Money & Investing – Banks.com

The stock market is making it very clear that investors like a middle class economic stimulus. The Dow ended up nearly 300 points today, to complete a rally. The S&P and the Nasdaq both also ended up today. On the stock market, it’s all about making sure that the middle class can spend money and prop up various companies and the economy, as the Investing Blog points out:

To spend money, the middle class needs employment and a solid economy to maintain their employed status. Many people agree, spending money on the American people is a much better investment than American banking operations.

There is hope that the rally will last longer than it has when banking bailouts are announced. The two main bits of news that helped today’s stock market rally are:

1. Barack Obama announced his economic stimulus plan over the weekend. This is a rather ambition plan that focuses a great deal on creating jobs by increasing work done in infrastructure repair and building, school construction and alternative energy development. With unemployment an issue, there is hope that a massive public works effort will help spur employment, giving people spending money.
2. The auto industry is likely to get its bailout. After Congress demanded a plan from the auto industry (it didn’t from the financial industry), the Big 3 delivered. Now it is likely that the U.S. auto industry will get a bailout. The rationale here is that hundreds of thousands of jobs in the auto industry and related industries are at stake. If people are laid off, than fewer of them can spend money to keep the economy going.

With bailouts coming (who knows how much they’ll cost), people are beginning to wonder how all of this will be paid for. Bond yields at multi-year lows, though, so the massive borrowing the government will have to do won’t be too expensive.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.