First, this is how a real bust looks like:
Atlético Madrid beat Chelsea 3 to 1 (ouch!) but Britain is doing much better in another discipline: property market.
First, this is how a real bust looks like:
You can almost hear the crushing sound. No wonder property prices are being crushed, too, amid the continuing Spanish banking crisis, much to the disappointment of many Britons.
Meanwhile in Britain:
Another bubble, some people say. I'm saying extremely expansive monetary policy. It sounds more sophisticated.
A couple of French economists have criticised Piketty for nothing less than deliberate misrepresentation of data. Cooking books, one might say. Cherry-picking, at best. Bernard Zimmern, François Saint-Cast, and Aymeric Pontier wrote as early as in 2010 that at least some of the data presented by Piketty are seriously distorted.
Take the following chart, which is supposed to show the relationship between one's wealth and the share of income taxes he or she pays. Piketty's intention was to emphasise the scandalous fact that the poorest pay a bigger share of their income than the richest. See the green line.
Source: François Saint-Cast, Bernard Zimmern
After adjustment for several factors, including unemployed and students who pay no taxes at all, income after redistribution, and non-existent income such as non-distributed corporate profits or imputed income from real estate, the final relationship appears much less scandalous. See the blue line.
The fact that the lowest income decile pays a higher share of taxes that the third decile is odd, but not exactly a cause for a revolution. Neither is the fact that the super-rich pay slightly lower share than the “ordinary” rich.
Knowing an important piece of fact like this, would you believe Piketty's book any longer? Or would you wish to get your money back?
Talking of stock market performance only. This is Hitler's score:
The German stock market loved Nazi economic policies since the beginning: National Socialist central planning limited the market freedom, but provided corporations with tons of public money and public procurement. This shows that big business may endorse socialist policies when the situation looks profitable at the moment. (I don't want to compare F.D. Roosevelt with Adolf Hitler, but the New Deal era was also beneficial for the stock market.)
The euphoria lasted until Stalingrad. At that time, a rational observer might have concluded that Hitler was practically finished and his defeat was only a matter of time. At that time, price regulation was introduced, which, in fact, brought about the halt of trading. German bourses were officially closed in August 1944.
Now, how has the Russian stock market been doing under Putin? Mixed message:
Before Lehman Brothers, the legend of ever-ouperforming BRIC markets worked. The more recent history is much less impressive, though. At least, Putin hasn't imposed price regulations upon the Russian stock market.
You might think of investing while there's blood in the streets, but it is always highly speculative. In any case, don't forget the disclaimer.
Disclaimer: This website is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities. None of the information or analyses presented are intended to form the basis for any investment decision, and no specific recommendations are intended. Accordingly this website does not constitute investment advice or counsel or solicitation for investment in any security. The owner of this website expressly disclaims any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from: (i) reliance on any information contained in the website, (ii) any error, omission or inaccuracy in any such information or (iii) any action resulting therefrom.
From 1980 to 2000, corporate profits were growing by 4.36% per annum. Stock prices (the Wilshire 5000 index) were growing by 16.57% each year on average.
Over the next ten years, 2000-2010, profits were growing by 11.28% per annum, while equity prices slightly decreased.
In the long run, stock prices MUST grow proportionally to profit growth. In the short to medium term, prices may deviate a lot from the equilibrium. We may call it bubbles. It's as easy as it appears.
The Google search term trends are no voting prefences, but still it says something.
Now this is what I call progress:
Even if 232,900 or 27% of salaried workers were fired from the Government services, the Greek state still exists. Obviously, there was a huge overemployment before the crisis. The following chart shows the fast build-up of the debt during the mostly Socialist goverments in the 1980's.
Incredible how easily a democratic country may be ruined by a populist politician in such a short time!
However, Greece's total national debt actually rose to 175% GDP. No ending of the sad story in sight yet.
Picture by Klara Pernicova
A reader of mine made a compelling point: Karl Marx believed that capital returns are diminishing, which would lead to ever greater degree of impoverishment of the working class. Marx claimed he “proved a logical necessity that in its development the general average rate of surplus-value must express itself in a falling general rate of profit.”
Thomas Piketty believes that capital returns are consistently high and perhaps even rising. He seems to be no less convinced about it than Marx about the opposite. His conclusion is that workers are going to be pauperised at an ever increasing rate.
Interestingly, Marx and Piketty start with very different assumptions, but still they come to the same conclusion: poor will be poorer. Both also propose a steeply progressive income tax structure as a remedy. (See Marx's Communist Manifesto, list of short-term demands, item #2.)
This is a truly socialist way of thinking. No matter what facts say, there's always the case for higher taxes.
Winston Churchill: The River War. Order the book soon, as there are only two copies left in stock at Amazon.co.uk.
Do you think equities are expensive? Many people think so. However, they have been wrong since March 2009. With a good reason.
If you look at the inflation-adjusted Dow, you can see it's way cheaper when compared with 2007, not to mention 2000. The market is on the level of 2002 or 2003 when measured by monetary inflation. Not exceptionally cheap, but not exorbitantly expensive, either.
Monetary inflation is defined as the growth of the MZM (Money Zero Maturity) aggregate. It is the sum of money in the U.S. economy, which may be theoretically available in the liquid form within 24 hours. Just cash, demand deposits, savings accounts, money-market funds. No time deposits.
Even though the value of the Dow of over 16,000 may seem optically expensive, it is not when measured by the monetary inflation. This is why permabears have been wrong, and possibly they will still remain wrong for some time.
Consumer Price Index, the more common measure of inflation, is of no use here. The CPI measures the price of the basket of goods or services of final consumption. Equities are neither goods nor services. They are investments; therefore CPI cannot be used.
France used to be a low tax burden economy until the beginning of the 1970's. The era ranging from 1945 until approximately 1974 has been known as Les Trente Glorieuses – The Glorious Thirty Years.
Then the French politics has adopted a variety of leftist recipes: high tax burden, excessively generous welfare state, mass immigration, onerous labour legislation, you name it.
Logically, things have gone bad. The euro didn't help much, either.
In March 2014, the total number of the French unemployed reached 3.3493 million people. An all-time high.
A white male with some professional experience in finance and investing.