Note how markets react to stimulus news

Just thought I’d point something about about gummints and markets.

Markets rose yesterday on news of massive European bailout. That’s because markets are pragmatic, not ideological, things.

Also, while I know Europe has it’s own psychoses (thank God our own neo-Nazis are marginal), I haven’t heard of anything equating to a Tea Party movement arising across the Continent to complain about the gummint taking steps to stave off disaster. That’s a peculiarly American phenomenon.

Of course, it’s early yet.

13 thoughts on “Note how markets react to stimulus news

  1. Brad

    And yes, the exuberance was tempered by economists worried about Europe taking on that much debt. Which is also rational.

    The problem is when one rejects or applauds based on ideological prejudice. At least, that’s MY problem with what we see all the time…

    Sometimes government spending is a good idea; sometimes it isn’t. Sometimes raising taxes is a good idea; sometimes lowering them is. Ideologies that assume it’s always one or the other are offensive.

  2. Brad

    Oh, and some of you — Doug and bud come to mind — will now accuse me of being ALWAYS for gummint spending. They couldn’t be more wrong.

    The problem is that I live in South Carolina, where every debate begins with the assumption that government is too big and taxes should be cut. It’s been that way since I started closely observing gummint in this state in 1987. So yeah, I try to pull things back toward a more neutral perspective, and that makes it look like I’m always for “growing government” to people who use phrases like “growing government.” To me, there is no right overall SIZE of government. There are only specific policy questions that should be answered, each on its own merits: Should we do this or that or nothing in this case?…

  3. Michael P.

    It’s all a house of cards, we have financially broke governments promising additional payments to stave off disaster. It’s essentially writing a bad check to keep from overdrawing another account. In the banking industry it’s called “check kiting”, and is illegal.

  4. Kathryn Fenner

    In my experience, traders, who ARE the markets, are not pragmatic–they’re crazy superstitious. They buy and sell on gut feelings that may or may not be rational outside their own little world. Commodities traders are the worst in this regard, but stock traders are in the same league.

  5. Brad

    I do find myself wondering why Jim is being redundant like that. Surely he means to say “government spending,” not “wasteful government spending.” As if he’s ever seen any other kind.

    I prefer that my ideologues be more economical in their use of words…

  6. Brad

    Hang on, let me backtrack a bit… now that I read the news story, I see that what triggered that response was apparently the fact that Southwest agreed to serve Greenville and Charleston (and to hell with Colatown) WITHOUT the gummint incentives that that been discussed.

    Which IS good news. A deal for the taxpayers. That’s great.

    Of course, this suggests that if incentives HAD been offered, and Southwest had come on the basis of that, it would have been a BAD thing. Which it may or may not have been; it’s just that some would hold that it would have been bad by DEFINITION. And that’s what I object to.

  7. Kathryn Fenner

    Michael P.–Macroeconomies are different from microeconomies, and the applicable laws are different, too.

  8. Doug Ross

    Everyone loves a bubble until it bursts. Rather than letting the market take its course , the government keeps pumping the air into the balloon.

    Spending money you don’t have is never a good policy. Spending money you don’t have on an institution as inefficient as the Greek economy or the south Carolina state government is just dumb.

  9. Kathryn Fenner

    I distrust any bubble. Indeed, I am a contrarian who won’t wear something I happen to already own if it is currently the “rage.”

    Sometimes spending money you don’t have IS a good policy. I bought my house on time, and my husband took out student loans to get his Harvard degree. We bought our Prius with a 0% 2 year loan–although we probably could have scared up the cash for that one.

    Investing in the future of our country by spending money we may not have on hand to educate our children well would be one example of when it is good to spend money you don’t have on a macro level.

    The Greeks do have a huge tax scofflaw problem. If they had a culture of paying their taxes proudly as the price of a great civilization, as Northern Europe does, they might actually have a great civilization!

  10. Steve Gordy

    The Greek (melo)drama is getting to look more like “Clash of the Titans” every day, perhaps with the EU as Perseus and the street demonstrators as the Kraken.

  11. Brad

    Yes, they are really quite EMOTIONAL (and I say that the way Lee Marvin said it to Robert Ryan in “The Dirty Dozen,” in a sneering way that cast doubt on his manhood — not because it applies to the situation, but because I like making movie allusions, and searching for just the right clip on YouTube to back them up), a far better term than “rational.”

    My point is that when they’re doing what they do, they don’t give a rat’s behind whose ideological ox is being gored.

    Hang on, I’m thinking whether I can work another animal metaphor in there… no… no, that’ll do.


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