Economy: The head-scratching continues as stocks take another leg down. Why, they ask, must the market be so negative? With an economy buckling under leftist incompetence, what, we ask, is there to be positive about?
Funny, because it's been going on for almost three years now, but hardly a day goes by without some bit of bad news the media calls "unexpected." But investors have noticed.
After selling off 2.9% on Wednesday, the S&P 500 dived another 3.2% Thursday. The Dow industrial average is testing a 52-week low.
Wednesday's drop came after the Fed unveiled its new plan for reviving the economy and as President Obama hit the road to sell his new but unimproved $447 billion stimulus.
Thursday's "unexpected" news was that the four-week moving average for jobless claims — a labor-market bellwether — rose to 421,000. Any number north of 400,000 is considered recession territory.
But should anyone really be surprised?
After all, we were promised in 2009 that $840 billion in stimulus would guarantee unemployment would not top 8%. Today, it's 9.1%, and has stayed above 9% for 26 of the last 31 months.
Since this president took office, U.S. businesses have shed 3.3 million jobs. We are still 6.9 million below our peak employment reached in January 2008. Ordinarily, more than two years after a recession has ended, well over a million jobs have been added to payrolls.
By any meaningful measure, then, our president has followed the least-successful economic policies of any U.S. leader since World War II. As recession seems ever more possible, the IMF warns of a U.S. "lost decade."
Whether it's jobs, economic growth, energy prices, incomes, regulation, weak foreign policy, or the quality of our lives and the nation's social fabric, America's current course looks questionable at best.
No wonder the markets are so volatile. They discount not the present, but the future. And the future for investors is murky at best and downright dark at worst.
So what's wrong? Here's a quick review of some of the federal policies launched in the name of "stimulus."
• Failed Fed policy. For three years, we've kept interest rates at record lows, undergone two rounds of quantitative easing and created $2 trillion in new money. On Wednesday the Fed announced its next move: the $400 billion "Operation Twist" — modeled on a failed Fed bond-buying program from the '60s to push down long-term interest rates. With so much Fed meddling, the markets can't help but be confused.