Firstly, lets be aware that the stock market is not the economy, but a reflection of current conditions in addition to a quantifiable estimation of future conditions.
When i worked with Morgan Stanley, in their financial adviser training program, i was able to see the inside of the operation with unique 'outside' eyes.
The first thing i noticed, is that advisers were being asked to sell particular products, as opposed to listening to the client and finding the best financial products that may help him/her in their financial goals.
The second thing i could immediately see was awry - at least half of the staff of prospective advisers were professional gamblers.... shorting their way to a decent income to break into the business. They were like poker junkies.. some openly showing classic signs of addiction.
Yes, the market needs investors so firms can raise capital through the sale of public stock... ya ya ya...
It's the huge hedge funds shorting stocks in specific markets, influencing the market to dip, with automatically triggered sell orders. One only has to have an idea of where the triggers lay.
The speculation has reached revolutionary complexity, as a science.
Take a look at the Dow chart above.... see when it started to fluctuate wildly.... funny how its in the mid 90's. The exact time a significant number of 'investors' started practically applying the computer to speculation.
This is our first encounter with the classic 'Robot' question, of science fiction novels of the 70's.. what we have here, is independently acting financial 'robots' that react instantaneously to perceived risk, according the preprogrammed and regularly faulty algorithms.
The instantaneous nature of the robots actions removes the markets isolation from rumor and unfounded speculation.
In the past, a rumor would start, and before anyone could buy or sell any stock over the misinformation, the rumor was put to rest with confidently stated fact by respected people, calming the market.
Think of it, like the financial market released thousands of robots on the streets of New York to beg for change.. ends up, through A. I., they figured out how to mug.
What else changed in the market at the time? market regulation? slightly... End of the cold war... not really. The end of Mork and Mindy?? perhaps. ... it was a good run...
Funny how the feds ended short selling as soon as it bit them in the but.
The 'bailout', if it does not lead to large changes on Wall Street, as far as the way people invest and the way the speculate on the market, they we are just delaying the enevitable pain of change.
After the 'Tech bubble' of the 90's, i thought that the dow would be flat at 10k for 10 years.. here we are... I was amazed that the adjustment has taken so long.
Who expected F and F, with the help of the feds, to start giving away money in a huge barn sale of cash.
These people were giving loans to people with no down payment, and no proof of income. Tell me they did not know what they were doing.
I remember thinking at the time, how can this be good business? They must be counting on the government to bail them out when this house of cards falls... no way, i thought, they wouldnt make such a huge gamble...
... unless they were very very sure they were going to be bailed out in the end.
You see... every one who is involved in the loaning of money was making money on this, if the fat cats at the top dont have to pay for the barn sale of cash, they all make out well.
The only people who dont do well, are the people who did not take the cash giveaway, because they knew better than to get into a wildly adjustable mortgage, like myself. These people will pay for all the idiots and greedy people who got us into this mess. These people need the tax relief, as they are the innocent in this situation.
Let me get this right... i cant borrow money for my little drum building business because greedy people on Wall Street and stupid people in Main Street messed everything up... and i have to pay $2300 to be reminded of why i can not get my micro-loan. And when i do have the %20 down payment, the bank will not be there for my responsible, but ill timed, moment to earn the American dream.
The people who defaulted on the loan this quickly, they shouldn't have been in the house buying mode. The people who will barely keep 'their' homes, will get some help from the tax payers, poor and rich alike.. i dont feel bad for these people. They are home owners, who will be very happy with the price of their house 30 years from now. I doubt any will think of repaying the poor tax payers who supported them, when they sell their house for a profit.
The influence of the donation of funds to politicians from those who would profit from a bailout of this situation is well documented.
In particularly interested in the political contribution history of F and F, The National Association of Realtors PAC, and Hedge fund managers contributions to politics.
Check out the following link... NAR all of a sudden, kicked in with millions in contributions out of nowhere in 2007 and 2008. Look at how it was spread evenly between dems and republicans... look at the top 10 contributors list, and see how no other contributor is so balanced in its contributions.. convenient, when you are trying to get a bill past both the house and senate.
http://www.opensecrets.org/pacs/expend.php?cycle=2008&cmte=C00083279
Take a look at the influence of Hedge funds in our broken system:
http://www.opensecrets.org/industries/indus.php?ind=F2700
And the financial greed mongers and what they are buying:
http://www.opensecrets.org/industries/indus.php?ind=F07
Check out the top contributing industries over the past few years... if you add real estate, financial services, securities and investments, the banking industry, etc... all the complicit actors.. you see that it is the largest contribution to the politicians who are voting to bail them out.
And Fannie and Freddie??
According to opensecrets.org, 'Current members of Congress have received a total of $4.8 million from Fannie Mae and Freddie Mac, with Democrats collecting 57 percent of that.'
And the following members of congress have personal investments in the same companies they are bailing out:
http://www.opensecrets.org/news/2008/09/congressmen-may-have-lost-17-m.html
In the end, they will choke on their money, as it can not isolate them from what they have done.
We (kids, grand kids etc) are left to clean up the mess.
Does anyone remember Tea Pot Dome??
Tony
