One of the great lines in a Dickens novel was uttered by Mr. Bumble in Oliver Twist. Confronted with a transgression by his wife, he was accused of being more culpable than her under then prevailing statutes because husbands were legally supposed to be totally in charge of their wives’ behaviors. A notion so obviously removed from real world experience, that Bumble opined that “the law is an ass.”
Looking at the behavior of many stock markets around the world today, including our own, it’s difficult not to come to a similar conclusion about these financial institutions. They seem removed from realities in the wider world to an astonishing degree; inflated by a statistical flood of hot air that’s linked hardly at all to most American lives as actually being lived; utterly devoid of a moral compass much less an awareness of the need to display common decency toward human crises; and perhaps most strange, largely oblivious to important makers of a purely economic kind.
The stock market is thus clearly, to the extent possible with an institution, an ass.
On the matter of its relationship to happenings in the wider world — it’s virtually impossible to watch a TV news broadcast or read the first pages of a newspaper these days, then turn to a show describing how the market that same day performed or what’s reported on the businesses pages, without noting an egregious dichotomy. We’re now fighting three wars, one new, one still unfinished, the other going to hell in a hand basket with no end in sight. We’re watching a part of the world where a huge amount of oil is produced laps into a revolutionary mode. The debt crisis in Europe is spreading (Portugal) and growth in some major countries (e.g. the U.K.) is sputtering. And the world’s third largest economy has just suffered a massively destructive natural disaster that is throwing off many short-term negative consequences.
And the stock market-as-ass response? A day or two slide and then back to an upward spiral.
It’s easy to forget these days that markets are actually supposed to be moral instruments of human improvement, the basis of writing by Adam Smith, a professor of moral philosophy. We have now gone way, way off that particular track. Indeed, our markets now take a disgusting attitude toward crises, the Japanese quake and tsunami being the latest, but certainly not the only example. Ten thousand dead in Japan at last count, 17,000 still missing, whole villages destroyed, countless thousand citizens of our closest ally in Asia facing total personal ruin, a nuclear element of the crisis showing few if any signs of disappearing.
And the stock market-as-ass response? A drooling focus on possible rebuilding contract opportunities. One can only ponder in horror how market movers would react to a good old fashion bout of small pox or a big meteor hit near a major city.
Ah, but you might say, surely there are really sound, hard-core economic reasons that the stock market is entering its third year of stunning increases. Well, no. You can’t honestly say that. You can drag out a bevy of stats that seek to give substance to this view. But as often noted in cases such as these, no matter how you slice it, it’s still baloney.
Inflation in this country has been running at more than 5 percent in the last three months. The employment picture at this stage of a so-called recovery is pathetic. More Americans are falling into poverty daily, More middle class Americans are losing their long-enjoyed perks and security. The country’s national debt is soaring, while state and local governments are cutting needed services and infrastructure projects left and right. Increasingly, around the world, we are being viewed as last century’s super power on the way down.
So what, then, is driving this stock market ass higher and higher? A weak reed of a President surrounded by Wall Streeters past and future promoting stock-friendly policies, supported by a buyable Congress, a Fed that views support of the stock market as its primary function, and volume trading gamed that churn endlessly to the benefit of big banks and hedge funds.
Yes, the stock market is truly an ass. And let me add, by way of full disclosure, that having spent much of my working life reporting on this now flagrantly ridiculous, self-serving, predatory institution, I’ve come to feel like an ass as well.
More from this writer at: http://blog.wallstreetpoet.com/