Monday, May 10, 2004
The Recoveryless Recovery
There appears to be little joy in financial speculationville today, as the Dow sinks under 10K with a daily drop currently at 160+. So what caused the markets to go so gloomy? Good economic news, oddly enough.
In an almost kafkaesque bit of timing, Alan Greenspan's prognosticating last week finally saw a lending rate increase in the near future. For several months certain economic indicators were showing renewed, albeit sometimes anemic and confusing, vigor--something that should be generally favorable. It would appear that for biz news types the great awakening occurred last Friday when a healthy 308,000 jobs were added to the economy. Even bearing in mind that we need 150K increase just to keep pace with an expanding workforce, those are still mighty respectable numbers. This increase, however, sent stocks tumbling Friday in the US. The dumpoff continued this morning in Asia and at press we're in pretty negative territory.
So just when we we're getting out of the tunnel, world markets react negatively--showing once again that market indicators are a really bad measurement of any economy. Speculators fear that the Fed will be forced to raise interest rates for the first time in many, many months. Since rates are practically at zero and couldn't get any lower, one would think this would not have come as much of a shock. Nevertheless, the spectre of a rate raise in the future linked with turmoil in the Chinese economy (the world's real engine of output), rising commodity prices (especially oil), and ongoing bad news coming out of Iraq and the collective 'Stans has burst this bubble just as it was starting to expand.
One can almost hear Bush and his editorial minions at the Wall Street Journal screaming at the financial news reports, "But jobs are up! Jobs are Up!!!"
But, alas, the market remains a fickle and volatile place. Which is why our nation's cummulative wealth should not be tied up in it lock, stock, and barrel as conservatives have long advised. Sometimes it just does irrational things, and when the money's gone (as any investor from 1929, or oops 2000) the money's gone.
Oh well, I'm sure TeamBush will just send in the clowns. . . they always do.
There appears to be little joy in financial speculationville today, as the Dow sinks under 10K with a daily drop currently at 160+. So what caused the markets to go so gloomy? Good economic news, oddly enough.
In an almost kafkaesque bit of timing, Alan Greenspan's prognosticating last week finally saw a lending rate increase in the near future. For several months certain economic indicators were showing renewed, albeit sometimes anemic and confusing, vigor--something that should be generally favorable. It would appear that for biz news types the great awakening occurred last Friday when a healthy 308,000 jobs were added to the economy. Even bearing in mind that we need 150K increase just to keep pace with an expanding workforce, those are still mighty respectable numbers. This increase, however, sent stocks tumbling Friday in the US. The dumpoff continued this morning in Asia and at press we're in pretty negative territory.
So just when we we're getting out of the tunnel, world markets react negatively--showing once again that market indicators are a really bad measurement of any economy. Speculators fear that the Fed will be forced to raise interest rates for the first time in many, many months. Since rates are practically at zero and couldn't get any lower, one would think this would not have come as much of a shock. Nevertheless, the spectre of a rate raise in the future linked with turmoil in the Chinese economy (the world's real engine of output), rising commodity prices (especially oil), and ongoing bad news coming out of Iraq and the collective 'Stans has burst this bubble just as it was starting to expand.
One can almost hear Bush and his editorial minions at the Wall Street Journal screaming at the financial news reports, "But jobs are up! Jobs are Up!!!"
But, alas, the market remains a fickle and volatile place. Which is why our nation's cummulative wealth should not be tied up in it lock, stock, and barrel as conservatives have long advised. Sometimes it just does irrational things, and when the money's gone (as any investor from 1929, or oops 2000) the money's gone.
Oh well, I'm sure TeamBush will just send in the clowns. . . they always do.
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