DOW 12,800

[iplaw]

How exactly was Bush at fault for the stock market crash that began in 2000?  You yahoos do realize that it started before he took office...

[iplaw]

quote:Originally posted by rwarn17588

Well, Conan, we *have* spent close to a trillion dollars in Iraq and not much to show for it.

If I were a businessman, I'd sure be grilling someone about the cost-effectiveness of such action.

If any other CEO had spent money like that with so few good results, he would have been fired.

More glass-half-empty-itice dear rwarn?  You do realize that there is no such thing as ROI in war...

[rwarn17588]

That's common sense, iplaw. If you spend that big a chunk of cash, you expect better results.

Wouldn't you?

[iplaw]

quote:Originally posted by rwarn17588

That's common sense, iplaw. If you spend that big a chunk of cash, you expect better results.

Wouldn't you?

Only if I was utterly impatient and looking for immediate results...typical dissapointment from our instantaneous microwave-result oriented society.

[Conan71]

Or only got my opinions on the results of the war via the filtered water coming from the media water cooler.

[rwarn17588]

I think the calls of patience are moot at this point. This war now has lasted longer than the Civil War, World War I, Korea and World War II.

In the past 150 or so years in U.S. history, the only war that's lasted longer is -- gulp -- Vietnam.

There's a time for impatience, too.

[MichaelC]

The Bush Administration has seen a lot of disasters.  And Iraq has caused "issues" with the DOW that it wouldn't normally see.  Mostly inflationary issues, fear issues around oil.

It is the nature of the DOW to grow.  Despite all the disasters and other events, if there's any sense of "normal" in the economy, the DOW should grow over time.  The question in my mind when it finally hit 2000's high a few months ago at around 11,700, why did it take so long?  The catastrophic losses can be explained fairly easily.  The growth rate and the ability of the DOW to rebound, is a more difficult question.  

I don't think anyone expected a growth rate that equaled that during the Clinton Administration.  Noting of course, that the DJI was around what 3000 or 4000 when Clinton took office.  But for it to be here 6+ years into the Bush administration, I'm doubtful that the "disasters" provide a full explanation of that growth rate.

And there's some contradictory signs, IMO.  The higher interests rates signal to me that inflation has to be balanced, but also that stocks may be overvalued growing at a rate that is ultimately unsustainable.  I'm making money in the markets.  I think there are plenty of good stocks to get into, but the market as a whole IMO has not reached what I would call normalcy.

[rwarn17588]

I don't think stocks are overvalued, Michael C. I've seen the price/earnings ratios, and they're well within standard ranges.

The only real blip I see on the horizon are the recent rash of mortgage defaults. The economy is absorbing them so far, but caution is in order to keep them from getting out of hand.

[YoungTulsan]

I think the economy as a whole has changed so much in the last 10-15 years that "normalcy" will never exist if you are comparing behaviours that existed before the 90s.  The internet, electronic trading, globalization and global market influences mean that things work differently these days.  If "normal" was something we learned over the 50s 60s 70s or 80s, we will not see this "normal" again.

[MichaelC]

It'll be interesting to see how that mortgage deal all pans out.  I'm fairly new to this game.  Last year, I mostly avoided financials and anything related to real estate.  Stuck mostly to pharmaceuticals and metals.  I have been eye-balling a couple of high yield financials lately.  Looking to creep towards some sense of diversification.

There are plenty of great stocks out there.

[Cubs]

quote: It's taken a long time for my portfolio to return to its previous level. Recessions do happen, but this one's taken nearly six years to get back to where it once was. That's a severe and prolonged setback.

Any knowledgeable eonomist would tell you that the recession of 2001-2002ish was a minor recesstion. Thanks to the Bush tax cuts we were able to pull out of it quickly.
Also, you cannot compare the 911 attacks and the effect it had on stocks to anything else because this country has never experienced anything like that, and hopefully we will never again.
Also, I truly believe that the main reason for the recession was the fact that the fed and the Clinton administration allowed the economy to overheat in the 1990s. (Obviously it was made worse with the terrorist attacks) When the economy overheats, it has to eqaulize, therefore resulting in a recession.

Also, don't forget that the unemployment rate of the US under Clinton is now slightly higher than it has been under Bush. Clinton did not have to deal with a recession nor the terrorist attacks. This says a lot about how well we have recovered from the recession.

I don't care what you think about Bush as far as Iraq and other things go, but he has done a great job when it comes to the economy. If you deny that, you are only lying to yourself.

[deinstein]

quote:Originally posted by Conan71

quote:Originally posted by deinstein

Debt. Debt. Oh yeah, don't forget about...DEBT.

What your student loans? []

You'll feel differently ten years down the road when you are away from the idealism of TU making good bank and have funds available to invest.

I don't go to TU, I don't have any student loans and I already do invest.

[]

[Conan71]

Stock market during the Clinton years:  

Exhuberance over internet companies, ways to transmit all that information, and bio-tech up-starts spurred a lot of the growth in the late '90's.  There were a lot of IPO's that left you scratching your head at the end of the first day of trading.  Suddenly companies who had never turned a profit were "worth" $100mm.  Some went on to major success with the extra capital, others tanked.  Remember when Yahoo stock was trading at over $400?

There were also a lot of people who got burned trying to day-trade with all the new options for people to do their own trading on-line without using a broker for advice and having little investment knowledge.

There was a ton of profit taking at the end of that binge.  There were also a lot of lessons learned about getting over-speculative on emerging technologies.  I don't think there will ever be that kind of explosive growth in the stock market again.  Well at least not until the "next" internet.  It's also not possible to throw heaps of credit on that growth to Clinton.  It had more to do with the greed of individual investors than anything.

Foreclosures: Take a look at the mortgage companies that are buckling.  These were high-risk lenders.  

There are also a lot of people who, due to the high price of housing in some areas, have elected to go with interest-only mortgages, ARM's, or found other vehicles to buy a home which is logically out of their price range with a traditional mortgage.  There are a lot of ARMS coming up for re-sets to higher rates in the next couple of years.  

And don't forget to add in the poor folks who bought at the peak of the market in over-heated housing markets who are now trying to move else-where and can't get what they paid for their house, so they are just leaving.

IOW- there is some blame to lay at the feet of over-aggressive lenders in a competitive lending market, and stupidity on the part of people buying homes they really couldn't afford in the first place.  It's not necessarily people losing their jobs who are facing foreclosure.

I'm not living in a vacuum and do realize there are pockets in the country where unemployment is higher.  There are people who have lost a job, gotten a divorce, or had a medical crisis that wiped them out.

However, using mortgage foreclosures as a leading barometer for the economy is an imperfect science when you take into account ALL the factors at play.

[Conan71]

quote:Originally posted by deinstein

quote:Originally posted by Conan71

quote:Originally posted by deinstein

Debt. Debt. Oh yeah, don't forget about...DEBT.

What your student loans? []

You'll feel differently ten years down the road when you are away from the idealism of TU making good bank and have funds available to invest.

I don't go to TU, I don't have any student loans and I already do invest.

[]

Must have you confused with another poster, my bad[]

[cannon_fodder]

(Conan, I swear I dont try to copy you!  I start posting these things and get interrupted and they grow and it ends up taking 30 minutes to finish a damn post.  This is the second time today I've done this.  Not trying to, sorry)

I went to TU and I have student loans.  and more loans.  However, at 4% they can sit and fester.
----

Per the DOW.  An economist friend of mine put it well when he said

quote:Probably the worst economic mistake made day after day after day in the news media is the confusion of the level of the stock market with the strength of the economy as a whole. The stock market is a place where a bunch of people come together to exchange guesses about the values of a bunch of different companies. Since many of the people participating in the stock market are speculators rather than investors, their guesses are often frenzied and wildly out of line with reality. The economy as a whole, by contrast, is where everything that we own and everything that we produce come together to make life tomorrow better than life today. Unfortunately, few reporters know the difference.

That is entirely true.  However, when you see the stock market rise it at least means people have some confidence and the money to invest.  Furthermore, when corporate profits are on the rise and P/E ratios stay in sane zones it is even more impressive. Again, I fully admit a robust stock market does not a strong economy make nor indicate.  But it helps (can money buy happiness?).
----

Per politics and economics.

It is undeniably true that the crash of 2000 was primarily caused by, as Greenspan put it, irrational exuberance.  The stock market didn't so much crash as get back to reality.  PE's in the 60's, companies with no assets OR profits worth hundreds of millions and capital flowing to any BusinessVenture.com to be had.  Clearly after the bubble burst there was still further fall out as investors got nervous.  And yet MORE following 911.  And the final death blow was the combined effect of scandals surfacing and some sectors collapsing (Communications & Aviation foremost).

Now, if someone can point out out to me what Bush had to do with any of that I would appreciate it.  His primary snafu was mentioning a weak economy/unstable stock market in his first State of the Union address.  Otherwise, his economic agenda has been praise other than one primary complaint.

The complaint obviously being his total lack of fiscal responsibility.  It makes investors nervous to see continuation of debt load both presently and in the future obligations.  A secondary complaint would be his failure to garner good relations with the rest of the world.  This has yet to have a serious impact on international trade, but the prospect is enough to keep the markets scared.

So overall I dont think you could blame Bush for the collapse.  It started before he was there and factors outside his control were the primary drivers for its continuation.  If you wanted to try and point a political figure the prior office holder would certainly have more responsibility for the irrational exuberance, the terrorist strikes, and the accounting scandals.  All of the underlying causes took place during Clinton's administration, not Bush.

Though, I would like to point out, there is little the executive could have done for at least 2 of the 3 causes (how much does the average president know about accounting schemes and shadow corporations?).  And just like Bush in Iraq, Clinton acted in regards to Osama with the best intelligence we had available.  A bombed warship, a few marines, a barracks, and a couple embassies was worth doing anything about at the time.

Oh, and for the BOOM under Bill Clinton., thank god Al Gore "took the liberty, of inventing the Internet."   []

Clinton is an example of being in the right place at the right time and being smart enough to stay the hell out of the way, economically speaking.