Following the DOW

As promised here’s an update on the chart for the DJIA since meeting Barack Obama. We first started reviewing Obama and the DOW last February.

Mid-May is the time chosen as that is when it became obvious Obama would win the Democratic nomination. The DOW was about 13,000 then. Now the DOW is once again approaching 8,000 after dropping to a low of around 6,500.

We still have a long way to go, but I graciously acknowledge the return of 1,500 points following the recent March lows. I’d speculate the last jump came from the Obama administration offering details on the work to book toxic assets, and the detail explaining money to manage the problem was already appropriated.

Keep in mind:

–The DJIA is still down about 45% from the 2008 highs.
–Overall, the DJIA fell from about 14,000 to 6,500 or close to 54%.
–The DJIA is up around 23% from the low. If the pundits are to be believed, we should be seeing about 40% – a little over 9,000 – before we level out after this rally.
–It remains to be seen if this is a bear market rally or the inception of a new bull market. I vote for the first, but I’m just a housewife.

There you go folks. As usual, I will give Obama full credit for both sinking the markets and recovering them. There’s no way of knowing for sure if that was a generational low and we can get on with investing. I doubt we’ll see much more than 10,000 for many years. But that 10,000 will look a whole lot better than 6,500 did!

Comments

  1. I’m glad that you hinted to us that you were just kidding when you put the entire drop in the DJIA, since his nomination, on B.O.’s shoulders. Good one! I’m, “just,” a single dad with a teenager and laughed a bit when you said that you are “just a housewife,” and were feigning knowledge of the subject.

    I know you realize when regulators failed to regulate new investment vehicles , GW Bush (2003) promulgated rules to prevent states from regulating national banks in their own states, bond rating agencies failed to properly evaluate bonds, and, at this very minute, TARP dollars through AIG are paying banks such as Goldman-Sachs, BoA, etc., full face value of worthless paper, (various derivatives, etc., values of which are indeterminable), you almost had me there.

    The supposed “value,” of the highest DOW numbers were not tangible real value in any sense of the word, except for the elite, chosen few gamblers, that didn’t include either you or me. We are simply paying in real dollars (plus interest) for the losses that these gamblers created. That is the definition of an economic bubble: an air-filled shell (game). You know that those high DOW numbers were just that, hot air, smoke and mirrors. How else could my self-funded IRA simply evaporate.

    Beyond that, I know you didn’t forget about an eight year war, “financed,” on a tax cut for the wealthy. I don’t think anyone fairly conservatively can deny that Bush doubled the national debt on his watch. I don’t think you forgot the costs of 10’s of thousands of US veterans who will require lifetime medical care for serving all of us so bravely in a war that we, “won,” in 2002. I know you didn’t just forget the off-shoring of some of the last of the decent manufacturing jobs from our country. How about the $70 million we just paid to Blackwater, (now, Xe) who supposedly isn’t supplying services in Iraq anymore. In case you really didn’t understand these things, I’ll re-post some info:

    http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html

    http://www.alternet.org/blogs/peek/132547/was_eliot_spitzer_taken_out_because_he_was_going_to_bust_aig/

    http://www.slate.com/id/2213942/ The Real Scandal at AIG

    All of us can sit around and watch the DOW and wonder when it might bring back our, “lost,” fortunes. What was “lost,” was never really there. The past is done and something new in the way of an economy is going to replace it. The America we knew is done, like it or not. Sit and watch the DOW, a few less people going after my beans, rice and onions.

  2. D, I do hope you’ve done a little past reading on this blog. I’m not inclined to show you line by line where you’re spinning in your post, but suffice it to say most of your effort will be recognized as crap.

    The housewife has spoken.

  3. d_n_dc:

    Congress approved landmark legislation yesterday that opens the door for a new era on Wall Street in which commercial banks, securities houses and insurers will find it easier and cheaper to enter one another’s businesses.

    That’s Gramm-Leach-Bliley, which dismantled Glass-Steagall.

    Some quotes:

    ”Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,” Treasury Secretary Lawrence H. Summers said. ”This historic legislation will better enable American companies to compete in the new economy.”

    Larry Summers eh? Oh, you mean the stooge in Obama’s Cabinet? Yes, him.

    The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation’s financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.

    Funny how we waited until everyone who went through that special Hell known as “The Depression” were dead, then we simply rode roughshod over what they taught us and declared them “fools.”

    ”The world changes, and we have to change with it,” said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ”We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.”

    Uh huh Mr. Gramm. Like your “mental recession” Mr. Gramm?

    Freedom is the answer, but freedom does not include freedom to defraud, whether it is the fraud of a borrower overstating his income, the fraud of a ratings agency being “bought” or the fraud of an investment bank selling what it represents are “perfectly good” securities out the front door while shorting them on its prop desk in the next room.

    ”I think we will look back in 10 years’ time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930’s is true in 2010,” said Senator Byron L. Dorgan, Democrat of North Dakota. ”I wasn’t around during the 1930’s or the debate over Glass-Steagall. But I remember the early 1980’s when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.”

    Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ”seemed determined to unlearn the lessons from our past mistakes.”

    And now we get to the learn them again!

    ”Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.”

    Citibank, Bank America, Wells Fargo, Wachovia, Washington Mutual, IndyMac, Downey Savings and Loan. Need I go on?

    Supporters of the legislation rejected those arguments. They responded that historians and economists have concluded that the Glass-Steagall Act was not the correct response to the banking crisis because it was the failure of the Federal Reserve in carrying out monetary policy, not speculation in the stock market, that caused the collapse of 11,000 banks. If anything, the supporters said, the new law will give financial companies the ability to diversify and therefore reduce their risks. The new law, they said, will also give regulators new tools to supervise shaky institutions.

    ”The concerns that we will have a meltdown like 1929 are dramatically overblown,” said Senator Bob Kerrey, Democrat of Nebraska.

    History, ten years hence, has now played out.

    Who was correct?

    There is a special place in Hell for the architects and supporters of this legislation, and if we learn one thing from this, it is that we need to put Glass-Steagall back into place and repeal this piece of legislative dog squeeze.

    Oh, and while you’re at it, look at when that law was passed, and who signed it.

    1999 – right at the peak of The Internet Bubble, and President Clinton put his signature to that piece of paper.

    So much for “it was all Bush’s fault”.