Wall Street Keeps Crumbling
An old parable tells us that the wise man who builds his house on a rock foundation, will hold fast and hold tight when the storms of life come. However, the foolish man who builds on sand will see the house swept away when the storms come. Why? Because the foundation of sand is easily washed away and crumbles when stormy weather hits.
Could it be Wall Street’s foundation of sand is crumbling?
For some reason the government thinks the answer to the financial woes of the nation is simply to fire up the money-making-printing-machine. But, have they not figured out that every time they do that, the value of the dollar falls and the whole money market becomes less stable? It’s a slippery slope and maybe all of this is showing the true, and weak foundation, that Wall Street was built on.
Now we find ourselves on a very slippery slope as panic and fear continues to run rampant in the area of finances.
Now I must admit I am not an economist. Nor do I have any kind of degree in economy. However, maybe it’s time to use simple common sense here and stop listening to all the so-called expert economists who are giving advice to government leadership. It’s become more and more obvious that the economists are more concerned about protecting their big fat pocket books, instead of helping those who are living paycheck to paycheck.
The $700 billion dollar bailout that was first voted down by Congress, but later passed by the Senate and Congress, is doing nothing to strengthen the market.
If anything, it’s weakened the market more and more. Some insist on using the new catchphrase coined by the political spin doctors hoping it might change something. Instead of referring to the recently passed bill as a bailout, the spin doctors hope the term financial rescue bill will take hold. The only problem is, the so-called rescue is not happening. As a matter of fact, the Dow Jones industrials closed at a loss of 370 points on Monday on fears that the credit crisis is spreading worldwide. At one point, the Dow recorded its largest ever one day drop, falling 800 points until it finally rallied at the end of the day.
Why did the Dow Jones fall so drastically?
Investors aren’t comfortable with the idea of the government buying back bad loans. They also don’t think the bailout will produce instant results. We live in a world with a microwave mentality. But, reality is, we didn’t arrive at this point overnight. It took years of poor decisions and crooked deals on Wall Street to create the money problems we have now. There is no microwave-instant-money-solution to the problems we’re facing now. It will take time to restore the foundation, and possibly allow some of Wall Street to crumble, so a firm foundation can then be built.
On top of the Dow Jones falling, thanks to economists, alarmists, and yes, even President Bush and other political leaders, panic is running rampant. People are scared and they’re selling, selling, selling. Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working. In other words, the very faulty foundation of Wall Street is crumbling because what used to work, is not working. Yesterday close to 3,000 stocks on the New York Stock Exchange fell, while only 264 rose. Investors usually buy and sell on speculation of where the economy will be six months from now. Of course there’s that wonderful word that’s caused many problems in the past — speculation. That’s the code word for – money-shuffle.
There’s no simple answer to fixing the financial issues we’re facing now. There’s also no instant answer to correct the issues we’re facing now either. However, I do believe it’s time to realize the very foundation of Wall Street has been possible built on shifting sand. Now is the time to address the foundation issues, and rebuild on a firm foundation of rock.
On another interesting historical note — as we find ourselves in the midst of a market meltdown — This is the anniversary of the Dow Jones Industrial Average. On this date in 1896 the Dow started reporting an average of the prices of 12 industrial stocks in the Wall Street Journal.
Just my two cents,
Dr. Rus
