Putting the political in "political economy"
Golem XIV asks and answers a very interesting question:
What do the stock or bond markets measure?
Think you know the answer? Read on.
... The way stocks and bonds continue to levitate no matter what the news has been a strange factor of our ‘recovery’. There are so many indicators which all point down that the upward march of the stock valuations is odd. GDP has not rebounded anywhere, to any degree sufficient to warrant the Dow at 17000. Even the market cheerleaders admit the recovery has not brought with it employment other than a huge increase in part-time and low paid jobs. So what are the stock movements tracking or reflecting? It seems to me they no longer reflect any economic fundamentals but instead political ones. Of course the political was always a part of what the markets noticed. But in the past the political was a smaller part and the economic profitability of the company in question or eth market in general was the larger part. Today the health and viability of the entire market and the companies who float in it are entirely dependent on political fiat and power. Today the stock markets are a measure, I think, of the perceived grip of the global over-class on the levers of political control. Bad economic news hits, but what counts is not that news, but the market’s estimation of what that news might do to the ability of those in power to maintain their grip on power.
The dynamic is news hits, and the market looks to see how destabilizing that news might be to the political status quo. The questions are all political. Will loose money continue? Will lobbying for further loosening of not-yet-even-in-place regulations continue? Is the will to replace national regulation ( which is far too close to democratic review) with international agreements like the TPP and TTIP and best of all TISA still ascendant? If the news does nothing to derail the political underpinnings of the present golden era then no news is bad news. If you allow any of the above then the stock and bond markets are a measure of political control. The market measures the global overclass’s belief in their own grip on power.
To me it makes complete sense to see unemployment remain high, austerity cutbacks eviscerate public services and the gap between the have-it-alls and the have-nothings to grin wider and wider and yet have the stock markets rise and rise as everything were fixed. Because what the market indices are measuring is the fix.
The Dow is a measure of political control not economic health.
So, following the Dow is a classic example of identifying with you oppressor. Too bad about the pensions, but we're sovereign in our own currency.
NOTE OK, OK, political science. Nevertheless.