Dow Up Almost 500 Points

The Dow was up 497 points today followng the announcement of the Treasury Department’s plan was released.

For the most part, market levels reflect weaknesses in the economy which have been a factor since last fall. I don’t put much weight on one day changes but many Republicans have attributed recent drops in the market to Obama’s actions as opposed to economic fundamentals. While today’s gain may or may not hold long term, it certainly does seem to be a direct response to an action of the Obama administration. I wonder how conservatives who have been blaming Obama for the drop since election day will spin this.

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  1. 1
    Eclectic Radical says:

    They will either ignore it entirely, as they ignored the inconvenient drops due to Bush policies when he was still in the Oval Office, or they will spin it as the natural market recovery from the crash and deny it has anything to do with current White House policies. Naturally. 🙂

    More seriously, I don’t know good an idea it is to weigh the economy based on the stock market. Clearly, the stock market crashed in this instance because of the massive credit collapse. But without the credit collapse the economy was far from ‘healthy’ before, and while there was some ‘adjusting’ there was no massive crash. The market recovering and staying steady would likely speed recovery, but it would not mean an end to the current economic crisis even if the Dow jumped 10000 tomorrow.

    The stock market is an off-track betting parlor. Looking at the ticker-tape doesn’t tell one who is winning the race or how good the race will be. It just shows how people are betting on the race ending.

  2. 2
    Ron Chusid says:

    You can’t say much about a one day change other than as a reflection of how investors are feeling that day. You can’t use the stock market as the sole measure of the economy but over the long run it has meaning.

    In the case of this post, I was meaning that the drops over the last several months are related to the decreased business at many companies, as well as many companies going under. This was a process which started before Obama took office, and it makes no sense to blame Obama  for the drops since election day as some conservative bloggers have been doing.

  3. 3
    Eclectic Radical says:

    Oh yes, I agree completely with your description of the conservative commentary on stock market drops. It is a combination of people who know better churning out propaganda and people who don’t know better assuming that what happens today is always because of who is president today.

  4. 4
    Ron Chusid says:

    Besides, it is a good measure of how my  portfolio is doing (regardless of whether other indices might be better measures of the market) and therefore an increase in the Dow (if sustained) is an excellent measure of the economy to me.

  5. 5
    Eclectic Radical says:

    Well THAT, of course, is a point against which even I cannot argue. 🙂

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