. . . key political victories for the Team Obama spending plan have not been viewed as buying opportunities on Wall Street. A string of negative market reactions began with the December 18 announcement of a stimulus bill of $700 billion (Dow down 2.5%), continued with the January 7 announcement that the actual plan would be “on the high side” (-2.7%) and continued with last week’s 61-36 Senate vote supporting the Administration’s fiscal plan. The White House victory and the new bank bail-out plan announced the following day by Treasury Secretary Geithner were met with a 5% wipe-out in the DJI, and a decline in Treasury bond yields, indicating a “flight to quality.”Is more spending really the solution? Under President Reagan, a time when unemployment passed 10%, deficit spending reached 6% of GDP. Before the American Reinvestment and Recovery Act the deficit was projected at 9% of GDP, now it's shaping up at 12%. So will the recovery be twice as big as under Reagan? Or will it arrive in half the time? Or were other Reagan-era policies actually the key to recovery?
Sunday, February 22, 2009
Worst January stock market in 113 years
So say Professors Bittlingmayer and Hazlett in The Market Is Shorting Obama's 'Stimulus' over at Real Clear Markets. Importantly:
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