04-09-2018, 05:51 AM
(04-07-2018, 02:44 PM)Cynic Hero Wrote: The problem with your (John Xenakis) financial predictions isn't that the predictions was wrong, in fact it was correct. It is the fact that the predicted Financial Crash has already occurred. You Predicted a Crash Caused by Speculative lending and other economic malpractice in 2003/2004 and the predicted crash Did in fact Occur, in 2008. The Problem with a Crash "worse than 1929" at this points is that Nobody is Investing in the stock Market that much in 2018. There is No Mass speculation like in 1929, because nobody other than established investors trusts the stock market with their money. The Current stock market as some have pointed out, is largely decoupled from the "real" economy at this point. If The stock Market reflected real numbers it would still be at 2010 levels.
I have an explanation. It is the level of saving that allows people to snap up bargains in a falling market and stop the hemorrhaging of the valuation of the stock market. Savings are cash available for anything from paying off debt to consumer spending (on luxuries) to buying up assets, or starting small businesses when those are reasonable. Near-zero interest rates made high price-earnings ratios tolerable. Dividend income bigger than bank interest? You would almost be a fool not to invest if you got some windfall. But you need such a windfall or already have the assets.
The super-rich generally do not cut participate in cut-throat competition to reduce their own rates of return. High stock market prices depend upon people not so rich investing in equities because investment in equities is at times more attractive than is putting money into a savings account or buying life insurance. Figure that the young adults who have middle-class incomes are typically deeply in debt for student loans, paying exorbitant rent to live where the jobs that pay anything adequate are, and are deep in debt for the needs of commuting. They are socking money away, all right -- to landlords and creditors.
Should there be another market crash, there might not be people snapping up the bargains in a collapsing market and putting a stop to the collapse. It is the not-so-smart money that props up a stock market as things get shaky. The financier Bernard Baruch once said that once a cabbie asked him how to invest in the stock market (in 1929) he chose to bail on the securities market and go to cash while he could do so. Incomes were not keeping pace with paper profits, and paper profits are the first to disappear.
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.
