What’s wrong with the stock markets?
They’re a stock market, after all.
And so the question becomes, why does it have such a high return?
And for that, we turn to our expert, former financial correspondent and now a finance lecturer at Oxford University, Professor Matthew Goodwin.
Goodwin is a professor of economics at the University of Oxford and author of A History of the Modern Economy: How the Modern World Went from Bronze Age to Industrial Revolution.
He tells us what the stock boom and bust are all about.
Goodwin explains that during the great depression, when people realised they were stuck with a debt load, the stock bubble burst and people bought stocks, but stocks don’t behave the same way as bonds, and so the bond market was in a different league.
When the crisis broke in 2008, the financial markets were in a tailspin, but the bond markets were roaring.
And they didn’t stop.
It wasn’t until the middle of 2011 that the bond bubble burst, and that’s when bond prices really started to climb, and the stock economy started to grow.
So what’s going on here?
Goodwin thinks that the stock world is more than a bubble, it’s a bubble fuelled by the greed of big companies, and he thinks the reason is because they can get their way with their shareholders.
They can get a huge amount of money in return, which is how they can buy back their own stock.
And he thinks this is what’s happening in Australia right now, and we’re seeing it all over the world.
Goodman says that the reason that Australia is seeing a boom in the stock sector is because there are now a lot of big investors that are willing to pay huge amounts of money to buy stock, and when these investors are in the position to do so, it means that the economy can get back on track.
Goodland says that there’s no reason why a stock bubble would be so damaging in Australia.
He says that a stock that has a high yield and low volatility can help stimulate the economy, because people can save their money to invest and invest again, which helps the economy.
And the problem for people who are investing is that if they sell their stock, the market will sell them, and they can’t reinvest their gains, so they end up losing out on a lot.
Goodwins argument is that when the bubble bursts, and everyone who bought their shares gets their money back, then they can use that money to pay down their debt.
And then the economy will be able to recover.
He also says that if the government stops cutting taxes for companies and instead makes them pay into the social security system, people can spend money on food and clothes.
And there’s another reason why stock markets are doing well in Australia, Goodwin says.
In the UK, stocks are doing so well because of the big banks, which have so much influence over the government that they can manipulate the market.
Goods says that in the US, the same thing is happening.
When Wall Street banks can manipulate stock prices, they have a lot more influence over government than there are people on Wall Street.
Goodwood says that these big banks can buy up stocks, because they’re big investors in the economy and they don’t want to see prices fall, and therefore they can keep buying stock.
But what happens if the bubble pops?
And that’s the big question.
Goodwins conclusion is that it will probably pop, but it won’t pop quickly.
He predicts that the next five years will be quite a long one for the Australian economy, and says that it’ll be a very long time before people can put any money into stocks again.