Monday, November 21, 2011

The king of democracy

Democracy has a king, and the king is the stock market.

A headline today in The Telegraph says "Spanish election fails to calm market fears." A few hours later, The Independent newspaper says "Madrid markets fall on return of the centre-right."

What I find interesting is the amount of emphasis on the stock market's reaction to the result of the Spanish election. The Independent reports "The markets were not assuaged by Mr. Rajoy's victory speech ......". Further on, it says "To the dismay of some PP officials, and the markets, ........."

There is just too much fanfare about how the stock market reacts to everything that happens around the world, especially in the political arena. And very often, the reaction is exaggerated and the market quickly bounces back to where it was. So why is the market reaction still so keenly observed?

Politicians everywhere are scared of making decisions that will spook the market. They want every vote of the general public, down to the lowest economic rung of society. But they make decisions to suit the market's wishes (the unseen power brokers with wealth to move the market), and not the voters' wishes. Such is the state of democracy today. This is why many once-prosperous developed countries are now in a pickle.

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