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To be fair, the world is constantly changing. I don't know if that means each recession is special so much as unique. Just looking at the last major recession

by gph 11y ago

To be fair, the world is constantly changing. I don't know if that means each recession is special so much as unique. Just looking at the last major recession in the 70s, things did change quite a bit from there. Manufacturing and distribution of goods started to form into the global supply chain we have today, that was certainly a unique development in our world based on changing technologies. It's not that much of a stretch to expect similar unique changes to the global economy today due to changing technology and consumer habits.

nevinera 11y ago
It is, and eventually, we will probably run into a real game-changer.. but I'm mostly concerned for all the people that are saving money in index funds. Every recession, the news and the discourse are about how this one is special, and how the causes of this recession run so deep. People are not good at remembering that we had those same conversations last time and the time before - they get a gut feeling that 'this is the big one', and they pull their money out of the market during the recession and put it back in after everything's ok, essentially tossing a major fraction of their life savings overboard. What people seem to never consider is that when we actually move out of an expansionist economy, the effects will be much broader than "our stock returns are not so good anymore"; their inability to retire at 65 would be the least of their concerns.
- anti-shill 11y ago
  but the casino aspect of the economy has grown stronger and more pervasive over time. Look at a chart of the 10 year US bond. The interest rates have plummeted over the last 30 years. These low rates have intensified the casino aspect of the stock market. The rates were lowered after the crashes of 2001-2002 and 2008-2009. But the rates cannot be lowered any more. Why? They are at zero, effectively. That is different.
  - nevinera 11y ago
    The point is that there are always differences - each recession is a snowflake, with distinct causes and circumstances. That doesn't impact the fact that they all behave pretty much the same way at the large scale, and it shouldn't affect your decisions about the market (unless you are an expert, and inordinately good at avoiding various cognitive biases). Gloom and Doom sells papers, and it always has.
    - mrdodge 11y ago
      There is nothing about growth that is guaranteed. Perhaps thinking that the entire world can adopt western style institutions and would become good consumers was too optimistic.
  - kruhft 11y ago
    > But the rates cannot be lowered any more. Why? They are at zero, effectively. They could always go negative: http://www.global-rates.com/interest-rates/libor/swiss-franc/swiss-franc.aspx
    - ersii 11y ago
      Another example - Sweden's National Bank: http://www.riksbank.se/en/ http://www.riksbank.se/en/ (See the Repo rate).
  - forgetsusername 11y ago
    >These low rates have intensified the casino aspect of the stock market. So, are you making the claim that the stock market is less stable today than it was 100 years ago?

by gph 11y ago

nevinera 11y ago

It is, and eventually, we will probably run into a real game-changer.. but I'm mostly concerned for all the people that are saving money in index funds. Every recession, the news and the discourse are about how this one is special, and how the causes of this recession run so deep. People are not good at remembering that we had those same conversations last time and the time before - they get a gut feeling that 'this is the big one', and they pull their money out of the market during the recession and put it back in after everything's ok, essentially tossing a major fraction of their life savings overboard. What people seem to never consider is that when we actually move out of an expansionist economy, the effects will be much broader than "our stock returns are not so good anymore"; their inability to retire at 65 would be the least of their concerns.

anti-shill 11y ago
but the casino aspect of the economy has grown stronger and more pervasive over time. Look at a chart of the 10 year US bond. The interest rates have plummeted over the last 30 years. These low rates have intensified the casino aspect of the stock market. The rates were lowered after the crashes of 2001-2002 and 2008-2009. But the rates cannot be lowered any more. Why? They are at zero, effectively. That is different.
- nevinera 11y ago
  The point is that there are always differences - each recession is a snowflake, with distinct causes and circumstances. That doesn't impact the fact that they all behave pretty much the same way at the large scale, and it shouldn't affect your decisions about the market (unless you are an expert, and inordinately good at avoiding various cognitive biases). Gloom and Doom sells papers, and it always has.
  - mrdodge 11y ago
    There is nothing about growth that is guaranteed. Perhaps thinking that the entire world can adopt western style institutions and would become good consumers was too optimistic.
- kruhft 11y ago
  > But the rates cannot be lowered any more. Why? They are at zero, effectively. They could always go negative: http://www.global-rates.com/interest-rates/libor/swiss-franc/swiss-franc.aspx
  - ersii 11y ago
    Another example - Sweden's National Bank: http://www.riksbank.se/en/ http://www.riksbank.se/en/ (See the Repo rate).
- forgetsusername 11y ago
  >These low rates have intensified the casino aspect of the stock market. So, are you making the claim that the stock market is less stable today than it was 100 years ago?