Income falls 3.2% during Obama's term thus far

[Schneed10]

Originally Posted by firstdown

We do agree that the stock market can be irrational and reactionary on a day-to-day basis. You don't think that the decisions over the past year or more to bail out the banks, car companies, etc... did not have a long term affect on the stock market?

First, on auto bail-outs, no I don't think that has any meaningful long-term impact on the performance of American companies. In the end that only affected a few companies, a drop in the bucket compared to the stock market overall.

One could make the argument that without bailing out the banks, we would have entered a gigantic depression due to frozen lending. That particular bailout action had to be taken, or businesses nationwide would have lost the access to capital and hence lost the ability to invest and grow their businesses. Our whole economy could have ground to a halt.

Now, one could also say that the bank bailout caused us to drive up our national debt, which pushes down the value of the dollar, which makes our imports more expensive, which costs American companies over the long run. So maybe the bank bailout affected the stock market outlook, taking it from a 6.75% expected return to a 6.5%. That would be a reasonable assertion.

But nothing an administration does can cause stocks to gain ground during one period of time vs lose ground during another. Policies, especially those of the Fed, can swing stocks maybe 1% up or down, but as you know the stock market makes much larger swings from week to week and year to year than just 1% here and there. Economic conditions are what drive the ups and downs of the stock market.