The numbers do not lie, Every time there was a bailout announced, the market jumped up. It did not make sense to me because everyone knew bailouts have consequences. If the market was not fixed it would have tanked with the jobs data. I understands banks are and were in serious trouble, but a truly free market would be afraid of government intervention. My only conclusion is, it has been rigged. It dropped rather precipitously, we had a “crisis”, now suddenly it’s all better now. That does not even make sense. Every time there was a negative report it dropped, until last week? I understand some firms are reporting profits,gee, that’s kinda quick. I am not an economist, armchair or otherwise, but I see some serious inconsistencies that scream “Rigged!”
I think we may have some semantic confusion, between “free markets” (think Main Street) and the shares market (Wall Street). The shares market, short term, is extremely sensitive to preceptions and fears. Long term, the shares market judges results. The government can influence both short term perceptions and fears and long term results.
The government has grotesquely distorted the free market by providing perverse incentives to favored activities, which may or may not help the long term health of the economy and the Republic. One example is subsidizing higher education. I, for one, think the obscenely bloated education establishment has had a distinctly negative effect on the economy, on public comity and political cohesion. (’An idea so stupid only an intellectual could believe it.’)
The dreadful effect of Fannie Mae and Fannie Mac on the housing market is now becoming painfully apparent. It will take at least a generation to recover.