The stock market and the political economy

Until today, every time Obama or one of his socialist allies opened their mouth, the stock market dropped because the only things they ever talked about was increasing socialism. Today, Hoyer and Bernanke backpedaled from the socialists' position that they were going to nationalize the banks, and the stock market rebounded in response. It's common to think that the when politicians make the stock market go up, that's a good thing, and when they make it go down, that's a bad thing.

But they're both bad. The value of a stock is supposed to reflect the expectations the public has for a given business. That should be based soley on business prospects, the business environment, the position of the company, etc. The words of politicians should have no effect at all.

But our system has been corrupted for so long, we take for granted that stock prices reflect what politicians have to say, and we consider their statements that makes stocks rise a good thing. But in fact, when a politician's words makes stocks rise, it tells us that government has been depressing stocks. And since stocks are generally a reflection on all those things I mentioned above, our economy. And since nothing changes but the temperature of the air when a politician talks, it means government is still depressing our economy. Obviously the market hopes the government will depress our economy less, so stocks rise, but it still shows that government is generally depressing the economy.

The same thing is true when politicians drive down stock prices with their words. It means government is depressing the economy, and that the politicians intend to depress it more.

We'll know we've freed our economy from government when stock prices are immune to the words of politicians.