Skip to comments.Stiglitz: 'Very uncomfortable' with stock levels
Posted on 07/07/2014 5:45:15 AM PDT by Citizen Zed
"The reason the stock market is high, in part, is that interest rates are low, wages are low and the emerging markets are still growing much faster than the U.S. economy, let alone Europe," Stiglitz said. He pointed to the fact that many U.S.-listed multinationals are increasingly getting a large chunk of their profits from emerging markets.
"These very strong stock market prices are in a sense a symptom of the weak economy, not a symptom that we are about to have a strong recovery to our real economy," he said.
Stiglitz, a professor of economics at Columbia University, said the recent stock market gains are not a sign that we are witnessing a recovery. Instead, we would see the continuation of a "North Atlantic malaise," he said.
"Remember, labor force participation is at very, very low levels, much lower than before the crisis. Real wage increases have been very weak, well below what they should be if we were having a robust recovery," Stiglitz said. "There are lots if indicators that suggest this is a weak recovery."
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Regardless, I happen to agree.
capital has to go somewhere.
stocks are the “obvious” choice here.
I sort of tend to agree. crappy economy, but capital needs a return and stocks “seem” good.
It’s all about the timing, really.
just don’t stay in longer than the big investment banks. b/c when they bolt, it’s gonna drop fast.....
That should be "Obama malaise".
This is a Fed driven market. Pure and simple.
(P.S. I like your tag line)
when they bolt, its gonna drop fast.....
Agree. The quickness of the turn will catch nearly everyone by surprise.
Around the new year Bill O’Reilly advised people to put floors under their investments to protect their gains. Pretty good advice IMO. While the market has continued rising since then, that just means you periodically move up your stop loss point to maintain your protecdtion.
IMO the correction is going to be a wicked one when it occurs. In view of the Fed’s massive and unprecedented “easing” it remains to be seen how well it will be able to control a sharp and severe descent.
If the Fed continues printing money like it has company fundamentals will become meaningless. IMO the Fed is badly distorting the markets and the economy.
The part about low interest rates is exactly correct. There is nowhere else for money to go when interest rates are ridiculously low. CD? Forget it. However at any moment one has to be willing to accept a correction if one invests. No safe haven.
Which, IMO, means he has forced everyone to put all their eggs into one basket and now he can hold that basket hostage.
This is how men like George Soros wreck countries.
In a very real sense, the Fed has kept Obama afloat. IMO they will keep printing until a looming Reopublican victory (e.g., control of the senate, the presidency, or both) gives them the green light to “reset” so that Republicans will take the blame for the resulting economic mess. Yellen is a hardcore Dem.
Yep. This is just one of the shiite sandwiches that Obama has prepared for any future Republican Presidents.
They have ballooned the national debt. Once interest rates rise the interest on debt will choke out entitlement spending. That’s why they are desperate to keep interest rates close to zero as they can get.