The Dow Jones Industrial Average seems to be hovering in the low to mid 1200's for about the past year.
This is almost double it's value from the crash on March 6, 2009 (6469 - down from a high of 14164 on March 6, 2007).
Are you really twice as well off as you were three years ago?
Is the economy doing twice as well?
All the numbers we view on the nightly news have no meaning to the common man.
If you would have invested in Chevron (up 15%) or American Express (up 16%) you would be a lot better off than if you would have invested in Hewlett Packard (down 16%) or Bank of America (down 26%).
The numbers are intended to give an overall picture of the economy - but they don't.
Since deregulation - most companies invest (gamble) the money contributed to their pension funds on the stocks of other companies through mutual funds and other instruments created to 'create wealth' from the large sums of money workers invest in their 401k's.
Since the money is not reinvested in their own improvement, the performance of another company can effect the bottom line of a company which may be be doing well in it's own industry.
This was necessary because these companies are mandated to 'create wealth' even if there is none.
Which is why the housing bubble burst - how many times did banks expect to sell the same house, and to whom?
Since they could could only sell a house once - banks created instruments which permitted them to sell the same house (at a profit) over and over to each other until someone decided they had had enough and decided to collect.
Since the homes were then valued by banks at multiples of their real value - the market collapsed.
But this is foolish.
We need stability not growth.
It's time we evaluate our debts and assets and begin to take a look at our real economic positions.
Sure, many workers will lose their jobs - but were those jobs necessary to begin with?
How many government jobs could be cut?
How many people will have to downgrade their lifestyles in order to live within their means?
While making 50k, having to do real labor, driving only one or two cars and living in a smaller home which he could actually afford may sound bad to someone making 100k but still in debt - it is what is needed.
We would all be much better off if we only bought that which we could afford to pay for instead of us buying what we could afford to finance.
I would submit that the stock chart is meaningless, unless you view it as something like a mood ring, or a Magic 8-Ball.
ReplyDeleteHere are some much better charts:
http://cscs.umich.edu/~crshalizi/weblog/779.html
Notice (in the 2dn chart of the URL provided) that growth per capita is basically flat after, say the id 60s. This is because everything that had been blown to smithereens in WWII was finally rebuilt.
Other than that, minus the impetus from scientific progress and women entering the workforce, minus the terrifying population growth modern finance is basically just the fandom community at a Grateful Dead concert, trading beads for feathers, back and forth... which, I think is what you done just said in your essay.
Iceland went belly up a few years back and is now better off than it was before they melted down. Why? Because they were forced to stabilize.
ReplyDeleteStocks do have effect on the common man in that many of the employers of said man rely on wall st. to make thier money rather than thier ACTUAL business (be it manufacturing, service, whatever). A company can be doing just fine, but if the market doesn't like something... possibly not having anything to do with the company itself, stocks drop and jobs get lost.
It is a level of corporate speculation that is not attached to the real world, but puts the real world in peril.
Sheer heresy.
ReplyDelete...like a damn trio of slack-jawed communists.
That speculation on future growth and earnings and the profits taken from the same comprise the primary system of contemporary human governance.
When you humans cease to be profitably governable, you know what has to happen then, right?
the hypertiger's wisdom;
ReplyDeleteIt's over...
Everything the top has comes from the bottom.
The top certainly thinks they have the power and use what power they have to persuade/force the bottom into thinking such...but all the power that sustains the civilizational system originates at the bottom.
The roof is held up by the walls that are attached to the foundation...the QE is like buying a new roof when the foundation of the structure is crumbling.
Handing a pile of money to the top is not going to help the bottom find new sources of energy to continue supporting the lifestyles of the inconsiderate, arrogant, and selfish game players.
It's impossible to live off the yield from the bottom forever...
The ability of the banking system to continually expand the money supply combined with the steam engine and various other innovations the past 600 years has allowed the bottom to continually borrow more and more and more and sustain the economic advancement that has allowed this take more than you give system to last as long as it has.
Now it's over.
But everyone is just not aware that it is and is still acting like it's not...
Which is good...because once everyone wakes up...It will all end in the blink of an eye.
@ SeeNew - Hypertiger is still writing? I thought he/she retired. Good to know...
ReplyDeleteSpoke to soon UBJ as the double dip is here but since we are already near the bottom it won't seem so bad!
ReplyDelete