Blogging My Life...The big news today is that the market sunk under 7,000. Right now, we are at 6,815 on the DOW and there is no end in sight. It is scary and it is taking a toll on virtually everyone...
When I was looking at the chart on Google Finance, I decided to max out that chart. I was looking to see, when did we become so rich and wealthy?
Some time in 1985, the market just started to grow. Look back, the line between the 70s and about 1985, it was somewhat flat. Basically between 800 and 1,100, give or take. Then sometime after 1985, it exploded. From 1,200 to 4,500 or so between 1985 and 1995 and then almost 11,000 between 1995 and 2005 and then over 14,000 in 2007. Wow, we have grown a lot, incredibly quickly.
Someone told me, they fear that American's will have to get used to living the lifestyle we did, during the 1980s. We simply won't have as much "stuff," this person told me. Our homes will become smaller, our cars will be slower, our needs will be less and what is important to us will become more focused.
All I know is the late 80s, mostly the 90s and now. I was born in 1980, so I don't really know what it means to return to our lifestlyles of that generation.
It is just amazing to me, how we became so wealthy so quickly and so much of it is gone. Where did all that money go? Or did it simply never truly exist?
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Comments
Very insightful... this is a great post!
Posted by: lokipro | March 2, 2009 1:44 PM
The money still exists, it is just allocated to different places. Many more millionaires out there than used to be (worldwide).
Consumer confidence and company performance will tend to drive the DJIA. With tax changes and the 401K coming to life in the mid 80's and to some degree the Cold War starting to come to a positive conclusion didn't hurt.
Posted by: Tom Goering | March 2, 2009 1:56 PM
Your statement about virtual is so stunning. that recalls me of a saying of CITIC chairman (don't remember the name) that said: "USA started to sell the chair, then the image of the chair, then the image in the mirror of the image of the chair, then the image of the image of the image of the chair, now there are so many mirrors we understand nothing"
Posted by: yvonh | March 2, 2009 2:00 PM
"In the mid-'80s, Wall Street turned to the quants—brainy financial engineers—to invent new ways to boost profits. Their methods for minting money worked brilliantly... until one of them devastated the global economy." Felix Salmon from Wired.com
Wired.com did a brilliant piece on the math formula that killed Wall Street. Check it out: http://www.wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all
Posted by: K.S. Katz | March 2, 2009 2:17 PM
Nostalgy. In fact, a quick look at this financial time-machine screenshot tells you everything. It shows you where we started to make virtual money on virtual products that had no direct use :
Remember, the ancients never accepted "2 virtual playground" because they knew it couldn't be reliable.
1. We first had a warning with the burst of the internet bubble (2001-2002 in the graph). It only touched the new economy but still made considerable damages.
>People learned their lesson, were more carefull, and stabilized the situation. Only the most useful new technology corporations & products survived.
2. Then we had a warning with the climate crisis. CO2 & the Ozone layer, species extinction, deforestation, Hurricanes. Hopefully things are changing.
>People learned their lesson again, changed their ways, made it "bio & eco". Denouncing/highlighting the bad alimentation, and how it was involved with bad diseases.
2. The 3rd warning was then the burst of the real estate bubble. Its repercutions not only shook the economy, but also directly damaged real people. This is what you get when you play with fondations : estates.
CCL :
Put a weapon into the hand of a child - give information technology / foods & good management / finance & banking into the hand of youngtsers or unexperienced people, with no "longview", no wisdom, and you get a warning... Or worse, a punition.
That's what happens when you realise that life is not a movie, nor a videogame. Or maybe that our playgrounds, our videogames / movies are not sensibilizing the new and upcoming generations enough, mmhh ?
I was born in 1983. From Lego Technics through videogames, to the corporate world - one of the thing that lacked the most in my education was in fact the most crucial class I needed : moralilty & responsability.
That's what we need, that's what they'll need. That's why we're being sent these "warnings"... That we actually deserve - may we seek forgiveness and take care of the people that had nothing to do with this mess that was created. That's the first step.
Posted by: Yitzchak Shlomo | March 2, 2009 2:47 PM
Oh, I get a clue, the money may come from the huge debt. US borrowed loads of money from China (around 600 billions USD?).
Posted by: yvonh | March 3, 2009 9:19 AM