On January 16th, the last trading day prior to Obama's inauguration, the market levels were 8281, 844, and 1529 for the Dow, S&P 500, and Nasdaq indicies respectively.  During the subsequent fall to their March lows, conservative blogs continually pointed at the collapse in these indicies as proof that Obama's financial policies were a disaster.

Today, after rallying for about a month, these same indicies closed at 8083, 857, and 1653.  Unsurprisingly, the vast majority of conservative blogs have stopped talking about the index levels.  Using their previous logic, Obama would have to get credit for somehow reversing the course of the markets such that they're now above (on balance, the Dow being the narrowest index) where they were prior to his inauguration.

In fact, if I were a typically idiotic lefty blogger, I'd be trying to give Obama credit for the entire rally, while laying the sell-off at Bush's feet.  It wouldn't be too hard to make a seemingly good case that the markets sold off due to Obama's honesty in detailing the trouble Bush left us in, but then rallied due to his approach to the situation.

Do I actually believe this?  Of course not.  Of course, I didn't believe that Obama's policies had much to do with the sell-off either.  The only extent to which Obama should get credit in either direction is the initial uncertainty about his policies (Geithner running around like a chicken with his head cut off), followed by some indication of a plan (the quality of the plan is largely immaterial in the short term).  Markets hate uncertainty, and short of Obama saying he was going to nationalize everything and wipe out the equity holders, they were going to rally on any semblance of organization in the new administration's approach to the financial situation.

The lesson?  Most bloggers know nothing about markets and should stick to discussion of policy rather than pointing to index levels when they seem to support their positions.

Posted by: Hermit Dave at 04:07 PM | No Comments | Add Comment
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