Rick's been posting some disturbing data. As much as I'd like to cheer things up, I can't get over what's been going on in the U.S. Stock markets in the last couple of days. Check this out:
I feel really bad for those nearing retirement. But I guess we have to remember that this is a huge transfer to those of us in the younger generations, not a "destruction of wealth" as properly defined.
Related to these recent numbers, Bryan Caplan posits an excellent question:
"If the government had followed a laissez-faire policy for the last six months, and output, employment, housing, and financial markets stood exactly where they stand today, what fraction of people would conclude that 'Events decisively prove that laissez-faire is a disaster'?"
Related to these recent numbers, Bryan Caplan posits an excellent question:
"If the government had followed a laissez-faire policy for the last six months, and output, employment, housing, and financial markets stood exactly where they stand today, what fraction of people would conclude that 'Events decisively prove that laissez-faire is a disaster'?"
"we have to remember that this is a huge transfer to those of us in the younger generations"
Can you expand on this? It isn't immediatley obvious.
We get to buy cheap. These are basically the same companies as on Oct 9, 2007, but now they are selling at a 56+% discount from the price on that date. If you own them, that's not good, but if you don't it's great. Since younger (and less affluent) folks have less invested, this is a transfer to them.
Again, the stock market crash represents depreciation in prices,but not in the capital stock. It's easy this same thing in the housing market- a fall in housing prices, but not in housing value. Those McMansions still provide the same services they did in 2005, but not sell as a steep discount. No wealth was destroyed (the house is still there), but it was transferred from the owners to non-owners.