Wednesday, March 04, 2009

Stupid Political Points: Dow/Obama

Let's put this to rest.

It's become fashionable for Pubbies to pin the Dow-dump on Obama.

That's just stupid. Cute, yes. Talking point, yes.

And it's pure barnyard effluent.

As we explained below, the Dow was selling at roughly 26x earnings in 2000--which was simply unsustainable.

No different from the $600K cost of a 2-bedroom/1 bath California residence. Unsustainable when viewed in the price/rent crucible.

The DJIA is tanking because it was overpriced, and it will continue to tank until it is UNDER-priced; then it will recover to the mean, which is about 14x earnings.

And don't "authority-quote" on this. Try running with actual historical facts--or concede that Eisenhower, the (R), was the cause of the recession in the late 1950's.

2 comments:

Dan said...

Ok, the DJIA is an abberation, then how do you explain all the other stock market failures world wide? Yes, some stocks were over priced, but were they over 505 over priced? some yes, but most no.
Is it all Obama's fault? of course not. But to say his policies have no role in the collapse is also not true.

Dad29 said...

Dan, a bubble is a bubble, whether confined to the US or not.

Obama's policies are deleterious, but only at the margins (most of them have NOT been implemented yet.)

I'm no fan of Obama, as you know (I hope.) But using asinine "arguments" is destructive of credibility. There are plenty of good, reality-based points to be made about Obama's wealth-destruction.

Let's make them, instead.