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Why Stocks, Crypto, and Home Values Are All Plunging at Once

47 points by gnicholas 4y ago

deleted 4y ago
[deleted]
picture_view 4y ago
The general point seems to be that the Fed can only do 1 substantial thing for the economy, raise or lower interest rates. (yada yada quantitative easing, forward guidance) And interest rates, devoid of any true monetary policy, creates a damned-if-you-do and dammed-if-you-don’t situation for the lower 90% of wealth owners. The government wasted 10 years of free money by not investing in infrastructure and the clean energy transition. Instead we got 10 years of 1% loans to corporations and billionaires to do stock buybacks. The fed can only lead the horse to water, but if there is a filibuster the horse will never drink. On a side note: it’s news to me that home values have plunged. A market softening for sure, but a plunge in sale prices? Not in my metro area. Plus a 20% plunge doesn’t mean much when home prices are up 20% yoy
- deleted 4y ago
  [deleted]
simonh 4y ago
>He was worth $16 billion at the time, meaning he could have bought that house and a hundred more outright That's not necessarily true. I mean yes, he could, but to do that he'd have to sell a chunk of Facebook shares. He doesn't have $16bn sitting in a big warehouse piled up with mountains of dollar bills, or in a checking account. The $16bn is the notional value of him controlling Facebook, and he still wants to control Facebook. The way to leverage that into wealth without selling shares is to take a loan out with the shares as collateral, but that's just essentially a Mortgage again collateralised against the shares instead of the house.
- HWR_14 4y ago
  > The $16bn is the notional value of him controlling Facebook, and he still wants to control Facebook. I mean, I want to buy things and have the numbers in my accounts go up too. It's not outrageous that when you get some things you have to sell some of your other things.
  - simonh 4y ago
    I don't understand why it's so awful if he just takes out a loan. I've taken out loans and mortgages many times. So what? All this shiv the rich crap just seems so petty and mean spirited. Bah, they have nice things, let's take them away!
    - HWR_14 4y ago
      I have no problem with him taking out a loan. I have a problem with him avoiding taxes by taking out a loan.
      - simonh 4y ago
        I avoid takes on my mortgage too (here in the UK). Surely the point of the rule of law is that the law applies equally, right? Or is people being rich and having rights too much to bear. Sure, well off people should pay more tax, that's fine. Advocate for tax reform, sure. But I find this kind of mean spirited jabbing at basic rights just such a miserable attitude. It's not as if this particular point really makes any meaningful difference anyway. It's not even got anything to do with the rest of the article at all, which by the way is grossly factually incorrect. Home ownership in the USA isn't not a "small share of Americans", home ownership rates in the US are at 65%. Vast swathes of Americans do participate in the investment markets through their pensions. US pension funds now account for about 60% of assets in the P22 largest markets, and pension funds account for about 1/4 of all assets under management globally.
        HWR_14 4y ago
        The point is that borrowing money for your entire lifetime based on inflated stock prices to avoid capital gains taxes is bad. Not that mortgage interest is deductible.
Gunax 4y ago
I hate to be so cynical, but the news tends to write stories along the theme of 'rich-get-richer' no matter which way the economy goes. When the economy booms, it's 'stock market gains mostly went to the wealthy'. When it crashes, it's 'the poorest are hurt most by unemployment'. Or to take the interest rate example: high rates = unaffordable mortgages, low rates = high asset prices. No matter what happens, one can always write an article about 'X increasing wealth disparity'. In a sense they are correct, in that having money allows one to take advantage no matter which way the economy bends... But I am pretty sure there is an unwritten rule that articles must always have a bit of evil, plotting, Mr. Burns-esque element.

47 points by gnicholas 4y ago

deleted 4y ago

[deleted]

The general point seems to be that the Fed can only do 1 substantial thing for the economy, raise or lower interest rates. (yada yada quantitative easing, forward guidance) And interest rates, devoid of any true monetary policy, creates a damned-if-you-do and dammed-if-you-don’t situation for the lower 90% of wealth owners. The government wasted 10 years of free money by not investing in infrastructure and the clean energy transition. Instead we got 10 years of 1% loans to corporations and billionaires to do stock buybacks. The fed can only lead the horse to water, but if there is a filibuster the horse will never drink. On a side note: it’s news to me that home values have plunged. A market softening for sure, but a plunge in sale prices? Not in my metro area. Plus a 20% plunge doesn’t mean much when home prices are up 20% yoy

deleted 4y ago
[deleted]

simonh 4y ago

>He was worth $16 billion at the time, meaning he could have bought that house and a hundred more outright That's not necessarily true. I mean yes, he could, but to do that he'd have to sell a chunk of Facebook shares. He doesn't have $16bn sitting in a big warehouse piled up with mountains of dollar bills, or in a checking account. The $16bn is the notional value of him controlling Facebook, and he still wants to control Facebook. The way to leverage that into wealth without selling shares is to take a loan out with the shares as collateral, but that's just essentially a Mortgage again collateralised against the shares instead of the house.

HWR_14 4y ago
> The $16bn is the notional value of him controlling Facebook, and he still wants to control Facebook. I mean, I want to buy things and have the numbers in my accounts go up too. It's not outrageous that when you get some things you have to sell some of your other things.
- simonh 4y ago
  I don't understand why it's so awful if he just takes out a loan. I've taken out loans and mortgages many times. So what? All this shiv the rich crap just seems so petty and mean spirited. Bah, they have nice things, let's take them away!
  - HWR_14 4y ago
    I have no problem with him taking out a loan. I have a problem with him avoiding taxes by taking out a loan.
    - simonh 4y ago
      I avoid takes on my mortgage too (here in the UK). Surely the point of the rule of law is that the law applies equally, right? Or is people being rich and having rights too much to bear. Sure, well off people should pay more tax, that's fine. Advocate for tax reform, sure. But I find this kind of mean spirited jabbing at basic rights just such a miserable attitude. It's not as if this particular point really makes any meaningful difference anyway. It's not even got anything to do with the rest of the article at all, which by the way is grossly factually incorrect. Home ownership in the USA isn't not a "small share of Americans", home ownership rates in the US are at 65%. Vast swathes of Americans do participate in the investment markets through their pensions. US pension funds now account for about 60% of assets in the P22 largest markets, and pension funds account for about 1/4 of all assets under management globally.
      - HWR_14 4y ago
        The point is that borrowing money for your entire lifetime based on inflated stock prices to avoid capital gains taxes is bad. Not that mortgage interest is deductible.

Gunax 4y ago

I hate to be so cynical, but the news tends to write stories along the theme of 'rich-get-richer' no matter which way the economy goes. When the economy booms, it's 'stock market gains mostly went to the wealthy'. When it crashes, it's 'the poorest are hurt most by unemployment'. Or to take the interest rate example: high rates = unaffordable mortgages, low rates = high asset prices. No matter what happens, one can always write an article about 'X increasing wealth disparity'. In a sense they are correct, in that having money allows one to take advantage no matter which way the economy bends... But I am pretty sure there is an unwritten rule that articles must always have a bit of evil, plotting, Mr. Burns-esque element.