4 ms·

Unfortunately the same reasoning could be applied to Hertz selling stock in a bankrupt company, which would have been impossible 5-10 years ago, but maybe even

by zpeti 6y ago

Unfortunately the same reasoning could be applied to Hertz selling stock in a bankrupt company, which would have been impossible 5-10 years ago, but maybe even a few months ago. I think the markets have been completely messed up by stimulus since 2008, and it's only getting worse. Governments are buying company bonds for gods sake. Stocks aren't about market pricing any more. They are some vanity metric that governments are obsessed about now to keep from falling (just like house prices).

bildung 6y ago
> I think the markets have been completely messed up by stimulus since 2008 Maybe, but OTOH the stock market returns are actually no different from pre 2008 (S&P500 in this case): https://www.macrotrends.net/2526/sp-500-historical-annual-returns https://www.macrotrends.net/2526/sp-500-historical-annual-re...
- fennecfoxen 6y ago
  That's a symptom of the problem GP is alleging, though: of companies obtaining returns by mooching off the free capital provided at taxpayer expense to grow your market share at the expense of others... rather earning them them by doing hard work to build businesses that earn their profits, while paying the real costs that your unsubsidized competitors have to pay themselves. There's been real disruption since 2008. Stock market returns don't show it, and they should. The efficient allocation of society's capital depends on honesty and fairness here, and instead this gap is papered over by government intervention, meant first and foremost to prop up politicians' careers, in an unsustainable sham. It will go better for society if we are honest about it than if we wait for everything to collapse when we are truly put to a test and find there is nothing to our prosperity but a mirage.
- _curious_ 6y ago
  I concur with zpeti’s sentiment that “I think the markets have been completely messed up by stimulus since 2008, and it's only getting worse.” And as you, Qasaur, say: “this erroneous monetary policy will only stop if politicians and central bankers are willing to stomach a harsh market recalibration, but seeing as they seem to not be willing to do that judging from their recent actions so I fear that this systemic malinvestment and inequality will just get worse and worse until something breaks.” I think society has reached that breaking point and starting to show the cracks. Digging underneath the protests/riots/violence/standoffs in cities like Minneapolis or Seattle, as they have revealed, what you'll find is rooted in socioeconomics.
Qasaur 6y ago
It's not vanity, because governments have dugged themselves into a hole where pension funds and others have invested enormous amounts of money in equities (seeing as bond returns are non-existent due to the aforementioned stimulus) as well as venture capital. Allowing the market to reset and recalibrate itself would also mean wiping out a lot of pensions as well as investments from wealthy donors, which is bad for votes. The sad thing is that this erroneous monetary policy will only stop if politicians and central bankers are willing to stomach a harsh market recalibration, but seeing as they seem to not be willing to do that judging from their recent actions so I fear that this systemic malinvestment and inequality will just get worse and worse until something breaks.
linuxftw 6y ago
Honestly, Hertz selling stock didn't seem that crazy to me. "We need more money, or we're going under." They're basically asking for new investors to make the business solvent. How is this any different than a startup asking for more investors prior to closing shop? Frankly, not unreasonable either. The entire travel industry was destroyed overnight, so it's entirely possible they could emerge from insolvency with an infusion of capital and be just fine. I'm not putting my money on it, but it's not the most outlandish thing I've heard either.

by zpeti 6y ago

bildung 6y ago

> I think the markets have been completely messed up by stimulus since 2008 Maybe, but OTOH the stock market returns are actually no different from pre 2008 (S&P500 in this case): https://www.macrotrends.net/2526/sp-500-historical-annual-returns https://www.macrotrends.net/2526/sp-500-historical-annual-re...

fennecfoxen 6y ago
That's a symptom of the problem GP is alleging, though: of companies obtaining returns by mooching off the free capital provided at taxpayer expense to grow your market share at the expense of others... rather earning them them by doing hard work to build businesses that earn their profits, while paying the real costs that your unsubsidized competitors have to pay themselves. There's been real disruption since 2008. Stock market returns don't show it, and they should. The efficient allocation of society's capital depends on honesty and fairness here, and instead this gap is papered over by government intervention, meant first and foremost to prop up politicians' careers, in an unsustainable sham. It will go better for society if we are honest about it than if we wait for everything to collapse when we are truly put to a test and find there is nothing to our prosperity but a mirage.
_curious_ 6y ago
I concur with zpeti’s sentiment that “I think the markets have been completely messed up by stimulus since 2008, and it's only getting worse.” And as you, Qasaur, say: “this erroneous monetary policy will only stop if politicians and central bankers are willing to stomach a harsh market recalibration, but seeing as they seem to not be willing to do that judging from their recent actions so I fear that this systemic malinvestment and inequality will just get worse and worse until something breaks.” I think society has reached that breaking point and starting to show the cracks. Digging underneath the protests/riots/violence/standoffs in cities like Minneapolis or Seattle, as they have revealed, what you'll find is rooted in socioeconomics.

Qasaur 6y ago

It's not vanity, because governments have dugged themselves into a hole where pension funds and others have invested enormous amounts of money in equities (seeing as bond returns are non-existent due to the aforementioned stimulus) as well as venture capital. Allowing the market to reset and recalibrate itself would also mean wiping out a lot of pensions as well as investments from wealthy donors, which is bad for votes. The sad thing is that this erroneous monetary policy will only stop if politicians and central bankers are willing to stomach a harsh market recalibration, but seeing as they seem to not be willing to do that judging from their recent actions so I fear that this systemic malinvestment and inequality will just get worse and worse until something breaks.

linuxftw 6y ago

Honestly, Hertz selling stock didn't seem that crazy to me. "We need more money, or we're going under." They're basically asking for new investors to make the business solvent. How is this any different than a startup asking for more investors prior to closing shop? Frankly, not unreasonable either. The entire travel industry was destroyed overnight, so it's entirely possible they could emerge from insolvency with an infusion of capital and be just fine. I'm not putting my money on it, but it's not the most outlandish thing I've heard either.