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(Yahoo)   Now I am become the debt fueled bubble, destroyer of stock markets   (finance.yahoo.com) divider line 98
    More: Obvious, Steve Keen, economic bubble, Dow Jones Industrial Average  
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4420 clicks; posted to Business » on 13 Mar 2013 at 3:25 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-03-13 12:19:38 PM  
Watch out Japan, here we come. USA! USA! USA!
 
2013-03-13 12:39:23 PM  
So, buy my book and stimulate my economy because you're all screwed anyway
 
2013-03-13 12:45:44 PM  

MaudlinMutantMollusk: So, buy my book and stimulate my economy because you're all screwed anyway


Can you link to your book?
 
2013-03-13 12:52:14 PM  

Brontes: MaudlinMutantMollusk: So, buy my book and stimulate my economy because you're all screwed anyway

Can you link to your book?


Heh... I wish

/I was referring to the book they refer to in TFA
//sarcasm
 
2013-03-13 12:53:53 PM  
Also sarcasm :)
 
2013-03-13 01:31:39 PM  
If you think the economy warrants the stock market being at an all time high, you're an idiot who deserves to lose however much money you've put into it.
 
2013-03-13 01:34:01 PM  
You noticed?
 
2013-03-13 01:48:47 PM  
Thank FSM the working class can't lose all those gains, since nothing trickles down.
 
2013-03-13 01:56:43 PM  

GAT_00: If you think the economy warrants the stock market being at an all time high, you're an idiot who deserves to lose however much money you've put into it.


Why not, companies and CEO's are making more now than ever?
 
2013-03-13 01:57:41 PM  

GAT_00: If you think the economy warrants the stock market being at an all time high, you're an idiot who deserves to lose however much money you've put into it.


Dammit.

Now I'm just going to have to follow the advice of the local TF investment expert.
 
2013-03-13 02:03:30 PM  

GAT_00: If you think the economy warrants the stock market being at an all time high, you're an idiot who deserves to lose however much money you've put into it.


The 1% is doing awesome, and they have like 50% of stock market assets.  And with all the options and leveraging that goes on, why it should only go higher.
 
2013-03-13 02:04:18 PM  

GAT_00: If you think the economy warrants the stock market being at an all time high, you're an idiot


I agree with you.
 
2013-03-13 03:15:36 PM  
If you index corporate profits and S&P 500 to 1981, it looks like the markets have finally returned to nominal.

research.stlouisfed.org
 
2013-03-13 03:27:28 PM  
A banker don't take a dump without a plan, son.
 
2013-03-13 03:28:10 PM  
Yeah, that "all time high" business doesn't account for inflation.  And right now things are going fairly well, without Fed action we'd have been royally screwed.
 
2013-03-13 03:30:15 PM  
I think it's the same Boomer investor classes who are chasing their retirement portfolios for the past 30 years and it keeps blowing up in their faces.

See, Boomers are lazy and entitled and impatient. They want ALL THE MONIES now through super fast investments instead of through slow, steady, productive growth that had been the hallmark of investment policy since the 40s. When they moved into positions of management and finance in the 80s, in concert with Reagan-era supply side policies they stuffed Wall Street full of cash and tried to make off like bandits.

Then the crash of 87 occurred and they lost it all. Or, most of it. (also, the recession of 91)

Thankfully, the 90s tech boom came around and they saw an opportunity to make it all back, so they stuffed Wall Street with venture capital tech dollaz and tried to set themselves up for life.

Then the crash of 2000 occurred and they lost it all. Or, most of it. (also, the boondoggle of 03)

To make it all back, they moved into positions of power and leadership and prodded the Bush puppet regime into relaxing financial regulations so they could make it all back, and they stuffed Wall Street with derivatives earmarks and tried to clean house.

Then the crash of 2008 occurred and they lost it all. Or, most of it.

Now, they are attempting to make it all back again, so here we go on another roaring speculative bubble. And this is probably the last one because they're getting old and they want to retire with their money, so they hope to cash out before it crashes again. And it will. And most of them will lose all their money again.

It's like a generational Martingale Strategem -- every time they lose all their virtual paper wealth, they double up and try to make it all back on the next upswing. And each time, the swings get larger, longer, and more pronounced, wrecking untold suffering, misery, confusion and death to whole populations.

Which is essentially what the markets were doing up until 1929.
 
2013-03-13 03:34:09 PM  
Yup - stock market moves and valuation have NOTHING to do with actual value right now and haven't for a couple of decades.
 
2013-03-13 03:34:50 PM  
Aren't all bubbles debt bubbles, more or less?
 
2013-03-13 03:38:38 PM  
Just watched about 1/2 the video.  Stopped when the guy bragged about seeing the 2008 crash coming.  Who didn't see that coming?  Anybody with common sense who wasn't making commissions off selling mortgages to dumb people saw it coming.
 
2013-03-13 03:38:47 PM  
Never seems to be a shortage of "money experts" writing books.  Since I can remember, some idiot's been trying to make a buck selling a book saying we're either royally farked or that "the sky's the limit so read my book to get yours!"

And every time, without fail, they claim to have been right in the past about timing the market.  Yet when you look for the evidence, try to find out what they were actually saying historically, it always comes up blank.

The internet must have a funny blind spot about financial people getting things right.

If someone found a way to ever predict what was going to happen, they would either shut their mouths tight, or everyone else would already be following them.
 
2013-03-13 03:41:01 PM  
Keen has his eye on margin debt. This is the money people borrow from their stockbrokers to expand their holdings of shares. Keen says the ratio is now 70%, meaning with $300,000 you can borrow $1 million worth of shares.

Keen says margin debt levels in the U.S. now are similar to where they were in 2000 and 2007.

So where were they in 2007? I remember reading that the Big Five investment houses were leveraged up to 95-98% -- a hell of a lot more than 70%.  Don't know if that's the same measure that this guy is using but there was some serious craziness going on back then.
 
2013-03-13 03:43:44 PM  

Ishkur: And this is probably the last one because they're getting old and they want to retire with their money, so they hope to cash out before it crashes again. And it will. And most of them will lose all their money again.


One can only hope it is the last one for a while.
 
2013-03-13 03:43:47 PM  

stuhayes2010: Just watched about 1/2 the video.  Stopped when the guy bragged about seeing the 2008 crash coming.  Who didn't see that coming?  Anybody with common sense who wasn't making commissions off selling mortgages to dumb people saw it coming.


Your misunderstanding of the 2008 crash is stunning in its breadth and simplicity.
 
2013-03-13 03:48:35 PM  

JohnBigBootay: stuhayes2010: Just watched about 1/2 the video.  Stopped when the guy bragged about seeing the 2008 crash coming.  Who didn't see that coming?  Anybody with common sense who wasn't making commissions off selling mortgages to dumb people saw it coming.

Your misunderstanding of the 2008 crash is stunning in its breadth and simplicity.


I think he might be thinking of the real-estate crash, which started 2 years earlier.
 
2013-03-13 04:07:06 PM  

impaler: I think he might be thinking of the real-estate crash, which started 2 years earlier.


He'd still be wrong. Shoddy underwriting practices leading to mortgages being held by unqualified buyers was such a miniscule part of the housing bubble it barely warrants being linked at all. All the malfeasance with the ratings agencies and the credit default swap fiasco exposed some unqualified buyers but the housing crash was created by bankers, not first time home buyers. They very idea is absurd on its face.
 
2013-03-13 04:07:32 PM  

UseUrHeadFred: Never seems to be a shortage of "money experts" writing books.  Since I can remember, some idiot's been trying to make a buck selling a book saying we're either royally farked or that "the sky's the limit so read my book to get yours!"

And every time, without fail, they claim to have been right in the past about timing the market.  Yet when you look for the evidence, try to find out what they were actually saying historically, it always comes up blank.


That's why I am currently writing three books.  The first one is titled: "writing money expert books to make money" , the second: "how to write a book based on another book by stating everything in that book is wrong." and the third one is more of a self-help book: "how to write a self-help book for dummies"

I should be able to retire once I finish writing them.
 
2013-03-13 04:08:47 PM  

GAT_00: If you think the economy warrants the stock market being at an all time high, you're an idiot who deserves to lose however much money you've put into it.


First time I've heard of someone else feeling that way.  I can't figure out what's driving the market higher.

BTW - what's the status of the commercial real-estate market?
 
2013-03-13 04:10:25 PM  
Steven Keen is probably the most interesting 'non-mainstream' economist around. It's always good to see him getting coverage. I'd highly recommend his book.
 
2013-03-13 04:10:46 PM  

Odd Bird: I can't figure out what's driving the market higher.


Uhhh the Fed creating more and more money?
 
2013-03-13 04:12:21 PM  

JohnBigBootay: impaler: I think he might be thinking of the real-estate crash, which started 2 years earlier.

He'd still be wrong. Shoddy underwriting practices leading to mortgages being held by unqualified buyers was such a miniscule part of the housing bubble it barely warrants being linked at all. All the malfeasance with the ratings agencies and the credit default swap fiasco exposed some unqualified buyers but the housing crash was created by bankers, not first time home buyers. They very idea is absurd on its face.


Paul Krugman was writing about the housing bubble and the probability of a crash as early as 2003.
 
2013-03-13 04:18:44 PM  

Odd Bird: GAT_00: If you think the economy warrants the stock market being at an all time high, you're an idiot who deserves to lose however much money you've put into it.

First time I've heard of someone else feeling that way.  I can't figure out what's driving the market higher.

BTW - what's the status of the commercial real-estate market?


Slowly recovering for all I've heard.  I remember people predicting massive collapse and doom in that around now back in 2009 but I haven't seen anything else since then.
 
2013-03-13 04:20:58 PM  

ricewater_stool: JohnBigBootay: impaler: I think he might be thinking of the real-estate crash, which started 2 years earlier.

He'd still be wrong. Shoddy underwriting practices leading to mortgages being held by unqualified buyers was such a miniscule part of the housing bubble it barely warrants being linked at all. All the malfeasance with the ratings agencies and the credit default swap fiasco exposed some unqualified buyers but the housing crash was created by bankers, not first time home buyers. They very idea is absurd on its face.

Paul Krugman was writing about the housing bubble and the probability of a crash as early as 2003.


That's because that bubble was easy to see when you look at an inflation-adjusted housing price history.  Even by 2003 it stood out as a big bubble.

s.wsj.net

People chose to ignore that and declared infinitely rising house prices a new normal.
 
2013-03-13 04:22:03 PM  

MugzyBrown: Odd Bird: I can't figure out what's driving the market higher.

Uhhh the Fed creating more and more money?


lulz
 
2013-03-13 04:44:54 PM  

GAT_00: People chose to ignore that and declared infinitely rising house prices a new normal.


One would expect housing prices to rise infinitely. It's inevitable actually. It's just supposed to be real slooooooow and measured and sort of kind of track with inflation and gdp.
 
2013-03-13 04:46:54 PM  
In 500 years time people will look back and see this as the biggest debt-financed bubble in human history and ask, 'why didn't we realize it,'" Keen says. "But we think it's normal."

This makes the enormous and unsupported assumption that people will learn from their mistakes.
 
2013-03-13 04:49:02 PM  

Odd Bird: GAT_00: If you think the economy warrants the stock market being at an all time high, you're an idiot who deserves to lose however much money you've put into it.

First time I've heard of someone else feeling that way.  I can't figure out what's driving the market higher.

BTW - what's the status of the commercial real-estate market?


As far as I can tell, it's optimism that's sending the stock market up. People invest with their stomachs, not their brains. If they feel good about the future, they buy. They feel bad about the future, they sell. The stocks I've been tracking since about 2007 seemed like they were being held artificially low in price while everyone bemoaned about how awful things were. Once things started turning around, people started feeling comfortable buying again. It's the same thing that causes the 5 day gain, the 2 day correction, rinse and repeat . "Oh life is good, we should buy!" "Oh crap but it's going too high too fast" "Whoops, nope, we're okay again." From 2008 until a few months ago I could set my watch by it.

I'm just not sure about the long term. Student debt, federal debt, the massive healthcare expenses that we know are coming, gold bubble, etc. All that makes me a little nervous about future returns; there's no way a 23-yr-old kid today is going to have disposable income in 10 years if she gets a Master's degree, and that's simply not good for product markets. By the same token, most of the people who HAVE disposable income either aren't doing anything with it (see 1%) or are too sick to do anything with it (see seniors). Could change, but that requires Congress, and I'm certainly not putting any good money on betting that Congress will act.
 
2013-03-13 05:04:32 PM  

JohnBigBootay: One would expect housing prices to rise infinitely. It's inevitable actually


No. Only if population keeps increasing. Since this isn't possible and a relative maxima is certain, inflation and housing will eventually reach an equilibrium. And then capitalism will fall apart because it's not designed for such a contingency.
 
2013-03-13 05:10:34 PM  

Ishkur: JohnBigBootay: One would expect housing prices to rise infinitely. It's inevitable actually

No. Only if population keeps increasing. Since this isn't possible and a relative maxima is certain, inflation and housing will eventually reach an equilibrium. And then capitalism will fall apart because it's not designed for such a contingency.


To be fair I don't think a population increase is strictly necessary, just home buyers. One could certainly have a housing boom fueled by an increase in the number of buyers even in a shrinking  or stable population. If wages rose that is. So, right about when monkeys fly out my ass.
 
2013-03-13 05:10:37 PM  
One thing is clear. This is Bush's fault.
 
2013-03-13 05:14:42 PM  

Ishkur: No. Only if population keeps increasing. Since this isn't possible and a relative maxima is certain, inflation and housing will eventually reach an equilibrium. And then capitalism will fall apart because it's not designed for such a contingency.


I'm not sure I see a cap on human population, we still have a LOT of space on Earth to fill up, and there is an ever expanding universe out there.   Assuming we don't have a global nuclear war, getting our tech to the point we can colonize other off-planet areas shouldn't be too much of a stretch.
 
2013-03-13 05:16:05 PM  

UseUrHeadFred: If someone found a way to ever predict what was going to happen, they would either shut their mouths tight, or everyone else would already be following them.


Hi, can you please familiarize yourself with the Ancient Greek myth of Cassandra before reality bursts your bubble?  The world does not work the way you think it does.

There were people screaming about the bubble.  But when people chase money, awful things happen, principally among them a total abandonment of reason.
 
2013-03-13 05:17:43 PM  

AdolfClamwacker: Assuming we don't have a global nuclear war, getting our tech to the point we can colonize other off-planet areas shouldn't be too much of a stretch.


Didn't you see the space-junk thread?  We're stuck here.

/bored, end of the day, killing time
 
2013-03-13 05:19:06 PM  

JohnBigBootay: To be fair I don't think a population increase is strictly necessary, just home buyers. One could certainly have a housing boom fueled by an increase in the number of buyers even in a shrinking or stable population. If wages rose that is. So, right about when monkeys fly out my ass.


Well, yes, demographics plays a key part of it. Since our population is aging and older people generally have more money, that is what is fueling investment, real estate and stock speculation bubbles. Don't expect this to continue: Boomers are a greedy bunch and they plan to sell off everything when they retire, spend it all and leave nothing for their kids. There WILL be a housing crunch in the next 10-15 years.

Wages are always the LAST thing to go up in an inflationary period. Inflation is not bad -- it's supposed to happen. It's good for borrowing but bad for working classes.
 
2013-03-13 05:21:13 PM  

AdolfClamwacker: I'm not sure I see a cap on human population, we still have a LOT of space on Earth to fill up, and there is an ever expanding universe out there. Assuming we don't have a global nuclear war, getting our tech to the point we can colonize other off-planet areas shouldn't be too much of a stretch.


This is an awful lot of assumptions.

We can barely sustain ourselves now at 7 billion with the resources we have. What makes you think things will be better with 10/20/50 billion people at first world consumption levels?
 
2013-03-13 05:21:38 PM  

JohnBigBootay: Ishkur: JohnBigBootay: One would expect housing prices to rise infinitely. It's inevitable actually

No. Only if population keeps increasing. Since this isn't possible and a relative maxima is certain, inflation and housing will eventually reach an equilibrium. And then capitalism will fall apart because it's not designed for such a contingency.

To be fair I don't think a population increase is strictly necessary, just home buyers. One could certainly have a housing boom fueled by an increase in the number of buyers even in a shrinking  or stable population. If wages rose that is. So, right about when monkeys fly out my ass.


A massive shift in population could do the trick on a temporary basis too.  Or a massive shift in living style.
 
2013-03-13 05:23:23 PM  

Odd Bird: Didn't you see the space-junk thread? We're stuck here.


I didn't, I'll look over at the geek tab in a bit.
 
2013-03-13 05:29:22 PM  

Ishkur: AdolfClamwacker: I'm not sure I see a cap on human population, we still have a LOT of space on Earth to fill up, and there is an ever expanding universe out there. Assuming we don't have a global nuclear war, getting our tech to the point we can colonize other off-planet areas shouldn't be too much of a stretch.

This is an awful lot of assumptions.

We can barely sustain ourselves now at 7 billion with the resources we have. What makes you think things will be better with 10/20/50 billion people at first world consumption levels?


I don't see the race off the planet a matter of bringing everyone up to first world standards, it's more about developing the tech to leave before we drag everyone down to third world standards.
 
2013-03-13 05:29:37 PM  
The market goes up, the market goes down.

You can't explain that.
 
2013-03-13 05:29:38 PM  

ShawnDoc: GAT_00: If you think the economy warrants the stock market being at an all time high, you're an idiot who deserves to lose however much money you've put into it.

Why not, companies and CEO's are making more now than ever?


media.tumblr.com

And the wealthy are the ones who won stock, yes, even including your pitiful 401K.
 
2013-03-13 05:35:59 PM  

AdolfClamwacker: I don't see the race off the planet a matter of bringing everyone up to first world standards, it's more about developing the tech to leave before we drag everyone down to third world standards.


You have an awful lot of confidence in the feasibility of space travel/living.
 
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