At least this cartoon portrays the relationships properly. In the “old days” (pre 2009) the market was looked at as a forward looking indicator for the economy. With all of the QE (quantitative easing) that the Federal Reserve has undertaken QE1, QE2..QE-indefinitely, it has pumped billions into the financial system and Wall street can borrow for .25 % interest. So they borrow billions, turn stocks and bonds for a 2 to 3 percent profit and feed the markets with contrived activity.
Meantime, “the folks” are still buried in debt, have houses totally undervalued with mortgages that significantly exceed the market value. Add to that layoffs, higher cost of living, insurance etc and they are living paycheck to paycheck. Then we have the last frame for the homeless, chronically unemployed, mentally ill and no hope for the future. Not much of a connection to the all time highs reached by the markets. What’s ridiculous is Europe is back in recession, unemployment in Spain and Greece is as high as 25% in some areas yet their stock markets are reaching all time highs as well. Disconnected? To say the least…
At least this cartoon portrays the relationships properly. In the “old days” (pre 2009) the market was looked at as a forward looking indicator for the economy. With all of the QE (quantitative easing) that the Federal Reserve has undertaken QE1, QE2..QE-indefinitely, it has pumped billions into the financial system and Wall street can borrow for .25 % interest. So they borrow billions, turn stocks and bonds for a 2 to 3 percent profit and feed the markets with contrived activity.
Meantime, “the folks” are still buried in debt, have houses totally undervalued with mortgages that significantly exceed the market value. Add to that layoffs, higher cost of living, insurance etc and they are living paycheck to paycheck. Then we have the last frame for the homeless, chronically unemployed, mentally ill and no hope for the future. Not much of a connection to the all time highs reached by the markets. What’s ridiculous is Europe is back in recession, unemployment in Spain and Greece is as high as 25% in some areas yet their stock markets are reaching all time highs as well. Disconnected? To say the least…