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Don’t Tell the Truth, NASDAQ Might Be Listening

Harris and Allen:

It was a perfectly reasonable question, and on the surface it seemed like a perfectly reasonable answer. But when Senate Banking Committee Chairman Chris Dodd went on Bloomberg TV Friday and mused about the possibility of bank nationalization, panicked investors sent the Dow plummeting a hundred points in the next hour.



“Sen. Dodd’s ‘nationalization’ comment wins the Oscar for most irresponsible remark by a U.S. official,” said Tony Fratto, a financial spokesman at the White House and the Treasury Department during the Bush years. “The last thing markets need is to have officials speculating about hypothetical policy choices.”

On the other hand, what Dodd said — like what Schumer said last summer — had the advantage of being true.

I understand that every time the market takes a big drop trillions of dollars evaporate from the face of the planet and people already worried about their economic future become even more concerned, and politicians should certainly not speak recklessly.  But there is a logic flaw embedded in the idea that its overall health is a function of the direction in which the Dow is heading, and that nobody should be saying or doing anything to drive it down.  As if the market is some wise arbiter of sound policy hovering over the financial crisis and not riddled with the same termite holes that plague the beleaguered banking system.

Having the courage to take action to restore the integrity of the market means doing things that will depress in the short term.  If it doesn’t go down when it has to swallow the bitter pills of regulation or bank nationalization, you’re doing something wrong.  

Letting the market decide what is and what is not sound policy is like disciplining your kids based on how well they like it.

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Jane Hamsher

Jane Hamsher

Jane is the founder of Her work has also appeared on the Huffington Post, Alternet and The American Prospect. She’s the author of the best selling book Killer Instinct and has produced such films Natural Born Killers and Permanent Midnight. She lives in Washington DC.
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