(no subject)
Jan. 28th, 2003 11:10 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
andrewduckerThis morning, while walking to work, I noticed the following newspaper headlines displayed prominently outside a newsagent Stunned silence as market plummets and We have the green light for war - PM.
Using the traditional philosophical method of taking two things that you notice at the same time and constructing a theory from thin air to explain how the two of them are inextricably linked, I'd like to present you with a conspiracy theory:
The reason why the US agreed to go to the UN was not because they wanted other countries on-board for any attack, but because it was the best way to deflate a dangerously overheated stock-market.
Since the end of the .com boom (which gave me a fair amount of schadenfreude) the market has certainly deflated from its ridiculous heights, but numerous studies had shown that it was still far too high - the ratio of company worth to stock price was still badly out of whack and there was no way that there was going to be a general recovery when stock prices were doomed to fall back to more reasonable levels.
Now, there were two ways this could happen - gently, over a long period of time, as people slowly came to the realisation that the stock they had just wasn't worth that much, or in a short sharp shock, as other forces smacked the market downward. While the first method has certain plus-points (it feels less painful on a short term basis), the slow drag puts the economy in a drag for much longer and postpones any kind of economic recovery. On the other hand, the short sharp shock is certainly very painful ( companies go out of business very abruptly, unemployment rises, it's more obvious to the average person that there's a problem), but as the companies that go under are the ones that were actually inefficient and weren't making money anyway, it's actualyl a good thing for the economy that they do.
In any case, by stretching out the pre-war process for a few months, Bush corrects the stock market, puts the economy in the right place for a recovery and also has the time to get a better feel for what the country wants. If there is a war, this will boost the economy and if there isn't, the relief will still buoy things up. Either way round he gets kudos for a more measured decision and any recovery of the economy will pretty much erase the memories of stock-market falls.
Using the traditional philosophical method of taking two things that you notice at the same time and constructing a theory from thin air to explain how the two of them are inextricably linked, I'd like to present you with a conspiracy theory:
The reason why the US agreed to go to the UN was not because they wanted other countries on-board for any attack, but because it was the best way to deflate a dangerously overheated stock-market.
Since the end of the .com boom (which gave me a fair amount of schadenfreude) the market has certainly deflated from its ridiculous heights, but numerous studies had shown that it was still far too high - the ratio of company worth to stock price was still badly out of whack and there was no way that there was going to be a general recovery when stock prices were doomed to fall back to more reasonable levels.
Now, there were two ways this could happen - gently, over a long period of time, as people slowly came to the realisation that the stock they had just wasn't worth that much, or in a short sharp shock, as other forces smacked the market downward. While the first method has certain plus-points (it feels less painful on a short term basis), the slow drag puts the economy in a drag for much longer and postpones any kind of economic recovery. On the other hand, the short sharp shock is certainly very painful ( companies go out of business very abruptly, unemployment rises, it's more obvious to the average person that there's a problem), but as the companies that go under are the ones that were actually inefficient and weren't making money anyway, it's actualyl a good thing for the economy that they do.
In any case, by stretching out the pre-war process for a few months, Bush corrects the stock market, puts the economy in the right place for a recovery and also has the time to get a better feel for what the country wants. If there is a war, this will boost the economy and if there isn't, the relief will still buoy things up. Either way round he gets kudos for a more measured decision and any recovery of the economy will pretty much erase the memories of stock-market falls.
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no subject
Date: 2003-01-28 05:49 am (UTC)no subject
Date: 2003-01-28 05:54 am (UTC)I wish I was as confident as you.
Although, technically, it's got to rise sometime.
What I'd like to see is the total net worth of the companies in the FTSE 100. Divide that by 20 and you should have (give or take) the total stock worth. If the stock's still worth more than that, it's gonna fall lower...
no subject
Date: 2003-01-28 07:47 am (UTC)I'll either be a rich old lady or the world as we know it will have ceased to exist.
I've bought all the way down so i just have to buy all the way up or it's pointless. I do also have other protected investments.
There's no polite way to say this, but I have way too much money to just stick it in a savings account, and I don't fancy property right now (for obvious reasons).
no subject
Date: 2003-01-28 07:59 am (UTC)And yeah, thinking about it, I don't see the stock market falling much further, so you should be fine over the long period.
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Date: 2003-01-28 08:43 am (UTC)The prices in Edinburgh seemed pretty high when I was there in September (Sean likes looking at the huge things that you can buy outside of the South-East), but like everywhere there are expensive bits.
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Date: 2003-01-28 08:51 am (UTC)no subject
Date: 2003-01-28 10:14 am (UTC)Remove the '3' from the front of the price and you could get the same in Edinburgh.
But that's just the gloomy pespective....