Wall Street rolls dice, cries all the way to the bank

Bill Knight column for Mon., Tues. or Wed., Oct. 27, 28 or 29

Wall Street seems like a casino where the problem gamblers ARE the House, and they only bet on sure things. “Wall Street hates uncertainty,” analysts say.

So, recent volatility supposedly stemmed from worries over falling oil prices, or weakening economies in China and Europe, or a dip in retail sales, or tensions in Ukraine, or ISIS, or Ebola…

Isn’t such uncertainty the New Reality in the 21st century? In fact, wasn’t it ALWAYS?

Wall Street dates to 1792, when 24 New York merchants and stockbrokers signed an agreement and the New York Stock Exchange was born, according to the Library of Congress.

There certainly were many diseases, wars, financial anxieties and unknowns during those 222 years.

Besides calling BS on Wall Street’s excuses, here are two other points. First, the U.S. economy – viewed as a whole and not as a system that serves the majority of Americans – is in its best shape in years. Next, OIL?

In mid-October, the Dow Jones Industrial Average had declined about 6 percent for the year. Also, the price of oil by the barrel had fallen about 13 percent just since early summer, due to more fuel-efficient vehicles and technologies, less driving by penny-pinching motorists, competition from shale oil, etc.

But fuel prices at the pump dropped, too. The average gas price of $3.59 per gallon fell to less than $3 in much of Illinois. So consumers are expected to start spending that new-found $20 or $50 a month.

“For every 10-cent decrease in the price of gas, it adds about $11 billion to the national economy,” Busey Bank vice president Ed Scharlau told GateHouse business reporter Steve Tarter.

Stock prices for trucking, airline and other companies in the transportation sector have improved, and in other recent economic news, industrial production was up significantly last month, and initial unemployment claims fell to their lower level since 2000.

Oil prices seem more like an effect than a cause, and if there’s a cause it may be Wall Street greed stacking the deck. Please be tolerant with the following barrage of numbers, but consider this spot-check comparison of oil prices and Wall Street based on four S&P 500 “milestones” in the last year, showing the stock market has NOT suffered from plunging oil prices:

From August 1, 2013 (when the Dow Jones finished at 15,628.02, the S&P 1,706.87, NASDAQ 3,675.74 and price of oil was $107.93 a barrel) to Nov. 22, 2013 (Dow Jones 16,064.77, the S&P 1,804.76, NASDAQ 3,991.65 and price of oil was down to $94.53/barrel), oil had dropped 12.4 percent but the Dow improved +2.8 percent, the S&P +5.7 percent and NASDAQ +8.5 percent.
From Nov. 22, 2013 to May 23, 2014 (when the Dow Jones finished at 16,606.27, the S&P 1,900.53, NASDAQ 4,185.81 and price of oil was $105.01/barrel), oil had dropped 11 percent but the Dow improved +3.3 percent, the S&P +5.3 percent and NASDAQ +4.8 percent.

From May 23 to August 26, 2014, (when the Dow Jones finished at 17,106.70, the S&P 2,000.02, NASDAQ 4,570.64. and price of oil had dropped to $95.78), oil had dropped 8.4 percent but the Dow improved +3 percent, the S&P +5.2 percent and NASDAQ +9.1 percent.

The correlation looks to be the OPPOSITE of recent instability, with Wall Street RISING when oil prices fall. The stock market (like gas prices at the pump, arguably) is being manipulated. Oil or terrorists or natural disasters are excuses that are less significant than cooking the books for quarterly data, CEO raises, etc.

Viewing the stock market as a human being (like corporations, according to the Supreme Court, right?), it should be in therapy for pathological dishonesty or multiple personalities. Or possibly it should be treated as a sociopath, someone without a conscience who in this case thinks it’s a high roller although it’s really just a gambling addict.

If Wall Street wants certainty, maybe it should be subjected to the “shock therapy” of real financial regulations – or even price controls like Republican President Richard Nixon imposed in 1971 for a few years.

Such treatment may not fully heal Wall Street’s troubled personality, but it could protect from its manipulations all the neighbors hurt by its actions: the rest of us.

[PICTURED: Tony Auth editorial cartoon "Wall Street's monument to greed," from theburningplatform.com]