So I decided to fix it and post it here.
The thing on the internet that was wrong is this:
I particularly liked the part where, in February, the stimulus fails, despite the majority of it not kicking in until April. Good to know. I just love finding things like this, because they come from a fantasy world that is somehow bleeding into our own.
In this fantasy world, the economy would be just fine if only Barack Obama had never run for office. In this fantasy world, the foreknowledge of Barack Obama’s eventual presidency apparently caused then-Senator Phil Gramm (R-TX) to set to work repealing the regulatory framework that prevented this particular financial collapse. In this fantasy world, it’s Nancy Pelosi’s fault too, because she became Speaker of the House in 2006, but failed to fix the last 20 years of Republican legislation (not pictured here).
So, I decided to fix it!
As you can see, I highlighted where President Obama took office, and the discrepancy between the claim of failed stimulus and where the bulk of the stimulus began to take effect. I also, for reference, included a bright green line to indicate the latest market peak’s relative position to the previous market values. Then I divided this up correctly into “The Bush Recession”—although as I noted, it’s more a long-term Republican business-policy problem—and “The Obama Recession ?” I found that question mark because I felt it was necessary considering the lack of a general downward-direction of the market during this period. I mean, hell. If you actually look down at that lowest point on the chart, in early March, that’s the day that President Obama suggested everyone should buy stock, since it was so cheap now.
Turns out, he’s pretty smart.
amoco
baleon
Phillip
Chadwick
London Burt
MHook
ottomadenedamotto
Christa
Matt
VisualHierarchy
Andrew D.
Around Teh Table 
#1 by TD on May 21, 2009 - 11:46 PM
Becoming clear he would be elected (Early September): Just shy of Dow 12,000
Elected: Dow about 9600
Today: Dow under 8300
He was certainly smart enough to convince you he wasn’t a communist. Or did you not require convincing?
#2 by Chadwick on May 22, 2009 - 7:59 AM
Wow. I had no idea that so many people defaulted on their mortgages—causing major banks that had engaged in questionable lending and insuring that likely would have been regulated had not Phil Gramm and others not fought so hard to remove the regulations—because they thought Barack Obama was going to be elected.
It’s amazing that so many people would conspire to destabilize the entire economy like that.
Of course, that 9600 number is on the peak of one of the “bounces” standard with a sudden plummeting of the market, and it was significantly lower both before and after. But since you’re interested in living in the fantasy world…It’s terrible how Barack Obama was personally responsible for all the problems before even holding office!
Seriously. The economy has been recovering in a number of indicators lately, the markets have been rising pretty constantly since he said everyone should buy stocks, and the number of jobless claims is starting to fall it seems.
I don’t think he had to do any convincing, since you seem to have a fairly bizarre definition of “communist”. I mean, President Obama is taking at least as much heat for his policies from the left-wing of the Democratic Party as he is from the remains of the Republicans.
#3 by TD on May 22, 2009 - 11:39 AM
Central government seizing the means of production, using the threat of central government power at the heads of the legitimate bond-holders, and nationalizing the nation’s major banks seems like a rather non-bizarre definition of communism. Unless you don’t consider the likes of Stalin, Mao, Mihn, Pot, Tito, Chavez, or Castro and his personal butcher Guevara not communists. The only “heat” he’s taking from the left of the Democratic Party (interesting how you chose this group’s displeasure as a non-sanction by communists) is over human rights. Their error is their ignorance of history. Non of the list above would have objected.
Phil Graham certainly bears responsibility for the ridiculous override of Glass-Steagall but the mortgage crisis itself is largely a result of the changes to the Community Reinvestment Act in which the central government forced banks under the penalty of federal law to give home loans to those that couldn’t afford to repay them, offering the backing of Fannie Mae – which crumbled as former ranking Democrat of the House Banking Committee and current Chairman of the House Financial Services Committee Barney Frank continued to thwart all efforts toward its regulation. The results of federal policies such as “Lack of credit history should not be seen as a negative factor” and requiring welfare and unemployment payments to be used in qualification for a loan under penalty of federal law were predictable and are ours to pay for. How come it was Fannie CEO Rob Moses that Franks was having anal sex with when the major changes to the CRA were made and yet it is the tax-payer that will take it up the ass?
And finally, do you understand how the market works? It doesn’t simply respond to a manufactured 24-hour news cycle. The market responds to what it expects the business climate to be 6 to 9 months out. As it was became likely that a dedicated communist would soon be elected President of the nation with the globe’s most critical economy, hundreds of billions of dollars were pulled out of the market to avoid the eventual fate of Chrysler’s bond holders. This is not the fault of the current executive. The man has been a communist his entire life, the media failed to be rigorous, and the voters chose. The market also chose.
#4 by Chadwick on May 22, 2009 - 12:03 PM
Actually, no. None of the people listed were communists. By definition, communism doesn’t even have a government. These people tend to much better fit the definition of fascism or some forms of socialism. So yes, your definition is bizarre, as it requires communism to have something that, by definition, it does not.
Likewise, Barack Obama has taken stakes in the banks as part of a set of bailouts when there was significant pressure on him to fully nationalize them, especially by a number of Republican Senators. That doesn’t seem particularly communistic to me, either.
Also, to say that the Community Reinvestment Act was “largely responsible” implies that you’re using a different definition of “largely” than I do, or you’re misinformed. A majority of the sub-prime loans weren’t handed out by Fannie Mae, Freddie Mac, or any bank that operated under the standards of the Community Reinvestment Act. In fact, only one of the top 25 subprime lenders were even subject to this law.
Moreover, the loans weren’t being forced by the government. They were being forced by greed, as those loans were being repackaged and resold as mortgage securities, and there was more and more demand to create more of these securities, and banks responded by cutting the requirements to hand out loans. Is it just a coincidence that we ran into this problem now, 30 years after the CRA was signed into law, when the defaulting loans have been made almost exclusively since 2000?
Also, I’m quite familiar with how markets work. I’m unclear, though, as to why that would force all these companies to fail and drop the market during the end of the previous administration. More importantly, if the “market” was dropping because it was scared of Obama, then why did so much of Wall Street support Barack Obama for President? Was it their goal to lose all their money?
#5 by TD on May 22, 2009 - 1:26 PM
Did a freshman economics professor tell you that communism was exclusive of a government? Whether the example be Stalin or Jim Jones, history is clear that centralized control is always the goal. It’s just not the sales pitch.
So it’s the current President that took those stakes? Not bad for a man who couldn’t pay his credit card bills and needed a crooked home deal from Rezko plus a crooked home loan from Countywide.
True, the majority of sub-prime loans were not handed out by Freddie – and I certainly didn’t type so. Banks under the threat of penalty of suit by the federal government were forced to change their guidelines with the promise that Freddie would purchase them (you know, repackaged mortgage securities) later if needed. Yes, the original CRA was enacted in 1977. Yet what I clearly referenced were the major changes made in May of 1995 and again in August of 2005. And greed is never forced. It arises at the nexus of lack of character and opportunity – opportunity created by Franks thwarting previous administration efforts to reign in Frank’s campaign donors Freddie and Fannie. This ranking Democrat of the House Banking Committee adamantly stated these entities were not facing any financial crisis and that administration’s warnings that – unless curbed – these mortgage monsters represented systematic risk to our financial system were exaggerated and charged the administration cared more about financial security than housing. His priorities were clearly the reverse.
Finally, if you are unclear why this would cause companies to fail you don’t understand the financial relationships between Freddie, Fannie, AIG, and Lehman – all major donors to Franks, all major donors to the current President, all recipients of huge bailout packages, and all currently under investigation by the FBI. When these failed, the credit market for all companies were hammered, causing many failures. Now, after witnessing the thuggery perpetrated on the private bondholders of Chrysler, the market is logically not excited about entertaining similar risk and certainly would not willingly financially support the current President. Have you not recently read of their shock and distress at what this man is doing? They mistook him for the type of thief that Franks is and not for the type of thief a communist is.
#6 by Chadwick on May 22, 2009 - 2:56 PM
No, I know that because that’s the definition of communism. Simply because someone has labeled themselves doesn’t make it so. If I called myself the queen of england, it wouldn’t be. Simply because the Russians called themselves communists, likewise does not make them communists by definition.
If you were to actually look at the backstory of this financial mess, the majority of these banks were not in fact forced to do anything. As I noted, many had nothing to do with those guidelines.
I’ve read about the “shock and distress” of the bond holders of Chrysler who caused the bankruptcy when they tried to force actions by Chrysler, then started threatening legal actions when people closer to the front of the line for the remains of Chrysler started getting their necessary shares of Chrysler.
Fannie and Freddie might be responsible if they had been the ones actually buying up these subprime mortgages. They bought up less than 20% of the total because so many were being produced. These subprimes were being sold off to various private companies—not Fannie and Freddie.
Regardless, your argument is becoming a bit inconsistent. The market is currently “not excited”, because of Chrysler, yet is rising; but when the people on Wall Street wanted Obama, the market fell. So by those standards, it would even seem specifically that disliking Obama’s plans is good for the market.
#7 by Phillip on May 22, 2009 - 3:16 PM
Communism is a community in which everyone is treated equal with no distinction of classes, there is a common ownership, and being stateless (having no government). In true communism no one holds any more power or rank than any other person and as such there can be no government or state. I’ll agree with Chad here, what you’re thinking of is clearly not communism but socialism. The USSR has nowhere mentioned in the name communism but they do socialism.
“In fact, with new and lower-cost sources of funding available from the secondary market through securitization, and with advances in financial technology, subprime lending exploded in the late 1990s, reaching over $600 billion and 20% of all originations by 2005. More than half of subprime loans were made by independent mortgage companies not subject to comprehensive federal supervision; another 30 percent of such originations were made by affiliates of banks or thrifts, which are not subject to routine examination or supervision, and the remaining 20 percent were made by banks and thrifts. Although reasonable people can disagree about how to interpret the evidence, my own judgment is that the worst and most widespread abuses occurred in the
institutions with the least federal oversight.” So, 80% of these subprime loans were made with no supervision.
Click to access barr021308.pdf
Never mind the fact that you have people that qualified for prime rates but whom were put into the subprime category for higher interest rates and more profit. There was involved both packing subprime loans and flipping them. Again, motivated by greed. I should say here that I’m not saying that the CRA had nothing to do with it; I think people abusing the financial system had far more to do with it.
Now, this may be just nitpicking but Fannie Mae and Freddie Mac weren’t subject to bailouts. They were placed in conservatorship. And with Chrysler, the purpose of bankruptcy is to provide a fresh start. When Daimler purchased them they had quite some capital and their cars were selling fairly well. Daimler neglected them as did Cerberus. Now, seeing as how Cerberus owned Chrysler they had every opportunity to infuse more capital but they didn’t do so. I honestly don’t know why the market wouldn’t be excited. The government is providing Debtor-in-Possession lending, their liabilities are a fraction of what they were before, they’re getting engineering prowess from Fiat (which owns Fiat, Alfa Romeo, Ferrari, Maserati, Iveco, Lancia and Abarth). Now, as for these bond holders. If they are not secured creditors, as my understanding entails they weren’t, they’ve no reason to expect anything as Chrysler’s liabilities far outweighed their assets.
This is what happens in capitalism, companies go out of business, people that provide capital lose out. If I could loan money to a company and make massive amounts of profit on it risk free, I’d do that. I can’t say I’m quite understanding your position; you argue against “communism” and capitalism in the same breath.
#8 by TD on May 22, 2009 - 3:17 PM
Rather than listening to your freshman econ professor, you should have studied your history. This path has always led to economic disaster and the point of a gun with communist academics claiming the failure is the result of the population not being submissive (sanction their own intellectual and physical death) enough to their fantasy of “pure Communism” while the central authority insists that success will be achieved with just a little more power…and a little more power.
#9 by Phillip on May 22, 2009 - 3:34 PM
I’m not sure of Chad, but I know that some of my econ courses were graduate level utilizing calculus in both micro and macro situations. Far more advanced then what they teach in entry level econ courses. Communism was never actually mentioned in those, though it was in most of my political science courses, including the one on the history of the USSR.
I’d press you to delineate why China’s economy is doing so well, being a “communist” state. Further, Russia, after the collapse of the USSR, had economic problems. Now they have more cash sitting in banks than the US does.
All through history the people in power have wanted more power; power begets power. I’m personally a libertarian though I will agree that there are times when government needs to get involved. Without this “just a little more power” we wouldn’t have police, we wouldn’t even exist as a nation. When Hamilton made the US assume the states debts in fighting the Revolutionary War it was just a little more power. But it put down the foundation for what we are today with our credit and our spending.
#10 by Chadwick on May 22, 2009 - 4:06 PM
LOL. Funny, I don’t think my econ professors ever discussed communism. It was pretty much all about how free-market capitalism works—and doesn’t. Not sure what kind of econ classes you take, where they discuss comparative politics instead.
History is actually one of my favorite topics. And if by “this path”, you mean the one we’re currently on, then I’d suggest that you may want to read some things from actual historians, rather than political hacks. Stimulative spending, for example, has a fairly good track-record. It’s just not ideal for anything long-term.
You seem to be discussing, once again, how Stalin and the like claim to be communists, without citing how that makes them actually communist. As if Stalin was interested in any greater philosophical position aside from his own empowerment.
I suppose if you want to believe that Barack Obama is making some kind of power-grab by seizing all sectors of the economy, that’s your right to believe. But I don’t know what else we’ve got to discuss at that point. Frankly, I’m not sure it’s worth arguing with someone who wants to wave off the Republican part of the fault here to blame it wholly on a series of Democrats and Fannie and Freddie. Next thing we know, it’ll somehow be ACORN’s fault.
#11 by TD on May 22, 2009 - 4:43 PM
com⋅mu⋅nism
-noun
1. a theory or system of social organization based on the holding of all property in common, ACTUAL OWNERSHIP being ascribed to the community as a whole or to THE STATE.
2. (often initial capital letter ) a system of social organization in which all ECONOMIC and social activity is controlled by a TOTALITARIAN STATE dominated by a single and self-perpetuating POLITICAL PARTY.
3. (initial capital letter ) the principles and practices of the Communist party.
Oh, that Communism. The fleeing from these principles after decades of failure and starvation is why Russia and China are now prospering creatively and financially.
Economic study without the examination of world economics including the economics of Communism? Surely, you are kidding.
Actually I specifically blamed one Republican and one Democrat – unless you count the butt sex by former Fannie CEO Rob Moses who now sells pottery.
Stimulative spending does have a decent history. However, the CBO says only 23% (about 6% so far) of the $787B stimulus package will be spent in fiscal year 2009 and very little of it is stimulative in nature.
Of course if you give them a little more time and a little more power…
#12 by Chadwick on May 22, 2009 - 5:09 PM
And no, no discussion of communism. Because communism, for one, has no bearing on the real world, because it’s never been implemented. Pure Communism is like pure Libertarianism. They both rely on people to be significantly better than they actually are, and thus will never work in the real world. Economics discusses how markets function, and what effects various policies (price floors/ceilings, tariffs, subsidies, etc.). It also includes extensive modeling. Discussing historical foreign governments? No. Why would it? Economics barely touches on our own economy. It’s about the mechanics. If I want the history, I’ll take History and Political Science courses—which I did. If you have no experience with Economics, I’m sure there’s a community college nearby that offers courses.
And you’ve blamed one Democrat? So is it Barney Frank, or Barack Obama? Because you’ve suggested that both are responsible. Also, you admit that Phil Gramm was at least partly at fault, so should we then have voted for John McCain, with Phil Gramm as his economic advisor, and likely choice for head of the Treasury?
But you’re effectively ignoring many of the arguments now:
Why is it that a non-enthused market rises, while one that wanted Obama was falling?
What about the fact that the clear majority of the banks handing out subprime mortgages were not subject to any of the rules of the CRA?
Why are you so interested in anal sex?
#13 by Phillip on May 22, 2009 - 6:45 PM
If you had read into Russia you’d know that the vast majority of their wealth comes from the fall of the USSR wherein people were issued shares of the former governmental businesses. There was a lot of fraud surrounding these shares and some were acquired illegitimately. After Yeltsin left office, the government would begin nationalizing some businesses again, namely media. They also would do the same to their energies and thus, that’s how they’ve made people billionaires and who they’ve made the government flush with money. Nothing to do with starvation. I read some 15 books and papers on the Russian economy after the fall of the USSR to write a 25 page paper that the professor made a copy of to keep for himself. I do know a little bit about the Russian economy/history/state of affairs. I predicted a couple years before Putin left office what would happen. It was the exact same thing Yeltsin did, but I diverge from the topic.
Now, for China, they have cheap labor/cheap manufacturing. I will bet you that if globalization had been around in the form as present the USSR would have been successful had they produced goods that were sold outside. You know that Wal-Mart tells companies when told that they can’t produce the goods at the prices requested to go to China right? This cheap manufacturing is because they fail to have in place the environmental safeguards that are required here or in countries belonging to the EU. But no, I stand corrected. It’s obviously due to the Chinese dying of starvation.
Even your own definition of communism states that it’s political and not economic. I will say too that changing definition midstream is generally frowned upon. Communism is different than communism; I noticed that you started using Communism.
#14 by Christa on May 22, 2009 - 5:30 PM
Oh, oh, my turn!
Since you two seem to be holding up the adult end of the argument, I’m going to play the liberal talking head. But first, I will cite the Oxford English Dictionary. I cite my sources, unlike some *cough-TD-cough*.
Communism
1. A theory that advocates the abolition of private ownership, all property being vested in the community, and the organization of labour for the common benefit of all members; a system of social organization in which this theory is put into practice.
2. Freq. with capital initial.
a. A political doctrine or movement based on revolutionary Marxism, seeking the overthrow of capitalism through a proletarian revolution, the social ownership of the means of production, and the creation of a classless society.
b. A system of government in which all economic and social activity is controlled by the state acting through the medium of a single authoritarian political party, with the purported aim of realizing the doctrines of revolutionary Marxism. Cf. BOLSHEVISM n.
This system has been particularly associated with that established in the Soviet Union (1922-91) and countries considered to have come within its sphere of influence, and in the People’s Republic of China since 1949, though in the latter case a market-driven economic system has become increasingly dominant.
Oh shit, he’s not going to listen to my argument because labor was spelled with a u, and since I used it anyway, I’m clearly a communist. I don’t care I’m going to type up my thoughts anyway.
I did see state in there somewhere…
“A system of government in which all economic and social activity is controlled by the state acting through the medium of a single authoritarian political party, with the purported aim of realizing the doctrines of revolutionary Marxism.”
It’s the system and its the purported aim is be real communism. I think that makes it not really communism, but a bastard half breed. It’s got an under bite and two different colored eyes. So I guess Obama wants us to be a mutant, but not the X-Men. Although the X-Men did live in a compound and fight for the rights of the little guy. Wait, so Obama does want us to be X-Men!
But, if that’s true then he’s going to have to expose us to high levels of radiation or something. OMG! TD is right! We have to stop him! …then again…maybe nah.
In truth, all I can really say is that TD can string together sentences as well as I can most days after heavy drinking.
And on that topic of butt sex, didn’t you hear that’s like the cool way to pay your taxes, or buy your way into oil.
I can say, though, that TD beats out this crazy from the stumble comments from the page of the original chart.
From MinDoverX “It’s funny to watch the Bush haters squirm on this. They tried to blame Bush by saying “it happened under Bush”, yet while trying to discredit any successes by claiming it happened before Bush. Yet, the throw out the rule “it happened under ______ ” if it includes their own guy. Even worse, is they purposely ignore that when the “act” by Bush for finances started, the Congress that passed it (and Pelosi wrote the bill) was majority Democrats, and they are the ones at fault, equally if not solely. But, protect Jim Jones and pass the koolaid thinking is trying to protect all things Obama. The sham is the political prejudice that trumps the truth. That is the shame as well.”
I don’t even know what that means…
#15 by TD on May 22, 2009 - 5:45 PM
If you read the post, I specifically exempted the current president from blame. Clearly, the two I mentioned were Frank and Graham – the only other person referred to by name is Moses. And I certainly didn’t mention McCain or suggest anyone vote for him…as I’m sure you well know if you read the posts.
Markets rising? Did you read the initial post? 12,000, 9600, under 8300. Or were you busy typing the bit about jobless claims (more important to a government) falling rather than the unemployment rate (more important to the citizenry).
September: 6.2%
October: 6.6%
November: 6.8%
December: 7.2%
January: 7.8%
February: 8.1%
March: 8.5%
April: 8.9%
More to the point, I’m still not sure you really understand that the market prices the future and not the present of the 24-news cycle. This glaring blind spot is the core failing of your original post.
Anal sex? Barney Frank + Rob Moses + pottery. I will never be able to watch the movie “Ghost” again.
#16 by Chadwick on May 22, 2009 - 6:23 PM
I did read your initial (disingenuous) post. You’re either misreading me, or being intentionally obtuse, and I suspect the latter. Those three points are specifically chosen to illustrate a point you’re trying to make, which is visibly false when you take in the latter portion of the chart. Specifically (as I’ve mentioned a few times now), since that point in March when Barack Obama suggested we go out and buy stocks, the market has risen pretty consistently. So I guess that means the market is strongly looking forward to the rest of this presidency.
Meanwhile, regarding the jobless claims falling, I’m glad you can find the unemployment numbers, and show your superficial understanding of everything all over again. If you look deeper, the new unemployment claims have leveled off, and in the most recent month have begun to fall. That’s where you have to look for the turnaround. Unemployment being a trailing indicator of economic health, we’ll be basically out of the recession before the unemployment rate starts specifically going down. In case you weren’t aware (since you say that jobless claims are important to government, but unemployment is important the citizenry), unemployment is driven by jobless claims. You don’t stay unemployed for very long before you’re removed from the rolls.
My understanding of the markets has been pretty good thus far. Yours seems questionable at best, as you say that they rise or fall based on things “6-9 months out”, but claim that Obama is a communist, and everyone in finance is terrified of him now, and yet the market has been rising for more than two months now.
You have made contradictory arguments at several steps and show a remarkably shallow understanding of the topics of economics and finance. While the markets do move based on future projections, they also react to daily events. They react when, as happened back in October, actual companies lose most of their value overnight. They react when companies stop existing. The markets fell in October not out of some fear of Barack Obama, but rather because a significant amount of artificially inflated “wealth” in our economy simply stopped existing because of a rule known as “mark-to-market”, when every mortgage security ceased to have any value overnight when some foreclosures came down the pipe.
Long-term market trends are driven by expectations of future occurrences. The 3-day dive that took a third off the value of the markets had nothing to do with long-term forecasting. That was terrified people making bad decisions. The slow decline afterward is a symptom of the expectation that this could be a full-blown depression, with the failure of Lehman Bros and the effective bankruptcies of a number of other banks. The rises in the market now are being driven by expectations of growth in these industries.
The initial chart was nothing but a piece of propaganda, specifically cut to “show” that the market had only fallen, and imply that nothing that President Obama could/would do would make it better. This is pretty clearly evidenced by the “Stimulus Fails” tag, well before the actual stimulative spending even starts. So I presented the complete picture, which includes the rise of the markets over the last few months, and pointed out the bias of the initial chart.
For some reason, you’ve chosen to make the argument that the market is declining because it is lower now than it has been in the past, despite the direction it is currently heading. By that argument, the sun is setting in the morning, because it is lower in the sky than it was at noon the day before.
Also, I never liked Ghost anyway.
#17 by Chadwick on May 22, 2009 - 6:43 PM
Hey, TD. Just out of curiosity: this page has racked up a lot more views than is normal for pages around here, and no record of anyone clicking into it, or coming in via search terms.
Have you visited this page several dozen discrete times today, or sent it over to other people? ‘Cause I’m really wondering where the traffic has come from.
#18 by Joshua on May 23, 2009 - 6:00 PM
Then there’s people like me who get laid off in late November and don’t file for unemployment until mid January.
And I think he’s a troll or a spammer or something. Because pages don’t normally accumulate massive hits from anonymous sources. That’s normally indicative of someone trying to boost their search engine ranking.
#19 by Chadwick on May 23, 2009 - 6:53 PM
LOL.
#20 by Phillip on May 23, 2009 - 7:29 PM
Chad? Were you TD and trying to boost the ranking?
#21 by Chadwick on May 23, 2009 - 7:37 PM
Not specifically, but we did hit a new record.
100 views yesterday.
Previous high was 88 on two different occasions. And we’re gonna probably set a record for biggest single-day drop, since we’re only at 12 views so far today.
#22 by Chadwick on May 23, 2009 - 7:57 PM
Also, this page has gotten to be a bit of a nuisance to scroll through. The best part is, despite the count of 22 comments, it only counts as 10 of them. I don’t know where it goes to a second page, but it’s obviously not yet. We’ve never actually hit it, even on the one post that we got to like 38 comments.