I remember learning about stocks for economics class in 1987. This was my first exposure to what a stock was—a fractional share of ownership in the business it represents—and to how important they were to the economy. I’m afraid I wasn’t initially very interested in stocks. However, my timing couldn’t have been better: the biggest single-day loss in the stock market happened on October 19th of that year. The Dow Jones Industrial Average plummeted 508 points in a single day, or 22.6% of its total.
I’m worried about the role of uncontrolled debt in our stock market. A lot of Americans are living way behind their means and using a revolving door of credit to finance their lives. That’s what caused the Great Depression. You recently wrote about Charles Ponzi…I worry that the whole shebang is one huge Ponzi scheme waiting to fall. Some say that it’s ok that the US debt can’t be entered into a regular calculator in standard notation, that we owe the money to ourselves. I’m skeptical. Do we owe the money to ourselves or to our descendants? Those are different ideas.
Absolutely, everyone should be concerned about this incredible debt burden. At the same time, nobody knows just how it will end, or when the house of cards will come crashing down (years? decades? a century or more? nobody knows).
The first thought that crossed my mind when reading your lines about the pandemic-related crash was how it was the first time I got exposed to the concept of circuit-breakers, and how my first thought was: "What's the point? You're just delaying the inevitable." But after a few minutes of thinking, I intuitively came to the understanding that it's just there to prevent panic-triggered herd behavior. It's the equivalent of forcing yourself to count to 10 when you're angry. It's kind of funny that, no matter how sophisticated we get in terms of technology and institutions, in the end we still end up building "Take a timeout and a deep breath" mechanisms into our systems, just because at the end of the day, we're still emotional, silly humans.
I’ve been through all sorts of economic and market crashes over the past 70+ years and have managed to come out of them a bit battered, but still alive. The scariest one was the 2008-9 financial meltdown that actually resulted in an economic bottom that was below 1933. The meltdown nearly took out the global financial systems which would have been catastrophic for everyone.
Now my concerns are the impact of the last 50 years of neoliberal/Bork inspired tax cuts, including TFG‘s most recent cut, and the single handed takeover of the judiciary system by one man, Leonard Leo. The result is an untamed national debt balance of truly epic proportions and a judicial system that no longer cares about normal citizens.
The corporate and high earner tax cuts must be reversed along with reinstating Glass-Steagall and outlawing share repurchases to pay down the debt and reduce the risk of too big to fail bank failures. Resetting SCOTUS and the judiciary will take time.
Gotta say, Glass-Steagall made a tremendous amount of sense, and repealing it was the inverse of sense. I think we see things similarly! I was old enough to understand the GFC, but not actively invested or really paying much attention to anything other than my businesses. Both were very young at this time, and I really didn't put 2 and 2 together than this was an economic crisis we were living through... I didn't have time for that nonsense! I was trying to win customers so I could stay alive.
I was invested and clear-eyed in 2020, though, and I'll be looking over the horizon for the next one from here on out.
The stock market started out as a good idea. It started out as a way for businesses to support each other, by allowing more affluent businesses or people to help a business raise capital for improvements by selling off parts of the ownership. The idea was that when the business expanded and made money, it would buy back the stocks.
It was never meant to be used as a form of gambling.
I’m worried about the role of uncontrolled debt in our stock market. A lot of Americans are living way behind their means and using a revolving door of credit to finance their lives. That’s what caused the Great Depression. You recently wrote about Charles Ponzi…I worry that the whole shebang is one huge Ponzi scheme waiting to fall. Some say that it’s ok that the US debt can’t be entered into a regular calculator in standard notation, that we owe the money to ourselves. I’m skeptical. Do we owe the money to ourselves or to our descendants? Those are different ideas.
Absolutely, everyone should be concerned about this incredible debt burden. At the same time, nobody knows just how it will end, or when the house of cards will come crashing down (years? decades? a century or more? nobody knows).
We need to be prepared for multiple outcomes.
The first thought that crossed my mind when reading your lines about the pandemic-related crash was how it was the first time I got exposed to the concept of circuit-breakers, and how my first thought was: "What's the point? You're just delaying the inevitable." But after a few minutes of thinking, I intuitively came to the understanding that it's just there to prevent panic-triggered herd behavior. It's the equivalent of forcing yourself to count to 10 when you're angry. It's kind of funny that, no matter how sophisticated we get in terms of technology and institutions, in the end we still end up building "Take a timeout and a deep breath" mechanisms into our systems, just because at the end of the day, we're still emotional, silly humans.
Very much so! Many of the minds on Wall Street are among the smartest humans alive, and yet....
I’ve been through all sorts of economic and market crashes over the past 70+ years and have managed to come out of them a bit battered, but still alive. The scariest one was the 2008-9 financial meltdown that actually resulted in an economic bottom that was below 1933. The meltdown nearly took out the global financial systems which would have been catastrophic for everyone.
Now my concerns are the impact of the last 50 years of neoliberal/Bork inspired tax cuts, including TFG‘s most recent cut, and the single handed takeover of the judiciary system by one man, Leonard Leo. The result is an untamed national debt balance of truly epic proportions and a judicial system that no longer cares about normal citizens.
The corporate and high earner tax cuts must be reversed along with reinstating Glass-Steagall and outlawing share repurchases to pay down the debt and reduce the risk of too big to fail bank failures. Resetting SCOTUS and the judiciary will take time.
Gotta say, Glass-Steagall made a tremendous amount of sense, and repealing it was the inverse of sense. I think we see things similarly! I was old enough to understand the GFC, but not actively invested or really paying much attention to anything other than my businesses. Both were very young at this time, and I really didn't put 2 and 2 together than this was an economic crisis we were living through... I didn't have time for that nonsense! I was trying to win customers so I could stay alive.
I was invested and clear-eyed in 2020, though, and I'll be looking over the horizon for the next one from here on out.
The stock market started out as a good idea. It started out as a way for businesses to support each other, by allowing more affluent businesses or people to help a business raise capital for improvements by selling off parts of the ownership. The idea was that when the business expanded and made money, it would buy back the stocks.
It was never meant to be used as a form of gambling.