Crisis On Infinite Markets: What the bleep is going on in the economy?
By Dr. Jerry Hionis
The famed Keynesian economist Sir John Hicks once quipped, “Investment is a flighty bird”. What Hicks meant by this statement is that stock markets, bond markets and the investors involved wherein are almost impossible to truly predict. Further, investors are a particularly finicky bunch; suffering from a self-protective heard mentality that Keynes himself labeled animal spirits. Many stock markets boom and bust merely from the collective “feeling” of investors and rarely from data driven analyses.
After what is now being labeled the Great Recession of 2007/2008, the U.S. economy has been heading back into an expansionary period where all economic indicators (baring the growing wealth and income gaps) are looking quite positive. Yet the stock market took a couple of big dives at the end of August, causing a wide range of panic levels from the academically astute to the economic laity. And while I may spend my days roaming the halls of the preverbal ivory tower of academia (my office building does have a castle-like tower design), the average Joe’s questions about the economy have yet to subside: What is the state of the economy? What is the deal with China lately? Did the stock market collapse? Should I be worried about by savings account? What about my 401K and IRA?
Therefore, in my (never ending) quest to help service the economic queries of the community, I want to present a bit of background as to, as one acquaintance put it, “what the bleep is going on in the economy”?! Continue reading