One of the Fox News business "experts" on the teevee this morning claimed that the Dow Jones Industrial Average* closed at 11,444 yesterday because of this week's Republican gains in the House of Representatives. Tuesday's election results were known well before trading opened on Wednesday morning, with the DJIA at around 11,200. After a couple of hours of stasis, it began to fall, and by 2:30 it had lost nearly 100 points. A late rally brought it back to 11,200: No change on the day, despite the Fox expert's Republicans theory.
Then on Thursday morning, after the federal reserve announced $600bn in hated stimulus spending, the noisy condemnation of which is what won Republicans their elections, the Dow Jones gained more than 200 points by 11 a.m. So the Fox News "expert" was basically just making stuff up — par for the course — and the market, which those Republicans speak of as if The Oracle, responded far more positively to the hated spending than to the election of Republicans.
Go figger.
* Note the steady losses during the last two years of the George W. Bush administration and the steady gains under the first two years of Barack H. Obama's (he's the sworn enemy of capitalism bent on destroying the American economy and way of life). Under whose would you prefer to have invested your privatized social security?
November 6, 2010
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11 comments:
I'm not sure stimulus spending is the right term here. The Fed is not attempting to spur demand in the real economy; it's trying to further chop at interest rates (which is why Wall Street gets giddy - this increases its margins) and goose inflation.
True, but the "stimulus" has been put to all sorts of uses, including investment in infrastructure and tax cuts. Campaigning Republicans noted no such nuances: it was all "spending." I don't mind appropriating their rhetoric (even the Wall Street Journal called the federal reserve's Wednesday afternoon move "stimulus").
Nein! Nyet! Fight the dying of the light! Monetarism used to be regarded in many ways as the antithesis of fiscal intervention (thus Brad DeLong's running "Milton the Red" joke). Doing both at the same time would work at cross purposes. And now it's being used (in an exotic form) in desperation because the latter has been demonized out of political possibility.
What the Fed's doing now is stimulative in a the very broadest sense, i.e, attempting to keep the patient from going into shock. But it's a counterintuitive, quadruple reverse bank shot in terms of stimulating demand. And it's only "spending" - adding to the federal debt - if it results in economic cataclysm - which is the permise the WSJ et al are peddling. But in that case debt will fall below fighting over cat food on the priority list.
I should've been clearer on that last point. What the Fed is doing is loaning, not spending. It will eventually sell the bonds it has purchased.
One could technically say the same about fiscal policy - that the stimulus will be recovered in increased revenue. But that's a semantic stretch.
"Barton Biggs is the epitome of the Wall Street psychopath."
Now the WSJ calls it a "monetary-stimulus buying."
Stimulus buying. Oy. Must be Frank Luntz tested.
The Fed's obviously attempting to stimulate the economy, and more specifically stimulate lending and investment. But equally obvious is the attempt to conflate this top-down solution with the bottom-up Recovery Act (not by you, obviously). Here's what an actual Fed "stimulus plan" would look like.
...and little does Sarah Palin realize she's playing right into Bernanke's hands. Fear of inflation is exactly what the Fed is trying to stoke - getting business to stop sitting on mounds of cash and gubmint bonds.
Germany, a country that knows a thing or two about the dangers of inflation ...
And you know what that led to.
"Germany, a country that knows a thing or two about the dangers of inflation ...
And you know what that led to." -IT
It led to the NSDAP, 'National Sozialistische Deutsche Arbeiter Partei', the National Socialist German Workers' Party. They supported national health care, stimulus and jobs programs, nationalizing industries, and controlling industries/finance through government appointed overseers. They came to power by creating deliberate crisis after crisis, mobilizing unions as thugs and using "lawfare" to wage war against the citizenry and to tranfer legislative power to the executive. Then they demonize and imprison their own citizenry; anyone who dared to have different opinions, or dared to complain about the tyranny.
Good thing the left wouldn't try something like that again!
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After announcing that the currency is being de-valued by 20%, expect the value of all goods to suddenly be valued at 20% more paper.
Sadly incomes won't rise. National Health Care insurance is raising everyone's premiums next year. And income taxes are going up.
http://www.youtube.com/watch?v=Q8erePM8V5U
So we'll take home much less, and it will buy even less.
Stalin, Mussolini, and Mao had the same problems with their failed economic plans. And we know what comes next.
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