Posted on 04/10/2008 8:22:57 PM PDT by bruinbirdman
Why have U.S. stock markets been such relatively poor performers this decade? American equities have lagged their brethren in the rest of the world since they reached their lows in October 2002. At the height of the stock market last October--before it was clobbered by the credit crisis--the S&P was up about 100% from its lows of five years before. In contrast, German equities have risen more than 200%, the French about 120%. The MSCI World Index, which includes the U.S., has moved up about 135%. It's no surprise that the MSCI Emerging Markets Index has skyrocketed almost 400%.
It isn't as if the U.S. economy has been laggard. Between 2002 and 2007 the U.S. economy's growth exceeded the entire size of the Chinese economy. In effect, we grew the size of China in five years. China's growth rates are higher, but that's because it's coming off of a much, much smaller base.
The villain behind our less than lustrous performance is the ever weakening dollar. The Bush Administration and the Federal Reserve believe a weak greenback means greater exports, fewer imports and thus a smaller trade deficit. In the short term they're right. But they willfully ignore the disastrous price to our domestic economy that trashing the dollar exacts. The excess money created by the Fed led to the housing disaster and the return of inflation. Cheap money also hurts business investment in this country, one reason that companies have tended to beef up their capital outlays in their overseas subsidiaries and are clutching cash here at home. Rarely this late in an economic expansion has cash made up such a large portion of corporate balance sheets as it does today.
(Excerpt) Read more at forbes.com ...
The White House and the Fed should be less bullheaded about their misbegotten dollar policy and openly vow to take whatever steps necessary to buck up the buck. Then you'd see equities reach their true values, which are substantially higher than they are today.
Time for an eye exam. I thought it said “Why socks stink.”
Because they weigh more than a duck!!!
What do I win?
Under-performance of US capital markets are relatively easy to explain. We had a much bigger bubble which took a long time to wind down, and it was in the areas (Internet and related technologies) where the rest of the world was not invested on such a massive scale at the time.
In addition, we also had direct negative results and loss of Trillions of dollars in the capital and housing market and still have security and military expenditures in the aftermath of 9-11, which most other countries did not and do not have to bear.
If that was not enough, recently, we elected a socialist Congress which is doing everything possible to sabotage the economy and any progress on issues that might positively affect it.
We use “stupid science tricks” to justify production of ethanol from corn and other insignificant but expensive “alternative” forms of energy such as wind and solar.
And, as you said, our “debased but strong dollar” policy is once again (as everywhere it had been tried) proving to be a disaster - no country yet became prosperous by debasing her currency.
All this considering, we are probably doing better than was expected at the time of comparison, but we could have been doing so much better if not for our super-enlightened “let’s-try-the-70’s-again” policymakers.
Wish we had nominated Forbes. W has become a walking disaster.
“Teve Torbes” was my choice in 1996 and 2000.
The asset bubble just hit, and popped here first.
It's comin' to a town near them later.
The author picked the WRONG data to make his point on a weak dollar...anyone who makes monetary policy based on the desires of "the market"...will surely land us RIGHT WHERE WE ARE NOW.
The currency and the market are two completely (by necessity) separate entities. NEVER should any linkage be allowed.
And yes, the linkage built by first the Greenspan, and then the Bernanke Fed will surely kill us all.
I wish I had a wheel barrow to haul my money around.
then I could buy bread.
Soon everyone,I’m afraid is going to be a millionaire, like it or not.
In the 2000 Iowa caucuses I stood up and spoke for Steve Forbes. I told the caucus goers that George Bush was not a conservative and that govt would grow and that Bush would not do anything about abortion ect.
I hate to say I told them so... In the 2004 caucus I spoke out against illegal immigration and was shouted down.
In 2008 I did not attend the caucuses as I am no longer a registered Republican. I am an independent.
I think some of the reason for the lackluster stock market is that shortly after 2000 we had the dot com crash, which made many people sour on the market, and the housing boom was just beginning. People started plowing their money into housing as a safe investment in the post 9/11 era, and continued to fuel the boom until it popped. For this decade, the stock market was left to institutional investors.
How much growth have we had since 2002 that is not part of the asset bubble?
Thanks in advance to BobJ, JRob et al. FReeper's it's been a great ride from pushing Clintons peach-ment to ruining Algores career. I can't help grinning at our DC romps. Mike H needs to be alert and alive at convention time. We need to filibuster the process. A good ol' putsch should be started here and emplimented at the convention. Just like the good ol' days when the best man won because the US Senators were beholden to their states legislators, not supermen for 6 years at a time; enough black robed tyranny! God Save the Republic, Amen
LOL. I'll sell you my neighbor. 39 cents a lb. you'll feast for years to come. Tastes like roost chicken
Bush has appointed three conservative supremes. Recently partial-birth abortion was struck down. How do you like your crow served?
Keep drinking the Bush koolaid.
Bush has done nothing to stop abortion in this country. Wooo, he appointed 3 conservatives to the Supreme Court...WOW. This was after he tried to appoint Miers and other RHINO’s. He would have succeeded if conservatives hadn’t stopped him.
Nope. No crow needed here.
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