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

[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.

[El Kabong]

Kirkland....always the happy go lucky, sunshine on my shoulders, today is a wonderful day kind of guy.


A better way to look at things is this way: "Now or in the recent future is a great time to invest"

[Kirkland Laing]

Kirkland....always the happy go lucky, sunshine on my shoulders, today is a wonderful day kind of guy.


A better way to look at things is this way: "Now or in the recent future is a great time to invest"

Here are a couple of articles for you to read. They're written by partner in one of the world's biggest investment firms. This guy is one of the high priests of globalisation, and these articles caused controversy in the financial community when they were released. They're long and have no pictures but for somebody just setting out on the earning curve they're very worth reading. Try taking in some actual facts instead of nonsense, you'll benefit in the long run :

Morgan Stanley - Global Economic Forum


Morgan Stanley - Global Economic Forum

[pacfan]

Kirkland....always the happy go lucky, sunshine on my shoulders, today is a wonderful day kind of guy.


A better way to look at things is this way: "Now or in the recent future is a great time to invest"

Here are a couple of articles for you to read. They're written by partner in one of the world's biggest investment firms. This guy is one of the high priests of globalisation, and these articles caused controversy in the financial community when they were released. They're long and have no pictures but for somebody just setting out on the earning curve they're very worth reading. Try taking in some actual facts instead of nonsense, you'll benefit in the long run :

Morgan Stanley - Global Economic Forum


Morgan Stanley - Global Economic Forum

I've just breezed through these articles which were written on early 2006, several months after the start of oil price increases but little over a year before the eruption of the subrime loan crisis. It pretty well illustrates why the theorists' views sometimes fail against what actually happens, or collides with that of what businesses (the practical ones) actually do.

The part about household debts clearly illustrates my point. The author strongly implied that the household debt situation was healthier than what the data were indicating then (2006). In his analysis, he even included the mortgage credits, which is where the subprime loans comes in, and everyone by now knows what actually happened. Let me quote the crucial part of his analysis:


<EM>For investors, this scrutiny of the data has important implications. Careful analysis of consumer debt service and financial obligations ratios reveals a healthier American consumer than commonly thought. That throws some cold water on the pessimists’ slowdown story, because presumed household balance-sheet fragility is the lynchpin for that scenario. If I’m right about the prospects for improving job growth and wage gains, moreover, my colleague David Greenlaw and I think the housing bust scenario that many investors fear is far fetched. In our view, it would take soaring interest rates or declining employment to produce a bust (see “Housing Wealth and Consumer Spending” and “Home Sweet Home,” Global Economic Forum,

[pacfan]

Wait a minute folks, I've put much more than what came out above, the reply posting is having some bugs here so I'll continue later. Probably it has something to do with the copy and pasting.

[pacfan]

Let me continue where I left off.

But at least, the author had some forsight to say that,

As always, there are risks to the story. The American consumer isn’t invincible; for example, even moderate levels of debt and debt service can turn into vulnerabilities in the face of shocks such as supply-induced energy price hikes. Contrariwise, however, if energy prices stabilize and job gains improve moderately, overall growth may be stronger, inflation risks higher, and monetary policy may tighten further than is currently in the price.

Those vulnerabilities are exactly what I've been trying to point out here. High oil prices and subprime mortgage crisis are putting some (nobody knows exactly how much) pressure on the stock market, making it vulnerable to fall - the whole idea behind this thread. So now, you guys know why I'm a bit (to put it mildly) concerned about the health of the stock market.


About the falling real income of rich countries, geez, that's common sense! It goes like this: when a country become rich, because of high income and strong demand, the overall cost tends to go up. Businesses, which continuously aims for efficiency, naturally don't like high costs. So when the costs go up, they tend to shift to places where the costs (relative to production) are lower thereby shifting some of the incomes there.

Where the original idealists of globalization probably failed is that they failed to see the magnitude of that shift. They thought that the shift would probably be limited to low-tech, purely labor related areas. But that was clearly not the case, they shifted almost everything.

[Kirkland Laing]

Kirkland....always the happy go lucky, sunshine on my shoulders, today is a wonderful day kind of guy.


A better way to look at things is this way: "Now or in the recent future is a great time to invest"

Here are a couple of articles for you to read. They're written by partner in one of the world's biggest investment firms. This guy is one of the high priests of globalisation, and these articles caused controversy in the financial community when they were released. They're long and have no pictures but for somebody just setting out on the earning curve they're very worth reading. Try taking in some actual facts instead of nonsense, you'll benefit in the long run :

Morgan Stanley - Global Economic Forum


Morgan Stanley - Global Economic Forum

I've just breezed through these articles which were written on early 2006, several months after the start of oil price increases but little over a year before the eruption of the subrime loan crisis. It pretty well illustrates why the theorists' views sometimes fail against what actually happens, or collides with that of what businesses (the practical ones) actually do.

The part about household debts clearly illustrates my point. The author strongly implied that the household debt situation was healthier than what the data were indicating then (2006). In his analysis, he even included the mortgage credits, which is where the subprime loans comes in, and everyone by now knows what actually happened. Let me quote the crucial part of his analysis:


<FONT face="Times New Roman" size=3><EM>For investors, this scrutiny of the data has important implications. Careful analysis of consumer debt service and financial obligations ratios reveals a healthier American consumer than commonly thought. That throws some cold water on the pessimists’ slowdown story, because presumed household balance-sheet fragility is the lynchpin for that scenario. If I’m right about the prospects for improving job growth and wage gains, moreover, my colleague David Greenlaw and I think the housing bust scenario that many investors fear is far fetched. In our view, it would take soaring interest rates or declining employment to produce a bust (see “Housing Wealth and Consumer Spending” and “Home Sweet Home,” Global Economic Forum,

Nobody working on Wall Street will ever state publicly that they think any capital market in anything is going to lose value at any point in the future. Everything is always a fantastic investment and only ever going to improve.

When one of these characters whose job it is to boost up the products his company buys and sells tells you that there's trouble ahead it's worth paying attention to.

[pacfan]

Nobody working on Wall Street will ever state publicly that they think any capital market in anything is going to lose value at any point in the future. Everything is always a fantastic investment and only ever going to improve.

When one of these characters whose job it is to boost up the products his company buys and sells tells you that there's trouble ahead it's worth paying attention to.

Yup, even the news that comes from Wall Street usually paints the rosier side of the picture. They've got business to protect - which runs into trillions of dollars.