Are we witnessing the end of the surge on Wall St? Or is, what we witnessed this week, no more than a minor correction? The current roller coaster ride on the NYSE and other world markets including Australia, demonstrates just how much of a casino these places are.
Putting aside the investment most Australians have with the markets through their super funds, let’s call this out for what it is. While conservative governments pride themselves in using the markets as a guide to economic health, the reality is, they are nothing of the sort.
They are nothing more than gambling houses for institutional investors, merchant banks, brokerage firms and individuals brave or foolish enough to chance their hand.
Yes, there is a plethora of data to show a healthy stock market is necessary for each of us who hold super accounts but overriding that is the reality that super accounts are a secondary consideration when investors make their moves to buy or sell.
Super funds benefit on stock markets by good luck, rather than good management.
To equate these monetary whore houses with that of a feeding frenzy in a poorly run zoo would not be too far from the truth. To pretend that the stock market runs world economies is an insult to the average person’s intelligence. It does no such thing.
Better it didn’t exist, rather than have good performing companies pretending they have inflated values which are based on no more than a guess or a whim. Better it didn’t exist than to use well managed firms as a vehicle in a calculated strategy to make a quick profit from a confidential in-house tip-off.
Better, because only those who got in first benefit, while those who bought late are left wearing a loss when the ones who got in first decide to get out.
At the other end of the market, better it didn’t exist than to have poor performing companies suffer a rumour, become a target for takeover, and lose enough value to become a bargain. Invariably we see the new owners strip these companies bare, show long time employees to the door and bask in the glory of less competition in their chosen market.
Better it didn’t exist if all it does is enable banks to use excess reserves to pump money into a honey pot to reward executives with obscene bonuses.
The markets always recover after a crash. That’s because the crash had nothing to do with performance. Markets are manipulated by traders, by boardroom decisions, by insiders, always with one thing in mind: be first, or if not first, then cheat.
All bull markets, including the one witnessed on the NYSE over the past 5 years, end in a crash. It’s not an accident. It’s planned that way. Bull, crash, bear. Bull, crash, bear.
The clear majority of the QE money issued by the US Federal Reserve in the post GFC period, went into the stock market. It didn’t create jobs, it didn’t bring about the modest recovery experienced since the GFC. That came about by direct government stimulus spending in key job creating industries.
The QE money that flooded the stock market could, if targeted toward production and services, have brought about a quicker recovery.
Is this a responsible method of wealth creation? Money invested in the markets doesn’t produce anything except more money. The higher the index, the greater its value. But nothing has been produced. No jobs have been created.
Perhaps it is time that we called out our politicians who claim that the markets “won’t be happy if we continue with deficit spending.” Of course, they won’t and that’s probably the best reason to continue doing just that.
Better it never existed, or at least, have its reputation downgraded to no more than the commercial casino that it is.