How the easy money boom ends
Through the door there came familiar laughter
I saw your face and heard you call my name
Oh, my friend we’re older but no wiser
For in our hearts the dreams are still the same
Those were the days
– “Those Were the Days” by Gene Raskin
POITOU, France – Yes, they were good years… 1980-2015. We laughed. We cried. We got married. We raised children. We bought houses. We made money.Whose life has not been improved since the end of the 1970s?
Reagan’s “Morning in America.” Then the Clinton Years. Finally, George W. Bush’s “Fin de Bubble” era. Who is not older and better off (or at least older) than he was when the era began?
Should we just stop there, happy to have had such a wonderful time together?
Today, the Dow opens at 17,867 points – not far from its all-time high. And about 1,180% higher than it was 35 years ago.
A man would be fool to question his happiness in marriage; would he be so foolish to wonder about the bliss afforded by such a bull run?
Should we merely thank divine providence… or the profane feds… for our granite countertops, our rising stock market portfolios, our families, and our fortunes?
Should we look in the closets and under the rug?
Or maybe – just maybe – should we check the balance sheet?
Vanishing Capital
The press was unanimous as to what happened yesterday: “U.S. Stocks Slip on Yellen’s Testimony.”
What was it about her testimony that caused investors to think that their stocks may be less valuable at 4 p.m. than they had been at 9 a.m.?
“Yellen hints at December rate hike.”
Investors are no dopes. They know the fix is in. The value of a stock is no longer determined by honest commerce. Now, it is a feature of finance – specifically, the rate of interest the Fed pays commercial banks on their excess reserves.
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