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Who exactly is buying?
- Thread starter will848
- Start date
Quote from zdreg:
nearly every little tin horn dictator in south america has gone the bernanke route. the result has always been to bring the country to economic ruin. why americans think their country is exempt from the laws of economics is beyond me. perhaps they think the country is too big too fail. the reality is that it will be like the titanic. it just took longer.
I don't understand a lot about economics but I think the motivations are different.
In the case of Argentina, etc. it's to bail out the government's spending. Here it's to bail out the private sector's spending. The government prints the money and inflates the price of your house, you feel richer, and buy a Ford pickup. If the price of your house weren't inflated you would feel poorer. No one cares about real dollars. They only want nominal dollars.
That's the only arguement I can come up with. But given that there's no precedence (that I know of), it may not be different from Argentina.
Quote from zdreg:
nearly every little tin horn dictator in south america has gone the bernanke route. the result has always been to bring the country to economic ruin. why americans think their country is exempt from the laws of economics is beyond me. perhaps they think the country is too big too fail. the reality is that it will be like the sinking of the titanic. it just took longer.
+1
Quote from zdreg:
nearly every little tin horn dictator in south america has gone the bernanke route. the result has always been to bring the country to economic ruin. why americans think their country is exempt from the laws of economics is beyond me. perhaps they think the country is too big too fail. the reality is that it will be like the sinking of the titanic. it just took longer.
Your thinking is very similar to mine (though I know nothing of south america,I believe what you say). But for the sake of objectiveness, it could be that Bernanke is doing things better than those dictators. You can never assume that the same thing done by different people has same outcomes.
My opinion, anyway, is that it will end badly, the more they try to avoid the crisis, the bigger the disaster will be.
Maybe (I'm just speculating) the '29 crisis was the best possibility: a period of difficulties to clear all the damages accumulated in the past,then you start fresh again.
But nowadays the idea of facing hard times and suffering is totally rejected.
This is not related to bubbles: actually I don't see any bubble created by the FED.
Stock prices are not very high, house prices are lower than in the past, bond prices are high but not mad (see how long japan has kept interest rates at 0,6%),gold was not in a bubble and now has lost 30%...
I'd say the opposite: FED is trying to keep everything at "normal" levels. And this is the problem.
stock prices are very high but its how you want to view it. if you look companies have not grown sales its all cost cutting. if you drive around you see buildings going up for people to work in malls for $10 an hour. you don't hear companies looking to hire normal college people for 60k a year. taco bell plans to hire 75,000 in the next 10 years in america. that's scary so that means people need to eat cheap because they don't have money and we have 75,000 more low playing jobs haha
http://www.elitetrader.com/vb/showthread.php?threadid=267533
http://www.elitetrader.com/vb/showthread.php?threadid=267533
Quote from pfranz:
Your thinking is very similar to mine (though I know nothing of south america,I believe what you say). But for the sake of objectiveness, it could be that Bernanke is doing things better than those dictators. You can never assume that the same thing done by different people has same outcomes.
My opinion, anyway, is that it will end badly, the more they try to avoid the crisis, the bigger the disaster will be.
Maybe (I'm just speculating) the '29 crisis was the best possibility: a period of difficulties to clear all the damages accumulated in the past,then you start fresh again.
But nowadays the idea of facing hard times and suffering is totally rejected.
This is not related to bubbles: actually I don't see any bubble created by the FED.
Stock prices are not very high, house prices are lower than in the past, bond prices are high but not mad (see how long japan has kept interest rates at 0,6%),gold was not in a bubble and now has lost 30%...
I'd say the opposite: FED is trying to keep everything at "normal" levels. And this is the problem.
Quote from brokerboy:
stock prices are very high but its how you want to view it. if you look companies have not grown sales its all cost cutting. if you drive around you see buildings going up for people to work in malls for $10 an hour. you don't hear companies looking to hire normal college people for 60k a year. taco bell plans to hire 75,000 in the next 10 years in america. that's scary so that means people need to eat cheap because they don't have money and we have 75,000 more low playing jobs haha
The standard definition of "high stock prices" is based on P/E, doesn't matter if it comes from cost cutting or QE or whatever.
Also, we are just a bit higher than 6 years ago with "old economy", and "new economy" (nasdaq) is quite far from reaching 13 years ago prices (when there actually was a bubble).
And most countries are not in recession, so technically prices are not high.
These fake manipulated parameters of course don't reveal the problems you are pinpointing; to this I add that in Germany where unenployement is low, a lot of jobs are payed 400 euro/month.
Of course prices are at the height you see them: to me, in a dead system like this, an S&P500 at 800 points is way too high.
To reply to the thread title:
1) 25% of central banks in the world, because they can't afford letting their reserves be eaten up by inflation, given that bonds yields are way less than inflation
2) Fund managers who want to keep their job and have to produce gains
3) Shorters covering their positions
4) Market manipulators (including governments)
The first three are actually forced to do that by 4).
It's interesting to see how governments reacted to the end of the growth:
- at first, after the 2000 collapse, they put on incentives (tax cuts, public spending) to stimulate the growth
- now, after the debt problem, they not only heavily stimulate the system with fresh money, but also force investors to do what they would not (buy risk assets), making them look like fools if they don't.
Now the state controls economy: capitalism has become socialism.
1) 25% of central banks in the world, because they can't afford letting their reserves be eaten up by inflation, given that bonds yields are way less than inflation
2) Fund managers who want to keep their job and have to produce gains
3) Shorters covering their positions
4) Market manipulators (including governments)
The first three are actually forced to do that by 4).
It's interesting to see how governments reacted to the end of the growth:
- at first, after the 2000 collapse, they put on incentives (tax cuts, public spending) to stimulate the growth
- now, after the debt problem, they not only heavily stimulate the system with fresh money, but also force investors to do what they would not (buy risk assets), making them look like fools if they don't.
Now the state controls economy: capitalism has become socialism.
i think it does matter but again its the data you want to look at. margin is at all time highs again. i can give you a lot different studies of data that show this where a top is but everything is out the window because of the fed. i really have no idea what will happen anymore because i don't understand what the fed is thinking.
japan is doing something similar and the JGB is close to popping. i think japan and the JGB will be interesting if its yield raises much more since everybody has bonds and wants out because money is being devalued. the stock market is up 60% for year. this is what can happen when markets make decisions for central banks. if everybody wants out of the 10 year bond everything blows up and if you own the 10 year bond you need to be out because you are losing money everyday. japan can not afford to pay a high yields and it has more debt than it can ever pay back.
japan is doing something similar and the JGB is close to popping. i think japan and the JGB will be interesting if its yield raises much more since everybody has bonds and wants out because money is being devalued. the stock market is up 60% for year. this is what can happen when markets make decisions for central banks. if everybody wants out of the 10 year bond everything blows up and if you own the 10 year bond you need to be out because you are losing money everyday. japan can not afford to pay a high yields and it has more debt than it can ever pay back.
Quote from pfranz:
The standard definition of "high stock prices" is based on P/E, doesn't matter if it comes from cost cutting or QE or whatever.
Also, we are just a bit higher than 6 years ago with "old economy", and "new economy" (nasdaq) is quite far from reaching 13 years ago prices (when there actually was a bubble).
And most countries are not in recession, so technically prices are not high.
These fake manipulated parameters of course don't reveal the problems you are pinpointing; to this I add that in Germany where unenployement is low, a lot of jobs are payed 400 euro/month.
Of course prices are at the height you see them: to me, in a dead system like this, an S&P500 at 800 points is way too high.
Quote from brokerboy:
stock prices are very high but its how you want to view it. if you look companies have not grown sales its all cost cutting. if you drive around you see buildings going up for people to work in malls for $10 an hour. you don't hear companies looking to hire normal college people for 60k a year. taco bell plans to hire 75,000 in the next 10 years in america. that's scary so that means people need to eat cheap because they don't have money and we have 75,000 more low playing jobs haha
http://www.elitetrader.com/vb/showthread.php?threadid=267533
http://www.youtube.com/watch?v=jU2CHJ8bRbM
Quote from brokerboy:
i think it does matter but again its the data you want to look at. margin is at all time highs again. i can give you a lot different studies of data that show this where a top is
Sure if you want to do decent fundamental analysis, or search for a market top, you look at this data.
But I just wanted to show that this can't be defined a "bubble", as long as P/E stands where it is.
Anyway,let's not forget that market is not controlled just by the FED; there are also the usual manipulators that have always been.
I don't think the FED needs a market which doesn't retrace; this could be a maneuver commonly seen where situation is really bad.
That is, it's quite common that when a market has to fall heavily,manipulators send it sky high without retracement. Look for example at the USD/CHF chart before CHF went to the moon.
Just an idea...