The Dow Jones today continued its gains after the Federal Reserve said it'd do all in its power to prevent a liquidity crisis. However, the price of oil shot to an all time high above $110, this then triggered a sell off and brough the DJIA into negative territory.
What angers me about this is that the stock market went up and then down for THE SAME REASON. In other words, the cause for the increase in the stock market was the same cause for its decrease.
The Fed swore it would come to Wall Street's rescue even if that meant pumping the economy with hundreds of billions of dollars in liquidity.
YEA!!!!!
But in pumping hundred of billions of dollars into the economy, it further weakened the dollar. And if you've been paying attention, the reason oil has been going up in price is not that oil is becoming more valuable, but the dollar is becoming less and less valuable. And so by vowing to save Wall Street, the Fed hurts the dollar and drives up the price of oil which drove stock prices down.
Boo!!!!!
So Wall Street, Ivy Leaguing, Bulge Bracketing gurus, which one is it?
The Fed, of course, insists that it's not responsible for the tanking dollar.
ReplyDeleteWell here's an idea for saving the dollar: maybe if you weren't in such a rush to print the damn things to keep irresponsible subprime lenders afloat, they'd be worth more?
But hey, I'm sure the Keynesian jackasses out there will be optimistic, though... with all this inflation, unemployment's going to hit the floor, right?
... right? Yeah, I thought not.
We must save the ivy league fraudsters or else the end of the world will occur. They will bail because it is their skin on the line. When it is their wealth it's okay.
ReplyDeleteAll of this is simply socialism for the rich. Why are we bailing these god damn idiots out. The people who bought these houses can walk away and simply wait until prices fall to purchase.
Save housing? From what becoming affordable again? So a bunch of boomers and people who speculated they would retire off the wealth of their home won't. We shouldn't bail them out anymore than they want to assist the younger generation with dealing with globalization and the loss of wages and jobs.
We won't it both ways but that is impossible. The market is a two way street and we can only manipulate it so far.
A great example is globalization. You can't have cheap goods without cheap wages. It's a two way street and always will be. Just like physics and at least you seem to get that.
For every action there is an equal reaction applies to economics. In fact I wish some physics majors would actually model economics instead as the real fundamentals mimic this. It would also reveal all the flaws and fraud in the system very quickly when you evualate it from this level.
Yes it's horrible if housing becomes affordable for those who were living off the appreciation of an asset. But now you have to take the loss as a speculator. We shouldn't be bailing anyone out in housing. It fall to what real wages can afford not what the tooth fairy is willing to tend.