David Kirkpatrick

December 2, 2009

We all know …

… the 2000s were a fiscal disaster — tough markets, bubbles growing to bursting by the end of the decade and drunken sailor federal spending by a GOP-led government. The party of fiscal conservatism? Hardly.

Things were bad, but look at the longer view to get an idea of exactly how bad using just one indicator — the S&P 500 index (emphasis mine):

With the ’00s about to flip the odometer to the ’10s, there has been a raft of commentary about how lousy a decade this has been. Stock investors can vouch for that: The ten years since Y2K are on track to produce the worst total returns for investors since the 1930s. And, after the roaring ’80s and ’90s, the disappointment of the last decade is all the more galling.

Indeed, it will be hard for investors to wash the taste of trillions of dollars of losses from their mouths.

In both the 1980s and the 1990s, the broad S&P 500-stock index index provided a total return (which includes dividends) of more than 400%, according to Capital IQ, a Standard & Poor’s business. The total return for the S&P 500 since New Years 2000 has been negative 10.8%.

Now the Bush 43 administration and GOP Congress are given a pass on the events of 9/11 and how that disrupted the entire American social structure, including commerce. But that event was over eight years ago, plenty of time for the party of fiscal restraint to get the economy back on track, right? Not so much. And where did the profligate spending go? Into half-assed and outright fraudulent foreign adventures:

Hirsch believes a key factor for stocks in the 2000s was the September 11 terrorist attacks and the U.S. government’s expensive involvement in wars in Afghanistan and Iraq. The Vietnam War hurt stock returns in the 1970s, he notes, while World War II kept the market down in the early 1940s.

Of course Bush inherited what is now considered a highly over-valued market that was ripe for a fall back to earth. September 11 was the balloon bursting sledgehammer and seven additional years of absolutely horrible fiscal policy and economic management has put us where we are right now, and leaving a steaming bag for Obama’s administration that will most likely dominate the bulk of his first term, if not much, much longer.

And right wing media is now happily blaming Obama for the economic conditions on the ground.

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