Given the fact that President Donald Trump is probably insane, and has no viable economic policy to speak of, and is surrounded by advisors who are unqualified and/or evil, one would think that the movers and shakers of Wall Street would be pessimistic about the economy. But no, the opposite is true. The stock market loves Trump! Whenever he’s in trouble, securities exchanges plummet and vice versa. What does this say about those in charge of the economy?
That Awkward Moment When You Discover That Wall Street’s Insanity Is Helping You
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It says that while the cats are away, the mice will play, dude……While the sheeple are looking the other way, they will covfefe everything in sight! 🙂
Big money, its rational pretenses to the contrary, is not any more rational than political theology—rising and falling, surfing on the tides and swells of a mass emotive contagion, just like elections.
What mass enthusiasm gives, mass hysteria takes.
True believers stand in line for entry as if for a banquet, without recognizing it is they who are on the menu. Why else would taking a big profit be called making a killing?
After the last major collapse only those who sold short into the bubble—and who profited—were investigated by the FBI; the big criminals were not prosecuted, but bailed out.
Too big to fail, too big to jail, just right to bail.
«Given the fact that President Donald Trump is probably insane, and has no viable economic policy to speak of, and is surrounded by advisors who are unqualified and/or evil, one would think that the movers and shakers of Wall Street would be pessimistic about the economy. But no, the opposite is true.» I believe that dear Alan Greenspan – remember him – characterised this sort of thing as «irrational exuberance». The strange thing is that these people are, collectively, the highest paid persons in the world, subject to abject adulation by (most of) their subjects….
What sort of economic systems permits this sort of thing ? The late, unlamented Margaret Hilda Thatcher claimed that TINA – There Is No Alternative – i e, that H sapiens sapiens, which has created such magnificent intellectual constructions as General Relativity and Quantum Mechanics, lacks the imagination to create an economic system slightly less absurd than that which today rules the world….
Henri
The stock market’s taken a couple of dips as well, as it reacts to Trump’s craziness.
What I find fascinating, is the way it moves in anticipation. A democrat is elected, and it dips before he’s even in office – same w/ Trump – the market rose in anticipation of his election.
And therein lies the problem. The stock market is broken, it doesn’t follow the actual value of a company, it follows what the majority think that the majority thinks about what it will do next week. It’s not reality based, it’s an abstraction of an abstraction. People don’t buy and sell companies, they buy & sell stock.
That leads to vulture capitalism. ooh! The stock price is less than what I could sell the pieces of the company for – so I’ll tear down a company that actually produces something in favor of short term personal profit. So now, the US barely produces anything. This is not viable in the long term, but who cares? I got mine.
@CH
That is the sad state of affairs as I see them too.
Exactly – I got mine. When the going gets tough, the tough blame other people and use this excuse to hurt others to keep what they have. It isn’t capitalism, socialism, communism, consumerism, bad visions, etc. It is simple greed and fear.
Assuming capitalism for sake of argument, the stock market is actually a good idea. It allows small investors to support a company which couldn’t raise enough capital otherwise. Productivity increases and the little guy makes a return on his investment. Everybody wins.
(wait – public ownership … isn’t that communism? Perish the thought.)
I can see a couple of fixes to the problems we have now. One would be to outlaw this nonsense about buying stock one day and selling it the next, the *value* of a *company* does not change on an hourly basis. You want to invest, fine – you hold the stock for at least a year.
Get the computer traders out, it gives an unfair advantage to those who can afford them; and the overall ecosystem is prone to going even crazier than humans do.
Last but not least – ENFORCE the rules already on the books. Such a concept!
Once upon a time, the US taxed the profits on any stock sold less than a year after it was bought at 91%, and about 25% (or less) on profits if the stock were sold more than a year after it was bought. Fortunately, that silly law was replaced with a maximum tax of 15% on profits, and only if you’re too stupid to take all the available deductions, so day trading is a way for the big boys (and girls) to take all the money that the little people gamble with day trading, and not pay any taxes on the money they made. Much better.
It gets better – but this time I did get mine. I was at a company with stock options, they’d sell them to you for (15% ?) less than the current market rate. I reserved some, they vested a year later but the stock had dropped 5% by then, so I made a 10% profit but my taxes showed a loss because of the drop!
Okay, I benefited that time – but I can still see there’s something very wrong with this picture.
You say: “it’s an abstraction of an abstraction. People don’t buy and sell companies, they buy & sell stock. ”
But you then contradict yourself, below, at 12:50 PM: “It allows small investors to support a company which couldn’t raise enough capital otherwise.”
Sorry if I wasn’t clear. The first post was a discussion of reality – where we are now. The second was a discussion about the theory – where we should be – as well as some ideas about how to bring the two closer together.
I know the stock market is booming, but I have only seen a tiny drop in unemployment. Are people rushing to get jobs as brokers?
Trump’s insane? I think that’s more than oblivious! On the sea or on the land, he’s got our sick nation’s tiny hands!