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Stocks Off Sharply as Market Upheaval Grows

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Re: Stocks Off Sharply as Market Upheaval Grows

#391

Post by sillygeese »

pnut wrote: post #360
MCRed wrote: post #84

Earlier quoted context omitted.

We have a democrat who is president, and who took over after a crisis during the term of a republican. (never mind that he was part of the cause of the crisis with his 1990s era "not lending to people who can't repay is racist" lawsuit against banks)... so the liberals of HN are highly motivated to believe that democrats are "responsible" and that they have "fixed the economy" after republicans "wrecked it". So when…

America is the greatest economic engine the world has ever known. It's not because we're situated on a mountain of rubies, or that we are intellectually superior to other countries. It's because of our system of government. This talk about the government being the problem, causing harm to the economy, really irritates me - the American economy owes its very existence to the American government and the private propert…

> America is the greatest economic engine the world has ever known. It's not because we're situated on a mountain of rubies, or that we are intellectually superior to other countries.

> It's because of our system of government.

No, it's because of the relative freedom you enjoyed in the past. Strangely enough, the less of the fruits of people's labour you forcefully take away from them, the more motivated they are to produce.

The easier it is to do business, the more business will be done. Go figure.

There's a reason people were flocking to America from all over the world, and it wasn't to get horribly oppressed by filthy capitalist "Robber Barons".

Re: Stocks Off Sharply as Market Upheaval Grows

#392

Post by eli_gottlieb »

ArkyBeagle wrote: post #256
6stringmerc wrote: post #221

Earlier quoted context omitted.

Also of note: US worker demographics do not substantiate the narrative that a recovery is going on. Jobs added are typically in the service industry, and a large percentage of those are part-time situations. Also the only age group that has added jobs since 2008 is the 55 and up cohort, which only further punishes the under-employed youth with significant student loan / other debt burdens and stalls the general progr…

We will retire and the Fed will end up bailing out the IOUs on the SS trust fund. This is not a problem so long as it's done once. All SS money ends up strengthening the metric formerly known as M3, so it'll work out just fine. The problem is the closely-held belief that There Must Be Suffering or we're not being responsible adults. The economy has been liquidity constrained ( outside of bubbles ) since 1980, with th…

>The problem is the closely-held belief that There Must Be Suffering or we're not being responsible adults.

While this is quite true, there are underlying demographic factors to take into account. Namely, insofar as voting means anything at all, Generations X and Y together now outnumber the Baby Boomers among voting, working adults. This means that there is now an active, demographically-driven political conflict between the interest of incumbent creditors and the interest of an increasingly large majority of the voting, working adult public.

Re: Stocks Off Sharply as Market Upheaval Grows

#393

Post by eli_gottlieb »

wutbrodo wrote: post #367
coldtea wrote: post #359

Earlier quoted context omitted.

Not if capitalists can prevent it, crush it, disallow it, etc -- along with their friends in the goverment, with "right to work" laws, etc. It's funny that for something supposedly pragmatic and empirical, as capitalism, there are people invoking the "no true capitalism" defense. I mean when they say that in "true capitalism" the government would not interfere and the market would adjust itself etc, where in real lif…

> It's funny that for something supposedly pragmatic and empirical, as capitalism, there are people invoking the "no true capitalism" defense. This is hugely disingenuous. It's about as fair as crying "no true socialism" if someone were to say "moving towards socialism leads to mass famine! Just look at Mao!". I think part of what makes conversations like this so frustrating for everyone involved is that people are u…

> the market is good at certain things and bad at others, and gov't action is a sensible alternative in the areas it's better at (of which there are quite a few, not least dealing with externalities) or a damaging hindrance in the areas where it's worse than the market mechanism (explicitly setting prices, in most cases).

I don't think that's actually true[1]:

>Two German microeconomists tested the “widely accepted” hypothesis that “prices in a planned economy are arbitrarily set exchange ratios without any relation to relative scarcities or economic valuations [whereas] capitalist market prices are close to equilibrium levels.” They employed a technique that analyzes the distribution of an economy’s inputs among industries to measure how far the pattern diverges from that which would be expected to prevail under perfectly optimal neoclassical prices. Examining East German and West German data from 1987, they arrived at an “astonishing result”: the divergence was 16.1% in the West and 16.5% in the East, a trivial difference. The gap in the West’s favor, they wrote, was greatest in the manufacturing sectors, where something like competitive conditions may have existed. But in the bulk of the West German economy — which was then being hailed globally as Modell Deutschland — monopolies, taxes, subsidies, and so on actually left its price structure further from the “efficient” optimum than in the moribund Communist system behind the Berlin Wall.

Or in other words, mixed economies can easily operate just as far from the Efficient Market Hypothesis as centrally-planned economies. The Efficient Market Hypothesis should probably be considered more like a Carnot engine than like a real internal combustion engine: some substantial degree of inefficiency is probably an inevitable result of operating in the real world.

[1] -- https://www.jacobinmag.com/2012/12/the-red-and-the-black/

Re: Stocks Off Sharply as Market Upheaval Grows

#394

Post by deciplex »

cynicalkane wrote: post #181
deciplex wrote: post #169

Earlier quoted context omitted.

Let's say all the wealth in the world, minus a few percent, belonged to 400 people. Can you think of some ways that would wreak havoc on the economy, even without triggering a "proletarian revolution?"

No, because an economic crisis is a fall in economic output. The point is that "undesirable wealth distribution" is not what an economic crisis is. If 400 people controlled everything, the world wouldn't be a great place to live, but the economy would probably be more stable.

Can you think of some ways that an economy where virtually all the demand for goods theoretically possible is coming from 400 people, would see a substantial drop in economic output? Assume everyone's participation in the economy aside from that 400 is limited to getting enough shelter that they don't die of exposure and enough food that they don't starve to death.

Re: Stocks Off Sharply as Market Upheaval Grows

#395

Post by wocram »

swagswag wrote: post #263
anonu wrote: post #212

Earlier quoted context omitted.

Someone really bit the dust this morning in ETF land. Lots of US ETFs were down 10,20,30% and were halted due to circuit breakers. There is some quant/market-making firm out there that is really paying for this today.

Jane Street Capital making a killing today.

Speculation?

Re: Stocks Off Sharply as Market Upheaval Grows

#396

Post by brc »

monort wrote: post #366
brc wrote: post #363

Earlier quoted context omitted.

"Great Leap Forward"? Improvements only came when they abandoned communism, and came up with a fig leaf of 'mao was 80% correct' It is hard to rewrite history with a different set of rules, but I think it's fair to say that given the experience of Hong Kong, China would have been better off without 30-40 years of communist rule.

Not only Hong Kong, Taiwan and Singapore too. It's an experiment with control groups.

Yes in my haste I forgot that Taiwan is the perfect A/B test control group, because of the postwar history. It had a lot of the same issues to overcome.

I am biased towards Hong Kong having visited and loved the place, so it's always the first one I think of.

Re: Stocks Off Sharply as Market Upheaval Grows

#397

Post by blakecaldwell »

slg wrote: post #317
wiz21 wrote: post #313

Earlier quoted context omitted.

Pardon my ignorance, but why will the : "existing holdings will return to their yesterday prices at some point" ? The way you put it seems so inevitable (although "at some point" may be 100 years from now). So, as you're not the only one to say that, I'd like to know what makes you think that the holdings will get back to their previous level ? Because, if they increase from their current position, then you certainly…

It depends what you mean by holdings. If you mean a basket of holdings that is adequately diversified, then most people assume it is true because it has (almost) always been true. So while Apple may never again be as high as it is today, a portfolio including Apple and 50 other companies can reasonably be expected to go up in the long term. The simplest explanation for this is that the economy generally grows over th…

This is what I meant. I'm making the "crazy" assumption that the market hasn't hit the highest peak that we'll see in the next 30 years

Re: Stocks Off Sharply as Market Upheaval Grows

#398

Post by icebraining »

eli_gottlieb wrote: post #393
wutbrodo wrote: post #367

Earlier quoted context omitted.

> It's funny that for something supposedly pragmatic and empirical, as capitalism, there are people invoking the "no true capitalism" defense. This is hugely disingenuous. It's about as fair as crying "no true socialism" if someone were to say "moving towards socialism leads to mass famine! Just look at Mao!". I think part of what makes conversations like this so frustrating for everyone involved is that people are u…

> the market is good at certain things and bad at others, and gov't action is a sensible alternative in the areas it's better at (of which there are quite a few, not least dealing with externalities) or a damaging hindrance in the areas where it's worse than the market mechanism (explicitly setting prices, in most cases). I don't think that's actually true[1]: >Two German microeconomists tested the “widely accepted”…

The Efficient Market Hypothesis should probably be considered more like a Carnot engine than like a real internal combustion engine: some substantial degree of inefficiency is probably an inevitable result of operating in the real world.

That's a specious conclusion; the paper explicitly says that the inefficiency is due to the degree of management present in West Germany, which was significant.

It's not like the EMH says the market prices are theoretically perfect; it only says they're better than whatever individual or group can calculate. And the paper you cite provides evidence for that.

"To sum up, the unexpected similarity of overall deviance between actual prices and eigenprices in East and West does not warrant the conclusion that East German pricing behaviour was not so bad after all and more or less guided by relative scarcities. In those sectors where market forces prevail in the West, East German actual prices deviate significantly more from eigenprices. However, the similarity of the overall indicator testifies to the fact that a sizeable part of West German GNP is not produced under competitive market conditions. It obviously is the case in sectors with predominant public ownership rights and strong government influence."

(Emphasis mine)

https://www.europa-uni.de/de/forschung/institut/institut_fit...

Re: Stocks Off Sharply as Market Upheaval Grows

#399

Post by enraged_camel »

CWuestefeld wrote: post #362
enraged_camel wrote: post #347

Earlier quoted context omitted.

>>In fact, the VAST majority of Americans are better off than they ever have been. Check out this [1], for example, based on US census data. Yes, the middle class has been disappearing, but they haven’t fallen into the lower class, they’ve risen into the upper class http://www.aei.org/publication/yes-the-middle-class-has-been... -- You need to pick your sources a little more carefully. The organization whose article…

You need to pick your sources a little more carefully. I'm always annoyed at the invocation of the logical fallacy that the source of an argument renders it inadmissible. Not only is it a fallacy, but it's typically (but not in your case, especially since you're offering a specific criticism!) invoked by someone simply assuming that their own source is sacrosanct. That said... You may have a point, but it's not fatal…

>>I'm always annoyed at the invocation of the logical fallacy that the source of an argument renders it inadmissible. Not only is it a fallacy, but it's typically (but not in your case, especially since you're offering a specific criticism!) invoked by someone simply assuming that their own source is sacrosanct.

I didn't say it is inadmissible. I simply pointed out that it is significantly biased as a source, and proved it by pointing out the author's willful omission of important information and misrepresentation of facts.

Another issue with the AIE article is that defining the middle class purely by income is fallacious. Paul Krugman explained this wonderfully [1]. He makes the point that being middle class is really about two things: security and opportunity.

http://www.truth-out.org/opinion/item/21841-paul-krugman-red...

So a $60,000 family with good health insurance, high labor mobility and job security can be middle class, whereas a $90,000 family with no health insurance and terrible job security may not be.

Economist Miles Corak also elaborated on the opportunity aspect:

http://milescorak.com/2013/06/18/income-inequality-equality-...

Re: Stocks Off Sharply as Market Upheaval Grows

#400

Post by rorykoehler »

maratd wrote: post #358
rorykoehler wrote: post #353

Earlier quoted context omitted.

>(state ownership) of the means of production That would be Communism, a very extreme form of Socialism. Many countries in Europe are very Socialist.

Communism is state ownership of all property. The parent gave the proper definition of socialism. It is the state ownership of the means of production. Europe is not socialist. There were various attempts, but the means of production is still overwhelmingly private.

Reading Lenin's letters in the Lenin museum in Tampere was very eye opening and educational. Communism was never meant to be the state ownership of all property. It was meant to be the centralized state ownership of the means of production (mainly mining and large infrastructure) with cottage industries (local farmers and makers etc) existing and operating in a free market. Shortly before his death Lenin warned the politburo that Stalin was no good and should be purged from the party. When Stalin came to power he corrupted the original aim of Communism and installed new rules for state ownership to encompass the means of all production and also the proceeds of all production and we all now what happened next.

The commons is a very old concept in Europe. In the UK for example common ownership of agricultural land was the norm until the tragedy of the commons in the early/mid 1800's.

Today Europe is largely a social democracy which aims to walk the line between socialism and capitalism. Again social ownership of the means of production does not necessarily mean state ownership. As vezzy-fnord pointed out Mondragon is a cooperative who came about from the anti-Franco socialist movement in Spain in the mid 1900's. This is most definitely a socialist philosophy operating within a capitalist framework.

Socialism has had a major impact on European politics. The Nordic countries have an immensely strong welfare states due to this, the labour party in the UK (the blip of Tony Blair is an anomaly and they are swinging back to the left now), Sinn Fein (IRA political wing) in Ireland, François Hollande's Socialist party etc etc. Sure Europe operates within a capitalist framework but there is not such a fervent religious belief in unbridled capitalism as one would find in the States. All one needs to do is look at all the anti-trust lawsuits we have in the EU, against the likes of Google and Microsoft, to see how Socialist philosophy manifests itself in contemporary times.

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