Today the Dow opened at it's lowest level in nearly 12 years. It dropped and remains below 7,000. To put this in perspective, if you invested in a Dow index fund 12 years ago expecting a somewhat decent return (4-8%) over time, you would have made 0% interest on your investment as of today. Because a dollar 12 years ago is worth less than a dollar today, you would in actuality have lost on this investment, since it is not keeping up with inflation. Stocks are down across the board and gains made over the past decade are being wiped out in just a few months. This is not good news to anyone who has money in the market, even those who invested conservatively and diversified their holdings.
I expect the Obama Administration to deeply down play the stock market. The last thing they want right now is for their 'success' to be linked to the tanking market. But the funny thing is, as soon as it roars back (whenever that may be) they will be the first to take credit for the upward movement. Don't be fooled, if you credit them with moving the market up you must hold them responsible for the market moving down. The market has reacted negatively to almost every measure the government has made to 'stabilize' and jumpstart the economy. Most recently today news came out that AIG had lost over $60 billion in one quarter. It is expected to receive another injection of around $30 billion, and I can assure you this will not be the last. In correlation to this, you see the Dow dip today. From the Stimulus package, to fears of nationalization, to Timothy Geithner's unveiling of his master plan to fix the economy, we have seen negative reactions in the market.
These bad economic policies are not limited to Obama or the Democrats in Congress. The Federal Reserve Chairman and the Federal Reserve itself has contributed to the tanking market, as well as former Treasury Secretary Paulson. This is not limited to the Democratic Party, either, as many Republicans (including Former President George W. Bush and Former Presidential Candidate John McCain) supported the initial bailout that was the beginning of the string of government intervention policies.
Fortunately, the Republican Party is coming around, for the most part. They made a stand against the 'stimulus' package (except for a few Republican Senators), and we can see a renewed spark of fiscal Conservatism in Republican Governors such as Mark Sanford, Bobby Jindal, among others. The investors and public at large, through the stock market, are showing their disdain for the current economic policies. They are not confident that the actions taken by the government to 'fix' the economy are going to do any good. It falls further with each further intervention. Fiscal Conservatism has been abondoned by both parties, but I can see a spark of hope in the rapid growth of those calling for limited government and fiscal conservatism.
Are we at the point where politicians will take up stances such as abolishing the Federal Reserve, taking on the problem with fiat currency, and discussing the benefits of the gold standard? Not quite. But I wouldn't rule these out as impossibilities in the near future.