The AIG bailout is estimated to cost over $170 billion and yet the media is in a frenzy over the $165 million paid in bonuses to AIG executives. This is more than a 1,000 to one ratio.
A perfect analogy for this situation is to imagine you had a wallet filled with ten hundred dollar bills (i.e. $1,000) and one single dollar (i.e. $1). Next imagine the entire $1,001 was stolen from your wallet with one person stealing $1,000 from you and the other person stealing $1 from you.
The way I see it, the government who bailed out AIG is analogous to the person who took $1,000 and the executive bonuses is analogous to the person who took $1. What is happening now is the government (i.e. the $1,000 taker) is directing all attention toward the executive bonuses (i.e. the $1 taker).
It is absurd but people seem to actually believe the government (i.e. the $1,000 taker) when the government says something like the following: "Just look at that greedy person who stole $1 of your hard earned money right from your wallet and is now thumbing their finger at you. You need me, the government, to protect you from greedy people". It is unbelievable that people are actually buying into such a misdirection of outrage.
It is also interesting to point out that $170 billion AIG bailout is literally costing US taxpayers an average of over $1,000 per taxpayer because a $170 billion bailout divided by 150 million taxpayers comes out to $1,133 dollars per taxpayer.
Monday, March 16, 2009
Saturday, March 7, 2009
Did Obama Really Inherit This Economy?
Did Obama merely inherit the economy or were his policies and the likelihood of them being enacted an integral part of what shaped our current economy. Below are some key Obama dates and the corresponding Dow Jones Industrial Average numbers.
On January 3, 2008, the DOW closed at 13,056.72. The favorites to be the next president were Hillary Clinton for the Democrats or Mitt Romney for the Republicans. However, everybody knew the Democrats were the heavily favored to win.
On January 4, 2008, Barack Obama, an extremely liberal senator, won the Iowa caucus. The next day the DOW was down 256.54 to close at 12,800.18.
On Super Tuesday, February 5, 2008 Barack Obama won 13 states to Hillary Clinton's 9. The next day the Dow closed at 12,200.10.
On April 29, 2008, the controversy over Obama's Pastor got to a point where Obama felt it necessary to denounce his preacher. The story was hurting Obama politically. On that day the Dow closed at 12,831.94.
On August 23, 2008 Obama selected Biden, another extremely liberal senator, and the next trading day the DOW was down 241.81 to close at 11,386.25.
On September 26, 2008, the first presidential debate took place between McCain and Obama. All the news stations except Fox basically proclaimed Obama the winner. Fox took the view that there was no clear cut winner, but Fox News was quite clear that McCain did not deliver the knock out blow McCain desperately needed. A win or a tie was considered a victory for Obama. The next trading day the DOW was down 777.68 to close at 10,365.45.
On November 4, 2008, Barack Obama was elected the 44th President of the United States. The next trading day the DOW was down 486.01 to close at 9,139.27.
Barack Obama was one of the most active president elects in history. On the night Obama was elected the DOW was at 9625.28. On the day Obama was sworn in the DOW closed at 7,949.09.
Barack Obama and the Democratic controlled Congress have been extremely active and effective with passing their legislation since taking power. In less than 7 weeks of Obama being behind the wheel the DOW is currently at 6,626.94.
If you believe the markets are forward looking, then it is difficult to believe that Obama merely inherited the economy. It appears the probability of Obama's policies being enacted has played a role in shaping our economy.
On January 3, 2008, the DOW closed at 13,056.72. The favorites to be the next president were Hillary Clinton for the Democrats or Mitt Romney for the Republicans. However, everybody knew the Democrats were the heavily favored to win.
On January 4, 2008, Barack Obama, an extremely liberal senator, won the Iowa caucus. The next day the DOW was down 256.54 to close at 12,800.18.
On Super Tuesday, February 5, 2008 Barack Obama won 13 states to Hillary Clinton's 9. The next day the Dow closed at 12,200.10.
On April 29, 2008, the controversy over Obama's Pastor got to a point where Obama felt it necessary to denounce his preacher. The story was hurting Obama politically. On that day the Dow closed at 12,831.94.
On August 23, 2008 Obama selected Biden, another extremely liberal senator, and the next trading day the DOW was down 241.81 to close at 11,386.25.
On September 26, 2008, the first presidential debate took place between McCain and Obama. All the news stations except Fox basically proclaimed Obama the winner. Fox took the view that there was no clear cut winner, but Fox News was quite clear that McCain did not deliver the knock out blow McCain desperately needed. A win or a tie was considered a victory for Obama. The next trading day the DOW was down 777.68 to close at 10,365.45.
On November 4, 2008, Barack Obama was elected the 44th President of the United States. The next trading day the DOW was down 486.01 to close at 9,139.27.
Barack Obama was one of the most active president elects in history. On the night Obama was elected the DOW was at 9625.28. On the day Obama was sworn in the DOW closed at 7,949.09.
Barack Obama and the Democratic controlled Congress have been extremely active and effective with passing their legislation since taking power. In less than 7 weeks of Obama being behind the wheel the DOW is currently at 6,626.94.
If you believe the markets are forward looking, then it is difficult to believe that Obama merely inherited the economy. It appears the probability of Obama's policies being enacted has played a role in shaping our economy.
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