MrB, fascinating comments. You said...
"And personal bankruptcies are also at an all time high. Whilst you may not notice a direct effect on the market *today", this certainly has an indirect effect on our market *tomorrow*.
Personal bankruptcies are at an all time high. But what does this have to to with a trillion-dollar U.S. economy?
>During your MBA studies, you may recall that one of the key Intermediate MacroEconomic principles is how personal debt reduces capital injection inflows into our economy.
No doubt about it. However, consider that in today's economy, what we Americans do not contribute as a result of personal debt, is perhaps only a small part of the total picture.
>Witness the Fed bailout of the S&L scandal from a few years ago, and you'll realize that "my debt" could, under circumstances unforseen to you, can become "your problem".
This is a point well taken. And true. However, it was on a "slow burn", as I call it. It was nothing that happened overnight, as in '29.
>World markets and economies have a domino relationship. Those remarks last month from the Japanese official regarding our Treasury securities affected the bond market in hours. So the speed of light seems more like a hatchet rather than a bandage.
This seems (to me) to be a one-sided argument. Things can go just as quickly in reverse. No? I'll admit, however, that the "double-edged sword" that "cuts both ways" saying might apply here.
>I am concerned that the global interdependance of the world's economies, factored with a US stock market that 'appears'to defy the law of gravity, is forcing me to ask "What's the ticker symbol for Campbell's?"
I think the term "global interdependance", as you say, is on target with all the deadly accuracy of U.S. Tomahawk missiles. It is that very interdependance that makes me think a '29-style crash won't happen. The world is simply too interdependent for such a thing to happen again.
Thanks for your brilliant and inspiring comments.
Ice |
