Tamron Hall: Paul Krugman, he says that the plan "fills me with a sense of despair." Is he alone in that criticism? The Dow is up 313 points.this is one of those annoying things that the media does: it uses the performance of the dow on a single day to evaluate how the entire economy is doing. if the administration does or says something and the dow goes down that day, that something is deemed to be "bad for the economy". if, on the other hand, the administration does something and the dow goes up, that something is said to be "good for the economy." the latter is what happened today. geitner announced his plan and the dow went up. so, of course, the powers that be will deem the geitner plan to be great!
but that's just stupid. two years ago, i wrote about how the dow isn't a good way to measure the stock market, much less the economy as a whole. the dow isn't a grade, it's an average of a handful of stocks in the stock market. all it represents is the value of those stocks according to the shareholders who are in the market.
obviously, a plan to bail out troubled banks at the expense of taxpayers while letting the shareholders get off scot free is going to be popular with shareholders. if geitner had instead announced a swedish-style nationalization plan, where shareholders bear the brunt of the loss, that would be unpopular with shareholders, and it would remain unpopular with that crowd even if that were the best way to fix the economy as a whole. in that scenario, the stock market would tumble. but it may be the only way out of this mess.
all else be equal, i'd rather the market were going up than down. but the daily stock market gyrations aren't the only thing in the economy. sometimes you just have to yank the band aid off.
