What could have caused the market downturn?

[Eric714]

What could have caused the market downturn? In a nutshell: Obama being elected.

This week I was watching Jim Cramer go off on another rant. In which he said this is “the greatest wealth-destruction ever by a president.” He has called the stimulus plan “a total fraud… a bears dream called true… nothing, nothing, nothing… no recognition of housing… and unemployment” Pretty bold and harsh statements. He’s ticked-off the White House and has gotten into a feud with Press Secretary Robert Gibbs. (Just like Rick Santelli.)

For those of you that don’t know. Cramer is a Democrat. He supported and voted for Obama. By his own words, he has given hundreds of thousands of dollars to Democrat candidates. Now he has taken 180° position, explicitly stating that this downturn is directly caused by Obama and his radical policies (Cramer’s words, not mine).

If that were in fact the case – if the market is turning down because of Obama – it would have started before the election. Nationalized healthcare, cap and trade on CO2 emission, ending agricultural subsidies, tax hikes, etc. were well-known parts of the Obama platform. We should have seen the market responding as the likelihood of him being elected grew greater and greater.

Keep in mind that the market is not political. It doesn’t care about “Republican” or “Democrat.” It doesn’t care about “Liberal” or “Conservative.” It only cares about making money.

The Iowa Electronic Market (IEM) provides data that is essentially the probability of real world outcomes. http://www.biz.uiowa.edu/iem/markets/Pres08.html
Using that data, I compared it to the S&P 500. Downloaded from Yahoo Finance. (Citing my references.)

Below is a graph the data. I have had this "blindly" analyzed, by independent people who have concluded that "there is a very strong inverse correlation."


Image Deleted By Forum Moderator Gdoane



What does this mean for our future? You be the judge.

http://forums.hannity.com/showthread.php?t=1355501

^^^^ Talk to the Moderator Forum Complaint

[Eric714]

I want to add that while this data says "Democrat" since May 5, 2008 Barack Obama had essentially clinched the nomination. His probability of clinching the nomination was well over 80% and only grew from there.

So this data is, for all intents and purposes: "The Probability of Barack Obama becoming President."

[Reform2009]

What could have caused the market downturn? In a nutshell: Obama being elected.

This week I was watching Jim Cramer go off on another rant. In which he said this is “the greatest wealth-destruction ever by a president.” He has called the stimulus plan “a total fraud… a bears dream called true… nothing, nothing, nothing… no recognition of housing… and unemployment” Pretty bold and harsh statements. He’s ticked-off the White House and has gotten into a feud with Press Secretary Robert Gibbs. (Just like Rick Santelli.)

For those of you that don’t know. Cramer is a Democrat. He supported and voted for Obama. By his own words, he has given hundreds of thousands of dollars to Democrat candidates. Now he has taken 180° position, explicitly stating that this downturn is directly caused by Obama and his radical policies (Cramer’s words, not mine).

If that were in fact the case – if the market is turning down because of Obama – it would have started before the election. Nationalized healthcare, cap and trade on CO2 emission, ending agricultural subsidies, tax hikes, etc. were well-known parts of the Obama platform. We should have seen the market responding as the likelihood of him being elected grew greater and greater.

Keep in mind that the market is not political. It doesn’t care about “Republican” or “Democrat.” It doesn’t care about “Liberal” or “Conservative.” It only cares about making money.

The Iowa Electronic Market (IEM) provides data that is essentially the probability of real world outcomes. http://www.biz.uiowa.edu/iem/markets/Pres08.html
Using that data, I compared it to the S&P 500. Downloaded from Yahoo Finance. (Citing my references.)

Below is a graph the data. I have had this "blindly" analyzed, by independent people who have concluded that "there is a very strong inverse correlation."






What does this mean for our future? You be the judge.



Great post and so true. The way Obama is playing President, I think we are in major trouble and tougher times are ahead.

[ChrisSpencer]

What could have caused the market downturn? In a nutshell: Obama being elected.

This week I was watching Jim Cramer go off on another rant. In which he said this is “the greatest wealth-destruction ever by a president.” He has called the stimulus plan “a total fraud… a bears dream called true… nothing, nothing, nothing… no recognition of housing… and unemployment” Pretty bold and harsh statements. He’s ticked-off the White House and has gotten into a feud with Press Secretary Robert Gibbs. (Just like Rick Santelli.)

For those of you that don’t know. Cramer is a Democrat. He supported and voted for Obama. By his own words, he has given hundreds of thousands of dollars to Democrat candidates. Now he has taken 180° position, explicitly stating that this downturn is directly caused by Obama and his radical policies (Cramer’s words, not mine).

If that were in fact the case – if the market is turning down because of Obama – it would have started before the election. Nationalized healthcare, cap and trade on CO2 emission, ending agricultural subsidies, tax hikes, etc. were well-known parts of the Obama platform. We should have seen the market responding as the likelihood of him being elected grew greater and greater.

Keep in mind that the market is not political. It doesn’t care about “Republican” or “Democrat.” It doesn’t care about “Liberal” or “Conservative.” It only cares about making money.

The Iowa Electronic Market (IEM) provides data that is essentially the probability of real world outcomes. http://www.biz.uiowa.edu/iem/markets/Pres08.html
Using that data, I compared it to the S&P 500. Downloaded from Yahoo Finance. (Citing my references.)

Below is a graph the data. I have had this "blindly" analyzed, by independent people who have concluded that "there is a very strong inverse correlation."






What does this mean for our future? You be the judge.


It's ridiculous to state that the election of Obama caused the economy to turn south. The market was heading south for over a year before Obama was even the democratic nominee. In fact, in 2006 we were in a position that made an economic turndown inevitable.

However Obama's plans certainly aren't going to substantively improve the economy in any way.

[Eric714]

It's ridiculous to state that the election of Obama caused the economy to turn south. The market was heading south for over a year before Obama was even the democratic nominee. In fact, in 2006 we were in a position that made an economic turndown inevitable.

Yup, everyone is entitled to an opinion.

Why is it ridiculous? Look at the data. How do you explain the correlation. Which is undeniable related. (I have had that independently and blindly confirmed.) I work in the investment business. I shared this with people who analyzed the data and demonstrated and undeniable correlation. They begged me to tell them what it was. One guy said it was obviously an inverse ETF. I didn't tell them what the data was. I didn't want to bias them.

I bet if I showed to anyone (who knows anything about market technical analysis) they would make the same conclusion. The two are inversely correlated.

But, some people cannot put their biases aside.

However Obama's plans certainly aren't going to substantively improve the economy in any way.

Really? He's driving the economy into the ground. This is the worst economic situation since the Great Depression and it has every thing to do with Obama.

"The market" has no political agenda. It only cares about making money. Every time a new plan or package is announced, the market makes it very clear what it thinks about the plan.

The stock market will recover. It will bottom and move up before we know that we are out of recession (or is it a depression?). But, it will only do it when the market has confidence that we are on the road to recovery.

I make money on the market. I make money in any direction. I am making money now. I would rather be making money on the way up, but that's not where the market is going. (Actually, I expect a bounce this week, but we are still in a bear market.)

I have to agree with Jim Cramer. Obama doesn't get it - or doesn't care.

[ScarlettOhara]

It's ridiculous to state that the election of Obama caused the economy to turn south. The market was heading south for over a year before Obama was even the democratic nominee. In fact, in 2006 we were in a position that made an economic turndown inevitable.

However Obama's plans certainly aren't going to substantively improve the economy in any way.
Once Obama got the nomination and was ahead in the polls, my husband insisted that we sell all our stocks and buy treasuries and some commodities instead. We dumped because of Obama and so did some other people we know.

[ChrisSpencer]

Yup, everyone is entitled to an opinion.

Why is it ridiculous? Look at the data. How do you explain the correlation. Which is undeniable related. (I have had that independently and blindly confirmed.) I work in the investment business. I shared this with people who analyzed the data and demonstrated and undeniable correlation. They begged me to tell them what it was. One guy said it was obviously an inverse ETF. I didn't tell them what the data was. I didn't want to bias them.


Good for you. Now tell me why you missed the earliest finance lesson that correlation does not equal causation? I can show you any correlation you want about any hypothesis you come up with but that doesn't mean that, for example, the increased number of domesticated cats in America is the cause for the baby boom following WW2 (correlated, undeniably).



Really? He's driving the economy into the ground. This is the worst economic situation since the Great Depression and it has every thing to do with Obama.

"The market" has no political agenda. It only cares about making money. Every time a new plan or package is announced, the market makes it very clear what it thinks about the plan.

The stock market will recover. It will bottom and move up before we know that we are out of recession (or is it a depression?). But, it will only do it when the market has confidence that we are on the road to recovery.

I make money on the market. I make money in any direction. I am making money now. I would rather be making money on the way up, but that's not where the market is going. (Actually, I expect a bounce this week, but we are still in a bear market.)

I have to agree with Jim Cramer. Obama doesn't get it - or doesn't care.

I said that Obama's plan has no substantive improvement in store for the economy. I think you are clearly misunderstanding my statement. It is ridiculous to state that the DOWNTURN of the market, which started roughly Q4 2006, was caused by Obama. What we are experiencing now is the effect of errors in the market from years ago, back when Obama was a lousy unheard of freshman senator in Illinois.

[ChrisSpencer]

Once Obama got the nomination and was ahead in the polls, my husband insisted that we sell all our stocks and buy treasuries and some commodities instead. We dumped because of Obama and so did some other people we know.

That's all well and good but do you think that the market tanked because Obama was nominated, or because the quarterly earnings of every major financial firm continued to explode in the red?

[Eric714]

I said that Obama's plan has no substantive improvement in store for the economy. I think you are clearly misunderstanding my statement. It is ridiculous to state that the DOWNTURN of the market, which started roughly Q4 2006, was caused by Obama. What we are experiencing now is the effect of errors in the market from years ago, back when Obama was a lousy unheard of freshman senator in Illinois.

What are you talking about. Seriously?

[ChrisSpencer]

What are you talking about. Seriously?



Yes
Seriously.

Q4 2006 derivatives market exploded in value over $112 trillion. The peak, roughly december 2007, rested at almost $600 trillion. I would say that the MANIA that caused our current problems, while IMO existing entirely from 2004-2007, really took off in Q4 2006.

[LJB1031]

So what you are all saying is that if McCain was the president everything would be great? Would the Dow be at 14000 again? Would none of the layoffs had happened? Would the unemployment rate be under 5% again? Would nobody be losing their homes or be behind on their mortgages? Would the big 3 automakers be suddenly awash in profits again? To say that Obama caused all of the problems is just plain ridiculous. You might as well say that McCain would have been "THE MESSIAH" as you are all so fond of saying about President Obama.

[ChrisSpencer]

So what you are all saying is that if McCain was the president everything would be great? Would the Dow be at 14000 again? Would none of the layoffs had happened? Would the unemployment rate be under 5% again? Would nobody be losing their homes or be behind on their mortgages? Would the big 3 automakers be suddenly awash in profits again? To say that Obama caused all of the problems is just plain ridiculous. You might as well say that McCain would have been "THE MESSIAH" as you are all so fond of saying about President Obama.

If McCain were president right now we'd be in the exact same economic conditions that we are experiencing now with Obama as president. The only difference would be the response - Obama's response lacks any real substantive terms to produce growth and stimulus. McCain's plan would likely not hold the possibility of profound future potential inflation like Obama's plan does.

[Eric714]

That's not what you originally said:
the DOWNTURN of the market, which started roughly Q4 2006

I am not talking about the obscure derivatives market - that few American people understand. I am talking about "the market" (the DJIA or S&P500), which is considered the barometer for the economy.

I don't disagree that the derivatives / leveraging had a tremendous impact and helped to drive down the market.

I watch the stock market EVERYDAY. And it's my job to explain it. I could not explain why the market was turning south in late 2008. This was before the subprime and CDO mess really hit the fan. Afterwards, I just chalked it up to that.

However, I was listening to Jim Cramer rant this week. Saying "Obama is destroying wealth... he is causing the markets to go down." If that was true, you would see it before he was elected. The market is very intelligent. I just decided to test that hypothesis.

I did NOT expect to see a correlation. Really. I didn't.

But, my hypothesis is supported by the data that I presented. And it shocked me.

There is a clear mathematical correlation between the likelihood of Obama being president and the decline of the stock market.

There are three possible explanations:

1) The rise in Obama's likelihood of being president caused the market to go down.

2) The fall of the market increased the likelihood of Obama becoming president.

3) The two were directly related to some other causal factor.

I believe that #2 is doubtful because most Americans do not follow the market close enough to detect those subtle changes. Also, and more importantly, the Obama data was leading the market data. If #2 were the case, it would be lagging the market data. That fact supports #1.

#3 is possible, e.g., your theory that the derivative leveraging caused the market to go down and also caused Obama to rise. That would likely (and I agree that it did) impact the market adversely. But it requires a tremendous leap of faith that American voters understood that phenomenon and attributed the solution of derivative situation to Obama - especially considering his support of Fannie Mae and Freddie Mac. Or maybe there's some other #3.

I chose Occum's Razor. The simplest answer is probalby the right one.

Do you do doubt that Obama adversely affects the market?

Look at the exclaimations marks that the market gave us after his election, on his inaugeration, and following each of his "plan" announcments. The message was loud and clear to me.

[Tigerdrafted]

McCain blew it when he left the campaign to go to Washington to support Bernanke's TARP plan which was the same position Bush took. He showed everyone that he was no different than Bush all the while claiming that he was different. He was a damn fool. I don't think he would have however signed another stimulus plan like Obama did. McCain is a fiscal hawk.

Obama is a typical liberal that thinks he knows it all. He promises that the economy will grow with new green jobs. Yet he fails to even consider why that hasn't happened thus far. Surely he should have known that the DOE has been working on green energy projects now for 50 years. He didn't even propose more money than Bushes previous budget. What it's going to work because Obama says we will proceed with unprecedented accountability.

Liberals think that they can fix things with unprecedented accountability. That there shows the arrogance and that is one of the main reason why the market is down. Investors now realize the load of dung that just got shoved down their throats.

Investors are now aware that the Democrats are just full of themselves and don't really have any answers. They are in the White house pushing buttons. They can't even update their own websites.

[Eric714]

Image Deleted By Forum Moderator Gdoane

http://forums.hannity.com/showthread.php?t=1355501

^^^^ Talk to the Moderator Forum Complaint


Ok... I guess you can't post images in this forum. I can respect that.

Since my word that there's an inverse correlation between Obama and the stock market is probably not enough and I cannot post an image here, here's the links that were deleted. (I sincerely hope that's not a violation.)

http://i141.photobucket.com/albums/r80/EricHale/SP_500_vs_Prob_of_Dem_Pres.jpg
http://i141.photobucket.com/albums/r80/EricHale/SP_500_Q4_2006.jpg

[Tigerdrafted]

Ok... I guess you can't post images in this forum. I can respect that.

Since my word that there's an inverse correlation between Obama and the stock market is probably not enough and I cannot post an image here, here's the links that were deleted. (I sincerely hope that's not a violation.)

http://i141.photobucket.com/albums/r80/EricHale/SP_500_vs_Prob_of_Dem_Pres.jpg
http://i141.photobucket.com/albums/r80/EricHale/SP_500_Q4_2006.jpg

Works for me.

Markets do not like uncertainty.

When was the last time we had so many Democrats running things? Right now they have more than when Clinton took office. They are about to get cloture vote in the Senate. Something the Republicans never got close too. Hell the Democrats filibustered everything coming out of the White house. You could say that the Bush budgets had Democrat spending all over them by the time they allowed an up or down vote in the Senate.

Take the blame Dems. You are good for another 2 years.

[Safiel]

Ok... I guess you can't post images in this forum. I can respect that.

I have quoted the official forum rules below. Specifically, the pictures in this thread were deleted for exceeding both the file size and the pixel limit. As long as your pictures comply with the rules below they will be fine. Also, it is considered polite to delete pictures when quoting other users posts.

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[Studebaker_Hawk]

What could have caused the market downturn? In a nutshell: Obama being elected.

This week I was watching Jim Cramer go off on another rant. In which he said this is “the greatest wealth-destruction ever by a president.” He has called the stimulus plan “a total fraud… a bears dream called true… nothing, nothing, nothing… no recognition of housing… and unemployment” Pretty bold and harsh statements. He’s ticked-off the White House and has gotten into a feud with Press Secretary Robert Gibbs. (Just like Rick Santelli.)

For those of you that don’t know. Cramer is a Democrat. He supported and voted for Obama. By his own words, he has given hundreds of thousands of dollars to Democrat candidates. Now he has taken 180° position, explicitly stating that this downturn is directly caused by Obama and his radical policies (Cramer’s words, not mine).

If that were in fact the case – if the market is turning down because of Obama – it would have started before the election. Nationalized healthcare, cap and trade on CO2 emission, ending agricultural subsidies, tax hikes, etc. were well-known parts of the Obama platform. We should have seen the market responding as the likelihood of him being elected grew greater and greater.

Keep in mind that the market is not political. It doesn’t care about “Republican” or “Democrat.” It doesn’t care about “Liberal” or “Conservative.” It only cares about making money.

The Iowa Electronic Market (IEM) provides data that is essentially the probability of real world outcomes. http://www.biz.uiowa.edu/iem/markets/Pres08.html
Using that data, I compared it to the S&P 500. Downloaded from Yahoo Finance. (Citing my references.)

Below is a graph the data. I have had this "blindly" analyzed, by independent people who have concluded that "there is a very strong inverse correlation."


Image Deleted By Forum Moderator Gdoane



What does this mean for our future? You be the judge.

http://forums.hannity.com/showthread.php?t=1355501

^^^^ Talk to the Moderator Forum Complaint


The market began its downturn in the summer of 2007.

[ChrisSpencer]

That's not what you originally said:


I am not talking about the obscure derivatives market - that few American people understand. I am talking about "the market" (the DJIA or S&P500), which is considered the barometer for the economy.

I don't disagree that the derivatives / leveraging had a tremendous impact and helped to drive down the market.

I watch the stock market EVERYDAY. And it's my job to explain it. I could not explain why the market was turning south in late 2008. This was before the subprime and CDO mess really hit the fan. Afterwards, I just chalked it up to that.

However, I was listening to Jim Cramer rant this week. Saying "Obama is destroying wealth... he is causing the markets to go down." If that was true, you would see it before he was elected. The market is very intelligent. I just decided to test that hypothesis.

I did NOT expect to see a correlation. Really. I didn't.

But, my hypothesis is supported by the data that I presented. And it shocked me.

There is a clear mathematical correlation between the likelihood of Obama being president and the decline of the stock market.

There are three possible explanations:

1) The rise in Obama's likelihood of being president caused the market to go down.

2) The fall of the market increased the likelihood of Obama becoming president.

3) The two were directly related to some other causal factor.

I believe that #2 is doubtful because most Americans do not follow the market close enough to detect those subtle changes. Also, and more importantly, the Obama data was leading the market data. If #2 were the case, it would be lagging the market data. That fact supports #1.

#3 is possible, e.g., your theory that the derivative leveraging caused the market to go down and also caused Obama to rise. That would likely (and I agree that it did) impact the market adversely. But it requires a tremendous leap of faith that American voters understood that phenomenon and attributed the solution of derivative situation to Obama - especially considering his support of Fannie Mae and Freddie Mac. Or maybe there's some other #3.

I chose Occum's Razor. The simplest answer is probalby the right one.

Do you do doubt that Obama adversely affects the market?

Look at the exclaimations marks that the market gave us after his election, on his inaugeration, and following each of his "plan" announcments. The message was loud and clear to me.

I never said that I didn't believe that Obama adversely affects the market. I said that his plan was garbage (I wasn't so harsh before) and I think that he is adding to market uncertainty.

But to answer the question of what CAUSED the market downtown I think that your evidence is merely correlation - which we both know indicates nothing other than the simple fact that a correlation exists. While it's nice to have a correlation, that does nothing to prove with sufficient confidence that any substantive hypothesis is answered.

You watch the market everyday, and so do I. I respect your opinion and I do not believe it to be incorrect, but my personal opinion is that the market downtown has accelerated as the derivatives market collapsed, thereby causing the entire financial market to stall

When the major components of the derivatives market lost effectively their demand then (assuming mark-to-market) many banks lost significant value in assets. That doesn't have immediate effects. If it were a one month or two month crisis that was quickly resolved I think the market as an index, Dow for example, would experience little more than a hickup. The fact that banks were forced to continue holding onto significant marked losses, coupled with uncertainty and periodic panics, created major cash crises that took several quarters to emerge.

It's unreasonable IMO to expect that every impact of the downtown of the market was a direct result of an immediate effector. I believe that what we are experiencing right now is 99% to due with decision that were made 3 and 4 years ago. The evidence of the damage has floated to the surface now but the damage was done when CDOs were leveraged an average of 37.4 times their underlying worth, exploding the OTC market to 600 trillion dollars.

I believe this is a perfect example of the fallacy of causation.

[Tigerdrafted]

While it's nice to have a correlation that does nothing to prove with sufficient confidence that any substantive hypothesis is answered.


Amen to that.

[WhiteHatBobby]

Also keep in mind Pelosi in 2007 set the stage for this downturn. She put in the stupid wage hike of 40% that killed the labour market.

[Reform2009]

Also keep in mind Pelosi in 2007 set the stage for this downturn. She put in the stupid wage hike of 40% that killed the labour market.


I was really happy for Pelosi when she became speaker of the house. I thought, WOW, that is cool having a woman in such a powerful position being a father of a daughter and respecting women in general. I now change my mind because I think she is a royal arrogant stupid inbred bitch who is totally clueless in the economy and global international matters. It seems that Pelosi is running our country and Obama is just her boy. I feel so bad for the hard working American citizens who have lost over half their net worth and retirements due to President Pelosi and Messenger Barack Obama. I just learned that Obama was only a state rep from the South Side of Chicago just four years ago. He has only served two years as a U.S. Senator before he started campaigning and the has no business experience whatsoever. He scored big in writing a book and used the proceeds to purchase his house on the South Side of Chicago. I do give him credit for graduating from Harvard Law School, but the guy became a community activist after graduating from law school. It does not matter whether he is black or white (actually he is both) but I really think he is clueless and is surrounded by advisors who only think of only solving the problem for today and neglect the future consequences . I do not know whether the man has a chemical imbalance but he is the biggest hypocrite in this country`s history. I do wish him well, but having him as our leader during these tough trying times is a matter of major concern. I do not think he realizes the scope of work for him being the president of the United States. He is still campaigning and traveling all over the country on Air Force One. I think something needs to be done and be done quick before we turn into the world`s laughing stock. Sorry for ranting, but it is just frustrating and I feel a lot of Americans are losing respect for the office of the President of the United States.

[LJB1031]

McCain's plan would likely not hold the possibility of profound future potential inflation like Obama's plan does.
That may be true but we'll never know. At least you are reasonable and are not just spouting the party line.

[7426k]

A stock market that peaked in October of 2007 and lost 40% of its value the following year, Housing values that peaked in 2006, and recession that started in December of 2007 are the fault of....

A man who took office in January of 2009.

This is pathetic, even by Cramer standards. I hope you also believed Cramer when he gave his "buy! buy! buy!" rant about....Bear Stearns. 3 days before it collapsed.

[ChrisSpencer]

A stock market that peaked in October of 2007 and lost 40% of its value the following year, Housing values that peaked in 2006, and recession that started in December of 2007 are the fault of....

A man who took office in January of 2009.

This is pathetic, even by Cramer standards. I hope you also believed Cramer when he gave his "buy! buy! buy!" rant about....Bear Stearns. 3 days before it collapsed.

+1

I remember working on a paper for my gov regulation of business and antitrust course talking about Gramm-Leach-Blilely while in the background on my TV he was ranting about how great a buy Bear-Stearns was.

[7426k]

+1

I remember working on a paper for my gov regulation of business and antitrust course talking about Gramm-Leach-Blilely while in the background on my TV he was ranting about how great a buy Bear-Stearns was.

Have you noticed how popular the econ forum has become? Someone could do a great study about the correlation between changes in employment or GDP or something vs. Participation in econ forums.

When the economy is great, no one cares. but as soon as it turns bad, everyone's the next Freidman or Mises or Keynes with all the answers that those dingbats in Washington haven't thought of!;)

[ChrisSpencer]

Have you noticed how popular the econ forum has become? Someone could do a great study about the correlation between changes in employment or GDP or something vs. Participation in econ forums.

When the economy is great, no one cares. but as soon as it turns bad, everyone's the next Freidman or Mises or Keynes with all the answers that those dingbats in Washington haven't thought of!;)

Yea I remember only 10 of us posting on here. That's why I liked this one, you could have a discussion in a thread that wouldn't disappear from obscure new threads overcoming it.

Now I think I've read a dozen of the same verbatim posts about sending 250k dollar checks to Americans, converting to the gold standard, and the CRA.

[Tigerdrafted]

The Fed needs to let the banks go under because right now most people don't believe that the FED can even make a significant dent in the amount of money the banks owe. The FED also needs to release the bank records of debt payments but they won't because the truth will hurt.

Oil prices caused Americans to cut back. That is probubly what caused the market to turn down. There is a point of capitualation, when the tail starts wagging the dog. When imports from oil exceed all other imports and the dollar loses it's value. We reached that point at $100/barrel.

It was over 20 years ago when we banned drilling in ANWR and in the OCS.

It was over when we gave up on nuclear power.

The housing market dropped with the economy and the forclosures revealed the dirtly CRA secrets.

[ChrisSpencer]

The Fed needs to let the banks go under because right now most people don't believe that the FED can even make a significant dent in the amount of money the banks owe. The FED also needs to release the bank records of debt payments but they won't because the truth will hurt.

Oil prices caused Americans to cut back. That is probubly what caused the market to turn down. There is a point of capitualation, when the tail starts wagging the dog. When imports from oil exceed all other imports and the dollar loses it's value. We reached that point at $100/barrel.

It was over 20 years ago when we banned drilling in ANWR and in the OCS.

It was over when we gave up on nuclear power.

The housing market dropped with the economy and the forclosures revealed the dirtly CRA secrets.

The oil crisis wasn't the cause of the market capitulation. Instead it was one of the first and most obvious symptoms of market collapse. For no reason of underlying fundamentals the price exploded to over $148 per barrel in less than a year. That's evidence of a drastic panic in the capital market. A run on previous assets looking for anything that can seem to promise a return.

[Tigerdrafted]

The oil crisis wasn't the cause of the market capitulation. Instead it was one of the first and most obvious symptoms of market collapse. For no reason of underlying fundamentals the price exploded to over $148 per barrel in less than a year. That's evidence of a drastic panic in the capital market. A run on previous assets looking for anything that can seem to promise a return.

Yeah the old speculation theory again. I still think it was China buying up all the distillate for the Olympics which was causing the dollar to fall with every one of our oil purchases. Our demand for oil and the run on the Euro fed on each other causing oil prices to keep climbing and the dollar to keep falling.

Soon after the Olympics, oil started dropping like a rock and then the bank failures started. Sure I admit that they may have been caught long on oil contracts and lost their ass on that which might be why they had to come clean on their CDO ponzi scheme.

You can see how far the Con tango price is going right now. About $8/barrel and then it comes back down to the cash price on expiration every month. Same it was when oil was trading at $140/barrel. Speculators can't artificially run up the cash price at the harbor. Impossible unless they are taking delivery.

The market started tanking when oil went up. People cut back.

[wildcat87]

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BD224460E-3C4F-49A2-8CE4-F11EAA4697BE%7D&siteid=mktw

The exotic loans have mushroomed in the past three years, going from less than 2% of loans in 2000 to more than a third in 2006, industry data show. In 2005, about half of the exotic loans sold nationally were originated in California.

The Federal Deposit Insurance Corp. found that exotic loans were more prevalent in the housing markets with the biggest price increases, and suggested that the loans were both a cause of and a reaction to the housing boom.

"The greater availability of flexible mortgage structures probably allowed price increases to outstrip growth in incomes to a greater extent than would otherwise have been the case," said Sandra Thompson, acting director of supervision and consumer protection at the FDIC. But the popularity of the loans is also a response to the higher prices, she said.

The regulators testified that defaults and foreclosures on nontraditional loans remain very low, but they emphasized that it's too soon to tell what might happen if the economy slows, interest rates rise and housing prices stagnate.

Mortgage-industry representatives at the hearing insisted that they are merely responding to consumer demand. It's not up to the mortgage broker or banker to determine what's a "suitable" loan, said Robert Broeksmit of the Mortgage Bankers Association.

"I strongly believe that the market's success in making these nontraditional products available is a positive development, not a cause for alarm," Broeksmit said.

Consumer advocates, however, said the consequences could be devastating because many borrowers simply don't understand what they are buying and won't be able to afford the payments.


I wonder if those ARMs ever started resetting or if prices started stagnating...

[Drive Business]

There is a clear mathematical correlation between the likelihood of Obama being president and the decline of the stock market.

There are three possible explanations:

1) The rise in Obama's likelihood of being president caused the market to go down.

2) The fall of the market increased the likelihood of Obama becoming president.

3) The two were directly related to some other causal factor.

I believe that #2 is doubtful because most Americans do not follow the market close enough to detect those subtle changes. Also, and more importantly, the Obama data was leading the market data. If #2 were the case, it would be lagging the market data. That fact supports #1.

Why is 'the fall of the market increased the likelihood of Obama becoming president' doubtful? Your making a comparison between the stock market and a real-money presidential election market.

The IEM market does not represent average americans. They are MBA and finance students. They should all be following the stock market. If this is the case, #2 is very plausible.

From the website 'The IEM 2008 U.S. Presidential Election Markets are real-money futures markets where contract payoffs will be determined by the popular vote cast in the 2008 U.S. Presidential Election.'

The market vs Gallop would be what your looking to prove. But the numbers would have to be leading, not lagging. I think they are both reacting off the same news anyway.

[Lima India Bravo]

Once Obama got the nomination and was ahead in the polls, my husband insisted that we sell all our stocks and buy treasuries and some commodities instead. We dumped because of Obama and so did some other people we know.

Helping to drive down the market......:rolleyes:

[wildcat87]

Helping to drive down the market......:rolleyes:

Is that called "causation" or "correlation?"

[Lima India Bravo]

I think it's "causelation"....