The Stock Market

Step right up for 3-card Monte...

Up or DOWn?

UP forever & ever!
0
No votes
Down from now on.
1
17%
Sporadic rize over a long period with many little drops
2
33%
Stabilized at sumthing rezembling the real welth in the market.
1
17%
I dont care. Got no money.
2
33%
 
Total votes: 6

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The Stock Market

Postby JO 753 » Sun Feb 04, 2018 6:43 am

How much effect duz the Prezident and hiz polisiez really hav on the stock market?

It seemz to me its alot, sins its essentially a big skam thats very dependent on the goverment allowing sum level uv corruption to continue. Between lax enforsment uv the rulez and making rulez that enable or even encouraj corruption, The gummit haz made Wall Street into a jiant hole in the bucket uv the world'z welth.

Last week the Dow lost about 1000 points, so I got to rite a fun little gloat in a topic I started in the FFF forum. Therez a Trump supporter there who regularly boasts about the rize, crediting Trump. Then nothing last week. Hmmm.

JO 753 wrote:Odd. My JSF report haz alwayz been very reliable. Gess I'll haf to get the old ticker tape machine out to see wuts going on.

Takes a wile to warm up. Its actually a classic steam powered model. Wile I'm waiting, I'll hav a look at this Wiki paje about the greatest fluctuationz.
https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average
Interesting chart! Green on the good side, red on the drop side.

The 2 greatest ever, by far, are rite wen thingz were falling apart in 08! And the worst ever wuz a few weeks befor the best ever.

I can imajin the paniky investorz pooping their pants thinking "O NO! McCain iz going to win! Dump it! Dump it all!" But nobodyz buying. Then 2 weeks later it looks like Obamaz going to win and "I can get all that crap cheap now! Start buying godamit! BUY BUY BUY!" But its no good. A few daze later The Herd hirz sumthing on Fox and paniks agen.

Note that 8 uv the top 20 good dayz are during the Obama Admin, and another 5 in the 4th quarter uv 08 that coud possibly be attributed to investorz betting that the smart guy (Obama) wuz going to save us from falling off the cliff. (wich he did)

Nothing in the top 20 best ever for Trump, but he duz hav the 6th worst. so far.

OK, the machine iz running now and - O GOD! WUT THE HELL HAPPENED LAST WEEK?! Its like 1000 points down! Just notist the date on Trumps #6 entry wuz FRIDAY!
Ships sinking! Rats diving overboard into the flaming crude oil! Stampeding terror! Volcanoz spewing magma and noxious cloudz!


Coud it be that investorz still remember getting burned by Bush and see the same thing happening with Trump?
Last edited by JO 753 on Mon Feb 12, 2018 6:13 am, edited 1 time in total.
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Re: The Stock Market

Postby Matthew Ellard » Sun Feb 04, 2018 7:37 am

Trump's actions may contribute to short term variations in the stock market but there are many other contributing factors. The USA's stock market is concerning at the moment as it is going up and down in an unexpected manner.

A firm will invest money into infrastructure and training workers if it can predict what the end result will be in three, four or ten years, depending on its type of activities. It will then compare that "predicted profit" against other alternative profit making activities. This is called opportunity cost mathematics

In essence, as any activity will be in the same economic environment, it really doesn't matter what the inflation rate or tax rate is. However, if the economy goes through unexpected variations, the firm will not be able to make accurate predictions and will consider not proceeding due to increased risk.

All the Stock market really is, is "Inflation + an additional profit for taking a risk". The higher the risk, the higher the anticipated profit.

Australia has a lot of investment by firms because our reserve bank tries to never change the interest rate, so firms can make accurate predictions. Our dollar is generally stable because we trade with every country on the planet and thus our dollars is the average of everyone else's currency variations. That why tiny Australia's currency is the sixth most traded currency because holding $AUD is a form of currency variation hedging.

Trump is out of control. Any growth or shrinking of the USA's economy is probably not as important as the fact he is unpredictable and firms will see too much unexpected variation to consider investing.

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Re: The Stock Market

Postby TJrandom » Sun Feb 04, 2018 9:06 am

I think it is too early to assess the impact upon the stock market of reduced regulations, but assume that many/most firms will see the reduction as positive in the short run. For the longer term, my guess is that they will expect many/most regulations to be put back, once Trump is gone, along with new ones enacted to correct for additional issues he has permitted or even encouraged to develop.

This said, I have long opined that regulations should have a review/sunset date when initially enacted, so that they can be assessed and changed as necessary. Some at 10 years or so, and maybe others for 20.

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Re: The Stock Market

Postby JO 753 » Sun Feb 04, 2018 11:03 am

I think the dizaster potential factor iz going to cauze a crash real soon. Herd mentality based on fear vs greed.

The herd averaj thinking iz that an incompetent administration iz going to rock the boat recklessly and the DOW iz alredy deep into fantasy land, so get out wile the getting iz good.
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Re: The Stock Market

Postby ElectricMonk » Sun Feb 04, 2018 11:24 am

The comments of a President can have an enormous impact on the Stock Market, which is in the business of pricing future expectations.
The current market has accurately predicted the massive tax-cuts. But now, analyst see the budget deficit looming faster and bigger than expected: it becomes less and less likely that Republicans in Congress will continue to shovel taxpayer-money into the maw of multinational corporations.
The midterms will cause a lot of volatility.
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Re: The Stock Market

Postby bobbo_the_Pragmatist » Sun Feb 04, 2018 4:54 pm

The stock market is legalized gambling with a heavy skimming operation. Hard to avoid...........but anyone in it is either a huckster or a sucker.

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Re: The Stock Market

Postby JO 753 » Sun Feb 04, 2018 9:03 pm

ElectricMonk wrote:The midterms will cause a lot of volatility.


Makes me wonder how much partisanship influensez The Herd.

If the Demz get a majority in Congress, they will impeach Trump. Will that cauze rabid delusional GoP investorz to bail out, or are they (on averaj) bottom line oriented?

If the Republicanz maintain their majority, it coud be simple arithmatic that there will be a crash: Haf uv The Herd iz Democratic and they will remember how Bush'z polisyz worked out, add sum fraction uv Republican voter/investorz and you hav a majority who will think its a good idea to sell.
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Re: The Stock Market

Postby Matthew Ellard » Sun Feb 04, 2018 9:27 pm

ElectricMonk wrote:But now, analyst see the budget deficit looming faster and bigger than expected....

This is what I think is the bigger danger. Trump needs a "Laffer Curve" lift, hoping the economy will grow enough to make good tax percentage reductions, through higher turnover, while simultaneously threatening to get into a international trade war. The USA can't afford a trade war now.

Every other country on the planet knows this. China is laughing.

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Re: The Stock Market

Postby Matthew Ellard » Sun Feb 04, 2018 9:35 pm

JO 753 wrote:If the Demz get a majority in Congress, they will impeach Trump. Will that cauze rabid delusional GoP investorz to bail out, or are they (on averaj) bottom line oriented?


I suggest to you that both Republicans and Democrats are the same, in that they have to park their money somewhere. That suggests they will simply changeover their investments from risky portfolios to safe portfolios. That generally means a reduction in "start-ups" but the economy will always have a realistic "bottom line".

It seems to me that the USA has been a bit silly in forgetting that other world economies have been catching up with the USA and, therefore, to only concentrate on the USA means the USA is not getting into the new big international deals, that will go for decades. Eleven countries started the TPP last month without the USA. No one in the USA even noticed.

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Re: The Stock Market

Postby Matthew Ellard » Sun Feb 04, 2018 9:36 pm

bobbo_the_Pragmatist wrote:The stock market is legalized gambling with a heavy skimming operation.
I would certainly agree that the futures market is 100% gambling. :D

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Re: The Stock Market

Postby JO 753 » Sun Feb 04, 2018 10:59 pm

Matthew Ellard wrote:It seems to me that the USA has been a bit silly


If by 'a bit' you are being sarcastic and mean 'incredibly' then I agree.
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Re: The Stock Market

Postby JO 753 » Tue Feb 06, 2018 5:32 am

Dropped another 1,175 today. Its going to be a fun week at the NYSE.

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Re: The Stock Market

Postby Phoenix76 » Tue Feb 06, 2018 9:34 am

I luv Roller Coasters :D

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Re: The Stock Market

Postby bobbo_the_Pragmatist » Tue Feb 06, 2018 11:53 am

Stock Market Drops: the AlreadyTooRich skimmers taking their profit and resetting the bubble for their next triumph.

ITS ALL TOTALLY RIGGED.
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Re: The Stock Market

Postby Tom Palven » Sat Feb 10, 2018 12:25 pm

bobbo_the_Pragmatist wrote:The stock market is legalized gambling with a heavy skimming operation. Hard to avoid...........but anyone in it is either a huckster or a sucker.


I agree.

"Investments" in the stock market are no longer based on projected earnings, expected dividends, and the tangible assests that a company owns, but simply on hopes that certain stocks will increase in value.

Thus, the stock market, like bit coins, now behaves like Ponzi schemes.

When stocks go down the punsters proclaim that zillions of dollars in assets have been lost, but what REAL assets, real capital, like machinery and trained, qualified personnel, have been lost? None.

Marx called stocks "fictitious capital," and I think that he had a good point.

So, theoretically, a stock market crash really shouldn't change anything, should it? Are stock market crashes and depressions cause and effect, or are there other factors at work?

For incisive analysis we have this:
https://www.youtube.com/watch?v=dguiAWrUGMM
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Re: The Stock Market

Postby JO 753 » Sat Feb 10, 2018 1:41 pm

I wuz milling a slot in a chunk uv steel and suddenly the machine disappeared and the steel fell to the floor. Turned out the company I wuz working for had suffered a severe drop in its stock value.
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Re: The Stock Market

Postby bobbo_the_Pragmatist » Sat Feb 10, 2018 5:27 pm

Tom Palven wrote: Thus, the stock market, like bit coins, now behaves like Ponzi schemes.

Too much of our "economy", business, gubment is based on a Ponzi scheme. Why do we want more immigration? For Jobs.........to support those who have already retired. Straight Up Ponzi scheme. When more people/jobs are not brought in to support the Ponzi scheme, we get a recession/fall back to lower numbers so the Ponzi Scheme can be reset. All the worlds economies are based on "growth" which is.... just a Ponzi Scheme.

Its something to see.................................... just look.
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Re: The Stock Market

Postby OlegTheBatty » Sat Feb 10, 2018 8:16 pm

JO 753 wrote:I wuz milling a slot in a chunk uv steel and suddenly the machine disappeared and the steel fell to the floor. Turned out the company I wuz working for had suffered a severe drop in its stock value.


You're lucky it's a bear market. In a bull market, you'd have to machine two chunks at once.
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Re: The Stock Market

Postby OlegTheBatty » Sat Feb 10, 2018 8:38 pm

Tom Palven wrote:Marx called stocks "fictitious capital," and I think that he had a good point.

So, theoretically, a stock market crash really shouldn't change anything, should it? Are stock market crashes and depressions cause and effect, or are there other factors at work?


The stock market has very little impact on the economy. Occasionally, a stock market crash can trigger the general public to thinking that the economy is tanking, so they stop borrowing to buy stuff, instead, paying down their debts. When they do that, the economy does tank. The stock market is only a perceptual trigger.

A high stock market does not mean the economy is flourishing, it just means that investors are buying. In 2009, the stock market was doing well, even though the US economy (and Europe's) were at the bottom of the tank.

The 2008 crash was not triggered by the stock market, it was triggered by a real estate crash.
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Re: The Stock Market

Postby JO 753 » Sat Feb 10, 2018 10:10 pm

Triggered, maybe. But the canon wuz loaded by Wall Street.
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Re: The Stock Market

Postby TJrandom » Sat Feb 10, 2018 11:15 pm

Bear Stearns – the distressed debt portfolio creator.

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Re: The Stock Market

Postby JO 753 » Sun Feb 11, 2018 1:06 am

I wunder if the rating ajensyz are selling out agen.

We coud see a repeat uv the bogus AAA stocks getting weponized by run amok derivativ betting, exept this time they'd mix in all sorts uv bad loanz. Uzed carz, collej tuitionz and housez.
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Re: The Stock Market

Postby TJrandom » Sun Feb 11, 2018 3:53 am

The portfolios ARE (were) bad loans - but categorized by degree of badness... with the portfolio purchaser having an inspect and put-back right (exchange for a better bad loan) for those that were worse than advertised.

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Re: The Stock Market

Postby OlegTheBatty » Sun Feb 11, 2018 4:27 am

JO 753 wrote:Triggered, maybe. But the canon wuz loaded by Wall Street.


They contributed. So did consumers and producers.

Minsky's Financial Instability Hypothesis describes a cycle involving producers, lenders, and consumers.

1. Slow growth wherein most loans are hedge loans (loans where the income from the assets pays at least the interest on the loans, and usually make the whole loan payment.)

2. As the economy heats up, people get more optimistic increasing the demand for borrowing, and increasing the level of risk lenders will take. The percentage of speculative loans increases. (loans where income from the asset will only cover the interest payments, and maturing loans must be covered by new loans.)

3. Asset values are rising, with no end in sight. Overconfidence and excessive optimism rule. Ponzi financing becomes significant (Income from the asset will not cover the interest payments, and increasing debt is needed based on the rising value of the asset.)

4. Instability and crash. Goto 1.

Lenders don't generally loan unless a consumer requests one. If there is an overabundance of private debt, the borrowers have demanded it. Producers get caught up in the frenzy, producing to meet a demand that is fuelled by high debt levels. When the crash comes, they have high inventories, and must curtail production drastically to survive. The producers' contribution is overproduction, and sometimes overexpansion of plant assets).

Minsky Moment

Note that public debt does not enter the picture. Governments are hedge borrowers, can print money to pay debts and have other resources that private borrowers don't have.

The claim that banks stopped lending because they had no money to lend was a Big Lie. They stopped lending because the private sector stopped borrowing. Citizens started paying down debt instead of borrowing, and producers were laying off employees to survive while trying to offload inventory that was no longer in demand. Bailing out the banks didn't work. Australia's tactic of handing a lump of cash to every Aussie, and Canada's tactic of large deficit spending on infrastructure worked a lot better. (Maybe - Canadians still haven't paid down debt, and the housing market in Toronto and Vancouver is overheated - our Minsky Moment may lie in the future). Austerity in Europe worked no better than the bank bailout - they still think that public debt is a problem, even though there is no actual evidence to show that.
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Re: The Stock Market

Postby bobbo_the_Pragmatist » Sun Feb 11, 2018 6:37 am

Oleg: I have to admit I don't understand most of what you have posted. Its gibberish to my ears. Grammatically and structurally correct: but means nothing. EG: Post No 4
"Lenders don't generally loan unless a consumer requests one. If there is an overabundance of private debt, the borrowers have demanded it. Producers get caught up in the frenzy, producing to meet a demand that is fuelled by high debt levels. When the crash comes, they have high inventories, and must curtail production drastically to survive. The producers' contribution is overproduction, and sometimes overexpansion of plant assets)."
None of that makes any sense at all.

1. Lenders don't generally loan unless a consumer requests one. /// The failure was zero down liar loans based on fraudulent credit reports and fraudulent market evaluations: and no one went to jail.

2. If there is an overabundance of private debt, the borrowers have demanded it. //// Borrows always demand debt....its the JOB of lenders to screen these requests. THAT was not done, see No1 above.

3. Producers get caught up in the frenzy, producing to meet a demand that is fuelled by high debt levels. /// Producers were not caught up in the frenzy: the producers CAUSED THE FRENZY. See No 1 above.

4. When the crash comes, they have high inventories, and must curtail production drastically to survive. The producers' contribution is overproduction, and sometimes overexpansion of plant assets). /// Not clear at all except that you are mixing different industries up. "Plant assets" have nothing to do with credit swaps of bundled fraudulent real estate loans. Pure Gibberish..................... as most economics is.
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Re: The Stock Market

Postby JO 753 » Sun Feb 11, 2018 7:22 am

There are several useful perspectivez, bobbo. Oleg makes sense, but so do sum thingz that mite appear to contradict wut he rote.

I prefer the Les Leopold take on the whole mess.
https://www.youtube.com/watch?v=onhieyMNAb0&index=11&list=PL3480C0A8E4D49017
Better to read the book to get a handle on the crash.
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Re: The Stock Market

Postby bobbo_the_Pragmatist » Sun Feb 11, 2018 7:48 am

thanks jo, I do love Thom Hartmann and wish he was still on the tube. Always excellent guests as the one you linked to who present the basic issue of fraud and lack of regulation and enforcement. Not the "stock market" per se, but closely related.

I disagree that what Oleg posted makes sense. It doesn't as I gave 4 direct examples. Prove me wrong: make any one of the four make sense..........................

IMO, In the Main: "experts" try to put formal economic theory onto what is a criminal enterprise. Is a total misfit.
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Re: The Stock Market

Postby JO 753 » Sun Feb 11, 2018 2:34 pm

bobbo_the_Pragmatist wrote:1. Lenders don't generally loan unless a consumer requests one. /// The failure was zero down liar loans based on fraudulent credit reports and fraudulent market evaluations: and no one went to jail.


There really iznt much uv an argument there. Oleg points the finger uv blame at borrowerz, you are pointing at the crooked lending system.

Both are gilty, so its a matter uv who gets the most blame. I say its the lenderz kuz they were agressivly advertizing and tokking peepl into loanz they coudnt afford.

2. If there is an overabundance of private debt, the borrowers have demanded it. //// Borrows always demand debt....its the JOB of lenders to screen these requests. THAT was not done, see No1 above.


I agree with you on that wun. If sumwun iz paying 1,000 a month rent for a tiny apartment and you offer them a house for 900/mo. morgaj, therez no reazon not to take the offer. Iz a drill press operator suppozed to respect the tradition uv 20% down and 1/3 maximum uv hiz salary if the bank iz disregarding it?

3. Producers get caught up in the frenzy, producing to meet a demand that is fuelled by high debt levels. /// Producers were not caught up in the frenzy: the producers CAUSED THE FRENZY. See No 1 above.


I disagree with both uv you on this. Produserz were powerless to do anything about the crash. To supply the demand they need to forcast it based on the existing trendz. The more complex their product, the farther out they hav to project. Thats why the car companyz got hit so hard. Sure - if Chrysler'z CEO sed 'we're going to sit this out kuz it duznt look sustainable', they woud hav dun better az it turned out. But the CEO iznt sykik, and GM woud hav been happy to jump in and sell more carz with Chrysler out uv the way.

4. When the crash comes, they have high inventories, and must curtail production drastically to survive. The producers' contribution is overproduction, and sometimes overexpansion of plant assets). /// Not clear at all except that you are mixing different industries up. "Plant assets" have nothing to do with credit swaps of bundled fraudulent real estate loans.


Thats really just a continuation uv 3.

Shoud home bilderz not take advantaj uv a surjing demand? Shoud any uv their supplierz say 'sorry, we arent going to make any more bathtubz bekuz we woud be at risk uv having too much idle equipment and floor spase if this all kumz to a skreeching halt.' I expect that many factory ownerz and home bilderz think everything about Wall Street iz alwayz a bunch uv BS, so are they suppozed to be able to tell wen the BS haz gotten too deep?

Pure Gibberish..................... as most economics is.


Its far from pure.

Oleg iz correct that if enuf Americanz were smart and onest enuf, the corruption that led to the crash woud hav fizzled out long befor 2008. But thats not realistic. The corruption started senturyz ago and our entire capitalist system iz based on it. Unless everybody desidez we need to make a new set uv rulez, the best any individual can do iz try to work the system to their advantaj and hope to be in a safe plase wen the zombie apocalypse hits.
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Re: The Stock Market

Postby bobbo_the_Pragmatist » Sun Feb 11, 2018 4:37 pm

Jo: thanks. Its rare to get a relevant detailed reply. I could return point by point but as I perceive we mostly agree and only favor a different emPHAsis, I'll just say its natural and expected that borrowers/Amercanz SHOULD "scheme" for the best use of their money and that includes signing up for liar loan (non-recourse) when a lender is coaxing you to do so. Lenders SHOULD also scheme to make fraudulent liar loans when they later get rolled up into (non-recourse) security interests, and real estate portfolio processors SHOULD process the fraudulent loans when they are given AAA security ratings by those Agencies, and the Stock Market SHOULD bundles these in debt-swap instruments when the market is on a bull run.

This is what intelligent self interested people SHOULD do when criminal fraud is generally not prosecuted.

Now.......In my view.......this does not follow ANY economic "theory" and has little to do with "the stock market" "AS" a market. Its about the downward spiral that any society is in when guided by a theftocracy. Note: its all being set up again under the Republican rubric of "less regulation" and "we are open for business."
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Re: The Stock Market

Postby OlegTheBatty » Sun Feb 11, 2018 8:08 pm

bobbo_the_Pragmatist wrote:Oleg: I have to admit I don't understand most of what you have posted. Its gibberish to my ears. Grammatically and structurally correct: but means nothing. EG: Post No 4
"Lenders don't generally loan unless a consumer requests one. If there is an overabundance of private debt, the borrowers have demanded it. Producers get caught up in the frenzy, producing to meet a demand that is fuelled by high debt levels. When the crash comes, they have high inventories, and must curtail production drastically to survive. The producers' contribution is overproduction, and sometimes overexpansion of plant assets)."
None of that makes any sense at all.

1. Lenders don't generally loan unless a consumer requests one. /// The failure was zero down liar loans based on fraudulent credit reports and fraudulent market evaluations: and no one went to jail.

Those exacerbated the problem, and were part of stage 3 (I kept it simple). They did not cause the problem. High asset prices fuelled by excessive private debt caused the problem.

. If there is an overabundance of private debt, the borrowers have demanded it. //// Borrows always demand debt....its the JOB of lenders to screen these requests. THAT was not done, see No1 above.

Chickens and eggs. A healthy population of chickens needs both. Lenders make higher risk loans because the perception of risk is skewed by the rising asset prices, among other things.

3. Producers get caught up in the frenzy, producing to meet a demand that is fuelled by high debt levels. /// Producers were not caught up in the frenzy: the producers CAUSED THE FRENZY. See No 1 above.

Producers do not lend very much compared to financial institutions. They contributed primarily by overproduction. As consumers, they also contributed some by overexpansion of plant assets in some cases, which were caught up in the real estate bubble.

Pure Gibberish..................... as most economics is.


Which merely shows that you do not understand it well enough to make sagacious responses.
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Re: The Stock Market

Postby Matthew Ellard » Sun Feb 11, 2018 9:32 pm

Oleg knows "his stuff". :D

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Re: The Stock Market

Postby bobbo_the_Pragmatist » Sun Feb 11, 2018 10:45 pm

Oleg: you completely miss the role of fraud in what happens "routinely" but specifically in the Crash of 2008. What makes "economics" mostly Ivory Tower BS.........is it avoids the issue of fraud as well.

Fraud has been institutionalized in most economies. See the common root word/concept?
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Re: The Stock Market

Postby OlegTheBatty » Sun Feb 11, 2018 10:57 pm

Matthew Ellard wrote:Oleg knows "his stuff". :D


Thanks.

Minsky never modelled his hypothesis. He used bookkeeping charts to show how it functioned. For one thing, modelling it requires calculus, a skill Minsky didn't have.

Steve Keen, formerly an associate prof at the University of Western Sydney, has modelled it extensively. Private debt rules, or rather, the rate at which it is increasing or decreasing. The correspondence between model and data are in the .9 range, way better than most economic models.

I think the entire field of economics would benefit greatly if math proficiency at at least the calculus level were a constituent of economics degrees.
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Re: The Stock Market

Postby bobbo_the_Pragmatist » Sun Feb 11, 2018 11:04 pm

the keynote for most economic theories/applications is how well they explain what has already happened. Predicting the future: a crap shoot.
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Re: The Stock Market

Postby Matthew Ellard » Sun Feb 11, 2018 11:20 pm

OlegTheBatty wrote: I think the entire field of economics would benefit greatly if math proficiency at at least the calculus level were a constituent of economics degrees.


The reality is, that, students want to be taught how to work "in" the system rather than comment on it as a whole.

My economics modules were fairly dry until we had an old crusty Cambridge lecturer give us talks on private armies in India, taxation and how national economics work. We even had a Vietnamese lecturer who walked us through the problems of communist economies with the aim of fixing them, rather than getting rid of them.
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Re: The Stock Market

Postby JO 753 » Sun Feb 11, 2018 11:29 pm

OlegTheBatty wrote:I think the entire field of economics would benefit greatly if math proficiency at at least the calculus level were a constituent of economics degrees.


2 problemz with that idea:

1. You cant buy a brain.

2. Thats wut set us up for the 08 crash and several before it. Quants
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Re: The Stock Market

Postby Matthew Ellard » Mon Feb 12, 2018 2:40 am

JO 753 wrote: Quants
Before I clicked the link I thought you were going to show us something the QANTAS share price. :D

However you are right. Mathematical models can cause damage because they can't keep up with changes in the market.

The futures market can also be a form of insurance like hedging. You can't write a program for all users to use, if the users themselves have very divergent needs. It means the model will give one bad result to different users.

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Re: The Stock Market

Postby OlegTheBatty » Mon Feb 12, 2018 9:34 pm

Matthew Ellard wrote:
OlegTheBatty wrote: I think the entire field of economics would benefit greatly if math proficiency at at least the calculus level were a constituent of economics degrees.


The reality is, that, students want to be taught how to work "in" the system rather than comment on it as a whole.

My economics modules were fairly dry until we had an old crusty Cambridge lecturer give us talks on private armies in India, taxation and how national economics work. We even had a Vietnamese lecturer who walked us through the problems of communist economies with the aim of fixing them, rather than getting rid of them.
:D


The economy is a dynamic system. Calculus allows dynamic modelling. Way back when, early economists did not have calculus, so modelling dynamism was beyond their ability. Rather than learn the math, they simplified the models to a static system, and the world has been stuck with static modelling ever since (although that is beginning to change).

That's why there is such a poor correspondence between data and neoclassical models. Most are between .4 and .6. A physicist who came up with a model which fit the data so poorly would be laughed out of Dodge.
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Re: The Stock Market

Postby OlegTheBatty » Mon Feb 12, 2018 9:38 pm

bobbo_the_Pragmatist wrote:the keynote for most economic theories/applications is how well they explain what has already happened. Predicting the future: a crap shoot.


Actually, they are no better at explaining what happened. When an economist's job depends on reassuring his boss that things will be better in future, you can be sure he'll think of something, even if it's total BS. Hence Paul Krugman et al.

Milton Friedman, the hero of the Chicago School and of libertarians everywhere, is on record as espousing the tenet that it doesn't matter if a model corresponds to reality, it matters if it looks elegant.
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Re: The Stock Market

Postby Matthew Ellard » Mon Feb 12, 2018 9:54 pm

OlegTheBatty wrote:The economy is a dynamic system. Calculus allows dynamic modelling. Way back when, early economists did not have calculus, so modelling dynamism was beyond their ability. Rather than learn the math, they simplified the models to a static system, and the world has been stuck with static modelling ever since (although that is beginning to change).


My economics course's character was more geared towards law. We discussed financial modelling and a big problem was incorporating, what was then, innovate financial products, like trading discretionary trusts, futures options as hedging, option swaps and things like that. As you can imagine, it was not a matter of working out the maths as much as trying to work out what basic parameters you were trying to model. :D

I would certainly agree that non economist have picked up on buzz phrases like "Laffer Curves" without understanding they need to be modelled first. It does appear to me that Trump's tax cuts and "trickle down effect" are something he just did, with no modelling first, at all. To me, that is negligence of a high order, but he was voted in....so be it.


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