healthy economy

for the financial markets to function well, you do need investors to get a reasonable risk-adjusted return, one way or another. it can come through price appreciation and/or through dividends, it really doesn't matter as long as the total return is healthy.

in an extreme case, imagine if all companies thrived but always gave large dividends instead of hording cash. so prices never go up, but dividends are large. investors do fine, take their profits to start new companies, create new jobs, etc.

really not much different from low dividends and high price appreciation.

[Hubert Flottz]

12. Sooner or later the fur had to fly with an economy based on fuzzy

math.

Not even Karl can hold off reality forever...

[ClintonTyree]

14. And all of those tremendous "gains" by Corporations....

over the past few years were at the expense of the American worker. If not for massive layoffs, outsourcing to other countries and other various and sundry creative stock market manipulation tactics, what would the stock market look like today? And how can they possibly sustain this "record growth" now that they've cut everything down to bare bone? Where can they go from here to increase shareholder value?

They've run out of tricks, the well is dry, and short of coming up with some new and creative book-keeping techniques the prospects of holding their present positions is bleak, in my opinion. We shall see.

[Sammy Pepys]

20. You can't make these kinds of calculations based on where the average is....

The DJIA is only 30 stocks. It's not small caps. It's not midcaps. It's not microcap. It doesn't include foreign investments. You're not looking at the whole picture if you're looking at just the Dow.


On annualized basis, stock returns have outpaced inflation since 2000.

[Mugsy]

21. See, that's where your error is.

You are making the same error as another person does above:

You are trying to equate "those DIRECTLY profiting from the value of their own stocks" vs "the DOW as a reflection of the economy as a whole"... which is exactly its purpose. Those "30 stocks" are carefully chosen because how they do is considered a "clear indicator" of the health of the economy as a whole.

Wal*Mart and Microsoft (a NASDAQ stock) were added to the Dow precisely for that reason.

[Sammy Pepys]

22. I didn't say anything about t he DJIA and it's use...

..as an economic indicator.

[Mugsy]

25. I guess I was thrown....

...by your saying: "The DJIA is only 30 stocks".

Can't image how I thought you were talking about the DJIA.

And I believe noting that it is "an economic indicator" is the very point I was making and you tried to refute. :wtf:

[WCGreen]

28. No matter how much cheerleading CNBC does, the economy is just not

performing as well as it did under Clinton...

When Bush came in it was run capitalists run wild...

Ten years ago, sub-prime lending accounted for about 1.7% of the total market...

As of last count, that number had literally exploded to now capture over 17% of the total market...

Foreclosures are up across the board...

Too many Americans, unfortunatly, took their cue from the GOP and decided to borrow and spend like there was no tomorrow...