The Stock Market – Commodities down as dollar, economy up

May 2, 2008

The market has staged something of a recovery. Commodity prices are now falling as the dollar rises. The two are imperfect substitutes, but in this current economic climate of fear about recession and the credit-worthiness of the Fed, they are close to perfect. Unfortunately for the majority, I do not believe that all is indeed well, and the stock market is not going to get back on the same track that its been on for the past 5 years. The recent spatter of decent economic reports shows us that we are not in a doomsday scenario, and that seems to be enough to send the market up significantly. At a moment when the common level of fear is high, a little salve on the wounds goes a long way.

People are starting to regain some optimism about things as economic data is not as bad as some thought. However, the dollar is still an issue. One of the largest problems confronting the US Economy is our fiscal irresponsibility. Politics are really starting to get the better of the economy. The US Government needs to be more responsible when it comes to the point where people are starting to whisper about the government’s ability to guarantee its debt. This is a problem because both parties, Republican and Democrat continue to pander to the people that elect them, and opt to give out money to please voters, rather than make smart choices about budgets. The sad thing is that it completely makes sense why they act the way that they do, both the politicians and public.

I blame the system, but do not propose a better solution. The problem lies at the roots of Democracy. Let me explain. The average American does not know much about economics, especially the arcane principles that guide monetary policy, fiscal policy, international trade, and most complicated, the value of 1 American Dollar. Even if they DID understand, they probably wouldn’t choose the government’s economic policy that was best in the long run for everyone because this would often contradict their own short term needs.

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