A Sentimental Journey

Ah! The old standards! Swing, and economic crashes!

© Bryan Zepp Jamieson
1/22/08
http://www.zeppscommentaries.com/Sociology/crash07.htm

“Trading on sentiment” is the latest euphemism for “panic.” You don’t actually want to SAY “panic” because that might make nervous investors trade on sentiment. The banks don’t have panics. They just get sentimental. Those bankers just get a little misty-eyed, is all. And the Crash of 1929 and ensuing great Depression weren’t economic catastrophes; they were just a sentimental journey.

Yesterday marked a first in American history in that Martin Luther King, Jr. saved Wall Street’s ass. He didn’t MEAN to, of course. He probably wouldn’t have borne them any malice, but, what with being dead and all, he wasn’t going to be taking a real proactive role in current events.

But it was the official recognition of his birthday, which, like all American holidays, fell on a date which had nothing to do with the event it was meant to commemorate.

As a result, Wall Street was closed, and traders in the US got to huddle behind closed signs with MLK’s image on them while the rest of the world went to hell in a hand basket.

And hand basket it did. The traders were trading on sentiment, rather than with the calm, deliberative waltzes with which these movers and shakers normally guide human destiny. “Trading on sentiment,” on the other hand meant the traders were screaming, setting fire to cars, biting the knobs off fire hydrants and pissing themselves. About like any other trading day, except this time, they were losing gobs of money. Most had the worst day seen since 9/11.

Every other market in the world bombed. Some only went down 3%, which rates as a “sickening thud” on the Saffer-Simpson scale of market volatility. Others went down 7%, which produces a sound among traders not unlike that of babies burning to death. None made the magic 10% mark, which is when traders start leaping out of skyscraper windows, but the recession is still young. There is still hope.

I’m writing this in the eye of a hurricane. The Fed just announced in the wee hours of the morning that they were making a rate cut of three-quarters percent in the interest rates. It’s a move based on sentiment, since the Dow futures were down 606 points, and investors widely expected the Dow to open down by a thousand points or more.

The Fed announcement that accompanied this extraordinary move was a masterpiece of understatement: “The committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households.”

You know. “Strains.” Strains sort of like the Hindenberg felt after a few small flames appeared near its nose. Strains like those experienced by some buildings in Hiroshima after the Enola Gay flew over. Strains. Just stresses, you know.

Now, I often compare market traders to a flock of chickens in a thunderstorm, and that’s not meant as an insult to chickens. The old euphemism for their behavior used to be “volatile.” Now it’s “stressed,” or maybe it’s sentimental. When they “lose confidence in market conditions” and get misty eyed, they don’t usually inspire confidence in others.

But these same advocates of the unregulated and free market also have a strong tendency, when in trouble, to cling frantically to the pants leg of any perceived authority figure that happens to be near, and in America, that would be Ben Bernanke and the Fed. And the Fed has taken about the only move they could, and done so – for once – in a timely manner.

So when the market opens in a few minutes, it might actually go UP a bit, a phenomenon known as “hysterical relief” and one which is about as well-founded as the cackling glee of a delusional manic paranoid in a mental institution.

IF Bernanke is lucky, he’s delayed the inevitable for a week, maybe two.

Just the other day I wrote “[The corporations have] stripped the nation of its industrial core, but they have taken the world’s wealthiest nation and turned it into a pauper state, where the standard of living of the citizenry is rapidly dropping behind the rest of the third world, and people are unable to get decent health care, or have any safety net if they lose their jobs. And workers in America have no rights. The corporations, and their pet Republicans, simply stole that from the American people. Trillions and trillions of national wealth, gone. The greatest rip off in human history, the fall of the mightiest country.”

That’s what Bernanke is trying to hide with his wild slashes at interest rates. Easy credit helped get us into this mess, and Bernanke is hoping easy credit will get us back out, despite the trillions and trillions in debt that has replaced productivity as the backbone of the American economy. It’s what the market and the media are trying to hide with their increasingly silly euphemisms, even as Paul Craig Roberts noted that an astonishing 91% of jobs created in 2006 were “waitresses and bartenders, health care and social assistance, and wholesale and retail trade, transportation and utilities.” That isn’t an economy. That’s Douglas Adam’s colony of hairdressers and telephone sanitizers who tried building an economy based on tree leaves. Roberts also noted that 23% of all consumer spending went to foreign goods, despite the near collapse of the dollar.

The opening bell on Wall Street has rung, and some of the more . . . sentimental . . . among you might reflect on the fact that every time a bell rings, a Wall Street broker loses his wings.

And the Dow is down at opening another 400 points.

It didn’t work. It might slow the crash, but it can’t quite hide the fact that the supply-siders have destroyed the American economy.