Let's just blame Obama

This graph from the Wall Street Journal shows that the markets have fallen since Obama's inauguration. It is the perfect ammunition for the conservative republicans to use against Obama. It's easy for them to claim that HE is responsible for the decline. But there is a huge difference between a correlation and a causation. More accurately said, correlation does not necessarily mean a causation. Here's a simple example found on Wikipedia, the most accurate and reliable website EVER!

"The more firemen fighting a fire, the bigger the fire is going to be.

Therefore firemen cause fire."

While this is a stupid example it does a good job demonstrating the point that just because two things occur in tandem it doesn't mean one caused the other to happen.

Yes, the economy has suffered since Obma's inauguration but did he cause the decline? This isn't a very easy question to answer and you will probably get very different answers depending on who you ask but one thing is certain; Republicans will think Obama is doing a terrible job (no matter what). Two things are certain:

1. Obama inherited a terrible economy.

2. He hasn't been able to fix it.

Semi-related Topic

I had a very interesting conversation with someone that works on Wall Street. He has unique insight into the financial apocalypse. Even though we are on vacation, i couldn't help but pick his brain a little. He points to the demise of Lehman Brothers as the single cataclysmic event. Sure, we have heard this before but why he felt this was such an important event was interesting. When Lehman failed the debt holders were wiped out completely. If you held Lehman brothers debt on Friday it was gone Monday. Keep in mind that on Friday Lehman was considered an "A" rated company and by Monday (really Sunday night) it was bankrupt. The problem wasn't in the fact that the government let Lehman fail it was the fact that months earlier the government decided to save Bear Stearns because it was considered "too big to fail," a phrase that is becoming way too common. People holding Bear Stearns debt were able to cash in.

To a certain extent, Wall Street runs on confidence and predictability and trends. When the government treats one company as too big to fail and lets another fail it becomes harder to predict what is a safe investment. Citigroup's debt is trading at 80 cents to the dollar. If the government had acted consistently when handling Bear and Lehman then individual investors would have a better idea whether they should take the risk and loan (or acquire) Citi's debt.