william the wie
Gold Member
- Nov 18, 2009
- 16,667
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The Fed Taper is getting no attention and normal reversion to the mean requires the market to lose @ half of its real value after a bubble. Except for the NASDAQ after 2000 this has not happened since at least 1987 despite three stock market bubbles: 1996-2000, 2003-7 and 2009-13. While this may have happened in nominal terms (I am not aware of any cases except NASDAQ 2000-3) QE, interest rate policy and redefinition of inflation means that that has not happened in real terms, again with one exception.
So, we are way overdue for reversion to the mean in the capital markets. There is no way I can see for the ACA to directly cause a crash but given its massive and growing unpopularity I would be surprised if it did not get the blame for some other trigger. And there are whole bunches of potential triggers out there:
Energy glut. That could destabilize countries world wide.
The effective banning of domestic coal use. (With the increasing output of natural gas as a substitute for coal this could well be dumbest political move of the past century in Anglo-American being both unneeded and inflammatory. ACA affects more people but not as badly. With all of Obama's exemptions and watering down of the bill ACA could be dead in all but name by the 2014 election but Ds will have effectively zero election probabilities in coal country for 2 or more election cycles.)
Crash landing of the Chinese real estate market. Ooh! Look at $50T (trillion) in asset write downs. See just under 10% or more of world domestic product vanish. That might cause problems in the US.
Arab Spring again.
Saudi nukes Iran just for nice.
The ACA will be the prime whipping boy for the US effects any of these triggers but that won't bring the markets back any faster.
So what will be the result of this misplacing of blame?
So, we are way overdue for reversion to the mean in the capital markets. There is no way I can see for the ACA to directly cause a crash but given its massive and growing unpopularity I would be surprised if it did not get the blame for some other trigger. And there are whole bunches of potential triggers out there:
Energy glut. That could destabilize countries world wide.
The effective banning of domestic coal use. (With the increasing output of natural gas as a substitute for coal this could well be dumbest political move of the past century in Anglo-American being both unneeded and inflammatory. ACA affects more people but not as badly. With all of Obama's exemptions and watering down of the bill ACA could be dead in all but name by the 2014 election but Ds will have effectively zero election probabilities in coal country for 2 or more election cycles.)
Crash landing of the Chinese real estate market. Ooh! Look at $50T (trillion) in asset write downs. See just under 10% or more of world domestic product vanish. That might cause problems in the US.
Arab Spring again.
Saudi nukes Iran just for nice.
The ACA will be the prime whipping boy for the US effects any of these triggers but that won't bring the markets back any faster.
So what will be the result of this misplacing of blame?
