A few short weeks ago, there was a 900 point drop in the Dow Jones industrial average that occurred within about a half hour's time. Why this happened, I don't think we know for sure yet. This is been called the "flash crash." The stock market recovered within the hour and outside of the panic, it was a fairly normal trading day. Yet Congress has to have an inquest on this. Why?
It has been blamed on computer glitches, fat fingers, and other things that turned out not to be the cause. Yet Congress and the administration is all up in arms about this. Earlier this week, over a three day period the Dow Jones industrial average dropped at least the same amount of points. Yet investors are just supposed to take the losses as routine. Well, that's part of trading so why is an event that is spread out over three days it has the same result okay but when it happens within an hour we need to regulate the financial markets?
We thought the recession was over. Even President Obama came out and said that the recession is over with the GDP numbers that came out for the first quarter of 2010. A jump in the stock market is a leading indicator. And of course, the Obama administration claimed responsibility for a jump in the stock market as part of their recovery act a.k.a. the stimulus bill, that was passed last year. While the stimulus bill arguably had no impact, other than wasting all our money, it gets credit every time something good in the American economy occurs.
While the jobless rate increased, it was just brushed aside as a lagging indicator. Well, that's fine for anybody who hasn't gone past Econ 101, but there's more to it than that. Like elections, investing is done with the hope that the future will be better than the present. Unlike elections, investment decisions can be made faster than every other year, or even every four years. But that does not make him on related. With huge tax increase is coming, and the Obama administration needs to take credit for these two, there has been more long-term uncertainty than there has been in a long, long time.
Congress is now pushing through a financial reform bill that is supposed to take the risk out of losing money. But like everyone else in the administration, no one knows what's in this bill either. All it is doing is creating a government that is far too big, too far-reaching, and spends way too much money.
Members of Congress have now figured out ways on how to pass large sweeping bills. Of course that will mean that there will be as many coming in a short period of time as they can possibly get through. What does that mean for the average citizen? It means more expensive government that is being grown with borrowed money. The administration and Congress seem to have found that the supply of money to spend is endless. They have absolutely no qualms about spending more and more. As we get closer to the November elections, the spending is going to increase even more. One wonders, how can it? I'm surprised no one has compared Congress' spending to the oil disaster in the Gulf of Mexico. The money keeps coming like the oil from the ocean floor. And the result is a mess that is going to take years to clean up. If we ever can.