Stock Market

Stock Market Panic! Why is It Happening?

Perhaps stock prices for past few years were to a large extent an inflationary bubble.

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Everything is multicausal, economies and markets are complicated things, and at base the only thing we can know for sure about why prices start to plummet is that, other things being equal, lots of people are more eager to sell than to buy, and as to why that might be, well, I guess you need to ask them if you want to be absolutely sure.

But one culprit in the mix that is largely only voiced on the fringes of those doubtful about the fundamentals of an economy buffeted by the past few years of Federal Reserve quantitative easing and low interest rate policy (making it hard to get decent returns anywhere else, and mere saving is never an option) is the suspicious apparent link between those Fed policies and stock market prices rises, or perhaps more appropriate, stock market price inflation.

See these posts from March 2013 (see to the right the chart from 2013 mentioned in that post) and just last week raising the flag of a stock market rise that might not reflect enduring fundamentals, but temporary Fed policy.

Warning from 2011 (with many links) about how the general atmosphere over the past couple of generations of constant, even if sometimes low on a year by year basis, inflation making mere "saving" a suckers game and "investment" (or loaning the government money) a necessity feed into a financial economy perhaps not as healthy as we might like.

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  1. SELL, SELL, SELL!

    1. According to Fisher Investments, our money manager, selling into this Correction is probably the dumbest thing anyone could do. Talk about getting screwed by the MainScream media… d’oh!

      China’s 10+% average growth was unsustainable and driven by tons of tops-down gooberment plans to drag China from an agrarian economy to an industrial economy about 4-5 times faster than the US, for example, made that transition.

      Now, they’ve realized that the next step in Service Economy, but there’s nobody to live in or service the cities they built in the Last Wave. Communist/Socialist Morons in action.

      Now as the US struggles with our own transition from Service to Information Economy, China enters the picture by supporting data theft. Such wonderful ethics, morals and culture! Right up there with Nigeria… 🙁

      ctd…

      1. ctd…

        As for Quantitative Easing, Fisher points out the Ending or Tapering QE’s tends to free up MORE bank money for Real Loans to Real Companies, so those fears are BS, too. When the Fed guarantees an interest rate for banks’ money AND demands lots of reserve cash IN the banks, banks have got to be really stupid to take on higher risks, like… OMFG… loans to companies and to People!!!

        Mainscream media doesn’t have a fucking clue as to the connections. Neither does Obama, Hillary, Sanders or anyone else who thinks the gumblement can fix things… Morons!

        Oh, and Greece’s GDP is smaller than a lot of States’ “GDP’s” in the US… in the Big Picture, they’re mouse-nuts, and their problems are self-inflicted, but everyone freaks out when Greece sneezes. Great to ignore ’em, if you can.

        Subscribe to MarketMinder.com and ignore ALL the talking heads on TV and ALL the bloggers who preach doom and gloom OR tell you what to do with your savings.

        Just watch. It’s a Correction, not a Catastrophe. The “Catastrophization” of all issues is what’s hurting the US more than any ‘reality’ that’s out there.

        1. pps…
          If you were to take that snazzy, scary graph, plot the same data over maybe 100 years, AND graph it on semi-log paper, as I have, you’d discover that for about 20 or more years, the graph was pretty flat, then it ramped up for the next 20 or so years, and in the past ten or 15 years, got pretty “flat” again… on semi-log scales.

          I infer that we may have another 5-10 years of “relatively flat” followed by 20 years of faster increases.

          I’ll probably die of old age before that, but I’m not losing any sleep NOW over the stupid headlines and reactions of the MainScreamers. And ALL of MY living expenses come from Social Security and withdrawals from IRA accounts, and have since 2002 or so.

          Or you can join the MainScream mental-masturbaters in their ‘excitement.’

          Enjoy, one way or the other.

    2. The panic is strong in this one…

  2. Others say, “HOLD, HOLD, HOLD!”

    1. Central bankers say: “What bubble?”

      1. And with this decline, Wall St makes its case for continuation of more bailouts to prop up financial sector balance sheets.

        Keep subsidizing us with free money or we’ll drive everyone’s 401k into the dirt.

  3. As the Russians say, “chto delat?”

    1. As the Chinese say, “Sheme paomo?

      1. As Curly says: “Nyuk, Nyuk, Nyuk.”

  4. I, for one, am investing in wood to take advantage of the opportunities afforded by an Alien Apocalypse: https://www.youtube.com/watch?v=ZvIa4o38dJ0

  5. Markets on practically every continent are heavily manipulated by monetary policy, stimulus and government meddling.

    We keep talking about a “libertarian moment”, but we only seem to be interested in talking about it in terms of social attitudes towards sex or consumer choice.

    But there’s a huge elephant in the room in regards to massive currency manipulations and a government that systematically destroys the wealth of its people through large-scale wealth transfers. And I ain’t talking about welfare…

    1. But without government providing sane controls on unbridled capitalism the problem would be a thousand times worse! Don’t you understand!?

    2. we only seem to be interested in talking about it in terms of social attitudes towards sex or consumer choice

      Well, you work with what you’ve got.

  6. Don’t tell shriek!

    1. He’s already losing what little mind he had left over in the other thread.

  7. Warning from 2011 (with many links) about how the general atmosphere over the past couple of generations of constant, even if sometimes low on a year by year basis, inflation making mere “saving” a suckers game and “investment”

    It is not true that we were seeing low inflation year by year. Inflation is the rapid increase in the money supply. Whether this translates to higher prices only depends on how rapidly the money is released into the market, but rising prices is NOT inflation – that’s just raising prices.

    1. I have been tilting at that windmill for far too long now.

      Have fun with it, it needs to be said.

        1. Who is Fred and why does he have all of our money?

  8. You are correct, OM, but unfortunately the Top. Men. and all their sycophants think inflation is just rising prices.

    1. Speaking of which, WTF is up with eggs lately? Over $4 for a dozen. Milk is ridiculous too and while I know that’s total price controls not sure about eggs.

      /not a sycopahant

      1. Two factors:

        Avian flu

        California’s new regs requiring that chickens now have more space – hence, lower density of livestock in coops, (and probably, egg producers won’t be able to increase the capacity of their facilities as fast as consumers would like)

        1. Yes, but CA’s requirement is fucking those of us in other states, because CA requires (I believe, someone correct me if I am wrong) that even if the eggs are produced in another state, they cannot be sold in CA unless the coop space conforms to their regulations. So, basically, if an egg producer in another state wants to sell in one of the biggest states in the US, it has to conform to CA’s regulations even though it is not based there. Therefore, we all feel the effects of CA’s law, even though we don’t live there.

          CA politicians sure find ways to spread its government’s financial and regulatory stupidity around to the rest of the US, don’t they.

          Though I would say that the flu epidemic is probably the majority of the price increase and should go away eventually.

          1. CA politicians sure find ways to spread its government’s financial and regulatory stupidity around to the rest of the US, don’t they.

            They’re just imitating the Feds.

          2. That’s been that way for years. See CARB compliant power equipment.

          3. Correct: CA forces other states to comply. FUCK CA! Can’t wait to sell the house in a few years and GTFO!

      2. Ahh I had no idea there was a bird flu going on.

        Just read a Bay Area story about this. I shit you not:

        “A possible bright spot for California’s egg industry: Pasture-raised egg farmers have seen an increase in business, now that their $9 eggs no longer seem so expensive.”

        Outrageously overpriced food for everybody! Yay!

        1. “[Alice] Waters: I do feel like food should cost more, because we aren’t paying farmers a living wage. It has to cost more. Even to arrive at the right price for conventionally priced food we have to pay more.”
          http://www.pbs.org/wnet/need-t…..dren/4507/

          Not enough starving poor people.

          1. But don’t forget how she wants to feed everyone thru the public school system:

            Feeney: What about the flip side ? the families struggling to make ends meet. If food is more expensive, how do they access the kind of healthy, organic food you value so much?

            Waters: Well that’s why I want to go to the public school system. I believe there should be breakfast, lunch and afternoon snack, all for free and for every child that goes to school. And all food that is good, clean and fair. It’s unfair to charge for food in schools, especially to charge for food that is making children sick.

            1. The solution is obvious ? fixing the food access problem with Obamacare 2.0: The Egg Mandate.

              You will now be required to buy free range organic eggs or pay a 416$ tax for not buying 9$ eggs once a week.

              1. I don’t understand what heartless bastards could be against this type of program. Perhaps the grumpy old gun clinchers prefer kids to never enjoy a filling breakfast? but seriously eggs are high in cholestral and darn unhealthy….it makes more sense to just inject the kids with a new synthetic protein that Merck, Monsanto and Glaxosmithkline have co-developed. The leading scientist in the world are consensusly assuring us it is the healthiest thing ever developed. It uses the thimeresol preservative which has been proven to be safe and it can be provided to all kids for only $8 per day if we can get it mandated for all kids so that economies of scale can be utilized. Every person who opposes this plan is basically trying to prevent guud nutrishun for poor kids….because if some opt out then the costs will only go up.

            2. It’s unfair to charge for food in schools, especially to charge for food that is making children sick.

              Wut.

              Gee, why don’t we just send all Americans to their nearest school for feeding time? Eliminate all those wasteful kitchens and restaurants.

      3. So inflation is no longer a drop in the value of paper money?

      4. What you need is more Monsanto for breakfast and Merck Vaccines for dinner. Eggs are high in cholestral anyway…the high prices are probably making you healthier.

  9. WaPo’s cutting edge report on the real issue here.

    Most of the worst market crashes (defined here as a percentage of market value) pre-date the modern era of incessant polling and evaluation. How was Herbert Hoover polling before and after Wall Street cratered in 1929? Hard to say, given that the Gallup organization wouldn’t exist for another six years.

    With recent stumbles, though, we can take a closer look at apparent effects. And the good news for President Obama is that big drops in the Dow don’t really correlate to big drops in presidential approval ratings

    1. Phew. At least one disaster averted.

    2. So his 2016 campaign is still solid!

    3. because who cares if the country is going to shit so long as the guy leading it has good approval numbers.

      Just think about the implications of that statement.

      1. Do you want us to lose our reward in Heaven?

        1. 72 Obamas? Dear god no.

      2. The country is going to shit, except where it really matters.

    4. The GOP and Dems both backed prohibition in their 1928 platforms. Herb Hoover offered to enforce to the hilt and Al Smith to nullify. Just before Hoover took office, penalties for beer crimes went to 5 years in the pen and a fine of $10,000 gold dollars, and Hoover and Ass’t A.G. Willebrant used the new income tax to crush the narcotic alcohol. Once the economy was completely wrecked by AML bank account confiscations, the Democrats added a prohibition repeal plank and that made FDR President for Life. But prohibition was only half the problem. The income tax from the 1848 communist manifesto has been injected here 3 times, twice masked by wartime and once (the Panic of 1893 and ensuing depression) exposed in peacetime. Sooner or later folks will learn. The newspaper accounts are on microfilm in libraries everywhere and the rest is in published presidential papers. Overspeculation and correction are both circular reasoning convenient to the DemoGOP Congress.

      1. Er…ok. Thanks for stopping by and sharing.

      2. This revisionist conspiracy theorizing has gone too far. Your scaremongering about “the communist manifesto” is a modern form of McCarthyism. You and your fellow anti-semites have been discredited enough already. Please save yourself the embarassment and stop commenting with your rubbish.

        The truth is we could not have defeated the Nazis or the communist without a income tax. That is what helped fund our freedom that we enjoy today. If you don’t like it perhaps you should move to North Korea.

        1. I’m not sure that telling those that complain about the communist manifesto to “move to North Korea” is the cutting remark you think it is.

  10. Bubbles don’t happen in a vacuum.

    1. *checks old college physics textbook*

    2. Steam bubbles inside of a turbine condenser before they hit the tubes or the hot well. Usually occurs at a pressure of 15-27 inHg.

      What else you got crafty mammal?

      1. I note that no part of your little experiment contains the word ‘vacuum’.

        1. What, do you expect a complete vacuum? I don’t think that such a thing exists.

      2. Inches of mercury? What Steampunk world do you inhabit?

      3. Unless you’re in the gulf and ambient water temperature is over 90F.

    3. Bubbles don’t happen in a vacuum.

      We need to move the stock market to the International Space Station! #CallYourCongressman

  11. Obama inflated the bubble prosperity. Bush crashed it. Fact.

  12. “We have to get a hold of Valentine and tell him to sell!!!”

    1. +$1

  13. Stocks are cheap today (US only).

    Price/earnings multiple is 15 – well below bubble levels (like in 2000).

    1. It’s not the pricing that’s questionable, it’s the the earnings as well.

      1. Why? Who is cheating? Name names!

        Now the oil boys won’t meet earnings projections with WTI at $39 and falling due to our supply glut.

        The rest of the US economy is banging away.

        1. The rest of the US economy is banging away.

          At $18,000,000,000,000 in debt, I’m not sure I would call it “banging away”.

          Why? Who is cheating? Name names!

          It’s not a question of corporations “cheating” on their earnings, it’s a question of federal policy inflating America’s bottom line through endless QE

            1. QE 3 ended last year, interest rates remain at zero for the longest period in American history.

              If you consider interest rates as Fed “ammunition” to fight economic swings, the fed has zero ammunition to deal with a downturn.

              1. So what? The market sets interest rates (about 4% for a mortgage last I looked). The Fed sets the Fed funds rate which is only what banks pay each other for overnight loans.

                1. Which in turn distorts the market rate, which is why we are where we are.

                2. Re: Peter Caca,

                  So what? The market sets interest rates (about 4% for a mortgage last I looked)

                  The market is being distorted by a barrage of cheap credit.

                  The Fed sets the Fed funds rate which is only what banks pay each other for overnight loans.

                  Which in turn lowers the cost of risk for said banks. The banks can then, in turn, create credit out of thin air which lends at a lower rate than what the market would bear otherwise and still do it at a profit. The problem with this process is that there is a disconnect between credit and actual savings. Since the banks issue credit out of thin air ? credit that turns into money ? the market actors act like there are more savings (more capital, more capital goods, more untapped labor and raw materials) than what there actually is. The market actors act like the public is saving for bigger things, thus the investment in long-term projects for which there is no real demand. A central bank that acts like an arbiter of rates and lender of last resort is acting like the bar tender who encourages the patrons to drink more by telling them they do not look drunk.

                  1. OM, it doesn’t matter.
                    If it’s bad, Bush did it.
                    If it’s good, Obo did it.

                    1. Only a slight revision of the “If it’s bad, Hoover did it. If it’s good, FDR did it.” story of the Great Depression.

                3. If there were a timber cartel fixing prices for wood and timber, you could technically say the market determines prices for tables and chairs. But your narrative is a lie since the market is determining prices based on the cost of the factors of production, which are made artificially high by government sponsored cartel.

        2. “The rest of the US economy is banging away.”

          All commodities are down due to anemic demand, trade with china is way down, Consumer confidence is way down, retailers are all reporting horrible earnings, warehouse inventories are way up, tech stocks are awful and dropping like stones (Unless you are Apple they never had earnings), and the employment participation is as bad as it ever was.

          You are insane Shrike. The economy is in an epic recession.

          That said I hope you sold like I told you to. If not it is not to late to do so. Seriously dude get the fuck out now. It is going to get a hell of lot worse before it gets better.

          1. All commodities are down due to anemic demand

            You mean “Strong US Dollar” and a glut in the case of oil.

            The rest is bullshit.

            1. Nope the rest is 100% true and you just can’t deal with it and our shitty economy.

            2. Strong U.S. Dollar? Lol. Purchasing power has been continually robbed through currency debauchery. Only idiots believe fiat money and fractional reserve banking are good things and benefit individuals.

              Someone comes with Monopoly money and wants to buy your home with it. You say no. Then a politician comes with them the next time and says “this Monopoly money is backed by the full faith and credit of “top men”…..oh my!! Politician says it’s good!!!! Sell the house for that paper!!!!!

            3. Have a look at copper prices. Check out aluminium. Go from there. It’s not good.

          2. The economy is pretty great actually!

            With the stock market tanking I thought I’d help cheer you guys up with some positive news! There is still a lot of great opportunities in this economy as long as we keep those homeland security budgets up at reasonable levels. The free market will deliver as long as we keep rule of law and serious politicians in place from either side of the aisle.

            Look at LRAD http://www.lradx.com/

            the sound cannons they make are a huge growth business….even third party press is talking about it!

            https://goo.gl/JNm1Ai

            look at the partners like L3!
            http://www.lradx.com/about/strategic-partnerships/

            all these great american companies to choose from! You guys should be proud!

    2. Jordan|8.24.15 @ 12:07PM|#

      Central bankers say: “What bubble?”

      Predictable as the sun.

    3. Actually S&P P/E is much higher, It’s well into bubble territory, and those earnings are going to shrink just like in 2008.

        1. S&P running around 20, so not “much” higher, but higher.

          http://www.multpl.com/

          1. I use the Wall St Journal and they use a forward P/E since investors look ahead.

            1. Forward = fantasy

  14. Netflix now up $5. Hilarious! There is a P/E of about 80 and they are buying the shit out of it (I wish I owned it).

    1. I do own it. One of the few winners I’ve got.

      1. My Spider puts are doing pretty well. I haven’t decided when I’m pulling the trigger. I wanna see where this is going.

  15. Markets are the greatest invention in human history. Dow down less than 1% now. All the Zerohead Inflation crybaby crowd moaning.

    1. Less than 1% from this morning or 1% for the calendar year?

        1. Ignoring the past week’s declines = brilliant Keynesian economic analysis

          1. Well he’s “forward looking”

            1. -634.77 (-3.86%) Real-time: 3:00PM EDT

              1. Perfect.

    2. I know we say this a lot, but holy shit you’re stupid.

  16. I’m going to tear all my Federal Reserve Notes in half. Then I’ll have twice as much money.

    1. That’s called Krugnomics.

    2. Shriek approves.

  17. Nobody can reliably and consistently predict future economic events/ scenarios/ market moves etc.etc.

    They might occasionally get lucky, but that’s about it.

    ‘Truth is, it is not even necessary to be able to predict future economic events – all that a long term saver really needs is a simple, balanced long term savings protection plan that simultaneously protects the savers savings from inflation, deflation, recession, and at the same time allows the saver to sufficiently profit in times when the economy is booming, whenever that might be.

    So personally, I don’t worry about the latest “crisis” as outlined here, simply because the simple savings plan that I have used and recommended since 1986 has always worked to date , and will continue to work, regardless of what happens to the world economy:

    http://onebornfreesfinancialsa…..pdate.html

    Regards, Onebornfree
    Financial Safety Services
    onebornfreeatyahoodotcom

  18. Fucking corrections, how do they work?

    1. This correction isn’t anywhere near big enough. IMHO. And no, I’m not talking about this morning, I’m talking about the week.

      1. I agree. It seems half the economy is running on leverage at this point. If we don’t correct more sharply in the near term, it will be a nuclear event when it does come.

        1. Banks levered up 40-1 or more before the 2007-08 crisis. Capital rules don’t allow that now.

          1. Capital rules don’t matter; only price signals do.

          2. From a technical viewpoint:

            There’s a huge amount of money that has flowed into the private markets as of late. Uber, which Reason loves, has a valuation of 63.5 price to sales, not earnings, sales.

            Non-performing loans are also on the rise again, which is almost always the death knell for a bull market.

            1. This is to say that the private equity markets are over-inflated and due for a big pop. The ripples will travel back into the stock market.

          3. Banks levered up 40-1 or more before the 2007-08 crisis. Capital rules don’t allow that now.

            By capital rules, you’re talking about private sector banks? Because right now I think the Fed is levered slightly… slightly above 40-1.

  19. Has the President addressed the nation yet?
    I’m certain the soothing words of one of the great minds in history will soothe the frightened and confused among us.

    1. The Late P Brooks|8.24.15 @ 1:01PM|#
      “Has the President addressed the nation yet?
      I’m certain the soothing words of one of the great minds in history will soothe the frightened and confused among us.”

      I wanna be real short in advance.

    2. I’m thinking a GWB style “I have to destroy capitalism to save it” speech.

  20. I’m mostly annoyed it started going back up before I could buy more.

    1. Grab that knife! Try not to get blood on the rest of us.

    2. Surf that tunnel wave! You’ll get another chance

    3. I’m hoping it tanks for the next couple of days so I can be sure to get a nice low price with the money I’m investing. That sudden rebound after a correction is the best

      The more people convinced it’s the apocalypse, the better off I’ll be when the market goes back up (which it always does).

  21. He who defaults last wins.

    Err, maybe.

  22. “The results are in. Unfettered free trade has been a disaster for working Americans. It is high time we ended our disastrous trade policies.” ? Bernie Sanders, 24 Aug 2015

    1. Does he mean we should be winning at trade because he’s a winner? Seems like I’ve heard this one

    2. It never ceases to piss me off, this demagoguery about “working Americans”. Because I went to college, served my country, and now have a career in which I don’t have to pick up dog-shit for a living, or continually clean the grease out of my fingernails I am not a “working American”. The world needs ditch diggers, but don’t tell me how they are the backbone of society or that all our fucking policies should be geared towards them. Or fucking McDonald’s workers. (Never mind that the policies themselves don’t ACTUALLY help them.)

      Fucking proletariat bullshit.
      Different asshole, but the same shit coming out of the demagogue.

      1. Nevermind that this country hasn’t seen “unfettered free trade” in living memory.

        1. Or any memory. America in the 1800s had awful trade policy.

    3. I seem to recall a major stock market correction some time ago that was followed by a wave of protectionist rhetoric finally culminating in the Smoot-Hawley Tarrif Act in 1930. And nothing else happened.

      1. The 1930 tariff wasn’t that different from the 1922 tariff. But from 1928 through 1933 major liquidations coincided with congressional efforts to publicize the content of corporate income tax returns. When Herb Hoover did it by Executive Order in 1933, every bank in the country closed within a month. Major drug and alcohol busts and trials in the same timeframe produced a parallel series of breaks and crashes. European fighting over war reparations didn’t help, but the income tax and prohibitionism continue to wreck our markets to this day.
        Now, do you expect the congress that wrote those policies and the bureaucrats they own to admit this is true, repeal the income tax and stop kicking in doors?

  23. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.online-jobs9.com

  24. What percentage of Americans even have a substantial financial stake in the market? The huge percentages of Americans that have little or no retirement savings seems to indicate that the stock market isn’t that big of a deal to quite many people. Investing is for rich people, right?

    I’m lucky my dad opened a brokerage account for me at 18 and forced me to stuff my few hundred of dollars of savings into it and gave me a small percentage match on investments. Even played a game where if my portfolio beat his I would get a bonus. I felt really smart and cool about my investments until 2008-09 where I freaked out and locked in some substantial (to me) losses. I think I ended up with a cheap lesson from those years in the end. This time I am more established with a mix of assets and liquidity. I feel ready to take opportunities as they present themselves.

      1. Most American’s don’t really follow the markets, but many are heavily dependent on them, whether in 401ks or pensions.

        Actually, the impact this entire cratering could have on the ability of states like Illinois and California to meet pension obligations could be monstrous.

        1. Not at all! We couldn’t meet those obligations in the best of times!

          /Illinois

        2. When I told my wife the market was tanking, she asked: “Do we have any stocks?” Nearly shit my pants. Then I laughed and said: “Our 401k…your IRA…what do you think that is?”

    1. “What percentage of Americans even have a substantial financial stake in the market? The huge percentages of Americans that have little or no retirement savings seems to indicate that the stock market isn’t that big of a deal to quite many people”

      It’s an interesting point.

      Average people being able to use their discretionary income to procure the means of production was a major advance from an historical perspective.

      That the government would make it harder for people to invest money and buy the means of production that way should be seen by the left as an unmitigated evil.

      You’re too stupid and ignorant and uneducated to own shares in companies and vote on the board of directors, etc. is about the nastiest form of class discrimination possible. That’s what racists told blacks during slavery and Jim Crow.

      The difference between a slave and a serf is that an abject slave doesn’t really have any rights whatsoever, but slaves and serfs are the same in that neither has any reasonable hope of ever owning a share in a profitable enterprise.

      1. That the government would make it harder for people to invest money and buy the means of production that way

        Nonsense to “justify” more of your wacky hysteria. The “lack of retirement savings” is by individuals … but more than offset (overall) by pension funds.

        Pension funds have a total value of roughly $25 TRILLION (not counting 401-ks and individual retirement savings), which is more than the total market value of the NYSE. Normally they would be 35-50% in interest-bearing instruments, so with near-zero interest rates roughly $10 trillion is now propping up demand for equities, which will collapse when interest rates return to historical levels.

        Paraphrasing you, “You’re too stupid and ignorant and uneducated” … to know that pension funds CONTROL the stock market. And have for decades.

        1. “Nonsense to “justify” more of your wacky hysteria.”

          I’d ask what the fuck you’re talking about, but a better question is–who the fuck cares what you’re talking about?

          “Paraphrasing you, “You’re too stupid and ignorant and uneducated” … to know that pension funds CONTROL the stock market. And have for decades.”

          Paraphrasing me?

          You have no idea what anybody in this forum is saying or why, you angry, senile old bat.

          1. I’d ask what the fuck you’re talking about,

            (smirk) The Law of Supply and Demand.

            “Paraphrasing you, “You’re too stupid and ignorant and uneducated” … to know that pension funds CONTROL the stock market. And have for decades.

            Paraphrasing me?

            Umm, the words in quotation marks. Do you even know what pension funds are? Supply and Demand?

            You have no idea what anybody in this forum is saying or why, you angry, senile old bat

            “The rage is all yours. Mine was ridicule,” laughed the 73-year-old victor.

  25. Huh, now we’re down 346. Interesting how small this looks now.

    1. Why can’t they just settle on a price and leave it there for a while?

      Who’s in charge of setting prices on the NYSE anyway?

      —-Memo from the Oval Office

  26. Everyone is pouring into the dollar, especially our treasuries, as a safe haven, but it will be interesting to see what this devaluation is likely to do to China’s ability/willingness to buy our debt at new auctions in coming quarters.

    Gold hasn’t rallied much because the world isn’t concerned about inflation, but if China is worried about shoring up its currency over the long haul, they might be more inclined to pick up more gold at the expense of U.S. debt–which I believe is the trend already.

    Regardless, over the long term, if China can’t afford to buy as much U.S. debt as they have in the past or if they simply aren’t as willing to buy into new auctions at circa 2% for ten year treasuries, then that may mean higher interest rates are on the way on our debt.

    1. Lawd I hope you’re right. We need expensive debt now!

      Gold has been the one commodity that has not only stubbornly refused to fall in recent months but is not gradually rising. Most interesting.

      1. And China has been buying it like crazy–recent pauses aside.

        Even as they devalue, eventually they want to be a competing reserve currency, and buying gold works into that–especially if treasuries are rallying and gold isn’t.

    2. 2% for ten year treasuries, then that may mean higher interest rates are on the way on our debt.

      Nah, the Fed will keep them at zero. Oh wait, you mean the Fed doesn’t control what China charges us?

    3. How many here have read the July 2015 FATF report titled Money Laundering/Terrist Financing Risks and Vulnerabilities Associated with Gold? (Your taxes paid for it, so download already)
      China and India are major players in gold, and have enacted the communist income tax right out of the 1848 Manifesto. Your government organizes this stuff, hires cadres of bureaucrats and looters to push it, and I’d be surprised to find a single anti-tax gold bug here with the foggiest clue as to what is going on in the looting industry. The looting industry is what maintains the “unproductive hands” Adam Smith talked about. Looters grab, money flees, liquidity collapses. This is a clearly visible hand–visible to any who bother to look.

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    1. Ironically, I imagine these 50 Cent Army types are probably browsing for new jobs when their bosses aren’t looking–even as they get paid 50 cents an hour to post this shit.

  28. Stock Market Panic! Why is It Happening?

    Uhh…Bane?

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  30. What percentage of Americans even have a substantial financial stake in the market?

    Anybody who has an insurance policy or expects to get a pension not comprised of freshly printed Federal Reserve Notes, for starters.

    1. And among them those who *HATE* Wall Street and corporations!
      Yep, burn ’em to the ground! Cut off that nose to spite that face!

  31. Revealed faith and resentment of the WWI Federal Reserve are fun, but even with added arm-waving do not explain what causes crashes/depressions. But new data is made possible by computer speed. As Reagan and Bush prepared their replay of Herb Hoover’s prohibition enforcement in 1986-7, London stockbrokers computerized their trading system, dubbed “The Big Bang.” Orders firing everyone not pissing in a dixie cup went out to America’s largest employer as Congress passed hundreds of pages of prohibition, asset-forfeiture and tax grabs under the neologism “money laundering.” Liquidity disappeared then for the same reasons as in 1929, 1931 and 1933. The new flash crashes are an instant laboratory. The FATF and Treasury Dept. homed in on bank deposits belonging to Colombians on May 06, 2010. Instantly there was an algo-fired “flash-crash”. The day the Clinton Administration sent money-laundering rules to Congress there was also a flash crash, and just this March, the flash crash coincided to the day with release of the “money laundering and financial crimes” report from State. The explanation in Atlas Shrugged: “money was always seized by looters of one brand or another…” fits the facts. Surely Reason can do better than parrot disinformation by “both” parties that have never admitted to having been wrong.

    1. No offense, but what the hell does that have to do with anything under discussion?

    2. Total bullshit.
      1) Volcker increases interest rates to fight double-digit inflation. Craziest move of the century.

      2) Double-digit interest rates on savings and investments, versus banks and S&Ls; limited by Fed Regulation Q law to paying 5-5.25% on deposits.

      3) Money abandons banks and S&Ls; in droves, seeking double-digit interest in even simple mutual funds. “Disintermediation” a major issue in the 1980 campaign.

      4) Fed repeals Regulation Q, allowing banks to pay market interest rates,

      5) Banks and S&Ls; soon paying double-digit interest rates — to service FIXED-RATE underlying mortgages at 6-8% interest. (that’s WHY it was so dumbfuck)

      6) S&L collapse was barely avoided as losses mounted. New mortgage rates moved to double-digits to curb losses, but variable so they would rise and fall (mine began at 11.3%, eventually declining to 8.0% when it was refinanced at a fixed rate — true for the entire economy).

      7) The tax “reform” of 1986 collapsed it all, an unexpected fallout from repealing Reagan’s depreciation reforms on real estate (which also destroyed our industrial base, starting the loss of higher-wage jobs which is the true cause of 30 years increasing income inequality — shrinking percentage of high wage jobs.)

      1. And THAT suddenly collapses the money supply and brings on a liquidity crunch? Nice windmill, bad argument. Go back to what is happening in gold in “that” part of the world. Read more treaties and laws, watch less teevee.

        1. And THAT suddenly collapses the money supply and brings on a liquidity crunch?

          Ummm, no. (laughing at the dumbass gold nut)

          As real libertarians know, Milton Friedman demolished the gold standard with a simple question: “Do we want stable prices or a stable money supply?” DUH. Stable prices, which the gold standard FAILED to achieve since before our founding.

          Friedman’s Nobel came from his proving the Law of Supply and Demand also applies to the price of gold. (gasp) That he had to prove it says a lot about those assholes.

          As the Industrial Revolution ramped up the demand for gold, the supply was incapable of keeping up …. which is why silver HAD to be added …. but there was STILL deflation throughout the entire 19th century, except for the inflationary War of 1812 and Civil War,

          Indeed, gold helped launch Marxism. As Marx kept screeching about the exploitation of the working class … their wages had been cut steadily for over a century, not from capitalist greed, but from the gold-fueled deflation. That Marxism is still a threat also shows the gold standard’s continuing damage to freedom.

          But the puppets will not be denied.

  32. The biggest problem with having predicted this for years is this:

    Before you’re right, it sucks. Once you’ve been proven right, it still sucks.

    So.. yay… I was right… party and all that…

  33. 3rd item from the top on Google News:

    “What Market Swings Mean for Inequality” – Wall Street Journal

    Et tu, WSJ?

  34. Stock market evaluations are absurd. If I have a rental condo for sale this has a real value. It has replacement value for one thing, which is not hugely relevant. But, mainly it has a cash flow which can be compared to a bond, which is the benchmark investment.

    Stock market values have little to do with the real value of the company. The real value of the company is what a prudent buyer would pay for it. I.E. usually about 2-5x net, plus sometimes something for hard assets that are irreplaceable.

    PB above is saying valuations are low, only 15x net. These are absurd numbers. I could go into lots of reasons why, but simply put the value of the company has to return its capitalized value plus inflation, plus profit, over the length of time one can reasonably expect the cash flow to hold up. Which is why companies sell for 2-5x net to a prudent buyer, not 15x net.

    Amazon, last I checked had a real net of about 1/2B per year. It was selling at the time at about $300B. Or, about 600x. The amazing Elon Musk has a company, Tesla, that was worth about $30 B not too long ago, and it nets nothing. It is not worth $30 B. Not even close.

    1. The reason why these numbers are so high is partly because of the Fed, but mostly because of baby boomers. Starting about 25 years ago baby boomers began to think about their retirements. They began putting cash into the market.

      When more cash goes in than goes out on any given day the market as a whole goes up. When more cash goes out, than goes in, the market goes down.

      Most baby boomers are living well above their long term ability to live. They are spending all or most of their salaries if still working, and/or some of their savings. When the salaries are all gone, as they will be within 5 years, and the savings are all gone, what will happen is people will take out their stock market savings.

      I suspect this has just started to begin.

      Expect when this happens in full a long and sustained bear market. It will last until the next bulge, when the children of the boomers, begin to save in earnest for their retirement.

      1. Near-zero interest rates have a LOT more to do with inflating the stock market than boomers per se. There is now no mix of equity and interest-bearing instruments, adding a temporary prox $10 trillion demand for equities.

      2. this helps explain why we need to have the Federal reserve engage in QE at least until this demographic crisis ends….The Fed can step in and be a buyer of last resort until demographics improve….helps keep everything fair and even amongst generations. It really is a good deal for the millenials that Bernanke invented QE…someday they will make a statue in his honor.

    2. Well, in fairness, a stock is worth what someone is prepared to pay for it. When sufficient shareholders value a pile of cash (after appropriate tax and transaction costs) over an electronic entry in a ledger they’ll sell en mass and force the price down.

      QE has simply resulted in nobody valuing a pile of cash very highly.

    3. First – no, your condo has no “real” value. See “housing bubble”.
      Second – stocks have the same value as your condo, plus an extra due to “good will” or “expectations”. But so does your condo, if you now live in a good neighborhood. Let the hood deteriorate, and then see what your condo value is. Same with stocks.

  35. Corrections are good. If your investing every paycheck into your 401k you don’t want to be paying inflated prices. Nice reminder though to check your allocations the closer you get to retirement. I have a long ways to go so I’ll take the cheaper stock prices right now. At some point those interest rates will be going up though.

  36. i blame the bloodthirsty DAY TRADERS. They are always jumping around to be “ahead” of everyone else in the market. The Day Traders cause the market to swing when there really is no reason, and when there is some bad news, cause the market to over react.
    I say TAX MARKET TRADING!!! Tax each trade at say .1 % (.001) of the trade value. That would not harm real investors and retirement savers, but kill day trading.

    1. Good idea….and we can use the tax revenue stream to fund a good cause….like perhaps rule enforcement for a global marketplace for a free market under carbon cap trading system to help give us a better climate.

  37. Despite the conspiracy theories and all, it’s actually the most obvious – Supply and Demand.
    With interest rates near zero, money abandons interest-bearing properties and shifts to the stock market, On pension funds alone, that’s over $10 trillion in higher demand. Then add retirees and individual retirement savings, demand severely outstrips supply and stock prices increase sharply. For now.

    And when interest rates return to historic levels, a market crash is inevitable, and unavoidable. There’s no escape, just as there was no escape from the Fed inspired crash that Reagan inherited – a 70% loss. Has nothing to do with inflation or the lack of a gold standard. Simply dollars chasing the best return, manipulated interest rates and Supply and Demand, but the hysteria mongers are feeding their cults otherwise. As always.

    1. That’s… interesting. And the best comment I’ve seen you make here in a while.

  38. Why are stock markets worldwide crashing?

    The answer is 42.

  39. “Inflationary bubble”

    Hahahaha… At least you guys don’t change. The stock market is down by 13% since it’s high after a historic run up and right-wingers are already crowing about their decision to stuff their pillows with fiat currency and gold ingots. I made a pretty good chunk of change in obama’s socialist hellhole, but i probably could have made more if I only invested in se?or Ron Paul’s magical gold carpets. I missed out, I guess.

  40. We all know it’s Obama’s fault! You don’t need several paragraphs to explain this just two words: Obama…fault.

  41. While it may be difficult to come up with one item to explain the economic crisis, because of how complicated it is(unlike Global Warming which scientist have consensusly decided is caused by the lack of a carbon tax)…..let me take a stab:

    If there is really one cause of the current crisis….it will eventually be made public by the serious investigative journalist. Here is my prediction of what the best financial experts will conclude: Right now we have all the central banks randomly executing their monetary policies in a politically selfish manner. If China had been thinking in a more worldly manner they would have devalued in the manner they did. For the good of the world the different central banks would cooperate.

    That is the biggest weakness of the current set up…we have made great progress in getting all the countries set up with Central banks(even Lybia and Iraq thank lucifer!) and organized via the BIS…..but there is still more harmonization that could be done.

    We need one world central bank with more authority to act without fear of bickering local politicians mucking up the greater good. Hopefully in due time we will get this problem fixed. We may just need a financial crisis big enough to overcome the wailing and whining from the american redneck class that gets confused by “teh big numburs” involved in international finance.

    1. ..it will eventually be made public by the serious investigative journalist. Here is my prediction of what the best financial experts will conclude:

      Simple! Near-zero interest rates have shifted over $10 trillion to equities from interest-bearing accounts. Plus several trillion more from 401-Ks and individual pension savings. This inflates the demand for equities, which created a bubble (see Law of Supply and Demand)

      But bubbles burst for many reasons other than the cause, which is why they’re called bubbles.

      Our Fed has backed us all into a deadly corner. When interest rates are allowed to reach historic levels, all those trillions will abandon equities and return to interest-bearing accounts … thus creating a “reverse bubble” … aka a crash. (see Law of Supply and Demand)

      For now, let’s all sing along, “WorldBank, Worldbank, Uber Alles …”

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  43. Look at a 6-month chart of gold prices. There are depressions beginning at the March release of the State Department AML report released the day of the flash crash. See also the depression in gold when the FATF terrist-financing with gold documendacity was released just a month ago. Now, change the subject, wave arms or say it is all coincidence?

  44. I suspect that the people who are panicking are the people who don’t understand why.

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