World stock markets nosedived for a fourth day running on Tuesday, having seen $4 trillion wiped off from what just eight days ago had been record high values.
Just the week before, Oxfam America announced their analysis of all the world’s wealth created in 2017. Eighty-seven percent of it went to the upper 1%!
I’m wondering if that same wealthy 1% took 87% of the $4 trillion loss?
Probably not. The investors that took a bath this week aren’t the pros. They aren’t the ones with computers and experts doing their trading for them. They wouldn’t even know how to “sell short” like the big-time investors who are making fortunes from the downturn.
Once, before the implosion, I visited Moscow. They had a lot of fine museums made from the palatial buildings created in tsarist days. One of them had been the stock market. The Soviets, I was told, were running their economy without a stock market.
The Chinese, I understand, do have a stock market. It’s careening downward as this is written, just as other markets are around the world. The purpose of a stock market is to facilitate the flow of capital. Unfortunately, it also provides a giant gambling den where professional sharks swallow their competitors.
I’ve listened to several experts talk about the present downturn, and they are unanimous in saying that it’s just a correction and does not really reflect the basic world economy, which is sound. It seems to me that they nearly always say that during sharp downturns, because they don’t want investor panic to add to the problem, and they are nearly always right. But not always.
The experts go on to say that the selloff began when statistics were revealed showing that workers were beginning to get paid a tiny bit more. Wages, they said, were rising at the 3% rate. That’s a little bit more than inflation so, though tiny, it’s on the positive side for workers.
Why is good news for workers such bad news for capitalists?