# Is the stock market giving Bush's policies a thumbs-up? **URL:** \ **Category:** Great Debates\ **Created:** [July 17, 2007, 11:22pm UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194 "2007-07-17T23:22:42Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [July 17, 2007, 11:22pm UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/1 "2007-07-17T23:22:42Z")
[Conservative commentator Larry Kudlow thinks so:](http://corner.nationalreview.com/post/?q=MjRhNjFmZjI5ZjRlNTQxZGI4MmMyOGMwYzE1YWJmMDg=) > [@Larry Kudlow](#): > > Simply put, this is the greatest global stock market boom in history. > > What we are witnessing here, in virtually every corner of the globe, is the success and the spread of unbridled free market capitalism. It is a dynamic worldwide march toward lower tax rates, deregulation, and, as market strategist Don Luskin put it on last night’s show, the “interconnectedness” of global economies through free trade, the free flow of capital, and the robust free exchange of information. > > Despite the persistent doom and gloom refrain from various sourpuss prognosticators, it remains the greatest story never told. > > And it’s not over yet. > > … > > Here in the U.S., we’re getting a welcome speedup in the economy with profits and cash flow shares at record highs. > > … > > Despite all the criticism President Bush has received over his administration’s Iraq war policies, the stock market has been booming throughout the whole period from early 2003 onward. Markets are giving Bush’s steadfastness in the battle of Iraq and the world terror war a big thumbs up vote of confidence. Any comments on his comments? Seems like a bit of a stretch to me, but it’s finding welcome ears. (And I suspect some of you will have harsher words than that.) ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 18, 2007, 12:28am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/2 "2007-07-18T00:28:47Z")
New highs do not necessarily equal the greatest runup in history - that depends on the rate of change of the market. Nonetheless, it is quite possible those who invest might indeed love the present situation. There is less tax on their earnings, and environment is positive for them. But the cite is repeating the same old stuff, as if liberals deny the increase in profits. That this story isn’t told is a lie. What gets added, and which is ignored in the cite, is that these great profits have not been improving the lot of most of the American public. The message has been “we on the top are doing great - why aren’t you ingrates happy?” So, nothing new here at all. ---
**Author:** ![Triskadecamus](https://avatars.discourse-cdn.com/v4/letter/t/b19c9b/32.png) [@Triskadecamus](https://boards.straightdope.com/u/Triskadecamus)\ **Post date:** [July 18, 2007, 12:32am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/3 "2007-07-18T00:32:52Z")
Besides, the smart money goes in before the market really goes up. With George II coming to the end of his reign, perhaps this is part of a great sigh of relief on the part of investors. Tris ---
**Author:** ![Sublight](https://avatars.discourse-cdn.com/v4/letter/s/439d5e/32.png) [@Sublight](https://boards.straightdope.com/u/Sublight)\ **Post date:** [July 18, 2007, 1:29am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/4 "2007-07-18T01:29:38Z")
If there were ever an invitation to shout “but what about Clinton!”, this would be it. 1995-2000 saw a similarly exuberant economy, was this also “a big thumbs up vote of confidence”? And as for “the robust free exchange of information,” are they now claiming that W invented the Internet? A rising stock market may signal approval of a president’s economic policies, but I think they’re more strongly affected by transitions and trends, some cyclical and some not, that are beyond the scope of even the president. And as for approval of non-economic policies, that’s pretty laughable. “We caught Al Queda’s #2 man again! Quick, buy Starbucks!” ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [July 18, 2007, 1:40am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/5 "2007-07-18T01:40:23Z")
Supply and demand, folks, supply and demand. Shares of stock may represent fractional ownership of businesses, but they’re also something people want to buy, just for a somewhat different set of reasons than you’d want to buy a car or a microwave oven. One set of big buyers of shares of stock is rich people. Bush’s policies for six and a half years have been geared almost singlemindedly towards making the rich richer, and he has been very successful at it. So now we have a lot more money chasing a set of shares that hasn’t expanded nearly as fast as the money chasing them. If demand increases faster than supply, prices increase. ---
**Author:** ![Frostillicus](https://avatars.discourse-cdn.com/v4/letter/f/e9bcb4/32.png) [@Frostillicus](https://boards.straightdope.com/u/Frostillicus)\ **Post date:** [July 18, 2007, 2:22am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/6 "2007-07-18T02:22:06Z")
> [@](#): > > Despite all the criticism President Bush has received over his administration’s Iraq war policies, the stock market has been booming throughout the whole period from early 2003 onward. Markets are giving Bush’s steadfastness in the battle of Iraq and the world terror war a big thumbs up vote of confidence. I for one was unaware that Bush’s term began in early 2003. Talk about moving the goal posts. ---
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [July 18, 2007, 2:40am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/7 "2007-07-18T02:40:14Z")
Come back in 2008 or so, and we’ll discuss this. Assuming you can afford an internet connection at that point. ---
**Author:** ![Quartz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quartz/32/267_2.png) [@Quartz](https://boards.straightdope.com/u/Quartz)\ **Post date:** [July 18, 2007, 6:32am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/8 "2007-07-18T06:32:00Z")
How much of the US stock market is pension funds? ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [July 18, 2007, 10:08am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/9 "2007-07-18T10:08:38Z")
[QUOTE=Frostillicus] I for one was unaware that Bush’s term began in early 2003. Talk about moving the goal posts. [/QUOTE] To be fair, something kinda serious happened in 2001 that would probably keep the economy a little blah for a while, President or no. ---
**Author:** ![stolichnaya](https://avatars.discourse-cdn.com/v4/letter/s/bcef8e/32.png) [@stolichnaya](https://boards.straightdope.com/u/stolichnaya)\ **Post date:** [July 18, 2007, 2:20pm UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/10 "2007-07-18T14:20:50Z")
[QUOTE=Leaper] To be fair, something kinda serious happened in 2001 that would probably keep the economy a little blah for a while, President or no. [/QUOTE] And hence a recovery happened that would have probably happened to any president, give or take. So it’s not really fair to ascribe the whole recovery to this president’s unique policies. I find the “demand” element compelling, though. ---
**Author:** ![Patty\_O\_Furniture](https://avatars.discourse-cdn.com/v4/letter/p/96bed5/32.png) [@Patty\_O\_Furniture](https://boards.straightdope.com/u/Patty_O_Furniture)\ **Post date:** [July 18, 2007, 4:15pm UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/11 "2007-07-18T16:15:37Z")
[QUOTE=stolichnaya] And hence a recovery happened that would have probably happened to any president, give or take. [/QUOTE] Thus, the stock market is giving thumbs-up to al-qaeda’s policies. I can reach absurd conclusions as easily as Kudlow. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [July 18, 2007, 5:19pm UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/12 "2007-07-18T17:19:30Z")
I see the recent run up as due to the cheap US dollar. Foreign buyers can buy US stocks for much less 9than equivilent investments in their own countries). the cheap dollar is good and bad-it makes imports more expensive, but it does make US exports more competitive. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [July 18, 2007, 6:07pm UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/13 "2007-07-18T18:07:42Z")
[QUOTE=ralph124c] I see the recent run up as due to the cheap US dollar. Foreign buyers can buy US stocks for much less 9than equivilent investments in their own countries). the cheap dollar is good and bad-it makes imports more expensive, but it does make US exports more competitive. [/QUOTE] Which brings me to my question: Is there any connection at all between Wall Street and Main Street these days? Particularly in view of these facts: 1. A lot of the money flowing into Wall Street is foreign investment; and 2. A nominally “US company” may have moved all of its manufacturing (and thus most of the jobs it creates) out of the country. It seems to me that under these circumstances, Wall Street could boom at the same time the US economy in general tanks. But I am no economist, so feel free to disabuse me of my foolish notions. ---
**Author:** ![Common\_Tater](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/common_tater/32/13846_2.png) [@Common\_Tater](https://boards.straightdope.com/u/Common_Tater)\ **Post date:** [July 18, 2007, 6:24pm UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/14 "2007-07-18T18:24:22Z")
Spoke, I think you are correct - there is a lot of global investment and liquidity looking for the best returns. There is a robust connection between main street and wall street - bigtime. Japan has, or had, 0 per cent overnight interest rates - free money indeed. S&P500 companies have a very significant overseas exposure, contrary to popular sentiment. The “yen carry trade” simplified is borrowing long term yen at low rates and converting to higher yielding bonds or equities. There is a lot of “easy money” looking for a return - the tech-stock mania of the late 90s and subsequent meltdown, the real-estate markets, etc…, Institutional investors and pension funds, government entities and millions of “mom and pop” investment clubs, longtime brokerage houses, internet upstarts and a gazillion otherwise ordinary americans. Individual stocks and mutual funds outside retirement accounts have their place as they can be traded for quick cash or pledged as collateral or, security. China has of course the most rapidly growing investment pool of tens of thousands of new investors every day. They too, see the astonishing returns in the market compared with their paltry savings account returns. ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [July 18, 2007, 6:53pm UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/15 "2007-07-18T18:53:07Z")
[Here](http://www.bloomberg.com/apps/news?pid=20601070&sid=a2fIFVWje23E&refer=politics) is an interesting article on how investment bankers are giving more to Obama and Clinton. ---
**Author:** ![Sublight](https://avatars.discourse-cdn.com/v4/letter/s/439d5e/32.png) [@Sublight](https://boards.straightdope.com/u/Sublight)\ **Post date:** [July 19, 2007, 12:12am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/16 "2007-07-19T00:12:34Z")
[QUOTE=Leaper] To be fair, something kinda serious happened in 2001 that would probably keep the economy a little blah for a while, President or no. [/QUOTE] Actually, the market started declining sharply in late April 2001, several months before the attacks. The attack caused a dip, but by the end of the year the DJIA had returned to it’s pre-attack level. The general decline continued, however, until early 2003. So the whole economic condition can’t be be waved away as just the effect of the 9/11 attack (and if something like that doesn’t have a long-term effect on the market, what’s the President going to do to affect it?). [http://stockcharts.com/charts/historical/djia2000.html](http://stockcharts.com/charts/historical/djia2000.html) ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [July 19, 2007, 12:35am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/17 "2007-07-19T00:35:08Z")
Kudlow simply assumes a high-volume stock market is a sign of a healthy, productive economy. I don’t see any necessary connection between the two. From James Howard Kunstler’s online [“Clusterfuck Nation”](http://www.kunstler.com/mags_diary21.html) column, 7/16/07: > [@](#): > > **Psychotic Break** > > ``` > A curious phenomenon worth attention from pathologists in the financial press is the now nearly complete de-coupling of the finance sector from the salient ominous trend in the oil sector: the fast-developing permanent oil export shock. By that I mean a severe decline in export ability by those nations currently supplying the US, Europe, China, and Japan -- an export decline that will far exceed actual production decline rates in Saudi Arabia, Russia, Venezuela, the North Sea, Mexico, and Iran. > > This story or scenario developed by Jeffrey Brown and statisticians at The Oil Drum.com, is pretty easy to understand: production declines in these nations will combine with greater internal oil consumption to severely curtail exports in a shockingly brief time frame. The populations of Saudi Arabia, Venezuela, and Iran are growing; car sales in Russia are up 50 percent this year; even Norway is using more of its own oil every year. These nations are consuming about 25 percent of their total liquids (regular crude plus natural gas liquids and condensates). Basically, the picture shows that net exports from these nations will run to zero in nine years. And they will be low enough within five years to throw the importing nations into complete economic paralysis. > > The situation is even darker for the US because our number three source of imports, Mexico, is showing production declines far worse than the other exporting nations, suggesting not only that the US will receive no oil from Mexico in only two or three years, but also that the Mexican economy is likely to collapse and plunge that nation into political turmoil -- just what we need along our 2000-mile border. > > It's against this background that the stock market melt-up of 2007 presents a virtually psychotic picture of disconnection from reality, because the oil story says, essentially, that the global economy as we know it can't possibly continue to operate, and that therefore investment in its future operations is certain to go up in a vapor. > > ``` > > \ > > ``` > The psychosis in the stock markets might be explained by the fact that we are at a peculiar point in history: just coming off the absolute peak of the energy supply wave, which has allowed for a fabulous accumulation of surplus wealth, now sloshing through the markets. This may be so, but unfortunately the surplus wealth comes in the form of "money," and the "money" that is out there is subject to equally fabulous distortions and perversions, due to the fact that it is all leveraged into hallucinated multiples via credit rackets, and, perhaps more fundamentally, pegged to the unreal expectation that industrial economies will continue to grow and thus continue to multiply the value of invested "money." > > These two conditions -- the gathering oil export storm and the gathering crisis of capital -- are the reasons why I think 2007 will be a pivotal year. We're at the halfway point. Oil production (all liquids) has not exceeded the all-time peak of a year ago (or the crude-only peak of December 2005). Every day thousands of new driver's licenses are issued to Saudi Arabian men. Every day, thousands of new cars are sold in Russia (and China and India). Every day the price of crude oil on the futures markets creeps a few cents higher. Every day the US version of "money" (the dollar) loses a few clicks of value against other world currencies. The markets and the American public are headed for a collision with reality. When it happens, perhaps this fall, it is not going to be pretty. > > ``` ---
**Author:** ![Public\_Animal\_No.9](https://avatars.discourse-cdn.com/v4/letter/p/b9e5f3/32.png) [@Public\_Animal\_No.9](https://boards.straightdope.com/u/Public_Animal_No.9)\ **Post date:** [July 19, 2007, 12:51am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/18 "2007-07-19T00:51:20Z")
[QUOTE=spoke-] Which brings me to my question: Is there any connection at all between Wall Street and Main Street these days? Particularly in view of these facts: 1. A lot of the money flowing into Wall Street is foreign investment; and 2. A nominally “US company” may have moved all of its manufacturing (and thus most of the jobs it creates) out of the country. It seems to me that under these circumstances, Wall Street could boom at the same time the US economy in general tanks. But I am no economist, so feel free to disabuse me of my foolish notions. [/QUOTE] Main Street and Wall Street are connected much more today than they have been in the past. 401(k) plans, mutual funds, retirement funds all invest in US stocks, and internet access allows people to invest much more directly than pre-1990 or so. Just consider all the low-commission electronic access brokers out there - ETrade, Schwab, etc. The US economy is still by far the largest in the world - over $13 trillion GDP in 2006, which is more than the next four countries combined (Japan, Germany, China, and the U.K.). It’s still true that if the American economy sneezes, the world economy catches a cold. If the US economy went into a serious recession, that would do a lot of harm to China’s economy, as well as a lot of other countries, given the amount that we import. Even with multinationals, the U.S. still provides a huge amount of value added to products. The rest of the world is catching up, and it won’t be too long (I think I’ve seen 2025 or so) before China’s outpacing the U.S. in terms of total economic activity. But right now, the U.S. is still the big dog on the block. Does the stock market run-up mean an approval of Bush’s policies? It’s hard to say. My view is that Wall Street is much more interested in making money than in voting approval of policies. If those policies do provide a healthy business environment that creates profits, then by all means they’re for it. I have no doubt that an anti-regulatory philosophy is heartily cheered by Wall Street, not for any philosophical reason, but because that leads to higher profits. I think that Wall Street would be in favor of increased regulatory policies, anti-war demonstrations, free drugs, gay marriage, elimination of religion, pretty much anything if it resulted in higher profits. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [July 19, 2007, 2:10am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/19 "2007-07-19T02:10:31Z")
so when the global markets nose dives later this year =, does that mean global investors suddenly disagree with dubya? ---
**Author:** ![David\_Simmons](https://avatars.discourse-cdn.com/v4/letter/d/9de053/32.png) [@David\_Simmons](https://boards.straightdope.com/u/David_Simmons)\ **Post date:** [July 19, 2007, 2:32am UTC](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194/20 "2007-07-19T02:32:46Z")
[QUOTE=Leaper] [Conservative commentator Larry Kudlow thinks so:](http://corner.nationalreview.com/post/?q=MjRhNjFmZjI5ZjRlNTQxZGI4MmMyOGMwYzE1YWJmMDg=) Any comments on his comments? Seems like a bit of a stretch to me, but it’s finding welcome ears. (And I suspect some of you will have harsher words than that.) [/QUOTE] I will say that the stock market also gave a thumbs up to the policies of Calving Coolidge and Herbert Hoover. [Next page](https://boards.straightdope.com/t/is-the-stock-market-giving-bushs-policies-a-thumbs-up/412194.md?page=2)