The Economy Is Doing Great.. Except..

Tech stocks are collapsing.

Today is Monday, 7/30/18. The day is not over yet but as I write this, the Dow is down roughly -05 points. So id the NASDAQ. S&P is down about -14.

They may recover slightly by the end of the day. But the trend is set.

A few days ago, after an investor call, Facebook stock dropped -19% for one of the biggest drops in stock market history. Followed the next day by Twitter stock dropping by -20%.

A lot of people lost a lot of money in a short period of time. What will follow will be layoffs. When stocks decline, corporations start laying off workers to preserve profits for the stockholders. Not to mention their won stock value because most corporate executives are major stockholders. In any case, that means thousands of living wage to high income jobs are about to get erased from existence.

Meanwhile, a lot of people are arguing that the economy is doing great. Here’s the problem with their claims. They leave out very specific sectors of the actual economy. Like farming jobs and retail jobs, both of which are in decline. Hundreds of retail outlets are closing nationwide this year. Mostly anchor stores. When anchor stores close, entire malls fail, each one taking multiple, even dozens of small businesses with them. Translation: Tens or even hundreds of thousands of jobs from small business owners to large business managers to low wage workers will lose work. Don’t forget to factor in delivery drivers, maintenance workers, house keeping.

Then do not forget the ripple effect outward. Those workers have less money (if any at all) to spend at other businesses. So then we start seeing effects on basic needs across the economy. Grocery stores, car dealerships, car repairs, home repair, clothing.. Then we see effects on sales tax which affect local communities. Less money for roads, schools, libraries, police, fire departments.

The ones claiming a thriving economy are mostly looking at some minor increase in manufacturing jobs within the last few weeks. Here is the problem with that. There’s nobody to sell the products to.

If retail stores are closing, there will be no new outlets being built. If taxes fall, roads and bridges are not being built or repaired. No income means cars and clothing do not get made or sold. Less money for simple survival means fewer groceries and fast food being sold. Eventually, fast food and grocery stores close. People already unable to afford medical care will face the choice of medical care versus food and shelter. If they have not faced that choice already. That leads to doctors offices, clinics and hospitals closing.

With investors already losing money on investments, are they going to take the risk of long term investments to expand manufacturing capacity for long? Will they take out loans when the interest rate just increased for the first time in a decade? When they see no market for the goods they produce? Or will this minor blip in manufacturing increase show itself to be a false start? Does anyone actually think that investors blindly pump money into a project without looking ahead to what will happen next week, month or year?

Obviously some actually do. This problem cannot be blamed on Russia. Or China. Or Trump, really. Yes, he is making it worse but this problem has been coming for many years. Chain stores have expanded with 0% interest loans, trying to drive each other under. But loans are loans and have to be paid back. As wages stagnated, so did profits. As prices increased, profits have actually fallen. Now the loans are coming due. That is why so many closures are happening.

But you can fully expect corporate media to blame Trump, China, etc. For one simple reason. If they do not blame someone else, they must admit who the real villains are. They are. Their corporate owners and advertisers. The capitalist eating machine which has nothing left to feed on but itself. The goal is not even to consume you, you’re just in the way with no place to go. Many of your have cheered on the machine that will consume you. Some of you helped build it. Aren’t you proud?

But go ahead, keep telling me how well the economy is doing.

The stock market as I close this: Dow -144, NASDAQ -107, S&P -16

Written by

Issues unite, names divide

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store