Tax 'Em High | 74 comments (74 topical, editorial, 0 hidden)

Re: Tax 'Em High (none / 0)

Veblen (contemporarily with George) has a similar description of the business cycle, but doesn't make it dependent on land values. Bubbles are credit bubbles and the business cycle is a leverage/deleverage cycle.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Carrie (migeru at eurotrib dot com) on Fri Feb 27th, 2009 at 09:13:13 AM EST
[ Parent ]

Re: Tax 'Em High (none / 0)

Migeru:

Bubbles are credit bubbles and the business cycle is a leverage/deleverage cycle.

As above, I think the Dot Com boom might be a unique exception. ie Equity is different

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Feb 27th, 2009 at 09:18:51 AM EST
[ Parent ]

Re: Tax 'Em High (none / 0)

Do you have data on leverage ratios in the stock market during the .com bubble?

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Carrie (migeru at eurotrib dot com) on Fri Feb 27th, 2009 at 09:19:33 AM EST
[ Parent ]

Re: Tax 'Em High (4.00 / 2)

It just happens that Sudden Debt has this data in the latest post.

suddendebt.blogspot.com

Pierre

by Pierre on Fri Feb 27th, 2009 at 09:56:01 AM EST
[ Parent ]

Re: Tax 'Em High (none / 0)

That's spooky.

I thought there were restrictions on buying stock on margin?

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Feb 27th, 2009 at 10:03:19 AM EST
[ Parent ]

Re: Tax 'Em High (none / 0)

That chart is not of leverage ratios, but of absolute amount of margin debt.

One would have to divide that value into the market capitalization to find margin ratios.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Carrie (migeru at eurotrib dot com) on Fri Feb 27th, 2009 at 10:05:31 AM EST
[ Parent ]

Re: Tax 'Em High (none / 1)

A nice leverage bubble peaking in early 2000, when the .com bubble peaked.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Carrie (migeru at eurotrib dot com) on Fri Feb 27th, 2009 at 10:03:58 AM EST
[ Parent ]

Re: Tax 'Em High (none / 0)

Yup.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Feb 27th, 2009 at 10:06:45 AM EST
[ Parent ]

Uniqueness of .com (none / 0)

Wikipedia: Dot-com bubble

Historically, the dot-com boom can be seen as similar to a number of other technology-inspired booms of the past including railroads in the 1840s, automobiles and radio in the 1920s, transistor electronics in the 1950s, computer time-sharing in the 1960s, and home computers and biotechnology in the early 1980s in accordance with the Japanese economic meltdown.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Carrie (migeru at eurotrib dot com) on Fri Feb 27th, 2009 at 09:21:51 AM EST
[ Parent ]

Re: Uniqueness of .com (none / 0)

Plus canal mania before the railways...

These were all equity bubbles though eg daft canal schemes and railway schemes form nowhere to nowhere.

No leverage there, I think, and therefore no recession as a result of the ending of the bubble?

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Feb 27th, 2009 at 09:48:09 AM EST
[ Parent ]

Tax 'Em High | 74 comments (74 topical, 0 editorial, 0 hidden)

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