By: Mary Mostert, Analyst, Banner of Liberty (bannerofliberty.com)
March 21, 2001
While I am not a financial guru, one of the things that I have learned in recent years is that we are in a world financial market, not just a Dow-Jones or Nasdaq financial market. People who have the money and the time to play in the markets are playing in the world markets. The last time, for example, that the Dow-Jones took a sharp dive, while the Asian markets were also down sharply, I noticed that, of all places, the markets in Thailand and Russia were up sharply.
I concluded that people who sold in the down market in Washington were parking their money somewhere else, often, apparently, in unlikely places.
So where, do you suppose, with the Nikkei at a 16 year low and Dow Jones dropping yesterday, after Greenspan announced a mere .5 cut in interest rates, rather than a media discussed .75 or 1.0 cut in interest rates, did all that money go when it left the Down-Jones and Nasdaq? Well, the Nikkei, at 3:30 A.M. Eastern Standard time (3:30 P.M. Japanese Time) today had "surged 7.49 per cent or 912.97 points to 13,103.94, its biggest one-day percentage gain since April 10, 1992, when it jumped 7.55 per cent."
And what is the interest rate in Japan right now? It is zero. The South China Morning Post (www.scmp.com) reports today on the situation in Japan:
"The Bank of Japan's (BOJ) Policy Board announced a dramatic change in policy on Monday, scrapping its traditional interest rate target and aiming instead to increase the volume of commercial bank account deposits parked at it.
By flooding the banking system with extra funds through purchases of government bonds, the BOJ expects the key overnight money-market rate to fall virtually to zero, a rate it has pledged to sustain until nationwide consumer prices stabilise at zero or above.
Analysts said domestic-demand issues, especially retail stocks such as Ito-Yokado Co, were riding the BOJ's pledge in anticipation easier credit could kick start sluggish consumer spending.
Now, don't you wish you'd thought to take your money out of Dow-Jones and Nasdaq yesterday and invested in the Nikkei, which, until today's 912.97 point jump, was at a 16 year low? If you didn't, and you still have your money in a 401K or a balanced account somewhere, for heavens sake don't sell now.
The big problem here, we are being told, is that we don't have Clinton in the White House anymore and, as the entire news media, with a couple of exceptions like Neil Covuto of Fox News, is trying to sell us on a "Bush Recession." Some are pointing with horror to the sharp drop yesterday. Doesn't that prove that we are in a Bush Recession, just like Sen. Daschle was telling us on January 4th ? The New Australian (http://www.newaus.com.au/us175daschle.html) commented at the time:
"Not five minutes after making noises about bipartisanship the Democrats, led by the extremist Tom Daschle, demanded that Bush abandon his tax cuts policy. The sanctimonious Daschle warned that if Bush insisted on implementing his policy it would destroy any prospects of bipartisanship. What this hypocrite really means is that bipartisanship equals Democratic policies. Daschle's hypocrisy should not surprise us as this is the same political creep who fought successfully to hamstring the voting rights of America's service personnel."What is deeply worrying to Daschle and his Democratic ilk is not that all the economic indicators point to a looming recession but that Bush's economic policy might actually work and thus thwart their ambition to capture both Houses. Better, in their eyes, for the economy to be kept in recession for the next four years thus providing them with a club beat the Republicans. That's how deep Daschle's patriotism runs. But then, America's service personnel know just how patriotic the lying Daschle is."
What investors and stock market gamblers might want to think about, before they buy into what appears to me to be a deliberate media and left-wing political effort to scare them into a really serious personal financial mess, is to remember what was going on in the Dow-Jones during the last 18 month of the Clinton Administration.
From August 23, 1999, when the Dow reached 11,299.80 to October 13, 1999, when the Dow dropped to 10,019.00, it had dropped 1280.80 points. Do you remember what was going on in the news during those six weeks?
Well, for one, shortly before the drop Clinton had vetoed HR 2488, the $792 Billion tax break which passed 221-206 in the House and 50-49 in the Senate, commenting: "I will have no choice but to veto it immediately. It threatens Social Security and Medicare, makes it harder to pay off the debt, and imperils the prosperity that has brought real benefits to American families."
Not a single news commentator was talking "recession" or even a "slowing economy."
Then, a few months later, on January 13, 2000, the Dow had gone back up, surpassing the August 23rd 1999 high, reaching 11,582.90. And, Do you remember what was in the news on January 13, 2000? Bill Clinton was talking about requiring Websites that sell pharmaceuticals to registers, as part of his attempt to implement Hillary's health care plan in installments.
By March 7, 2000, the Dow had dropped to 9796, or 1786 points. Again, not a single news commentator was talking "recession" or even a "slowing economy.
Then, on April 3, 2000, the Dow had climbed back up to 11,221.90. Eleven days later it had crashed again to 10,305.80, a loss of 916.10 points. Do you remember what caused that 11 day drop? I wrote at the time, on April 6, 2000:
"Only Bill Clinton would have the nerve to invite a group of financial and business leaders to the White House and ask them "What could derail the current supercharged economy?" a day after the Stock Market fell 500 points caused by his Justice Department trying to halt Microsoft's incredible growth, with Bill Gates sitting beside him at the table.
"Earth to Bill Clinton: What could derail the current supercharged economy is your effort to destroy Microsoft. Microsoft is a major reason why the economy was doing well - up until Judge Thomas Penfield Jackson's decision Monday."
Again, not a single network commentator noted any connection. No one, it seemed, was willing to challenge Bill Clinton or even mildly suggest that his policies were NOT exactly helping the stock market. Microsoft lost about half its value after the Clinton Justice Department went after it.
In spite of that, the stock market again climbed, as the Clinton administration and its friends in the media tried their best to talk it back up during the election year with stories about how important an Al Gore victory would be in maintaining the Clinton economic boom. On September 6, 2000 the Dow reached 11,310.64 just 2 months before the election. It was assumed at that point that Al Gore couldn't lose. Yet, on October 18, 2000, only 3 weeks before the election, the Dow fell to 9975.02.
And what was the news during that period? The two issues that very well may have caused the defeat of Al Gore: $36 a barrel oil and reports of Gore's position on the Boy Scouts of America: I wrote on September: 18, 2000, commenting on a liberal columnists view that people at the Democratic National Convention had a "right" to boo a group of Eagle Scouts posting the colors:
"It would appear, from the news over the week-end, that the Gore campaign needs all the help it can muster from a supportive media, to beat George W. Bush in November. And, there are a couple of issues that the media seems to be trying to bury to help their man."One of those issues is the spiraling price of oil and the low reserves, especially oil for heating this winter. The other is an issue that some members of the left wish members of their own group had just not brought up until AFTER the election, when Al Gore was safely in office - the Boy Scout situation."
Again, that sharp drop in the Dow did not prompt a single commentator that I read to allow the word "recession" to ooze from his computer. That did not happen until the very DAY that Al Gore finally conceded defeat. The Electoral College voted George W. Bush into the Oval Office on December 18th.
On December 20th the Dow was 10,318.93. Yesterday, on March 20, 2001, three months after the country knew for sure he was the President Elect and two month after his inauguration, the Dow has dropped 598.93 points and all the sudden we are being told by the Democrats and their friends in the media that our economic sky is falling.
The stock market goes up. And then it goes down. Unemployment is at a near record low. People appear to have taken their money out of the Dow yesterday and plunked it in the Nikkei. And, the fact of the matter is - until people like Bill O'Reilly of Fox News, who seems to have had some slow news days, began talking recession, the ups and downs of the stock market for the last two years has not even been on the front pages. Bill O'Reilly, who is telling us the sky is falling over the 598.93 point drop since December 20th said nary a word about the 1786 point drop in the Dow during a shorter time span last year from January 13 to March 7th, while Clinton was in office.
To comment: mmostert@bannerofliberty.com
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