“S&P 500 at Reagan Recession Value after Trillions Lost.” I note the headline to this Bloomberg piece for a number of reasons; the first of which is that apparently we’ve got the go-ahead to begin calling this “the Obama recession.” After all, Bloomberg doesn’t call the economy Reagan faced the “I was handed this by my predecessor” recession, and rightly so. Obama, as Reagan, inherited a God-awful mess. But Obama made a bet that quadrupling the size of government through massive stimulus spending would pay off. It didn’t, and Obama now owns his recession.
Now that were back to where we were under Reagan, it’s instructive to remember his strategy for dealing with all he faced, a strategy that was the exact opposite of Obama’s; no pessimism about the decline of America, no class warfare, no bellyaching about the unprecedented nature of where he found himself. He campaigned for the job, got it and set to work fixing the problem for which he was hired. The 30 years of supply-side economics that followed led to the greatest explosion of global growth the world has ever seen. Baby boomers were age 35 then; 65 today. They rode the wave of prosperity along with everyone else, which has largely been lost in three short years under the current president. This brings me to what should be an obvious point; if we’re back to Reagan era valuations in the S&P, let’s at least get it right as we start to rebuild.