Copying this article was a real chore. I had to reboot twice before being able to do so. Think I know what the problem is, the WSJ site wants you to access articles via your browser rather than via normal e-mail protocol. This plays havoc with my system. However, the article is very important and was worth copying even if I will henceforth not want to visit WSJ for quite a while, this cost me more than an hour's time. I am surprised that no-one else had an interest sufficient to copy the article themselves but there is no use in saying such things, is there? But when even the WSJ tells us that the market is malfunctioning you know that there is a serious problem at the heart of the capitalist system itself. Guess that everyone prefers not to think about such "side issues." BR ______________________________________ WSJ Market Watch Dec. 11, 2013, 11:27 a.m. EST There is no bubble; markets just don’t work anymore Opinion: There’s been a breakdown in capitalism’s social contract
By _Michael Casey_ (mailto:[email protected]) Relax. There is no stock bubble, at least not according to an army of Wall Street prognosticators who’ve weighed in on the issue recently. So why do so many on both Main and Wall streets still feel uncomfortable with the way markets are behaving? Maybe it’s because valuations aren’t what matter. Maybe the real problem is that markets are no longer doing what they’re supposed to do. As mechanisms for allocating capital, markets are broken. Maybe that’s the issue. Unfortunately, this is less easily digested than the question of whether stock prices are too high. And so long as the investment community feels assured that the S&P 500 index’s /quotes/zigman/3870025/realtime _SPX_ (http://www.marketwatch.com/investing/index/SPX) +0.63% 26% gain over 12 months is in line with historical norms, why care about anything else? So rather than worry about how much harder it is to differentiate risk and return equations across investment options, we pull out our calculators and try to figure out the more narrow question of whether stocks are trading outside their historical norms. On that score, and with impeccable logic, many analysts are arguing that, even if stock prices have outstripped corporate earnings growth this year, they are cheap when forward-earnings projections are weighed against the yield on Treasury Yet the masses remain restless. It seems fundamentally wrong that the stock market should surge to record highs at a time when 11 million Americans can ’t find work and another 14 million have stopped looking for it over the past six years. And in any case, we wouldn’t be here if the Federal Reserve hadn’t injected almost $4 trillion into the financial system over five years of buying bonds. Doesn’t that just make this whole thing a house of cards? At the heart of such concerns is a question of fairness. Money is not going to where society needs it most. Into, for example, U.S. infrastructure (fly from JFK to Shanghai’s Pudong airport for a sense of America’s deficiencies) or education (take a look at American students’ ranking in the most recent Program for International Student Assessment exam). Sure, plenty of young Stanford graduates are getting rich finding new ways for teens to share selfies, and yes, a few serious IPOs are happening as well, but these examples do not resolve the problem that there has been a breakdown in the societal bargain that comes with market capitalism. In societies like the U.S., we are supposed to tolerate inequities in wealth and income because the greater good is served by a market system that rewards effort, competitiveness and innovation and which punishes those that fall short of those standards. History has taught us that this model is greatly superior to that of a planned economy like that in the former Soviet Union. But there are now such distortions in global financial markets, these benefits are all but lost. -- -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org --- You received this message because you are subscribed to the Google Groups "Centroids: The Center of the Radical Centrist Community" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/groups/opt_out.
