"uhhhh, what?"
But conservatives know by ideology the stock market is doomed because the Federal Reserve is one of those incompetent government agencies we need to abolish. Who else would buy up those hopeless mortgage-backed securities and pump Imodium into the market to stop the dump?
I hope it works. Strange that people here just a month ago were talking about how good the economy is. It's good it had an emergency crew on standby. Long live the Fed-- a government agency that works!
-- Modified on 8/10/2007 12:37:01 PM
-- Modified on 8/10/2007 3:33:30 PM
"uhhhh, what?"
Equity markets are volatile.
Now there's a real revelation.
the news flash is that you can't get pension fund money until you get the insider buttfucking down to a reasonable level. If the CA state employees are gonna invest, and they lose their money to some incestuous little twirps, you can bet that some of GWs cronies are gonna stretch rope.
The SEC is the reason that the NYSE drew more money than all the foreign stock exchanges combined.
Are you saying then that it's just weather? That mutual funds are useless because it has that unpredictable volatility? So, a whole cornerstone of our economic system is inherently shaky?
Isn't the free market itself a ouiji board then?
You’re baiting me right? Oh well.
Weather can’t be controlled. It can be predicted, somewhat, but for the most part it is random energy in chaos.
The stock market is quite the opposite. You seem to view it as some kind of bingo or roulette game. On a micro-level, most of its inputs are very much controlled. What each company does each day in an attempt to position itself in its own particular industry is very much controlled. Now, how their customers respond to those “offerings” of products and service is the flip side that becomes less predictable.
The stock market is not so much a corner stone of our economic system, but rather a measuring tool of all the economic pebbles (i.e. companies). Some groups of pebbles might be considered corner stones but there are so many ways to align and group the pebbles both horizontally and simultaneously vertically, that the interactions are impossible to predict. The stock markets are a method to measure all the company’s intelligence, their efficiency, their strength, their weakness, their effectiveness at meeting the needs of their customers, etc. etc. This measurement tool is not perfect. Some metrics are hidden for periods of time. Hidden occasionally due to dishonesty but mostly intentionally because instantaneous reporting of so many variables would overwhelm the system. Corrections in the system (downturns) are a natural occurrence and should be considered a healthy thing.
Even though most of these many things about companies and customers and consumers are measured and reported in quantitative methods where the number of significant digits in the report can be controlled, there is one measure more than any that adds tremendously to the volatility. Psychology. Or more specifically how different people interpret the same sets of metrics.
You know perfectly well that the overall markets have NOT been unpredictable over a sufficiently long period of time. Certainly some mutual funds will end up being useless, but not most. If you truly view a free market as a ouji board and were not simply baiting me, then I can understand how socialists would rather retreat to the relative comfort of allowing someone or something to orchestrate the dance, rather than let all the individuals move in there own directions. Problem is, no one has ever existed (nor will exist) that is sufficiently (fill in the appropriate adjective).
I could give you a reading list if you like.
out they're in the market. Or that good competitors don't do their best to eliminate competition, by hook, crook, cartel or any way possible.
Most of the world is pretty good about eliminating competition. If we didn't make some half-assed attempt to maintain it - through regulatory agencies - this talk about competition would be nonsense.
Of course, that's the beauty of knowing Dick Cheney - no-bid contracts.
Competition is not something Republicans would worry about. Why should they? They have god on their side. Well, at least his agent Pat Robertson.
You think I'm such a socialist? Not really. I know that a managed economy is just as prone to irrationality as the markets. However, I think very strongly that a totally free market is as absurd as a classless society. Why? Because trade can never be separated from our other social behaviors, such as politics, such as social hierarchies. The market cannot be walled off from any of it. As the government is the focus of politics in the nation-state, the market is never going to be completely separate from it, or vice-versa.
Therefore, I'll assert that the hypothesis of a free market totally unfettered from government interference is fundamentally flawed and idealistic. It based, almost purely on ideology. It's better, I think, to try to use the markets as much as possible where they work best and manage areas where markets can't work, and most importantly, learn the difference. In other words, a prudently mixed economy.
So, RWU, we agree on almost all the points you've made, but I have a few more premises that diverge our opinions: markets cannot be separated from politics; therefore, the economy cannot be separated from government.
IMO, you are correct about the psychology making movements in the stock market unpredictable. However, I believe psychology has great effect, probably greater than what you think. The numbers released can lead to reiterated psychological reactions, and feeding back repeatedly on the same numbers. For good reason, a big “correction” is called a “panic.” All markets are psychological, and people make judgments with varying rationality.
(Note: I have wondered if the introduction of psychiatric drugs has effected the behavior of the stock market, stabilizing them, and therefore the whole economy. I hope somebody looks into this.)
Now, IMO, stock markets are not predictable. Pick any expert, and you can quickly show how often he has been wrong. Some win, some lose-- really just like in Vegas, or rather, a horse race. The fact that you have winners does not imply that it's predictable. However, the odds are not static, and are not set so the “house” always wins at the end of the evening. Just like with Vegas, though, there are the professionals, and there are the duffers.
This has nothing to do with my comparison of a free market (not just the stock market) as being a gigantic Ouiji Board. On the Ouiji Board, the participants (businesses) put their fingers on the planchette, which, if none of them cheat, moves according to the individual will of none of them. Following their individual wills does not add up to the common will. Trying to determine their common wills to spell something out from the movement is futile. It might as well be ghosts talking.
I've also compared the truth of the market system to the reading of entrails, meaning that belief in the truthfulness and the arbitration of the market takes a certain amount of superstition and wishful thinking.
About the market having adjustments: quite an adjustment here to have central banks everywhere flooding the stock markets with money. Adjustment is a euphemism, designed to be neutral so as not to spread into something adjustments used to be called: a panic.
If it's an “adjustment” when it goes down, what is it when it goes up?
Those are my not-quite-humble opinions. Reading list please.
Let's face it, weekends are important renewable resources.
