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

[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]

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.

The subprime mess is inadvertantly propping the stocl market up as a great deal of the money the Fed is printing ends up being invested in stocks. Also the current inflationary monetary policy means that future inflation is factored into current stock prices, propping them up too.

Falling incomes wasn't in the brochure when the benefits of deregulating world markets was being sold to western populations. It's unlikely they'll view the effects of globalisation favourably in the future. Maybe if you're worried about the stock market it might be a good time to hedge your investments by investing in pitchfork futures.

[El Kabong]

Mr. Doom and Gloom strikes again....we haven't even really had a TRUE recession.....although it might be better for everyone in the long run if we had one as it corrects the market in small doses as opposed to an economic doomsday a la the Great Depression.

If the US economy tanks then everyone else is going to follow....same thing happened a couple years ago with the Asian markets. Everyone was like "Oh my God the World is going to end China and Japan are having a hard time!!!" well everyone is still here.....and the greatest thing.....Europe is next....have fun yall

[Kirkland Laing]

The US economy will continue to soar upward barring the occasional hiccup. The problem is that the beneficiaries of that growth are a small number of people and the vast majority of Americans are treading water at best and will be worse off in the long run. People entering the job market today will not do as well economically as their parents.

[luvfightgame]

Mr. Doom and Gloom strikes again....we haven't even really had a TRUE recession.....although it might be better for everyone in the long run if we had one as it corrects the market in small doses as opposed to an economic doomsday a la the Great Depression.

If the US economy tanks then everyone else is going to follow....same thing happened a couple years ago with the Asian markets. Everyone was like "Oh my God the World is going to end China and Japan are having a hard time!!!" well everyone is still here.....and the greatest thing.....Europe is next....have fun yall

Are you basing our "true" recession on statistics? You might enjoy this article...

Behind the falsification of US economic data

[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.