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gandalf
ParticipantWell, I respectfully disagree with the P/E acolytes.
Corporate earnings growth of late has been affected in no small measure by over-reaching and expansive consumption, major assist from loose lending. A good portion of earnings growth tracks back to leverage. The gains are not entirely ‘real’. They are not strictly the result of technological innovation, increases in labor or productivity or the discovery of resources. More likely, they are substantially connected to the current credit situation.
IMHO, the effects of credit and leverage on equities markets have been largely understated to date. The consumer economy is driven by credit and has clearly reached a peak. Detroit is a mess. Durables are in trouble. Retail is tanking. All this was before the run up in prices for energy and commodities, which will further depress consumption. Don’t forget to factor in ‘innovations’ in financial engineering (e.g. stupid Excel tricks) from the accounting and finance industries and Fortune 500 Budget/Finance Divisions…
Look for a combination of currency devaluation and outright deflation of asset values over the next few years, including in the markets for equities. Maybe we reach a nominal floor at some point, supported by foreign investment, after currency devaluation transforms our economy into a freakin’ yard sale.
And I am most concerned about collateral damage from the unwinding process, negative impacts on the ‘real’ economy. There is plenty of viable, profit-making, goods and services producing work and industry out there, and it depends on functional financial markets. I’m concerned that it’s going to take a fairly severe hit as a result of the shenanigans of the past decade. (Great job, Boomers, Greenspan. Hope you had a good party. Thanks for trashing the place. Now get the hell out.)
ParticipantWell, I respectfully disagree with the P/E acolytes.
Corporate earnings growth of late has been affected in no small measure by over-reaching and expansive consumption, major assist from loose lending. A good portion of earnings growth tracks back to leverage. The gains are not entirely ‘real’. They are not strictly the result of technological innovation, increases in labor or productivity or the discovery of resources. More likely, they are substantially connected to the current credit situation.
IMHO, the effects of credit and leverage on equities markets have been largely understated to date. The consumer economy is driven by credit and has clearly reached a peak. Detroit is a mess. Durables are in trouble. Retail is tanking. All this was before the run up in prices for energy and commodities, which will further depress consumption. Don’t forget to factor in ‘innovations’ in financial engineering (e.g. stupid Excel tricks) from the accounting and finance industries and Fortune 500 Budget/Finance Divisions…
Look for a combination of currency devaluation and outright deflation of asset values over the next few years, including in the markets for equities. Maybe we reach a nominal floor at some point, supported by foreign investment, after currency devaluation transforms our economy into a freakin’ yard sale.
And I am most concerned about collateral damage from the unwinding process, negative impacts on the ‘real’ economy. There is plenty of viable, profit-making, goods and services producing work and industry out there, and it depends on functional financial markets. I’m concerned that it’s going to take a fairly severe hit as a result of the shenanigans of the past decade. (Great job, Boomers, Greenspan. Hope you had a good party. Thanks for trashing the place. Now get the hell out.)
ParticipantWell, I respectfully disagree with the P/E acolytes.
Corporate earnings growth of late has been affected in no small measure by over-reaching and expansive consumption, major assist from loose lending. A good portion of earnings growth tracks back to leverage. The gains are not entirely ‘real’. They are not strictly the result of technological innovation, increases in labor or productivity or the discovery of resources. More likely, they are substantially connected to the current credit situation.
IMHO, the effects of credit and leverage on equities markets have been largely understated to date. The consumer economy is driven by credit and has clearly reached a peak. Detroit is a mess. Durables are in trouble. Retail is tanking. All this was before the run up in prices for energy and commodities, which will further depress consumption. Don’t forget to factor in ‘innovations’ in financial engineering (e.g. stupid Excel tricks) from the accounting and finance industries and Fortune 500 Budget/Finance Divisions…
Look for a combination of currency devaluation and outright deflation of asset values over the next few years, including in the markets for equities. Maybe we reach a nominal floor at some point, supported by foreign investment, after currency devaluation transforms our economy into a freakin’ yard sale.
And I am most concerned about collateral damage from the unwinding process, negative impacts on the ‘real’ economy. There is plenty of viable, profit-making, goods and services producing work and industry out there, and it depends on functional financial markets. I’m concerned that it’s going to take a fairly severe hit as a result of the shenanigans of the past decade. (Great job, Boomers, Greenspan. Hope you had a good party. Thanks for trashing the place. Now get the hell out.)
ParticipantWell, I respectfully disagree with the P/E acolytes.
Corporate earnings growth of late has been affected in no small measure by over-reaching and expansive consumption, major assist from loose lending. A good portion of earnings growth tracks back to leverage. The gains are not entirely ‘real’. They are not strictly the result of technological innovation, increases in labor or productivity or the discovery of resources. More likely, they are substantially connected to the current credit situation.
IMHO, the effects of credit and leverage on equities markets have been largely understated to date. The consumer economy is driven by credit and has clearly reached a peak. Detroit is a mess. Durables are in trouble. Retail is tanking. All this was before the run up in prices for energy and commodities, which will further depress consumption. Don’t forget to factor in ‘innovations’ in financial engineering (e.g. stupid Excel tricks) from the accounting and finance industries and Fortune 500 Budget/Finance Divisions…
Look for a combination of currency devaluation and outright deflation of asset values over the next few years, including in the markets for equities. Maybe we reach a nominal floor at some point, supported by foreign investment, after currency devaluation transforms our economy into a freakin’ yard sale.
And I am most concerned about collateral damage from the unwinding process, negative impacts on the ‘real’ economy. There is plenty of viable, profit-making, goods and services producing work and industry out there, and it depends on functional financial markets. I’m concerned that it’s going to take a fairly severe hit as a result of the shenanigans of the past decade. (Great job, Boomers, Greenspan. Hope you had a good party. Thanks for trashing the place. Now get the hell out.)
ParticipantI think we can all agree the run-up in asset prices these past few years has been partially, if not significantly, due to the effects of loose credit, leverage and financial engineering. As the business cycle turns and we head into a period of economic contraction and credit tightening, the impact on stock market capitalization, among other things, will be decidedly negative.
Personally, I’m anticipating further declines in overall asset values. Given the magnitude of the run-up, a 25% decline in stock market capitalization from this point and another 25% drop in property values isn’t outside the scope of reason. I expect the decline to be expressed through a combination of currency devaluation and outright nominal deflation. Wealth is actively being wiped off the books as we speak.
Overall, I am very concerned about multiplier effects and the collateral damage of de-leveraging on the ‘real economy’ (productive and profitable economic activities). I expect the impacts of the unwinding to be severe, with market failures in certain areas such as construction and credit. I think some regions will be hit harder than others, and I put San Diego in the ‘at-risk’ category due to state, county and municipal financials as well as general over-exposure of its economy to FIRE markets.
ParticipantI think we can all agree the run-up in asset prices these past few years has been partially, if not significantly, due to the effects of loose credit, leverage and financial engineering. As the business cycle turns and we head into a period of economic contraction and credit tightening, the impact on stock market capitalization, among other things, will be decidedly negative.
Personally, I’m anticipating further declines in overall asset values. Given the magnitude of the run-up, a 25% decline in stock market capitalization from this point and another 25% drop in property values isn’t outside the scope of reason. I expect the decline to be expressed through a combination of currency devaluation and outright nominal deflation. Wealth is actively being wiped off the books as we speak.
Overall, I am very concerned about multiplier effects and the collateral damage of de-leveraging on the ‘real economy’ (productive and profitable economic activities). I expect the impacts of the unwinding to be severe, with market failures in certain areas such as construction and credit. I think some regions will be hit harder than others, and I put San Diego in the ‘at-risk’ category due to state, county and municipal financials as well as general over-exposure of its economy to FIRE markets.
ParticipantI think we can all agree the run-up in asset prices these past few years has been partially, if not significantly, due to the effects of loose credit, leverage and financial engineering. As the business cycle turns and we head into a period of economic contraction and credit tightening, the impact on stock market capitalization, among other things, will be decidedly negative.
Personally, I’m anticipating further declines in overall asset values. Given the magnitude of the run-up, a 25% decline in stock market capitalization from this point and another 25% drop in property values isn’t outside the scope of reason. I expect the decline to be expressed through a combination of currency devaluation and outright nominal deflation. Wealth is actively being wiped off the books as we speak.
Overall, I am very concerned about multiplier effects and the collateral damage of de-leveraging on the ‘real economy’ (productive and profitable economic activities). I expect the impacts of the unwinding to be severe, with market failures in certain areas such as construction and credit. I think some regions will be hit harder than others, and I put San Diego in the ‘at-risk’ category due to state, county and municipal financials as well as general over-exposure of its economy to FIRE markets.
ParticipantI think we can all agree the run-up in asset prices these past few years has been partially, if not significantly, due to the effects of loose credit, leverage and financial engineering. As the business cycle turns and we head into a period of economic contraction and credit tightening, the impact on stock market capitalization, among other things, will be decidedly negative.
Personally, I’m anticipating further declines in overall asset values. Given the magnitude of the run-up, a 25% decline in stock market capitalization from this point and another 25% drop in property values isn’t outside the scope of reason. I expect the decline to be expressed through a combination of currency devaluation and outright nominal deflation. Wealth is actively being wiped off the books as we speak.
Overall, I am very concerned about multiplier effects and the collateral damage of de-leveraging on the ‘real economy’ (productive and profitable economic activities). I expect the impacts of the unwinding to be severe, with market failures in certain areas such as construction and credit. I think some regions will be hit harder than others, and I put San Diego in the ‘at-risk’ category due to state, county and municipal financials as well as general over-exposure of its economy to FIRE markets.
ParticipantI think we can all agree the run-up in asset prices these past few years has been partially, if not significantly, due to the effects of loose credit, leverage and financial engineering. As the business cycle turns and we head into a period of economic contraction and credit tightening, the impact on stock market capitalization, among other things, will be decidedly negative.
Personally, I’m anticipating further declines in overall asset values. Given the magnitude of the run-up, a 25% decline in stock market capitalization from this point and another 25% drop in property values isn’t outside the scope of reason. I expect the decline to be expressed through a combination of currency devaluation and outright nominal deflation. Wealth is actively being wiped off the books as we speak.
Overall, I am very concerned about multiplier effects and the collateral damage of de-leveraging on the ‘real economy’ (productive and profitable economic activities). I expect the impacts of the unwinding to be severe, with market failures in certain areas such as construction and credit. I think some regions will be hit harder than others, and I put San Diego in the ‘at-risk’ category due to state, county and municipal financials as well as general over-exposure of its economy to FIRE markets.
ParticipantSmall world, kewp. UCSD? What part of the University? I worked in RMP for many years. UCSD is a great place. The UC System is a remarkable institution, very much an economic engine for the state.
Yep, I understand and agree re: boxing quantity/quality with available resources (programs, enrollment, student fees, etc.). I don’t know if it’s trivial, but certainly doable.
What do you think about the state and municipal situation? A large portion of the state budget, for example, is directed towards K-12 and healthcare. Not as many variables to ‘dial down’ (e.g. capping enrollment).
What happens to the City of San Diego? Seems like the smart Mayor/Council would have been shoring things up while the money was there. With the tide going out, I wonder what happens to the City’s prospects of avoiding bankruptcy?
ParticipantSmall world, kewp. UCSD? What part of the University? I worked in RMP for many years. UCSD is a great place. The UC System is a remarkable institution, very much an economic engine for the state.
Yep, I understand and agree re: boxing quantity/quality with available resources (programs, enrollment, student fees, etc.). I don’t know if it’s trivial, but certainly doable.
What do you think about the state and municipal situation? A large portion of the state budget, for example, is directed towards K-12 and healthcare. Not as many variables to ‘dial down’ (e.g. capping enrollment).
What happens to the City of San Diego? Seems like the smart Mayor/Council would have been shoring things up while the money was there. With the tide going out, I wonder what happens to the City’s prospects of avoiding bankruptcy?
ParticipantSmall world, kewp. UCSD? What part of the University? I worked in RMP for many years. UCSD is a great place. The UC System is a remarkable institution, very much an economic engine for the state.
Yep, I understand and agree re: boxing quantity/quality with available resources (programs, enrollment, student fees, etc.). I don’t know if it’s trivial, but certainly doable.
What do you think about the state and municipal situation? A large portion of the state budget, for example, is directed towards K-12 and healthcare. Not as many variables to ‘dial down’ (e.g. capping enrollment).
What happens to the City of San Diego? Seems like the smart Mayor/Council would have been shoring things up while the money was there. With the tide going out, I wonder what happens to the City’s prospects of avoiding bankruptcy?
ParticipantSmall world, kewp. UCSD? What part of the University? I worked in RMP for many years. UCSD is a great place. The UC System is a remarkable institution, very much an economic engine for the state.
Yep, I understand and agree re: boxing quantity/quality with available resources (programs, enrollment, student fees, etc.). I don’t know if it’s trivial, but certainly doable.
What do you think about the state and municipal situation? A large portion of the state budget, for example, is directed towards K-12 and healthcare. Not as many variables to ‘dial down’ (e.g. capping enrollment).
What happens to the City of San Diego? Seems like the smart Mayor/Council would have been shoring things up while the money was there. With the tide going out, I wonder what happens to the City’s prospects of avoiding bankruptcy?
ParticipantSmall world, kewp. UCSD? What part of the University? I worked in RMP for many years. UCSD is a great place. The UC System is a remarkable institution, very much an economic engine for the state.
Yep, I understand and agree re: boxing quantity/quality with available resources (programs, enrollment, student fees, etc.). I don’t know if it’s trivial, but certainly doable.
What do you think about the state and municipal situation? A large portion of the state budget, for example, is directed towards K-12 and healthcare. Not as many variables to ‘dial down’ (e.g. capping enrollment).
What happens to the City of San Diego? Seems like the smart Mayor/Council would have been shoring things up while the money was there. With the tide going out, I wonder what happens to the City’s prospects of avoiding bankruptcy?
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