A Load of Bull

When the stock market started tanking in September, there was no shortage of good reasons offered. Most analysts cited high oil prices, the slumping euro, weak corporate earnings, and fear that the Fed would leave money too tight or not tight enough, triggering inflation or slower growth. A lot of observers thought the high price-to-earnings ratio of the late 1990s had primed the market for a fall, given the right events. Then in mid-October, escalating Middle East conflict, coupled with more bad news on profits, pushed the market even lower.

But James K. Glassman, co-author of Dow 36,000 and a longtime superbull, offered his own thesis. He blamed Al Gore.

In a September 21 opinion piece in The Wall Street Journal titled "The Gore Market," Glassman pointed to Gore's post-convention surge in popularity. The possibility of Gore winning and perhaps pulling in a Democratic Congress, Glassman claimed, had spooked investors. Then, in a truly creative overreach, he dismissed the heroic bull market of the Clinton years as the fruit of divided government. The Dow, he noted, did poorly during the periods when Democrats had both Congress and the White House (1976-1980 and 1992-1994). "If one-party control had prevailed since 1976," he calculated, "the Dow today would be 1,665 rather than 10,687." Of course, most observers attributed the weak markets of the late 1970s to OPEC and inflation, and the slack market of the early 1990s to the lingering recession.

Glassman is a repeat offender. Last April, long before the Gore surge, right smack in the middle of a benevolent divided government, high-flying tech stocks slid far off their March 10 peak. Most observers thought that the insane Internet stock bubble had belatedly burst. But in an April 6 Wall Street Journal op-ed titled "Is Government Strangling the New Economy?" Glassman blamed the Microsoft antitrust case. "No one ever knows for sure why a stock falls on a given day," he wrote, "but my interpretation of Nasdaq's sharp decline is that investors, jarred by the Microsoft decision, have suddenly woken up to these threats of government intervention." In the summer, nothing changed in the Microsoft case, but markets partly recovered. In September, Microsoft succeeded in blocking expedited review of the government's antitrust case by the Supreme Court, but oddly the NASDAQ kept right on sinking. Oh, well.

The Wall Street Journal editorial page has a long history of blaming stock market declines on policies it doesn't like. After a tax increase, it once ran a black-bordered editorial titled "The Death of Reason." Early in Clinton's first term, after the president proposed a tax increase on the wealthiest 2 percent of Americans as part of his deficit reduction plan, the Journal ran an op-ed sarcastically titled "Taxing to Prosperity." The February 17, 1993, article blamed an 83-point drop in the Dow on the president's budget speech. The Dow of course went on to rise from around 3,300 to over 11,000 in the course of Clinton's presidency. (Good stock performance during the Reagan years, needless to say, was credited to Reagan.)

Alas for Glassman and the Journal: As George W. Bush's standing rose in October, the stock market tumbled. There are two possible interpretations. Either the usual explanations--oil prices, war jitters, weak earnings--make sense. Or maybe investors are nervous about a "Bush market."