{"id":298877,"date":"2010-02-09T11:40:40","date_gmt":"2010-02-09T16:40:40","guid":{"rendered":"tag:business.theatlantic.com,2010:\/\/3.35633"},"modified":"2010-02-09T12:14:16","modified_gmt":"2010-02-09T17:14:16","slug":"the-worst-argument-about-the-dow-ive-ever-read","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/298877","title":{"rendered":"The Worst Argument About the Dow I’ve Ever Read"},"content":{"rendered":"

The stock market is mysterious. Myriad data points and projections go into investors’ decisions to bet on the future earnings potential of the 30 companies that make up the Dow Jones Indust… oh no, wait. I’m sorry. That’s all wrong. Predicting the stock market is very easy. Did liberals just do something? OK then, the market is going down.<\/p>\n

The Wall Street Journal op-ed section has a lot of bad habits, but one of the worst is blaming the White House for every stock market crash. I’m serious. Every<\/a>. Single.<\/a> One<\/a>. And adjusting for typical WSJ nonsense, this is the worst paragraphs I’ve read in a long time:<\/p>\n

From the beginning of this historic rally–up 73% over the 316 days
\nsince last March’s market bottom–politics has been an important theme.
\nThat horrific bottom was reached after Democrats in Congress rammed
\nthrough a $787 billion stimulus bill so quickly that no senator or
\nrepresentative could have possibly read all 1,073 pages of it. That
\nhastily concocted porkfest should not be credited with turning stocks
\naround. Rather, it should be blamed for the more than 18% loss that
\nstocks suffered in the 24 days from the date of its enactment to the
\nday of the March bottom.<\/p><\/blockquote>\n

In other words, the stock market crashed because Democrats succeeded in passing the stimulus. But wait. After the Congress rejected the first government bailout in September 2008, the Dow dropped 778 points. That was the single worst market value loss in American history, and it happened after a stimulus plan failed. Guess who the WSJ blamed? <\/i>Democrats for failing <\/i>to pass the stimulus!<\/a> <\/p>\n

In reality, I don’t know what makes markets move. Here’s what I know. In the 300 days after the Recovery Act passed, the market soared a
\n“historic” 73%. Economists from the CBO and Goldman Sachs credited the
\nstimulus with adding up to four percentage points to our third and
\nfourth quarter GDP growth. In the meantime the Federal Reserve spent
\ntrillions of dollars buying bad assets as the government set a floor to
\nbig bank losses and assured the financial system that it would not
\nallow another major failure, and the administration administered a
\nstress test of banks that clearly helped them to recapitalize<\/a>. Don Luskin’s conclusion? Forget last 12 months, let’s focus on blaming the administration for some stock fluctuation last March! <\/p>\n

Of course, this sets up a couple doozies: (1) if the market grows only when Democrats fail, why did it rally last spring and summer when the
\nDemocrats’ agenda looked more certain? And (2) how do you explain the
\nrecent stock market fall-off that occurred after the Massachusetts
\nupset threw a wrench into the Democrats’ plans? Luskin:<\/p>\n

It’s because the immediate reaction to the Brown election–in both
\nparties–has been a dangerous lurch toward antibusiness populism.\n<\/p><\/blockquote>\n

Of course, this is utter silliness. Financial regulation was nearly declared nearly dead last week<\/a>.
\nGoing by the Luskin Theory of Dow Fluctuations, that should have sent
\nstocks soaring. Instead the market hit a three month low yesterday. Explain that one, Luskin.<\/p>\n

Truly, the WSJ has outdone itself today.


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The stock market is mysterious. Myriad data points and projections go into investors’ decisions to bet on the future earnings potential of the 30 companies that make up the Dow Jones Indust… oh no, wait. I’m sorry. That’s all wrong. Predicting the stock market is very easy. Did liberals just do something? OK then, the […]<\/p>\n","protected":false},"author":1534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-298877","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/298877","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=298877"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/298877\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=298877"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=298877"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=298877"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}