(updated below - Update II - Update III)
Last Thursday, when the Dow was dropping to roughly 8,600, various right-wing polemicists claimed that the stock market was plummeting because investors were realizing that Obama would likely win and his policies would be bad for the economy. The Right's leading intellectual historian, Jonah Goldberg, wrote a post he entitled "The Obama Discount," and printed this email:
When are people going to start talking about the REAL reason the markets are down - Obama up in polls. If I was McCain, I'd start telling people, "If you want to lose more money, vote Obama."
Though Jonah said he had "no idea whatsoever if there's merit to this, and if there is how much merit," he nonetheless noted that he was receiving "lots of email like this" -- presumably from other geniuses who write emails sharing their economic theories with Jonah Goldberg.
Two days earlier, when the Dow was falling to roughly 9, 500, James Pethokoukis at U.S. News & World Report wrote a piece entitled: "After the Bailout: Is Obama Depressing the Market?" He began the column by conceding that "it would be an absolute cheap shot to blame the falling stock market on Wall Street's sudden realization that Barack Obama will very likely be the 44th president of the United States," but he then proceeded to do exactly that, rhetorically asking: "is fear of a potential Obama presidency playing any role at all in the weakness," and then quoted a conservative economist who claims that Obama's economic policies will hurt the economy.
That column led Jonah to write another post -- The Obama Discount Cont'd -- in which he quoted Pethokoukis' column at length and then insightfully added: "that sounds reasonable to me." Goldberg then posted a bunch of pretty charts which "a reader sent him" that purported to show a correlation between the increasing Intrade percentage that Obama will be President and the declining Dow, and -- after including some language questioning the theory -- Jonah added: "I think Pethokoukis' point that Obama's success may make investors more pessimistic about the future has some plausibility to it."
Over the weekend, multiple new extremely pro-Obama polls were released -- including from Newsweek ("Pulling Away") and The Washington Post ("the two presidential nominees appear to be on opposite trajectories, with Sen. Barack Obama gaining momentum and Sen. John McCain stalled or losing ground") -- showing Obama with an expanding, double-digit lead. Other new polls show Obama now even leading in numerous states previously thought to be certain GOP victories -- such as West Virginia and North Dakota -- along with 2004 red states such as Missouri, Colorado, and Nevada. As a result of all of this, conventional wisdom solidified this weekend that an Obama victory looks more certain than ever, and even hard-core right-wing ideologues are publicly attacking the McCain campaign for its "pathetic" ineptitude.
Following those events increasing the likelihood of an Obama victory, this is what happened today:
Wall Street explodes in historic one-day surge
Wall Street exploded in a historic rally Monday, snapping back from last week’s devastating losses, with the Dow Jones industrial average chalking up its biggest-ever one-day point gain.
None of the people propounding the self-evidently moronic theory that the dropping Dow was due to Obama's rising poll numbers has mentioned any of this today. They're as intellectually dishonest as they are dumb.
I receive e-mails fairly commonly these days pointing out some bad policy or another that Obama is advocating and asking why I favor an Obama/Biden victory in light of that. Even if you don't see much difference between the two parties and dislike both presidential candidates, the need to rid ourselves of the people who do things like this -- infecting our political discourse with abject idiocy and bottomless dishonesty, shaping their own realities to match their base desires -- is reason enough to favor that outcome.
UPDATE: I'm no economist, and there may be other causes, and it's possible that it's just a coincidence, but I'm pretty convinced (and some people who emailed me agree!) that the reason the Dow exploded today is because Wall Street spent the last few days hearing the following pessimistic things about McCain's campaign -- as compiled by the master video producer, Jed Lewison -- and realized Obama would probably win and that the economy would therefore flourish:
Maybe someone can make some charts with pretty colors in them reflecting this sequence of events and email them to me, and then I'll post them as though they constitute proof of my theory of market causation -- because, after all, economists use charts so if I do, too, then it means I'm making a serious economic argument.
UPDATE II: Very unsurprisingly, Goldberg's "market analysis" was echoed on Friday by Rush Limbaugh ("Fear of Obama Presidency Hurt Markets . . . I think Wall Street's afraid of an Obama administration"). In fairness, though, as right-wing economic commentary goes, this observation makes Jonah's Theorem look Nobel-worthy.
UPDATE III: The renowned economics-blogger, Fumigator in Chief, has created a chart -- complete with different colors and even an X and Y axis -- reflecting the correlation between John McCain's behavior and the movement of the Dow. The graph strongly suggests that the market reacts poorly when McCain's fortunes increase and reacts very well when they decline. I'm not an expert, but "it sounds reasonable and plausible to me," especially now that there is a graph supporting it.
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