U.S. Presidents and Comparative Stock Market Performance(endlessmetrics.com)
endlessmetrics.com
U.S. Presidents and Comparative Stock Market Performance
http://www.endlessmetrics.com/blog/president-stock-performance.html
40 comments
It would be interesting to see Clinton's return extended one more year. He exited right before the dotcom bubble imploded.
And if Bush could have left a year early, Obama would have taken the fall for the entire financial crisis (well, many Republicans blame him anyways).
Bush was pretty unlucky. 2 massive crashes during his presidency.
Ya, and neither were completely his fault. However, I do fault him for juicing a good economy when stimulus would be more effective during a downturn when not wasted during upturns. Save in good times, spend in bad would do a lot for stability. 2008 could have been handled much better if he was disciplined enough during the recovery in between (besides, taking more money out of the system would have acted against bubbles). In contrast, the Clinton surplus going into the dotcom bust made it much easier to deal with.
Trump is making similar mistakes, and if a problem occurs on his watch, he is going to have fewer tools to deal with it (and pressuring the Fed to cut rates during a boom is unforgivable).
Unfortunately, Americans seem to neither want taxes to go up or interest rates to rise in good times so they can go down in bad. They just want them to go down all the time. So we are the most at fault after all.
Trump is making similar mistakes, and if a problem occurs on his watch, he is going to have fewer tools to deal with it (and pressuring the Fed to cut rates during a boom is unforgivable).
Unfortunately, Americans seem to neither want taxes to go up or interest rates to rise in good times so they can go down in bad. They just want them to go down all the time. So we are the most at fault after all.
The problem with "save in good times, spend in bad" is that people don't actually save in good times. Even if you raise interest rates, people will still borrow money when times are good because that's when there's profit to be made by investing the borrowed money. They do it less when rates are higher, but they still do it.
The "problem" with the natural cycle is that in bad times people start to default on their debts, which would otherwise cause banks to raise rates to account for the higher risk, which would cause even more defaults. By central banks lowering rates at those times you prevent that from happening, but at the cost of ballooning everyone's debt out of control. Because then people affected by the downturn can borrow even more money at the low rates. So we borrow in good times and borrow even more in bad times. Real debt per capita has been increasing for decades, which obviously isn't sustainable.
But that's what Keynesianism does -- it defers a crash by allowing otherwise uncreditworthy people to take on additional debt rather than filing for bankruptcy, but nobody ever pays the debt back.
Now the problem is times are good except that everybody has too much debt, which is only fine because interest rates are low. Raise them and everything falls apart as the money people are currently using to buy stuff and live their lives is suddenly required to make interest payments on existing debt.
What we need at this point is for people to pay off their debts. But they can't, because the money they borrowed is now inside corporations that never spend it.
So we need to either find a way for that money to get out of corporations and back into the hands of regular people (without crashing the stock market), or print a bunch of new money that isn't derived from debt and give that to regular people so they can use that to pay back their debts with.
The "problem" with the natural cycle is that in bad times people start to default on their debts, which would otherwise cause banks to raise rates to account for the higher risk, which would cause even more defaults. By central banks lowering rates at those times you prevent that from happening, but at the cost of ballooning everyone's debt out of control. Because then people affected by the downturn can borrow even more money at the low rates. So we borrow in good times and borrow even more in bad times. Real debt per capita has been increasing for decades, which obviously isn't sustainable.
But that's what Keynesianism does -- it defers a crash by allowing otherwise uncreditworthy people to take on additional debt rather than filing for bankruptcy, but nobody ever pays the debt back.
Now the problem is times are good except that everybody has too much debt, which is only fine because interest rates are low. Raise them and everything falls apart as the money people are currently using to buy stuff and live their lives is suddenly required to make interest payments on existing debt.
What we need at this point is for people to pay off their debts. But they can't, because the money they borrowed is now inside corporations that never spend it.
So we need to either find a way for that money to get out of corporations and back into the hands of regular people (without crashing the stock market), or print a bunch of new money that isn't derived from debt and give that to regular people so they can use that to pay back their debts with.
That's not what Keynesianism does. Keynesianism is countercyclical stimulus spending which boosts the economy in general by increasing activity, balanced by higher taxes which prevent overheating.
The last decade or two haven't been Keynesian at all - they've been selective corporate welfare for the financial sector, combined with a bizarre implication that this will somehow trickle down into the economy as a whole, combined with very anti-Keynesian low taxation for the beneficiaries.
The effects are as you describe, but more for common sense reason than Keynesian ones. Financial actors who were some combination of bankrupt, inefficient, and corrupt were bailed out and Frankensteined into continued growth when they should have been left to die on the slab.
The result has been a fragile debt, leverage, and froth extraction economy, tentpoled - for now - by a few giant tech monopolies.
The last decade or two haven't been Keynesian at all - they've been selective corporate welfare for the financial sector, combined with a bizarre implication that this will somehow trickle down into the economy as a whole, combined with very anti-Keynesian low taxation for the beneficiaries.
The effects are as you describe, but more for common sense reason than Keynesian ones. Financial actors who were some combination of bankrupt, inefficient, and corrupt were bailed out and Frankensteined into continued growth when they should have been left to die on the slab.
The result has been a fragile debt, leverage, and froth extraction economy, tentpoled - for now - by a few giant tech monopolies.
[deleted]
> Keynesianism is countercyclical stimulus spending which boosts the economy in general by increasing activity, balanced by higher taxes which prevent overheating.
As implemented by the Fed it means lowering interest rates during downturns to stimulate spending on credit and raising interest rates during times of exuberance to cool things off.
But the result of that is that everyone is always getting further into debt, because it's the bad times when people would otherwise normally have either defaulted or paid the debts back (to avoid what would otherwise be higher risk-driven interest rates at those times, compared to the then-lower investment returns from the borrowed money). So by stimulating borrowing during recessions, debt increases significantly then instead of being reduced.
Meanwhile it still doesn't get paid back during the good times because the higher rates reduce borrowing during those times but nobody really wants them so high during times of productive business opportunities that people divert money from growing businesses to paying back old debts.
So consumer debt goes up but never down.
The corollary on the government side only works because "high taxes" rather than "high interest rates" actually increases government revenue, which gives them something to pay the public debt back with. (Assuming that's what they did with the money, which it isn't -- and can't be with the Fed doing the opposite, because paying back government debt in good times would lower interest rates then.)
But on the consumer side, higher interest rates reduce the amount of money people have to pay back debts with rather than increase it. And so do higher taxes.
Which leaves the way out as the government creating new money and giving it to people so that they have something to pay their debts with. Then it doesn't come from taxes, so you aren't just taking money from people to give it back to them (or crashing the stock market by taking it from businesses), and it doesn't come from issuing more government debt, so you aren't increasing interest rates and causing people to have to pay the money they receive as interest rather than principal (or crashing the stock market again).
As implemented by the Fed it means lowering interest rates during downturns to stimulate spending on credit and raising interest rates during times of exuberance to cool things off.
But the result of that is that everyone is always getting further into debt, because it's the bad times when people would otherwise normally have either defaulted or paid the debts back (to avoid what would otherwise be higher risk-driven interest rates at those times, compared to the then-lower investment returns from the borrowed money). So by stimulating borrowing during recessions, debt increases significantly then instead of being reduced.
Meanwhile it still doesn't get paid back during the good times because the higher rates reduce borrowing during those times but nobody really wants them so high during times of productive business opportunities that people divert money from growing businesses to paying back old debts.
So consumer debt goes up but never down.
The corollary on the government side only works because "high taxes" rather than "high interest rates" actually increases government revenue, which gives them something to pay the public debt back with. (Assuming that's what they did with the money, which it isn't -- and can't be with the Fed doing the opposite, because paying back government debt in good times would lower interest rates then.)
But on the consumer side, higher interest rates reduce the amount of money people have to pay back debts with rather than increase it. And so do higher taxes.
Which leaves the way out as the government creating new money and giving it to people so that they have something to pay their debts with. Then it doesn't come from taxes, so you aren't just taking money from people to give it back to them (or crashing the stock market by taking it from businesses), and it doesn't come from issuing more government debt, so you aren't increasing interest rates and causing people to have to pay the money they receive as interest rather than principal (or crashing the stock market again).
> 'What we need at this point is people paying off their debt!'
Debt... ('contextless OT') ...shortage... damn! Just for a second i remembered a picture of the historic, ancient egypt, where organs were 'weighted' - and that the last time i had seen it, was in the movie repo men ^^
> [P-:] //wiki/Repo_Man_(film)
Debt... ('contextless OT') ...shortage... damn! Just for a second i remembered a picture of the historic, ancient egypt, where organs were 'weighted' - and that the last time i had seen it, was in the movie repo men ^^
> [P-:] //wiki/Repo_Man_(film)
> 'What we need at this point is people paying off their debt!'
Debt... ('contextless OT) ...shortage... damn! Just for a second i remembered a picture of the historic, ancient egypt, where organs were 'weighted' - and that the last time i had seen it, was in the movie repo men ^^
> [P-:] //wiki/Repo_Man_(film)
Debt... ('contextless OT) ...shortage... damn! Just for a second i remembered a picture of the historic, ancient egypt, where organs were 'weighted' - and that the last time i had seen it, was in the movie repo men ^^
> [P-:] //wiki/Repo_Man_(film)
You missed an option C: forgive the debt (like default but less consequences) but keep companies and people accountable for externalities with really tight control.
Option C is a moral hazard and is fundamentally unfair. If everybody gets a UBI and people in debt use that to pay it off, people not in debt still get the same amount of money. Loan forgiveness is wrong because it doesn't work that way.
If you paid your student loans and I didn't because I decided to buy a Tesla instead, should I have my loans forgiven when you had to pay yours? If I bought a house on credit while you rent an apartment, I get my mortgage forgiven but you have to keep paying rent? If I bought a million dollar house I couldn't afford and you bought a $250K house you could, I get rewarded for living beyond my means?
Give everybody the same amount in cash.
If you paid your student loans and I didn't because I decided to buy a Tesla instead, should I have my loans forgiven when you had to pay yours? If I bought a house on credit while you rent an apartment, I get my mortgage forgiven but you have to keep paying rent? If I bought a million dollar house I couldn't afford and you bought a $250K house you could, I get rewarded for living beyond my means?
Give everybody the same amount in cash.
Could you please lend me half a million for a couple of years?
people forget Bush was fighting an energy recession, and those were a godsend to many. my brother used the money to apply for college and buy books to give college a go and see how it is, he's an MD now. I disagreed with almost everything Bush did, but that was not one of them.
The same is true for Trump, in the sense had it not been for the Trump tax cuts, we would be in a recession right now.
The same is true for Trump, in the sense had it not been for the Trump tax cuts, we would be in a recession right now.
A year later, it’s very clear that the tax cuts boosted gross domestic product and jobs a bit — and just for one year. Its effects are fading as U.S. GDP growth appears likely to weaken in 2019. The only thing that “rocked” were corporate profits and the stock market. And we’re facing trillion-dollar deficits as far as the eye can see.
https://www.marketwatch.com/story/its-official-the-trump-tax...
https://www.marketwatch.com/story/its-official-the-trump-tax...
that doesn't conflict with anything i said.
This sounds like you're suggesting to p-hack.
"Let's just adjust our window because we know something is going to change and it would be interesting."
Meanwhile, the results are voided.
It's seemingly minor adjustments like thesr that have been causing tons of incorrect data to get published in science for way too long now.
"Let's just adjust our window because we know something is going to change and it would be interesting."
Meanwhile, the results are voided.
It's seemingly minor adjustments like thesr that have been causing tons of incorrect data to get published in science for way too long now.
What is funny is that it wouldn't be fair to blame him for that inevitable crash, but it would be fair to blame him for the housing crash that happened much later. He changed the rules for mortgages. That took quite a long time to cause disaster.
It seems to me that these results don't take into account the fact that presidents inherit the policies of the previous terms. Some presidents can ride on the coat tails of former policies and take the credit or blame just because they're the ones serving. It can take as long as 8 years before the consequences of bad policy can rear its ugly head.
Makes no sense to measure from day of taking office. With a 1 year offset, Trump's market goes from performing "very well" to the erratic mess that it has been ever since.
[deleted]
I've always been more curious about this stat when:
-President and Congress majority are same party (and by party)
-President and Congress majority are different party.
I suspect different parties are better, to reign in the excesses of each. But not sure. Maybe I'll do it some time.
-President and Congress majority are same party (and by party)
-President and Congress majority are different party.
I suspect different parties are better, to reign in the excesses of each. But not sure. Maybe I'll do it some time.
If the parties were working for the good of all Americans I think you'd be correct. The Republican party decided to literally impede anything, right or wrong that President Obama did. Democrats changed some rules for lower court justices because Republicans refused to even vote against judges just to claim Obama was leaving seats vacant. That's not governance, that's plain impeding government from doing it's job by people who don't believe government should exist. You cannot have a functional government when people meant to govern it don't believe it should exist.
[deleted]
Stock variation doesn't really say much other than probably a degree of general confidence about how much profits companies can take.
How about actual corporate earnings? (Thereby normalizing for wacky p/e ratios?)
And what about bond yields? (Because bonds and stocks are the primary assets, valuations flow from one to the other)
Interest rates? (Because cheaper Fed rates entail easy money)
GDP? (Because that's a measure of the economy)
Housing prices? (Because that's a measure of consumer spending, i.e. 'the rest of us')
Housing starts? (A measure of business confidence in consumer)
Employment? (A good measure of overall health)
Inflation? (A variety of factors but it puts the others in perspective)
Instead of this 'stock prices' thing they should show us all that for perspective.
How about actual corporate earnings? (Thereby normalizing for wacky p/e ratios?)
And what about bond yields? (Because bonds and stocks are the primary assets, valuations flow from one to the other)
Interest rates? (Because cheaper Fed rates entail easy money)
GDP? (Because that's a measure of the economy)
Housing prices? (Because that's a measure of consumer spending, i.e. 'the rest of us')
Housing starts? (A measure of business confidence in consumer)
Employment? (A good measure of overall health)
Inflation? (A variety of factors but it puts the others in perspective)
Instead of this 'stock prices' thing they should show us all that for perspective.
[deleted]
Allegedly, stocks which are highly exposed to government spending outperform their low-gov-spending peers under a Dem presidency, and underperform during a GOP one: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1572801
It's too bad this analysis was done against the Dow Jones Industrial Average which is a price weighted index of only 30 large cap stocks and widely considered to be a poor indicator. Something like the S&P 500 index would would have been a better choice though it doesn't go as far back as the DJIA.
Although, the Dow doesn't really go back that far either in the sense that it swaps out stocks occasionally, which could cause spurious conclusions to be drawn if not accounted for.
"though it doesn't go as far back as the DJIA"
That's not a big of a deal, it has been calculated backwards using historical data.
That's not a big of a deal, it has been calculated backwards using historical data.
A cut in the corporate tax rate shockingly increases equity value.
I wonder if most policies put in place during a president's term actually affect the next term.
"Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans."
- Robert F. Kennedy
- Robert F. Kennedy
That's not badly put, but aircraft carriers don't grow on trees, and it seems that historians correlate GDP with military success.
Which has been bumming out people for much longer than that example of Greece becoming a province of the Roman Republic.
Which has been bumming out people for much longer than that example of Greece becoming a province of the Roman Republic.