"In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance."
Hyman Minsky, The Financial Instability Hypothesis
"Twenty-five years ago, when most economists were extolling the virtues of financial deregulation and innovation, a maverick named Hyman P. Minsky maintained a more negative view of Wall Street; in fact, he noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze. Wall Street encouraged businesses and individuals to take on too much risk, he believed, generating ruinous boom-and-bust cycles. The only way to break this pattern was for the government to step in and regulate the moneymen.
Many of Minsky’s colleagues regarded his 'financial-instability hypothesis,' which he first developed in the nineteen-sixties, as radical, if not crackpot. Today, with the subprime crisis seemingly on the verge of metamorphosing into a recession, references to it have become commonplace on financial web sites and in the reports of Wall Street analysts. Minsky’s hypothesis is well worth revisiting."
John Cassidy, The Minsky Moment, The New Yorker, 4 February 2008.
"The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revival, but finally giving up in the final collapse."
Charles Kindelberger, Manias, Panics, and Crashes: A History of Financial Crises
"The barbarian hopes — and that is the mark of him, that he can have his cake and eat it too. He will consume what civilization has slowly produced after generations of selection and effort, but he will not be at pains to replace such goods, nor indeed has he a comprehension of the virtue that has brought them into being. We sit by and watch the barbarian. We tolerate him in the long stretches of peace, we are not afraid. We are tickled by his irreverence; his comic inversion of our old certitudes; we laugh. But as we laugh we are watched by large and awful faces from beyond, and on these faces there are no smiles.”
Hilaire Belloc, This and That and the Other, 1912
Stocks went lower in a big way today, and failed to bounce into the close.
The refusal of the SP 500 to change the rules and allow the new SpaceX IPO join the SP 500 without any of the 'seasoning' measures deflated the balloon of the some of the insider wiseguys.
It's inclusion would have compelled the SP 500 index funds to buy it, while it had a very limited float, driving up the price.
Nice scam. It failed.
It may still carry through on the NDX/QQQ but they may look very bad in the process by comparison.
And of course, Trump's never-ending stream of market pumping lies and whoppers have faltered.
Gold and silver were hammered.
It must have been another Non-Farm Payrolls Report day.
I doubt a correction this mild was driving liquidation selling. Maybe later.
I have marked the 20 percent decline levels on my stock index charts.
Need little, want less, love more.
Because the only real tragedy is not to have been a saint.
Have a pleasant weekend.
