printJeffrey Tucker of the Mises Institute connects the dots:
“Ah, nothing focuses the mind that a good ol’ fashioned stock market sell-off. Nothing is more likely to cause people to decide that Bush is a really bad president, or inspire pessimism about the future. One might think that a war in Iraq and US equity valuations have politically nothing to do with each other, but when portfolios show declining cash value, blame flies in unexpected ways. Depending on how long this lasts, we might find that brutal criticism of all this president’s policies will become even more ubiquitous.
Meanwhile, looking through my email archive from yesterday, I see this alert from Frank Shostak: ‘The central bank of China’s tighter stance runs the risk of creating a financial accident, which could have serious effects on US real economic activity.’
So let us make another prediction: Republicans will blame China for its reckless monetary policy. And while the data seem to suggest that there is merit to the idea, Frank himself says that we must distinguish between the bullet (bubble in the US) and a trigger (China’s inflation).”
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I listened to Kudlow and Friends, but they seemed more interested in justifying their abiding political faith in Bush, deficit spending, and the miracle of tax cuts. Sure, on the face of it, returning stolen goods to their owners is a good thing for the robbed and the economy in general. The problem lies in what is unseen: the hidden theft/tax of inflation, which finances deficit spending. Congress, as you know, is spending so much more than the treasury collects in revenues. Could this malpractice possibly have (gasp) wider repercussions?!
Some “Texas Straight Talk” will help complete the picture.
Update: Wouldn’t you know it, “his Holiness Alan Greenspan, who can’t stand not being in the spotlight” (as a friend put it), shot his gob off about a recession on Sunday, and voila: the market reacted. Greenspan’s Delphic pronouncement contributed to a stock-market decline. The man should be muzzled!
What’s a stock worth? It’s worth whatever you can sell it for. In the short run. In the long run a stock, or anything else, is worth it’s actual value and sooner or later something is going to happen to make the stock market seek it’s real level. Which is mega-bucks less than the inflated market we have today. When that happens, and it is going to happen, the world’s economy will resemble a bucket of hippo dung. I plan to augment my retirement by selling apples door to door except my retirement, and yours, probably won’t exist and nobody will be able to afford an apple anyway. All we need now is another dust bowl and we are going to look like a John Steinbeck novel.