10,000 may mean opportunity. The question is opportunity for whom?
Unless you need cash now, falling stock prices are not, of themselves, a bad thing. Wait a few months or years, the prices will return. So if you can wait, these are good times. But who can wait? The answwr may not be the American Middle Class.
The real value of the stock market is probably at its highest level ever. There are over a billion new consumers in China, India, Brazil, and even Africa who want “stuff.” While there is a food crisis, our global productivity is rife for investments that will feed this ultimate demand. The bottom line? There is unused productive capacity and unmet need.
So what holds this back, what could dump us into a recession?
The first answer is classical … people who hoard capital can drive us into a recession. This was the essence of the brilliant ideas of John Stewart Stuart Mill … mercantilism. Capital is only useful, only grows, if it is productively used. If you hoard capital, it evaporates with misuse. This is the danger .. hoarding capital.
BUT .. who would want to hoard capital? We, the US rich, are the real enemy. are the real enemy. Our economy has run for decades on the dumb ideas called “trickle down.” Corporations measured their success not in terms of market share or productivity but in terms of stock price. The goal was not to increase profits, it was to increase “value.” The priests of Reagan’s odd religion maintained that the desire to have more cash would drive the wealthy to generate jobs for the rest of us.
That Reaganesque idea never made sense. Even if true, all it meant was that the rich would put their investments into minimum labor cost societies,in effect removing capital from our society in return for short term gains. The Trickle Down Economists argued seductively that since the owners of this capital remained in the US, the effect was to make US capital even more efficient so overall society would (magically) become yet more productive and the US workforce would benefit.
The huge error in this model is a lack of understanding that English history is not a paradigm for a world economy. Investing money in an English factory, benefited workers and owners. The workers used their wages to buy good, increasing the owner’s wealth. An ideal cycle?
This problem with this rosy scenario is that is does not deal with globalism and development totalitarianism. Many of the developing nations control their own central banks and capital exchanges. China and Russia have central, state controlled banks. 75% of stocks in their Stock Markets are owned by the Party, the government, or some similar CPC functionary. The Bank of China wants to get rich, but it wants this because, as part of the Communist Party, it wants to benefit ITS nation. What incentive is there for the CPC to work for the benefit of American workers? The only incentive is to create buyers for Chinese products. But why should a Chinese Bank want to use American buyers rather than Chinese ones?
Where does this all lead? The Dow WILL go up, at least in the near term. The question is who will be buying those shares? One answer is the soverign banks. But, is these new investors are also governments, presumably they will want to optimize their own societies,
We need an industrial policy. The US must become more able to compete with nationalist economies.
The alternative is bad.
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