CB, Sudden Wealth Syndrome was a global effect, though Japanese had it in the 1980s and have had hangover effects for a decade since 1990. Same for NZ since our big crash in 1987 after a few years of manic financial deregulation.
Alan Green$pan put his finger on what the problem was in 1996 when he queried how it's possible to know whether the markets had moved to irrational exuberance.
Irrational exuberance is a better description than wealth effect because it was irrational exuberance which got people spending money that they didn't really have, other than on paper as a result of the last high bid, for maybe only 100 shares. People thought that because somebody paid a high price for a few shares, that made all shares worth that much.
I'll read your essay. I know you've really made a meal of it, so I expect some interesting explanations and ideas. Over 3 years into the Y2K crash, there's no depression, so it's obvious that loss of market capitalisation of itself isn't sufficient to cause a depression.
Mqurice
PS: I wonder if Osama had a lot of investments in the the Biotelecosmictechdot.com era and was furious that he'd lost a bundle and that's why he attacked the Twin Towers. I bet a few Enron shareholders would like to have blown the Enron HQ up, with Kenny Boy in it. Loss of wealth, even loss of irrational exuberance, can be very psychologically messy. I know of one person who killed himself, a Sier, Kelly Kameyer, who had emotional problems anyway, but loss of $6 million and owing $1 million to USA tax people seemed to precipitate despair. Some people kill themselves, some people take it out on others. Some just go with the flow. |
