{"id":30637,"date":"2018-02-07T19:09:02","date_gmt":"2018-02-08T00:09:02","guid":{"rendered":"http:\/\/olduvai.ca\/?p=30637"},"modified":"2018-02-07T19:09:02","modified_gmt":"2018-02-08T00:09:02","slug":"steve-keen-why-did-it-take-so-long-for-this-crash-to-happen","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=30637","title":{"rendered":"Steve Keen: “Why Did It Take So Long For This Crash To Happen?”"},"content":{"rendered":"
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Steve Keen: “Why Did It Take So Long For This Crash To Happen?”<\/a><\/span>\u00a0<\/span><\/h3>\n<\/div>\n
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As originally written at RT, outspoken Aussie economist Steve Keen points out<\/a> that everyone who\u2019s asking \u201cwhy did the stock market crash Monday?\u201d<\/em><\/strong> is asking the wrong question; the real question, Keen exclaims, is \u201cwhy did it take so long for this crash to happen?<\/em><\/strong>\u201d<\/p>\n

The crash itself was significant – Donald Trump\u2019s favorite index, the Dow Jones Industrial (DJIA) fell 4.6 percent in one day. This is about four times the standard range of the index – and so according to conventional economics, it should almost never happen.<\/p>\n

Of course, mainstream economists are wildly wrong about this, as they have been about almost everything else for some time now. In fact, a four percent fall in the market is unusual, but far from rare: there are well over 100 days in the last century that the Dow Jones tumbled by this much.<\/p>\n

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Crashes this big tend to happen when the market is massively overvalued, and on that front this crash is no different.<\/strong><\/p>\n

It\u2019s like a long-overdue earthquake. <\/strong><\/u>Though everyone from Donald Trump down (or should that be \u201cup\u201d?) had regarded Monday\u2019s level and the previous day\u2019s tranquillity as normal, these were in fact the truly unprecedented events. In particular, the ratio of stock prices to corporate earnings is almost higher than it has ever been.<\/em><\/strong><\/p>\n

More To Come?<\/u><\/strong><\/p>\n

There is only one time that it\u2019s been higher: <\/strong>during the DotCom Bubble, when Robert Shiller\u2019s \u201ccyclically adjusted price to earnings\u201d ratio hit the all-time record of 44 to one. That means that the average price of a share on the S&P500 was 44 times the average earnings per share over the previous 10 years (Shiller uses this long time-lag to minimize the effect of Ponzi Scheme firms like Enron).<\/p>\n

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…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Steve Keen: “Why Did It Take So Long For This Crash To Happen?”\u00a0 As originally written at RT, outspoken Aussie economist Steve Keen points out that everyone who\u2019s asking \u201cwhy did the stock market crash Monday?\u201d is asking the wrong question; the real question, Keen exclaims, is \u201cwhy did it take so long for this […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[9257,7551,8666,501,506,750,4318],"class_list":["post-30637","post","type-post","status-publish","format-standard","hentry","category-economics","tag-djia","tag-dow-jones-industrial-average","tag-mainstream-economics","tag-market-crash","tag-markets","tag-steve-keen","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30637","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=30637"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30637\/revisions"}],"predecessor-version":[{"id":30638,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30637\/revisions\/30638"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}