Some of the nation's top political commentators, legislators and intellectuals offer insight into the biggest question burning up the blogosphere today, Thursday, Oct. 15, 2009.
The Dow on Wednesday topped 10,000 for the first time in a year. Are there any political points to be scored by President Barack Obama's team? By anyone?
Dean Baker, co-director of the Center for Economic Policy Research, said:
We have to get over the idea that the stock market tells anything about the economy or even necessarily anything about the state of business. Those of us who are old enough to have lived through the stock bubble know that the market often goes up (or down) for no reason. In principle, a rising stock market reflects the value of future corporate profits. Should people be happy when corporate profits are projected to rise because their wages are projected to fall?
A rising stock market is good for those who own lots of stock, a group that excludes the vast majority of the population. (Yes, I’m even including stock held in mutual funds in 401(k) plans. If you didn’t know this fact, then you should consider yourself too ignorant to take part in serious discussions of economic issues.) A rise in stock prices should be viewed in the same way that we view a rise in the price of corn. It’s good news for corn farmers, but not necessarily especially good news for the rest of us.
It is understandable that politicians would try to take credit for a rising stock market, just as they would take credit for the sun shining, if they could (and as long as people believe that a rise in the stock market somehow benefits them, even when they don’t hold stock).
It's the job of reporters to call them on this nonsense. Unfortunately, they rarely do.
John F. McManus, president of The John Birch Society, said:
The Dow Average is like the Consumer Price Index. When the CPI rises too dramatically, the items measured for it are changed to reflect a smaller increase. When some of the companies included in the Dow average go belly up or nearly so, they get dropped and others are inserted. The name of the game is manipulation of figures. We can be sure that some in the Obama administration will delight in the Dow again reaching 10,000, but foreclosures are up, unemployment remains very high, the dollar's value continues to sink, and the average American knows the nation is still in deep trouble. Anyone who points to the higher Dow Average as some sort of indication that the nation is pulling out of the recession - President Obama included - is either daft or dishonest.
Nick Nyhart, president of Public Campaign, said:
The 10,000 level is a quick-and-easy measure of success for those who want fast proof of an economic recovery. More important points to score are lowering the unemployment rate and Congress showing some backbone as it attempts to regulate the financial sector, resisting the full might of Wall Street’s big campaign contributors.
It's just another benchmark on this road to recovery, which I think is going to be long, but it helps build confidence from investors. Our biggest job here is to grow jobs, so with that confidence and investments, it's going to help with job creation. So, yes.
Michelle D. Bernard, president & CEO of the Independent Women's Forum, said:
No one deserves credit for the Dow Jones passing above 10,000, and any politician who tries to claim credit does so at his or her peril, since the Dow could head back down at any time. It is a positive sign to see investors willing to put their money into American corporations: they believe that better times are ahead and that there is fundamental value in American businesses.
Yet politicians should be very concerned about the state of the economy both today and in the future: our staggering unemployment and under-employment rate, the ballooning debt that will afflict citizens today and decades into the future, and the declining dollar which could undermine our economic well being, from deterring foreign investment to eroding the value of private savings.
Policymakers need to focus on changing these more important measures by encouraging job creation, eliminating the debt and rewarding sound economic growth. The path to prosperity lies with encouraging work and entrepreneurship – unfortunately too many of the current policies are moving us in the wrong direction. And unless we correct these fundamentals the DOW will likely start moving in the wrong direction again soon...
Glenn Reynolds, from Instapundit, said:
It's nice that the Dow has reached 10,000 again, at least compared to the alternative. But it's not much of an accomplishment, really. In constant dollars, today's 10,000 is equivalent to 7,537 ten years ago -- when the Dow first hit 10,000. In gold, today's 10,000 is worth 10 ounces of gold, while 1999's was worth 30. So an unadjusted 10,000 isn't all that impressive.
The real question is where we'll go from here. Policies of massive debt and profligate government spending have never done much to promote real, sustained economic growth, and there's certainly no reason to think that they'll do so this time.