RE: Bitcoin was NOT in a bubble – the 2017 rise and the 2018 consolidation (Chaos Monitaur–34)
Dear @majes.tytyty
Amazing piece of work buddy.
After the crash of the housing bubble in 2007–08, the Fed and other central banks blew massive bubbles in everything from bonds and real estate to student loans and money in general.
Don't you think that current bubbles are not really as bad as many think? When I look back at property bubble or dot com bubble or even crypto bubble I see one similar thing. Almost everyone at that time around me was talking about buying house, buying stock, buying crypto.
Basically market was always full of professionals and common people, who were the ones to panic the most. Right now there is very few amateours playing on stock market, buying bonds etc. Those are people panicing the easiest. Right now entire market is full of professionals and they do not reac the same way.
So for that only reason I would not expect Stock Market bubble to burst hard. Simply because this bubble is not really as bad as many think.
But then it's just my impression. I wonder what's your opinion.
Yours, Piotr
Excellent comment, Piotr, with a great though-provoking thesis. I'd never heard of it expressed in that way, and I've never considered it. You are correct in saying that the common people are not involved in this bubble. At least, not to the extent that they were in the dot.com and real estate bubbles.
However, that does not mean that the bursting of the bubble will be less traumatic. The fact is, as you implied, that the bubble is at the top, among the professionals. But they are the ones who own most of the stocks, and they are the ones who will dump their stocks when the market turns down. I believe they will react in the same way, once the shit hits the fan. And their reaction will be to throw much more of "their" shit at the fan.
Over the past decade or so, stocks have been bouyed by central banks' QE money-printing strategies, which allowed many corporations to buy back their own stock. That monetary morphine has resulted in an even exaggerated bubble.
And now, it's about to burst. (I'm not a stock analyst or an economist, and that's not my opinion. That's what many clear-eyed "expert" analysts say. Many of them accurately predicted the bursting of the dot.com bubble, and the bursting of the real estate bubble. 2 out of 2 is pretty good, so I'll believe them when they say Crash Number 2 is coming.)
So, even though the common people may not be actively involved in this bubble, that does not mean that the bubble is not big, nor that it will not burst, nor that they will not be affected.
It's big, it will burst, and all of us will be affected. Hang on tight!
Dear @majes.tytyty
Most likely you're right. At least to some certain degree. One need to rememeber about power of mass media and power of mass human panic.
If regular joe didn't invest in stocks then media will also hardly talk about this subject. Simply to avoid showing "boring" content. On top of that so called FUD will hardly have any impact if regular joes will not care and will not be involved.
That's obviously just a good wish :)
Very true.
Indeed. But it also means that mass media will literally not care that much about this bubble. And that's a real game changer. One must assume that mass media in current world are the biggest power. Playing with people by using fear or hope. Building dreams or crushing them.
Ok, let's put it this way. If this bubble will burst, then surely it would be MUCH MORE painful if regular joes would be involved and market would be "hot" and everyone out there would be trying to "jump into that train".
How does it sound? :)
Yours
Piotr
I see your point. And in a way, you have a good argument. Unlike the dot.com bubble and the sub-prime / real estate bubble, the current bubble does not actively involve Regular Joe.
So, when the massive financial bubble pops, Reg Joe will not lose on stocks, bonds, real estate, or other of his assets or investments.
However, I believe Reg Joe will still feel the effects, and will in fact be hurt by the effect. In a sense, it's gonna be like the 1929 crash. That resulted in primarily in the loss of the fortunes of the big, powerful investors and businessmen. But it had knock-on effects, which hurt Reg Joe for the subsequent decade.
This time, it will be the same. Or worse.
Yes, the knock-on effects on Regular Joe were terrible, because RJ was employed by the big, powerful investors. When they lost money, RJ got laid off.
This is probably a good point to mention that I do not believe austerity works to repair the economy; it works to enable the rich to buy up distressed assets for pennies on the dollar.
This is what's happening here in Argentina right now. The government is selling off the foreign reserves at great speed, nominally to satisfy the demand for dollars, thus keeping the exchange rate between the Argentine Peso and the US dollar stable. But the only people with the available capital to buy those dollars are the rich. Thus the net effect is a massive transfer of wealth from the national treasury to wealthy private individuals. The main theme of the Macri government is looting and sacking of the public treasury.
Of course this accompanied by the usual "privatization" of public assets, and we all know what that means. For more detail, you can see the article I wrote last week-
https://steemit.com/argentina/@redpossum/redpossum-mansplains-about-argentina