Why the Dow goes up with bad news

The US economy is headed into a serious recession. The Dow Jones, meanwhile, has rebounded 1500 points from a low of 7400. Doesn't this seem strange?

It won't after you read this article about the Fed Reserve and the Dept. of Treasury intervening in the markets to prevent a market collapse.

I have been curious about why the Dow Jones has shown remarkable resilience (even though we have been down 40%) with continual bad economic news.

I have also been curious why Golman Sachs seems like they are the fourth branch of government. Nearly every major player in the US Government from Treasury Secretary Paulson to former Treasury Secretary Rubin all worked at Goldman. Does that seem strange? 

No, because the Federal Reserve and the Department of Treasury, through the creation of the "Plunge Protection Team" intervenes in the market to prevent collapse of the economic system we have. In essence, there is no such thing of free and open markets. Instead, the government "allows" the market to exist by propping up stock prices at government created floors. When the government calls Goldman Sachs to start buying stocks, they have just created a floor. This is not free markets, rather, government controlled markets.

And that should cause you concern. Maybe we should let the system collapse and have everyone lose their 401k plans. What an amazing insurance policy Wall Street has created by encouraging Americans to invest their savings in the Stock Market. 

I call this the "political default swap."