Tuesday, February 28, 2012

Dow 13,000!

Stock values are back to where they were in the spring of 2008, before the great crash in the fall. I don't want to hear any naysayers looking for bad news on the horizon. I don't want to hear about how it's bad for the rest of us if they are making money on Wall Street. What I would respond is that the only thing worse than seeing people on Wall Street making money would be watching them lose money. That's what we saw at the beginning of this recession, and it wasn't a pretty sight. Having the Dow back at 13,000 is something for everyone to celebrate.


  1. 13,000 is good news. It would be great news great news if the stock market reflected the health of our economy; and greater news if 13,000 reflected the financial health of workers. But, most of us workers make less today than we did last year, pay twice as much for gas, more for food and 10% more for my health care insurance.

    Workers’ bargaining power remains very weak because of the high unemployment rate. Wages won’t be rising anytime soon and this is bad news for bulk of the population that relies on their wages for the vast majority of their income. In essence it is temporarily good news for corporate profits and for people who have lots of money invested in the stock market.

    However, if people like me continue to be squeezed, demand will turn downward again. With such weak consumers perhaps wealthy stockholders should be apprehensive.

  2. Did you not read the part of my post where I said I did not want to hear any naysayers looking for bad news on the horizon? Are you one of those people who like to spoil a picnic by telling everyone that it looks like it might rain?

  3. Ha ha ... I would the tell the Skipper of the S.S. Minnow, the Professor, Mary Ann, Gilligan and the others a tropical storm was coming. And I warn cyclists I work with when it is likely to rain at altitude, to wear a helmet and to bring enough calories for a five hour ride. I wish I could say to progressives 'you go ahead on your three hour tour' but they seem determined to drag us all along.

  4. The stock market indexes are also kind of a weather forecast. Primarily, stock prices tell people who buy and sell stocks what the price is today, but more importantly for the rest of us, they represent the collective wisdom in predicting future corporate profits. And that's really all they represent. And the collective wisdom is not always correct, because nobody has a crystal ball. If you think the market's predictions are too optimistic, then you could make money by shorting the market. But over the long haul, hardly anybody outperforms the market. So I would be careful in suggesting that the market is wrong.

    Since the only thing that stock indexes represent are a prediction of future corporate profits, the indexes don't say anything about wages or unemployment or gas prices or other concerns you mentioned. (except to the extent that rising values creates actual wealth and that has got to help the economy generally) But you don't see the White House bragging much about the Dow Jones Industrial Average. Instead they brag about increases in private sector employment, reductions in unemployment, increasing US energy production, and other stuff that does actually matter to most people.

  5. Thanks Joe! Sounds like we agree about the value of 13,000.