RAY Gibson, morning talk-show host (K-57) and a nice all-round fella, is excited that the stock market is soaring. I am happy for him. There are also retirees and would-be retirees that have their investment portfolio weighted in some equities so I would want the stock market to do well.
But Gibson also went on to “rock” those who say the economy is in bad shape. (April 26) That is the position some take. That if the stock market is doing well, the economy cannot be doing badly. To which I will pose the question: which came first: The economy to the stock market? Most people would say that the economy came first and then the stock market rolled along. If the economy came first, then the stock market should ideally be a reflection of the economy and not the other way around. To mean because the stock market is doing well the economy SHOULD be doing well. The stock market can be doing well for many reasons. Such as laying off workers, or if you prefer cutting costs to meet Wall Street revenue estimates.
In the late ‘90s, then Fed Chair Alan Greenspan said that there was “irrational exuberance” in the market. But at the time, the economy was booming, creating thousands upon thousands of jobs and the stock market took off on a bull run, I believe, as a reflection of the roaring economy only to see the dot corn bubble burst. Still, the fundamentals, as they say were decent, hence the wild recession in ’01. I believe as financial engineers conduct leveraged buyouts. And not demand-led Keynesian economic growth when investments are made in labor and plant creating a conducive climate for business to take place. When this bubble bursts, it will be a severe not mild recession!

MATT PHILLIPS
Mangilao, Guam