Week in Review
The Dow Jones Industrial Average is at a record high. The unemployment rate fell one tenth of a percentage point in April. Nonfarm payroll employment rose by 165,000 in April. And interest rates are still so low that they are almost negative. Good news for Wall Street. And rich investors (see Revised Wall Street Forecast: We’re All Going to Be Rich by Kyle Stock posted 5/13/2013 on BloombergBusinessweek).
Whether, the country’s 500 biggest companies are collectively worth that much is another question. Goldman says most of its own valuation engines show the market is currently at or above where it should be trading. In other words, eager buyers are keeping it high. Low interest rates are spurring things along, as investors borrow increasingly large sums to place bigger bets.
That’s not to say some people aren’t nervous about the recent gains. “It’s one big carry trade, and all it’s doing is setting us up for a bigger correction,” says Joseph Saluzzi, partner and co-founder of Themis Trading, an institutional brokerage firm that specializes in equities. “Whether it’s going to be a week from now or a year from now, I don’t know; but it’s going to be ugly.”
President Obama has been saying for years now that the economy has turned around and things are getting better. But better for who? Wall Street. Not Main Street. The 1%. Not the 99%. Things are still pretty horrible for the 99%. The unemployment rate may have fallen in April but the labor force participation rate hasn’t budged from March. It’s still at record lows. You have to go all the way back to President Carter’s Seventies to find so many people unable to find full time work. That’s right, even George W. Bush had better economic numbers throughout his presidency. And he suffered through a couple of recessions. And the greatest terrorist attack on American soil. So things aren’t getting better. They’re only getting better for the 1%. Who are borrowing that cheap money the government is printing to make more money. While the general economy languishes in the worst recovery since that following the Great Depression.
And it gets worse. Once the markets correct all of that irrational exuberance the economy is going to crash. Hard. Just as it always does after artificially low interest rates push stock prices into the stratosphere. And “it’s going to be ugly.” As it always is. And the longer they keep those interest rates artificially low the uglier the inevitable correction will be. When the correction comes it will be the 99% that will suffer the most. As they always do. As even more people will be unable to find a full time job. Pushing the labor force participation rate even lower than it ever was in the Seventies. This is what President Obama is doing to the 99%. While he and his 1% friends are living large. And will continue to live large after the crash. Just as Hugo Chavez was able to live large in a country that couldn’t even make enough toilet paper for its people. Because rich people and those in government always do well. No matter what they do to the people.