This NEXT Bubble Is Going To Hurt!

Discussion in 'Stock Market' started by DarkFury, Jul 3, 2018.

  1. Indeependent
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    Indeependent Platinum Member Gold Supporting Member Supporting Member

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    From R&D to actual product you truly believe current vehicles are so overpriced?
     
  2. Andylusion
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    Andylusion Gold Member

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    Well.... that's true of literally everything.

    Values change constantly. Nothing is static in a dynamic economy.

    Meaning, that when people say "this is a bubble".... that is usually not true. Prices during economic growth, or usually high and going up.... because there is economic growth, and the demand for assets is high.

    When the economy falls, values fall. That doesn't mean it was a bubble. When the demand was high, the values were correctly high. When the demand falls, values correctly fall.

    It doesn't mean the high values during high demand, were wrong. They were correct. It wasn't a bubble.

    It's the same thing as people claiming there was a bubble in the stock market in the 1920s. The claim there was a bubble, because when the market crash, stocks lost half their value.

    No, it wasn't bubble. The economy changed, which changed the demand, which changed the values.

    There is no evidence whatsoever, by any economic or statistical measure, that the market in the roaring 20s, was over valued, or that there was a bubble.

    Bad government policy intervening in the economy, ruined the economy, which changed demand, which changed values of the market.

    So how do you tell the difference between a real bubble, and simply a change in the market? It's hard.

    It's usually when you can see a drastic change in prices over a relatively short time frame, the deviate from long term trends.

    [​IMG]

    As you can see, there was a fairly stable increase in housing prices, that lasted from the 1950s to about 1997. Then in 1997, you see a massive spike in prices.

    That indicates an actual bubble, rather than just a result of market demand.
     
  3. Indeependent
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    Indeependent Platinum Member Gold Supporting Member Supporting Member

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    Market Demand goes hand in hand with irresponsible lending practices.
    There are slums in Hempstead, Roosevelt and Uniondale NY where people making under 50K have already received 600K mortgages and have built their mansions and are leasing their BMWs.

    My son-in-law lives in Miami and does commercial and industrial real estate assessment; there's not one piece of real estate available and there's been no real estate transaction in over 2 years because even the banks know everything that sold was way overpriced.
    Houston is also in way over it's head.
    The big growth now, which is pretty much exhausted, is the purchase and development of Big Tech near dozens of universities around the country.

    Our lenders are out of control and they'll get away with it just as they did the last time.
     
  4. iamwhatiseem
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    iamwhatiseem Gold Member

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    Sorry, but cars are better built today than perhaps ever before.
    They are 1000 times more reliable than decades ago. Particularly the 60's - 80's. Who can forget people driving cars and trucks where they were literally disintegrating into a pile of rust before they even paid them off!
    The old late 70's - 80's uni-body frames were notorious for warping even if all you did was drive over some rough pavement, not to mention they also rusted out fast.
    Mechanically, the power train today is vastly superior to decades ago.
     
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  5. Andylusion
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    Andylusion Gold Member

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    Well.... sort of....

    You can artificially create demand, by increasing lending. That's true. However, in a free-market.... free-market meaning a market free of government influence, the loss suffered by banks at the hands of defaulting lenders would put in place a restriction on unqualified borrowers.

    Equally in a free-market, where people had to own up to their contractual agreements, like paying back every penny you borrow, the consequences of borrowing too much would cause borrowers to restrict themselves.

    Canada is a great example of this in both regards.

    The Canadian banking system is significantly less regulated than the US banking system. Equally the Canadian government does not bailout banks when they make bad loans. Also, there is no bankruptcy laws that allow Canadian citizens to just avoid the consequences of going into debt.

    Both of those effects result in a self-regulated system where banks are less likely to make risky loans, and the citizens themselves are less likely to apply for loans that they can't afford.

    This is why there were no massive bank crashes in Canada, in the 2008 recession, or the 1930s depression.

    So, again I would say the solution is to deregulate the banking industry, and absolutely refuse to bail anyone out.

    IF the lenders are out of control.... who cares? Let them default, go bankrupt, and then when they remove themselves from the market, the economy will recover.
     
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  6. Manonthestreet
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    Manonthestreet Platinum Member Supporting Member

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    Don't need deregulation to let Banks fail....simply need the will to say no when them come asking
     
  7. Toro
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    Toro Diamond Member

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    Most of the loans were packaged and sold to investors. They were on the merry-go-round, getting paid until the music stopped.

    I remember having some f****** bank pitching synthetic CDOs to us as being a safe investment to us in 2007 as part of an equity index swap. When the meeting was over, I looked at my boss and told him there was absolutely no fucking way we’d be doing this. We didn’t. That’s the only time I’ve ever sworn to/at my boss.
     
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  8. Dale Smith
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    Dale Smith Gold Member

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    Yeah, the Fed loaned their alleged failing banks "money" from an empty vault and put it on the "good faith and credit" of their indentured debts slaves whose signature that was put on a monetized Promissory Note that got fucked out of their homes due to predatory lending. So, to sum it all up? The banks get bailed out and have a hard asset to resell with no equal risk/ consideration on their part. I know EXACTLY how the system works and "yes", this conversation need not go any further because you are utterly clueless.
     
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