Bloodbath

Scott Black, president and portfolio manager at Delphi Management, says the state of the stock market is a "bloodbath."

USA TODAY reports:

Wealth is being destroyed on Wall Street at a rate not seen since the 1930s. The gains from the 2002-07 bull market are gone. A big chunk of the huge profits from the 1990s dot-com stock boom have been wiped out. In all, after Monday's 300-point drop to 6763, more than 7,400 Dow points, or 52.3%, have disappeared since the October 2007 peak, the biggest-ever point drop. Of all the bear markets in Dow's long history, only the 89.2% drop during the Great Depression was worse.

The Chicago Tribune, if less baneful, agrees, saying:

No question, another spate of bad numbers could be coming. This week's key economic indicators include car sales on Tuesday, retail-chain sales Thursday and what's widely expected to be another disastrous employment report Friday. Analysts believe the economy lost as many as 800,000 jobs last month, which could raise the U.S. unemployment rate to more than 8 percent.

No matter how you cut it, it is bad news, and cause for alarm. Consistent throughout the media coverage is a sense that the lack of confidence is a weak show of support for Obama. USA Today calls it a "vote of no confidence." The president's approval ratings have dropped 8 points over the week, although he is still enjoying high approval overall at 57%, according to Cook political polling, and still averaging a +35% positive approval rating. Those are great numbers, but they won't last if the market doesn't bounce back. Obama is in jeopardy of being, as I would call it, "Carterized." Jimmy Carter was a good president. But he was blamed for failure to adequately address the economic troubles of his time. And this is a lot worse. The faithful have confidence and patience, but if public opinion turns against the stimulus bill and the government, it's trouble.

I have no opinion on how the President should address this, but I do know it was recently leaked that when the reality of just how bad the economy was, and how much worse it was going to get really hit home, then-Senator Obama was heard to joke, "It's not too late to tank this one." (Meaning, lose the election on purpose.) Hopefully the multiple government bailouts that are being conducted will get credit where credit is due, excuse the pun. And, the president will be able to muster more praise. People are tired of spin, so some meat with the bread would be good, too. This sweeping government intervention in the form of the stimulus bill was the event horizon for Obama's win in November, and the speed with which it was created and signed into law was a hallmark moment for the new administration; unfortunately, they will not be able to distance themselves from it if it goes bad, and will have to work to claim credit if it goes well.