Posts Tagged ‘nasdaq bubble’

DID THE CONSUMER EVER RECOVER FROM THE NASDAQ BUST?

Pragcap explains why the reflation fix cannot work in the long run and is nothing more than a kick-the-can solution to our economic woes (high unemployment, losses of houses, lack of money for retirement, too much debt, record numbers of people on food stamps, etc). – Ilene 

DID THE CONSUMER EVER RECOVER FROM THE NASDAQ BUST?

Courtesy of The Pragmatic Capitalist 

There are more than a handful of notable economists and investors who believe that the current credit crisis is really just an extension of a much larger bust that was set in motion more than a decade ago.  In essence, the 90′s created a mentality that everything was different.  American net worth exploded and the world appeared to be permanently altered for the better.  Specifically, assets to liabilities soared:

Then the Nasdaq bubble burst and the paper wealth went up in flames.  Alan Greenspan’s approach was simple.  If we could simply reflate the consumer balance sheet through asset reflation everything would be resolved.  So, the consumer was encouraged to continue taking on excess debt without the underlying income to sustain this debt.  In essence, Americans were trying to sustain the lifestyle that they had become accustomed to in the 90′s and the Federal Reserve and Treasury did everything in their power to maintain that lifestyle.

As the housing bubble grew Americans once again felt the invincibility of paper wealth.  Of course, just like the Nasdaq bubble none of this was actually supported by the underlying fundamentals.  And as the housing bubble wealth effect dissipated in 2005 so did the ability of the consumer to sustain its 25 year spending spree:

The surge in household wealth due to the double bubbles proved to be nothing more than paper gains that were not supported by the underlying fundamentals.  Assets were higher than they otherwise should have been.  It’s clear, in retrospect, that Americans never really recovered from the excesses of the 90′s.  The government’s response to this bubble era has done little to help create the foundation for a sustained recovery.

This past weekend, Brian Sack admitted that the Fed’s recovery plan is largely dependent on propping up asset prices that would “otherwise be lower.”  The U.S. government hopes they can reflate assets and sustain a supposedly capitalist market without having any losers. They just can’t come to grips with the fact that there are decades of…
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Krugman, 2002

Krugman, 2002: "Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

Tom, at Applying the Lessons of Free Market Economics: 

I check in with Stefan Karlsson’s blog once in a while. He is a young economist working in Sweden. Anyway, he put me onto this amazing Krugman column from 2002.
 
Has anybody ever made Keynesian thinking more transparent? And does anybody still think Krugman’s current prescriptions will be effective? More importantly, perhaps, does anybody still think the bubble was inadvertent? In How the Government Caused the Crisis I argued that the housing bubble was a deliberate Fed creation to achieve a particular political goal. To my mind, this Krugman column adds to the evidence. If Krugman could think like this, so could Bush Administration operatives — and we know that Greenspan was never anything but a tool in their hands.

Krugman and McCulley, Déjà Vu All Over Again

Courtesy of Mish

Paul Krugman says Stay the Course.

The debate over economic policy has taken a predictable yet ominous turn: the crisis seems to be easing, and a chorus of critics is already demanding that the Federal Reserve and the Obama administration abandon their rescue efforts. For those who know their history, it’s déjà vu all over again – literally.

In previous liquidity-trap episodes, policy makers gave in to these pressures far too soon, plunging the economy back into crisis. And if the critics have their way, we’ll do the same thing this time.

A few months ago the U.S. economy was in danger of falling into depression. Aggressive monetary policy and deficit spending have, for the time being, averted that danger. And suddenly critics are demanding that we call the whole thing off, and revert to business as usual.

Those demands should be ignored. It’s much too soon to give up on policies that have, at most, pulled us a few inches back from the edge of the abyss.

Flashback August 2, 2002

With thanks to "CS" for sending me the link, inquiring minds are investigating what Krugman was thinking on August 2, 2002.

Please consider Dubya’s Double Dip?

A few months ago the vast majority of business economists mocked concerns about a "double dip," a second leg to the downturn. But there were a few dogged iconoclasts out


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Zero Hedge

Experts Fear 'Suicide Wave' As The Social Fabric Of America Becomes "Unstitched"

Courtesy of ZeroHedge View original post here.

Millions of Americans have just lost their jobs in the last several weeks due to the COVID-19 outbreak shutting down large swaths of the US economy. Households are coming under severe financial stress, with no savings, insurmountable debts, and job loss. Many are waiting for President Trump’s stimulus check to arrive in the mail, some have skipped out on their rent or ...



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ValueWalk

Pandemic-related deterioration may cause a drop in PMI

By Gorilla Trades. Originally published at ValueWalk.

In an intra Day note to investors, Gorilla Trades strategist Ken Berman, while commenting on the pandemic-related deterioration, said:

The major indices are all trading lower at midday following another choppy and bearish morning session on Wall Street. The continued exponential growth in the number of U.S. COVID-19 cases and the weak economic data have been weighing on investor sentiment, but stocks are holding up relatively well following yesterday’s bounce. The government jobs report was at the center of attention this morning following yesterday’s record number of new jobl...



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Phil's Favorites

Unmasking the Truth on Masks to Protect Against Coronavirus: Fire the Surgeon General

Courtesy of Pam Martens

By Pam Martens and Russ Martens: April 3, 2020 ~

On March 23 we wrote this:For want of a mask the largest economy in the world has been gutted, with Goldman Sachs now projecting that U.S. GDP could contract by as much as 24 percent in the second quarter.” Now, in the past two weeks, 10 million Americans have filed claims for unemployment. Let that sink in, 10 million of our fellow citizens have l...



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Kimble Charting Solutions

Depression Coming or Is the Bottom Already In? Joe Friday Says Your Answer Lies Here!

Courtesy of Chris Kimble

Are we headed towards a Depression or is the worst already behind us? In today’s world, comparisons to the great depression are easy to find.

Are the Depression concerns well founded or are the declines of late already pricing in a bottom?

In my humble opinion, this chart and the upcoming price action of this index will go miles and miles towards telling us if we are headed towards very tough times or if the huge declines of late are actually in a bottoming process.

This chart looks at the Thomson Reuters Equal Weighted Commodity Index on a monthly basis over the past 54 years. The index has been heading south, reflecting weakness in demand for basi...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Biotech/COVID-19

Antibodies in the blood of COVID-19 survivors know how to beat coronavirus - and researchers are already testing new treatments that harness them

 

Antibodies in the blood of COVID-19 survivors know how to beat coronavirus – and researchers are already testing new treatments that harness them

A person who has recovered from COVID-19 donates plasma in Shandong, China. STR/AFP via Getty Images

Ann Sheehy, College of the Holy Cross

Amid the chaos of an epidemic, those who survive a disease like COVID-19 carry within their bodies the secrets of an effective immune response. Virologists like me...



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The Technical Traders

Founder of TradersWorld Magazine Issued Special Report for Free

Courtesy of Technical Traders

Larry Jacobs owner and editor of TradersWorld magazine published a free special report with his top article and market forecast to his readers yesterday.

What is really exciting is that this forecast for all assets has played out exactly as expected from the stock market crash within his time window to the gold rally, and sharp sell-off. These forecasts have just gotten started the recent moves were only the first part of his price forecasts.

There is only one article in this special supplement, click on the image or link below to download and read it today!

...

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Chart School

Big moving Averages and macro investment decisions

Courtesy of Read the Ticker

When price is falling every one wonders where demand will come in.


RTT black screen Tv videos study the simplest measure of price (simple moving average). What has happen before guides us now. 














Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, ...

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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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