magdalene - It is all a part of bringing the market to the masses (Teeming millions?). If it is in your face all the time, it will wear down your resolve until one fateful day you will stumble across one of the numerous on-line trading sites. You will say to yourself, “How hard can it be? Buy low, sell high, retire early.” (All said in the dreamy voice of the brainwashed.) You will click in all the right spots and then you will become one of us!!! bbbwwwaaaahhahahahahah!
dropzone - Errrr… I am not one to say you are wrong, but I think a health dose of a macroeconomics class (if there is such a thing as a health dose of macroeconomics…) might point out the falicy of your statement. The economy is not based on the stock market. The stock market is somewhat of an indicator of how the economy is doing, though. The economy is based on, basically, spending. How much are businesses spending to make their products (raw materials, labor, etc.)? How much are consumers spending (you hear this during the Holiday seasons a lot.)? How much are people/businesses spending for goods and services?
It’s all about the flow of money. (And I am talking about in greater amounts than the paltry sum those green pieces of paper that are starting to look like they were printed by Parker Brothers. [aka M1])
Enter the stock market. There are a number of valuation models used to figure what a stock is “worth”. (I use that term losely because it is all a guessing game.) One of those models says that a stock price is the present value of all future earnings of a company. Hence if the flow of cash to a company drops (their sales drop, etc.) their stock price would drop. Now, take that over a majority of the companies (their sales drop, they start laying people off, etc etc etc – hence their stock drops) and you can see where the stock market becomes an indicator for the economy.
Of course, that entire model is blown out of the water when looking at any of the “dot-com” stocks. I would have to say speculation is the driving factor behind those, not the worth of the company. That is why I said the stock market was “somewhat” of an indicator of the economy. You have to look at what is driving the indexes(and that is what the Dow Jones average, the NASDAQ and S&P500 are) up or down. Did a large industry just lay off 5,000 people or was it some sky-high dot-com stock tanking when investors come to their senses and realize penguins do not need refrigerators?
Greenspan was trying to burst the “technology stock buble”. The price of the technology stocks kept going up without any real basis (there’s gold in dem der dot-coms!). When interest rates are raised, it makes the bond market look more attractive (why put your money in a stock where you think you can get an 8% return when you can put it in a bond and almost assure yourself an 8% return?). Unfortunately it did not affect the tech stocks since those returns were WAY higher. So investors took money out of the ‘blue chip’ stocks and put it in bonds while their dot-com money stayed put.
Therefore to end my mind-numbingly boring hijack, to say the economy is based on the stock market just ain’t right.