QOD
September 30th, 2008 • Related • Filed Under
By jason330
Can we get a better metric of the national’s economic health than the Dow Jones Industrial Average?
BTW – DJIA up 400 points as a write this.
Special BTW to Kavips – You might want to cancel that water purification system you have on order.
Comment by Mike Matthews on 30 September 2008 at 2:56 pm:
Interesting concept, Jason…would you like to come on air and talk about what you are saying here?!? I soooo need a guest!
Comment by Linoge on 30 September 2008 at 2:59 pm:
Damn. Knew I should have filled that grand-sized-hole in my IRAs yesterday evening. Oh well.
Comment by anonone on 30 September 2008 at 3:02 pm:
Mike,
Perhaps you could discuss how someone that claims to have despised Bush/Cheney for the last 7 years could support McSame-Palin even though McCain voted with Bush 90% of the time and selected the empty pantsuit Palin as his running mate.
I think that might make an interesting show. Just a suggestion.
Comment by Mike Matthews on 30 September 2008 at 3:05 pm:
Or maybe you could just call in and take off your damn mask! 302-645-8990! On air in 4 minutes!
Comment by Dorian Gray on 30 September 2008 at 3:05 pm:
That is a good question.
Comment by anonone on 30 September 2008 at 3:11 pm:
The Dow Jones Industrial Average is a price weighted index, and it should be ignored as a meaningful indicator. The S&P 500 is not price-weighted and is therefore a better indicator of relative market value of a basket of large cap companies.
Comment by Dorian Gray on 30 September 2008 at 3:12 pm:
Explain to me the Russell 2000.
Comment by cassandra_m on 30 September 2008 at 3:15 pm:
New Rule: No writing of serious economic policy based on what the stock market does today.
Comment by anon on 30 September 2008 at 3:47 pm:
Wouldn’t the credit markets be better served by NOT writing $700B in new federal debt?
Comment by Not Brian on 30 September 2008 at 6:43 pm:
My two cents…
Real Gross Domestic Product”
If you want to be progressive about it try Genuine Progress Indicator or Index of Sustainable Economic Welfare
Stock markets are pricing mechanisms. They do not tell you anything about the economy other than what investors think the earnings of future earnings of individual stocks will be over time (at least theoretically a stock’s real value is the net present value of it’s future cash flows – earnings and dividends).
Comment by Joanne Christian on 30 September 2008 at 11:49 pm:
Yea…Thank you Not Brian for returning….
Comment by Not Brian on 1 October 2008 at 9:42 am:
If you all want a barometer of how the banking system and credit markets are doing though, check out the LIBOR today… when banks are scared to lend to other banks it goes up… it went up to a record in Euros and the fastest increase ever for dollars.
But a lot of the reason for that was financial institutions cleaning up their balance sheets for 3rd quarter reporting… it has eased today but is still high. I understand this is a lot of the reason that Paulson and Bernanke were freaked out – we have no real monetary policy if we pump liquidity into the market at 2% but banks won’t even lend to other banks for less than 6%… this is all a little esoteric, but this is the heart of the concern right now…
Interesting downstream impact – LIBOR is the underlying rate for a lot of variable rate consumer loans and credit cards…
Explanation of LIBOR:
http://en.wikipedia.org/wiki/LIBOR
Article on the increase in LIBOR:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFan9b.OV37U&refer=home
Comment by kavips on 1 October 2008 at 10:57 am:
Lol, you should have linked…. I missed this one…
Anyone who has even casually studied the Great Depression knows it is no laughing matter…
The conditions it creates are so bad, the only human way to deal with it is to laugh at it….
Comment by kavips on 1 October 2008 at 11:00 am:
(PS. was going to chuckle, what about the day after the rebound, but decided “nah…I’ll leave it alone.”)