It is not just the busted financiers of Wall Street who have a stake in the Dow's ups and downs - millions of working Americans have their hopes for a comfortable retirement tied up in the benchmark of 30 major stocks.
That index is now plumbing its lowest levels since 1997, but Obama refuses to be swayed by what he calls the "day-to-day gyrations" of the markets as he hustles through far-reaching plans to remake the world's biggest economy. "There are a lot of losses that are working their way through the system," the president said Tuesday at a joint appearance with British Prime Minister Gordon Brown. "It's not surprising that the market is hurting as a consequence," Obama said, turning investor-in-chief as he presented the current slump as a potential buying opportunity for long-term investors.
Obama's robust poll ratings average more than 60 per cent, surviving an economic downturn that has accelerated since he succeeded George W. Bush on January 20. In fact, his ratings during last year's election campaign benefited from the sinking markets, just as Republican rival John McCain's fell in step with the Dow. The Democratic president has successfully argued that he inherited this mess from Bush, and needs time to put it right.
But the opposition Republicans, still battling to find a way of attacking a popular new president, scent opportunity as the Dow has dived and taken down the "401(k)" retirement accounts of a large swathe of voters.
The share index closed at 9,625.28 on November 4, election day. It lost nearly 600 points the next day, after Obama's victory over McCain, and dipped below 8,000 when he was inaugurated.
When Obama signed a gargantuan stimulus bill worth $787 billion on February 17, the Dow slumped another 300 points. On Tuesday, it closed at a fresh 12-year low of 6,723.95.
The toxic assets clogging up US banks' balance sheets are a major factor in the erosion of confidence. But for John Boehner, Republican leader in the House of Representatives, Obama's policies are now part of the problem. "The policies promoted by Washington Democrats are undermining Americans' confidence in our markets and our economy," he said Tuesday as Congress began hearings on Obama's $3.55 trillion budget plan. "American families and small businesses know we cannot afford more taxes, more spending, and more debt amid this increasingly severe recession," Boehner said.
Phil Levy, analyst at the free-market American Enterprise Institute, wrote on foreignpolicy.com that "markets seem to be sending an unambiguous signal that the US economy is now headed in the wrong direction."
And the conservative editorialists of the Wall Street Journal weighed in to argue that as "the Dow keeps dropping, the president is running out of people to blame."
But for professor David Epstein, an expert in political economics at New York's Columbia University, that view is myopic. "He's got two years," he said, arguing Obama has until the mid-term elections of November 2010 to start turning the economy around. "The fact is people are giving him a large benefit of the doubt. He did inherit the crisis[...]The one thing that does generate lots of angst among voters is the financial aspect, with all the bailouts. They're running out of patience with that," he said. "But the Republicans run a risk too. They are seen as the party of no hope and no can't do. And after driving a car full speed over the edge of the cliff, they don't have a lot of credibility on economic matters, period."
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