| In this moment of passing blame for the financial woes, | | | | the housing market and mortgage lending this decade. |
| there is one place that the average American has | | | | All were situations where a runaway market fueled |
| failed to look- Wall Street. We have been trained to | | | | itself on unrealistic expectations based on the belief |
| believe that Wall Street and its pundits are the factual | | | | that the conditions which existed at the time could and |
| bellwethers of the current state of the financial state | | | | would go on forever. Forgotten was the fact that the |
| of America. Every step they make is scrutinized and | | | | current conditions of the time were based on nothing |
| explained away in the media by some report, statistic, | | | | but conjecture and whim. |
| or projection, carrying on the illusion that their actions | | | | Today we are seeing the flip side of that same coin. |
| are driven by some type of objective rationale. This | | | | We have supposedly been in a recession since |
| illusion is the foundation for the financial services | | | | December of 2007, yet the market continued on |
| industry, creating the confidence that allows people to | | | | reaching record levels by ignoring the reality all around |
| feel comfortable handing over their life's savings to a | | | | it. Now it steadfastly refuses to look at anything but |
| complete stranger to handle according to his whims | | | | the negative, choosing to overlook any positive |
| and beliefs. | | | | numbers coming out of any venue and keeping on its |
| However, the objectivity and rational decision making | | | | doom and gloom tack. |
| of Wall Street pundits, movers, and shakers is just an | | | | A perfect example of this is GE. GE is a blue chip |
| illusion. In reality, Wall Street is driven by rumor, | | | | stock which is heavily diversified, meaning it has |
| innuendo, fear, and an optimism created by greed. | | | | interests in many different areas. GE Financial is a |
| There are no certainties until after the fact. The rest is | | | | substantial division in its portfolio and was a strong |
| nothing more than a well informed guessing game, only | | | | money maker for them, but it was not their whole |
| sometimes the information is not accurate or is | | | | operation, only a part. The corporation and its other |
| sketchy at best. It's a crap shoot, with winners and | | | | divisions are still going strong; they have good liquidity |
| losers changing places every day. It's Las Vegas | | | | and plenty of capital to work with, despite having to |
| without the blinding lights, sirens, and show girls. Yet we | | | | swallow some losses from its finance division. They |
| allow this place and its players to tell us whether we | | | | are unlike a lot of the players in the financial services |
| really are secure and in good fiscal shape. We allow | | | | and banking arena in that they do hold interests outside |
| their whims to determine whether or not we should | | | | the financial realm. However, despite the fact that they |
| hope for the future or despair. We place our fiscal | | | | have gone out of their way to publicize their overall |
| self-worth in their hands on a daily basis. | | | | health, they have seen their stock take a huge decline |
| People made a mass shift in their transportation | | | | over the market average because they have a |
| methods based on the price of gas, which was driven | | | | financial services division. Market speculators have |
| by the market. We all watched the trading price of light | | | | decided to take a dim view of any group that makes |
| sweet crude go up to ridiculously high numbers. Foreign | | | | money from lending or dealing in financial services, no |
| governments in oil producing countries tracked their | | | | matter what the true overall economic health of the |
| future spending to those high numbers. Yet why did | | | | company is. That line of thinking is as irrational as the |
| people on the whole not look at why that price was | | | | belief that the good times will last forever. |
| so high and how realistic that price was? If they had, | | | | I think its time that Wall Street and the financial |
| and there were a lot of people in the financial sector | | | | services industry look at how they do business and |
| trying to get the word out, they would see that the | | | | examine how they let unsubstantiated beliefs and |
| price increase was due heavily in part to the work of | | | | erroneous information determine how they act. In the |
| speculators. These were people betting on the fact | | | | rush to be the first one to spot and capitalize on new |
| that oil prices would stay high because people could | | | | trends in the market, on the whole they do not take |
| and would pay them and demand would not decrease. | | | | the time or effort to do proper due diligence. This |
| They believed we would buy oil at any price, | | | | leaves Wall Street operators in the position of looking |
| convinced that it would only continue to go up in price. | | | | like day trippers to Atlantic City, sitting and putting in |
| And for a while, they were right... until the bubble | | | | coin after coin on the hope that what they heard and |
| caused by irrational optimism spurred by greed burst, | | | | believe will come true, that they will hit the jackpot and |
| bringing oil prices down to a realistic and sustainable | | | | make become rich. Until Wall Street wises up, |
| range. Is oil ridiculously cheap? No, it is about where it | | | | Americans need to take the market with a grain of |
| should be given the current world economic state. The | | | | salt and attach an appropriate amount of authority to |
| anomaly is that the price was able to be hiked to the | | | | its opinions. |
| level it reached by speculators. | | | | Would you take financial advice for a little old lady who |
| There are examples of this all throughout history- the | | | | spends hours sitting in front of a slot machine, or a guy |
| Dutch tulip bulb craze of the 1630's, margin stock | | | | who hangs out at the track betting on horses who he |
| purchasing in the 20's, gold and platinum in the late 70's, | | | | believes are "sure things"? I didn't think so... |
| junk bonds in the 80's, tech stocks craze in the 90's, | | | | |