The Personal Financier: The Stock Market as a Parody of Itself

I’ve already called it manic-depressive but now the stock market just has that aroma only really bad jokes have

I honestly didn’t think the politicians had it in them. It takes guts to vote against a plan which is, allegedly, the only thing that can save the markets. Imagine yourself presented with a $700 Billion vote you really know nothing about. Common sense suggests there isn’t really any other way to go.

Have no doubt. The so-called rescue plan will pass. This is about politics and politicians taking their pathetic stand, too little too late, so they’d be able to later claim they didn’t simply role over and approve the plan but really showed those Wall-Street fat-cats …

I don’t appreciate the market’s tone

There’s something violent and brutally extortive about “the market’s” response to the news of the delayed approval of the rescue plan. A look at today’s price surge is enough to realize what we all already know last night: This price drop can’t be justified. The message was loud and clear: You had your fun. Now make what cosmetic changes you’d like and approve the darn plan.
We don’t really have any new information today we didn’t have yesterday and in a beautifully synchronized rhythm the markets plunged and soared. Foreign stock markets were quite puzzled and indecisive losing 4% on average. If markets could talk they’d ask out lout: I am supposed to shed 10% today? Why!?

The Dow went down 777 points and came back up 500 the next day. Aren’t economist supposed to rational people?

The Human Psychology at Play Once More

One of my personally favorite subjects is that of biases and the human psychology. Its simply mind boggling to witness how easy it is to make and pass billion dollar decisions while budget appropriations of mere millions often take weeks and months to approve through various committees. There’s something about scale the human mind simply can’t fathom.

It’s a phenomenon we’ve all experienced whether in personal life or at work. When the numbers are big enough we forget about our everyday scale and treat it as such. Try and remember what was it like when you bought an apartment or took a vacation abroad. When buying a million dollar home we don’t mind several thousand dollar this way or the other; when touring France we don’t really care that that quick lunch just cost us $80.

Corporations and politicians obviously act the same. Why $700 billion? Any number would have won really. What’s a couple hundred thousand millions (!) give or take? You’ve got two days to think it over and vote.

No Signs Of Relief So Far But As Usual We Will Only Notice Them In Retrospect

Meanwhile, housing prices drop 16% YoY leaving the earth beneath our feet very unstable. It appears more than 15 Million American homes are worth less than the mortgage taken.

There are some encouraging numbers as well as various cities begin to show price increases signifying a sort of bottom (Denver, Dallas, Boston, Atlanta and Minneapolis).

Great Britain, France and Belgium have recently started joining the trend bailing out banks of their own. It seems you can’t really call yourself a regulator these days if you don’t own at least an 80% share in a major bank….

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