Lately the Democrats have been trumpeting the gains in the stock market as proof of the effectiveness of Obama’s economic policies whilst ignoring the affect of Quantitative Easing in all this. It has been quite a ride indeed, with stock market more than doubling. Is that all about to come to a halt? This article offers a broader perspective that is worth reading in its entirety.
I have witnessed it all, and yet the cycle goes on. It is simply the degree of severity to the downturn that changes, and the policies that claim to fix the situation, but in the end, policy makers, and capital markets players, repeat the same mistakes. The politicians pull out the populist rhetoric, and they all say they will fix things, they care about the common man, the capitalist pigs stole the money, bailouts are unfair, or we need more regulation….
Even with all the new regulations, more scrutiny, more lenders with awful memories, it is starting again. After five years of no action, the animals are hungry and need to be fed. The same statements are being made– this time is different, we know how to be careful. O yeah- I have heard that all before, in each cycle, and it is all BS.
The train has left the station again, and Thelma and Louise are calling from the bottom of the cliff. It may take 7-12 years this time, but it will happen again, no matter what regs they write. As Reinhart and Rogoff proved, there is never a This Time Is Different. Only the faces change. It is human nature to try to find a way to do more volume and beat the competition, no matter the business or even between countries, and in the end the bubble bursts. Just remember this time to jump off the train before it goes off the cliff. You may get bruised, but you won’t get killed.