DJIA 9500 - the last nine times we were here...

Nothing like a lil history to put today’s economic environment in perspective. The DJIA has crossed 9500, the level it’s at today, some nine times since it first crossed it more than a decade ago:

Feb 1999 up

March 2001 down

April 2001 up

Sept 2001 down

Nov 2001 up

June 2002 down

Sept 2003 up

Oct 2008 down

Aug 2009 up

In Feb 1999, the biz headlines included Microsoft defending itself against Netscape/DoJ, the Fed Funds rate was at 4.75%, unemployment was at 4.4%, our national public debt stood at about $6.5 trillion and Lil Timmy Geithner was Under Secretary of the Treasury for International Affairs (1998–2001) under Treasury Secretaries Robert Rubin and Lawrence Summers.^[6] Summers was his mentor,^[11][12] but other sources call him a Rubin protégé.^[12][13]

In March 2001, the biz headlines included Turner Cable and WB Network merging, the Fed Funds rate was at 5.50%, unemployment was at 4.3%, our national public debt was still at about $6.5 trillion and Mary Shapiro, now the head of the SEC, had been President of the National Association of Securities Dealers (NASD)(now Financial Industry Regulatory Authority) as the president of NASD Regulation since 1996, ignoring all pleas from smart traders who knew that Bernie Madoff was running a Ponzi scheme right under her nose as a partner with her at the NASD.  Oh, and she was on the board of Duke Energy and Kraft Foods.

In April 2001, the biz headlines included two prominent consumer safety groups issuing a report saying that the auto maker was largely to blame for accidents in which Ford Explorer sport-utility vehicles, equipped with Firestone tires, spun out of control after the tires lost their treads, the Fed Funds rate was at 5.00%, unemployment was at 4.4%, our national public debt was inching up towards $7 trillion and Hank Paulson was borrowing billions in the private market to buy back his company’s stock at much higher levels than he’d initially sold it when he had taken Goldman Sachs public back in 1999.

Fast forward a year to June 2002 and the biz headlines included Worldcom announcing that they’d improperly accounted for some $4 billion in expenses and that their financials were all one big fraud, the Fed Funds rate was at 1.75%, unemployment was at 5.8%, our national public debt was spiking towards $8 trillion and Ben Bernanke was getting started in his post on the Board of Governors of the Federal Reserve where his only job was to make sure people like Ken Lewis and Lloyd Blankfein weren’t rolling up their competitors and creating products that were worthless and pretending their balance sheets were fine.

In September 2003, the DJIA rallied above 9500 where it stayed for five years and the business headlines included Richard Grasso and Ken Langone were battling Elliot Spitzer over the hundreds of millions of dollars Grasso and his boys were paying him for running the (at the time) non-profit NYSE, the Fed Funds were at 1.00%, unemployment was at 6.1%, our national public debt was getting over $8 trillion and Barney Frank, who’d been supposedly watching over and regulating Fannie Mae, Freddie Mac, Bank of America, and Citigroup and as a senior member of House Financial Services Committee was telling anybody who would listen that "These two entities [Fannie Mae and Freddie Mac]...are not facing any kind of financial crisis.... The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

In October 2008, the DJIA fell back below 9500, and the business headlines included Yahoo refusing a $33/share offer from Microsoft, the Fed Funds rate was at 2.00%, unemployment was at 6.6%, our national public debt had climbed above $10 trillion and Alan Greenspan was telling people that he used sales of men’s underwear as a reliable economic indicator.

And today, the DJIA has climbed back above 9500, and the business headlines include stories of housing’s supposed recovery and the suspected end of the recession, the Fed Funds rate is at 0.00%, unemployment has spiked to 9.4%, our national public debt is over $11 trillion, and Ben Bernanke’s been reappointed to his post as Fed Head by the latest President from the Republican/Democrat Regime.

My upshot -

The same guys who were in power in 1999 when the DJIA first climbed above 9500 are still in power 10 years later and we’re still trying to climb above 9500.  Let’s get rid of them, no?

With debt and unemployment having doubled since the last time we were here, with the Fed Funds rates already set as low as they can go (not to mention the trillions of wealth redistributed to the banks and major conglomerates and credit card companies and money managers like PIMCO already spent in the last 18 months)…who’s calling this current economy a “victory”?

And more to the point – are there any more bullets left to shoot when this economy does turn down again, as it always does – whether in two months, two years or five years, the economy will turn down again…what will we do then?  Any potential economic boom we experience is coming off these historically depressed levels, and we don’t have any bullets left in our gun, do we?

The best case scenario is that we boom for a couple years from all this stimulus and bailouts and borrowing of our children’s money and hope that everybody takes advantage of the boom this time and sells at the top?  Just for the record, if everybody’s selling, then nobody would be buying.  Won’t there be people who “need to be bailed out” next time we turn down?  Or were all these bailouts and programs for homeowners who are overleveraged, credit card companies who are insolvent, banks who were fraudulent and so on just a one off?  Who decides why the people need bailing out this time, but won’t next time?

Nothing like a lil history to put today’s economic environment in perspective.