The Dow Jones Industrial Average, whose value is about what it was as 1996 ended, has shed roughly a third of its value since Election Day. Do you think the Winning Candidate's gospel of government takeovers, instrusions, and expansions might have something to do with this precipitous decline?

Yes. Absolutely.

But to what degree so is what is uncertain. Obama is clearly making things, much, much worse. But the trend was started well over a year earlier, when the massive credit bubble - primarily and leading in the housing market but elsewhere as well - started its rapid collapse. And that collapse might not be over. (Incidentally, this means that the real problem was the bubble; the collapse is the needed but painful correction -- made much worse by two president now trying to reinflate it, much like giving a heroine addict a higher dose than what he was already on - the crash is at best delayed, but will now be much worse as a consequence.) Of course, Obama is making things much, much worse, and the market clearly reflects that, as well.

It is also worth mentioning that the stock indices are only one measure of the economy, and are highly volatile in the short run. Almost everyone reads too much into what the causes of a one day fluctuation might be. The more telling measure are the indices trend over longer periods of time. Then the fundamental strength of the economy and the direction it is heading become more evident - though probably more as a lagging indicator.

I never cared for the DJIA, or rather the importance put upon it. There are many measures of the economy, but this is the only one we hear on a daily basis. I do not think that most Americans, those that do not invest at least-do not even know what the DOW really is.

Yet every day the national news reports this one figure. If it has a drop for several days or one big drop, the national news anchors deliver the story as if it is time to panic.

It has been my opinion that the uninformed will indeed worry when they hear this type of story and then the gloom-and-doom news story becomes self fulfilling.

Yet good economic news is BURIED right now, one has to dig to find it.

For instance...
A report from the Commerce Department showed consumer spending rose 0.6 percent in January, the largest increase since May, after falling 1 percent in December.

Incomes advanced 0.4 percent in January, the biggest increase since May, after December's 0.2 percent decrease, the Commerce Department said.

And right now the government reports even good news with a qualifier...
In yet another sign that consumers were not ready to loosen their purse strings, savings jumped to an annual rate of $545.5 billion in January, the highest level since monthly records began in 1959, the Commerce Department data showed.

I am glad people are saving. That is the best economic news I have heard in a while. I realize we need people to consume in this Keynesian model, but I believe that people will still buy goods...but with money they have saved rather than credit.

Be well,

Sponge

Hey, the cost of radically changing what America is will be expensive. Get used to it.

Is this surreal in a 1984 kind of way?....

"President Barack Obama's Treasury secretary says the administration will unveil a series of rules and measures in the coming months to limit the ability of international companies to avoid U.S. taxes."

Excuse me?

Isn't the Treasury secretary the guy who, essentially, stole the tax stipends he got by not paying any taxes?

I think that might make him a non-international company who avoided U.S. taxes.

Thomas, that is similar to a story I saw within the last few weeks.

There were buyers getting a glamorous tour of expensive homes for sale in California.

The buyers were Chinese millionaires.

Wait, I thought in communist nations all were given according to their needs. There should be no millionaires.

As you can see, Thomas, the rules do not apply to the party elite.

Be well,

Sponge

Sure, the correlation is hard to avoid and I think it's safe to assume that the Obama administration has caused some of this. However, and as I'm sure we all know, markets bounce back in spite of government intrusion. Bear markets are where the uber-wealthy make even more money. Look at how many blue chip stocks are at levels unseen in over a decade. They're going to get bought up, and when it happens, it will be in a hurry. When, not if, when the stocks bounce back during this administration, are those blaming Obama going to line up and praise him? Obama has this in the bag. Things are only going to get better and he will take all the credit. The American people are going to be sick of losing money, will eventually do something about it somehow, and all in spite of the government. I think Obama knows this and likes it.

I read that too and was not surprised as the Chinese are swimming in our money and are the holders of much of our debt.

Your point is well taken that, especially these days, the elites live by a different set of rules. But therein lies the problem. Without playing the class warfare game, if we ALL don’t follow the rules, we have chaos. And that’s now what we’re seeing clearly develop here in the U.S.

For some time now, our elites have been selling our country right out from under us. But they wave the flag once in a while and expect us to get all misty and pay up to support a concept that they themselves don’t believe in anymore.

What will be interesting will be to see how a tough aggressive people like the Chinese handle all of those illegal alien gang bangers who will inevitably invade their neighborhoods. Not as nicely as those Americans who abandoned those properties in the first place I suspect.

Listen, I'm far from a Chinaphile, but there are two fallacies here. First, China is hardly a communist country anymore. Authoritarian, sure. Oppressive and tyrannical to their own people when they want to be, yes. But they have ceased following Maoist principles many years ago. Their economy has many thriving and largely free areas now. I'd say their system is much more akin to fascism than communism.

Second, looking at history, the Chinese are not traditionally an aggressive people. Sure, there are instances. But compared to so many other nations - esp. the Japanese - no. Matter of fact, if we are honest about it we would have to say that America is much more an aggressor nation than China. This is NOT saying that China is "better" or we are a "worse" people and nation. America remains much more free than China in many important areas, and remains an immensely better place to live. But on the question of aggression, that simply has not been the nature of their people, on balance.

I really didn't mean overall aggression by China. What I meant is that culturally and socially, the Chinese people take no excrement from anybody. So I can't see them calling the cops if some thug were harrassing them or breaking into their property as they haven't been softened like many Americans. If you catch my drift.

Nicky,

I think that’s a valid an@lysis and I agree that the markets will come back. But they will come back with the investments of and for the benefit of the financial high rollers and lower level more common investors will have been weeded out. Many just vested with retirement money in the game will likely never see a return on their initial ante.

When you hear guys like Warren Buffett and George Soros talking about depression and the market doom and gloom there of, you know that once it’s low enough that they’ll be the first ones in there buying it up. This, I agree will revive the market to a respectable level and, naturally, the corrupt Marxist will take credit for the upturn as will be advertised in print and electronic media.

The wild card here, as it's been from the beginning, is what other bit of nonsense the current administration might have in store for the next 40 days.

I would like someone to explain to me how we're going to get out of this mess? I really don't think our economy ever recovered from the 2000 financial collapse. There was really no net private sector job creation during the Bush years, and the only reason economic growth was marginally respectable was because of the real estate boom. Take that away and Bush would've been a one termer.

But the real estate boom was an unsustainable bubble -- our economy really hasn't grown since 2000; growth being defined as private savings and investments leading to more productivity gains. The past 8 years were an orgy of debt, and now it appears as though Obama is set to surpass President Bush. But it seems to me the American economy is pretty much finished.

Hopefully, I'm wrong.

So, what is it going to take to straighten things out? Is impeachment a possibility? Every day it becomes clearer that Obama is working really hard to destroy this country that he appears to not particularly care for.

On top of the social and financial meltdown planned and perpetrated by the new administration, is a secret letter to Russia suggesting we will stand down our missile defenses if Obama’s comrades take care of Iran enough? Or his collusion with foreign governments to form a “Global New Deal” at the expense of the U.S.? Or in a time of financial crisis, promising the doubling of U.S. Foreign Aid to the tune of $50 billion? Or the plan for a National Health Care system that will further bankrupt the country and that categorizes treatments based on actuarials and threatens with prosecution doctors who don’t conform to it’s guidelines, even if it means saving lives? Or that his policies will position government to consume 40% of GDP in 2009? Or his plan to completely abandon the border security of the U.S., and welcome all illegals with the promise of unrestrained citizenship? Or acting non-Presidential by projecting away from his incompetence by picking fights with private citizens?

He can't be stopped or even limited as there are no checks and balances in the traditional two party sense.

He’s a dangerous disgrace and when the job proves it’s too big for him, he does the only thing he’s good at and gives a speech.

But he is one bang up community organizer. If you are familiar with that breed then you recognize that his actions conform with his past. For a view of community organizers, and the folks who fund them, check out the website of the Tides Foundation.

Impeachment may only be successful if we can impeach everyone down the line of sucession until we reach Ron Paul.

Eric,

That is what it would take, ha, I love the thought! Impeach until we get to the Good Doctor.

If our economy collapses it won't be b/c of the actions of normal Americans. The uptick in savings is evidence of that. Normal people realize they have to stop buying and spending. But since the ruling class won't their fascist policies will continue and the very possible result is hyperinflation when they finally have to devalue our currency in order to get the creditor nations of our back. I still think that is a good ways away though only b/c you can never underestimate the willingness of Asian governments to oppress the living standards of their citizens out of their fear of the masses.

I am more inclined to think that we will have a very very long depression but yet not a complete collapse here. The black market activities may crop up more than ever to sustain people in their daily lives but suburbanization may save us yet (stupid liberals and their hatred of suburban "sprawl") as people start growing vegetable gardens and in general developing very local small scale economic independence.

The wild card in this scenario is that we are not the same people we were during the first Great Depression. Too many families are childless and property-less. Cities are already squalid and unsustainable and racial powder kegs. So I expect those places to completely blow up.

Hmmm, maybe I am not painting a very optimistic picture at all. Oh well, I still think it will take a few years more of the ruling class destroying our currency and free business associations and confiscating our property (taxes) before utter ruin hits, and when it does it will be *mostly* contained in urban areas as long as you suburbanites learn to shoot.

Has anyone head of what Glenn Beck calls the Bubba effect? It is interesting as he points out that ammunition sales are up 100% since last year, and gun sales are up around 50%.

People here area already using a barter system for some things to avoid taxes. I know of several businesses that are paying people under the table to avoid outrageous payroll taxes.

Very slowly and quietly, more and more decent people are doing small acts of resistance against their government. These actions will grow. I think within a few years that resistance will not be so passive.

I am thankful we have a large Amish community here. They can teach us a lot.

Be well,

Sponge

"the Good Doctor."

The guy that put a billboard outside my window saying that he would eradicate the IRS because it was unconstitutional??? He is about as loony as Nader.

Ron Paul put a billboard outside your window?

Nader isn't looney either, why do you think that?

Nor is the desire to get rid of the IRS. Being a friend of that bureaucracy is certainly more crazy then wanting to get rid of it, don't you think? I can't imagine that I know anyone who is a fan of the IRS.

"Ron Paul put a billboard outside your window?"

I live in a city, where there are billboards, even outside my apartment. Hard to imagine??? open your mind, or get off the farm once a while.

"I can't imagine that I know anyone who is a fan of the IRS."

how about anyone who ever has or will apply for Social Security... or anyone who has benefited from research sponsored by the NIH... or anyone who wants government funded elections... or anyone who wants their local bridge repaired with federal funds (remember I-35?)... or any farmer who has received a subsidy in the last 40 years. There are hundreds of millions of people in the US who use services provided by funds collected by the IRS. It is ignorant to think that no one likes it.

Al,

Thanks for the response and for showing your true colors.