Why the Dow Dropped 250 Points, or, the Only “Boom” is from the Economy Imploding


Not even the NYT can avoid reporting that on the last trading day in October, the Dow Jones dropped like it was pole-axed, completely erasing yesterday’s 2% gain, while other financial indexes posted a monthly loss for the first time in 7 months.  Consumers still seem skittish despite news the Economy grew by 3.5% in the 3rd quarter. How can we grow like that and still have major issues with the Economy?

The Times reported the drop in Consumer spending was “tied to the end of the government’s cash-for-clunkers program, which gave car buyers thousands of dollars in vouchers for the purchase of new vehicles.” I would add to that the end of the Government’s program to give money to home buyers.  I call it cash-for-condos.

It’s hard not to note this is what Administration critics predicted.  Stimulus plans costing taxpayer billions have not produced a recovery.  There are only blips here and there as people take advantage of “free government money” (read “tax dollars taken from someone else and given to them”, remember Joe the Plumber?). After Cash for Clunkers and Cash for Condos produced their false positives the Economy retreated to a more accurate picture of consumer confidence.

The Times also noted “The drops were led by stocks in banks and financial firms …” Yet just just a month ago this Economic sector was posting record profits. The Times failed to remind readers what the Government did in that sector. President Obama told some in the financial sector they could no longer pay their employees as they saw fit and called for a maximum wage when it comes to CEOs. Administration members ominously said they hoped the rest of the industry would voluntarily comply with the new wage structure.

Investors took one look at the President’s plan and bolted with their cash.  Investors put cash in firms headed by those making millions seeking a good ROI from the plans and minds worth that sort of money.  Investors rightly understand their return is jeopardized in the hands and minds of lesser corporate leaders.  People who understand Economics told the President this would happen. They were ignored and, for their trouble, they were pilloried as racists.

The Times reports the most important facts in two separate paragraphs.  They note “The revival of the consumer sector is considered paramount in turning the United States economy around, since purchases by consumers make up about two-thirds of the nation’s spending” shortly after revealing “Consumer spending in September dropped by the largest amount in nine months …”  When the false positives of Cash for Clunkers and Cash for Condos are stripped away, consumer spending is getting worse, not better. What’s more, the rate of decline is escalating.  After 9 months of Stimulus, consumer spending had its worst month in September.

The only question now is how long the administration will pimp failed New Deal era policies to solve the economic problems of another century.  Perhaps if Barack Obama took time from date nights, golf games, begging for the Olympics and disrespecting Constitution and Liberty loving Americans to pay serious attention to the Economy he’d realize the only “economic boom” he’s likely to experience will come from the Economy imploding on his watch.

Cross posted from Blue Collar Muse



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35 Comments Leave a comment

I think most of us who have a firm grip on reality

janis (Diary) Friday, October 30th at 8:33PM EST (link)

knew that the blip was a false indicator of a turnaround in the economy. And most of us think it will get worse, probably a lot worse. So the question I have is this, “Does Obama even care that all of this is not working?”

Because I don’t really think he does. I think it’s deliberate. And if not deliberate, that’s almost worse. Because that means that our country is being governed by the most economically illiterate bunch in the nation’s history. Your opinion?

The good news, janis

Xasteius (Diary) Friday, October 30th at 9:52PM EST (link)

Obama will own the next recession.

No more blaming Bush. It’s Obama’s economy.

Don’t leave the party, hijack it back!

The only poll that counts is the one at the ballot box.

I don’t want to be Reagan. I want to be a Chance/Soros hybrid.

They will be blaming Bush for years.

Third Street (Diary) Saturday, October 31st at 1:02AM EST (link)

But let ‘em. Nobody’s going to be buying it in ’10 or ’12.

“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” –Wilkins Micawber, “David Copperfield”

The stock market rise on Thurs was due to Obama

6eorge Jetson (Diary) Saturday, October 31st at 1:04AM EST (link)

The fall today was Bush’s fault.

 
 
 

Janis, I agree 100% ...

Blue_Collar_Muse (Diary) Friday, October 30th at 11:27PM EST (link)

I almost said so in the body of the diary but wanted to try and stay more neutral/factual.

But I have long believed the Left is too smart for them not to know exactly what their plans are doing to the country and the economy.

That makes them not only complicit in the destruction of the country (and beyond) but the architects of that destruction. Somewhere recently I read the sentiment that the author felt we were living in a novel – “Atlas Shrugged” to be precise – and I find no reason to disagree with that sentiment.

The Moochers are busily undermining everything for their own benefit and power and expect the Producers to bail them out time after time. Only there isn’t a Galt’s Gulch for anyone to escape to. There’s just then end unless we are able to stop them.

Blue Collar Muse

Smaller Government! Lower Taxes! Stronger Defense! More Liberty! Complete Transparency!

Then that makes them evil. There is no other

janis (Diary) Friday, October 30th at 11:36PM EST (link)

word for it. To deliberately ruin the lives and well-being of hundreds of millions of people for their own gain is the very definition of evil. But there is something they do not grasp, isn’t there?

There will be no more Producers left to bail them out when the country’s economy lies in ruins if they get their way. So we must stop them. There is no other choice. Thank you for all you have been doing to promote activism, BCM. I know it’s probably been a huge undertaking when you have a family to take care of and support.

 

investors remain on strike - yes, existing businesses are getting more efficient thru

Mike gamecock DeVine (Diary) Saturday, October 31st at 8:38AM EST (link)

creative destruction and some inventories are being filled, but there is nowhere to go now but flat or down given govt policies that demonize the profitable.

Mike DeVine’s Examiner.com, Charlotte Observer and The Minority Report columns
“One man with courage makes a majority.” – Andrew Jackson

Not only that GC, but if you parse the

eburke (Diary) Saturday, October 31st at 12:43PM EST (link)

‘above expected earnings’ press release which accompanies each ‘earnings surprise’ which is ‘driving the market’, you will note that almost without exception you will find the phrase ‘while sales fell below forecast, earnings were better than expected due to cost cutting measures.’

Since the highest, single cost for virtually any company or industry is labor, translated into English that means ‘we made a higher profit than expected because we laid off so many employees.’

I’ve been in the financial realm of business long enough to know that you can’t ‘cut’ your way out of a slump. Sooner or later you have to have top line sales to drive the bottom line.

It ain’t happenin’ and if it doesn’t, the markets *very* pricey P/E ratio now to trailing earnings is about to get even pricier.

“All that need be done for evil to triumph is for good men to do nothing.”

Unified Patriots

 
 
 
 

If allowed, the Donks will make all of the same mistakes FDR did.

Vegas_Rick (Diary) Friday, October 30th at 9:11PM EST (link)

They’ll just keep spending good taxpayer money after bad.

3.5% GDP growth? That means we added about 112 billion dollars to the economy last quater.

Yet the government spent almost 175 billion in porkulus money. Take out porkulus, and how much did GDP “grow”?

“God is great, beer is good and people are crazy.”- Billy Currington

“Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘press on’ has solved and always will solve the problems of the human race.” Calvin Coolidge.

give them a little more credit for sophistication Rick

kyle8 (Diary) Friday, October 30th at 9:47PM EST (link)

I am sure that they have a whole lot of new and improved ways to screw up now.

“Nothing works like freedom, Nothing succeeds like liberty”
Kyle

 

Not exactly the same as in 1930: (for) now we have the Internet and

Xasteius (Diary) Friday, October 30th at 9:56PM EST (link)

the ability to organize effectively. And we won’t go down without making a lot of noise.

Don’t leave the party, hijack it back!

The only poll that counts is the one at the ballot box.

I don’t want to be Reagan. I want to be a Chance/Soros hybrid.

 

They seem intent on making all the mistakes of Wilson, Hoover, FDR, Nixon, Carter and

Mike gamecock DeVine (Diary) Saturday, October 31st at 8:39AM EST (link)

make some new ones

Mike DeVine’s Examiner.com, Charlotte Observer and The Minority Report columns
“One man with courage makes a majority.” – Andrew Jackson

 
 

The War On Business Is Deliberate: The "Pay Czar" Is An Obvious First Step

Ausonius (Diary) Friday, October 30th at 10:26PM EST (link)

Fairness! The whole ideology of BIG BRObama is based on his obsessive mania for fairness.

Profits are not allowed: profits are unfair, because they mean somebody was cheated. Because we all know that businessmen are really just crooks!

Recall all the “advice” to college graduates NOT to work for real businesses, but to go to NON-profit foundations, or to start NON-profit companies. Fairness in society demands only breaking even.

Only when the government controls as much of the economy as possible can things finally become leveled: no rich people, only moderately poor people in BIG BRObama’s Paradise of Fairness.

The deliberate hyper-inflation of the currency is another step to teach a lesson to successful investors and people with large bank accounts: the only solution will be a new type of dollar to replace the hyper-inflated ones, traded at e.g. 1,000 to one.

So rich people will have their accounts cut down to size with MAObama Dollars: and to be fair, expect “seeding accounts” to be handed out to “hard-working Americans” as part of the “currency overhaul” program, all stemming from the dollar crisis which, undoubtedly, will be shown to be the fault of W. Bush! :)

Ausonius: 310-395 A.D. Teacher, Poet, Consul, General, Farmer.

Personal Tutor to the future St. Paulinus of Nola and to young Gratian, heir to the throne during the turbulent final years of the Western Roman Empire. When his former student Gratian was assassinated, Ausonius threw up his hands and retired to his farm in Gaul. Rome was captured by barbarians 14 years after his death.

Cato@rock.com

You are correct

izoneguy (Diary) Friday, October 30th at 11:43PM EST (link)

That is why I ROTFLMAO when people ask “where are the jobs”?

Of course conservatives ask this question because they know the answer. Obama could giving a flying fart about “creating jobs”.
The worse it gets the more he has everyone over a barrel.

The smart money is gone. It won’t return until Obama is gone and then it won’t all come back. Why would it? Take the money and go invest in communist China – better payback then the former “United States” – the statists are in a war and want to destroy capitalism. Where the hell they will get the money to finance unicorn rainbows is beyond me. I figure once they control everything then they will start drilling for oil and keep it to fund the new socialist army.

The point cannot be made often enough: Modern liberalism, as embodied in the Obama presidency, is the defender of the status quo. And the status quo is a road to economic ruin. Political forces cannot redistribute the wealth that the economic system does not produce.

 

Pay czars were the 23rd step - the first steps were made by the 2007-8 congress, all of which Obama voted for

Mike gamecock DeVine (Diary) Saturday, October 31st at 8:41AM EST (link)

esp including ending the Bush tax cuts and signaling no tax cuts in the future, hence, investors went on strike and remain there.

Mike DeVine’s Examiner.com, Charlotte Observer and The Minority Report columns
“One man with courage makes a majority.” – Andrew Jackson

Agreed: The "First Step"...

Ausonius (Diary) Saturday, October 31st at 9:04AM EST (link)

of the Pay Czar and the War On Business has been prepared by typically hostile-to-growth Dem attitudes in previous months.

What has distressed me particularly is the class warfare aspect of the War On Business, and how it – in part at least – successfully sold the American people on BIG BRObama.

I am a Catholic teacher in various subjects, and therefore not wealthy at all, and have never been interested in becoming so.

But I am also a conservative who knows that capitalism is necessary for a free society, that people have a right to become wealthy, that capitalism works most of the time, and that it fails when governments interfere, or when the people at the bottom become resentful of those at the top or in the middle.

Rather than seeing successful people as models for their aspirations, which used to be a common attitude in AMerica, the lower levels are seeing them as criminals, whose evil deeds and oppression are the reason why people in the lower classes are unsuccessful in life.

And why do they have this opinion? Has this idea been pushed by somebody?

To be sure, the Bernie Madoff’s do not help to counter the impression of corruption at the top. But such people are the exception: and he is now in an orange jumpsuit!

That lesson would seem to counter the class-warfare agitprop! :)

Ausonius: 310-395 A.D. Teacher, Poet, Consul, General, Farmer.

Personal Tutor to the future St. Paulinus of Nola and to young Gratian, heir to the throne during the turbulent final years of the Western Roman Empire. When his former student Gratian was assassinated, Ausonius threw up his hands and retired to his farm in Gaul. Rome was captured by barbarians 14 years after his death.

Cato@rock.com

amen Professor, and I was just exorcising against one of my pet peeves, which is a tendency for republicans to describe everything dems do as the

Mike gamecock DeVine (Diary) Saturday, October 31st at 10:06AM EST (link)

“first step” or “slippery slope” towards socialism, when the first steps were taken under Wilson! And I think by using these phrases, we in some ways wipe the slate clean for them, which is why I have a regular column topic that

the slope done slipped!

http://www.examiner.com/x-1597-Atlanta-Law–Politics-Examiner~y2009m10d25-Obamas-Pay-Czar-proves-Pitchfork-Thuggery-slope-done-slipped

Another pet peeve of this rooster is when things are revealed abour Obama or dems or they say things, the import of which is so obvious that it amounts to an admission againts interest and all we manage to say is the

it raises questions!

raises questions my ass

we have the answers about the dem party, and on Halloween, it would be nice of we could drive a stake thru what is left of that blood-sucking vampire’s heart.

Mike DeVine’s Examiner.com, Charlotte Observer and The Minority Report columns
“One man with courage makes a majority.” – Andrew Jackson

Mike this started earlier during under Teddy Roosevelt

Richard Mullins (Diary) Saturday, October 31st at 10:24AM EST (link)

and Woodrow Wilson made it worse. During TR time, the Iron Grip of Progressive Actions started and President Wilson continued that during his time. I hope we don’t forget that. We’re locked so tight in Progressive ideas that we almost can’t get out of it.

BTW, 2007-08 in DC was really Zomieland because the one minded thought was infectious to every politician there.

Richard Phillip Mullins BlogThe Squash Satire SiteNews on Happy Jet Airlines
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Joe Biden is like a Decrepit Park owner with a Meth lab that happens to not only be a dealer but a user.

Let’s Bankrupt the Democratic paty. Make spend all the money to defend thier candidates.

The Dominoes Of History

Ausonius (Diary) Saturday, October 31st at 10:48AM EST (link)

You and Mr. Devine are both right of course: and you can keep asking, Where did the turn-of-the-century Progressives and T.R. derive (at least some of ) their ideas?

And you can trace it back to the 19th century Utopian philosophers (Marx, Saint-Simon, etc.), back through the Levelers of the English Civil Wars of the 1600′s, all the way to the Gracchan Revolution of the Roman Republic, and then to Ancient Athens and Plato’s Utopian ideas, etc.

Ultimately you end up with the answer lying in psychology, in the quirk of human behavior for security, and to protect that security, for predicting the future, and then wanting to predict the future through controlling all aspects of life to prevent any bad thing from ever happening.

Freedom, therefore, because it is unpredictable and leads to inequality, is the enemy of security. In the end you can say that the modern-day liberal is the one who trembles before the adventure of life and its unknowns.

The conservative revels and marvels and delights in the surprises Life brings, whether good or bad! The conservative enjoys the adventure in conquering adversity and meditates with sometimes rueful happiness on the mystery of it all.

Ausonius: 310-395 A.D. Teacher, Poet, Consul, General, Farmer.

Personal Tutor to the future St. Paulinus of Nola and to young Gratian, heir to the throne during the turbulent final years of the Western Roman Empire. When his former student Gratian was assassinated, Ausonius threw up his hands and retired to his farm in Gaul. Rome was captured by barbarians 14 years after his death.

Cato@rock.com

thx and amen - nt

Mike gamecock DeVine (Diary) Saturday, October 31st at 12:29PM EST (link)

Mike DeVine’s Examiner.com, Charlotte Observer and The Minority Report columns
“One man with courage makes a majority.” – Andrew Jackson

 
 

agreed - nt

Mike gamecock DeVine (Diary) Saturday, October 31st at 12:29PM EST (link)

Mike DeVine’s Examiner.com, Charlotte Observer and The Minority Report columns
“One man with courage makes a majority.” – Andrew Jackson

 
 
 
 
 
 

I am not buying this 3.5% economic growth garbage

Dave Friday, October 30th at 11:14PM EST (link)

I expect it will be revised downward at the end of next month.

What troubles me is that so many Americans still believe that these people are actually trying to “improve” this economy, when nothing they have done has ever caused growth anywhere but the public sector, and that goes all the way back to the beginning of recorded history.

Obama intends to rapidly dismantle our private sector economy, and I believe he is much closer to succeeding than many people realize, or if they do, don’t want to think about it.

Sad what government “education” has done to our republic.

-Dave

Our elected representatives have failed us.

3.5% does two things.

acat (Diary) Friday, October 30th at 11:39PM EST (link)

First, it gives an idea of the scale of the government injection.

Second, it officially ends the recession. Even if revised downward, the recession that started under Bush 2.0 is over.

The second point is key. If the 4th quarter sucketh and it’s a bleak retail Christmas, then we get the start of the Obama recession – and we’re going to have our work cut out for us making sure the media spin it that way….

Mew

——
self-portrait

“All that is gold does not glitter, not all those who wander are lost”. –Tolkein

I don't believe any figures the government puts out

izoneguy (Diary) Saturday, October 31st at 12:22AM EST (link)

They could have said 6.5% or 4% or whatever they want to lie about.

I do believe edmunds.com when they say that each “clunker sale” cost the taxpayer (the chinese government) $24,000…..

Same reason the government spends $600 for a $30 hammer.

The point cannot be made often enough: Modern liberalism, as embodied in the Obama presidency, is the defender of the status quo. And the status quo is a road to economic ruin. Political forces cannot redistribute the wealth that the economic system does not produce.

 

How does this officially end the recession?

bk (Diary) Saturday, October 31st at 8:00AM EST (link)

Isn’t the definition two consecutive quarters of growth? The economy shrank 0.7% in the second quarter. Obama artificially (at least in part) got the third quarter numbers better, but it would take pulling a rabbit out of a hat in the fourth quarter to end the recession.

3.5% growth is so inflated

redpens (Diary) Saturday, October 31st at 8:09AM EST (link)

They’re probably thinking cash for idiots next. Oh wait, they did that
in Detroit a couple weeks ago. I heard that on Mike Church’s show,
that idiot who got Obama money from his stash. That could give them increased consumer spending.

 

Oil: The Next "Useful" Crisis

Ausonius (Diary) Saturday, October 31st at 8:14AM EST (link)

Oil prices have been rising recently, and the dollar’s declining value – thanks to BIG BObama’s deliberately destructive policies – obviously will buy less and less.

His solution will NOT be to expand exploration, of course: the crisis will be used to slap more controls over various sectors of the economy. Postulating price controls or even rationing or driving restrictions in favor of mass transit, even postulating a partial Federal take-over of refineries as part of a phony national emergency, would not be too fantastic.

And if the Israelis do indeed attack Iran before the end of the year…watch out!

Ausonius: 310-395 A.D. Teacher, Poet, Consul, General, Farmer.

Personal Tutor to the future St. Paulinus of Nola and to young Gratian, heir to the throne during the turbulent final years of the Western Roman Empire. When his former student Gratian was assassinated, Ausonius threw up his hands and retired to his farm in Gaul. Rome was captured by barbarians 14 years after his death.

Cato@rock.com

 
 
 
 

In response to some of the comments above

avgamerican (Diary) Saturday, October 31st at 3:43AM EST (link)

The economic policies of the Obama Administration are deliberate. They are destructive by design. How else could one interpret spending another trillion dollars on top of an already trillion dollar deficit? That’s unintelligible. They are deliberatley moving to absolute socialism while devaluing the US dollar at the same time. There are so many mixed up and down economic reports out right now. It’s pure schizophrenia. It is going to get worse. Much worse. Wait till the commercial real estate and ARM lending crisis hit.

avgamerican

Karina (Diary) Saturday, October 31st at 6:52AM EST (link)

Did you ever think two or even one year ago you’d be writing that paragraph in reference to your own country? Me neither! Yet here we are facing the new reality while so many others are still asleep. They remind me of some of the people in “Atlas Shrugged” who keep doing what they’re doing without question because they always have; with no desire to change or question authority. Scary. My best frind is one of these. She absolutely will not listen or look at anything going on. It’s like she’s deliberately putting her head in the sand and refusing everything outside her day to day life.

I Know Several Ostriches Also

Ausonius (Diary) Saturday, October 31st at 7:48AM EST (link)

They shut down, overwhelmed by the immensity of MAObama’s audacious revolution, the deliberate destruction of the American economy, and possibly even the American dream.

History has shown one simple rule: Revolutions only need well-organized minorities to be successful.

The majority will be pulled along, whether they know it or not, whether they like it or not. We will see how far America will be dragged downward – we have already been dragged downward – and how far upward we can go in the future.

Ausonius: 310-395 A.D. Teacher, Poet, Consul, General, Farmer.

Personal Tutor to the future St. Paulinus of Nola and to young Gratian, heir to the throne during the turbulent final years of the Western Roman Empire. When his former student Gratian was assassinated, Ausonius threw up his hands and retired to his farm in Gaul. Rome was captured by barbarians 14 years after his death.

Cato@rock.com

 
 

That's why Obama is 100x worse than Carter

bk (Diary) Saturday, October 31st at 8:01AM EST (link)

Carter was well-meaning but incompetent. Obama and his band of merry socialists know exactly what they are doing.

 
 

Empty Stockings This Christmas

revivefederalism (Diary) Saturday, October 31st at 12:26PM EST (link)

I really doubt that shoppers are going to be throwing caution to the wind this season. How many grandparents with 201(k) accounts are going to be spoiling their grandchildren? I’ll bet that a lot of young adults who wish they were living on their own and working are living with their parents and still eating them out of house and home. I foresee some deep discounts at retailers in January if they’ve been stocking their shelves assuming we’d be undergoing a meaningful recovery.

 

You left out the other reason the markets tanked

Beaglescout (Diary) Saturday, October 31st at 3:25PM EST (link)

Pelosi document dropped 1990 pages of healthcare highjack economic atom bomb on the economy.

“A nation which can prefer disgrace to danger is prepared for a master, and deserves one.”

–Alexander Hamilton

Dadgummit! I just KNEW there was something else ...

Blue_Collar_Muse (Diary) Saturday, October 31st at 3:51PM EST (link)

n/t

Blue Collar Muse

Smaller Government! Lower Taxes! Stronger Defense! More Liberty! Complete Transparency!

 
 

In Many Ways, This False Recovery Hurts Obama Much More

DavidSage (Diary) Sunday, November 1st at 12:44PM EST (link)

If the American people think we are recovering and stabilizing, and the economy goes south again, it’s now all on Obama.

Had we truly hit rock bottom early on, the damage could have been laid on Bush, and Obama could taken credit for the “V” shaped recovery. Instead, all of these attempts to reinflate the credit bubble will eventually burst on Obama’s watch.