And what will happen next?READER: PLEASE CLICK THE REACTION BELOW - THANKS!
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3 comments:
My take? Computers and satellite communication made the movement of money faster, introducing more short-term variance. The system will eventually oscillate out of control.
You can't compare percentage change with a linear scale.
Same chart with a log scale:
http://i60.tinypic.com/20pspba.png
Thanks for taking the trouble, M.
Quibbles/observations:
1. It's not percentage change, though you could analyse it that way.
2. Yahoo's graph stretches the first decade, so the incline should be a bit steeper there.
3. In a non-inflationary financial universe, stocks would rise at the expense of something else, and would eventually have to reach a ceiling, wouldn't they?
I suspect the "new normal" or "new paradigm" is based on:
(a) monetary inflation/QE
(b) the repeal of legislation designed to prevent banks from gambling with depositors' money
(c) the explosion in derivatives
(d) high-frequency trading
- and I fear that the gyrations of the last decade - 50% drop in the Dow, twice (so far) - are signs of "economic weirding", akin to the "global weirding" of the climate.
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