Sunday, July 13, 2014

Manufacturing a Stock Market Crash

Manufacturing a Stock Market Crash Lex Loeb, Yahoo Contributor Network . The great stock market crash and allied world banking crisis of 2008 is a very curioius phenomenon. Some oberervers are certain that equities and real estate were grossly overpriced even prior to 2007 when the first signs of stress in bull market started to appear. The bear market commentators almost universally were wrong about the entire bull market run such that durring the bull run they completely loose credibility. It was not until stock price declines and company failures that they once again gain credibility. As things fall apart the bear market believers get more and more media exposure until they have the whole stage to themselves and the bulls are completely ignored. These guys get no exposure and no play while the bull is going strong then suddenly things start going bad and they take control of the prognostication department. As 2008 progressed into more initial stock declines and bank failures into 2009, It already looked like a self fullfilling was occuring. It is hard to believe that the market , itself, did not intend to crash. The market is not human, nor national, nor a single organism. It is not a multicellular organism. The market is probably more like an ecosystem, an ecology or a seasonal food chain if you want a better analogy for it. Looking at post crash real estate prices one does not see universal bargain prices across the country nor around the world. Real Estate failures mostly happend in specific over built and over mortgaged areas. In Oregon the evidence is that real estate prices are still generally over priced at the same time the state has an effective unemploynment rate nearing depression levels at 25%. The way supply is balanced by demand, a 20% decline in real estate prices may not be any real bargain. If homes that were worth 200,000 dollars 7 years ago are now selling for $475,000 but discounted to $380,000 may not be a bargain as job losses in the recession squinches the number of buyers that are available. Buying real estate as an investment might not pay off very quickliy if all that the discount is is 20%. . Get Ready. We Panic Tomorrow at 9 am.

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