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Dispatches from the Two Americas

Wednesday, April 27, 2011

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This is why the geniuses who populate the Beltway and Wall Street, and run the country, are completely AWOL while the rest of the country is in economic turmoil:
After waiting on the sidelines most of Wednesday in anticipation of the Federal Reserve's statement and Fed chief Ben Bernanke's first press conference, investors waded back in.

As expected, the central bank said it would keep interest rates low and end its $600 billion Treasury buying program in June, while Bernanke reassured investors that the nation's economic recovery is on track.

...The lack of news pushed the Dow Jones industrial average (INDU) up 96 points, or 0.8%. The S&P 500 (SPX) rose 8 points, or 0.6%, and the Nasdaq Composite (COMP) added 22 points, or 0.8%.

The gains put all three indexes at fresh multi-year highs. The Dow climbed to its highest level since May 2008, while the S&P 500 rose to its highest level since June 2008. The Nasdaq pushed to its highest level since December 2000.
Emphasis mine.

There is a lot of metaphorical ink spilled (though not enough) about the increasingly vast chasm between rich and not-rich in this country, but most of it focuses on income disparity between CEOs and workers and tends not to address equity disparity. The fact is, the rich are exponentially more likely to be invested in the stock market than the not-rich—and they are incredibly likely to wrongly believe that holding investments in the stock market, even if just via retirement plans, is nearly universal among USians. Nope.

All of us are affected by the performance of the stock market, whether we're personally invested or not, because we live in a market-driven economy that can be fucked in an afternoon by panicky, reactionary, and/or opportunistic investors. But we're not all tied to its recovery after a downturn: The market can improve while unemployment stays high and personal debt increases to stave off bankruptcy and foreclosure.

It doesn't matter to Jane Blow in Cornville, Indiana that the stock market is doing AWESOME when she still can't find a job and can't afford her blood pressure meds because she's got no insurance and she's about to lose her house, because she's got not a single penny of equity in the stock market. Its immediate gains don't matter to her. They only matter to investors, whose profits ain't trickling down to Jane and never will.

Meanwhile, they look at their balance sheets and feel good that the market is up. And they use their belief that everyone's in the market, and their belief that the market will solve everything, to rationalize not doing a damn thing beyond feeling good that the market is up. Huzzah. ads
 

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