Point B on chart - stock markets drift back to pre-announcement levels.
Time taken - 4 trading days.
Any 1 week stock market chart says the same - by the time of writing the FTSE100 was at 5,335 points, marginally lower than the closing price of 5,362 on Thursday 4th September (i.e. one week ago) folllowing a few days of slightly better performance. The US stock indexes have followed a very similar pattern.
The much heralded support for the market provided by the US government's actions over last weekend have amounted to not a lot in market terms. True, it's early days yet.. but the market has little or no medium term memory. It reacts, it evaluates fundamental strengths and weaknesses and moves on. Fast.
When I used the phrase 'short term' in my last post I meant a little more than a week's worth of reprise.. Yet another proof that modern government's need to re-appraise what exactly their role is in the modern world.. A quick leaf through Adam Smith's 1776 Wealth of Nations and other older economics writings might provide a useful guide.. This is highly unlikely given that said books won't also provide help on how to get voted in, or how to put spin on otherwise terrible public sector performance.. For that, the government must turn to consultancy advice.
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