I read these interviews and think to myself, 'that Taibbi guy is pretty fuckin smart about a lot of different sectors'
Great interview. Also, even though I have a couple degrees, and had a thirty year executive career in a very complicated sector, I absorbed maybe 10-20% of the content of this interview.
I read these interviews and think to myself, 'that Taibbi guy is pretty fuckin smart about a lot of different sectors'
Great interview. Also, even though I have a couple degrees, and had a thirty year executive career in a very complicated sector, I absorbed maybe 10-20% of the content of this interview.
I absorbed it largely because I'd already seen an earlier analysis that covers similar ground regarding the tech bubble bursting in the last few months:
When interest rates are rock-bottom low, deep-pocketed investors can take all sorts of chances on taking out loans and using them to buy stock in various companies all vying to be "the next big thing", because if even 1 of those stocks takes off, that will pay for the interest on the loan and also pay for all the other stocks that went nowhere.
As a result, low interest rates coupled with printing new money both flood the stock market (and land, crypto markets, etc.) with speculation and gambling, which pushes all the prices up. If interest rates are below companies' % target for annual dividends, then it's cheaper for the company to take out loans and buy back stock than it is to keep paying out dividends on those stocks. Those buybacks also drive the stock price up.
So in 3 ways (incentivizing speculative leveraged investing, incentivizing leveraged buybacks, and printing fucktons of new money), the Fed indirectly drove asset prices up into bubble territory, mostly in the stock market but also in land and other investment areas.
I read these interviews and think to myself, 'that Taibbi guy is pretty fuckin smart about a lot of different sectors'
Great interview. Also, even though I have a couple degrees, and had a thirty year executive career in a very complicated sector, I absorbed maybe 10-20% of the content of this interview.
I absorbed it largely because I'd already seen an earlier analysis that covers similar ground regarding the tech bubble bursting in the last few months:
When interest rates are rock-bottom low, deep-pocketed investors can take all sorts of chances on taking out loans and using them to buy stock in various companies all vying to be "the next big thing", because if even 1 of those stocks takes off, that will pay for the interest on the loan and also pay for all the other stocks that went nowhere.
As a result, low interest rates coupled with printing new money both flood the stock market (and land, crypto markets, etc.) with speculation and gambling, which pushes all the prices up. If interest rates are below companies' % target for annual dividends, then it's cheaper for the company to take out loans and buy back stock than it is to keep paying out dividends on those stocks. Those buybacks also drive the stock price up.
So in 3 ways (incentivizing speculative leveraged investing, incentivizing leveraged buybacks, and printing fucktons of new money), the Fed indirectly drove asset prices up into bubble territory, mostly in the stock market but also in land and other investment areas.
Yes, of all Matt's talents, his ability to break down and make clear the financial stuff is his strongest.