I agree with Wanderer. Boom 1.0 was replaced with boom 2.0. and a heavy influx of investment into stocks that wouldn’t have happened without the stimulus.
The interesting thing is despite the amount of money thrown at it the yeild of boom 2.0 is miniscul compared to the original boom from the housing bubble. I would speculate that you can stimulate dead weight only so much, at some point it will turn bearish. Each time we stimulate we may get a response but it will be marginally less with each attempt.
Again back to the drug addiction analogy. With each new hit your tolerance grows to the drug requiring you to take more. Even still your high is never as strong as the first high was.
Are you high? The bust started this time last year! Remember the month or so when everyone thought we were doomed and the stock market crashed ass? That was ALMOST the full bust but because of what the govt. did were absolutley f***ed, the end, quite frankly, is nigh. No later than 8 years, probably 2-4 could happen any time
The bubble is already deflating and it’s taking its toll on the small ordinary people on the street: there never was a crisis for Goldman Sachs, General Electric, Siemens or HSBC. Unemployment is literally skyrocketing even in welfare Europa and if you are not a “too big to fail” firm you are in for a rough ride which will last God only knows how long. I went to pick up some parts from a supplier, a friend I’ve known and worked with for more than fifteen years; we’ve never talked about politics or economics before but he looked me into the eyes and said “when is this crisis going to end?”. It’s the first time I’ve seen him so worried. The situation is dire and next year will be a bloodbath for ordinary people.
Right now the huge issue is government debt. Deficit spending is driving business for a selected few (weapon merchants, car manufacturers and purveyors of various eco-friendly devices) but who is going to buy all that debt? I personally wouldn’t (and I haven’t got a penny in government bonds of any kind), Japan cannot anymore and I bet China’s patience is running out. There are simply too many governments competing for bond buyers out there, and the mass of paper is piling high. The choice is simple: either raise interest roofs through the roof to make your own bonds more palatable to buyers, with all the consequences we know too well, or monetize the debt, with more consequences we know all too well. Slashing spending is out of the question, no government is going to do that: possibly even more sober governments (Germany anyone?) will join the party.
So it’s simple: the present scenery isn’t going to change. Stock prices will continue to grow, unemployment, deficit and discontent too. My bet is that if there is going to be a long slide into nothingness, with growing social disparity which could spark all sorts of problems, unless of course drastic measures are taken. But no politician is willing to do that.
In my opinion the bust began when rumblings started surfacing about the sub-prime market in late 2007. I sold my entire South African stock portfolio in July of '07 (which turned out to be the peak of the bull run) after a friend of mine involved in investment banking and derivatives showed me some figures for housing surpluses in the US.
I invested in commodities and have doubled up, thus far.