Governments are continually looking for sources of more funds to flow into financial markets, to prop up securities prices. That is one of the main things that drive privatization.
So there is something "rigged" even when it comes to long-term investment in the stock market. A bomb, H bomb, Minuteman / The names get more attractive / The decisions are made by NATO / The press call it British opinion -- The Three Johns
The point is that, with an increasingly large share of the national income going to the very wealthy, you are going to have more and more funds for which investment opportunities have to be found. That alone will drive up stock prices. A bomb, H bomb, Minuteman / The names get more attractive / The decisions are made by NATO / The press call it British opinion -- The Three Johns
http://www.bullandbearwise.com/SPEarningsChart.asp
I agree that much of the pressure is money flowing into the market that used to go elsewhere, but a big reason for that is that safer investments don't return squat compared to inflation. The Japanese and Greenspan have made borrowing way too cheap.
The Japanese and Greenspan have made borrowing way too cheap.
Japan, imo, is a one-off due to their unusual situation in demographics. thus a stagflation for years,,,,,and a prelude for the world looking out 5--20 years. ie, wonderful situations don't last forever.
As for Greenspan and Co, I just dont agree. Our rates have been dropping since about 1997. I used to get 7% in a money market then and it got as low as 1%. That forced a lot of folks into other riskier investments if they had to have the yield. We just spent it on a house so that took care of our cash "problem".
We didn't need to go so low on rates but the liquidity was made available first for y2k and then after 9/11 to make sure the economy didn't puke. Still, it has had some side effects of puffing real estate and other markets IMO.
The huge deflation in labor made it possible to keep these rates low without inflation. But it was a bad bargain for many in the labor pool while making people like me richer.
The huge deflation in labor made it possible to keep these rates low without inflation
actually I think the boom would be far stonger in the euity markets without the terror issues in the MidEast. There is a large risk premium on financial assets, imho, due to this factor. these factors will make markets grow steadily since the risk premium is already there. but if things ease in the mideast (and I doubt it), but if they do. watch out, these equity markets will explode.
as to Japan, I think it's a prelude to the future. the next 5 years demographically will be OK for them, so their markets will be OK. but then it comes back, and begins to hit the western world as well. I don't know if we have answers for this one yet. (I know this is not accepted economic thinking, btw.)
I don't think Greenspan did a poor job either btw. I think he and the Japanese both did what they had to for the most part. The drop to 1% seemed a bit overdone though. But if I was that smart I'd be rich.
btw, I find your comments and insight very valuable. you're obviously a very bright guy, and I think come at things from a different experience base than mine. one learns a lot from bright people with a different perspecitve,,,,that was a valuable lesson for me that I learned early in life. Whew, at least I learned something early in life.
http://www.wilshire.com/Indexes/Broad/Wilshire5000/
their site shows about 14.45 Trillion as of today.
I think the main reasons the markets have done so well the last 15 years are
One major reason for why Wal-Mart has smashed companies like Sears and K-Mart into dust, aside from the utter incompetence of companies like K-Mart and the fact that the game has long passed Sears by, has been its strong integration of technologies to measure and control its inventory. Wal-Mart has enjoyed, I believe, stunning productivity growth relative to its major competitors. CostCo -- WallieWorld's big competitor in the Buy In Bulk market -- has, as well, if I'm not mistaken.
So there are very good reasons for the markets' solid gains. Some of it was the result of too much hype, of course, back in the 1990s. And, no doubt, that will happen again, because that's simply a fact of life in the stock market. But, on the whole, I think the trend makes sense. The primary role of Iraq has been to spook investors, who really and truly hate that sort of uncertainty, especially in a region as dangerous -- and, for now, as economically important -- as the Middle East. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
