Actually I think it's pretty acurate to say it goes beyond market correction. Companies with good financial statements and earnings reports are also taking a hit. The reason is because of all the scandal people no longer trust those good reports. Even companies that would normally be good investments are being brought down, becuase the scandals, and shady accounting have brought in an era of distrust. A normal correction would have been one thing, but this isn't just brought on over exhuberant investment. The current downturn is brought on by unethical business practices, fruadulent accounting, and a general distrust of those in charge of the large companies.
I understand that it's not right, but that's just how it is. Don't you agree? That's how its always been, no matter who is in charge.
There is distrust, to be sure. But Bush has set a deadline of August 14 for companies to restate their earnings. The corporate CEOs will submit these numbers under the penalty of perjury should they be false. Not only that, but any company involved in a scandal will now be unable to do business with the US government or with any company that does do business with the governement. To say that Bush has done nothing to correct the problem is ludicrous. It is easy to blame this on Bush, but you need to be fair here. To say that this amounts to much more than a correction isn't exactly accurate. Sure corporate distrust has become an issue, but these "companies with good earnings" were overvalued to begin with. They were BOUND to lose value. No company should be trading at 40 to 50 times earnings because it is simply insane. At that point people are trading on mere speculation. Not surprising given the proliferation of online trading where people who know nothing to little about the market and financial data are making their own trades. Many people bought the traditional "blue chip" stocks, and they became overvalued. The corporate distrust and scandals are an aggravating factor, not the sole cause for the decline.
I didn't mean to say that distrust was the sole reason. I agree that market correction is part of the reason for the current decline, but I think it goes beyond market correction as well. As for what Bush is doing... Basically he's just voicing the stuff the SEC and congress has already put forward. I will be fair to Bush and say it's not his fault that the CEO's guilty of fraudulent or dishonest practices did what they did. It didn't just start with Bush. At the same time it's hard for a lot of what Bush says to be taken seriously, because a lot of the things that will now be illegal, Bush did when he was an executive himself. It's true that it wasn't illegal at the time, but it doesn't lend the impression that Bush is real reformer when it comes to corrupt business practices.
Yes that the games these guys play. I always give credit due (bad or good) to the deserving party. I understand where your coming from, just I have never agreed with it.
just curious but what exactly should Bush do to help the stock market/ investor confidence? the SEC investigations are turning up new scandals every week... short term that sounds pretty counter-productive to me but it has to be done so again, if you think Bush is at fault for all of this what has he done wrong (as president, who cares what he did before he was pres) and what should he do?
so again, if you think Bush is at fault for all of this what has he done wrong (as president, who cares what he did before he was pres) and what should he do? For one, he needs to sign the strongest possible corporate reform legislations. US News this week shows the differences between the President's proposals, the Senate's, and the House's. The President's is the least-aggressive of the three. Whether he'll sign whatever version gets worked out between the House & Senate remains to be seen. If he does sign it, that will be a huge step in the right direction. Personally, I would also like him to replace the SEC chair with someone who has a history of fighting corruption rather than someone who's primary job was to get around SEC regulations. I don't believe for a second that he's suddenly changed his ways. Outside of that, I don't think people are so much blaming him for the problems themselves -- some people (esp. the stock market) just don't think he's the ideal leader to tackle these issues because of his history and his ties to many of these companies and industry in general. He and his SEC guy have always been anti-regulation for these types of things. When he comes out and says there absolutely needs to be regulation, it's hard to know just how serious he is. If there was a marriage fidelity crisis or crisis with labor unions being too powerful, I wouldn't want Clinton leading any type of reform plan either. The White House's refusal to cooperate in the Enron investigation didn't really help the image either. Regardless of if they did anything wrong, having a bi-partisan Congress subpeonaing and suing the White House can't have helped their image. Remember, perception is reality in Washington.
I just can not honestly believe you can believe that what a president has done in a year and a half could lead to this. Major, you in particular are way too smart to believe that....it doesn't surprise me from everyone here...but from you, it definitely does. You seem to have such a good understanding of economics and the forces that affect the US economy.. I just can't imagine you actually believe that Bush is to blame. I remember hearing long before the election that the president who took office after clinton would most certainly have to deal with a recession or some suspended periods of little or no growth....BUT THE ECONOMY IS GROWING, RIGHT?? This is more overestimation of the importance of the Dow Jones at the end of the day to tell us if we're all doing okay. Worker productivity has been fine...the economy has been growing...and all this after a terrorist attack less than a year ago directed right at our financial center. I would be willing to bet that half of the people here who have placed the blame on Bush for the fall in the market (and its perceived effect on the economy at large) have no idea what the Dow Jones is.
I think it is also worth mentioning that part of the massive drop in the Dow Jones Industrial Average is due to a side effect of the scandals. The size of the scandals has investment houses selling in fear of overregulation as a knee jerk reaction. Too much regulation is not good for business. Knee jerk levels of regulation are imposed, companies spend money on compliance, profits go down, companies lay people off to make up the difference. Hmmmm...all of a sudden our growing economy stops growing and resumes contraction. Remember, monetary policy and regulation can CAUSE a double dip recession...or even a depression. Let's not be knee jerk reactors.
I just can not honestly believe you can believe that what a president has done in a year and a half could lead to this. Major, you in particular are way too smart to believe that.... I'm not blaming Bush for this -- notice my last post: <I>Outside of that, I don't think people are so much blaming him for the problems themselves -- some people (esp. the stock market) just don't think he's the ideal leader to tackle these issues because of his history and his ties to many of these companies and industry in general.</I> Economic policy takes a lot of balancing and is really driven by confidence. If people don't trust Bush and his ability to handle the economy, that *can* (not necessarily will) erode consumer confidence. That can spiral into something worse. This was actually one of Clinton's best traits -- he made people believe things were going to get better. That does lead to things getting better to some extent. This is more overestimation of the importance of the Dow Jones at the end of the day to tell us if we're all doing okay. Worker productivity has been fine...the economy has been growing... Agreed on the current economic strength. Where the Dow and the market in general come into play is again consumer confidence. Right now, the economy is growing because people are still spending. However, people have lost nearly $3 trillion dollars in savings this year. That won't affect day-to-day spending, but at some point, that can affect home and car purchases and big-spending items like that. If that happens, that ripples and can cause a second downturn. It's certainly a credit to the strength of the economy that this hasn't happened, but some of the fear in the markets is that it CAN happen if confidence isn't restored and the market keeps falling. Personally, I don't really know what specifically Bush can or should do. But just from watching CNN and CNBC and interviews with investors and stuff, they seem to want a stronger commitment from him on reforms. He gave a speech on it early last week (I believe) and some investors interviewed said it just wasn't enough. Many of them say they aren't going to put their money back in until there is stability and confidence in the earnings of these companies. I think there are certainly more things he can do to help improve the current situation. I don't think what has happened is his fault, though.
