Take a look at another example:
April 2000 the NASDAQ market started to crash. What we did not know then was that the price of optical fire also crashed, eventually by 90%. Later Enron was caught to hide billions of losses into its thousand of special purpose entities.
The point is that there were lots of bursting of asset bubbles since April 2000, the economy could have collapsed with new economic activities.
Then, in Sept 2001, we had 9/11 tragedy and the decade long "war on terror". As a result, the defense spending almost doubled from 1999 level.
You can consider everything as coincidence. But economists like to connect the dots.
I also noticed that the stock market trading in April and May were quite anemic. Maybe there were rumors about several LTCM kind of blow-up in the process so that no dealers wants to buy/sell large positions from other dealers/clients.
The only difference between now and 1998 is that the Wall Street has tuned it down and did not chase the "blood". Maybe they knew that the market could no longer sustain another liquidity crunch with weakening US Dollar.
The Head of the currency unit left. Why? Market manipulation, or massive loss from wrong-way currency bet?
I noticed that EURO has been on a up trend until the Ukraine crisis started. I do not believe that any trader or strategist has anticipated that crisis. So highly leveraged wrong bet is possible.
The multiplier effect is expected to be low except in developed countries with fully-functional financial system.
The multiplier is effect was probably 7-8 during the dotcom booming years. But it hovers around probably 5 in this new normal.
For non-economist, just try to imagine what will happen if the entire defense budget reset to zero. Will its impact on GDP growth be only in the range of $700 billion? Conduct the mental exercise.
In determining the total liability of C, the face value of bad mortgage bond sold is not the deciding factor. The quality of the mortgage bond sold is also quite important. Since lower quality bond has lower performance and hence higher losses for the investors.
C had two units which sold the troubled mortgage bonds: Merrill Lynch and Soloman Smith Barnie. JPM has only Bear Stearn, if I recall correctly.
Here is the trick:
Let us assume there are 10 million undocumented immigrants. By legalizing their status, they can legally receive various Federal and State assistance program.
For this analysis, let us assume that none of them work and each is given $10,000 through those programs and spend it all within US. That would cost $100 billion per year, and would likely add into the budget deficit and total debt load.
However, the total boost on the GDP growth would be $100 Billion x Multiplier = $500 billion. The key is the multiplier effect. Because US Dollar is the global reserve currency, it can engineer GDP growth by keep spending since the increase in deficit/debt would be much smaller than the increase in GDP growth.
Unfortunately, such positive effect is only for the short-run.
If you choose to consider the motives behind the major policy changes within the domain of economics, then the proposed immigration reform is just another poly of boost US GDP base and GDP growth.
Once the new immigration reform is in, I expect that the immediately GDP growth could be as high as 8%.
The crisis in Ukraine had adverse impact on economic growth in EU. So the already negative interest rate could become even more negative.
It is interesting to note that UK and Italy have recently decided to include the proceeds from illegal drug trafficking and prostitution into their calculation of GDP growth. For UK, such measure alone points to a 5% jump in Q2 GDP growth. The EU countries are desperate for growth.
US does not need to go that low, yet, because it can boost GDP growth by legalizing the undocumented immigrants. Legalizing will allow them to apply for federal and state benefit, such as food stamp, medicaid, healthcare, social security, education, etc. Although such measure will add into the budget deficit and the total debt load, it has bigger boost to the GDP growth, at least in the near term, due to multiplier effect.
It is time for Apple to make its products affordable to the mass market.
Get your own copy, unless you believe that the discount will become deeper and deeper in order to drive sales.
That is more than 33% discount.
Let the price war, with Androit, begin!
Distinctively higher volume today ... Maybe the institutional investors are selling?
Maybe the CFO in today's conference hinted the possibility of more-than-expected revenue reduction for Q2 due to volatility?
The old figure is 20% reduction in trading revenue. I wonder how much now.
It increasingly looks like that this donkey is running out of tricks. Soon .....