Wall Street Volume at 10 Year Low
Another worrying article on Zero Hedge raises concerns about the declining health of the US economy. An 8/16/12 post by Tyler Durden points out that Wall Street has lost hundreds of billions of dollars of wealth over the past two years. Durden cites data showing that Wall Street markets have experienced 17 weeks of “inflows” in the last 106 weeks, amounting to $31 billion. During the same period, they have experienced outflows of $300 billion. In other words, America’s publicly traded companies have experienced a net loss of wealth of $270 million. This loss has been accompanied by a steep decline in volume (numbers of shares traded). I guess it’s no surprise the mainstream media chooses not to tell us about this.
The mainstream media does report on the Dow Jones Average every night. The $270 billion loss isn’t reflected in the DJA, which only measures the performance of 30 carefully selected stocks. During the 2008 economic collapse, the DJA dropped from an all time high of ($)14,164.53 to ($)6,547. Since 2008, it has continued a steady upward trend that has failed to reflect the massive loss of wealth which has occurred over the past two years. On Aug 29th, it closed at ($)13,014.06.
Although the DJA is the most common index quoted in the mainstream media, it is calculated using a price weighted average that causes it to trend higher than other indices. Because high value stocks like IBM and Chevron have a greater influence than lower priced stocks like Alcoa and Bank of America, the DJA rises faster than other indices – giving potential investors the impression that Wall Street is performing better than it really is.
It may also be significant that poorly performing stocks are removed from the DJA and replaced with better ones. AIG (which required a massive government bailout to stave off bankruptcy) was one of the 30 Dow Jones stocks in September 2008. It alone was responsible for ($)3,000 of the ($)7,600 DJA loss. It was subsequently removed from the Dow Jones Average.
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Comments
The US Economy pumped out @$30 Trillion worth of goods and services during that same period.
What you're saying is that we could have pumped out $30.3 trillion during that same period, except for the stock market eating up that wealth?
Now, an additional 1% in GDP growth would be big right now, but the losses you're talking about are not exactly earth shattering.
Indexes are the way they are for a reason - the DJA is comprised of the butter stocks, because when the butter stocks tank, it's time to get your gun. (little economics humor for ya...)
China is doing OK with the growth in their economy, and their infrastructure and power grids are holding up fairly well and growing with them.
India, on the other hand, has long since reached their limit to intake jobs from Multinational Corporations, most of originated in the US or have the largest part of their operations here (if only because we are still, by far, the largest economy in the world). But, because these corporations can still save a buck through outsourcing (because they don't care about India's power issues, nor does TCS or any of the other job factories in India), and because India will keep taking all the jobs they can, the power situation continues to worsen.
Enter the lobbyists from The Better Business Bureau who start to put a bug in someone's ear that US Economic Interests are being stifled by India's power issues, which is stupid, because they have a huge potential source of oil and natural gas (which is the real prize here for us and India) in the Caspian Sea, and as long as they can shoot it through Afghanistan, or get the Iraqi oil (not the largest oil reserve, but the largest UNTAPPED one)through Syria, then they're golden and the CEOs of these destructive entities can get another $100 million in stock option for their golden parachute before they completely destroy the US economy through kicking every job out the joint, and forcing us to fight a series of useless wars that speed up the economic ruin that their job outsourcing started in the 1st place.
And, Obama supports it every step of the way...because he's "pragmatic".
Awesome. Change I can finally count on. Whoo hoo!!!
Thanks for pointing out the role of outsourcing in this. It's a pity this isn't being seriously addressed in all the election rhetoric.
Thanks for pointing out the significant role outsourcing