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tisonlyi · 03-26-2009, 12:38 PM

Greenspan should have known about the irrational exuberance, he created it by flooding the world with cheap credit. The Asian crisis, Russian collapse and fall of LTCM should have been followed by global recession. Greenspan inflated out of that, quite deliberately, hence the insanity that followed in the stock markets.

It's been the same story since 1987, and since stocks really started to take off in the early 80's based on this efficient/rational market theory markets have been pushing ever higher... when they go down, the Greenspan/Bernanke puts come into play for re-inflation.

That can't work now. Doesn't work now. There's no more debt to create in the system.

The theory was always nonsense. Mandelbrot PROVED its lack on credibility at its inception back in the 50's, by looking back at cotton exchange data.

Literally, and i've seen them make this argument, confronted with the evidence that these models and theories (portfolio theory, rational/efficient markets) do not work, economists say "Oh yes they do, except for when they don't.".

The other argument is even better: "We need a model to work with and these are the best we've got, even though we know they're wrong."

The events which cause irrational markets are historically commonplace. Over the last 30 years we've had the crisis of the early 80's(killing inflation), '87(based on nothing, really), early 90's(soviet union's collapse, s&l crisis, etc), 97'(asian crisis, russian collapse and the fall of LTCM), 2001-3(global equities crash) and now, 2007-present.

Every one of those crises has been inflated away, dismissed as freak occurances 'one in a billion' type events. why?

BECAUSE THE UNDERLYING THEORY AND ASSUMPTIONS OF PORTFOLIO THEORY AND EFFICIENT MARKETS DO NOT APPLY TO THE REAL WORLD.

---------- Post added at 09:29 PM ---------- Previous post was at 09:28 PM ----------

You've been betting on volatility. Well done. Just look at the VIX.

---------- Post added at 09:38 PM ---------- Previous post was at 09:29 PM ----------

Hang on.

You lost your shirt in the last bubblecrash because you were greedy, irrational. You're actually trading through an incredible period of volatility now and calling yourself rational?

You don't see the obvious there?

03-26-2009, 12:38 PM	#39 (permalink)
tisonlyi Nothing	Greenspan should have known about the irrational exuberance, he created it by flooding the world with cheap credit. The Asian crisis, Russian collapse and fall of LTCM should have been followed by global recession. Greenspan inflated out of that, quite deliberately, hence the insanity that followed in the stock markets. It's been the same story since 1987, and since stocks really started to take off in the early 80's based on this efficient/rational market theory markets have been pushing ever higher... when they go down, the Greenspan/Bernanke puts come into play for re-inflation. That can't work now. Doesn't work now. There's no more debt to create in the system. The theory was always nonsense. Mandelbrot PROVED its lack on credibility at its inception back in the 50's, by looking back at cotton exchange data. Literally, and i've seen them make this argument, confronted with the evidence that these models and theories (portfolio theory, rational/efficient markets) do not work, economists say "Oh yes they do, except for when they don't.". The other argument is even better: "We need a model to work with and these are the best we've got, even though we know they're wrong." The events which cause irrational markets are historically commonplace. Over the last 30 years we've had the crisis of the early 80's(killing inflation), '87(based on nothing, really), early 90's(soviet union's collapse, s&l crisis, etc), 97'(asian crisis, russian collapse and the fall of LTCM), 2001-3(global equities crash) and now, 2007-present. Every one of those crises has been inflated away, dismissed as freak occurances 'one in a billion' type events. why? BECAUSE THE UNDERLYING THEORY AND ASSUMPTIONS OF PORTFOLIO THEORY AND EFFICIENT MARKETS DO NOT APPLY TO THE REAL WORLD. ---------- Post added at 09:29 PM ---------- Previous post was at 09:28 PM ---------- You've been betting on volatility. Well done. Just look at the VIX. ---------- Post added at 09:38 PM ---------- Previous post was at 09:29 PM ---------- Hang on. You lost your shirt in the last bubblecrash because you were greedy, irrational. You're actually trading through an incredible period of volatility now and calling yourself rational? You don't see the obvious there? __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}-- Last edited by tisonlyi; 03-26-2009 at 12:32 PM..