Reich: The Recovery’s False Glow Is Fading
Posted on Jun 13, 2011
After six straight weeks of a falling Dow and a period of stalled economic growth, the stagnation of national recovery is glaringly visible to everyone—except our representatives in Washington, says Robert Reich. —ARK
Over the past year, the Street lured small investors back into the market on the smokey promises that the worst is over and stock prices are bound to rise. The lure became a self-fulfilling prophesy. As investors re-entered the market, they bid up stock prices. Hence, the mirror.
Insiders on the Street are always the first to bail when they sense they’ve been overselling, as they started to do a few weeks ago. This gives them a second opportunity to make money off small investors — by selling short.
The nation’s second-largest financial redistribution in history (the largest, on a percentage basis, occurred in 1929) came in 2007 and 2008 – from small investors and their pension funds to the Street’s savvy traders who shorted them. Now it’s been repeated, although on a smaller scale.
And Washington? Completely clueless. Our representatives in the nation’s capital continue to obsess about future budget deficits and games of chicken over raising the debt ceiling — neither of which has anything at all to do with the stalled recovery and the carnage on the Street.
Flickr / Policy Network
Robert Reich, former secretary of labor.