Market participants fight for short term equilibrium. Institutional investors continue with selling while individual investors buy on the dip. Since selling from institutional investors is relatively light and not followed by day traders, market seems to find support at current level. The selling from institutional investors should be approaching the end as they cannot drive the market further down without heavy selling. The majority of existing equity stock holders are not willing to dump the shares which are expected to appreciate in the long run. On the other hand, the demand for equity stock is still weak because household, being the largest buyer, is staying away from stock. Nevertheless, it is anticipated that market will drift upward slowly by liquidity as well as wealth effect. There may be oscillation as market participants manipulate for short term profit.
More analysts speak of an optimistic outlook on economy. As mentioned in the Yahoo! article "'The Next American Economy': Govt.-Sponsored Innovation Is Our Best Hope, Holstein Says", they key is innovation. The U.S. needs to make a “deep structural adjustment” he tells Aaron in this clip. No longer can we rely on credit cards and rising home values to finance our growing consumption. If done right, government involvement in research and development can spark new industries and create millions of jobs. Innovation in communications, the Internet, biotechnologies all have their roots in government funding, Holstein notes. “Look at so many of these thing that have come out of the right kind of federal funding that goes into the right kind of institutions and then allowing those ideas to blossom commercially.”
Sonders: Building Blocks for Recovery "Starting to Stack Up," But Don't Expect a Boom. While Wall Street and big business post record profits, the popular perception is the 'real economy' is still struggling to gain ground. With the unemployment rate near 10% and housing still bouncing along the bottom (at best), the divergence of opinion between Wall Street and Main Street is probably no surprise. Her pessimism on jobs is due in large part to “structural impediments” that have prevented people looking for work from moving to areas where there are actually jobs.
An undesirable outcome of 2008 financial crisis and 2009 stock market rally is the concentration of wealth. Although wealth of the nation, measured by asset valuation, recovers significantly, it is only redistributed to the already rich people. This explains that the majority of population is not benefited from the recovery. The Rich Get Richer, and They Have You to Thank, Says David Cay Johnston. The wealth gap in America is outpacing much of the world. "Income inequality in the United States has soared ... with 1 percent controlling 24 percent of American income in 2007," New York Times columnist Nicholas Kristof recently wrote. Kristof notes that's worse than "historically unstable countries like Nicaragua, Venezuela and Guyana." What's even more striking is that many of these unfair advantages are given to the biggest political contributors. The Wall Street bailouts are a perfect example. "There's been a massive turnover of money to people who didn't have to face the consequences of the market," Johnston says. "Goldman Sachs got its bad bets paid off at 100 cents on the dollar. I’ve never seen the government do that for me."
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