Wall Street Parties ... Like It’s 1929

Sep 14, 2020

A lot of experts say they are puzzled by the sharp rise in the stock market, driven largely by the rise of a handful of high-tech company stocks. They say they don’t understand how this can happen, while the rest of the economy has been mired in its deepest slump since the Great Depression.

Certainly, the enormous rise in a few high tech stocks has little to do with reality. Just look at Tesla, the manufacturer of electric cars. In less than a year, Tesla’s stock price increased by 950%! The company is now worth twice as much as Toyota on the stock market, even though Toyota sold 13 million cars, while Tesla sold only 400,000 cars. And Tesla is worth more than 10 times as much as General Motors, even though GM sold about 20 times more cars than Tesla!

Or look at Apple. Its stock price has more than doubled in less than six months and the company is now worth more than two trillion dollars. Apple may sell a lot of very overpriced cell phones and computers. But two trillion dollars? That is about the size of the economy of Italy, a country of about 60 million people with such cities as Rome, Milan and Venice! And the galloping price increases of Amazon and Microsoft stock mean that they, too, may soon join Apple in the two trillion dollar club.

High tech stocks have become so valuable to Wall Street financiers, they overshadow everything else. Dow Jones recently replaced Exxon with a company called Sales Force in its index of the 30 most important companies in the U.S., what they call bellwether stocks. How could Sales Force, a relatively new company that provides software and cloud computing services, be considered more important than Exxon, the largest private oil company in the world? Oil is still the primary source of energy for the entire global economy, and it remains the basis for many of the chemicals that go into industrial, agricultural and consumer goods.

In the world of Wall Street financiers, what counts is not the real economy, the production of goods and services to meet the needs of the population, but simply how much profit can be made as quickly as possible. There is nothing new in all this. The rapid rise of high tech stocks is just another financial bubble, driven by the speculative mania of a few big capitalists and financiers.

The capitalists, who claim that their power astride the world economy is justified by their ability to efficiently funnel investment to where it can do the most good, actually just watch their fortunes grow by running up big amounts of debt in order to place ever more risky bets on various companies in the stock market, thus driving up their prices—until the bubble pops and it all comes crashing down.

So, as the capitalists party, as vast amounts of money slosh around in the stock markets, the real economy is starved. There is no money to hire or pay workers, no money to build affordable housing, or for schools, roads, or health care for big parts of the population.

The capitalist class is running the entire society into the ground. And this will continue until the working population organizes itself and opposes its power against the capitalist class.