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I expect some bounce back tomorrow, but as you said, who cares? These evil bulls that jimhcom despises made all these huge gains while he sat on the sidelines screaming it ain't real, then lost some of them. Unless you showed up when the DIJA was at 12k and chucked your life savings in, big deal.
I suspect many long term stock market investors see this as a better price opportunity for their monthly flush and couldn't care less about their paper worth today or tomorrow.
Isn't Keynesian economics a wonderful thing!
I do not despise bulls; I simply think anyone who ignores the economic fundamentals is naive.
In order for there to have been the huge "gains" you allude to, we would have to suppose that the "bulls" got in at the market bottom, that is a huge supposition, more likely they rode the market down selling some as it went , and slowly buying back in as the positive propaganda kicked in.
Most were lucky if they were breaking even at the top. In the mean time, the more conservative investors have seen decent returns in precious metals and bonds right along, and are well ahead of where they were in 2007. If they are lucky they have even kept pace with the inflation that you deny has happened.
As far as not caring about paper worth goes, a 500 pt one-day drop is in itself proof that they do care. A 500 point drop does not happen unless people are panicked and being whipsawed by the market. Bottom line is like I have said a hundred times, eventually the fundamentals of the economy will assert themselves regardless of what the Keynesians try to do. You cannot run an economy on debt and bubbles.
For all of you proposing more borrowing in order to fix the problem of too much debt, answer me this; at what rate of interest does the current debt become unsustainable? Interest rates are at all time lows currently, but just as sure as you are reading this, they will rise.
They always do, and then there is hell to pay.
In order for there to have been the huge "gains" you allude to, we would have to suppose that the "bulls" got in at the market bottom,
Yet you are so quick to jump over the market going down and claim others are worried about a paper loss. Works only one way right? Gains don't count if you don't sell, but losses do.
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that is a huge supposition, more likely they rode the market down selling some as it went , and slowly buying back in as the positive propaganda kicked in.
Countering a supposition with a different supposition? Really? Ask anyone you'd label a "bull" on this forum whether they did this, I suspect you'll find most don't conform to your theory on their behavior.
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Most were lucky if they were breaking even at the top. In the mean time, the more conservative investors have seen decent returns in precious metals and bonds right along, and are well ahead of where they were in 2007.
Actually no, I've seen threads where a chorus of people in here have mentioned that they had again passed all-time highs in net worth, and yes most of them do own bonds as well. Funny you consider precious metals a conservative investment, but whatever floats you.
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If they are lucky they have even kept pace with the inflation that you deny has happened.
You are confusing denying inflation exists with finding humor in your consistent way off predictions about the extent of it, especially when accompanied by your back-pedaling with word games about whether saying what interest rates would be was actually a prediction.
at what rate of interest does the current debt become unsustainable? Interest rates are at all time lows currently, but just as sure as you are reading this, they will rise.
They always do, and then there is hell to pay.
0% sounds like a good long-term number. Very sustainable.
If the Deflationary Depression (ok, "Great Recession") kicks back in, even negative interest numbers might look attractive.
What I DON'T get is why everyone decided this wasn't a "bull" market all at once? The debt deal that was just signed had little to do with this correction, considering that it is close to what everbody said would come from the negotiations.
These things do not happen all at once. They build slowly as evidence of the unsustainabilty of the situation increases. Look at the housing bust, everyone knew the fundamentals of the housing market were skewed, but greed and stupidity kept in going until the point it became obvious the ponzie scheme could not continue, then the big investors ran for the door causing panic that spread throughout the entire market.
The stock market is only reflecting the realization that our current ponzie scheme of unsustainable government debt is now reaching that point of the straw breaking the camels back.
The basic problems that existed in 2007 still exist. Hundreds of trillions of dollars in toxic derivatives, a decimated jobs base, over valued assets including real estate and equities, a government spending massively more than it is receiving in revenue, dwindling supplies of cheap energy, and an economy designed to simultaneously make mass profit by exploiting cheap overseas labor and 1st world credit driven consumption.
of the economy will assert themselves regardless of what the Keynesians try to do. You cannot run an economy on debt and bubbles.
1.) Nobody in the government is pursuing Keynesian policies. 2.) Keynes never suggest you can run an economy on "debt and bubbles".
Let's be clear about what basic Keynesian is about:
1.) The government "saves" during booms by paying down the deficit.
2.) The government makes investments during recessions and grows the deficit, the investments should be such that they increase the nations capital and improve productivity.
The government has totally failed at 1.) and 2.) has not been taken seriously, the vast majority of the "stimulus" funds were used to bail out wall street, help states avoid layoffs, fund unemployment insurance, etc.
Anyhow, criticisms of Keynes today are just utterly bizarre, everyone is looking at just one side of the balance sheet, namely the liabilities. Effective fiscal stimulus will increase liabilities but also increase assets, this is critical as the increase in assets will ameliorate future debt payments.
Keynes is good for the working folk, so naturally the working-folk are against him. America has become....just a very ironic place... But more seriously, democracy broke in this country when modern propaganda/marketing methods started to be utilized by the American aristocracy to mold and shape public opinion.
Its funny, the very people that can help...namely academics...are hated by the general public. Gee.....I wonder how that happened? The aristocracy got their grounds covered... I mean, isn't it funny that so many people hate Keynes despite well, not reading anything he has ever written?
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Originally Posted by jimhcom
For all of you proposing more borrowing in order to fix the problem of too much debt, answer me this; at what rate of interest does the current debt become unsustainable? Interest rates are at all time lows currently, but just as sure as you are reading this, they will rise.
Interest rates will not rise until the economy improves in which case government revenue will increase as well.
But, treasuries don't have variable rates, the government can fund fiscal stimulus with 10, 20 and 30 year treasuries and the rates on these will never increase. If the government uses the funds to invest in the nations future paying off the treasuries before they mature won't be a problem, the investments will pay for themselves.
The foreclosure crisis is much worse than the average fellow knows. Banks have too many foreclosures on their books and the fed says they must have 5 times the amount of cash reserves for each foreclosure on their balance sheets.
The banks are not moving on many people who are living in their homes for years before foreclosing on them. The are living free not paying the mortgage and the banks have to pick up back taxes when it goes through the complete mortgage cycle becoming an REO. This is driving more money into the banks to cover losses . Many banks closed and FDIC had to cover it .
of course, keynesianism wasn't going to work. mises again sums it up quite adequately:
Surprised? You shouldn't be. The Austrians had it right all along. This was no magic trick. The Austrians knew that all these efforts were dangerous and destructive. After all, this Keynesian nonsense has had many trial runs, and it has failed every single time. And there are SPECIFIC REASONS: government spending drains reserve capital, nationalizations prop up inefficiencies, and money creation distorts reality and forestalls recovery.
It doesn't take a fortune-teller to discern that this hokum will not work to accomplish its stated aims. All it does is prop up the state and its friends at our expense. I mean, I want to be sympathetic to those who were deceived — and grant the best of intentions to those who favor stupid policy — but it is really hard.
Maybe it was possible to be fooled in 1932, but, really, most every attentive observer should have wised up by 1936. But to then go through round after round after round of failed stimulus and still not get it? Incredible. As Bob Higgs has demonstrated, we didn't get out of the Great Depression until the government stopped trying to stimulate the economy.
1.) Nobody in the government is pursuing Keynesian policies. 2.) Keynes never suggest you can run an economy on "debt and bubbles".
Let's be clear about what basic Keynesian is about:
1.) The government "saves" during booms by paying down the deficit.
2.) The government makes investments during recessions and grows the deficit, the investments should be such that they increase the nations capital and improve productivity.
The government has totally failed at 1.) and 2.) has not been taken seriously, the vast majority of the "stimulus" funds were used to bail out wall street, help states avoid layoffs, fund unemployment insurance, etc. .
To be fair to Keynes, the policies that are being implemented in his name are a perversion of what he wrote.
Still people refer to the modern economic theories of trickle down economics as Keynesian.
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Originally Posted by user_id
1.)
Anyhow, criticisms of Keynes today are just utterly bizarre, everyone is looking at just one side of the balance sheet, namely the liabilities. Effective fiscal stimulus will increase liabilities but also increase assets, this is critical as the increase in assets will ameliorate future debt payments.
Ah, but there is the rub. Increase who's assets? You see that is the entire issue. If government spending was going to the working people and increasing their assets, there would be nothing to argue about. Clearly government spending goes to government contractors who are getting rich from lucrative government contracts, that are put on the working peoples tab, as the wealthy lobby for continually larger tax breaks. I am all for you going into all the debt you want, so long as the profits of your debt is going into my pocket. When I have to pay for the debts you are running up and getting no benefit then we have a problem.
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