Can you believe the stock market these days?
Happy – up. Scared – down.
Absolutely insane. Stormy weather these days.
IFO sincerely hopes that NONE of her readers is buying or selling stock right now. This is where the amateurs get slaughtered! If you have done your own due diligence (research) in to the companies you have picked, you should just sit still. Wait until the storm subsides.
It may take a while. There is a lot to consider. Governments, of course, are panicking, too. When a dinosaur like China starts to flounder around, everybody is in danger. Remember, they are new at this capitalism stuff.
They never really let go of the government strings (controls), they just parceled out some business entities, which we hesitate to call companies or banks, to their friends and relatives. Then capitalism’s greatest weapon, greed, was unleashed.
Greed, like fire, can operate for good – cleaning out deadwood, allowing new healthy sprouts to grow, or for evil – destroying living tissues, laying bare the landscape. So, the Chinese have to figure out which it is in their own economy as well as the world’s economy.
We called China a dinosaur deliberately. This is an image raised by a former Econ professor of hers at Michigan State University – Walter Adams, pictured below right.
Adams was highly popular with the students because he was a marvelous lecturer and didn’t like to play the typical academia political games.
He accepted a temporary appointment as president of MSU, making it clear he would not accept a permanent appointment. He won IFO’s heart by smoking a cigar and attending every MSU baseball game he could.
He said, back in 1970, that GM should be broken up into its original constituent parts. Total heresy in Michigan! GM had bought numerous startup auto companies and built itself into what seemed to be unstoppable.
Adams said GM was like a dinosaur. When it walked its tail moved about, knocking over and killing smaller critters. It wasn’t evil. Wasn’t doing it on purpose. It was just because it was so big that that happened. Also, it took ages for information to get from the tail up to the little head and vice-versa. Not efficient from an economic point of view.
But, as we all remember from 2008-2009 and an other earlier time, GM and other auto executives had to go begging to Congress for a bailout. Remember when the news broke that executives had flown in company airplanes??? Big hullaballoo.
So, for their next appearance, they took regular, commercial flights. Even though, at their salaries, it was far less expensive to GM to fly on their own planes. But the ignorant hoi polloi, the media assumed, didn’t understand that highly sophisticated point.
We think the public anger was over the d*mned bailout, not the private airplanes. But since the media supported the bailout – jobs, dontcha know, they chose the false narrative.
What do we learn from this? Don’t go out into the stormy market! Just sit back and enjoy the show of rain, thunder and lightening.