Courtesy of Pam Martens.
Yesterday, the Bureau of Labor Statistics reported a very weak jobs number: just 148,000 new nonfarm jobs had been added by employers in September. To the rational mind, an appropriate reaction in the stock market would have been to sell off on the basis that the economy remains weak. Instead, the Standard and Poor’s 500 hit a new record, closing at an all time high of 1,754.67.
The general thesis to explain this reaction is that today’s Wall Street is running a racket similar to Lance Armstrong. It’s on a heavy doping regimen in the form of the $85 billion a month that the Federal Reserve is funneling into the markets through the purchase from Wall Street of U.S. Treasurys and mortgage-backed securities. When the Fed buys those instruments, it forces $85 billion of cash each month into the hands of traders to deploy into higher risk assets – stocks, exchange-traded funds (ETFs), stock futures and what have you, artificially forcing the market higher.
A weak job creation number means the Fed’s dope pushers will keep the money flowing to Wall Street rather than risk a stock market crash that could create even worse job numbers.
The other doping regimen that you’ve likely never heard discussed unless you’ve read Wall Street’s Collapse and the Ownership Society, is the money fueled into the stock market through regular deductions from workers’ paychecks, into their 401(k) plans, and then out the back door where Wall Street over time gobbles up as much as 25 percent of your retirement savings.
The 401(k) is the mechanism that created the subliminal mindset that what’s good for Wall Street is good for Main Street. The hard reality is that the top 5 percent of the wealthiest Americans own 60 percent of stocks.
This dubious 401(k) link between the huddled masses and the Wall Street mindset is effectively causing millions of workers to join Wall Street in cheering a tepid jobs number in hopes their 401(k) will bail them out of their stagnating wages. Good luck with that one.
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