WHEN OBAMA HANDS YOU A LEMON

Make lemonade. At least that’s what I think is happening. Consider the chart below. It shows the percentages changes in Dow Jones Industrial Average, NASDAQ, and my retirement accounts, as of last Friday, all normalized to January 1, 2009. The dashed lines are second-order least-squares curve fits to the data points and the trend lines are clearly on an upward trajectory.



What does it mean? One plausible explanation is that the bubble has burst, the market collapse is complete, and the present value of the market indicators is the “real value” of the stock market.

I don’t think that’s true, however. I think the stock market – and business in general – has taken a careful look at Congress and the Obama administration and found them wanting. Some states have refused to accept stimulus money; business are appearing more and more inclined to refuse federal “assistance”; and some financial institutions are actively seeking to give back stimulus funds they had previously accepted.

It appears that business and financial institutions would rather take their chances in a less regulated economy and risk bankruptcy in a well-ordered court process than risk the whims of an obviously incompetent administration and Congress.