Thursday, February 26, 2009

On Stock Market Volatility

Some of it comes from the increasing reliance on Washington. Dig this.
It was a perfectly reasonable question, and on the surface it seemed like a perfectly reasonable answer. But when Senate Banking Committee Chairman Chris Dodd went on Bloomberg TV Friday and mused about the possibility of bank nationalization, panicked investors sent the Dow plummeting a hundred points in the next hour.


Dodd’s casual remark and the not-so-casual consequences it caused were among the most vivid examples of a new Washington phenomenon. The city’s sudden status as the de facto world financial capital means that briefings and interviews that once would have passed with a yawn can create instant terror on Wall Street and Main Street alike.
As power and money are sucked into the black hole that our Federal government is becoming, ordinary investors will look to people like Chris Dodd, Barney Frank and Nancy Pelosi for investment information. Instead of digesting earnings news and annual reports where some folks with decades of experience in the company's industry will weigh in on the future of the firm, people will listen to the politicians to see who will be rewarded and who will be punished.

This is Hunter Biden, Joe Biden's son. He is a lobbyist with no other real skills. It will soon matter more if a company hires him than if they announce a technical breakthrough in their industry.

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