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"and a government ready to spring into action if the market goes down too much?" This is an important aspect to the current craze not mentioned in the article.
by _curious_ 6y ago
"and a government ready to spring into action if the market goes down too much?"
This is an important aspect to the current craze not mentioned in the article.
There are people - retail & institutional players - literally banking large sums of money on this dynamic of socializing losses. So long as this continues, we'll see an artificially inflated market.
- pradn 6y agoThere's two aspects of the government "springing into action": 1) The government trying to preserve businesses and jobs (both capital and employment) in a crisis through general Keynesian stimulus and industry-specific bailouts (a sort of corporate clientelism, whatever the justification may be). 2) The government having to pay to shore up losses of business where the business should have known better. This is the general populace taking the hit for particular bets gone wrong by private actors. I don't see that as much in this crisis. The closest I can tell is companies spending so much on dividends and buy-backs in the past few years without keeping any sort of cushion. The companies that are most distressed are the squeaky nails that get the hammer. This is a moral hazard. Of course, you must seem sympathetic to the present administration and, to a lesser extent, the public too. That's why airlines have been bailed out but not cruise companies.
- dodobirdlord 6y agoAirlines are also important in ways that cruise companies are not.
- rswail 6y agoAir travel is important. Airline companies are not.