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March 29 - March 29, 2020
Ominously for the American stock market, interest
Every modern stock market crash has an external catalyst at its heart. These external catalysts—some are acts of nature, such as 1906’s earthquake; some are geopolitical, as in 1987 and 2010; some are political, as in 2008; and some are criminal, as in 1929—are not sufficient themselves to start a crash, though they are necessary.
greed overcomes fear.
Just as every modern stock market crash has an external catalyst, each collapse has been fueled by a new, poorly understood financial contraption that introduces leverage into a system that is already unstable.
The system can’t handle the chain reaction of their cascading demands simultaneously.
“The business of America is business.”
After a drop of 1.56 points the next day, it would take twenty-five years to regain the level reached on September 3, 1929.
Every crash has a catalyst. Most have little to do with finance,
The 1980s bull market began on Friday, August 13, when the Federal Reserve lowered the discount rate by 0.5 percent, the third such rate cut in six weeks, leaving interest rates at their lowest level in nearly two years.
“if everybody gets it into his head that inflation is inevitable, they will start taking actions which will create” higher inflation,
sometimes you have to destroy the village in order to save it.
although prior to the 1980s all subprime mortgages had one thing in common: they were illegal.
The number of subprime mortgage loans made that year was 9.5 percent of the total mortgage market.
“Economics of a Free Society,” in which he condemned “one of the historic disasters in American history, the creation of the Federal Reserve System.”
But the biggest failure was the abject refusal to craft and implement sensible regulation on mortgages and mortgage lenders because of a misplaced trust that short-term greed could be stifled.
New financial products might seem to solve an immediate problem, while creating a much larger one in the future when stressed.
because at their heart, it’s not about money or numbers or individual stocks but about fear and greed.
By comparing the phenomena common to every crash we can better understand America and how it continues to change.
