{"id":49247,"date":"2019-10-29T12:21:41","date_gmt":"2019-10-29T17:21:41","guid":{"rendered":"https:\/\/olduvai.ca\/?p=49247"},"modified":"2019-10-29T12:21:44","modified_gmt":"2019-10-29T17:21:44","slug":"the-economic-crisis-of-2008-did-not-end-it-has-been-in-remission","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=49247","title":{"rendered":"The Economic Crisis of 2008 Did Not End, It Has Been in Remission"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.valuewalk.com\/2019\/10\/high-stock-prices\/\">The Economic Crisis of 2008 Did Not End, It Has Been in Remission <\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">There have been many articles appearing in recent months suggesting that the economy might go into a recession within the next year. Many have focused on whether the&nbsp;<a href=\"https:\/\/www.valuewalk.com\/2019\/10\/fed-loretta-j-mester-u-s-economy\/\">Federal Reserve<\/a>&nbsp;should cut interest rates to stop this from happening. There also has been a lot of speculation as to the effect that an economic downturn will have on the 2020 Presidential elections. I have not seen anyone talk about how today\u2019s high stock prices will likely cause an economic collapse.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/d2wsh2n0xua73e.cloudfront.net\/wp-content\/uploads\/2019\/06\/Stocks_1561570375.jpg\"><img decoding=\"async\" src=\"https:\/\/d2wsh2n0xua73e.cloudfront.net\/wp-content\/uploads\/2019\/06\/Stocks_1561570375.jpg\" alt=\"Trading Penny Stocks\" class=\"wp-image-2128606\"\/><\/a><figcaption><a rel=\"noreferrer noopener\" href=\"https:\/\/pixabay.com\/users\/Pexels\/\" target=\"_blank\">Pexels<\/a>\u00a0\/ Pixabay<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">There have been numerous suggestions coming at things from the opposite direction, making the case that a&nbsp;<a href=\"https:\/\/www.valuewalk.com\/2019\/10\/recession-yield-curves-consumption-function\/\">recession<\/a>&nbsp;will likely cause stock prices to fall hard. But I view that way of thinking about things as a holdover from the Buy-and-Hold Era. If stock price changes are caused by rational assessments of economic developments, it would make sense that economic bad times would cause stock prices to fall. But I believe that Shiller\u2019s research showing that valuations affect long-term returns is legitimate research. If that is so, then high stock prices are caused by irrational exuberance and the inevitable disappearance of irrational exuberance causes trillions of dollars of consumer spending power to leave the economy, causing a contraction.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If that\u2019s the way things work, the economic crisis of 2008 never came to an end. Employment numbers improved and businesses stopped going under. So, in a surface sense, economic conditions certainly improved. But the economic numbers improved only when\u00a0<a href=\"https:\/\/www.valuewalk.com\/2019\/10\/shillers-book-2008-economic-crisis-total-destruction\/\">CAPE<\/a>\u00a0levels returned to the dangerous levels that applied prior to the onset of the crisis. We pumped up stock prices to make people less fearful of spending but at the cost of insuring that a follow-up price crash would be coming in not too long a time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Economic Crisis of 2008 Did Not End, It Has Been in Remission There have been many articles appearing in recent months suggesting that the economy might go into a recession within the next year. Many have focused on whether the&nbsp;Federal Reserve&nbsp;should cut interest rates to stop this from happening. There also has been a [&hellip;]<\/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":[8,312,1849,27456,17188],"class_list":["post-49247","post","type-post","status-publish","format-standard","hentry","category-economics","tag-8","tag-financial-crisis","tag-financial-markets","tag-rob-bennett","tag-value-walk"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49247","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=49247"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49247\/revisions"}],"predecessor-version":[{"id":49248,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49247\/revisions\/49248"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=49247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=49247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=49247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}