Stock Market Summer Silliness
Stock markets have rallied this summer on falling crude oil prices. But is this a sane and sensible response to what these falling prices actually portend? The answer to this question is this: Only if you happen to be a Wall Street trader and playing with OPM—Other People’s Money, my money and yours in mutual and pension funds.
Crude prices are falling for two reasons: a weakening demand for oil and a rising US dollar. This weakening demand, however, is the result of faltering economies that don’t use as much oil. And the US dollar isn’t strengthening, it’s only rising in comparison to the Japanese yen, the British pound and West Europe’s euro, reflecting the fact that their economies are performing even worse than our own.
Pursuing current stock market logic, stock prices should really soar if we have a full-fledged depression because then demand for oil would plunge still more. And if it were a worldwide depression that would be also be really great for stock prices because other people in the world would be suffering even more than Americans.
Often, whom the gods would punish, they first make silly…
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2 Responses to “Stock Market Summer Silliness”
I think that stock market logic is a meaningless phrase. Consider. All the traders on Wall Street know that about 70% of the U.S. economy depends on the U.S. consumer. But somehow in spite of this Wall Street almost inevitably rewards those companies that fire thousands of people not when they're losing money but when they don't make as much as the “analysts” think they should. In addition they consider it a good business strategy to eliminate American jobs whether it is done by automation or offshoring. These brilliant thinkers also think that companies making as many of their remaining workers as possible part-timers with low pay and no benefits is also a great business strategy. And then they just don't understand why the typical American thinks we're on the wrong path and things aren't just great for the economy because after all, GDP looks good, doesn't it?
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