If you had any questions about how differently the economy will be covered with Barack Obama in the White House they were answered by George Stephanopoulos on Sunday when he credited the president-elect with causing the recent stock market rally as well as better than expected sales the day after Thanksgiving.
I kid you not.
During the panel discussion of the most recent installment of "This Week," Stephanopoulos said (video available here, relevant section at 11:05):
President-elect Obama also said this week in a series of press conferences that he held Monday through Wednesday on the economy and laying out his economic team. You got to give him credit for one thing at least: ever since the leak of Tim Geithner as Treasury Secretary at 3:00 last Friday, the Dow has gone up 17%, the S&P has gone up 19%. So at least there's been a vote of confidence in the markets for president-elect Obama…And Black Friday, that’s exactly right, sales up three percent surprisingly on Black Friday. So, is this about the Obama economic team?
Interesting that Stephanopoulos knew exactly what time Obama leaked the information concerning Geithner two Fridays ago, but chose not to discuss WHY it was leaked at that hour. After all, for the previous two weeks, the final hour of trading on the New York Stock Exchange had been absolutely brutal with many big down days seeing most of their losses in the final 60 minutes.
Maybe more important, the Friday in question was the day options on many stocks and stock futures expired which typically creates a lot of volatility. By leaking the information about Geithner at 3:00, the Obama team must have known how this would impact such a normally hectic day, and that those with short positions -- meaning that they're betting on stocks going lower -- might have been forced to buy in the final hour to either protect profits or prevent losses.
Stephanopoulos chose not to address the likelihood that this was exactly why the Obama team leaked the information at that time rather than waiting until after the market closed.
What also eluded Stephanopoulos were other key events that happened last week which were likely more the cause of the rally continuing. For instance, the announcement Monday morning that ailing Citicorp was going to get more funds from the government as well as guarantees on all their troubled loans sparked a huge rally in financial stocks which provided much-needed confidence that the banking system wasn't in imminent danger of a total collapse.
Beyond this, mortgage rates plummeted last week suggesting that the credit markets are finally beginning to ease, and that financial institutions, after almost three months of inactivity, were more interested in lending. The impact such a thawing could have on all industries is huge, and was a big factor in last week's stock explosion.
Lest we not forget that the shares of GM and Ford more than doubled last week as investors became more confident there would be some federal moneys going to the ailing auto makers.
None of this was addressed by Stephanopoulos Sunday, nor was the fact that the market is still down eleven percent since Election Day. The worst post-presidential election performance (through the end of the same calendar year) since 1900 is down 15.8 percent in 1920; the average since 1900 is a 2.7 percent gain.
What this means is that although the markets typically rally after a presidential election, despite the explosion the last five days, we're currently on track to record the second-worst performance for this period in the Modern Era.
This hardly appears to be the vote of confidence Stephanopoulos suggested it was.
Of course, maybe more preposterous was saying that the apparently better than expected sales on Black Friday were because of Obama's economic team announcements.
After all, the overwhelming majority of Americans don't know who the current Vice President is let alone the Vice President-elect. Do you really think they're basing spending decisions on who Obama's Treasury Secretary is?
Sadly, you better get used to this kind of nonsense, for it seems a metaphysical certitude that anything good that happens anywhere in the world once Obama is inaugurated will be somehow connected to him just as anything bad that happened anywhere in the world during the past eight years was blamed on President Bush.
Funny how that works, isn't it?