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Mises Economics Blog

Holding up the stock market

February 26, 2008 4:10 PM by Mark Thornton | Other posts by Mark Thornton | Comments (3)

Oil is over $100 per barrel and gold is approaching $1000 per ounce. Consumer confidence just hit a 15 year low and every statistic about the housing bust just keeps on getting worse. Unemployment has spiked upward and so has price inflation. How has the stock market managed to hold its own under these conditions?

One factor was the surprise cut in the Fed Funds rate, another was the announcement in the media of a bailout of Ambac and MBIA, the bond insurers. Now we have the rating agencies reaffirming their AAA rating on Ambac's and MBIA's credit ratings which must be maintained. The rating agencies are basically admitting that their rating services are nothing but a sham. What kind of strong arm tactics will they use next? 

All I can say is that its a good thing we have come "decoupled" from the Chinese market as they have lost 30% of the value of their stock index in the last four months (or 90% on an annualized basis:)

Comments (3)

  • We should be as lucky as Zimbabwe.

  • The stock market is an awful barometer of the health of the economy. All you need do is drop the value of the currency and companies easily make their earnings and their stock prices go up.

    The best performing equity market in world is Zimbabwe. Wouldn't it be great to just toss currency out of helicopters and watch our stock market returns skyrocket.

  • Published: February 26, 2008 6:47 PM

  • frank

  • The stock market is still rising because monetary inflation is good for it just as it is for commodities. Regulation and taxation is what kills a liquid market and will eventually be the death of both commodities and stocks. Right or wrong, long or short, you can get out of your position in stocks or commodities in an instant. Not true of Real Estate.

  • Published: February 26, 2008 7:00 PM

  • cree

  • Sure and the feds been dumping hugh sums into the large investment firms which in turn play that back into the market moving up this sector or that sector.The return on the stock market by the time you factor in inflation is in all truth on the minus side.As the one broker said as the bell closed "see that group heading tru those oak doors,they can tell you exactly what the market will do tomorrow for they control it tru thier hugh sums of money."
    And thats about it..

  • Published: February 26, 2008 8:41 PM

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