Jim Cramer: Obama is a recession. McCain is a depression.

[gravity]

What will New York look like a year from now? The answer: bad and probably worse, and perhaps downright catastrophic. Three degrees of awful. The first step was passing the bank-bailout legislation. Now that it’s done—and if it didn’t get done we would have been looking at a guaranteed economic collapse—the critical issue will be presidential leadership. And while any president will be an improvement over the current one, there is a growing belief on Wall Street that Barack Obama has the capacity to lead us out of this wilderness while John McCain does not. I’ll go a step further: Obama is a recession. McCain is a depression.

Wall Street usually favors Republicans when it comes to managing the economy, but this time around the financial community is skeptical. John McCain has done everything he can to avoid talking about the economy, lest he be tarred with the brush of George Bush’s ineptitude. And when McCain has attempted to step into the fray, he’s been far from reassuring. First, he insisted that the fundamentals of the economy were sound; then he turned around and told us it was the end of the economic world as we know it, and suspended his campaign to scramble back to Washington and save the day on the bailout bill—only to have little visible effect

For all his talk of being a maverick, McCain looks an awful lot like President Bush on the credit crisis: He doesn’t seem to understand Wall Street or Main Street, he is dogmatically anti-regulation, and his economic team is a joke. Carly Fiorina almost destroyed the onetime best technology company in America, Hewlett-Packard, and Meg Whitman took eBay, the best dot-com player, and turned it into a mediocre franchise that has no growth. Both are perceived by Wall Street to be also-rans who are on the team because they have nothing else to do.

Obama is no messiah, of course, but there’s a reason the Street sees him as a more capable manager of the credit crisis. He seems to understand the complexity of the problem, and while he’s nobody’s populist, he’s at least perceived as less tone-deaf to everyday Americans’ problems than his opponent. Obama also has a better team, in the likes of Larry Summers, the renowned economist and former Harvard president who probably knows more about this crisis than anyone, and Warren Buffett, the smartest man in business, period. And Obama is a globalist, in an age where the world’s economies are increasingly interdependent.

More: http://nymag.com/news/businessfinance/bottomline/51007/

I know there aren't any Jim Cramer fans here, but enjoy.

[FrenchieCat]

1. We'll take it!

Kramer is Kookie, and I know that most over at CNBC are True Blue Republicans. I wonder what they think about Kramer's statement?

[gravity]

10. Larry Kudlow is probably having a hear attack

but the smarter people on CNBC probably agree, especially after McCain's bailout stunt.

[WCGreen]

13. That Kudlow is a sanctimonious shit head....

Every time he comes on CNBC, I turn the channel to Bloomberg...

[gravity]

16. I do the same

He is the only person I just can't stand on the channel. I think some other reporters are annoying, but at least they try to remain objective.

Larry Kudlow is just like Bill O'Reilly, never checking facts and always yelling his agenda.

[WCGreen]

19. The people on that channel are the only real reporters on cable news...

[CrispyQ]

17. Kudlow's an ass & exemplifies everything that is wrong with this country.

I wouldn't miss him. Just saying.

[HysteryDiagnosis]

2. When I think about Johnny Boy'z economic superstitions, I feel

myself slipping into a deep depression. I'm sure the economy feels the same.

[progressivebydesign]

3. People underestimate Consumer Confidence. It plunged when Bush "took" office..

.. and until people feel confident again (even if it's irrational) the economy will not heal.

McCain will NOT inspire confidence in Americans. Obama will. We need that breath of fresh air and that change. If McCain manages to somehow steal it, it will be dire.

We need to clean house and give consumers reason to feel hopeful again.

[DevonRex]

4. Sounds good to me. nt

[islandmkl]

5. are you telling me that a guy that talks LIKE THAT...

can write coherent thoughts like those....??

[niceypoo]

6. McCain is also Depressing...

..or at least the thought of him becoming president is..

[Convertee]

7. scrubbing bubbles

they do the work so you don't have to!

[eshfemme]

8. His bombastic mania is amusing to watch

but then again I don't invest in the stock market so for me, he's basically a clown that jumps around for my amusement.

He did appear on Stephen Colbert's show and apparently (I'm not sure if this is accurate), Jim Cramer had appeared on Colbert's show before a year ago right after Cramer went on this insane tirade about how there was going to be an economic apocalypse coming on his show. So it was kinda weird to see a moment on Stephen Colbert's show where Jim Cramer was actually right in predicting something.

[Critters2]

15. Doesn't he go one an insane tirade on every show? nt

[CrispyQ]

9. Is this why we've seen more media call-outs on McCain than we've seen in 8 years?

I'll grant they are still overall biased for McCain, but there have been more negative comments about McCain-Palin from the talking heads than we have heard in eight year.

I believe that if Wall St. wants Obama, America will get Obama. Even though Wall St. is all about the money, I'm grateful they're on our side for a CHANGE.

[weezie1317]

11. Gooooooooooo Cramer!!! I knew he was smart.

[democrattotheend]

12. I'm a Jim Cramer fan

I don't agree with his endorsements of certain stocks I consider objectionable, but I like that he tries to level the playing field for small investors. And beyond what I think of him as a person, I trust his judgment and advice with regard to my stocks.

I'm surprised but not shocked that he seems to prefer Obama...he sometimes calls Democrats "Bolsheviks", but he also has been pretty critical of Republicans.

[crankychatter]

14. i've heard that guy foul mouthin' democrats, while hopping up and down and spitting every worrd

and he's never been right

ok, maybe he has... good thing I hung on to that Bear Stearns

[theothersnippywshrub]

18. It may be a good time to point out that the market performs significantly better under democratic

presidents than under republican presidents.

Some basic numbers with little analysis from Slate show the outperformance:

But Democrats, it turns out, are much better for the stock market than Republicans. Slate ran the numbers and found that since 1900, Democratic presidents have produced a 12.3 percent annual total return on the S&P 500, but Republicans only an 8 percent return. In 2000, the Stock Trader's Almanac, which slices and dices Wall Street performance figures like baseball stats, came up with nearly the same numbers (13.4 percent versus 8.1 percent) by measuring Dow price appreciation. (Most of the 20th century's bear markets, incidentally, have been Republican bear markets: the Crash of '29, the early '70s oil shock, the '87 correction, and the current stall occurred under GOP presidents.)

http://www.slate.com/?id=2071929

One well known study showing the outperformance based on a fairly rigorous statistical analysis is briefly discussed at this blog.

Should investors lean toward governments at one end of the country political spectrum to find outperforming equity markets? In their October 2003 paper entitled "The Presidential Puzzle: Political Cycles and the Stock Market", Pedro Santa-Clara and Rossen Valkanov examine monthly U.S. stock market performance versus executive branch party across 18 Presidential elections (1927-1998, 864 months) encompassing 10 Democratic and 8 Republican Presidencies. In their July 2006 paper entitled "Political Orientation of Government and Stock Market Returns", Jedrzej Bialkowski, Katrin Gottschalk and Tomasz Wisniewski investigate whether the political orientation of 173 different governments systematically affects the performance of 24 international (mostly European) stock markets. Findings are:

"The Presidential Puzzle: Political Cycles and the Stock Market" concludes that:

* The broad value-weighted stock market has beaten the 3-month Treasury bill (T-bill) rate by an average of about 11% under Democratic Presidents and just 2% under Republican Presidents -- an economically and statistically significant 9% difference. Equal-weighting of stock returns produces a difference of 16%, with small-capitalization stocks strongly outperforming large-capitalization stocks. (See the chart below.)

* The difference in returns holds for sub-periods 1927-1962 and 1963-1998, and is generally independent of business cycle explanations.

* The difference in returns is not election-centered. It accumulates gradually across Presidential terms, suggesting it is due to systematic surprises in economic policies.

* Volatility of returns is somewhat higher during Republican than Democratic Presidencies, indicating that stock market outperformance during the latter is not reward for risk.

* The party in control of Congress does not indicate significant differences in excess stock market returns.

* Given the limitations of the data, the impact of party-in-Presidency on the stock market in this study could be a statistical fluke.

http://www.cxoadvisory.com/blog/external/blog8-08-06 /

Another well known study.

The Presidential Puzzle:
Political Cycles and the Stock Market

ABSTRACT

The excess return in the stock market is higher under Democratic than Republican presidencies:nine percent for the value-weighted and 16 percent for the equal-weighted portfolio. The difference comes from higher real stock returns and lower real interest rates,is statistically significant,and is robust in subsamples.The difference in returns is not explained by business-cycle variables related to expected returns,and is not concentrated around election dates. There is no difference in the riskiness of the stock market across presidencies that could justify a risk premium.The difference in returns through the political cycle is therefore a puzzle.

http://www.personal.anderson.ucla.edu/rossen.valkanov/Politics.pdf

This analysis covers the years 1927-1998 and separately examines the years from 1927-1962 and 1963-1998. Results which included the years from 1999-2008 would show an even greater difference. All studies show this difference, although there is at least one which finds the difference of a few percentage points to be statistically insignificant.

In addition to stock market outperformance, real GDP growth is higher, the rate of job creation is higher and federal budget deficits are lower under democratic presidents than under republican presidents.

[Life Long Dem]

20. Obama Is The Answer!!!

[Honeycombe8]

21. I'm a Cramer fan. Especially now! This is great news. nt

[On the Road]

22. Thanks for the Quotes

Hadn't seen those.

I'm a Jim Cramer fan. I think of all the financial talking heads he's closest to the average person, probably because of his own poverty in his 20s. Although his picks don't always pan out (whose do?), he teaches the average person how to think about the market and how it behaves.

[Jennicut]

23. CNBC has not been showing McCrap any love and the house rethugs in general

They knew this economy is in crisis and that Wall St. was going to start crashing. They don't even trust Rethugs any more thanks to Shrub and McCrap votes with Shrub so they are being smart.