Don’t blame Obama for market gyrations
No sooner had Barack Obama been elected president than the securities markets, already in a year-long steep downward spiral, shed yet another 20 percent or so of their value.
That plunge sent the right-wing chattering class into near-euphoria. It was proof-positive, according to the high potentates of talk radio and the far-right blogosphere, that the election of The One would do nothing but destroy the already-ailing U.S. economy.
Maybe it will.
Then again maybe it won’t.
The Dow Jones Industrial Average declined 2,073 points, from 9,625, to 7,552 between Election Day and Nov. 20, all of it, according to those in the know on the right, because of Obama’s election.
We’ll never know what would have happened had stocks risen by 2,000 points, but we’re pretty sure the right would have been quiet and the left would have been crediting it all to Obama’s victory.
None of which, to us, makes any sense at all.
Markets, in the short run, and to a lesser extent in the long run, are unpredictable creatures.
In the short run, they tend to overreact. Economic conditions certainly didn’t change as much in the first couple of weeks after the election as the market change would indicate. In the long term, we think markets reflect not political events, but rather general underlying economic conditions.
Talking heads, though, tend to grab onto every little thing they can to further their ideologies.
Sometimes that can backfire on them.
Just how, for example, do the right-wingers explain the more than 1,000-point gain in the Dow in the past week? We haven’t heard any of them crediting it to Obama.
We’re not going to, either, although many experts believe the announcement of Obama’s economic team helped drive one day’s uptick in stock prices.
Nor are we going to claim the 2,000-point loss right after the election was caused by him.
Both are short-term market swings caused by who knows what.
If, in four years, the market remains beaten down and the economy is in no better shape than
it is now, then we can, quite rightly, question the wisdom of electing Barack Obama.