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stock_creeper
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Stock market researcher, investor
  • Economic Truth [Edit or Delete]0 comments
    May 25, 2011 11:36 AM
     The goal of these articles is to inform the reader how the new economy works while providing actionable investing advice, instead of whining about how the economy should be. We want more jobs, long bear markets, cheap gas, high interest rates, budget surpluses, and ‘lessons learned’ but it ain’t gonna happen. The events that happened in 2008 were a wakeup call- one we will fortunately sleep though as the dow rallies to 13,000 – a nearly hundred percent gain from the March 2009 lows. The truth is risk, speculation and leverage is making a comeback and it won’t be going away anytime soon, and this is good for the economy because when we deleverage and overregulate the free market loses.

    Linkedin stock, for example, is still above $90 and hasn’t imploded as so many were predicting would happen by now. China’s economy doesn’t need to ‘land’ ..it’s growing faster than ever. I remember reading articles as far back as 2006 about how China’s economy would derail, how real estate would crash, the suicides at foxcomm, the ‘ghost towns’ etc. The blogosphere , in particular, has a preoccupation with negativity, and even if they are right, the outcome will unexpected. It’s widely believed that the unemployment rate is 20%, and I will not deny that it is very high, but the economic impact, however, isn’t much. This is where the blogs get it wrong by equating ones’ own personal problems and bearish biases as being analogous to a dynamic global economy. The reality is consumer spending is doing great with retailers, reporting blowout numbers quarter after quarter. Macroeconomics may be the gloomy science, but it’s also a counterintuitive one.

    Why do we repeat our mistakes?

    Why is Bernanke keeping rates low forever like Greenspan did? Why are we in another dotcom feeding frenzy? Because those things work. The success of bernanke’s economic policies and the ‘free market’ are affirmed by the stock market rallying. Because these web 2.0 valuations are not unreasonable.

     

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