(05-22-2016, 02:26 PM)John J. Xenakis Wrote:(05-06-2016, 12:32 PM)Odin Wrote: > If there is a crash with a 10,000 point Dow drop I think it will
> be a tech crash. There seems to be a huge bubble involving
> everyone and their mom trying to get into marketing on social
> media sites and the number companies centered around managing
> other companies social media presence seem to be growing at an
> exponential rate and reminds me a lot of the delusion that took
> hold in the late 90s.
(05-21-2016, 09:09 AM)Mikebert Wrote: > Likely. The last stock crash in 2000 involved the same. Although
> the 2007-2009 bear was bigger than the 2000-2 one, this crash is
> better characterized as a real estate crash like 1837, 1857, 1873,
> and 1893. Both 2000 and the new crash would like be stock centric
> like 1907, 1929 and 1987.
A stock market crash like 1929? As I recall, when we discussed this
ten years ago, you ridiculed the idea. Good to see you're coming
around. But 1987 really wasn't much of a crash.
Do Keynesian economics well, and you prove the Austrian school wrong. Do Keynesian economics badly, and you will get the results that prove the Austrian school right. Sponsor a corrupt speculative boom (the "Ownership Economy" of George Worthless Bush), and get an economic meltdown. The Double-Zero Decade was practically a replay of the 1920s, and Sinclair Lewis' Babbitt caught the mood of both decades very well as it caught the mood of no intervening decades from the 1930s to the 1990s.
I could see the 2007-2009 crash coming when I read a Business Week article exposing the ratings scandal on packaged mortgages. It's possible to hedge risks on large volumes of well-performing risks of fault (or as in insurance, on large-scale catastrophes), but the packaging of fecal loans has no such value. Those loans should have never been made.
Sure, it was real estate, but that took much else down with it as people were suddenly disabused of the wealth effect. With the real estate crash also came crashes in the the financial sector that had supported the speculative boom, the construction business that had built the housing, building materials, household appliances, and furniture. If you are talking about General Motors -- it had more exposure to a bad economy through its lending arm (which also financed housing) as did its auto business.
A speculative bubble devours capital, pricing it out of reach of alternatives to the object of the bubble. America over-invested in real estate and under-invested in plant and equipment, agribusiness, and public-sector improvements not related to housing. When the one high-cost expenditure of the time (Boston's Big Dig) came to an end, then along came the end of the real estate boom. The real estate boom ensured under-investment in energy development and investments in job-creating plant and equipment. So when the housing market goes kaput, there is nothing left. The economy implodes.
It's the bubble that does the harm; the financial panic at its end is simply the recognition of the speciousness of the alleged wealth of the speculative boom.
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.