Quote:
Originally posted by hytem
IThat big push upward a few years back when Clinton balanced the budget reflected a very bullish attitude about the future. The demand for stocks climbed out of sight. Then, Greenspan lowered the boom on interest rates, and the "irrationally exuberant" market deflated. It recovered again when he dropped interest rates sharply when Bush took office. But the bullish attitude that prevailed prior to 2000, when the budget was balanced, has not returned because of 9/11, Iraq and big budget deficits.
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A bit of cart beforet he horse.
The budget was balanced during the Clinton years largely through capital gains taxes from the booming stock market. The stock market
did not boom because of a balanced budget.
The fact is that the stockmarket does not require a balanced budget to do well because, by and large, the Federal balance sheet is independent from the many corporate balance sheets that make up share trading companies.
That the market does not need a balanced budget is empirically demonstrated by performance of the last 5 years, which has generally been upward.The budget has never been balanced during that time. Ditto during the Reagan years and the stock market rise then.
Finally, Greenspan did not "lower the boom" on the stock market.
Greenspan made his famed "irrational exhuberence" statement in 1996... a full 4 years before the 2000 decline of the market. His interest rate moves also preceded the collapse substantially. But given the incredibly high tech P/Es of the time, I doubt anyone could ever justify them, regardless of the interest rate. They were indeed, quite irrational.
I agree with your statements on carbon emissions.