The day after the Dow Jones Industrial Average crashed a record 777 points, it's rebounded with a stunning 485 point gain.
I think some of us expected that a rebound would be a hundred points or so; but the third highest gain in history?
It's time to stop panicking, and to start figuring out some realistic solutions to the economic challenges we're facing. While we can't allow the market to collapse, it's acceptable for Wall Street to suffer a stinging loss once in awhile. Everyone forgot for awhile that markets go down, too; even real estate.
Instead of handing over mountains of cash, we should look into helping the stable institutions absorb the failing ones, and we should make sure that the ones we save are in fact worth saving. We should make sure that those who brought us to the abyss are removed; there has to be a penalty for fucking up this big. We have just received an abject lesson that they haven't been earning their massive salaries; time to reign in these out-of-control compensation packages. While I agree that it's perfectly acceptable to be rewarded for increased profits, those rewards should be spread through the entire company; an executive is only as good as his employees, never, ever better.
And we need to go after those who set us on this destructive path but bailed out with their "golden parachutes." They have stolen from all of us, and they have to return their ill-gotten goods. They are no better than pirates, and should receive treatment no better than that.
I think some of us expected that a rebound would be a hundred points or so; but the third highest gain in history?
It's time to stop panicking, and to start figuring out some realistic solutions to the economic challenges we're facing. While we can't allow the market to collapse, it's acceptable for Wall Street to suffer a stinging loss once in awhile. Everyone forgot for awhile that markets go down, too; even real estate.
Instead of handing over mountains of cash, we should look into helping the stable institutions absorb the failing ones, and we should make sure that the ones we save are in fact worth saving. We should make sure that those who brought us to the abyss are removed; there has to be a penalty for fucking up this big. We have just received an abject lesson that they haven't been earning their massive salaries; time to reign in these out-of-control compensation packages. While I agree that it's perfectly acceptable to be rewarded for increased profits, those rewards should be spread through the entire company; an executive is only as good as his employees, never, ever better.
And we need to go after those who set us on this destructive path but bailed out with their "golden parachutes." They have stolen from all of us, and they have to return their ill-gotten goods. They are no better than pirates, and should receive treatment no better than that.
I meant to comment on your blog yesterday to not pay too close attention to one day on Wall Street. Sure, everyone would point out the stock market crash of 1929. But most people don't realize or know that the big crash of 1929 was a huge 2 day drop and the second day, the one they teach you about in school, was actually less of a drop than the first day. Sure, yesterday was the biggest point drop of all time, but that has more to do with how high the DJIA is right now. Dropping 700 points when it's at 11,000 is NOTHING compared to when it dropped 500 points when it was at 2,200. Losing 23 percent in one day is a big deal. To rich people. And even then, it's only paper loss. In financial circles, it's called a correction. The DOW was higher that the economy could withstand at that moment.
ReplyDeleteWhere the Dow affects the little guys like us is when it loses 25 percent from its high over the course of 6 months or so. THAT'S a sign that something is wrong. In this day and age, the DOW losing 5 percent probably has more to do with the knee jerk reaction of a bunch of e-Traders than the sign of a devastating problem.
The economy evolves like everything else. It's the danger of a free market. The weak are starting to die and the younger and stronger will soon take over.
I'll make this prediction for you right here and now. Remember the internet boom? Or more important, the media boom in the 80s with the explosion of cable TV and VHS and later CDs? The birth of the media conglomerate. It's going to happen again in about 2-3 years. Best guess? It'll be an explosion of environmental friendly companies. Why? Because we're due. And it doesn't matter if it's Obama or McCain, it'll happen on its own because the economy doesn't care who's in office. Economy sucked during Carter, great during Reagan, sucked during Bush, Sr., great during Clinton, sucked during Bush. And no policy would've made it any other way.
Oh, and P.S. You can ask my wife. She expressed concern over the near 800 point drop on Monday. I told her "Don't worry. We'll get half of it back tomorrow. That's just how it works." SMELL ME!
ReplyDeleteP.P.S. I didn't really know that for sure.