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View Diary: It's getting very bubbly, and that's not good (324 comments)

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  •  Tom, I have issues with your comment headline... (3+ / 0-)

    ...what you see is what you GET. (You're a bit confused.)

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Mon Apr 07, 2014 at 08:50:37 AM PDT

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    •  Huh? (10+ / 0-)

      I am confused.  Sorry that I was insulting.  

      When I see Krugman and Stiglitz with this point of view, I will be more convinced.  What I have read, and I no expert, is that price to earnings (profit) ratios are not very high, nothing like in 2000.

      I understand that extremely low interest rates force money into riskier investments.  That is the idea.  The Fed wants businesses to spend.  

      We'll see.  Take care.  Again, I apologize.  

      Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

      by TomP on Mon Apr 07, 2014 at 09:03:27 AM PDT

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      •  Is that really how we measure things now? (5+ / 0-)
        What I have read, and I no expert, is that price to earnings (profit) ratios are not very high, nothing like in 2000.
         Only the most extreme prices are now considered bubbles?
           We crashed in 1987 with lower P/E ratios. We crashed in 2007-2008 with the exact same P/E ratios.

          But you only want to compare to 2000, or the bubble doesn't exist?
         Doesn't that seem a little nuts and unrealistic?

        "The oppressors most powerful weapon is the mind of the oppressed." - Stephen Biko

        by gjohnsit on Mon Apr 07, 2014 at 09:37:56 AM PDT

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        •  just to be clear (3+ / 0-)
          Recommended by:
          TheLizardKing, Deep Texan, duhban

          are you arguing that 2007-8 was a stock bubble? (in addition to the housing bubble.)

          •  Yes (2+ / 0-)
            Recommended by:
            JVolvo, thanatokephaloides

            If it ends with a crash/panic then there was a bubble.

            "The oppressors most powerful weapon is the mind of the oppressed." - Stephen Biko

            by gjohnsit on Mon Apr 07, 2014 at 12:46:26 PM PDT

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            •  That doesn't really (4+ / 0-)
              Recommended by:
              Deep Texan, duhban, petral, red moon dog

              compute. A panic doesn't require there to have been a bubble and a bubble popping does not require a crash/panic.

              A bubble implies that the assets in question (stocks, housing, etc) were artificially inflated in respect to the information available at that time and, well, eventually the bubble will pop.

              But if oil were to suddenly, and without forewarning, skyrocket in price (as an easy example) the market would crash--regardless as to the existence of a bubble or not.

              •  Fair point (2+ / 0-)
                Recommended by:
                JVolvo, thanatokephaloides

                But can you point to what external shock caused the stock market to crash in 2000-2001 and 2007-2008?

                "The oppressors most powerful weapon is the mind of the oppressed." - Stephen Biko

                by gjohnsit on Mon Apr 07, 2014 at 01:37:10 PM PDT

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                •  I didn't say (3+ / 0-)
                  Recommended by:
                  duhban, gjohnsit, Deep Texan

                  a stock market bubble popping can't result in a crash, just that it isn't required that the market crash if the bubble pops and, vice versa, a crash does not require a bubble to have existed in the stock market.

                  •  Very true (2+ / 0-)
                    Recommended by:
                    Don midwest, jhancock

                    And what you say is worth pointing out.

                     However, it is also rather rare.

                    Of the crashes the stock market has seen in modern history (2007-2008, 2000-2002, 1987), none of them happened because of an external event.
                       Even when we had an energy crunch in the late 70's it didn't crash the market.

                      The only two instances I can think of that came close are the oil embargo in the early 70's and the start of WWII.
                       And since 1974 was worse for stocks than 1973, I don't think even that really applies.

                    "The oppressors most powerful weapon is the mind of the oppressed." - Stephen Biko

                    by gjohnsit on Mon Apr 07, 2014 at 07:35:21 PM PDT

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                    •  The crash in the early (1+ / 0-)
                      Recommended by:
                      Deep Texan

                      70s was 73-74, so I'm not sure why 74 being worse, when the oil crisis didn't develop until late 73, would result in not applying.

                      How about the crash in September 2011?

                      But, even more than causation not being required, it is very difficult to actually extricate external influences. In 87, for instance, the crash was immediately preceded by substantial concerns over oil and war in the mideast, as well as the collapse of the Hong Kong market. 07/08 (really 09) had a bit of a bubble in the market, but the crash was really the result of credit contracting and subprime exposure.

                      •  9/11 (0+ / 0-)

                        I had thought of that, but that was a political event, not an economic one. The stock market had been declining for 18 months before then.
                          Then 9/11 closed the market for a week, and the following week was terrible, BUT the market bounced and regained everything from the post-9/11 week, before continuing its decline the most of the following year.

                        "The oppressors most powerful weapon is the mind of the oppressed." - Stephen Biko

                        by gjohnsit on Mon Apr 07, 2014 at 11:02:54 PM PDT

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            •  nope (0+ / 0-)

              -You want to change the system, run for office.

              by Deep Texan on Mon Apr 07, 2014 at 01:36:39 PM PDT

              [ Parent ]

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