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freak80
2012 Sep 14, 4:06am
Of course they do! They transfer wealth from the 99.9% to the 0.1%, helping the 0.1% to create jobs, which makes us all wealthier!
bmwman91
2012 Sep 14, 4:31am
Yup, as of yesterday all of the market bears got slaughtered. Say hello to price increases in everything, especially houses. With banks getting the liabilities from their shadow inventories wiped out every month, they will probably begin doling out more poorly underwritten loans. They want nothing more than to return to the glory days of 2000-2006, and it looks like us taxpayers are paying for them to do it again.
It is completely unsustainable and we will pay dearly for this in (my guess) 5ish years. I hope everyone likes $6 gas and paying 50% more for groceries. We may even see negative interest rates on savings accounts at some point.
You may as well load up on as much debt as possible now. It will either become worthless via inflation, or you can just walk away from the obligation later. The market has spoken: spend like a drunken sailor until the entire system ceases to function. We WILL QE ourselves into oblivion, so there really is no point in trying to be financially prudent anymore, as far as I can tell.
curious2
2012 Sep 14, 4:38am
Do Asset bubbles make us wealthier?
Only in the fleeting sense that crystal meth makes people feel happier. Bernanke's ridiculous comments seemed almost as disingenuous as the credulous recitations from corporate media and house organs (NewsHour interviewed only ONE source, a WSJ writer who had written an adoring book about Uncle Ben and even sported the same beard, a laughable mini-me).
Ron Paul outpolled the President nationally, but he didn't stand a chance in the Republican party, brought to you by the unholy axis of corporate "persons" and their fundamentalist footsoldiers.
This is how empires fall.
freak80
2012 Sep 14, 4:54am
We may even see negative interest rates on savings accounts at some point.
They already are negative, in real terms. When nominal interest is lower than inflation, real rates are negative.
We WILL QE ourselves into oblivion, so there really is no point in trying to be financially prudent anymore, as far as I can tell.
Amen.
bmwman91
2012 Sep 14, 4:56am
They already are negative, in real terms. When nominal interest is lower than inflation, real rates are negative.
Indeed. I feel silly for routinely forgetting this.
They already are negative, in real terms. When nominal interest is lower than inflation, real rates are negative.
Indeed. I feel silly for routinely forgetting this.
Yup, savings accounts are effectively losing 3% in purchase power annually at this time. For wealth preservation, a multisector bond fund that has emerging market debt and high yield debt accounting for about 70% of the portfolio is a better play right now.
If you can manage to avoid participating in them, then they will make you wealthier once the herd capitulates. You can buy up whatever had bubbled, post peak, on the cheap, especially because whatever bubbled will have been mass produced, so it's stock will be super saturated AND cheaply priced
well, maybe after the housing bubble, that statement will need re-evaluated, because now we know that the government will force you to participate in the madness AND keep you from reaping the benefits of avoiding it. DOH!
bmwman91
2012 Sep 14, 5:50am
well, maybe after the housing bubble, that statement will need re-evaluated, because now we know that the government will force you to participate in the madness AND keep you from reaping the benefits of avoiding it. DOH!
Exactly. THE SPICE MUST FLOW!
freak80
2012 Sep 14, 6:13am
well, maybe after the housing bubble, that statement will need re-evaluated, because now we know that the government will force you to participate in the madness AND keep you from reaping the benefits of avoiding it. DOH!
Yep. The game is rigged. We all are forced to play this high risk game just to preserve our capital. It's yet another transfer of wealth from the 99.9% to hustlers on Wall Street.
FortWayne
2012 Sep 14, 7:26am
Fake prosperity bites society in the rear once it crashes. Last bubble put our society a good 10 to 20 years behind the curve.
freak80
2012 Sep 14, 7:31am
Indeed. I feel silly for routinely forgetting this.
Wall Street would like all of us to forget this! That's why I constantly harp about it.
uomo_senza_nome
2012 Sep 17, 9:40pm
Did you know that neoclassical macro economic models actually make an assumption that no ponzi schemes are allowed?
http://econweb.rutgers.edu/rchang/purexslides.pdf
See Slide 31.
No wonder Bernanke loves blowing asset bubbles, his models tell him it's A-OK to do so.
http://www.zerohedge.com/news/punchline-his-own-words-bernanke-advocates-blowing-asset-bubbles-antidote-depression
To the extent that home prices begin to rise, consumers will feel wealthier, they'll feel more -- more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they'll, you know, make a better return on that purchase. So house prices is one vehicle.
This is sad, because the head of the most powerful Central bank in the world is openly advocating asset bubbles.
Self-fulfilling prophecy (a social behavior observed by Robert Merton) is a primary reason for speculative bubbles (rising prices feed even more rising prices).
Sorry Patrick - I know you want interest rates to rise and house prices to fall (because higher borrowing costs reduce credit availability) but ain't gonna happen.
#bubbles