dancer from dance
The stock market has been a lousy barometer of the economy.When the Wall St. Journal asks about the reliability of the Dow Jones Industrial Average (sub req'd), it suggests a loosening in the bowels of our public thing.
From the beginning of 2004 through the first quarter of 2006, economic growth averaged an impressive 3.4%. The Dow Jones Industrial Average rose just 6%. Since then, economic growth has slowed to a little more than 2%, yet the blue-chip index has leapt 18%, ending yesterday's session at a record 13089.89, the first time it has closed above 13000.
So, is the stock market providing reassurance? Or is it out of touch? Heard on the Street
We wonder whether those things that we've habitually interpreted a certain way can still be reliably so read. A widening gap between sign and sense, symptom and diagnosis, poll and will of the people, song and political vision of the singer, idiocy and idiot, performance...
and performance review.
This sort of stochastic simulation of legibility can lead to a different sort of anxiety from that marketed to us by mainstream media. We aren't worried about Bush, or the economy, etc., but about whether any of our habitual signs, those usual sources of navigational compass, still mean what we thought they used to mean, or whether anyone remembers what they even are.
A meta-anxiety, a different order of paranoia. Less immediate, more global. Less physical, more difficult to resolve or enclose in any strict, disciplined, scientific way.
An anxiety of reading.
posted by Tom Matrullo at Thursday, April 26, 2007
5 Comments:
I have a slightly different, perhaps nit-picky, quibble with the DJIA "market" barometer and the WSJ story: The Dow Jones Industrial Average is NOT a proxy for the stock *market* (let alone a more nebulous barometer). Even the WSJ's Marketbeat blog acknowledges that it's "a vestige of the days when pen and paper were the tools for calculating indexes, necessitating a simple formula". The crossing of the 13000 threshold is about as significant as someone's 13000th fart of the year --- absolutely and utterly gaseous.
If the Dow Jones Index boys and WSJ had a few shreds of decency, they'd create and publish a new index that is more analogous to the global "market" -- something like the FTSE All World Index.
Unfortunately, the rubbishy index has taken on a life of it's own. Options, futures and other derivative contracts trade on the index, so, naturally there's interest in the continuation in it's implied significance.
Let's say we use an alternative (more applicable) measure of the "market". How useful would a more accurate market index be as a economic adumbrate, social barometer or other foretelling device? I don't know. However, the story doesn't make any sense, in part, because the assertion that the DJIA is a measure of "the market" is false.
Nothing nit-picky about it afaic. It would be of interest to go back and see if the DJ ever was a reliable index to anything, and if so, to what.
This sort of sentence:
"The stock market has long been regarded as a leading economic indicator, though it sometimes sends the wrong signals."
is a fine example of the babble of money writing. What's it indicating? Did the nature and scope of that indication change over time? How about when the composite changes? How come it sometimes sends "wrong" signals? How are they wrong? Why are they wrong? What's the purpose of using it if not only it, but the entire NYSE, seems mostly to be an index that allows newspapers to fill columns with interpretive charades?
Someone might wish to help us understand how it is that we keep using these arbitrary indices rather than, as per your suggestion, try to find something sensitve and reliable.
Any chance an index could be devised that actually indicated something? We could consult it and do with fewer prognosticators.
I remember (vaguely) reading once a critique of financial / business news which stated that one could find polarities and conflicting forecasts / advice on almost every page which, taken in dribs and drabs over time, helped realize a semi- or sub-conscious state of continuing dissonance and anxiety.
I think one could extrapolate that dynamic to the ongoing stream of information (particularly as managed by television) and end up with McLuhan's "we would not have let television be invented if we had known what it would do to our societies" (paraphrase).
For at least 20 years I have been watching groups of people and large segments of society hoping that with the next interest rate adjustment or the next election or the next whatever, things would return to some past "normal". I have been and continue to be astonished at the tenacity of this widespread desire, and the accompanying desparate actions it engenders.
The use of arbitrary indices suits the purposes of the money managers ... it keeps the small fry and not-insiders edgy and focused on the fear of possible loss.
Jon - yep - it suits many purposes to have us all bathe in this artificial prolongation of ignorance. Then there's this.
On yr main point, Jon, see also.
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