Vital Signs

Wall Street Boom, Main Street Doom

America's economy is in great shape, government officials and the establishment media tell us. "Just look at the stock market," they say, pointing at the record-breaking Raging Bull of Wall Street which set a new 12-month high of 9,377 in July. To such "bulls," I say, "Bull!" Using today's stock market as a barometer of the economy is like citing the Las Vegas odds to gauge the health of college education.

Once upon a time, the stock market may have had some, however tenuous, connections with the fundamentals of the companies whose shares it traded. But that was back in "the good old days." Today's stock exchanges have become almost totally decoupled from the economic reality of the companies whose shares they trade. Instead, they are casinos at which the big business elite do what "Joe six-pack" does when and if he can afford a trip to Las Vegas. Both play the odds on whim and emotion: the former wearing pin-striped suits, the latter in jeans and T-shirts.

Modern Wall Street is a game of cashflows, not GDPs (Gross Domestic Products). It is a market ruled by supply and demand. The more money available for Wall Street to invest, the higher the Dow Jones matadors' capes will fly. The boost which Wall Street received from the Asian crisis last fall is a case in point. The money pulled out of Asia by the global "Joe six-packs" washed up on America's...

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