 |
|
Thanks for that info. I don't see that as evidence, however,
Posted on: September 28, 2016 at 11:42:24 CT
JeffB MU
Posts:
72394
Member For:
21.45 yrs
Level:
User
M.O.B. Votes:
0
that he's a charlatan or just a fear monger trying to sell books or whatever with little or no evidence to back up his claims.
The fact of the matter is that bubbles are notoriously unpredictable as to timing when they will collapse. Here's a paragraph from Investopedia's article on the 5 steps of a bubble:
4. Profit Taking: By this time, the smart money – heeding the warning signs – is generally selling out positions and taking profits. But estimating the exact time when a bubble is due to collapse can be a difficult exercise and extremely hazardous to one's financial health, because, as John Maynard Keynes put it, "the markets can stay irrational longer than you can stay solvent."
Note that it only takes a relatively minor event to ***** a bubble, but once it is *****ed, the bubble cannot "inflate" again. In August, 2007, for example, French bank BNP Paribas halted withdrawals from three investment funds with substantial exposure to U.S. subprime mortgages because it could not value their holdings. While this development initially rattled financial markets, it was brushed aside over the next couple months, as global equity markets reached new highs. In retrospect, this relatively minor event was indeed a warning sign of the turbulent times to come.
That is a common pattern seen in bubbles throughout history.
I remember seeing that pattern in two recent bubble events in the U.S. In the dot.com bubble some economists & financial analysts were speaking out about how nuts the prices were and how disconnected they were from reality. Those economists and analysts were warning that the underlying profits of the dot.com companies were tiny or even non existent in many cases while the valuations were skyrocketing. Other economists and analysts were saying that we were in a new paradigm. The internet was going to explode and people needed to get in on the ground floor. These companies might losing money now, and might have been losing money for as long as they had existed, but it was "all about the eyeballs". If they had a lot of visitors the revenues would eventually start rolling in.
The arguments continued on for a few years or so. During that time the prices kept going higher and higher and those warning that it was a bubble were ridiculed as Chicken Littles. People that listened to them early on left a lot of money on the table as those who believed those that we were in a new paradigm had portfolios that were growing at astonishing rates.
Eventually it topped out & the bubble popped and fortunes were lost and the economic effects rippled throughout the economy. The Fed was freaked out enough that they followed the idiot Paul Krugman's advice and pumped tons of liquidity into the economy to stop the economic slide, blowing the new bubbles, the housing bubble in particular. That of course set the stage for the next and bigger financial collapse that the Fed & the Treasury screamed was going to collapse the world economy in short order unless Congress ignored their constituents' overwhelming consensus and bailed out the banksters with trillions of dollars (if you count the European banks the Fed bailed out surreptitiously).
That, unfortunately, has set the stage for the next and even more horrific crash from this bubble of all bubbles that the Fed has blown. Unfortunately, they no longer have any dry powder, so to speak. The western countries bailed out the banksters by buying up all of their toxic assets, transferring their private debt into massive mountains of public debt in the process.
The housing bubble, of course, followed the same pattern of the dot.com bubble and all of the other bubbles throughout history. Saner heads were warning of the stupidity for years before the bubble actually burst, and the mainstream called them nuts, or lunatics, or any other number of names... and events seemed to bear out their laughter at these Chicken Littles who were warning of disaster just ahead... at least for a few years... until eventually the Chicken Littles were proven right and the catastrophic collapse came to fruition.
The Chicken Little tinfoil hat crowd is notoriously bad at getting the timing right, but they are pretty good at seeing and explaining where the financial dislocations are occurring and of detailing much of the fallout that will likely result.
Look at how the Fed pumped up the money supply leading up to the bubbles in the 80s, 90s & 00s, and how it shot up so dramatically in the proverbial hockey stick fashion after the 2008 crisis to prevent the market from correcting in painful, but necessary fashion by blowing newer, bigger and more (eventually) castrophic bubbles:
https://fred.stlouisfed.org/series/AMBNS
The fact of the matter is that bubbles are notoriously unpredictable as to timing when they will collapse. Here's a paragraph from Investopedia's article on the 5 steps of a bubble:
4. Profit Taking: By this time, the smart money – heeding the warning signs – is generally selling out positions and taking profits. But estimating the exact time when a bubble is due to collapse can be a difficult exercise and extremely hazardous to one's financial health, because, as John Maynard Keynes put it, "the markets can stay irrational longer than you can stay solvent."
Note that it only takes a relatively minor event to ***** a bubble, but once it is *****ed, the bubble cannot "inflate" again. In August, 2007, for example, French bank BNP Paribas halted withdrawals from three investment funds with substantial exposure to U.S. subprime mortgages because it could not value their holdings. While this development initially rattled financial markets, it was brushed aside over the next couple months, as global equity markets reached new highs. In retrospect, this relatively minor event was indeed a warning sign of the turbulent times to come.
That is a common pattern seen in bubbles throughout history.
I remember seeing that pattern in two recent bubble events in the U.S. In the dot.com bubble some economists & financial analysts were speaking out about how nuts the prices were and how disconnected they were from reality. Those economists and analysts were warning that the underlying profits of the dot.com companies were tiny or even non existent in many cases while the valuations were skyrocketing. Other economists and analysts were saying that we were in a new paradigm. The internet was going to explode and people needed to get in on the ground floor. These companies might losing money now, and might have been losing money for as long as they had existed, but it was "all about the eyeballs". If they had a lot of visitors the revenues would eventually start rolling in.
The arguments continued on for a few years or so. During that time the prices kept going higher and higher and those warning that it was a bubble were ridiculed as Chicken Littles. People that listened to them early on left a lot of money on the table as those who believed those that we were in a new paradigm had portfolios that were growing at astonishing rates.
Eventually it topped out & the bubble popped and fortunes were lost and the economic effects rippled throughout the economy. The Fed was freaked out enough that they followed the idiot Paul Krugman's advice and pumped tons of liquidity into the economy to stop the economic slide, blowing the new bubbles, the housing bubble in particular. That of course set the stage for the next and bigger financial collapse that the Fed & the Treasury screamed was going to collapse the world economy in short order unless Congress ignored their constituents' overwhelming consensus and bailed out the banksters with trillions of dollars (if you count the European banks the Fed bailed out surreptitiously).
That, unfortunately, has set the stage for the next and even more horrific crash from this bubble of all bubbles that the Fed has blown. Unfortunately, they no longer have any dry powder, so to speak. The western countries bailed out the banksters by buying up all of their toxic assets, transferring their private debt into massive mountains of public debt in the process.
The housing bubble, of course, followed the same pattern of the dot.com bubble and all of the other bubbles throughout history. Saner heads were warning of the stupidity for years before the bubble actually burst, and the mainstream called them nuts, or lunatics, or any other number of names... and events seemed to bear out their laughter at these Chicken Littles who were warning of disaster just ahead... at least for a few years... until eventually the Chicken Littles were proven right and the catastrophic collapse came to fruition.
The Chicken Little tinfoil hat crowd is notoriously bad at getting the timing right, but they are pretty good at seeing and explaining where the financial dislocations are occurring and of detailing much of the fallout that will likely result.
Look at how the Fed pumped up the money supply leading up to the bubbles in the 80s, 90s & 00s, and how it shot up so dramatically in the proverbial hockey stick fashion after the 2008 crisis to prevent the market from correcting in painful, but necessary fashion by blowing newer, bigger and more (eventually) castrophic bubbles:
https://fred.stlouisfed.org/series/AMBNS
Please explain why this message is being reported.
MESSAGE THREAD
Thanks for that info. I don't see that as evidence, however, - JeffB MU - 9/28 11:42:24