Post Reply A BUBBLE ON WALL STREET!
2047 cr points
Send Message: Send PM GB Post
24 / M / USA
Offline
Posted 10/4/15
So, as I understand, and correct me If I'm wrong, there were low interest rates in the USA since way back, which caused the Real estate Bubble and then it's burst in the crisis of mortgages, the Sub-Prime crisis.


I couldn't find historical data of the interest rates in the USA - Can someone please send me a reference (interest rates in the USA, as far back as possible, A link would be great - thanks! )


As a result of this, other places in the world have also lowered their interest rates, because no one wants its currency to be too high relatively to the U.S dollar. (it's bad for countries who are exporting to the USA, because then they receive "less" of their money for the dollars that are paid with).

Also, low interest rates environment is a environment in which, potentially, Bubbles can develop - either real estate or the stock market.

Does anyone have examples of Real estate bubbles/ Stock Market Bubbles that have developed when the interest rates were low, (or not low)?

There were low interest rates a couple of years now in USA, Canada, Europe, Israel (Anywhere else ?). In some places we can see a Real estate bubble starting - Canada and Israel for example.

Now, Since some of the Indexes of the Wall Street have crossed their all time peaks, and they did not do that in a while, It looks like there is loads of optimism in Wall street, the indexes seems to go up and up.

So I am wondering - Do we have a little bubble starting there? If we take for example, the Wall street crisis of 2000, a burst of Wall Street Bubble between the years of 1992-2000 (The High-Tech crisis), how did the graph of the Dau Jones looked then?

What should we look for when trying to figure out if there is a Stock Market bubble?


Can someone please send me a link to The Dau Jones index, and others - S&P etc. as far back as possible? I could only find a few years back. I would appreciate it very much - thanks!

So, I am very curious to see how you understand all this, get some links to some data/graphs, and please correct me If I was not accurate in some of the things I wrote.

Looking forward for your posts,
16787 cr points
Send Message: Send PM GB Post
Hoosierville
Offline
Posted 10/4/15 , edited 10/4/15
What your looking for is the federal reserves interest rates.... its the interest rate they charge to banks so banks can loan it to other banks, businesses, and people.

http://www.tradingeconomics.com/united-states/interest-rate


China just had a market bubble due to it encouraging people to invest heavily in it, Chinese only. It rose ungodly amounts then crashed 75% till the Chinese government threatened to jail/shoot people that sold their stocks. Now its a disaster.

Go to Google finance or yahoo finance and look back at their charts. You can spot bubbles easily.
md4124 
48303 cr points
Send Message: Send PM GB Post
Offline
Posted 10/4/15
Pretty much none of what you wrote is true. And it's Dow Jones, not Dau, and it's easy to Google up all of the info that you want so that you can see that everything that you wrote is false.

And coming to Crunchyroll for info on economics makes the baby Friedman cry.
2047 cr points
Send Message: Send PM GB Post
24 / M / USA
Offline
Posted 10/4/15

md4124 wrote:

Pretty much none of what you wrote is true. And it's Dow Jones, not Dau, and it's easy to Google up all of the info that you want so that you can see that everything that you wrote is false.

And coming to Crunchyroll for info on economics makes the baby Friedman cry.


Theres alot of knowledgeable posters here I would be a fool not to get advice from them.
2047 cr points
Send Message: Send PM GB Post
24 / M / USA
Offline
Posted 10/4/15

Rujikin wrote:

What your looking for is the federal reserves interest rates.... its the interest rate they charge to banks so banks can loan it to other banks, businesses, and people.

http://www.tradingeconomics.com/united-states/interest-rate


China just had a market bubble due to it encouraging people to invest heavily in it, Chinese only. It rose ungodly amounts then crashed 75% till the Chinese government threatened to jail/shoot people that sold their stocks. Now its a disaster.

Go to Google finance or yahoo finance and look back at their charts. You can spot bubbles easily.


Thanks for the tip!
2841 cr points
Send Message: Send PM GB Post
M / Houston, Tx
Offline
Posted 10/4/15
I thought there was actually Bubbles on Wall Street.

You have disappointed me.
7493 cr points
Send Message: Send PM GB Post
30 / M / In a world that d...
Offline
Posted 10/4/15
We're already seeing the China bubble burst and spread. Firms kept saying investing in China was profitable, but anyone that have seen the ghost cities in China could tell you that long term investment prtfolios in Chinese stock, even Alibaba, would be horribly disastrous if you didn't discard it within a year. Many firms have been placing too much faith in emerging economies, particularly China and India, and China is struggling now. Predictably, stocks have been tumbling.

I would, however, not say that there is a "stock market bubble" affecting the entire thing, as there are markets that are underperforming now that were doing so before the China bubble burst. When looking for bubbles, you want to see particular markets that have been unusually bullish for way too long. In 2008, it was real estate and financial institutions, now it was Chinese stock and all markets that have reliance in Chinese supply or any other sort of investment that would tie down capital to China.

The reason why the interest was so low to begin with was to encourage a record round of home buying in the mid 2000s after the economy recovered from the September 11th crisis. It was the greed of the financial institutions leading to predatory lending that caused the bubble to pop, so the stock market crashed thanks to...well... a lot of shit. Rates remained low to help the ailing economy steam through it. The fed didn't want to raise rates too soon because they were afraid of an overreaction in the market that would cause the feared "double dip recession" to happen. The fed didn't lower interest rates now because they were afraid of the ailing Chinese market would bring down the American market, but the market took that to mean that America has too much money in China, and so the economy is at risk of contracting with the markets now.

I would say the market is overvalued though, I plan to play it safe with a few bond purchases in a planned round of investment buys soon. Rates ain't the greatest now but...eh, they're relatively guaranteed.
19574 cr points
Send Message: Send PM GB Post
23 / M / missouri
Offline
Posted 10/4/15
the "bubble" Had noting to do with interest rates in my opinion. It was caused by bad loans..

Real bad practices like selling houses to people who couldn't afford them, and then taking insurance out encase they defaulted. Then when they inevitably could no longer make a house payment for 1/2 there salary the lender got the house back and the insurance money they recieved from the default. leaving a market flooded with vacant housing and home builders without people to build new houses for.
11707 cr points
Send Message: Send PM GB Post
22 / M / AZ
Offline
Posted 10/4/15
Pics or never happened.
You must be logged in to post.