Felix Salmon comments on the stock market dropping below its November lows:The fact is that prospects for the economy are much worse than they were in November. As such, it stands to reason that stock prices should be lower than they were in November: if they were much higher, and the Dow was still above 9,000, that would be the real news, since it might imply that the November lows were panic-driven rather than rational.
That's right, but I think people's Dow-driven anxieties point to a larger pathology that started at the policy level and has now infected the media and the general public's understanding of how the economy works.
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And the increase in value was driven by a combination of speculation, and buy the fact that consumption was creating economic activity.
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