Obama Needs a History Lesson

Amidst the daily shake-up of the financial sector, Barack Obama compared this as “the most serious financial crisis since the Great Depression.” Obama railed against Bush (and ergo McCain), outraged at the 6.1% unemployment rate and the 504-point (4.4%) drop in the Dow Jones average.

Here, Obama goes beyond hyperbole to mislead us. Absolutely, the economy has yet to recover from the sub-prime mortgage fallout. However, economic history is proof positive that his gloom & doom assessment of our current economy is a better argument for Obama being “out of touch” with reality.

Does he think that we don’t know unemployment didn’t drop below 6.1% from 1975-1987 …and went as high as 9.7%? How would Barack Obama characterize those years?

Obama’s economic vision for America and his obvious admiration for the European model should give us pause. Does Obama look so kindly on a model which, in practice, results in unemployment rates generally higher than the US and in some cases, a broken welfare state?

Admittedly, Obama is not the only politician or pundit to cry foul at the increase in unemployment. But many critics are the same people who bemoaned the 4.6% unemployment last year and every year under the current administration.

And to be fair, the rate of unemployment  that balances with steady inflation has decreased over the past decades. Maintaining control over inflation is a challenge for Bernanke & the Fed. Hopefully, they will act appropriately.

DJIA did drop 4.4% on Monday, and barring a slight recovery the following day, it’s dropped 7.1% so far this week. Compare this with the one day 7.68% drop following 9/11 and 22.61% loss on Black Monday, October 19, 1987. And there are more large one-day drops:
7.74% on 10/24/1997
7.42% on 10/12/1989
7.36% on 01/07/1988
8.74% on 10/23/1987
7.00% on 09/23/1955
22.46% on 06/05/1945
7.27% on 05/20/1940
7.30% on 05/13/1940
Great Depression 1929-1939
12.78% on 12/17/1921
11.81% on 09/19/1918
7.81% on 01/31/1917
30.76% on 07/30/1914
7.42% on 07/29/1914
14.46% on 03/16/1911
13.08% on 10/28/1908

But I’m comparing oranges to clementines. Though should not diminish the serious problems at Fannie,  AIG, et. al., the losses listed above are probably more significant than what we’ve experienced today. Obama’s freehanded revision of economic history and the future outlook banks on voters’ “short-term memory” mentality - and his assumption that we’re not smart enough to access public statistics.

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