NOTE: THIS ARTICLE WAS WRITTEN AFTER THE HOUSE DEFEATED THE BAILOUT BILL THE FIRST TIME IT WAS CONSIDERED.
By Cody Willard
I am shocked that our democracy might work after all. Capitalism and private ownership (in this case of losses) still matter in this country after all.
As I wrote last week –
“We probably hit DJIA 10,000 in a heart beat if we don’t pass this bill. We probably spike 500 or 1000 points in the near term if we do pass this bill….and then we’ll eventually see DJIA 9,000 or lower because central allocation of capital is always politically-driven and not profit-driven…and only profits make stocks go up. These guys who think this destruction of capitalism and the right to profits is a bullish thing are dead wrong.”
And the market is indeed crashing on the news that this Wall Street Bail Out Bill of 2008 isn’t looking like it’s going to pass. Which means I’m going to be getting bullish again, because in the long run, the only thing that matters to the stock market and this economy is how much profits are running through the system…and we just ensured that our profit-driven system (that does indeed cycle and create both booms and busts as it has always done, but that over time has created the most wealthy nation in the history of the planet) remains intact.
I’m sure not going to be in any rush, because the bad times that were coming because the virtuous cycles had turned to vicious cycles anyway and no matter what we’re going to be in for some more pain in the near-term in this economy (and therefore also likely in the markets)…
But I’m going to be getting much more bullish (and probably start buying stocks again) much sooner than I would have if this bill had passed.