Just take a look at this chart:

http://www.nytimes.com/interactive/2008/10/14/opinion/20081014_OPCHART.html

Rather stunning really, and surprises a lot of people.

vocabulary cop, i use the term ‘apocryphal’ in direct reference to the claim that the cold caused his death. this is the way the story is usually presented, e.g., the NOAA page. and he was apparently trying to show how tough he was by not wearing a coat.

harshpotatoes, i don’t see any sort of trend between market and presidential party (either at inauguration, or a year later) in the data presented in the table linked in the post above.

They started with the terrible week the markets had following Obama’s election. What is not mentioned in these commentaries is that investment banks and financiers gave overwhelmingly to Obama over McCain. Either they support Obama’s politics over its effect on markets (in which case, perhaps we should take that as a cue) or they didn’t think Obama’s presidency would be relatively bad for markets or they wanted to donate to a winner, in which case markets shouldn’t have fallen after the election because they all thought he was going to win anyway as indicated by the fact that they gave him much more money.

Thinking of math – is this false correlation a “Black Swan” thing? I have tried reading that book but to be honest I gave up. Is there another explanation of the “Black Swan” concept/theory you could recommend?

I’m also not thrilled with the tax cuts, as we seem to have learned from recent experience that monies given by tax cut go into saving rather than spending. But if this is what it takes to get a bit of Republican cover for the bill… that’s a political decision, and I assume Obama is better at those than me.

Otherwise, if Republicans just won’t get with the program at all, and choose to try to make Obama (and America) fail instead of succeed, the alternative course of action will be to point out how busy they were tying together the shoelaces of the two feet instead of helping with useful ideas. If that message comes across, the Republicans will be in even a worse shape than before.

It could go that way: with the Republicans led by Rush Limbaugh circling the wagons and shooting into the night. If so, it could go either way, but, as a non-fan of R, I suspect the probability is slightly greater that it will be Limbaugh’s balloon that leaks and sags into the swamp.

The market expected/predicted (incorporated in their models) weaker numbers on job reports and consumer spending recently and a thousand times in the past but it was only when those numbers were released did the DOW/Nasdaq etc fall.

But those expectations/predictions are based on rumors and guesswork. After election day, Obama’s inauguration was inevitable unless he died prior to the 20th. That comparison is totally off base.

I was looking at a couple of right wing message boards at the time of Obama’s address (I am somewhat masochistic in that regard) and the Obama haters were counting down the Dow minute-by-minute as it fell. It’s obvious that it’s not the left which was being deluded about that. (I wonder if they bothered to report the Dow’s soaring move the following day… nah, I suppose not).

However, let us assume that the market gives a damn about which day Obama gets inaugurated. You’re still only looking at the cherry-picked parts oh history, how many presidents have been inaugurated when the market’s teetering on collapse? You have no precedent. There’s at most 2 presidents who’ve been in this situation, FDR and maybe one obscure one. One can draw any kind of trend line with only 2-3 data points.

I’d be happy that at least we didn’t elect the one that believes the fundamentals of our economy are strong. One Krugman fan to another.

The story is not apocryphal. All of the elements of the story are true (other than blaming pneumonia on cold). But the link between cold and disease is surely fallacious.

You write “Obama’s election has been incorporated into market valuations for months.”
The market expected/predicted (incorporated in their models) weaker numbers on job reports and consumer spending recently and a thousand times in the past but it was only when those numbers were released did the DOW/Nasdaq etc fall.
my point is you have no idea what caused it to fall a whopping 4 %-not .5 % or 1% or even 2%- maybe partly it was Obama? what else was going on that day? were weak job numbers released etc etc?????

Obama does not inspire confidence in the markets. he is trying to do same thing bush did- give out massive tax cuts. it didnt work when bush did it last year. why would it work under obama? his attempted new deal has potential but it will fail because of the WAY he does it. Krugman is right you have to spend A LOT of money- obama is not thinking big enough- but what krugman hasn’t addressed the fact that money has to go to the right places!!
the economy will get better eventually but all obama cares about is getting re-elected. here’s to hoping for change.