According to Reuters, equities in markets with small financial sectors perform better than those with big financial sectors.
This means that someone up there is intelligent enough to realise that the making-money-by-making-money business isn't all it's cracked up to be. If I buy something (imaginary at that [equity]) with the intention of selling it again, the price will go up-- as long as I can sell it at that price. The feedback loop continues for as long as it takes for the players to fold and cash in their chips. Then everyone at the table realises there's not enough chips to go around.
Investment is all good and fine as long as there is some sort of grounding to keep the reaction from going out of control. We've learnt about this since the 1600s from the Netherlands and her lovely tulips, after all. Is this a failing of modern economics, or its design? Certainly many people have become rich-- but even more have lost everything.
The silver lining here is that there are economies out there which are even more volatile: 18% for the US, but 30% for China?
"The irony in that conclusion is that the U.S. equity market might be relatively attractive when compared to many other markets, even though the conventional wisdom is that the credit crisis is a U.S. problem," the analysts wrote.
(This is all coming from a guy who's got £300 tucked away in wind power)
Wednesday, August 13, 2008
The Magic Money Machine Goes Poof
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2 responses:
Interesting article, good post.
Screw the financial sector. A bunch of worthless leaches, if you ask me.
I find it a little scary when I think about how these guys conjure up money from nothing. Business does not have the equivalent of the First law of Thermodynamics which states that energy can neither be created nor destroyed.
Wallstreet guys always seemed to me to be like alchemists or magicians. Consider that for centuries druids and sorcerers got away with claiming to make gold from non noble metals. We are saddled with these fuckers.
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