Recent history would beg to differ:
After 4 years of all-Republican government:
Dow Jones Industrials, Jan 2007 – 12,398.01
After 2 years of divided government:
Dow Jones Industrials, Jan 2009 – 9,034.69
After almost 2 years of all-Democratic government:
Dow Jones Industrials, Oct 2010 – 10,829.68
Did Lawler point this out? Of course not! The narrative rules!
Please share widely!
through a straw. This only (nearly) four years of data, and typically these questions are answered with decades of data. Not that I know the answer, but your example is limited.
So recent that it’s almost the present!
<
p>Yes, it’s only 4 years of data, but it’s the last 4 years. It shouldn’t be all that hard to remember, or to bring up on the spur of the moment. So did Lawler bring it up? Heck, no!
Questions of this nature and correlation with market and economic data isn’t usually viewed through a 3-4 scope; it’s normally viewed through a historical lens of decades to achieve the highest degree of accuracy. It’s done that way to rule out anomalies. Any economics or finance majors – please correct me if I’m wrong, but every class I’ve every economics class I’ve ever taken dealt with questions of this nature with a decades view.
There have been 16 2-year periods where government control has been split, 7 2-year periods where Democrats had all 3 branches and 2 periods where Republicans had sole control.
<
p>In periods of divided control, the DJIA increased an average of 8.5%
In periods of Democratic control, the DJIA increased an average of 10%
In periods of Republican control, the DJIA decreased an average of 1.8%
<
p>So Pond is still not correct.
<
p>But it would never suit the narrative to point out that Democratic control is better for the economy.
where?
http://www.nyse.tv/dow-jones-i… for the DJIA and the chart in this: http://uspolitics.about.com/od… for control of branches of government.
WBZ boils its pots with advertising, and advertising demands an audience.
<
p>If WBZ, along with the rest of the media, simply covers the facts — especially the economic facts — then the Republicans lose. It’s that simple.
<
p>That sort of runaway is terrible for viewership.
You dont provide any statistical balance for overlap. A bill passed under one party may take months or years to make an effect on the economy. Power swithes hands and soemtime the legacy of the former party rules the current day economy. This type of argument is ridiculous. Economies find ways to avoid the ruin caused by government to make money. If you think one party has any effect other than ruin on the economy than you are not living in reality
by pointing out that the original assertion made on WBZ – that the markets “prefer divided government” – was false. Obviously, it would take an extremely detailed and complex study to take into account the kinds of things you’re talking about – effective dates of legislation, etc. But I really appreciate Steve’s making the effort to disprove “conventional wisdom” claptrap that passes for intelligent commentary on our airwaves.
that I don’t expect Lawlor to have the 50-year history at her fingertips, but we just lived through the last 4 years, and it’s something I’d expect her to know off the top of her head.
<
p>I expect too much?
in fact, we almost always do. Indeed, if markets are in (well, close to) equilibrium, they tend to try and create them. South Sea Bubble, anyone? Dot-bomb? Housing boom? Tulip craze? Electronics bubble?
<
p>Can you honestly say that at anytime in the last 150 years, in the US, there has passed a single decade where a significant market event (or marketing campaign, to be blunt) has not driven that mythical equilibrium?
<
p>The Civil War – rape of the confederacy – westward expansion – the consolidation and expansion of Wall Street – TR’s anti-trust reaction – WWI – Roaring 20’s reaction – the Great Depression – WWII – the 50’s expansion and the Cold War – the 60’s reaction – the oil embargo – the Reagan de-revolution (which brings us up to the present).
<
p>All of these events have at least some roots firmly planted in the movement of capital and in commerce. I left out, intentionally, other events like bad weather and harvests, mineral extraction (oil and electricity’s role throughout almost all this period) and such. Those were fortuitous, genuine market events driven by acts of god, discovery or innovation. I also left out the enormous effects immigration had on this entire process, as well as an almost guaranteed revenue stream which Wall Street enjoys in the form of everyone’s retirement investments – tax subsidized, please note. And please note that if you’re looking for a reason that P/E ratios are broadly elevated over historical norms, there you go.
<
p>However, the only market event any of us need concern ourselves with, and one which nobody in elected office will discuss plainly, is that the ride is over. No more frontiers to develop, and the world is busy grabbing what portion of the global industrial base they can lay their hands on. Convergence will never actually take place and the global race to the bottom is newly demonstrated almost daily.
<
p>30 years ago it was beginning to look like we were heading in England’s direction, a mature and stagnant, but stable, economy, but I’m beginning to think we’ll wind up more like China was 30 years back, a huge economy which consumes pretty much everything it produces. Competition won’t be so much between businesses as between sectors: housing will compete against arms producers for capital. Anyone with natural resources left to extract will dole them out like Scrooge.
<
p>Everything is anomalous, and analysis of historical price data tells you almost nothing.
<
p>When he says business likes divided government, he’s telling you he likes weakened government. He’s telling you that he likes a government he can always pry his way into to gin up a competitive advantage somewhere or simply to collect rents. He is being disingenuous though, because what he likes best is a government whose philosophy is aligned with that of business and that business likes whatever freedom to maneuver it can get.