Obama's Rhetoric Is the Real 'Catastrophe'

[I AM NOT THAT GUY 5,715]

WALL STREET JOURNAL

February 16, 2009

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package.

In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

This fearmongering may be good politics, but it is bad history and bad economics. It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.

Job losses in the Great Depression were of an entirely different magnitude. In 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. And then in 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82.

This was reflected in unemployment rates. The latest survey pegs U.S. unemployment at 7.6%. That's more than three percentage points below the 1982 peak (10.8%) and not even a third of the peak in 1932 (25.2%). You simply can't equate 7.6% unemployment with the Great Depression.

Other economic statistics also dispel any analogy between today's economic woes and the Great Depression. Real gross domestic product (GDP) rose in 2008, despite a bad fourth quarter. The Congressional Budget Office projects a GDP decline of 2% in 2009. That's comparable to 1982, when GDP contracted by 1.9%. It is nothing like 1930, when GDP fell by 9%, or 1931, when GDP contracted by another 8%, or 1932, when it fell yet another 13%.

Auto production last year declined by roughly 25%. That looks good compared to 1932, when production shriveled by 90%. The failure of a couple of dozen banks in 2008 just doesn't compare to over 10,000 bank failures in 1933, or even the 3,000-plus bank (Savings & Loan) failures in 1987-88. Stockholders can take some solace from the fact that the recent stock market debacle doesn't come close to the 90% devaluation of the early 1930s.

Mr. Obama's analogies to the Great Depression are not only historically inaccurate, they're also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren't likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup. Beyond that, fearmongering can trigger a political stampede to embrace a "recovery" package that delivers a lot less than it promises. A more cool-headed assessment of the economy's woes might produce better policies.

Mr. Schiller, an economics professor at the University of Nevada, Reno, is the author of "The Economy Today" (McGraw-Hill, 2007).

[one...two...tree 2,762]

WALL STREET JOURNAL

February 16, 2009

President Barack Obama has turned fearmongering into an art form.

Oh the irony.

[웃 910]

I'm glad Bill Clinton put the rookie in check on "Good Morning America" a few days ago. All I hear when I think of Obama talking about the economy is: "We are in a crisis unlike any we have ever seen before....The worst since the Great Depression....People are losing jobs.....Unemployment is going up..." etc. etc.

I agree that this recession is nothing compared to the Great Depression, however, there is one aspect that is similar which is highlighted below... The Dow Jones peaked on October 9th, 2007, so we are a little over 500 days into this bear market and the Dow is off by 48%. 500 days into the Great Depression the Dow was down 57%. So in that regard we are very similar to the 1929 crash. In fact, this has been a very steep decline in 500 days; the second worst in history, and only behind the Great Depression. About 1 year and 4 months ago the Dow was closing over 14,000 points. Now we are just barely above 7,000! Here is what I think: If we can bury the "N" word (nationalization of banks) then I believe we'll be out of this recession in no time and hopefully last Friday was the bottom.

Some interesting analysis:

As we continue trading, it's important to keep the context clear. We're in a monster bear market, much worse than I thought it would become. It's one of the worst in history.

We're now 16 months into it, and many are saying that after 16 months we have to be close to the bottom. That's true for ordinary bear markets, but not monsters. The following table shows five monster Dow bear markets and four other monster bear markets. It includes the dates, index, bear duration in months, time to low in months, and loss at the low:

1929-1954 | Dow | 301 mos | 34 mos to low | -89% at low

1989-? | Nikkei | 233+ mos | 229+ mos to low | -82% at low

1974-1987 | Madrid | 145 mos | 74 mos to low | -74% at low

1988-1995 | Helsinki | 76 mos | 41 mos to low | -73% at low

1988-1995 | Stockholm | 51 mos | 38 mos to low | -53% at low

1973-1983 | Dow | 120 mos | 23 mos to low | -49% at low

2007-? | Dow | 16+ mos | 12+ mos to low | -48% at low

2000-2006 | Dow | 81 mos | 33 mos to low | -40% at low

1966-1972 | Dow | 201 mos | 66 mos to low | -34%

Among these nine monster bear markets, the average duration was 136 months, the average time to the low was 61 months, and the average loss at the low was 60%. In this crowd, the current bear is young.

That means one of two things. Either we are blessed and the low was indeed hit last November, or we haven't yet seen bottom. Statisticians flag the latter as more probable.

The following link displays a chart of four bad bear markets, courtesy of dshort.com, that shows us to be a little past the middle of the typical length of a bad bear:

http://tinyurl.com/587968

On Friday, we were 500 calendar days into this bear market and the Dow was already down 48% from its Oct. 9, 2007 peak at 14,165. That's the second-steepest beginning of any U.S. bear market in history. Only the 1929 bear dropped faster in the first 500 days, declining 57%. The 1973 bear fell only 22% in its first 500 days, and the 2000 bear only 6%. If the momentum of the beginning of the current bear market persists, it will become the worst of all time.

[I AM NOT THAT GUY 5,715]

Interesting, and scary at the same time!

[ready4ONE 5,400]

WALL STREET JOURNAL

February 16, 2009

President Barack Obama has turned fearmongering into an art form.

Oh the irony.

Spot on observation!

[웃 910]

BTW, the post I quoted above is from Jason Kelly (www.jasonkelly.com)

Here is some common sense analysis of my own:

The following table shows five monster Dow bear markets and four other monster bear markets. It includes the dates, index, bear duration in months, time to low in months, and loss at the low:

#1: 1929-1954 | Dow | 301 mos | 34 mos to low | -89% at low <----The Great Depression

#2: 1989-? | Nikkei | 233+ mos | 229+ mos to low | -82% at low

#3: 1974-1987 | Madrid | 145 mos | 74 mos to low | -74% at low

#4: 1988-1995 | Helsinki | 76 mos | 41 mos to low | -73% at low

#5: 1988-1995 | Stockholm | 51 mos | 38 mos to low | -53% at low

#6: 1973-1983 | Dow | 120 mos | 23 mos to low | -49% at low

#7: 2007-? | Dow | 16+ mos | 12+ mos to low | -48% at low <------------Current Situation

#8: 2000-2006 | Dow | 81 mos | 33 mos to low | -40% at low

#9: 1966-1972 | Dow | 201 mos | 66 mos to low | -34% at low

The Dow Jones Average closed at a record high of 14,165 points on October 9th, 2007. Right now it is down exactly 48% from that high, with a most recent close of 7,365.67, which ranks it 7th worst out of the 9 "monster" bear markets shown above. Scratch the lows on #1 through #4 (-89% Great Depression, -82% Nikkei, -74% Madrid, and -73% Helsinki) because there is no way in hell the Dow will drop 70% or more from the October 2007 high. Here is what it would look like if it did:

-70% = 4,249.50

-75% = 3,541.25

-80% = 2,833.00

-85% = 2,124.75

-90% = 1,416.50 <----This would be a repeat of the Great Depression (-90%)

More realistically speaking:

-48% = 7,365.67 <-------current Dow Jones close and new bear market low

-49% = 7,224.15

-50% = 7,082.50<--------If current bottom doesn't hold, then this is where I see support (7,000)

-51% = 6,940.85

-52% = 6,799.20<--------Anything below this # is highly unlikely

-53% = 6,657.55

-54% = 6,515.90

-55% = 6,374.25

-56% = 6,232.60

-57% = 6,090.95

-58% = 5,949.30

-59% = 5,807.65

-60% = 5,666.00

The Dow is off 48% since the October 2007 high (14,165 to 7,365.67). It is not going to drop much further

Edited February 23, 2009 by Confucian

[I AM NOT THAT GUY 5,715]

BTW, the post I quoted above is from Jason Kelly (www.jasonkelly.com)

Here is some common sense analysis of my own:

The following table shows five monster Dow bear markets and four other monster bear markets. It includes the dates, index, bear duration in months, time to low in months, and loss at the low:

#1: 1929-1954 | Dow | 301 mos | 34 mos to low | -89% at low <----The Great Depression

#2: 1989-? | Nikkei | 233+ mos | 229+ mos to low | -82% at low

#3: 1974-1987 | Madrid | 145 mos | 74 mos to low | -74% at low

#4: 1988-1995 | Helsinki | 76 mos | 41 mos to low | -73% at low

#5: 1988-1995 | Stockholm | 51 mos | 38 mos to low | -53% at low

#6: 1973-1983 | Dow | 120 mos | 23 mos to low | -49% at low

#7: 2007-? | Dow | 16+ mos | 12+ mos to low | -48% at low <------------Current Situation

#8: 2000-2006 | Dow | 81 mos | 33 mos to low | -40% at low

#9: 1966-1972 | Dow | 201 mos | 66 mos to low | -34% at low

The Dow is off 48% since the October 2007 high (14,165 to 7,365.67). It is not going to drop much further

I am seeing a lot of similarity between the current situation, and the fall of the Nikkei, which has still failed to recover. For some reason, the current administration is following the same stategies. Will the US soon start buying other currencies again to keep the dollar artificially low?

[spookyturtle 9,465]

BTW, the post I quoted above is from Jason Kelly (www.jasonkelly.com)

Here is some common sense analysis of my own:

The following table shows five monster Dow bear markets and four other monster bear markets. It includes the dates, index, bear duration in months, time to low in months, and loss at the low:

#1: 1929-1954 | Dow | 301 mos | 34 mos to low | -89% at low <----The Great Depression

#2: 1989-? | Nikkei | 233+ mos | 229+ mos to low | -82% at low

#3: 1974-1987 | Madrid | 145 mos | 74 mos to low | -74% at low

#4: 1988-1995 | Helsinki | 76 mos | 41 mos to low | -73% at low

#5: 1988-1995 | Stockholm | 51 mos | 38 mos to low | -53% at low

#6: 1973-1983 | Dow | 120 mos | 23 mos to low | -49% at low

#7: 2007-? | Dow | 16+ mos | 12+ mos to low | -48% at low <------------Current Situation

#8: 2000-2006 | Dow | 81 mos | 33 mos to low | -40% at low

#9: 1966-1972 | Dow | 201 mos | 66 mos to low | -34% at low

The Dow is off 48% since the October 2007 high (14,165 to 7,365.67). It is not going to drop much further

I am seeing a lot of similarity between the current situation, and the fall of the Nikkei, which has still failed to recover. For some reason, the current administration is following the same stategies. Will the US soon start buying other currencies again to keep the dollar artificially low?

Probably. Too bad McCain wasn't elected. All would be well now.

[I AM NOT THAT GUY 5,715]

BTW, the post I quoted above is from Jason Kelly (www.jasonkelly.com)

Here is some common sense analysis of my own:

The following table shows five monster Dow bear markets and four other monster bear markets. It includes the dates, index, bear duration in months, time to low in months, and loss at the low:

#1: 1929-1954 | Dow | 301 mos | 34 mos to low | -89% at low <----The Great Depression

#2: 1989-? | Nikkei | 233+ mos | 229+ mos to low | -82% at low

#3: 1974-1987 | Madrid | 145 mos | 74 mos to low | -74% at low

#4: 1988-1995 | Helsinki | 76 mos | 41 mos to low | -73% at low

#5: 1988-1995 | Stockholm | 51 mos | 38 mos to low | -53% at low

#6: 1973-1983 | Dow | 120 mos | 23 mos to low | -49% at low

#7: 2007-? | Dow | 16+ mos | 12+ mos to low | -48% at low <------------Current Situation

#8: 2000-2006 | Dow | 81 mos | 33 mos to low | -40% at low

#9: 1966-1972 | Dow | 201 mos | 66 mos to low | -34% at low

The Dow is off 48% since the October 2007 high (14,165 to 7,365.67). It is not going to drop much further

I am seeing a lot of similarity between the current situation, and the fall of the Nikkei, which has still failed to recover. For some reason, the current administration is following the same stategies. Will the US soon start buying other currencies again to keep the dollar artificially low?

Probably. Too bad McCain wasn't elected. All would be well now.

Don't know. We already started on this path before Obama was sworn in. It is sorta like heading downhill without brakes. You know you need to ride it out, but there is no reason to keep your foot on the accelerator!

[spookyturtle 9,465]

BTW, the post I quoted above is from Jason Kelly (www.jasonkelly.com)

Here is some common sense analysis of my own:

The following table shows five monster Dow bear markets and four other monster bear markets. It includes the dates, index, bear duration in months, time to low in months, and loss at the low:

#1: 1929-1954 | Dow | 301 mos | 34 mos to low | -89% at low <----The Great Depression

#2: 1989-? | Nikkei | 233+ mos | 229+ mos to low | -82% at low

#3: 1974-1987 | Madrid | 145 mos | 74 mos to low | -74% at low

#4: 1988-1995 | Helsinki | 76 mos | 41 mos to low | -73% at low

#5: 1988-1995 | Stockholm | 51 mos | 38 mos to low | -53% at low

#6: 1973-1983 | Dow | 120 mos | 23 mos to low | -49% at low

#7: 2007-? | Dow | 16+ mos | 12+ mos to low | -48% at low <------------Current Situation

#8: 2000-2006 | Dow | 81 mos | 33 mos to low | -40% at low

#9: 1966-1972 | Dow | 201 mos | 66 mos to low | -34% at low

The Dow is off 48% since the October 2007 high (14,165 to 7,365.67). It is not going to drop much further

I am seeing a lot of similarity between the current situation, and the fall of the Nikkei, which has still failed to recover. For some reason, the current administration is following the same stategies. Will the US soon start buying other currencies again to keep the dollar artificially low?

Probably. Too bad McCain wasn't elected. All would be well now.

Don't know. We already started on this path before Obama was sworn in. It is sorta like heading downhill without brakes. You know you need to ride it out, but there is no reason to keep your foot on the accelerator!

I was being sarcastic about things being better if McCain was elected. We are in a real mess, regardless of who the President happens to be. I think Obama is more suited to the task at hand than McCain or any other Republican at the moment. And sometimes the best defense is offense.

[I AM NOT THAT GUY 5,715]

I was being sarcastic about things being better if McCain was elected. We are in a real mess, regardless of who the President happens to be. I think Obama is more suited to the task at hand than McCain or any other Republican at the moment. And sometimes the best defense is offense.

well, I am not to sure about Obama. Right now he is on live tv, with his Fiscal Summit circus. It reminds me a lot of the '68 Democratic Convention, and we all know what happened there! When is this guy going to shut-up, and start leading!

http://www.cnn.com/ALLPOLITICS/1996/conven...o68/index.shtml

Edited February 23, 2009 by Mister_Bill

[Troy W 0]

There is only 1 thing I care about in regards to the present economy; in 2007 and 2008 my company had 250 million in sales in both years. So far for 2009 we have only sold 97 thousand. That is all there is to discuss, folks that is the bottom line. Corporate sales and jobs.