Today's Equity Market Declines

Much is being made in the media of today's equity market decline. As I write this, the S&P500 is down 2.5%. However, only this past April 20th saw a 4.3% loss in the S&P500.

Perhaps the newsy aspect of today's decline is that it follows several weeks of fairly sustained gains, albeit without any real positive economic news.

Then again, as with significant market declines last fall and again in January of this year, perhaps the selloff is a function of worrisome news that is not directly economic, but never the less, indirectly suggests more economic uncertainty in the near future.

For example, the senior executives of GM were reported to have sold all of their shares earlier this week. Hardly a vote of confidence. Maybe those executives have a better grasp of the ultimate fate of the nearly-bankrupt auto maker, once it falls into government hands, then the rest of us do.

Sadly, I wrote that last sentence as if it is pre-ordained, when it should not be so. That may be part of the problem.

Then we have the nation's VP promise a roomful of schoolchildren yesterday that every child's college education will, if necessary, be paid for by our government. Meaning you and me.

More economic lunacy and uncertainty. What if this sort of nonsense actually becomes law?

Then we have Ed Liddy, the poor public servant who agreed to come out of retirement to help out as AIG's CEO, only to be pistol whipped by Congress earlier this year, reappearing on the Hill today. More opportunity for Congressional grandstanding, unreasonable, unlawful demands, and threats of show trials.

Finally, Congressional Democrats and the president held a press conference to announce some sort of health care reform news. Again, the sort of intrusion by government into another private sector in a way that freezes private investment and causes uncertainty with respect to future competitive and regulatory actions by the government.

Perhaps the sum of the political signals of the past few days, added to the vote of no confidence in GM's future by its own executives, has finally begun to weight heavily on the equity markets, and bring investors to their senses about real risks ahead for the US economy.