Archive for February, 2009
Is it bad for stocks to be down?
Posted by Benjamin J. Thompson | Filed under Economics, Essays
Have you ever wondered why we keep getting told the economy is bad when the stock indexes are declining? These are just numbers on a trading floor. This is a place where 20-something Harvard grads drive to work every morning in expensive Miatas to wave pieces of paper at each other, shuffling money back and forth, each hoping to be a better guesser than the rest of the frothing traders around him. Has a bunch of shouting and the buying and selling of abstractions ever produced a single air conditioner or automobile? Of course not. There are parts of our economy much more important than what those overpaid lemmings on the trading room floor do every day.
Don’t get me wrong, the stock market has a vital function in any free economy, but why does our media and government hold these people in such reverence? Our economic lives need not be at the mercy of a graph at Yahoo! Finance. Yet for some reason our government and media are convinced that that is the way it is.
The stock market’s natural function — apart from producing profit for those with foresight — is that of an economic seismograph. It broadcasts how the economy is moving and where. But if the DOW crashes, is that a bad thing in and of itself? No. It gives us vital information. It tells us that demand for ownership in the DOW’s component companies has gone down. We can then start diagnosing why. Why is it that the constituent companies were so overvalued? What truth dawned on the biggest investors that caused them to take their money out of companies like Disney, Microsoft and 3M? If the smart guys whose careers depend on making good investment calls don’t see opportunity in stocks, where do they see it?
In diagnosing the problem, there are several potential culprits, but one of the biggest I think is this: Our government turned a huge portion of the American workforce into stock investors by threatening people with taxation if they didn’t put money into 401(k) plans. The more polite, Orwellian phrasing for this is that your 401(k) contributions are “pre-tax.” It’s a subsidy on putting your money in the capital markets, and a penalty on puting it elsewhere. Without this forcing of workers into the capital markets, a big drop in the NYSE, NASDAQ or DOW stocks would not have robbed people of 60% of their retirement savings. Without putting so many Americans into dependence on stocks, then a crash in the DOW would have affected you and me comparatively little. But those who make their living on Wall Street have a lot of money to blow on lobbyists, so my guess is that our government will continue searching for ways to subsidize their sector of the economy at the cost of others.
The stock market is risky. It’s a place for investors, and most of us (including a lot of the Miata-driving 20-somethings) are not investors. Perhaps the people in Washington thought they could court Wall Street lobbyists by forcing the people’s money into their pockets. Maybe they sincerely believed the lie that stocks always go up, and thought diverting Americans’ savings into stocks was truly a good idea.
Whatever the case, if you are one of the foresighted few who had diversified your savings into tangible assets (gold is a great hedge) alongside your stock investments, a plunge in the stock market is only a signal to move your savings around a little to keep from losing any of it. If you’re one of the unfortunate majority who saw 30, 40, or even 60% of your savings decimated by stock market madness, then rest easy. I hear the new President is about to join the Fed chairman in dropping $800 billion from helicopters to “save the economy.” Perhaps he’ll acknowledge the federal government’s responsibility for your plight and drop you a few Benjamins.
Anonymous Letter to the Federal Government
Posted by Benjamin J. Thompson | Filed under DownsizeDC, Liberty
The following has been passed around some forums and mailing lists. David Bardallis claims at LewRockwell.com that it was left at a local drinking establishment.
Dear Federal Government,
Drop dead.
Excuse us. Some may consider such bluntness to be indecorous, but why beat around the bush? In any case, we’ve been around this bush (Bush?) too many times to count already. It’s time to let you know what we really think of you, what we say behind your back, what we whisper to each other when you leave the room.
We hate you. We want you to drop dead. Or, anyway, to go away and never come back. You are not welcome anymore. We have tolerated you – and we emphasize “tolerated” – for a long time, long after whatever romance there may have been was gone. We can pretend no more. You are disgraceful, boorish, nauseating, corrupt, shameful, arrogant, dishonest, self-serving, parasitic, disgusting, hypocritical, and rotten to the core. You have not even one redeeming quality. There is nothing you offer that we want any longer. We’re not even sure what it is we ever saw in you to begin with.
We suppose you can be forgiven if this letter comes as a shock. “Why,” you say, “what do you mean? I still command great respect and inspire widespread adulation. And I still care about you. Isn’t it obvious?”
It’s true that, in public, we often nod our heads and agree with you, even defer or appear to defer to you. But we assure you that this happens not out of respect; rather, it arises merely from the fact that you have a lot of guns and a bad temper. Inside, we are seething and resentful. Inside, we imagine your demise in the most vivid and gratifying of ways. We may fear your irrational and violent behavior, but we manifestly do not respect or agree with you. We don’t love you. We don’t even like you. (See the part about hate, above.)
At any rate, our revulsion toward you has finally come to outweigh any fear we have of you. We refuse to keep our real feelings in for even one more second. We want you gone from our lives. And we mean completely. Vamoose. Go. Die.
Please understand we aren’t here to argue. No special new subsidy, tax break, or privileged “loophole” is going to sway our opinion or make us change our minds about this. We’ve been there, done that, for too many decades to count now. Likewise, your threats are starting to make us yawn and even laugh. You see, we know all your tricks now. We can see through your lies because we’ve heard them all so many times before. We are fully aware of your true nature, and we see that that nature is radioactive evil, wrapped in a tattered blanket of ignorance, foolishness, and stupidity.
Look, we know it’s only a matter of time anyway. Your dimwittedness, greed, fraudulence, and moral bankruptcy are finally starting to catch up to you. Even your former employees admit as much. Do you remember Paul Craig Roberts, one of your past Treasury officials? Today he says of your latest economy-wrecking and warmongering efforts:
“The world has never seen such total mindlessness. Napoleon’s and Hitler’s marches into Russia were rational acts compared to the mindless idiocy of the United States government.”
Mindless idiocy: We could not have said it better ourselves. Wait, yes, we could have, because we would have also mentioned your meanness and malevolence.
Our state governments are starting to feel the same way about you that we do. Many are openly refusing to obey your so-called “REAL ID” attempt at creating a national “your papers, please” regime of Hitlerian proportions. Some are even starting to make noises about the Tenth Amendment, which reiterates that you aren’t allowed to just do anything you feel like doing. (We are not big fans of our state governments either, but at least they don’t start wars, counterfeit our money, and prop up tyrannies across the globe.)
You see? Look in the mirror for once. The emperor not only hasn’t got any clothes, he’s a quadruple amputee demanding that everyone admire his muscular physique. We don’t know whether to laugh at or feel pity for such a pathetic creature.
In conclusion and just so we’re clear: We’re done. Pack up and get out. Better yet, don’t pack – all that stuff belongs to us in the first place. Just get out. And when you finally, mercifully, do kick the bucket, please make sure it is in some place far away from us, where we won’t have to smell the stench of your hideous, rotting corpse.
Signed,
Every Normal Human Being in America and the Rest of the World