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I’m waiting for this bubble to pop, and take everyone down with it. This QE insanity has gone on for far too long.. And for the rich.. don’t worry about your

I’m waiting for this bubble to pop, and take everyone down with it. This QE insanity has gone on for far too long.. And for the rich.. don’t worry about your assets. The next president will bail you out first.

kortilla 7y ago
Shareholders took huge losses in the bank “bail-outs” in 2008 so there isn’t really a precedent for bailing out the rich. The only precedent is bailing out entire business sectors that the whole economy depends on.
- blackrock 7y ago
  And who owns the “entire business sectors”?
  - nopenotthatway 7y ago
    The fed got majority of the banks when it bailed them out, and all executives where on a leash, and getting paid less until it was all back to normal. In fact, the fed ended up turning profit, as the banks healed, and the fed sold its part. those "owners" got their assets froze until the situation became under control, and the fed got its money back. All these complaints about savings big banks are just extremist (both commies and libertarians complain about it) FUD. If banks were not saved, the economy, the middle class and the poor would be far worse. and as grandparent said >Shareholders took huge losses in the bank “bail-outs” in 2008 Shareholders are by definition "who owns". Sure there are both Billionaires and middle-class shareholders, but if you have a bigger % of shares, you have a bigger loss.
    - DarknessFalls 7y ago
      The amount of subsidies given to farmers to offset the tariff wars with China are said to eclipse the amount given to bail out the banks. Do you think the Fed will ever see a similar return on investment from agriculture?
  - kortilla 7y ago
    The shareholders, which are the people that took huge losses. https://en.wikipedia.org/wiki/Shareholder https://en.wikipedia.org/wiki/Shareholder
- jariel 7y ago
  Homeowners were effectively bailed out in 2008.
  - blackrock 7y ago
    That was the mistake. It’s not much of a market when the government bails you out with tax payer money, to the detriment of everyone else. And then, they kept making one mistake after another and another. And here we are.
    - jariel 7y ago
      The alternative was the total destruction of the economy :), so it's not just some normal 'gov. intervention' argument. Homeowners were bailed out indirectly by the type of banking 'bailout' that doesn't get talked about - the fact that the Fed was willing to accept garbage mortgages at face value as collateral for cash. A home with market value of $100K, mortgage at $200K - meaning a -$100K value ... was accepted at the Fed at '$200K' in return for cash. This wiped out the toxicity from bank balance sheets and allowed them to operate normally. The idea being in the future, when housing was re-inflated, the banks would eventually have to 'take back' those crap housing assets. Can you imagine if other businesses were allowed this kind of special facility? And it was not a small thing, it might be the biggest chunk of asset movements literally in the history of the world - it doubled the size of the Fed's balance sheet very quickly. The USD used to be backed by TBills, i.e. the US government ability to pay. Now, the USD is backed 1/2 by crap mortgages. Can you imagine any other country getting away with this? If Greece did this, the currency would crash and they'd be devastated. This is the power of supposed 'trust'.
      - blackrock 7y ago
        The problems are multi fold. Speculators, flippers, subprime ARM borrowers drove the cost of housing up. Housing was seen as an investment, not as a place to live in. After the crash, the Fed reduced the interest rate to historical lows, and allowed lots of housing to be bought up by corporations, or groups of individual investors. When a bunch of investors join forces, they can easily buy practically any property. You and I as an individual, cannot. Our salaries don’t bring home enough money. On top of which, what about the young millennials that want to start a family? They were devastated after the 2008 meltdown with massive layoffs. Then they are priced out from housing now, with the historical highs. And they have massive student loans, and some have mediocre jobs to pay back those loans. So they’re smacked on both ends. Now, we have a social problem. Families are delayed. People delayed marriage. Couples delayed making children. The women in their 20s got older, and delay childbirth into their 30s, if they even have children. And the risks of genetic defects goes up. Now, the responsible people that you want to procreate and have children, are not bearing children. As a society, those in power and authority, and those with the financial wealth, just gave this a collective shrug: “Not my problem. Every man for himself.” Then they kept making more mistakes. Low interests fuels investors speculation. Housing is not being built. Home sale prices begin rising rapidly. Rents go up to match. QE Infinity keeps fueling this massive bubble. Those millennials again, that society needs to buy a house, and to begin building stable communities, had their salaries eaten up by rising rents. And now here we are. The starting price for a home is now $700,000. How does a young couple afford to start a family, when a starter home is that high? I don’t know. Nobody cares. Everyone is out for themselves. In retrospect, the better solution was to not bail out the homeowners, since they were speculating anyway. And to kill the notion of seeing housing as an investment vehicle, thereby making potential investors shy away from buying properties. This could’ve normalized the housing market, and allow those that should be in a home, to have a home that they can own. But I don’t see this ever happening. The masses are now slaves to paying off a massive $700,000 mortgage that they will work over 30 years of their life to pay off. We will need a revolution to change this.
- feintruled 7y ago
  I imagine the OP means the billionaires, the middle-classes will get reamed, of course.
oblio 7y ago
> I’m waiting for this bubble to pop, and take everyone down with it. I don't like bubbles, obviously, but don't be so thrilled about bubbles bursting and "taking everyone down with them". Life becomes miserable for a lot of people when bubbles burst, and frequently it becomes way more miserable for people that aren't responsible for the creation of these bubbles. Suicides rates, depression rates, etc. go up.
- blackrock 7y ago
  I don’t like it either. But we need a real correction. This current trajectory is not sustainable.
  - puszczyk 7y ago
    Why? — serious question. A lot of the people I know and/or follow online have been saying that stock markets (and housing) is a bubble since at least 2015 if not earlier. Yet 4–5 years later we’ve seen massive gains. Also, the top companies are making a lot of money, so their valuations are high, but not crazy. On the other hand: startup valuations seem to be through the roof. So when you say — “we need a real correction” and “not sustainable”. I’m curios — what exactly is not sustainable, and why a correction will make it more sustainable? Why do we “need” a correction?
    - oblio 7y ago
      Because the economic theory behind bubbles is solid and easy to understand: 1. resources are not infinite 2. human creativity is basically boundless, but it needs time 3. humans tend to think alike and to get excited about the same things at the same time We find a better way to manage resources, everybody hopes it will cure cancer, provide world peace, etc. As a result investment skyrockets, the "new way" develops and helps everyone but inevitably it doesn't do everything people investing a lot of money were hoping it would do. So people pull their money back and get scared when they realize how much they risked. People spend less money and things enter a downward spiral.

kortilla 7y ago

Shareholders took huge losses in the bank “bail-outs” in 2008 so there isn’t really a precedent for bailing out the rich. The only precedent is bailing out entire business sectors that the whole economy depends on.

blackrock 7y ago
And who owns the “entire business sectors”?
- nopenotthatway 7y ago
  The fed got majority of the banks when it bailed them out, and all executives where on a leash, and getting paid less until it was all back to normal. In fact, the fed ended up turning profit, as the banks healed, and the fed sold its part. those "owners" got their assets froze until the situation became under control, and the fed got its money back. All these complaints about savings big banks are just extremist (both commies and libertarians complain about it) FUD. If banks were not saved, the economy, the middle class and the poor would be far worse. and as grandparent said >Shareholders took huge losses in the bank “bail-outs” in 2008 Shareholders are by definition "who owns". Sure there are both Billionaires and middle-class shareholders, but if you have a bigger % of shares, you have a bigger loss.
  - DarknessFalls 7y ago
    The amount of subsidies given to farmers to offset the tariff wars with China are said to eclipse the amount given to bail out the banks. Do you think the Fed will ever see a similar return on investment from agriculture?
- kortilla 7y ago
  The shareholders, which are the people that took huge losses. https://en.wikipedia.org/wiki/Shareholder https://en.wikipedia.org/wiki/Shareholder
jariel 7y ago
Homeowners were effectively bailed out in 2008.
- blackrock 7y ago
  That was the mistake. It’s not much of a market when the government bails you out with tax payer money, to the detriment of everyone else. And then, they kept making one mistake after another and another. And here we are.
  - jariel 7y ago
    The alternative was the total destruction of the economy :), so it's not just some normal 'gov. intervention' argument. Homeowners were bailed out indirectly by the type of banking 'bailout' that doesn't get talked about - the fact that the Fed was willing to accept garbage mortgages at face value as collateral for cash. A home with market value of $100K, mortgage at $200K - meaning a -$100K value ... was accepted at the Fed at '$200K' in return for cash. This wiped out the toxicity from bank balance sheets and allowed them to operate normally. The idea being in the future, when housing was re-inflated, the banks would eventually have to 'take back' those crap housing assets. Can you imagine if other businesses were allowed this kind of special facility? And it was not a small thing, it might be the biggest chunk of asset movements literally in the history of the world - it doubled the size of the Fed's balance sheet very quickly. The USD used to be backed by TBills, i.e. the US government ability to pay. Now, the USD is backed 1/2 by crap mortgages. Can you imagine any other country getting away with this? If Greece did this, the currency would crash and they'd be devastated. This is the power of supposed 'trust'.
    - blackrock 7y ago
      The problems are multi fold. Speculators, flippers, subprime ARM borrowers drove the cost of housing up. Housing was seen as an investment, not as a place to live in. After the crash, the Fed reduced the interest rate to historical lows, and allowed lots of housing to be bought up by corporations, or groups of individual investors. When a bunch of investors join forces, they can easily buy practically any property. You and I as an individual, cannot. Our salaries don’t bring home enough money. On top of which, what about the young millennials that want to start a family? They were devastated after the 2008 meltdown with massive layoffs. Then they are priced out from housing now, with the historical highs. And they have massive student loans, and some have mediocre jobs to pay back those loans. So they’re smacked on both ends. Now, we have a social problem. Families are delayed. People delayed marriage. Couples delayed making children. The women in their 20s got older, and delay childbirth into their 30s, if they even have children. And the risks of genetic defects goes up. Now, the responsible people that you want to procreate and have children, are not bearing children. As a society, those in power and authority, and those with the financial wealth, just gave this a collective shrug: “Not my problem. Every man for himself.” Then they kept making more mistakes. Low interests fuels investors speculation. Housing is not being built. Home sale prices begin rising rapidly. Rents go up to match. QE Infinity keeps fueling this massive bubble. Those millennials again, that society needs to buy a house, and to begin building stable communities, had their salaries eaten up by rising rents. And now here we are. The starting price for a home is now $700,000. How does a young couple afford to start a family, when a starter home is that high? I don’t know. Nobody cares. Everyone is out for themselves. In retrospect, the better solution was to not bail out the homeowners, since they were speculating anyway. And to kill the notion of seeing housing as an investment vehicle, thereby making potential investors shy away from buying properties. This could’ve normalized the housing market, and allow those that should be in a home, to have a home that they can own. But I don’t see this ever happening. The masses are now slaves to paying off a massive $700,000 mortgage that they will work over 30 years of their life to pay off. We will need a revolution to change this.
feintruled 7y ago
I imagine the OP means the billionaires, the middle-classes will get reamed, of course.

oblio 7y ago

> I’m waiting for this bubble to pop, and take everyone down with it. I don't like bubbles, obviously, but don't be so thrilled about bubbles bursting and "taking everyone down with them". Life becomes miserable for a lot of people when bubbles burst, and frequently it becomes way more miserable for people that aren't responsible for the creation of these bubbles. Suicides rates, depression rates, etc. go up.

blackrock 7y ago
I don’t like it either. But we need a real correction. This current trajectory is not sustainable.
- puszczyk 7y ago
  Why? — serious question. A lot of the people I know and/or follow online have been saying that stock markets (and housing) is a bubble since at least 2015 if not earlier. Yet 4–5 years later we’ve seen massive gains. Also, the top companies are making a lot of money, so their valuations are high, but not crazy. On the other hand: startup valuations seem to be through the roof. So when you say — “we need a real correction” and “not sustainable”. I’m curios — what exactly is not sustainable, and why a correction will make it more sustainable? Why do we “need” a correction?
  - oblio 7y ago
    Because the economic theory behind bubbles is solid and easy to understand: 1. resources are not infinite 2. human creativity is basically boundless, but it needs time 3. humans tend to think alike and to get excited about the same things at the same time We find a better way to manage resources, everybody hopes it will cure cancer, provide world peace, etc. As a result investment skyrockets, the "new way" develops and helps everyone but inevitably it doesn't do everything people investing a lot of money were hoping it would do. So people pull their money back and get scared when they realize how much they risked. People spend less money and things enter a downward spiral.