Image by publik16 via FlickrComment of the day by Keri at Bankste... Like today, it was true 100 years ago that most people had very little skin in the stock market game; in fact, the average man's involvement in the stock market was even less at that time. However, the people who did---as is still true today---not only had/have skin in the game, but also happened/happen to be the most politically powerful. Thus, what hurts the politically powerful will be "fixed" by the politically powerful. Enter the Federal Reserve Act.
What Sept-Oct 2008 taught us if nothing else is that the bottom 90% really does not matter; very cynical, I know, but that's what I learned, anyway. Remember the first TARP vote? Paulson's three-page blank check authorization bill, aka TARP, was overwhelmingly unpopular with 90%+ of the voting public. And when it was voted down in the House at the end of September, the DJIA crashed 777 points the same day. Many of our elected representatives are themselves members of that top 10%, thus all the sudden their votes were hurting their own pocket books. Within a few days, TARP came up again for a vote, and those same reps had two choices: 1.) help themselves on the backs of the taxpayer (aka, the other 90%), or 2.) release the taxpayer from the cluthes of the zombie banks. They chose the former---and then, many of them were re-elected by their own "90%" back home two years later. Go figure.
"We" are getting what "we" deserve to a great decree---but only if "we" means "the collective majority." The collective majority still falls for the manufactured left-right paradigm, and fails to see that the different puppets are manipulated by the same hands, year after year. The average person on the street, and probably the average rep or senator, has no clue that the US is backstopping the EU banks as we speak, and no clue that the US is bailing out Greece (and Ireland, and Italy, and...) through the US-run IMF. The biggest danger of a stock market crash, as inevitable as it is, is not the danger that pension plans will lose money, or even that the top 10% will get hurt. The real danger is that it will repeat the "Rich Man's Panic" of 1907 that prompted the FRS, and this time on a global scale. We call the VIX the "fear index," but the SP500 or DJIA are truly the fear scales of the elite and the wanna-be elite politicos, and if/when we get another market crash, the fear level will very likely prompt the test-tubing of creature worse even than the one from Jekyll Island.
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