A Taxed Market Reopens
The market didn't crash. The 684-point fall doesn't even make history's top 10 percentage declines. And so we may conclude that if Congress now does the right thing quickly on tax policy, the market will rise.</br></br>Problem is, the early indications we're getting is that Congress may enact a new tax bill using conventional means, such as tax credits, mainly to shore up the largest corporations. Incentives at the margin will be minimal. That is, half a loaf.</br></br>The outlook would be considerably more worrisome had the market's indices spent the whole of yesterday in a steady, precipitous decline. The reality is that most of the day's 7.13% loss occurred in the first hour of trading, and remained fairly flat through the day.</br></br>A 684-point drop is a rough ride, and the burden on the market at the opening bell was substantial. The economy before last week was already in the doldrums, with little upside evident so far from a series of interest rate cuts, or for that matter the tax rebate. Much of the airline industry has suffered for years from fixed union costs that leave little room for sustained profitability. The closure of the air transport system may have merely pitched several airlines toward inevitable dissolution, which would be reflected in yesterday's trading.</br></br>That said, share prices generally rose in Europe, and Asia's losses were modest. It is a small miracle that trading in New York opened at all; most likely operations will smooth in the weeks and months ahead. Most importantly, all available evidence suggests that the men and women who make up the American economy are prepared to move heaven and earth to prove that their system will not be defeated by homicidal barbarism.