02-28-2020, 11:13 AM
We are on the brink of having the worst week for the securities markets since -- stay tuned for the final results this afternoon.
In view of abysmal savings rates (because the people who do the real work get a smaller share of the pay) there won't be fresh cash for people to put into the markets. In effect, as the market tanks (and it seems to be doing so) there will be no new buyers. An inverted yield curve means that borrowing short term, as is the norm for companies on life support and over-leveraged entities will go belly-up, as funds dry up discharging large numbers of workers -- even those who thought that they had the security of being overworked and underpaid.
As for people losing money in their 401K accounts -- the account is a valuation and not really savings. They are designed to commit people to buy and hold... I would have sold out just about any stock portfolio at the latest a couple months ago, watched with a little regret as the DJIA went to near 30,000 but been glad to have cash not in the market now.
The good side is that we will get through an economic downturn none the worse for wear. America came out of the Great Depression in such a way that things were better for Americans in 1939 than in 1929. We will insist upon sanity and humane values in politics again. We will again recognize the need for dignity in toil and start recognizing that family and community, even if demonstrably flawed, will mean more than will ostentatious indulgence. I expect to see some exorbitant rents (and of course real estate values) to crash.
We will insist upon trustworthy leaders in government and commerce. We will be seeing long-term again, if only because the short-term is but the means of making a better world. Small business that depends more upon sweat equity than upon passive capital will flourish again. People will again treat the word debt as an obscenity, a consequence not so much of convincing others that one can better invest money than they can but instead of gross improvidence.
Government? Government will be investing in infrastructure and thus creating large numbers of jobs in big construction projects... but on a pay-as-you-go basis.
In view of abysmal savings rates (because the people who do the real work get a smaller share of the pay) there won't be fresh cash for people to put into the markets. In effect, as the market tanks (and it seems to be doing so) there will be no new buyers. An inverted yield curve means that borrowing short term, as is the norm for companies on life support and over-leveraged entities will go belly-up, as funds dry up discharging large numbers of workers -- even those who thought that they had the security of being overworked and underpaid.
As for people losing money in their 401K accounts -- the account is a valuation and not really savings. They are designed to commit people to buy and hold... I would have sold out just about any stock portfolio at the latest a couple months ago, watched with a little regret as the DJIA went to near 30,000 but been glad to have cash not in the market now.
The good side is that we will get through an economic downturn none the worse for wear. America came out of the Great Depression in such a way that things were better for Americans in 1939 than in 1929. We will insist upon sanity and humane values in politics again. We will again recognize the need for dignity in toil and start recognizing that family and community, even if demonstrably flawed, will mean more than will ostentatious indulgence. I expect to see some exorbitant rents (and of course real estate values) to crash.
We will insist upon trustworthy leaders in government and commerce. We will be seeing long-term again, if only because the short-term is but the means of making a better world. Small business that depends more upon sweat equity than upon passive capital will flourish again. People will again treat the word debt as an obscenity, a consequence not so much of convincing others that one can better invest money than they can but instead of gross improvidence.
Government? Government will be investing in infrastructure and thus creating large numbers of jobs in big construction projects... but on a pay-as-you-go basis.
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.