Why Should We Fear Plunges in Stock Prices, and Why Can't Reporters Ask?

by

USA Today reports on the SEC's success in slowing short-trading and reversing price declines in several financial stocks. What the article never explains is why the government has an interest in preventing sharp price declines in the affected stocks. Has the SEC assessed the balance sheets and growth prospects for the affected companies and determined that they are under-valued? If so, will it share this analysis? If not, then why is the SEC intervening to prevent the market from determining the price of the stock of these companies? Why do we have any more reason to be concerned about a stock's price being driven down by irrational pessimism than being driven up by irrational exuberance? Wasn't it a problem when a junk company like Priceline.com carried a market valuation of more than $150 billion? Why didn't the SEC intervene then? Most of all, why aren't any reporters asking these questions?

--Dean Baker

I’m writing to you today with a sense of urgency that I haven’t felt since I began my journalism career. As executive editor of The American Prospect, I’ve witnessed firsthand how independent journalism serves as a crucial bulwark against the erosion of our democratic institutions. Today, that role is more vital than ever. Can you step up today and show your support?

The winds of authoritarianism are blowing stronger. We’re seeing alarming signs of a coordinated effort to silence critical voices and undermine the very foundations that support progressive causes. As Bob Kuttner presciently wrote in our August 2024 issue, a weaponized IRS could attack the very foundations of the progressive movement. We need readers to step up and help us dig in for the long haul.

We’re falling behind in our spring fundraising campaign, and with so much at stake we can’t afford to come up short. If you value fearless, independent journalism that holds the powerful accountable and defends democracy, now is the time to step up. The American Prospect depends on reader support to stay in the fight. Pitch in today and help us close the gap. Please consider making a donation today.

–David Dayen, Executive Editor