Of course, this belief in the markets as reflection of a correct political/economic path to take is nothing new. And Jon Stewart’s mockery notwithstanding, it certainly makes sense for those with a particular political/economic point of view; looking at market reaction definitely makes a lot more sense to them than listening to single individuals who may or may not be “right.” And given the popularity of online “markets” in which people invest real money predicting the outcome of a wide variety of events, it’s an idea that has some cachet in the world at large. (Granted, those kinds of markets may very well be completely different animals than the stock market; I leave it up to commentary whether they’re worth discussing in the same thread.)
So I’d like to toss out the question: how much is the movement of the stock market worth paying attention to, when it comes to indicating a particular political and/or economic path to follow? Is it only worth paying attention to in certain circumstances? Towards certain kind of policies? Should it be weighted against certain other factors? Which?
Market reaction is a good measure of the general reaction to short-term perceptions of market-focussed policies by those with a stake in responding correctly.
That’s about it. They’re not a good measure of anything else - especially not economic activity which they’re usually conflated with - and perceptions may change over time.
I’m bumping this thread not only to thank Marley23, but also to add an update: today’s USA Today’s front page story on yesterday’s market drop heavily promoted the outlook I talk about in my OP.
I think the real danger of this assumption is that it’s very tempting to do anything, ANYTHING, if it’ll bring the market back up, and as we know from what got us into this mess in the first place, making the market go up isn’t necessarily good for the economy at large.
I really think this is a rich topic worthy of discussion, unless you think BigNik has already said all there is to say. How much attention should Obama pay to what the market does in response to his actions? Many of those who say “a lot,” as my OP and BigNik pointed out, already have a vested political or personal economic interest in advancing that point of view. But could they somehow be right?
Speaking as someone who does think that BigNik has already said all there is to say…
“The market” is an easy handle for a judgement, but it’s a poor one. Especially if you’re just looking at equity index prices. Unfortunately, because it’s (a) a number that’s (b) easy to get, poor journalists imbue Dow numbers with more import than they actually have.
It doesn’t measure anything important, the way GNP, employment or income distribution numbers do. It’s just… easy.
