Ever since the last hour "compromise" by congress to elevate the debt ceiling and consequent downgrading of the United States' debt, the stocks have been in turmoil and for some reason this is a cause for panic, thus further plunging the stocks until the fed reassured them that the interest rates would remain at historic lows. Basically, we got held hostage by the stock brokers who used the guise of fear to get exactly what they wanted out of us.
Everyone seems puzzled as to this recent turmoil when a large piece (albiet not all of it given the complexity of the market) is common sense to anybody removed from that strange little world.
Quite frankly, a plunge in the stock market was a very necessary market correction as the stock recovery has existed in a bubble aside from every other economic factor. Since 2009 we have seen a fairly consistent bull market in play wherein the market recovered the losses and even getting the economy to limp forward. This has happened while consumer demand has remained stagnant or even negative depending on the region. This is unsurprising considering that official unemployment numbers have struggled to remain below double digits. We know we're grasping for straws when the good news is 9.1%. And this is just the official number... with no accurate means to evaluate the actual unemployment the speculation varies depending on the article, group conducting the study or what colors are in fashion. Those who remain employed have largely seen their salaries stagnate, which is a significant decline when you account for increases in fuel, food and health care, which incidentally are not counted in the calculations for inflation. In an economy that is based upon roughly 70% consumer spending these numbers should be of greater alarm than the possibility of yet another unsustainable bubble bursting.
Yet Wall Street marches on... for now.
Nobody wants their stocks to tank again like they had in 2008, yet the reality is that something needs to give. The bull market alongside cost saving measures (some with better foresight than others) had two years to raise the cash at hand of fortune 1000 companies and they have failed to reinvest their profits in any meaningful manner. This means that the stock numbers mean nothing to the 98% of Americans that rely primarily on their personal income or salary to survive.
The current trend goes against every other recession in the past century. Great Depression, the early 80s, the dot com bubble recession all had their recovery come not solely on stocks, but rather on the return of the average worker to gainful employment. The shareholders simply don't have the consumer clout to raise the economy try as they might.
We created a bubble over the past decade in the housing market by completely skewing supply and demand with a glut of ill advised loans at rates that should be considered usury. Houses were purchased rather than homes and artificially reduced the supply and helped with an overwhelming building response to meet what was an artificially pumped up demand. We paid for it and continue to pay for it and yet it seems as though we've simply moved on to the next bubble to exploit until it collapses under its own weight.
The longer the stocks fail to reflect the actual economic situation in this country and as long as we perpetuate this nonsense that we must appease the stockholders at every turn to avoid calamity, then we will become imprisoned by those who care more for personal wealth than the good of the economy as a whole. Even a place like Haiti has its millionaires.
Is this class warfare? Perhaps. Although I'm thinking there's a lot of people who are finally seeing that the direction of it might just be turned toward us. According to every measure, the disparity of wealth is at the greatest point since the 1920s and some even argue it goes as far as being as bad as the industrial era. This would be a great opportunity to make the claim of hyperbole, but I am struggling to find any numbers beyond blatantly slanted think-tanks that refute this. I personally look at this situation and cannot see what the average person has gained lately as our economy is allegedly growing. Those who have means and always have had it simply seem lost on the amount of harm that has been wrought.
I would like to believe that complete greed is not the complete basis on the current economic environment. It is easy to get caught up in that line of thinking and listen to the alarmists who see us plunging to third world status by the time the end of time on the Mayan calendar. Perhaps we've become too embroiled in the stock market where we have allowed it become the absolute stick by which we determine our economic outlook at the expense of so many other factors. It's easy to say, "just get a job" when the options are limited, even for the over-educated.
But for that reason, I would like for the market to cool down substantially for a bit and perhaps kick some of those companies into using some of that money they shoveled into the coffers to give something back to the people. It's not altruistic by any means as it would save their hides in the long term as well.
Note: I apologize for the rambling nature of this one. It's hard to stay on just one topic on something this complex without getting into a bunch of tedious statistics. I'm also in a bit of disbelief at the Federal Reserve for basically coming out to pacify Wall Street leading to a quick rally.
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