03-17-2020, 07:42 PM
(03-17-2020, 06:06 PM)Bob Butler 54 Wrote:(03-17-2020, 02:42 PM)pbrower2a Wrote: The eleven-year bull market was going to end, and market speculation that got the DJIA to nearly 30K was the last act. The market was already sliding as news of COVID-19 started to appear. AIDS did not have that effect.
Any bull market fosters bad habits such as short-term borrowing for long-term projects, under-reliance upon bonds for financing, inadequate savings, and over-payment to executives while workers get the shaft. Were it not for COVID-19, then something else would have triggered a downturn.
Possibly not this soon. The Republican habit of using voodoo economics, of using debt to stimulate in good times and bad, usually lasts well past the first term in the White House before the economy gets ugly. The virus seems to have caused the crash much sooner.
Well, I am reminded that Dubya did a lot of blunders that didn't catch up with his administration until after he was re-elected. Still, the run-up in stock prices until February looks like behavior in 1929 before the Crash. The 2008 crash had speculation in real estate as its core while stock prices had not gone "crazy high". Adjusted for inflation, securities prices had not reached those of before the "Tech crash", and in fact had barely reached the nominal prices of 2000.
The virus can expose fundamental weaknesses in our system. Most obvious is Donald Trump -- but also, under-investment in manufacturing, severe inequality of income, an inadequate level of personal saving, regional distress, excessive leverage in corporate finance, and excessive concentration of economic activity. Severe inequality of income and inadequate savings relate because blue-collar and low-level white-collar workers save if paid well.
We have our work cut out, and the usual Trump solution of making those already filthy-rich even more filthy-rich has gone as far as it can go. It could work with Reagan, but forty years later it is no longer a viable solution. The Skowronek cycle strikes again.
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.