The stock market’s latest rebound shows how disconnected from reality it truly is

The NASDAQ Stock Exchange

Following a series of dramatic plummets in the wake of the novel coronavirus (Covid-19) pandemic, the stock market recently bounced back with one of its best-ever recorded months. This might, on the surface, seem like a good thing. But it also raises a question about the paradoxical nature of modern finance capitalism. If economies have been devastated by the pandemic, how can the stock market be doing so well?

Best performance since 1987

On 30 April, the Washington Post reported that Standard & Poor’s 500 – one of the US’s most prestigious stock market indexes – experienced its best month of returns since 1987. Along with other indexes like the Dow Jones and Nasdaq, it ended April with a double-digit percentage point increase compared to figures from the beginning of the month.

This is despite the fact that the US economy has experienced one of its largest contractions in recent memory as a result of the coronavirus pandemic. The fallout has included the loss of around 30 million jobs and the closure of a large, and still unknown, number of businesses.

Indeed, the dramatic turnaround comes just a matter of weeks since the US stock market suffered its biggest loss since 1987. On 12 March, markets were shut down via ‘circuit breaker’ measures in an attempt to stem losses. Less than a week later, markets experienced a second serious downturn, which almost completely wiped out US president Donald Trump’s touted economic gains.

How could this be?

How could it be that markets could rebound so quickly after such calamity and before any significant revival of the real economy? The answer is that the stock has increasingly come to resemble a glorified casino that has less and less to do with the provision of actual goods and services. And worse still, those who profiteer from it can adapt to circumstances so that they win regardless of whether or not the real economy is doing well. In other words, they can manoeuvre to benefit themselves as much in a downturn as in an economic boom.

This reality was rammed home in a YouTube video featuring a BBC News interview with a stockbroker from 2011 – just a few years after the 2007/8 financial crash. In a remarkably candid interview, Alessio Rastani said that traders like him don’t really care about what is happening in the real economy. In fact, he said that many people in his position actually prefer a crash as it represents a huge opportunity.

Downturns are ‘an opportunity to make money’…

Asked about governments’ response to the economic crash, Rastani said:

Read on...

I’m a trader; I don’t really care about that kind of stuff… If I see an opportunity to make money, I go with that. So for most traders… we don’t really care that much how they’re going to fix the economy, how they’re going to fix the whole situation. Our job is to make money from it.

He then explained how, for many finance workers, a downturn can actually be a good thing.  He said:

Personally, I’ve been dreaming of this moment for three years. I have a confession, which is I go to bed every night; I dream of another recession. I dream of another moment like this. Why? Because… the depression in the ‘30s wasn’t just about a market crash. There were some people who were prepared to make money from that crash.

In other words, as ordinary people, many of whom work in actually important and socially useful occupations, suffer during a downturn, people like Rastani are profiting from it. This perfectly demonstrates how jobs based on this kind of speculation are not only pointless but actively harmful to society. As The Canary has previously argued, such parasitism could be eliminated by simply abolishing these kinds of jobs.

…and a threat to democracy too

Rastani also made another startling admission. He said: “The governments don’t rule the world. Goldman Sachs rules the world”. Since such private organizations are completely unelected and therefore unaccountable, this poses a threat not just to good governance, but to the very concept of democracy itself. And perhaps the coronavirus pandemic will have one silver lining insofar as it wakes people up to these brutal realities.

Featured image via Flickr – bfishadow

We need your help to keep speaking the truth

Every story that you have come to us with; each injustice you have asked us to investigate; every campaign we have fought; each of your unheard voices we amplified; we do this for you. We are making a difference on your behalf.

Our fight is your fight. You’ve supported our collective struggle every time you gave us a like; and every time you shared our work across social media. Now we need you to support us with a monthly donation.

We have published nearly 2,000 articles and over 50 films in 2021. And we want to do this and more in 2022 but we don’t have enough money to go on at this pace. So, if you value our work and want us to continue then please join us and be part of The Canary family.

In return, you get:

* Advert free reading experience
* Quarterly group video call with the Editor-in-Chief
* Behind the scenes monthly e-newsletter
* 20% discount in our shop

Almost all of our spending goes to the people who make The Canary’s content. So your contribution directly supports our writers and enables us to continue to do what we do: speaking truth, powered by you. We have weathered many attempts to shut us down and silence our vital opposition to an increasingly fascist government and right-wing mainstream media.

With your help we can continue:

* Holding political and state power to account
* Advocating for the people the system marginalises
* Being a media outlet that upholds the highest standards
* Campaigning on the issues others won’t
* Putting your lives central to everything we do

We are a drop of truth in an ocean of deceit. But we can’t do this without your support. So please, can you help us continue the fight?

The Canary Support us