<\/p>\n
Following Ben Bernanke’s big speech in Atlanta<\/a> (not to mention the perpetually rising stock market) there’s been a lot more talk about bubbles, how we can prevent them in the future, and whether we’re in a new one already now.<\/p>\n On this question, David Goldman<\/a> has been making a salient point that deserves more attention: What we’re experiencing is really an asset dearth.<\/p>\n Gretchen Morgenson’s recent hit-job<\/a> on Goldman Sachs (GS) and its synthetic CDOs kind of<\/em> hinted at this, though she got the equation wrong.<\/p>\n As she interpreted it, Goldman Sachs manufactured these real-estate backed synthetic CDOs, marketed them to pension funds, and then because of that, when it all came tumbling down, the effect of the collapse was magnified.<\/p>\n In reality, there was incredible demand for higher-yielding assets, because with all the retiring boomers, there was a shortage of decent yielding non-synthetic assets.<\/p>\n And we’re still in that exact same boat. As David Goldman notes<\/a>, corporate issuance of all kinds of assets: IPOs, corporate debt, convertible debt, etc. has fallen off a cliff.<\/p>\n Specifically, here’s total issuance for the past several years:<\/p>\n 2000: $1.2 trillion So the number has fallen off a cliff, but the huge sums being socked away in 401(k)s, pension funds, (not to mention traditional savings), etc. has to go SOMEWHERE.<\/p>\n So every time there’s a little bit of yield out there, all the money has to chase it immediately. There’s no choice. It’s not a matter of being greedy. It’s mandatory. And so the boom and bust cycle must go on.<\/p>\n Join the conversation about this story »<\/a><\/p>\n See Also:<\/b><\/p>\n Following Ben Bernanke’s big speech in Atlanta (not to mention the perpetually rising stock market) there’s been a lot more talk about bubbles, how we can prevent them in the future, and whether we’re in a new one already now. On this question, David Goldman has been making a salient point that deserves more attention: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-144457","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/144457","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=144457"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/144457\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=144457"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=144457"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=144457"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
2001: $1.57 trillion
2002: $1.48 trillion
2003: $1.9 trillion
2004: $2.2 trillion
2005: $2.62 trillion
2006: $2.98 trillion
2007: $2.73 trillion
2008: $1.1 trillion
2009: $1.34 trillion<\/p>\n\n
<\/p>\n","protected":false},"excerpt":{"rendered":"