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Thursday, November 06, 2008

It’s not Obama’s fault

An item from the I-wouldn’t-have-believed-it-if-I-hadn’t-seen-it-myself department:

How did the media report the 486-point crash of the Dow-Jones industrial average on Wednesday, the day after Barack Obama was elected president?

According to most media reports, the crash had little or nothing to do with a new president who is pushing redistributive wealth, higher taxation and other anti-business policies. On WMAQ-TV (an NBC station in Chicago on Channel 5) the words “Obama” or “election” weren’t mentioned in the brief item about the huge sell-off. It was as if the election hadn’t occurred, or that it was unthinkable that investors might have taken Obama’s election negatively.

The New York Times’ lead paragraph in its story reporting the huge Dow loss began: “Stocks erased all their gains from Tuesday’s rally—the biggest on a presidential Election Day in 24 years—as investors banked their profits and dealt with another round of bleak economic news.”

[Emphasis added] Not a mention of the election in the story until the end when it noted:
For those curious about the connection between stock markets and presidential elections, Wednesday’s declines fit in with historical precedent. Since 1888, on average, stocks fell 0.5 percent from Monday to Wednesday of a presidential election week when the Democrats took the White House, according to Jeremy J. Siegel, a professor at the Wharton School. (A Republican victory brought an average return of 0.7 percent.) This week, stocks fell about 1.5 percent over the same period.

Over the full four-year term, stocks have historically fared better under Democratic administrations.

“For those curious…” How condescending, as if the writer was stooping to explain it for those of us who are too stupid or audacious enough to think that Obama’s election might have at least a smidgen of something to do with the disastrous day. Notice that there is no attribution in the last sentence, which suggests that the business world prefers to have Democrats mucking up the free markets. If, indeed, stocks have performed better under Democrats, I anxiously await from the writer an explanation for the causal connection.

Of course, there was no mention in the story that, according to the Wall Street Journal story, Wednesday’s losses were the Dow’s “worst percentage decline ever on the day after a presidential election, surpassing the 4.5 percent drop on he day after Franklin Roosevelt’s first election in 1932.” No, mentioning that would have thrown dirt on Obama’s victory.

The Journal story rightly explored the other reasons for the massive decline (“renewed economic worries, coming on top of an unsustainable series of market gains,” as well as expectations for a bad jobless report on Friday), but it also gave attention to the possible Obama factor:
“Some commentators concluded that Wall Street was welcoming Barack Obama with a Bronx cheer. While polls had favored Mr. Obama for weeks, the reality of a new president and uncertainty about how, and how successfully, he will handle the financial troubles may have contributed to the losses, which left the Dow down 5.1 percent at 9130.27.”
I haven’t done a systematic survey of newspaper financial reports on Wednesday’s market drop, but I’m surprised at how quickly the media that I saw in my regular watching and reading so quickly discounted any relationship between the market and Obama’s election—except like the New York Times, which was quick to credit Obama for the previous days big increase, but dismissed any notion that Obama might have something to do with the loss.

It’s what we can expect for four more years.

(For one view from the business community about the impact of Obama’s policies, read the next post.)

1 comment:

Anonymous said...

We have always been told that one person doesn't have that much control of an economy. I guess the caveat is as long as capitalism is allowed to do it's thing.