Economic Update: [Will the stock market hold up? or is it ready to fold up?]
The stock market has been overvalued ever since the 'irrational exuberance' days of Alan Greenspan - the former Federal Reserve Board chairman, IMO. Good for us, it has so far withstood all the crisis ever since that time, beginning with the Asian crisis, to 9/11 and Iraq war continuing up to now, primarily because of the safeguards that the government and the market have instituted over the years. We are facing a real crisis now and the situation is far worse than any of those previous crises, one of the worst in the recent times. Will all the safeguards put in place over the years help now? But the real questions is, if the safeguards were really in place, would the subprime crisis happened? Time has shown over and over that easy credit is a no-no for the health of any economy. The government and the market's decision to allow the stock prices to soar to unprecedent level even after Greenspan's famous warning puts to doubt if there indeed were adequate safeguards put in place, which makes the stock markets condition eerily similar to the loan market condition just before the subprime crisis. Without some form of intervention, the stock value can go up and up as long as there's fuel (money) to feed it. Once the money that feeds the prices up starts to dry up, the price will start to collapse and the long bubble would finally burst. The subprime loan crisis and the record-breaking oil prices are putting enormous pressure on those money that supports the stocks. So my friends, you may not be aware of it but there is a serious possibility that the long overvalued stocks could finally crash, putting the whole economy into a real crisis situation that we haven't seen in the recent years. Are we ready for this
Last edited by pacfan; 10-07-2008 at 07:32 PM.
Once in awhile, get outside in fresh air, take a deep breath & with a deep sigh, let out all the things that's bottled up inside you & be free, & you'll get a glimpse of nirvana.
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