Geopolitics and American finance market.

If independent observer who is not loaded with any political affiliation takes a look at the chart of DOW for last decades he could just conclude that it grows fast. Exponentially and unstoppable fast.

Maybe on the long run it is. Maybe in more zoom in is not.

What is the correlation between party affiliation in White Hose and performance of DOW? Democrats obviously more market friendly than Republicans. Average DOW growth per year for Republican President is about 3.5% and for Democrat it is 10%Really?!! Yes.^*. Very counterintuitive result if consider republicans as a Party of Big Business. 

Even more staggering difference in DOW performance demonstrate upon type of political leader in Russia. Yes. Dow in USA versus who is in charge in Russia. For reign of three nationalistic hardliners - Stalin, Brejnev and Putin - Dow grows for 1.5% per year. Only. Practically stagnated. In case of three collaborators with west - Chrushev, Gorbachev and Eltzin - DOW flourish for 18% per year.

There are a facts. What could be explanation for them?

My hypothesis is based on the premise that changing of value of DOW directly depend on the strategy of economic development that has two major mode - expansion and  profiteering.

Expansion - time for technological revolution, open and exploring new markets - in other countries or domestic population - women, minority, poor becomes part of the customer's economy. Companies grow and prices of their shares rise together in concert.

Profiteering - a time of stagnation. Owner just taking dividends, avoiding to invest into risky and innovation enterprises. Establishment hold their position and happy on the top of society.

Republican Party in therefore can be characterized as a Party of Fat Cats. They a conservators against progress. And so no progress happens. DOW stagnate together with inflation.

Democrats is a Party of self-made men. They are for innovations technological and social. Economy is flourishing. DOW expands.

Russian politics influence more directly on the type of economy mode. Collaborators welcome investment in Russia and satellite territories. Hardliners push out foreign presence out of their territory in control suppressing expansion.

Method of calculation.

You can download MS Excel spreadsheet to check accuracy of numbers for yourself. I must confess that I did not care to much about precision of taking exact number in day of inauguration as well for exact announce of sizing power by next Russian leader. It could make some small difference. But not too much. As well just to divide percentage change during term of leader by number of years not too accurate as well. But it quite nice estimation. If anybody will care to recalculate this numbers with full precision  - you are welcome to write be and I will post your job. But my advise - don't waste your time. My numbers is good enough for speculation in area of alchemy like science - Practical Political Economy.

by Leonid Sakharov

01/22/2007

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