It’s tempting to go into a long rant about the results of the Massachusetts elections. But I’m basically of the “let the dust settle a bit” school of punditry. For now I fall into the “It takes a fight to win” camp. Having said that, something that really got me going before the polls closed on Tuesday was Wall Street and the stock market.
Business reporters and Fox Noise analysts were ecstatic. All the U.S. markets rose steadily all day long. “The markets are betting that the Democrats will lose Kennedy’s seat in the Senate,” they thrilled, “and this will not only kill health care reform, but all the rest of the Obama agenda.” Most mentioned banking reform and labor rights, like Employee Free Choice. Then they also mentioned that pharmaceutical and insurance stocks seemed to be leading the way higher.
Most of us have heard economists tell us that the stock market is not much of an indicator of the health of the economy. Sure, when it goes all to hell, it does tend to state the obvious: things are bad. But remember how it was rising out of sight just before the crash? Not a clue. Of course the stock market’s value as gauge of the economy has gotten even worse as banking capital has gotten “too big to fail,” and edged out manufacturing capital that might be some small measure of productive wealth creation. Now it’s more of a “heads they win, tails we lose” kind of indicator. “They” are Wall Street and “we” are most of the rest of us who work for a living on Main Street. Another example – next time a giant corporation announces a huge layoff, watch the ticker. Cost cutting (jobs, automation and speedup) seems to raise stock prices.
Anyway, back to the elections. The stock market might not be a useful economic indicator, but at times it just might be an indicator of the class struggle. The investment houses, the banks, the derivative traders, (“coupon clippers,” Woody Guthrie used to call them) got giddy at the thought of defeating even the modest reform agenda of the Obama administration. Even though none of the modest reforms being proposed would be more than a mosquito bite on Wall Street profits.
The next day the stocks took a tumble that wiped out more than the gains of Election Day. Traders were worried about profits because the dollar got stronger, the price of oil dropped and China’s banks are tightening lending. What irony. The financiers who took billions in bailout money are worried that China’s banks might tighten money and “hurt the economic recovery.” Isn’t it still a problem that the U.S. banks are not lending much even with all the government handouts that were supposed to loosen their lending? Well one thing for sure – reading the tea leaves of the stock market won’t tell us much about how working people will respond to Tuesday’s election in Massachusetts. Anyone know where I can buy some “fight for a second stimulus and public works jobs” futures?