the american economy

it has been too long since i have graced the blogosphere with my presence. but it was tonight, after a conversation with my roommate mark over a stuffed bowl about the current direction of the american economy, that prompted me to write here.

to better frame this, keep in mind the nature of united states capitalism: the rich get richer (by exploiting their riches to control market movements) and the poor get poorer. also remember that the us federal reserve is a private corporation and that when the fed turned private in 1913, the united states signed its proverbial soul to the devil: wealthy international bankers who, like any banker, always has his best interests in mind (mortgages, for instance: banks will loan you money but ask for collateral--if you default on your payments, the bank gets your house). so the united states became a corporation, built on top of conglomerates, congress, and lobbyists. eventually, the government is working for lobbyists/corporations and not for the everyman, the american.

the infamous 'american dream' as middle school teachers preached to our young minds about their hopes and aspirations always included upward social mobility. for example, any dumbass sitting next to you can strike it rich in america (keep in mind that this mindset was held before the 9-11 attacks--i'll mention why further on). america to everyone, to our parents who immigrated here from china or india or wherever, was a beacon of opportunity. so our parents, being asian, studied hard and were awarded with the chance to live a new life in america, where their first generation asian babies can move up the social ladder (because they don't bear the burden of thick asian accents that have prevented our parents from moving up) and won't have to suffer a life of hardship they endured as children (thank you mom).

so now, thousands of americans are working for their american dreams, wishing that some day their dumbass minds can somehow produce a 'hot' beat or that their dumbass looks can land them a role in a movie. but everyone knows that a standard measurement for social class is the amount of money chilling in the bank account.

so sure, only .0001% strike it rich in the hollywood industry, record industry, professional sports, the lottery, etc. what is a pretty sure fire way of getting money? well, what is the study of money in society? the economy.

one way that people raised money for building infrastructure or buildings were through finding investors and paying dividends. this is the early and basic idea behind companies and shareholders (for short history of stock market, see here). eventually, by the 1980s when trading equities and bonds became really hot (the movie 'wall street' also added to the hype), everybody started getting into it.

around 1980s, investors assessed companies based on their market cap and rate/amount of dividends paid towards shareholders (this was called fundamental analysis, analysis based on the general workings of the company). only a handful at the time were using technical analysis, which was based on huge amounts of data. soon, everybody started seeing the yields of the stock market and wanted to get a piece of that 'get rich quick american dream'. but when people enter the stock market, the general yield goes down. think about it this way--the market is always trying to reach efficiency and when more people are chasing after the same amount of return, each individual will receive a smaller portion of the proverbial market pie.

have you ever heard people say that putting money on the stock market is like gambling? by the 1990s, when the advent of the internet brought about online brokerage systems and any dumbass sitting next to you can put money into an account to start trading stocks, everybody was throwing money at everybody else that the movement of the stock market became essentially random. so random in fact that the second school of thought behind trading equities is that 'everything is random'. bizarre, huh?

so taking that principle and applying that to the finance industry, we notice that this first generation born into immigrant families are all going to graduate with some sort of business degree (of course there are exceptions, you engineering masturbators, but i generalize for the sake of this entry) and enter the finance industry with the american dream deeply embedded into their minds. but with so many people who want to make quick money off any sort of market (equities, bonds, etc) the yield is getting lower and lower. now, by 2000s, most traders use technical analysis over fundamental analysis because we now have the computer power to run simulations. soon, mark speculates that trading will all be done with algorithms (maybe within 10 years) and there will be no need for an actual trader to sit at a computer, looking for a sign to enter the market and then, subsequently, looking for a sign to exit. and of course, paying that trader a lot of money and giving him amenities like a comfortable chair with lumbar support, free snacks, a black car that will take you to as far as northern new jersey, etc. market efficiency and the constant improvement of technology will eventually get rid of human traders.

as if that isn't one factor that i am concerned about (i want to be a trader, that is the whole purpose of my undergraduate degree in finance), the united states economy is tanking. it all began with the subprime mortgage meltdown. before any word got out about people unable to pay their mortgage loans, the dow jones industrial average (the standard used to measure the american economy) kept hitting record highs. is that a sign that america is artificially inflating its own economy, or that american people are just plain retarded? the federal reserve cut interest rates to 4.75% on september 18th and may cut it again tomorrow (today, october 31) to help out the market. but if the feds continue to help out the market, then the dollar will continue to depreciate.

when my parents moved here, they were able to find a nice home and live decently with $70,000. but now, people who graduate and earn the same amount of money can't even find a townhouse to live in (apparently houses in detroit are cheap, if you are interested). the turning point of the united states economy is the 9/11 attacks. it was then when things began turning sour. the federal reserve putting more and more money into the market; corrupt politicians working in their own best interests; enron, world com, and other corporations cooking books and practicing corporate scandals; and everything, especially gas prices, are getting more and more expensive. the quality of life in united states isn't as it once was, the land of opportunity, the land of greatness, where everyone can exercise the freedom of speech. after 9/11 and the patriot act established by george w. bush, the first amendment went out the window. america is becoming shittier by the second. i want to raise my kids elsewhere.

so how can i get the money that i so hunger and thirst for? i can't make much in the united states finance industry (unless i suck mad balls, aka investment banking). its in china's market. china, a young united states, if you will, will soon rise as an economic power. we should catch the wave and make our big bucks before its too late.

so all of you chinese money chasers out there, take advantage of being chinese--the reign of america as the super power will soon be over.

-andy