Unfortunately, there are a lot of powerful people in the government (such as the "Plunge Protection Team") and Wall Street who are doing everything in their power to prevent or slow down the oncoming collapse. It's in their interest to do so -- for example, the U.S. government has already figured in large capital gains taxes into the supposed budget surplus, giving them (for now) increased revenue without raising tax rates.
This damned stock market mania is everywhere -- for example, I recently got back from doing some telecommunications work in Asia. I got stopped by a female U.S. Customs officer who started asking me about my trip, trying to see if I was a smuggler. When I told her what I had been doing, she started telling me how she was into telecom stocks!
We're in unknown territory here -- based on valuation measures like P/E ratios, we have the most overpriced market in U.S. history. People not only have forgotten history (financial manias and the inevitable crashes), they have forgotten mathematics. (see Message 10935364 for example)
Eventually, stock prices will go down, causing serious problems like the destruction of a lot of people's retirement plans, bad debts all over the place, a collapse in real estate prices, and a U.S. government that supposedly had a budget surplus facing hundreds of billions dollars in annual deficits because of declining tax revenues (for extra credit, figure what happens to the budget if tens of millions of people a year start claiming the limit of 3000 dollars a year in capital losses while millions more declare bankruptcy). You could even have disgruntled Yuppies living in their SUVs because they've lost everything else.
Despite the best efforts of many people, this thing will eventually sink. I happened to be working in Thailand during the economic collapse 2 years ago. What happened there will happen here -- you will have a glut of people trying to dump their stocks and real estate with few buyers, you will have massive amounts of goods in business inventories that simply can't be sold, and you will have banks collapsing or being forcibly merged together. |
