Will the stock market hold...or is the bubble ready to burst?

[pacfan]

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

[Douglas]

Does that mean any and all money we have in our banking accounts will be lost? (Like the Great Depression?)

[Cortez The Killer]

We always think we are the big picture, but it's key to recognizing the past and understanding it to see what the future will be like.

AMericans today just expect the economy to grow indefinitely and when there is any hitch in that it's always "OH NO!!!"

Economies dont just go up and up all the time. Nothing in life works that way, nothing can grow without consequence, there will always be set backs.

I'd say what is happening now is a natural process and for those who have belief in the system will adhere to the old adage "buy low and sell high"

[pacfan]

We always think we are the big picture, but it's key to recognizing the past and understanding it to see what the future will be like.

AMericans today just expect the economy to grow indefinitely and when there is any hitch in that it's always "OH NO!!!"

Economies dont just go up and up all the time. Nothing in life works that way, nothing can grow without consequence, there will always be set backs.

I'd say what is happening now is a natural process and for those who have belief in the system will adhere to the old adage "buy low and sell high"

Very well said.

[Von Milash]

9-11 was a huge factor. greenspan cut the fed funds rate to about 1% making loans easy to come by. the lack of regulation in the housing market exacerbated the prblem which eventually precipitated the subprime crisis. but its also the variable rate loans that eventually rebalanced combined with offshorig of manufacturing jobs that have perpetuated the housing market woes and the overall economy

the market overall will be fine in the lung run. if you look at history, black monday is a blip, the tech bubble isn't really noticeable and there has never been a 10 year period where there wasn't a gain.

if a crash is on your mind, short index futures.

[Kirkland Laing]

There's a bubble in almost all capital markets right now. There's a vast amount of newly-printed money constantly being pumped into the financial system and that's a. causing the problem and b.going to keep the problem going till somebody gets a grip on monetary policy. Until then anything can happen. Long term, the stock market is a good investment. Short term, it all depends.

[pacfan]

Does that mean any and all money we have in our banking accounts will be lost? (Like the Great Depression?)

No Clubber, it probably won't be that bad though. It would probably mean that some people will lose some money and lots of jobs would be gone. I actually don't see it happening; it's just the possibility of that happening that bothers me. The possibilility is there no doubt, but it is a small one. But who feel comfortable thinking even just the possibility of losing jobs, right? All I can say for sure is that it can happen, but it probably won't. Let's just keep our fingers crossed.

[Douglas]

Does that mean any and all money we have in our banking accounts will be lost? (Like the Great Depression?)

No Clubber, it probably won't be that bad though. It would probably mean that some people will lose some money and lots of jobs would be gone. I actually don't see it happening; it's just the possibility of that happening that bothers me. The possibilility is there no doubt, but it is a small one. But who feel comfortable thinking even just the possibility of losing jobs, right? All I can say for sure is that it can happen, but it probably won't. Let's just keep our fingers crossed.

What a relief. It's already hard enough to find a job out there as it is. Several factories in the town we live in have already been shut down, even though they'd been in business for years.

[Kirkland Laing]

[pacfan]

Ooogh. We not only have a stock bubble but also a debt bubble, part of which already burst. National (public) debt is always manageable but the level of those personal household debt is somewhat alarming, especially the increase in percentage relative to the disposable income. But let me tell you that debts themselves are not necessarily bad things as long as they are manageable. You can keep on borrowing and borrowing without problem as long as you have the capacity to pay the due amounts. But the problem is that any imbalance in the economy may affect that capacity or capability to pay. Now, we are faced with at least two of them, the subprime crisis and the high oil price. IMO, among the three of them, the debt crisis, high oil price and the stock market, one gotta give. So the way I see it, if the subprime debt crisis and the high oil price persists, the stock market, which is the barometer of economic health, will be increasingly vulnerable. But, good for us, even if it falls it'll probably be a soft landing like a domino tipped with short one-ended track. But - a big but - on the other hand, it is not entirely impossible that the domino could be a long, multi-ended tracks, which once tipped could have immense impact on the economy. I have to say that I'm not about to press the panic button, but still, it won't hurt to be prepared for the worst. So what I'm trying to impress upon you guys here is that you should at least be prepared for the worst, mentally and emotionally - there is nothing to lose. Though it's easy to exagerrate the effects of economic decline, the worst that can happen is that there will be more business and personal bankrupcies, more lost jobs, less or even negative economic growth, which translates as lesser overall wealth and declining values of your assets (properties) and earnings. Can you live with that? Of course you can. At least you guys in the developed world are still lucky because you probably won't go hungry, unlike the rest of the world.

[Kirkland Laing]

Ooogh. We not only have a stock bubble but also a debt bubble, part of which already burst. National (public) debt is always manageable but the level of those personal household debt is somewhat alarming, especially the increase in percentage relative to the disposable income. But let me tell you that debts themselves are not necessarily bad things as long as they are manageable. You can keep on borrowing and borrowing without problem as long as you have the capacity to pay the due amounts. But the problem is that any imbalance in the economy may affect that capacity or capability to pay. Now, we are faced with at least two of them, the subprime crisis and the high oil price. IMO, among the three of them, the debt crisis, high oil price and the stock market, one gotta give. So the way I see it, if the subprime debt crisis and the high oil price persists, the stock market, which is the barometer of economic health, will be increasingly vulnerable. But, good for us, even if it falls it'll probably be a soft landing like a domino tipped with short one-ended track. But - a big but - on the other hand, it is not entirely impossible that the domino could be a long, multi-ended tracks, which once tipped could have immense impact on the economy. I have to say that I'm not about to press the panic button, but still, it won't hurt to be prepared for the worst. So what I'm trying to impress upon you guys here is that you should at least be prepared for the worst, mentally and emotionally - there is nothing to lose. Though it's easy to exagerrate the effects of economic decline, the worst that can happen is that there will be more business and personal bankrupcies, more lost jobs, less or even negative economic growth, which translates as lesser overall wealth and declining values of your assets (properties) and earnings. Can you live with that? Of course you can. At least you guys in the developed world are still lucky because you probably won't go hungry, unlike the rest of the world.

What's going to happen in the future is that economys are going to keep growing, but the wealth generated by those economys is going to increasingly end up at the very top end of the earnings scale. People who have to work for a living are fucked as labour rates are increasingly arbitraged downwards by the billions of new workers in the global economy.


In America the median wage has stood still since Reagan took office and this generation won't do as well economically as their parents. For the next generation or two in industrialised countries, things will be increasingly tricky for their populations. But in the long run -- by which I mean the long run in which we're all dead -- economic circumstances will improve immeasurably.

[brucelee]

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

So you know some concepts in financial management pacfan. What I'm more concerned is the increasing price of fuel. It's very alarming.

[Douglas]

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

So you know some concepts in financial management pacfan. What I'm more concerned is the increasing price of fuel. It's very alarming.

Eventually the gas will start going down. Just pray and have faith, and do as little driving as you can.

[Salty]

Eventually the gas will start going down. Just pray and have faith, and do as little driving as you can.

I highly doubt that mate, as right now we would be getting pretty close to peak oil. But I'm glad my dad is not on this site, he would be writing a 20 page essay on this as we speak. But basically many western economies along with the world will probably be screwed over by this. With that level of debt and people living beyond there means people's standard of living is going to fall eventually and take with them not only the US but dent the world's economy. Although Aus will be fine with our plentiful supply of natural resources

[Kirkland Laing]

Fed auctions $75 billion to banks to ease credit stresses
Tuesday May 6, 1:27 pm ET
By Jeannine Aversa, AP Economics Writer
Fed auctions $75 billion to banks to ease credit woes, total is $435 billion since December WASHINGTON (AP) -- Battling to relieve stressed credit markets, the Federal Reserve said Tuesday it has provided a total of $435 billion in short-term loans to squeezed banks since December to help them overcome credit problems. The central bank announced the results of its most recent auction -- $75 billion in short-term loans -- the 11th such auction since the program started in December.
It's part of an ongoing effort by the Fed to help ease the credit crunch, which erupted last August, intensified in December and January and took another turn for the worst in March.



Fed auctions $75 billion to banks to ease credit stresses: Financial News - Yahoo! Finance


While the Fed keeps printing money on this scale to deal with the results of Bush's disastrous presidency, oil prices are only going to remain high. If you think gas is expensive now, just wait till the summer.