Global Meltdown Thread

Bubble? What Bubble Edition.

American capitalism is enjoying one of the longest periods of growth since WWII. Even though wages continue to get squeezed, stock markets have done remarkably well in the last 8 years, and especially since the election of Donald Trump it has enjoyed what has been colloquially termed the Trump bump. However, some are cautioning that stock markets may have entered a bubble phase and may be due for a "correction" or crash. They single out tech stocks as over-valued and ETFs (electronically traded funds) maybe fueling this overheating market. The FAANG stocks(Facebook, Apple, Amazon, Netflix, Google) and Tesla are said to be representative of this "irrational exuberance".

Economist Dean Baker questions Amazon's stock value.
cepr.net/blogs/cepr-blog/is-amazon-s-stock-price-justified-what-it-means-if-it-is
Tesla's "inexplicable" "ponzi-scheme" valuation wolfstreet.com/2017/04/11/tesla-gm-comparison-market-share-income-valuation/
Why Facebook is ridiculously overvalued seekingalpha.com/article/4012178-facebook-ridiculously-overvalued

How the ETF bubble feeds the stock market bubble forbes.com/sites/vincentdeluard/2017/06/28/how-the-etf-bubble-feeds-the-stock-market-bubble/#14afa1275457

In addition some leading indicators of stock bubbles are already flashing red.
Wilshire 5000 index/GNP cnbc.com/2017/02/07/by-this-measure-stocks-are-massively-overvalued.html
CAPE ratio cnbc.com/2017/06/29/economist-robert-shiller-urges-caution-on-market-of-unusual-highs.html

Bonus: Bitcoin bubble dwarfs tulip mania from 400 years ago cnbc.com/2017/07/20/bitcoin-bubble-dwarfs-tulip-mania-from-400-years-ago-elliott-wave.html

Other urls found in this thread:

archive.is/3vMg2
scmp.com/news/china/economy/article/2103006/chinas-super-regulator-fails-impress
investopedia.com/terms/d/debtdeflation.asp
nakedcapitalism.com/2016/09/the-private-debt-crisis.html
ftadviser.com/investments/2017/07/25/will-end-of-qe-burst-tech-bubble-and-kill-zombie-companies/
seekingalpha.com/article/4062029-forget-valuation-netflix-major-solvency-issues
en.wikipedia.org/wiki/List_of_countries_by_oil_exports
en.wikipedia.org/wiki/List_of_countries_by_oil_imports
en.wikipedia.org/wiki/1973_oil_crisis
en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
en.wikipedia.org/wiki/Random_walk_hypothesis
youtube.com/watch?v=77CcQQjj2Ao
en.wikipedia.org/wiki/Bahraini_protests_of_2011
youtube.com/watch?v=2yQjGZ482l8
thenextrecession.wordpress.com/2014/04/23/a-world-rate-of-profit-revisited-with-maito-and-piketty/
twitter.com/NSFWRedditVideo

Would it be too alarmist to say that this coming crash might be even as bad as the Great Depression?

Also, I'm trying to make some quick cash off the crypto market while the bubble still hasn't popped. Hopefully it pays off for me.

I think 2008 was the big one, the coming crash would be less severe I think. That's just my opinion. I don't have any data for that.

Pretty sure I've heard Yanis Varoufakis say this, for whatever that's worth.

it could be way worse, the tech industry is basically one enormous bubble. Today's tech giants are an order of magnitude larger than the silly dotcom bubble startups that went under in 2000. You can tell they are getting desperate, investing in increasingly dubious moonshot ventures like space travel or useless 600 dollar juicers with internet connectivity. Remember theranos, that bilion dollar biotech startup that turned out to be a blatant hoax? turn on the news and it's all technohype, muh automation, elon musk this and that, but many in the industry, Peter Thiel for example, think sillicon valley is actually facing a crisis of stagnation. Amazon, Uber, AirBnB, Tesla, all have been running at a loss since day one, buoyed up by massive amounts of investment capital. People invest in those companies in the hope they will find a way to make massive profits at some point in the future, but what if they don't?
Facebook and Google rely on ad click revenue , but turns out most of those clicks are bots while humans increasingly tend to block the ads.

Freedom caused the economy to crash. It wasn't first weakened by taxes, regulations, irs (pushing money into the stock market), cronyism, fractional reserve banking, IP laws, all of which create COMPOUNDED detriment to the market. Also jews

Ancap stockmarket would be run entirely like Enron.

You could make a lot of money if you didn't buy into hype though.

You could make a lot of money breaking the entirety of the SEC handbook because it didn't exist anymore, sending everything into chaos.

Everyone sees this crash coming, they just don't know what to do with it.

Interesting Zerohedge article, as usual hold your nose:

archive.is/3vMg2

Zerohedge has predicted 11 of the previous 2 recessions.

I fundamentally disagree with this article. I believe lower inflation peaks and lower growth are both related, and those have very little to do with the age distribution. We have lower inflation because the fed has a hair trigger on interest rates now. Whereas previously, the fed would've let inflation grow before raising interest rates, the fed seems to be willing to pull the trigger and expect no political consequences because of it. Take for example the recent interest rate hike. Every other fed in the world refused to increase rates and wait for inflation, whereas Yellen just went ahead with it. If they've let inflation grow, wages would've followed, and the increased money supply at the bottom would've lead to more growth in the real economy. Yellen or the bankers in the White House are uninterested in the real economy because they care more about upward redistribution through rate hikes.

Bourgeois economists say the same thing about Marxist economists though but the funny thing is that the bourgeois economists haven't predicted any. That's not to defend Zerohedge of course.

For what it's worth, I think we're still at least six months away from some serious trouble. More in the optimism/enthusiasm phase.

If I were a betting man my money would be on a lackluster or outright dismal Christmas season sending investors into a selling stampede that severely disrupts the market.

China crash when?
(Economics shithead here so I am not evenness remotely close to understanding what she gonna happen and shit)

China is threatened with debt deflation and they're trying to control or at least slow it down with the creation of a 'super regulator'.

scmp.com/news/china/economy/article/2103006/chinas-super-regulator-fails-impress

what does this entail

investopedia.com/terms/d/debtdeflation.asp

If true this is pretty cool:

Private debt, not debt in general. But, yes. There's a high correlation between the two.

nakedcapitalism.com/2016/09/the-private-debt-crisis.html

ftadviser.com/investments/2017/07/25/will-end-of-qe-burst-tech-bubble-and-kill-zombie-companies/


Hint: Netflix

seekingalpha.com/article/4062029-forget-valuation-netflix-major-solvency-issues

Also now it can be much worse because crush of those companies may initiate crush industrial giants like intel or foxconn?

It'll be interesting to see if we see a bubble-popping chain reaction this time.

I could see something like this happening…

Tech-stock bubble craters overnight.

Market enters instability mode as it reels from the crash of some of its largest entities.

This market instability leads to massive downturn in the tech sector (like what we saw in the early 2000s after the dot com bubble popped) However, this, when coupled with the existing housing crisis in metro areas, leads to not only a lot more homeless people, but a lot of home owners trying to exit the market as fast as possible.
Their homes may have lost as much as 50% of their value. The draw to massive, gentrified metro areas in the last decade or so has been largely because of tech revolutions and startups which are now almost worthless.

The now cheap luxury houses will be scooped up by the vultures who will likely rent them out, sell them to wealthy foreigners, or just wait for the market to recover to the point where they can make a profit off it.

The ACA being repealed by this time; people go into even more massive debt to pay for their healthcare.

The economy never properly recovers (it arguably hasn't for the average person since 08), medical debt and student debt continue to spiral out of control and more people begin to miss payments or just go off-grid, there being no jobs for them to fulfill, van-dwelling goes mainstream as houses stay unaffordable, and more people lose hope that there will be a positive future for themselves, their families and their communities unless something really changes.

Things will probably stay this way until the price of oil reflects reality again, at which point it's WWIII baby.

Nobody is going to start WW3, it's just retarded handwaving whenever someone brings it up.

I think this is actually good for workers. It shows the efficiency gains brought on by IT are all plateauing and additional growth will require additional labor. Increased demand for labor means increased leverage for labor. I'm actually quite happy automation turned out to be such a meme I really bought into it.

Do you mean right now, or ever?

For the various bourgeois factions, the ultimate options are either merger, or war.

So unless the US, Russia, China, and/or the other major economies can resolve their contradictions and economically merge, at some point it's going to mean war.

Still sounds like handwaving to be honest.

Cool

Why am I excited at the prospect? Boredom really fucks with your brain. I'd know it would be an awful experience, but that doesn't stop me wanting it to happen, for some reason.

Well, as a hypothetical, answer me this. What do you think America would look like if gas was $60/gal.?
What about Mexico and Canada?

en.wikipedia.org/wiki/List_of_countries_by_oil_exports
en.wikipedia.org/wiki/List_of_countries_by_oil_imports

The US exports ~41,000 barrels of oil per day.
The US imports ~9,000,000 barrels of oil per day.

Additionally, the EU as a whole imports over 11,000,000 barrels of oil per day.

If there is a crash as severe as 08 it could destabilize world trade on a pretty massive scale, though as I mentioned in my last post, things will probably continue along a relatively slow social/economic decline until oil prices reflect their true value, at which point the world enters a new era of conflict as nations struggle to control the remaining natural energy resources.

WWIII in this context is several nations which no longer have the means to feed their populations or produce basically anything. WWIII in this context is what happens after a globally destabilizing event occurs, because we aren't going to be coming out of it with nearly as many people as we went in with, and this is before we really talk about the role that climate change will have in destabilizing markets, nations and populations across the globe.

You'll be in for a wile ride, assuming you're young enough now.

I mean, something like that has happened before, though not at that scale
en.wikipedia.org/wiki/1973_oil_crisis

You probably crave the potential schadenfreude, but you may not get to enjoy it.

Sure, we want to watch the pompous elites and their media lackeys tripping all over themselves. Same reason we almost enjoyed watching Hillary lose. Almost. When I saw the news of all those states falling to Trump, I didn't exactly cry but I wasn't exactly smiling either. I remember glaring at my screen, muttering, "You bitch. You stupid bitch. You couldn't even beat Trump."

I suspect the next economic crash will have the same effect. We won't laugh or cry, we'll simply shake our heads and curse the neoliberals.

I don't think people have the patience left for their governments to fuck them around with another crash and even a minor war, everyone will have their hands full trying to stay in control. The only people who don't seem to mind at this point are the Germans.

I dunno' dude, Obama took Bush's 2 wars and made them into 7. People had plenty of patience then.

When Wall Street got bailed out for causing the 08 crash only a handful of people were upset enough to head to Occupy, and they were treated as criminals just for being there.

The people at Tahrir Square had lost their patience for corrupt governments, and for their protests they were rewarded with a military takeover and Islamic rule.

If there's one thing I wouldn't underestimate in the modern individual it would be their capacity to be patient with whomever is buttfucking them at the moment, be it their boss or their government. That's not all their fault, mind you, but still, it modern revolutions tend to turn out shitty, and I'm not sure how to change that.

That picture is so damn depressing.

Really? I find it kinda hopeful…life sucks as it is anyways..better off we start anew.

For people over 30 yeah I'd say this is true.

But for the Occupy generation and after they've spent half their lives or more with this bullshit and things are only getting worse, and maybe I'm just being optimistic but the next time something like Occupy happens I don't know if it will be peaceful.

What did he mean by this?

And yeah, all of that anger hasn't gone away, it's just been left to fester in a pot of growing discontent and polarisation. Liberals have had their chance and failed miserably as evidenced with their feel good bullshit at Occupy, and people are getting pissed off at a faster rate than 2008 I'd say. If we have another crash soon they'll be too close together for them to do another sleight of hand.

it doesn't work like this
anyone who claims they know what the market is doing next is selling snake oil

People who this snake oil for a living (Hedgefund and Mutual Fund managers) don't outperform the market on the aggregate

en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
en.wikipedia.org/wiki/Random_walk_hypothesis

The Standing Rock protests were arguably a lot more peaceful than Occupy, and look at the reception they got…

I fear you are indeed correct, however, and that future protests will continue to be more violent (in reaction to the increasing economic violence that has been done to them), however, the capacity of an angry, hungry, economically underwater population to out-violence their state (which has been preparing for this violence non-stop since roughly the 1850s) is horrifying to imagine.

I'll let comrade Dore explain it.
youtube.com/watch?v=77CcQQjj2Ao

This was a nice bit of descriptive writing, I enjoyed that quite a bit

If a modern state is forced to engage in mass repression against civilians, this can only be a sign of its imminent collapse. There is no way to stop once you've entered a cycle of unrest, repression and intensified unrest. The events of the arab spring can be instructive.

Spot on. Watch for it, and remember that no matter what form that mass repression takes, tens of millions will cheer for it so long as it makes them feel even the slightest bit safer.

Yeah, standing rock came to my mind too when I was writing that, and I don't think the violence the protesters were treated with went unnoticed. If it hadn't happened in South Dakota, I can't help but imagine things would have been different. Correct me if I'm wrong, but didn't they also expressly forbid anyone bringing guns and turned away folks that did?

But I agree. When things finally snap it's going to be a bloodbath on a scale that hasn't been seen in the West in living memory. Ultimately I think the people will win out, but the (hopefully) red flag is going to be planted atop a mountain of bodies.

I believe they did turn away some who were trying to enter with guns. Early on when the protest was just starting to get media traction they caught someone who worked for the oil company (or at least drove a truck licensed to the company) bringing a rifle in trying to appear as one of the protestors.

I'm not sure if that was a hard policy at every camp, though it may have been, likely a necessary safety measure - those cops were out for blood in a truly grotesque way.

Thanks, I thought I remembered hearing something like that too.

In the tiny island nation of Bahrain, protests were suppressed through the use of foreign troops and mercenaries. with a huge, diverse country like the United States you get a whole different story. The collapse is already happening and has been happening for a while. we should organise accordingly. Catastrophe is merely the continuation of the status quo.

en.wikipedia.org/wiki/Bahraini_protests_of_2011

daily reminder that major political instability in the US will result in covert and overt foriegn intervention on all sides of the conflict

Maybe I'm being a STEMlord but the message conveyed by the image is clearly that it was all for nothing, that it will all return to nothing, that most of human ingenuity will end up as a literal pile of trash.

Bump because I love this thread

Take that Lenin hat off.

...

But you forgot that China produce huge amount almost all tech stuff. And I am not sure what influence caused crisis in China on China itself and world. Perhaps they may rebuilt communism or something like that?

youtube.com/watch?v=2yQjGZ482l8

Thanks! Now if only I could do something useful with it…

Perhaps its a bit of stretch to attempt to predict when the bubble is going to burst, but it's not snake oil to say that the market is in a bubble. FAANG stocks have a price/earnings ratio of 90. The market average is 25. They are massively overpriced, and they're still going up.

Write for Spectre Rouge. (search for it in catalog)

My entire family has stock with Disney and are completely ignorant that there's a potential bubble forming. I feel like they think this is a second Post-WWII market instead of a Roaring 20s stock market. Should my family be worried at all if this bubble pops?

If they're long term investors, not really. If they bought overpriced stock with credit, then probably yes. Also, the bubble is in the tech sector. Disney is reasonably safe, even though a downturn may effect them temporarily.

Fam everyone should be worried for when this bubble pops.

reply to this

Tesla stock is going strong? Why is Tesla doing so well? Don't they just make electronic cars? Or is it the Elon Musk cult of personality? PayPal co-founder who has lots of controversial libertarian-esque opinions. However he kind of believes that tech is going to save the world too.

Thanks

please let this be true, i mean they could be waiting for a crash and use their economic power or something to deepen the crisis until capitalism can never recover. (im talking completely out of my ass and I have no idea if comrade Xi can do this)

bump

China is now a major component of global capital, so theoretically they could crash or at least cause major damage to the whole economic system if they wanted to, but I sincerely doubt they want to.

Sales of their cars have been increasing (last I heard) and they've been expanding their charging stations across the Western US, and aside from that the hype machine is still going strong. So, it has all those qualities that make Tesla stock irresistible to investors: it's big, growing, well known, and surrounded by an impenetrable wall of hype. It doesn't hurt either that it's part of the Elon Musk "brand". He's a billionaire, after all, so he must know what he's doing.

Anyone got the pic of declining profit margins?

...

thx

how exactly is this even measured? Where do they get this data from?

The trick is to slowly withdraw as the market rises. As soon as you've doubled, take out what your initial buy-in was, that way everything else is playing with the house's money.
Then every so often, as the market rises, take chunks out and stash it. By the time it's done, you've got 3-4x your money set aside in cash, and the market crashes, and you lose whatever you kept in play. But it's cool because it wasn't yours to begin with.

And if it sounds like I'm talking about a casino, it's because that's all Wall Street is.

this post has all the details
thenextrecession.wordpress.com/2014/04/23/a-world-rate-of-profit-revisited-with-maito-and-piketty/

I'm not even a Christfag but Ecclesiastes is literally the book which is never wrong

The depressing part is that there's still a human alive to repeat our pathetic failure. Better to just die out at that point and hope there'll be another species which isn't fucking retarded.

That's also a concern of mine. Who's to say they won't be planting a fascist flag and misidentify the problem?

Oh just fucking wait, cause it's coming to Virginia.

Not North Dakota. Not a fucking square state in the middle. Virginia. One of the original 13. And it's gonna be done with land seizures from armed rednecks. Specifically, from armed rednecks whose grandparents took up rifles to defend coal mine strikes.

You're gonna see some shit in the next 2 years. Mark my fucking words. Screenshot this. SIC SEMPER TYRANNIS, MOTHERFUCKERS.

Know what? Fuck it. This is getting it's own thread.

link it here when you've got it up

Will the 2020s be the decade that Hobos make a comeback?

The only counterpoint I'd put to you is that we didn't really pass any laws to effectively prevent another 2008 from happening again… as far as I know, that is. I have repeatedly read that another 2008 could easily happen in a slightly related sector… but idk I am not basing that on anything.

The things that lead to the 2008 crash were never resolved and inequality has only gotten worse and the big banks have only gotten bigger since then. Every month we hear a new story about how the criminals in charge of them broke the law out of greed again.

A bigger one is still coming.

About damn time

This will probably come back to bite him.

No. They will build more prisons.