stability bred instability

In 1992, Minsky warned that "capitalist economies exhibit ... debt deflations which ... spin out of control ... [as] the economic system's reactions to a movement of the economy amplify the movement ... . Government interventions aimed to contain the deterioration [are often] inept in … historical crises." Minsky concluded that over long periods of prosperity, the economy transits from financial structures that make for a stable system to ones that make for an unstable system—i.e., that "stability leads to instability," largely through what he described as hedging, speculation and Ponzi finance. In that sense, Minsky was a prophet of one of today's economic crises. Another insight was also prophetic: "Institutional complexity [read: today's collateralized debt obligations and credit default swaps] may result in several layers of intermediation between the ultimate owners of the communities' wealth, and the [business and individual] units that control and operate the communities' wealth." This separation between ownership and control has now come to pass. In a mere half-century, we have moved from an ownership society (92 percent of all stocks owned by individuals; 8 percent by institutions) to an agency society (24 percent and 76 percent, respectively) == "a pathological mutation in capitalism." ============================================= Now my thoghts: We are truly no longer a capitalistic society under any definition of the word. We are now in the final implosion stage, which will be horrific and astonishing to many. What results from here will be a far different society. $9 trillion in stock value has been wiped from the face of the US planet. roughly half what it was before. Many say that US enterprise has to be "worth" more than that. That may be true, but that was in a capitalistic model of business and society. What results from here, its difficult to predict, but it will be a far different model than many have been used to. Thus I personally conclude there is no possible way that the market can adequately discount the future or "weigh it" going forward as it has done in the past. NB. I predict what I will call SPASTIC choppiness for quite some time. Rally's followed by periods of mega chop then sudden downward thrusts, then rallies, with no clear trending or bottoming patterns that we have seen in the past after such violent falls. Many people will be calling a bottom. For a long long time. Then you will see many calling short term tops. I believe these will be spasmodic periods of deception and false signals, where former TA worked, but maybe not so much going forward. Some may work to a degree, but this market is going to chop the hell out of many portfolios still, that try too hard to make those big bucks. This period since late Oct is a prime example. You look at the charts from that period and tell me if you think this is a bottom, and we will rally, or whether we yet again drop below any prior lows we've had in the market. I predict some major spasmodic behavior that will frustrate so many, that by the end of the year, people will start shunning stocks and swear off of them forever. And also many a day trader will be joining that crowd as well.