3 Responses

1. alternative explanation, Wall Street prefers a liberal, but member of eastern establishment, Democrat, especially during a recession.

   So much for those who see an Obama election as a doomsday scencario (unless you are a right-wing Israeli or an unborn baby with very selfish parents).

2. shtussim the market will “have the biggest loss” b/f u know it. the market has been very irrational lately

3. Please read the following article, This writer has been right on every article he has ever written.

   HERE’S WHAT YOU AND THE NEXT PRESIDENT WILL FACE

   By JOHN CRUDELE

   November 4, 2008 —
   THE stock market was supposed to be higher this year; then down in 2009.

   That, at least, is what should have happened based on historical precedents.

   The party that controls the White House – in this case the Republicans – usually does all it can to keep the economy robust during a presidential election year, and the financial bliss makes the stock market behave itself.

   Next year – when there’s no need to make the voters feel good – is when the economy and the market is supposed take a hit.

   Consider these facts from The Stock Traders Almanac: In the last two years of all presidential administrations since 1833, the stock market has gained 752 percent, compared with just 243 percent in the first two years of a new president’s term. And since 1953, no matter which party wins, the market loses its energy in the first year of a new administration.

   During the past 5½ decades, there have been eight up years and six down years immediately after a new president takes office, for an average gain of just 5.6 percent.

   The market, however, does a lot better when the Democrats wrest the White House from the Republicans, instead of the other way around.

   What does this all mean for next year? Absolutely nothin’! As you are already well aware, the stock market has done very poorly this year. Even with a stunningly large and inexplicable gain in stocks late in October, when professional money managers strutted their stuff for the end of the quarter, equities are still down around 34 percent for the year.

   Since I was one of the very few to predict a bad market in 2008, despite bucking history in doing so, I’ll be bold, stupid and arrogant enough to tell you what I think President Barack Obama or President John McCain will have to deal with next year.

   Keep in mind that it almost never fails that stocks rally at the end of the year. The pros, especially in the late December, try their hardest to impress customers and earn a bigger bonus.

   And with their performances so horrendous in 2008, these portfolio managers will be doubly intent on making stock prices go higher between tomorrow and Jan. 1.

   And they might succeed, unless the fundamentals of crisis economics go against them. The failure of more banks, horrible earnings or some other unexpected new financial meltdown could throw the pros off their market-rigging game.

   But in 2009, you – and the new president – should be more worried about bonds than stocks.

   The Bush administration, of course, did all it could to help the stock market and the economy this year. It just didn’t work.

   In fact, with an assist from Federal Reserve Chairman Ben Bernanke, Washington took such unprecedented steps to rapidly pump liquidity into the economy that nobody really had the time to understand the full consequences.

   Here’s what I’m afraid will happen:

   Investors will eventually start focusing on all of Washington’s bailout and realize that they amount to unfathomable amounts of money.

   The US Treasury will have to raise the money for these bailouts somehow. That’s the simple economic fact of the matter. Yesterday Treasury said it would borrow $550 billion just for this quarter.

   And once Washington tries to raise the $1 trillion or more, investors will start demanding higher interest rates. And they will get them.

   Ultimately, this will drag all rates higher even if the Fed is still publicly lobbying for lower borrowing costs.

   The alternate scenario is even more troubling.

   What if the Treasury never seeks to raise the $1 trillion in financial rescue money that has been promised?

   Investors will then be even more worried, fearing that all the as sets supposedly “bought” from failing institutions are simply being monetized – that is, turned into money and made to disappear into the nation’s monetary supply.

   In either case, interest rates will climb faster than they already have; borrowing will become harder and the economy will suffer.

   Then we can get back to worrying about the stock market.

   So, let me get this straight.

   Hank Paulson gave banks hundreds of billions in government money (our money), but he forgot to tell them that this dough must be lent out and not just hoarded. Or used for acquisitions. Or dividends.

   He forgot to make this part of the deal for the capital! How much of a knucklehead is this guy!?

   Remember, Paulson was the guy who came up with the first ridiculous idea that the government should bail out Wall Street from its bad investments because the benefits would trickle down to the economy.

   What a fool!

   I said in this column during the first plan that the $700 billion rescue needed to go directly to the banks and that they should be ordered to make loans.

   But, really, Washington couldn’t figure that out itself.

   I’m still wondering what Paulson is up to.

   A year or two from now we’ll see him squirming in his chair in front of Congress just like ex-Fed Chief Alan Greenspan was recently.

   And Congress will ask all the questions then that it should be asking now.