Why Not Government-Guaranteed Price Floors for Stocks?


Americans got a few trillion dollars richer in the second quarter of 2009, according to the new Flow of Funds report [pdf] issued yesterday. We're still more than $12 trillion poorer than we were at the 2007 peak, when the world was powered by the black fuel, the deserts sprouted great cities of pipe and steel, and U.S. household net worth, powered by inflated prices for condos, strip malls and Beanie Babies, was at an all-time high net worth of $58.6 trillion.

You may have guessed that this increase from March through June has come from the stock market. For confirmation, swing on down to page 118, which reveals that Americans' equity shares at market value increased from $11.1 trillion to $13.3 trillion during the three-month period.

Leave aside why the stock markets continue to rise when all the economic "green shoots" are really too pathetic to name (but I'm sporting, so I do name them). The question is how do we make sure this number stays up? When the Republocrats were making the case for intervening in the debt economy and the real estate market (through TARP, Making Home Affordable, etc.), they did so strictly on greater-good principles: Foreclosures hurt whole neighborhoods, allowing the financial system to "melt down" will make us all poorer and so on.

So why treat stocks, which are the only bright spot the American public has seen this year, as any less precious than real estate or banks? There are those who say we cannot afford a federal guarantee that the Dow Jones Industrial Average never again fall below 9820. I say we can't afford not to. This isn't just Wall Street funny money. It's our 401(k)s, our children's education funds, the nest eggs and hopes of countless American working families.