The Washington Post quoted Neil Newhouse in an article about the recent scandals plaguing the Obama administration. Glen…
President Obama: “What I’m looking at is not the date-to-day gyrations of the stock market…” Well, he should be. The Dow Jones Industrial Average has dropped more than 2,500 points and lost 27% of its value since November 5. Why is this important?
The market isn’t just for rich people anymore. And, it hasn’t been for some time. With the invention of IRA,s, SEP-IRAs, 401Ks and tax-deferred college savings plans, a recent Gallup survey showed 62% of American adults own stocks and other equities – a figure that has jumped from 32% in 1989 according to published studies.
To underscore how many Americans now are invested in the stock market, prior to the Crash of ‘29, the crash that shook the world has become part of the American ethos, only three percent of Americans were stockholders. Multiply that by 20 and then some to get to today’s numbers.
The point is that far from being the providence of America’s wealthiest, the stock market is now part-and-parcel of America’s main stream. And, well over half of America has suffered double-digit losses in their retirement plans since Barack Obama’s election. A fact Americans are reminded of every month when they receive their financial statements.
To be sure, American’s don’t blame the president now for their woes. But, they will if the losses continue. If the president continues to ignore it, it will become apparent that he has no strategy to put America back on track.
Worse than no strategy is a wrong strategy.
The market’s slide-causing sell-offs as a result of the President (or his proxies) near daily policy roll-outs and proclamations is a rational response to events. Started under President Bush, President Obama has continued Washington, DC’s displacement of New York and other world financial centers. Since last fall, government has been one of America’s few growth industries. As a percent of America’s Gross Domestic Product, federal government spending has grown from 21% to 28% since President Obama released his budget.
So when President Obama and Congress massively expand government expenditures while drawing down the pool of private investment, a market dive has been the inevitable result. Union pension fund managers and traders alike will always look to preserve and protect their shareholders (who now represent six-in-ten Americans) regardless of their politics.
America’s loss of wealth since election day has been enough to turn CNBC Mad Money man Jim Cramer, a professed Obama supporter, against the Obama Bear Market. If the President doesn’t watch the Dow, voters will follow in time.