September 19th’s Indicator from Planet Money turned out not to be too surprising to me.
It is not only in the housing market and mortgage market where we observe these effects. Take the stock market. Financial crisis clearly affected returns to your personal portfolio. And our calculations suggest that a person who was about 30 when, say, in 2008 the financial crisis hit will drastically reduce her inclination to be a stock market participant. And it will take about 30 years until this effect is not detectable anymore in the data.
As if 2008 was the only crash Americans who are alive today have been through. I remember black Monday. Even though I remembered that crash, I still stupidly invested in the stock market in the 1990’s. That lead to my being caught up in the collapse of the dot-com bubble. It infuriates me that they call that crash a bubble, as if it was self-revelatory that the markets would crash that time, when in fact there was no more warning that the whole market would reset at that time. No more warning than there was any other time that the markets crash. There are only warnings if you are paying attention to the details. If you have enough money to pay people to mind the details for you.
There were warning lights all over the boards in 2007 leading into 2008. Ask any of the analysts featured in The Big Short, if any of them will talk to you. The real estate bubble not only didn’t fully deflate after the slaughtering started on September 14th of 2008; not only did it not fully deflate, the same people who cashed in before the last crash are already re-inflating that bubble to make more money off of it. And so it goes, round and round and round. Inflate. Short and deflate. Rinse and repeat. For the the wealthiest 1% it is just a game. They have money to burn and if they lose a few millions here, a billion there, what do they care? It passes the time. So what if a few of the little fish jump out of windows or die in poverty?
I will never invest in the stock market again. That is what I learned dabbling in the stock market. Investing is for wealthy people and I will never be wealthy. The markets are rigged to favor the wealthy, this is patently obvious. Insider trading gets you a slap on the wrist, and that’s what the wealthy do. They exploit information asymmetry, one of the baseline benefits of wealth, the ability to buy the latest information and the best people to make that information tell you what you need to know. Most Americans, most people, will never be wealthy. It is time Americans learned this lesson and structured their society accordingly.
Most of them, most of us, will die poor. We have the ability to make poverty something other than a slow, miserable death sentence. If we’re smart we’ll set that system up, replacing the one we have now.