The Dow was down 4.5% and many financials got pasted and were down 10% and more.
This is, I think, a good think. Apparently the bankers don’t think the bailout will be tossing them stacks of money after all.
Politics in the Zeros
"A republic, if you can keep it." Defeat MAGA
Politics in the Zeros
"A republic, if you can keep it." Defeat MAGA
Despite habits in the media, I’m not sure you can read markets ipso facto like this, where Stimulus = Drop. There’s an uglier side to this known as “Government By Dow.” Markos Moulitsas did some really good stuff on this in his diary last fall when the collapse first started.
I’m not saying its wildly out of line or anything, it just seems that the markets react to trillions of entirely free radicals, not floor votes in the Senate, y’know?
So yeah, that comment says absolutely nothing.
Basically, Government by Dow is when lawmakers in Washington start assessing and making policy based on the reactions of the stock market. The foolishness of this is obvious, from possible undue foreign influence by manipulating commodities in the third world to simply blowing up Wall Street’s data centers and computer systems (as almost happened on 9/11, see Richard Clarke’s book). Not to mention we fundamentally govern by DEMOCRACY, not economic growth (fuedalism).
The problem with the media proliferating ipso facto rationalizations about the economy are the same problems it causes in law, morality or anywhere else. It’s dangerous to start judging things based on whether or not the market likes it. Bob, your analysis is deeper, saying that the bankers’ poor reaction is evidence it could be working, but most will probably not be as sophisticated as you.
What happens when the analysis becomes the bankers didn’t like it so it FAILED? Markets react INSTANTLY, and if we start living too much in the moment as it were, we could cause severe long term harm by reacting only to the present. This would be the equivalent of avoiding the polio vaccine because needles hurt.
This isn’t entirely relevant, but here’s a recent take by Noam Chomsky on the relationship between states and their markets:
http://www.fpif.org/fpiftxt/5860
“The state sector is innovative and dynamic. It’s true across the board from electronics to pharmaceuticals to the new biology-based industries. The idea is that the public is supposed to pay the costs and take the risks, and ultimately if there is any profit, you hand it over to private tyrannies, corporations. If you had to encapsulate the economy in one sentence, that would be the main theme. When you look at the details of course it’s a more complex picture, but that’s the major theme. So yes, socialization of risk and cost (but not profit) is partially new for the financial institutions, but it’s just added on to what’s been happening all along.”
It is a bad thing. The bankers don’t have the money left to shoot Wall Street up or down right now. They have zero say in this market response. This is the rest of the market reacting to a plan that, basically, lays out nothing.