The European Tribune is a forum for thoughtful dialogue of European and international issues. You are invited to post comments and your own articles.
Please REGISTER to post.
That can only hold if the stock market represents a small fraction of GDP. I doubt everyone's pension could grow at 7-8% There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
Agent Smith: I'd like to share a revelation that I've had during my time here. It came to me when I tried to classify your species and I realized that you're not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Human beings are a disease, a cancer of this planet. You're a plague and we are the cure.
Compounding interest is usually unsustainable, which is why a prudent lender should insist that interest be paid as it accrues.
This, incidentally, breaks money neutrality. Hard.
- Jake Friends come and go. Enemies accumulate.
So investment theory is bollocks. Oh, well... There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
A not insignificant fraction of all capital assets is not in the stock market, but in (generally) far less risky investments like bank accounts, corporate and sovereign bonds, or real estate. As they (usually and in the long run) have a lower return, a higher return on stocks might very well be sustainable even in the long run, as long as economic growth runs at a reasonable clip.
Also, if you buy the existing asset on credit, the existing asset acts as collateral. If you borrow to build, there's no collateral until the thing is built.
Therefore, the banking sector has a bias against lending for capital formation and for lending towards asset bubbles. There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
True. Which is why people talk about risk-adjusted returns, and why choosing the highest risk-adjusted return is what you should, given that the absolute level of risk is something you can stomach. Peak oil is not an energy crisis. It is a liquid fuel crisis.
(Also - project finance bankers do not get million-dollar bonuses) Wind power
Ball-park figures is what I am looking for really. Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
The extent to which it's less risky is basically a function of credit seniority and recovery/collateral values. There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
Interestingly, in English there's "equity" and "debt" = "fixed income", but in Spanish there's no word for "equity". Rather there's "fixed income" (renta fija) and "variable income" (renta variable).
What makes equity more risky than debt is not the seniority but the discretionality of dividend payments. There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
But of course, there are differnt kinds of seniority when it comes to bonds as well, and the more junior bonds pay higher interest. That's completely reasonable and not mysterious at all. Peak oil is not an energy crisis. It is a liquid fuel crisis.
by ATinNM - Jan 26 2 comments
by Frank Schnittger - Jan 24 26 comments
by Oui - Jan 26 2 comments
by Oui - Jan 20 56 comments
by Oui - Jan 23 32 comments
by gmoke - Jan 24
by Frank Schnittger - Jan 14 58 comments
by gmoke - Jan 22 2 comments
by Oui - Jan 27
by Oui - Jan 262 comments
by ATinNM - Jan 262 comments
by Frank Schnittger - Jan 2426 comments
by Oui - Jan 2332 comments
by gmoke - Jan 222 comments
by Oui - Jan 2110 comments
by Oui - Jan 2056 comments
by Oui - Jan 2013 comments
by Oui - Jan 172 comments
by Oui - Jan 1610 comments
by gmoke - Jan 16
by IdiotSavant - Jan 1521 comments
by Oui - Jan 1453 comments
by Frank Schnittger - Jan 1458 comments
by Oui - Jan 1390 comments
by Oui - Jan 1177 comments
by Oui - Jan 1061 comments
by Frank Schnittger - Jan 877 comments