4 ms·

I am not sure if I agree or disagree but I like where you're going. What is economic reality? That's such a tough definition. A pessimistic view of the economy

I am not sure if I agree or disagree but I like where you're going. What is economic reality? That's such a tough definition. A pessimistic view of the economy would say it is horrible because we now have a 14.7% unemployment rate and this is a record. An optimistic view is in an unprecedented time we have a 85.3% employment rate. So, what is an economic reality? One thing I do agree on, the market needs to stay up so as to secure the future of many.

pbourke 6y ago
> What is economic reality? Employment and GDP contracting at historic rates. A pandemic that is not close to being over. > One thing I do agree on, the market needs to stay up so as to secure the future of many. So, this is a new thing in the world. It used to be that markets were thought of as a fair playing field* on which price discovery and capital allocation happens. Sometimes markets would go down - a lot - and that was okay. For most people, the market and the economy are separate. The market could crash - as it did in Oct 1987 - without that spilling over too much into the economy at large. Certainly when the market skyrockets the wealth of households below p90 are not dramatically affected. So now, what are markets? Not a fair playing field for price discovery and capital allocation, but something else. And if they're something else, how should we view the long-term prospects for markets to really do anything meaningful at all? Are they just going to keep going up forever, entirely divorced from the performance of the businesses that comprise them? Seems like we're steaming for the icebergs if that is the way forward. * = yes, I know they were never truly fair.
- trcollinson 6y ago
  > Employment and GDP contracting at historic rates. A pandemic that is not close to being over. I think you've made my point, this is a short term reality, and a pessimistic one. We don't have a model for the long term economic reality of this situation. We only have speculation and guessing. So we have a short term economic reality but nothing more. To say that the US stock market hasn't historically effected the economy at large seems to forget the Great Depression. I believe it is taken as economic fact that the Great Depression started with the crash of the stock market in 1929. There was quite a bit of speculation and the market went up and down all over the place, but finally settled with a huge amount of unemployment and a massive reduction in GDP. We have put into place numerous measures to make sure that doesn't happen again, and we are using them, effectively. Also, I disagree that the markets are entirely divorced from the performance of the businesses that comprise them. Most people don't look at the entire market. We look at indexes. Look at the DJIA. With the exception of Nike, Disney, and Boeing, which of the 30 companies in the index are hit hard by this pandemic? If anything, which of those companies are increasing substantially before of the pandemic? They aren't steaming towards an iceberg. They a solid, recession resistant conglomerates that have substantial production power.

pbourke 6y ago

> What is economic reality? Employment and GDP contracting at historic rates. A pandemic that is not close to being over. > One thing I do agree on, the market needs to stay up so as to secure the future of many. So, this is a new thing in the world. It used to be that markets were thought of as a fair playing field* on which price discovery and capital allocation happens. Sometimes markets would go down - a lot - and that was okay. For most people, the market and the economy are separate. The market could crash - as it did in Oct 1987 - without that spilling over too much into the economy at large. Certainly when the market skyrockets the wealth of households below p90 are not dramatically affected. So now, what are markets? Not a fair playing field for price discovery and capital allocation, but something else. And if they're something else, how should we view the long-term prospects for markets to really do anything meaningful at all? Are they just going to keep going up forever, entirely divorced from the performance of the businesses that comprise them? Seems like we're steaming for the icebergs if that is the way forward. * = yes, I know they were never truly fair.

trcollinson 6y ago
> Employment and GDP contracting at historic rates. A pandemic that is not close to being over. I think you've made my point, this is a short term reality, and a pessimistic one. We don't have a model for the long term economic reality of this situation. We only have speculation and guessing. So we have a short term economic reality but nothing more. To say that the US stock market hasn't historically effected the economy at large seems to forget the Great Depression. I believe it is taken as economic fact that the Great Depression started with the crash of the stock market in 1929. There was quite a bit of speculation and the market went up and down all over the place, but finally settled with a huge amount of unemployment and a massive reduction in GDP. We have put into place numerous measures to make sure that doesn't happen again, and we are using them, effectively. Also, I disagree that the markets are entirely divorced from the performance of the businesses that comprise them. Most people don't look at the entire market. We look at indexes. Look at the DJIA. With the exception of Nike, Disney, and Boeing, which of the 30 companies in the index are hit hard by this pandemic? If anything, which of those companies are increasing substantially before of the pandemic? They aren't steaming towards an iceberg. They a solid, recession resistant conglomerates that have substantial production power.