Economic Myths
I talk to people. I listen to people a lot too. I am very good at having grown up conversations. Recently, a surprising number of people I talk to think that the DJIA being high means that the economy is better. Some slightly more sophisticated people think that the DJIA being high means that economic improvement is right around the corner because these flush with cash companies will start building factories and hiring people.
A few very sophisticated people know that “the Dow” isn’t related to our economy much at all anymore. They know that the widespread mythology that the DJIA is related to the economy is a testament to the success that the investor class has had framing their goals and aspirations as the country’s goals and aspirations.
Who knows though, maybe if we all believe in the DJIA hard enough, if we light candles and kneel before our Jim Cramer (sp?) shrines, companies will put some money back in the system? Maybe the egg heads who are always looking for clear connections between “cause” and “effect” just need to shut up and enjoy a day at the dog track. Maybe it is time for a good old fashioned ghost dance?
Sequester, schma-quester – Happy days are here again!!
I can’t figure out what is causing this bubble. We had the dot com bubble that was fueled by tech and the real estate bubbles, many over the years, but what is bubbling now? I don’t see anything that is adding value to the market — other than ridiculously low interest rates and billions of financier dollars seeking a home. So what is this? The TARP Bonus Bubble? If that’s the case then the minute the Fed loosens up on interest rates it’s all going to go down the tubes again.
Cash rich businesses will not hire until there is so much demand for their products that they need more hands to meet that demand. And then only to gain more in profits. Can’t really blame them. There are few of us who spend money without looking for some improved personal status.
As it stands, there is not enough purchasing by the 97% because they either don’t have jobs or feel that they must save what they can in case they lose employment. To me, the only answer is increased stimulus by the feds. A no no for the Repubs. Deficits hurt no matter how they are achieved. Except, perhaps that increased employment might lead to bigger profits.
I’m with you auntie. Especially with the GOP House working overtime to undermine market predictability, his is perplexing.
“I can’t figure out what is causing this bubble. We had the dot com bubble that was fueled by tech and the real estate bubbles, many over the years, but what is bubbling now?”
Quantitative easing bubble.
Then why isn’t the S&P 500 feeling the bubble? That is a better index. It is up, but not dramatically so.
puck, I believe Apple’s stock is dragging down the S&P