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Wednesday, July 26, 2017

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Flirting with 11,000


The Dow Jones Industrial Average is the most-referenced barometer of the economic health of corporate America.  Under Bill Clinton, and his "irrational exuberance" Internet stock bubble, it reached the lofty height of 11,723 points.  Since then, the Clinton bubble burst as the business world realized that most of the Internet "information superhighway" phenomenon was all smoke and mirrors.  The Internet was and is a business tool, not a new way of doing business.  Almost all of the Internet businesses made no business sense, and when the market realized this, they rightly punished the worthless businesses.  After that, we have 9/11 and the Dow dropped into the high 7,000ís.  It rebounded and then basically stagnated in the 9,900-10,500 range for about two years.  Today, however, we see the Dow flirting with 11,000.


"Itís a tax-cut-fueled economic boom.  Just as Bill Clinton and Al Gore deserve the entire blame for the Internet bubble-pop recession, George W. Bush deserves every iota of credit of the resurgence of the stock market as the economy roars."


Is this another irrational economic bubble?  No.  Itís a tax-cut-fueled economic boom.  Just as Bill Clinton and Al Gore deserve the entire blame for the Internet bubble-pop recession, George W. Bush deserves every iota of credit of the resurgence of the stock market as the economy roars.  No matter how much the Democrats whine about tax cuts in wartime, they cannot whine away the surging Federal coffers as American companies, unshackled from oppressive taxes, thrive.  Notwithstanding the best efforts of Democrats and terrorists to ruin us, President Bush has prevailed.

The present surge is far from over.  Ben Bernanke is sailing into the Fed chairmanship, and Wall Street loves this.  He is unlikely to raise interest rates, and that means that the real estate sector will stay healthy as mortgage rates remain reasonable.  It also means that there will be capital for companies to expand.  President Bush has also made it clear that he will veto any tax increase.  This will make it easier for corporate America to compete worldwide.


"Why did this surge take so long?  Weíve been in a recovery mode for a while, havenít we?  Well, al-Qaeda did serious damage with 9/11.  You cannot tear out the heart of a major city and expect no side effects."


Why did this surge take so long?  Weíve been in a recovery mode for a while, havenít we?  Well, al-Qaeda did serious damage with 9/11.  You cannot tear out the heart of a major city and expect no side effects.  In fact, the fact that New York has bounced back so fully and so rapidly is a testament to the heart and fundamental goodness of our largest city.  Itís nothing short of a miracle.  And I note that New York bounced back with a relatively small amount of Federal help.

Now, many retirees were apopleptic at the losses that they sustained in their nest eggs.  Now, however, those retirement accounts are fully replenished as the market has recovered.  The Dow is now higher than it was on the day that George Bush took office.  Considering the fact that President Bush took office and got hit with the "trifecta" of war, recession and a national crisis within nine months of taking his oath, and the market lost one third of its value, the fact that it took only four years to regain these losses is a testament to our Presidentís excellent economic leadership.  In fact, spineless Senators now seek to impose windfall profit taxes on our oil companies, or more accurately, on the retirees who hold the shares of these companies, either directly or through mutual funds.


"The Dow is near 11,000, and will certainly exceed it as the Holiday season turns out to be healthy.  The Democrats can do nothing to suppress this economy, and the 11,723 high mark will certainly fall in the next quarter."


The Dow is near 11,000, and will certainly exceed it as the Holiday season turns out to be healthy.  The Democrats can do nothing to suppress this economy, and the 11,723 high mark will certainly fall in the next quarter.  By election day 2006, the Dow will be over 13,000.  If the Democrats are right and the people vote their wallets, those seniors who see their retirement accounts replenished will remember who cut their taxes and made their retirement much more affluent.  The end result will be GOP gains at every level of government.

There is something else that the healthy Dow Jones results should revive:  Social Security reform.  Who can argue that private accounts are "too risky" while the stock market shows just how resilient it is, bouncing back from a direct physical attack on Wall Street and still growing?  Well, reality-challenged Democrats can make the argument, but whether or not itís believable or believed, thatís another thing.

From the depths of depression in October, we come to the realization that we were worrying for naught.  This flirtation with 11,000 is just one more sign that we should continue in our optimism.