Wednesday, August 15, 2007
What's Wrong With This Picture?
I happened to log into the on-line version of the New York Times and saw the headline, "Dow Off 167 Points in Late Swoon." This, I knew, was on top of all the previous losses, and did not make me happy. I had been lulled into a false sense of security a month or so ago, as every time I checked my 401k balance, it had risen still further and was looking good. Now it looks sadly similar to what it looked like at the beginning of 2007. And did I mention I kind of need the 401k to keep going up in order to achieve my dearest goal: early retirement?
There is something wrong with a system that has the stock market going sky high, hitting new records of 14,000 points only a month ago, and now plummeting day after day. The conditions have not changed so much in the past month to warrant this big a difference. The leading economic indicators are looking good; so why is this not reflected in the markets?
As the Times article says, "Though the latest economic readings indicate that growth is steady, they also make a rate cut by the Federal Reserve less likely. And a rate cut is what many on Wall Street have been hoping for, underscoring the growing disconnect between what economic indicators are saying about the health of the American economy and what is playing out in the stock market."
The purpose of the stock market was once to actually sell shares in viable companies that had solid futures ahead of them. Under that premise, the success of the overall economy would likely lead to investment in the companies that make up the stock market. But now, as in 1929, people are just using the stock market as a fancy form of gambling. It seems to bear no reflection on either the state of the economy, or even the health of the companies whose shares are being traded.
The other thing that always bothers me about the stock market's performance is that when a company lays off thousands of people, their stock goes up. To me, there is something wrong with a system that profits off of the ordinary working man's misfortunes.
Now that so many companies have gotten rid of their pension plans and are getting their employees into 401k's instead, investing in the stock market is no longer a real choice for many middle class people. They have to do it in order to save money for retirement. And saving that money in government securities or other low interest funds will never get them to the level of savings that will enable them to have as comfortable a retirement as they would have had with a pension, unless they invest in riskier funds, such as stocks.
In 401k's, we employees can't play the markets the way the rich do, selling short and performing various other clever maneuvers that I don't even understand. Our only option is to switch between funds, but we are always advised to remember we are in the market for the long haul, and not to move things around too much. But when you're nearing the magic age of retirement, you aren't in it for the long haul anymore. And that's when losses like this hurt.
So, we sit here and watch as our 401k's plummet and lose everything they've gained in the past year, all because of a bunch of rich gamblers who like to play in the stock market. Retirement now looks more and more like a vague dream rather than a future reality. Surely there must be a better way.
As many have already commented on Rove's departure from the Bush administration, I will be brief on the subject. This man was responsible for much of the small mindedness, the hostility, the partisanship, and general hatefulness of the political scene over the past generation. Here is a great article that details all of his dirty tricks over the past 35+ years. This is a man who started out with no integrity and went downhill from there.
The really scary part of the article is in the second-to-last paragraph, where it mentions that "Rove and his wife have built a house in the Florida Panhandle -- the "Republican Riviera" -- and that former Florida Gov. Jeb Bush will be 59 in 2012, a ripe age for a run for the White House."
Oh My God. Not that. Rove helping another Bush get into the White House would be more than I could take.