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Edited on Fri Apr-16-10 06:28 PM by Kurt_and_Hunter
Why would the stock market tank just because one company (Goldman Sachs) got flagged for some illegal activity?
Because the market is keenly interested in the broad question of whether Washington will hold corporations accountable for anything. So an indicator that the Feds are willing to charge someone with something is bad news for corporations in general.
Which, unfortunately, tells us something about corporations in general.
Yes, perception of federal willingness to enforce the law is factored into stock prices.
Most of the increase from DOW 6600 to DOW 11,000 has been based on avoiding economic disaster and entering a recovery.
But 500 or 1,000 of those points are a relief premium built in as it became apparent that most malefactors were likely to get away with what had gone down.
It is a positive thing long-term that at least some little part of the get-out-of-jail free premium was wrung out of the market today.
IMO.
(The market was overdue for an off day and of course not all action was Goldman response. But the story set the tone.)
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