Strengthening Constitutional Self-Government

No Left Turns

Obama’s Poor Performance = Possible Economic Turnaround?

This economist seems to suggest it. The Calafia Beach Pundit has a very readable and engaging blog--even if you are a novice like me. Some months ago, he even managed to make a discussion of the winding down of credit default swaps sound interesting. Perhaps the reason he can manage this is because he is also thoughtful about the intersection between politics and the economics. His thought now seems to be that because Obama appears to be winging it, he is losing some of his credibility in very public ways. The markets are cheered by this because they take it as an indication that he may not be able to go forward with the most absurd of his costly and business killing plans. I did not watch the press conference tonight, so I suppose I should take a gander in case it suggests any action one way or the other for the portfolio in the morning . . .

Discussions - 14 Comments

A whole lot of real serious stuff going down this week. That PPIP wasn't half bad. I notice that Hayward isn't commenting, probably super busy figureing things out. I figured it would be an up week but I didn't know it would surge 500+monday. Friday is the last day you can own stock and be elligible for the quaterly earnings...(probably could cause surge Thursday with light trading friday)hard to figure what is priced in...a lot of numbers look good, and Geithner sounded good...market adds another 300 points closing on friday slightly above or bellow 8k on the Dow. Also remmember that all this huge money is driving the dollar down relative to other currencies making firms that do a lot of business overseas more valuable: like PG(they get more dollars when they trade back Euro or Yen)...Also might push up oil slightly. It is easy to feel in the zone, when thanks to Hayward you caught some Oil short spiders from 85-60(not enough faith to ride all the way down.)

Ironically if market recovers and dollar gets weak enough oil might be above 75 when the bet with Dr. Deenen expires.

Biotech is doing alright and financial are surging off nasty bottom...alternative energy is crushed because oil is low...so that is an obama sector/play that doesn't pan out yet...A lot of Obama plays are decent for the stock market, really if you look at stuff that the Obama plan might hurt you are thinking smaller business with the proposed tax increase...but these smaller businesses aren't publically traded...and if you don't free up capital and lending then these get hurt as well...I don't understand the rationale that says Obama doesn't go foward with his promises as premise for surge in part because the guy is non-stop...in other words it is almost the opposite...this guy has done a whole, whole lot...and it is the blow back from the whole lot that explains the poor performance view...better to argue that the short run stock market isn't best indicator of economy as a whole...after all the Dow is just 30 stocks, and what may be bad in terms of small business isn't directly factored in because those companies are not publically traded(or part of Dow Index).

Also predicted surge week because of double bottom in many stocks...the guys who trade are as likely to be influenced by charts, but really impossible to know what everyone is thinking. I think it is important to note the impossibility of the range of thinking...these aren't folks for whom the economy is good bad but folks who seek out opportunity...I am up on the market this year but in a non-market market sense I note that things are good because gas is cheaper and just when I was getting tired of $5 footlongs Quinoz failled to dissapoint in the "SUBWARS" now they are only $4!

So the "Economy is bad" needs to be understood to designate the range of things that are bad, but similarily with the statment the:"Economy is good".

I think when you understand this you understand why the markets are reacting favorably to Obama...and also realize how increased tax rates may harm small business...without it meaning anything but increased market share for bigger players.

On one level the dollar is weaker...this is a fact...on another level my dollar buys me more Quiznos and gasoline...inflation is relative to the index...and in the possible world where the Dow is at 18k, I missed buying opportunity at 7k, Quiznos is at $9 and Subway at $7 and gas costs $6 a gallon...think about it.

Having read a few comments here on Obama's performance since taking office, I can't help but mention that of my years observing American politics, I can't remember any other president who took office in a worst state than Obama and yet, has made more positive changes in a short space of time as he has, can you?

If the man is to continue on this trend I am not sure America itself will handle such change based on it's history.
Mark Felix from Airportessentials - The Right Choice Every Time

Yep, thanks to Hussein Obama America is a much better place now if you're an Arab terrorist.

Let me see ...

An ecomony that was anemic, but growing. A deficit that was less than half of what we have now. Success in Iraq, albeit with a hold in Afghanistan.

That is what Obama inherited.

What Obama did with it afterwards is ALL his and a Democrat's wetdream.

Hal,

You need to be louder! I want everyone to know what you think! Because you don't look rediculous at all! Make signs, protest, make your voice heard! No one will think you're a bigoted imbecile, no one!

Some good news today, 4.63% interest rates on housing very good....Durable goods are good...that failled bond auction overseas in the gilt and average to weak bond auction here...tanked it...it really is impossibly hard to figure out what is priced in...that japan export number was bad, global demand is weak, possible trade wars...mixed signals...Geithner talked about "strong dollar"...folks took profits on Google and Apple...I am open to the idea that developments overseas overshadowed anything having to do with Obama or congress directly...Japan, China, shipping rates and most importantly the first failed Gilt bond auction in Britain since 2002.

Sorry, I disagree with Obama's agenda as much as the next Reaganite (and for the same reasons) but this makes me want to go on a ren-like rant. So when the market tanks it is a sign of Obama's incompetence, and when the market surges it is a sign of Obama's incompetence. Since the conclusion is predetermined, any set of facts is juat as good as any other.

I always appreciate Pete's efforts to be fair-minded and clear sighted but, in this instance, Pete, I think you miss the mark. The two positions are not mutually exclusive nor is the conclusion predetermined or simple-minded. The incompetence you discuss above in the first instance has to do with the substance of his proposals being unequal to the task and the converse perception that that they might be implemented anyway. People then might fairly conclude that he is "incompetent" at handling the economy and the market would react accordingly. The incompetence now being witnessed has to do with his capacity to accomplish his goals--so, again, with the perception about whether or not his bad plans are likely to be implemented. If it is true that people think Obama is not making much headway, it may also be true that this explains the uptick in the market. I'm not sure if I am fully persuaded that Obama's impact on the markets is this direct at all. There are, as John Lewis in his typically cryptic way, many factors that contribute to the rise and fall of markets. But the Grannis suggestion is, at least, worthy of consideration. If politics has any impact on the markets (and I think it must have some) this explanation of what's going on seems to make some sense to me.

Julie, well my tone was off anyway. But my objection was also to the substance of the fellow that you linked to. I guess he is really smart, and I am no economist, but is it really plausible that the recent market rally has more to do with Obama giggling on 60 Minutes than the announcement of his bank rescue plan? I do believe that the things that Obama says and does can have both a short and long term impact on the market (though there are many, many other factors and of course actions that might have a positive impact in the moment might have a negative impact in the long term). But I also think that there is a game going on in which conservatives try to pin the blame on him for every slide and find ways to avoid giving him credit when the market rises (except of the back-handed "he is so incompetent that his liberal insanity won't happen" variety.). Larry Kudlow pioneered this kind of analysis even before Obama became President in which he related market slides to Obama speeches, Obama leading polls and any other Obama related thing. But Obama sppeches and Obama polls were never linked to market surges (of which we have had few enough). To the extent that this analysis is serious rather than spin, there is the danger that conservative thinking will be distorted by a kind of confirmation bias that will hurt our credibility with nonconservatives.

I merely think that the substance of Obama's plans combined with the likelihood of him getting what he wants probably has something to do with what the markets do. I also think that by looking backwards from what the markets are doing you can probably gauge, to some degree, what it is that people on Wall Street (that is to say, Americans like you and me who invest in this economy) really think about the substance of Obama's plans. Put another way, we ought to pay some serious attention to what people with skin in the game are thinking about Obama's plans for the economy.

Julie, I feel like we are talking past each other. Its not that I disagree with your point that Obama's policies both real and prospective, can have an effect on te market, it is that much of the conservative analysis on this point is flawed. In the micro sense there is the case of the fellow that you linked to. I don't find it at all plausible that the recent market surge has more to do with Obama's gaffes than with Obama's bank rescue plan and of course all the other economic factors that don't directly relate to the partisan politics of the moment. In the broader sense there is a pattern of conservative commentary stretching back to before the election that seeks to stretch to pin every market downturn on Obama and to ascribe every upturn to other factors (there is of course giving him reverse credit for the surge - the market is surging because he may be crazy, but at least he is incompetent and crazy).

I have several problems with this kind of analysis. First, it seems to smack of a kind of confirmation bias that distorts analysis of events. Second, it comes across as so oppurtunistic and self-serving that nonconservatives will use it to dismiss conservatives as dishonest, partisan carpers.

Do you see honestly see his point as being that the "gaffes" account for things? I don't think that's a fair characterization of his point; maybe that's where I part company with you. If it were his point, I think I'd be on board with you that it is, at minimum, rhetorically ineffective. But I see his point as being more akin to an argument that there is a broader sense out there now that Obama is not going to get everything he wants . . . that America is not taking a hard turn for the left and against capitalism and private business initiatives. He will be checked. You can disagree about whether this broad perception could account for the turn in the markets. You could even disagree with him about whether such a perception exists. Fine. But I think your desire to be fair here is causing you to unfairly characterize his argument as chasing his political opponent around the mulberry bush. I'm pretty sure, btw, that Grannis also said some favorable things about the bank rescue plan. But he did not think that it, by itself, was enough to explain the rising optimism on Wall St. And neither, of course, is this explanation . . . by itself.

Julie, yes I do see his point. The gaffes were supposed to be important because they (in part) took the wind out of the sails of his legislative agenda. I just find it very, very implausible as an explanation or even as a major factor for the present market surge. One thing I want to make clear is that I don't think that the fellow is dishonest or a liar (I don't think Kudlow is either). It just seems like there is a kind of confirmation bias that can reinterpret any set of data to reach the same set of conclusions. If the market goes down there will always be some kind of liberal Obama-related activity (whether word or deed) to blame it on. If the market goes up there will always be other factors (and very real factors) to credit the market rise to other than Obama.

I am not epecially concerned about being fair to Obama for Obama's sake. I worry that such habits of mind are sincere and can truly distort our analysis of both the economy and our politics which would in the end be quite a good thing for Obama but not for us.

Pete, I am happy to take all that you say as a good caution and I do appreciate your spirited defense of your position. Bad habits of mind and ineffective rhetorical strategies are always to be avoided. But I'm also willing to consider that there may be something to the Grannis analysis.

Leave a Comment

* denotes a required field
 

No TrackBacks
TrackBack URL: https://nlt.ashbrook.org/movabletype/mt-tb.cgi/13741


Warning: include(/srv/users/prod-php-nltashbrook/apps/prod-php-nltashbrook/public/sd/nlt-blog/_includes/promo-main.php): failed to open stream: No such file or directory in /srv/users/prod-php-nltashbrook/apps/prod-php-nltashbrook/public/2009/03/obamas-poor-performance-possible-economic-turnaround.php on line 753

Warning: include(): Failed opening '/srv/users/prod-php-nltashbrook/apps/prod-php-nltashbrook/public/sd/nlt-blog/_includes/promo-main.php' for inclusion (include_path='.:/opt/sp/php7.2/lib/php') in /srv/users/prod-php-nltashbrook/apps/prod-php-nltashbrook/public/2009/03/obamas-poor-performance-possible-economic-turnaround.php on line 753