The Nasdaq is currently at the level it was in September of 2006. In 2006, due to dividend trading and loose regulation, low interest and great speculation in the housing markets, we were driving 80 miles an hour towards an economic cliff.
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It is now 4 years later. We just printed a bunch of money to bail out the banks. We have lowered interest rates rock bottom.
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My question: Have the laws changed regarding dividend trading? Has any thing changed regarding all the other factors that led to this?
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My mom is getting a lump sum of money from her pension, she wants to buy a second home. Isn't this a big gamble. In another 2-6 years isn't the market going to crash but only larger?
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HN what are your thoughts?
I think there're some areas that we're better off in. Banks are no longer making those crazy subprime loans. People are saving again. A lot of the "walking dead" companies that were going to go bankrupt have gone bankrupt. Lame web startups that are nothing but Rails or Django frontends aren't getting started. Pretty cool web startups that actually take use of some technology enablers (say, cloud computing and mobile) are getting started.
In other areas, we're worse off. Now, people aren't just losing their houses because they should never have bought them, they're losing them because they lost their jobs. There's a shitload of extra money out there that's bound to come out as inflation sometime. The government has added something like $2T of extra debt. We've lost the confidence of the international community, who we need to finance our debt. The government has basically blown its wad as far as fiscal and monetary stimulus goes.
So I dunno. A lot of the excesses that led to this have been trimmed, but things are so much more fragile now that it takes a lot less to set us off on a downward spiral.