Remember way back two weeks ago when the stock market zoomed past 13,000 for the first time since 2008? Pundits were asking how long until 14,000?
The headlines were everywhere. Unemployment was at 8.3 percent and was continuing to drop. Inflation was in check at about 3 percent. It was happy days all over again.
Last week some people apparently woke up and the stock market fell a few hundred points. What happened? Did they suddenly notice that Greek treasury bonds were paying above 1,100 percent and moved their money? That's right. You can invest $1,000 in Greece and in one year they will pay you back over $1,000,000. Now that's a good investment.
Maybe the investors took note of the true U.S. inflation and unemployment rates. If we measured inflation as they did back in 1980, the rate would currently be about 8 percent. One could argue that if we actually calculated personal spending on the things we constantly purchase such as food, gas, electricity and clothing, then we would see a greater impact caused by the reduction in the value of our dollar.
Could it be that the investors realize that the true unemployment rate is much higher than what they're telling us? If you count people who are no longer seeking work or are working a part-time job just to feed the family, that unemployment number is anywhere from 15 percent to 23 percent depending on who you ask.
Maybe the investors noticed that the Eurozone's unemployment rate hit a new record last week and they know that the Euro will not survive.
Maybe the investors finally paid attention to the news last week. If so, maybe they are awakening to the fact that our government is not a good steward of our money. There was the story about a portion of an $11 million grant given to Detroit. Instead of helping the 400 people it was designed for, it only helped two job seekers obtain business clothing. Or perhaps it was the story about the $1 million lottery winner in Michigan who was still getting food stamps.
Last April I was warning that Solyndra was a waste of money and, behold, it turned out to be a $535 million black hole. Beacon Power, a maker of power storage devices, also went bankrupt last year after receiving $43 million from taxpayers. Then there was all the money that we gave to GM, much of it helping produce the car of the future, the Volt. If you missed it, they are suspending production of the car and laying off 1,500 workers.
Just last week, President Barack Obama logically hinted at dumping more of our money into electric cars. Obama also overspent by $229 billion in February. This is the largest deficit ever created in one month in U.S. history.
Maybe investors noticed the price of oil and the fact that the Democrats are trying to kill the Keystone pipeline. Or was it because increasing turmoil in the Middle East in countries such as Libya, Syria, Iran and Israel could lead to ever higher prices? Or is it the fact that we're not increasing the production of oil in the U.S. but instead are listening to the decade old line from the Democrats, "if we started drilling today, we won't see any oil for a few years."
Who knows why the markets dropped? Personally, I think it's because most of us are lemmings and we just do what the rest of the lemmings do. Is that a cliff up ahead?
