REAL WORLD EVENT DISCUSSIONS

Rising interest rates = bubbles popping everywhere!

POSTED BY: SIGNYM
UPDATED: Friday, October 12, 2018 20:20
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Wednesday, October 10, 2018 1:59 PM

SIGNYM

I believe in solving problems, not sharing them.


Stocks going down.
Real estate going down.

Now we get to see just how "bubbly" the financial system is (or, was)!


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Wednesday, October 10, 2018 4:46 PM

SIGNYM

I believe in solving problems, not sharing them.


TODAY

Dow -3.5% 25599/-832
Nasdaq -4.1% 7422/-316
S&P -3.3% 2786/-95

But remember, it's not a correction until it loses 20%. That means about 21,000 for the Dow, about 6000 for Nasdaq, and about 2200 for S&P (If I've calculated correctly).

*****

I think the real problem will be that a lot of hedge funds have been based on a near-zero interest rate. However, once that interest rate changes, the whole risk structure wobbles.

-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

"The messy American environment, where most people don't agree, is perfect for people like me. I CAN DO AS I PLEASE." - SECOND

America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876

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Wednesday, October 10, 2018 7:58 PM

JEWELSTAITEFAN


A 20% drop would surely be in Bear Market, by most definitions. A drop of 10% would be what I consider a correction, some might call it 5%.

During 2018 so far, Dow has dropped to about 12%, but not to 13% IIRC. I don't recall hearing anybody deny that was a correction. But it was not a Bear Market, despite the Chicken Littles. Then it went to New Record All-Time Highs recently.

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Wednesday, October 10, 2018 8:14 PM

6IXSTRINGJACK

[/i]


The possibility of rising interest rates was my argument against buying a house vs renting back in the mid 2000's when everyone was telling me that I was throwing money away and that a house was a great investment. This was "common knowledge" after years of that bubble growing.

The funny thing is, rising rates had little to nothing to do with that bubble popping. House prices took a shit and the rates never got high. Imagine what your house would be worth on the market if we saw Reagan era interest rates of over 20% again and it took somebody $3 Million to pay off a $200,000 loan in 30 years.

Do Right, Be Right. :)

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Wednesday, October 10, 2018 10:43 PM

JEWELSTAITEFAN


Quote:

Originally posted by SIGNYM:
TODAY

Dow -3.5% 25599/-832
Nasdaq -4.1% 7422/-316
S&P -3.3% 2786/-95

But remember, it's not a correction until it loses 20%. That means about 21,000 for the Dow, about 6000 for Nasdaq, and about 2200 for S&P (If I've calculated correctly).

*****

I think the real problem will be that a lot of hedge funds have been based on a near-zero interest rate. However, once that interest rate changes, the whole risk structure wobbles.

A Dow drop of 20% would be 21,462.

2,344 would be 20% drop of S&P 500.

6,487 would be 20% drop of NASDAQ.


Golly, good news is now bad news. Thriving Economy is too good, causing inflation which raises interest rates on that humongous Federal Debt that Obama multiplied.

Too low Unemployment means we have a manpower shortage, not enough people to perform work.

This is horrible. And completely unforeseen. Unlike all of Trump's successes, the Debt explosion really can be honestly blamed on Obama instead of Reagan or LBJ or whoever.

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Thursday, October 11, 2018 7:01 AM

6IXSTRINGJACK

[/i]


Quote:

Originally posted by JEWELSTAITEFAN:
Quote:

Originally posted by SIGNYM:
TODAY

Dow -3.5% 25599/-832
Nasdaq -4.1% 7422/-316
S&P -3.3% 2786/-95

But remember, it's not a correction until it loses 20%. That means about 21,000 for the Dow, about 6000 for Nasdaq, and about 2200 for S&P (If I've calculated correctly).

*****

I think the real problem will be that a lot of hedge funds have been based on a near-zero interest rate. However, once that interest rate changes, the whole risk structure wobbles.

A Dow drop of 20% would be 21,462.

2,344 would be 20% drop of S&P 500.

6,487 would be 20% drop of NASDAQ.


Golly, good news is now bad news. Thriving Economy is too good, causing inflation which raises interest rates on that humongous Federal Debt that Obama multiplied.

Too low Unemployment means we have a manpower shortage, not enough people to perform work.

This is horrible. And completely unforeseen. Unlike all of Trump's successes, the Debt explosion really can be honestly blamed on Obama instead of Reagan or LBJ or whoever.



To follow up the remark about your partisanship from the other thread...

These numbers are bullshit. If Obama were still president now, and Trump were running for president, and the numbers were exactly as they are now and showing that upward trajectory that the pretty graphs tell us, then Trump would be calling them bullshit. The only thing that has changed is that he is in office now.

This is my biggest disappointment with Trump as President. It seems that for the next 2 to 6 years we're largely just going to be keeping up the status quo and lying about how good everything is, and he's just going to keep the seat warm for the next Democratic administration that's going to put the final nail in the coffin of the American economy.

Hey... I hope he proves me wrong, but so far all of those high numbers and pretty graphs aren't translating at all into a better quality of life or standard of living for the working class.

Meanwhile, although spending less than Obama did, we're still making GWB look downright miserly when it comes to additions to the National Debt.

Do Right, Be Right. :)

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Thursday, October 11, 2018 7:17 AM

SIGNYM

I believe in solving problems, not sharing them.


Quote:

This is my biggest disappointment with Trump as President. It seems that for the next 2 to 6 years we're largely just going to be keeping up the status quo and lying about how good everything is
I suspect that The Fed doesn't like Trump either, and that they're deliberately popping the bubble right before the elections. And of course once you pop a bubble you can't unpop it, it has a course of its own that needs to be followed because it can't be reversed, so if things are going the way I think they're going then it's going to be impossible for Trump to be telling everyone how great things are.

Quote:

and he's just going to keep the seat warm for the next Democratic administration that's going to put the final nail in the coffin of the American economy.
Sorry to say but the problems with the economy are far too large for any one President, even over two terms, to fix. Heck, FDR couldn't fix the Great Depression over two terms (we'll never know what might have happened over three terms because WWII intervened) and I think our current problems are even more severe and intractable simply because we've had status as the world reserve currency since WWII and if we lose that status it's going to be a bigger crisis than the Great Depression. IMHO.

*****

JSF- you're right, a 20% loss is bear territory, and 10% is a correction.



-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

"The messy American environment, where most people don't agree, is perfect for people like me. I CAN DO AS I PLEASE." - SECOND

America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876

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Thursday, October 11, 2018 7:23 AM

6IXSTRINGJACK

[/i]


Quote:

Originally posted by SIGNYM:
Quote:

This is my biggest disappointment with Trump as President. It seems that for the next 2 to 6 years we're largely just going to be keeping up the status quo and lying about how good everything is
I suspect that The Fed doesn't like Trump either, and that they're deliberately popping the bubble right before the elections. And of course once you pop a bubble you can't unpop it, it has a course of its own that needs to be followed because it can't be reversed, so if things are going the way I think they're going then it's going to be impossible for Trump to be telling everyone how great things are.




Yes. But it's also inevitable that it will pop one day, intentional or not.

We've been living in an economy of "Musical Bubbles" for a few decades now, and the American Dollar is paying the price for it.

But the multi-national corporations aren't going to worry about it. They're very well diversified.

Quote:

Quote:

and he's just going to keep the seat warm for the next Democratic administration that's going to put the final nail in the coffin of the American economy.
Sorry to say but the problems with the economy are far too large for any one President, even over two terms, to fix. Heck, FDR couldn't fix the Great Depression over two terms (we'll never know what might have happened over three terms because WWII intervened) and I think our current problems are even more severe and intractable simply because we've had status as the world reserve currency since WWII and if we lose that status it's going to be a bigger crisis than the Great Depression. IMHO.




I agree with all of that.

Hey... maybe that's even part of Trump's strategy. Now that he's president he's going to try to get people to believe things are better than they really are because at the end of the day all the American Dollar is worth is a promise and whatever value people believe it has.

Do Right, Be Right. :)

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Thursday, October 11, 2018 7:28 AM

JEWELSTAITEFAN


Quote:

Originally posted by 6IXSTRINGJACK:
Quote:

Originally posted by JEWELSTAITEFAN:
Quote:

Originally posted by SIGNYM:
TODAY

Dow -3.5% 25599/-832
Nasdaq -4.1% 7422/-316
S&P -3.3% 2786/-95

But remember, it's not a correction until it loses 20%. That means about 21,000 for the Dow, about 6000 for Nasdaq, and about 2200 for S&P (If I've calculated correctly).

*****

I think the real problem will be that a lot of hedge funds have been based on a near-zero interest rate. However, once that interest rate changes, the whole risk structure wobbles.

A Dow drop of 20% would be 21,462.

2,344 would be 20% drop of S&P 500.

6,487 would be 20% drop of NASDAQ.


Golly, good news is now bad news. Thriving Economy is too good, causing inflation which raises interest rates on that humongous Federal Debt that Obama multiplied.

Too low Unemployment means we have a manpower shortage, not enough people to perform work.

This is horrible. And completely unforeseen. Unlike all of Trump's successes, the Debt explosion really can be honestly blamed on Obama instead of Reagan or LBJ or whoever.



To follow up the remark about your partisanship from the other thread...

These numbers are bullshit. If Obama were still president now, and Trump were running for president, and the numbers were exactly as they are now and showing that upward trajectory that the pretty graphs tell us, then Trump would be calling them bullshit. The only thing that has changed is that he is in office now.

This is my biggest disappointment with Trump as President. It seems that for the next 2 to 6 years we're largely just going to be keeping up the status quo and lying about how good everything is, and he's just going to keep the seat warm for the next Democratic administration that's going to put the final nail in the coffin of the American economy.

Hey... I hope he proves me wrong, but so far all of those high numbers and pretty graphs aren't translating at all into a better quality of life or standard of living for the working class.

Meanwhile, although spending less than Obama did, we're still making GWB look downright miserly when it comes to additions to the National Debt.

Do Right, Be Right. :)

Regardless of which direction the Sun comes up in your local neighborhood, runaway spending and exploding Debt is not the path to sustainability and needed to be stopped and reversed. Nobody else was doing it, not Speaker or Senate Leader.
It still needs more, but this is a start.

This is the best hope we've had since GWB, who's original budget proposal had the Debt paid off in 10 years.

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Thursday, October 11, 2018 7:33 AM

6IXSTRINGJACK

[/i]


Quote:

Originally posted by JEWELSTAITEFAN:
Regardless of which direction the Sun comes up in your local neighborhood, runaway spending and exploding Debt is not the path to sustainability and needed to be stopped and reversed. Nobody else was doing it, not Speaker or Senate Leader.
It still needs more, but this is a start.

This is the best hope we've had since GWB, who's original budget proposal had the Debt paid off in 10 years.



Anything GWB said about money was fantasy land.

Runaway spending under his administration is largely what got the ball rolling here.

Do Right, Be Right. :)

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Thursday, October 11, 2018 12:24 PM

1KIKI

Goodbye, kind world (George Monbiot) - In common with all those generations which have contemplated catastrophe, we appear to be incapable of understanding what confronts us.


"This is the best hope we've had since GWB, who's original budget proposal had the Debt paid off in 10 years."

You forget that dubya funded most of his Iraq and Afghanistan wars off the books and out of the budget via emergency spending requests and private contractors. His budgets looked so good because they were cooked very specifically to not include his actual war spending, or to show increased Defense Department spending.

https://www.theguardian.com/commentisfree/2013/mar/11/us-public-defrau
ded-hidden-cost-iraq-war

https://www.reuters.com/article/us-iraq-bush-budget-idUSN0149466320070
201

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/25/AR2008
122500757.html

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Thursday, October 11, 2018 12:35 PM

SIGNYM

I believe in solving problems, not sharing them.


Quote:

Anything GWB said about money was fantasy land.

Runaway spending under his administration is largely what got the ball rolling here. - SIX

Indeed.

Nobody twisted GWB's arm into spending a trillion dollars or more invading two nations that had fuck-all to do with 9-11 and posed absolutely no threat to us, and nobody twisted GWB's other arm into creating Medicare Part D without even being able to negotiate for better pharma prices, and nobody twisted GWB's other ... er, arm ... into cutting taxes for the rich.

Of all the the Presidents since FDR, the only Presidents who consistently reduced the Federal deficit were Eisenhower, Nixon, and Clinton. (The apparent "reduction" under LBJ was a mathematical artifact of including Social Security in the budget, which at the time had a huge surplus.)

The big budget-busters were
LBJ - War on Poverty, Vietnam
Reagan- tax cuts, "defense" spending
GWB- tax cuts, war, bank bailout
Obama - bank bailout (continued), QE, ACA

The full impact of Trump's economic and fiscal policy has yet to be determined, but is far he's running approx a $1 trillion/year deficit.



https://www.thebalance.com/us-deficit-by-year-3306306
https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-m
ajor-events-3306287



Budget-busting has been a bipartisan effort. Curiously, so has debt-reduction (Eisenhower, Clinton).




-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

"The messy American environment, where most people don't agree, is perfect for people like me. I CAN DO AS I PLEASE." - SECOND

America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876

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Friday, October 12, 2018 8:20 PM

JEWELSTAITEFAN


Quote:

Originally posted by 1kiki:
"This is the best hope we've had since GWB, who's original budget proposal had the Debt paid off in 10 years."

You forget that dubya funded most of his Iraq and Afghanistan wars off the books and out of the budget via emergency spending requests and private contractors. His budgets looked so good because they were cooked very specifically to not include his actual war spending, or to show increased Defense Department spending.

That is not quite correct, at least not what I was talking about.
Bush43's original Budget, which did not get passed or go in to Effect before 9/11, did not include any Wars. It had the Federal Debt paid of by 2010. Clinton's War with Osama was not factored in.


I was talking about the level of Hope we had, not what we ended up with.

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