Mimsy Were the Borogoves

Editorials: Where I rant to the wall about politics. And sometimes the wall rants back.

Can the president take responsibility for market rises?

Jerry Stratton, March 24, 2009

For a long time, it’s seemed as if every time the White House comes up with a new economic plan, the market has reacted by immediately dropping. Remembering that over the short term the market isn’t always right, it isn’t unfair to “blame” President Obama for these drops. But that also means that it isn’t unfair to give the White House some credit now that the market has risen immediately after a new plan was announced.

The market may see Geithner’s latest plan as a boon simply because it’s a return to basics. Here’s the thing: it’s very similar to the original TARP plan from last October. The market wasn’t too happy about it then, but may see it in a new light now that they’ve seen what else might get tried. I saw that plan as a reasonable one: given that some sort of bailout was going to happen, it seemed to be a good choice.

Another possibility is the removal of uncertainty. If there’s one thing that the market tends to not like, it’s uncertainty. Even when the two possible outcomes are both good, the market tends to want to wait until one outcome wins. This plan is the first one from the current administration that has an actual plan attached to it.

Now the question is, can the President stop here and let the recovery happen instead of spending ourselves into inflation. We may find out tonight.

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