When Steel Was The Big Mac

[Policing Wall Street]

I am old. 

When I look back the world was different- economically. The Dow Jones Industrial Index meant “industrials.” 

America was a country that produced- and was proud of its manufacturing might.  So proud was America of its manufacturing prowess that there is a bridge in New Jersey, popularly called, “The Trenton Makes Bridge” after the logo that appears on the bridge:  Trenton Makes ...

The Dow Jones Industrial Index once comprised such stalwarts as General Electric, when General Electric was a manufacturer and not some snake oil financial company; IBM, when IBM manufactured mainframe computers; Anaconda Copper;
DuPont; U S Steel, when the American Steel Industry was a behemoth; Bethlehem Steel, when it was second only to the mighty U S Steel; International Paper, when it produced paper; Anaconda Copper, when it was looting Chile of its
copper; General Motors, when it was making cars; Goodyear, which manufactured tires for the world; and Sears Roebuck, the major retailer in America.

That was before changes in the tax law in the 1960s began to sponsor new waves of massaging earnings- which reached a peak in the current debacle.

In the past, companies were debt averse because of the experience of the depression of the 1930s.  Then came new financial theories, which stated that the mix of capital and debt had an optimum point. In other words, debt became more favorable since the assumption was that the “perfect” limit had not yet been attained. So more debt was favored-because interest payments were to be tax deductible. The potential risk of failure as a result of over-debt burden was not a big consideration.

Yet these theorists never owned a business and never comprehended when credit would be unavailable. Financial stocks, such as Citicorp’s and Bank of America’s were the rage-inspired by phantom earnings.

Today, the Dow Jones Industrial Index includes Disney, McDonald's and Kraft Foods.

In the past the stock market soared with the price of steel. Now the stock market soars when McDonald's sells more dollar hamburgers.