I haven't felt the first one leave. :s Once you have to liquidate any stocks you have the market is a lot easier to watch.

You and me same, Tiff. That was about 8 years ago... and I'm still living with the consequences of the first one, and definitely not ready for the new one. For example, except for the mountain of debt and loss of future prospects, I haven't bought a gun to join the Banker Lynch Squad that is surely going to come soon yet.

Zizek is probably planning a book right now, entitled "I Told You So"

But of course hardly anybody but the super rich are in the stock market. Over 85% of all equities are owned by the top 10%. The top 1% owns about half. So the stock collapse is just rich people selling to rich people. Hardly any working folk any where in the world have any stake in any stock market, and to the extent they do, it's meaningless to their financial future.

Somebody is now going to mention 401k's - as if any working people actually have any meaningful pension any more. A total myth exposed by the fact that the average American has put away about $10K for his or her retirement. The stock market is utterly irrelevant to 90 percent of Americans

Not really irrelevant, since the whole economy runs on a credit system, and huge swathes of credit provided by banks is tied up in the market. Currency values for international trade also have a huge dependency on the stock market. Also, let's not forget the retail traders, especially in Asia and South America. If the stock market is utterly irrelevant to 90% of Americans, when markets crash there shouldn't be that many layoffs, small businesses closing down, and so on.

Chinese regulators tried to head off such concern by announcing earlier in the week major shareholders could sell only in private transactions to avoid flooding the market. This is the second asinine attempt by Chinese regulators in less than 9 months. The first time they only allowed large shareholders to buy, and not sell for 6 months.

Layoffs don't occur when the market collapses. Layoffs occur when there are credit bottlenecks as in the Bush Recession. Markets go down for all sorts of reasons, most of them totally irrelevant to credit or the value of the companies.

Like I say, markets are mostly rich people buying and selling from rich people for their own reasons (sometimes to lock in capital gain reduction offered by feckless GOP lawmakers sometimes to cover margins allowed by feckless GOP lawmakers). Hardly any stock purchases are related to the companies at issue - only IPOs involve capitalization, and those are vanishingly rare with respect to stock trades.

I'd note that the market has risen to historical heights not too far after the Bush Recession, while unemployment remained high and is still high by historical standards.

A huge number of jobs depend on company stock options in lieu of payment nowadays. Companies attempting expansion or ones that need to a credit-line depend on other companies that depend on financial markets for their cash. Like it or not, when there is a huge financial market crash, huge numbers of layoffs necessarily follow.

No. A huge number do not. 90% of Americans (probably 99%) have no stock options and barely get by on low wages.

Stock options are for comfortable people in the higher middle class who are doing just fine.

You're describing an economy that hasn't existed since the GOP set its sites on destroying unions back in the 80s and succeeded.

Look, I hate Wall Street as much as the next guy, but you can't just make shit up.

Read your own link.

The amount of stock options are meaningless since the average American has about 10K in savings. Your link is about stocks in any case. 85% (about 90% now) are owned by 10% of the upper income earners. 50% are owned by the top 1%. Those facts are not in doubt. Do the math.

You're fallling for WSJ agitprop.

In any case, stock options don't involve current payment of wages but future exercise, so a drop in stock prices has no impact on employment. If you think otherwise, describe the process.

This may help to see the irrelevancy of stock ownership to 90% of Americans

http://inequality.org/wealth-inequality/

http://www.cnbc.com/2014/09/08/the-stock-gap-american-stock-holdings-at-18-year-low.html

http://money.cnn.com/2014/09/18/investing/stock-market-investors-get-rich/

I think I know what I'm talking about since the last time this shit happened, the exact same scenario applied to me. I didn't own stock, never even thought about it, but not only did my student loan bank go under, forcing me to drop out of college and go homeless for a month, but the company I was selling my labor to experienced a severe credit crunch, and started laying off half their workers, including me. So, like it or not, people's livelihoods are tied to the financial markets.

This didn't happen to just me. It happened to huge numbers of people all around the world. You claim yourself that 90% of Americans have no ties to the stock market, but that link says 54% do, directly (as of 2011). Most likely 95%+ have indirect economic ties to the financial markets. So, what's it going to be? Also, say they have 10K in savings, and savings are historically calculated in these polls to include equity in the stock market, then when their 0-10K vanishes in thin air, isn't that a big fucking deal? I don't know about you, but the last time I lost 0-10K in the market that I wasn't even playing, I went starving for half a year.

I also come from a relatively poor Asian country, and the markets crashing here in Asia means suddenly our currency devalues at multiple percentage points. Suddenly, our prices for imports goes up multiple times, huge credit crunches occur because foreign investors pull out of our markets (which, I don't care for the act of them leaving, but they have made more than a third of our economy dependent on expecting their cash). Our banks suddenly stop lending, work becomes hard to come by. I don't know where you come from, but down here in non-rich leftist land, we are directly screwed by huge market crashes.

You're simply not describing reality. The vast majority of Americans - and even more so in the world - own no substantial stocks. It makes no difference to their situatoins whether stocks go up or down.

Read the links. The average middle class family owns - 14K in stocks. That it. It has no impact on their financial situation except in the bad sense that every penny counts for 90% of working people. But you don't retire or start a business on 14K.

Credit crunches are serious matters. Hence the Bush Recession was disastrous. They are almost always the result of underregulation of financial institutions and margin purchases (Thanks Bush). That has no direct relationship to stock prices, much less stock options.

Like I say if you think stock options are related to unemployment, show us the mechanism. That's not how stock options work.

At best they only affect people who are retiring. The average amount of saving a retiring American has is $10K or so. A pittance.

Stock prices have nothing to do with capitalization by foreign investors. The capitalization would have occurred during the IPO. After that stock sales proceeds go from rich owners to rich owners. The company doesn't get any of the "investments".

Stock market investments - except for IPOS - do not capitalize companies. It's investment in the same way a gambler "invests" in a roulette wheel.

No. I don't think we are having an economic crash right now. Separate out the next economic crisis from fluctuations in the stock market There is no earthly reason for stock markets to not fall--and fall precipitously, spike, and go up and down. Yes, it is stomach turning. But markets go up and down. That's what they do.

Sell when the market is high, buy when the market is low. Buy low, sell high. It's a formula that works. Just don't bet the farm on it working conveniently. It may go down when you need it to go up, and you may not have time to wait for a recovery. It took several decades for the economy and stock market to fully recover from the 1929 crash.

The Chinese decided that after a one-day drop of 7%, their market should close (the circuit breaker). The New York Stock Exchange also has a circuit breaker -- it kicks in after a 20% fall. One commentator noted that a 7% brake is too quick -- it cements in the losses for the day. Better to let it fall farther and then recover. Actually, declines in the price of shares is a factor that enables people with less money to buy into the market at all.

According to the Gallop Organization, about 55% of Americans claim to own stock. That doesn't mean that 55% of adults are individually buying and selling stock. About half of Americans have some amount of money (as Lundru noted, not very much) saved for retirement. It is quite often in some sort of tax deferral package like an IRA. Having an IRA isn't that difficult to arrange, and you definitely don't need all that much money. But once you have one, the IRA is usually invested in stock.

A stock market crash (like a 20% drop) causes real economic pain, but in itself it isn't an economic crisis. Some of the causes (and/or symptoms) of economic crises are

• a loss of liquidity in the banking system (banks won't loan anybody any money--especially big businesses and other banks)
• a loss of confidence in the banking system (depositors fear they won't get my money back, "Give me my money right now!"--the classic run on the bank)
• a collapse in the credit markets (I can't get a loan, they want to be paid back right now, they're taking the farm away, my house is gone...)
• a wave of business failures (no markets, no credit, debts come crashing down, businesses go bankrupt, workers are unemployed, can't get another job...
• production falls
• deflation sets in (debts incurred with cheap money have to be paid back by increasingly expensive money);

2007 was an economic crises, not just a slump in the market.

Whether we have an economic crises or not, most Americans are facing major economic risks naked because they have been in a long-term wage-price squeeze that is the result of policy rather than accident.

The WSJ agitprop likes to talk about how 50% of Americans own stock as if that means working folk's financial well-being is tied up in the market (the myth the rich want to propagate). It's nonsense. Except for the top 10%, Americans own a de minimus meaningless amount of stock in terms of value (I provided the links).

The average value of stock owned by middle class people is about $14K. For lower class, it's $6K. And of course over 50% of Americans own no stock. Zilch.

In short, if the market disappeared tomorrow it would have almost zero impact on 90% of Americans. The stock market is owned by the superwealthy and the wealthy. Nobody else has a stake in it.

In short, if the market disappeared tomorrow it would have almost zero impact on 90% of Americans. The stock market is owned by the superwealthy and the wealthy. Nobody else has a stake in it. — Landru Guide Us

I think you're overlooking the fact that if the superwealthy catch cold, the poor die of pneumonia.

A stock market crash triggers a series of events that result in increased unemployment and economic stagnation. When unemployment reaches 25%, it's a depression.

The WSJ agitprop likes to talk about how 50% of Americans own stock as if that means the working folk's financial well-being is tied up in the market (they myth the rich want to propagate). — Landru Guide Us

LANDRU: I'M WARNING YOU... WARNING: We are on the same side here.

Your inequality link doesn't contradict what I was saying. Working class people CAN have a personally significant stake in the stock market EVEN IF the working class's collective assets add up to a scant fraction of all the assets there are to be had. The reason they can is that their holdings are small. Some working class people who were lucky enough to have some cash to put into a retirement investment account (say... in the 1980s) and left it there, will have a substantial chunk of money now -- EVEN IF ONLY in proportion to their past annual incomes. It won't be enough to retire on by any stretch of the imagination, but it will definitely help.

401Ks for many working people don't amount to easy street. Perhaps a worker has $100,000 in a 401K when they retire. (He or she would be a fairly lucky working person.) It isn't as if one could retire on that amount alone. It would merely provides a small but helpful monthly supplement to Social Security. A sudden reduction in that supplement will hurt -- because this person's finances are too close to the bone. Even $100,000 + a typical working class Social Security benefit adds up to little financial security. It wouldn't take much of an uninsured illness, injury, or accident to wipe out $100,000.

It may not be a myth that 50% of the people have a stake in the stock market. The myth is that the average stake a working class person has means they are "well off". They are not well off. Being well off would mean having like, one million dollars to retire on, as a minimum. Being well off means having assets that can be sold off without reducing one's quality of life. A second home one almost never uses is such an asset. (Not talking about a small run down cabin on a lake.) A collection of antique cars is such an asset. That "old gold and jewelry one doesn't want any more" is such an asset.

For a working class person, selling stuff for cash without consequences is not in the cards.

I never thought we weren't on the same side, Bitter

I think you're overlooking the fact that if the superwealthy catch cold, the poor die of pneumonia.

A stock market crash triggers a series of events that result in increased unemployment and economic stagnation. When unemployment reaches 25%, it's a depression. — Mongrel

No, it doesn't.

A credit bottleneck does. A credit bottleneck may also lead to a decline in the market. But a decline in the market does not by itself lead to unemployment. There is no relationship here.

But if you think it is, describe the mechanism. All a decline in the market means, for the most part, is that very rich people are selling their stocks to other very rich people, at a lower value than the day before. They may still be making tons of profit (if the stock is appreciated). And they may do it because they want to lock in that profit.

Thus when Reagan lowered cap gains on the rich, the market declined precipitously. The reason is obvious. Now lots of things affect the market. But mostly it has to do with what rich people are doing with their money and why. It has little to do with the economy per se.

Indeed, money that is in the market isn't doing anything to create jobs. A decline in stocks can mean that the rich are cashing out and putting money into real investments that actually produce things and hire people. The stock market is almost exclusively a secondary market.

Stock is a strange substance. If you buy stock in my new company, Dante's Dildo Delights (stock market abbreviation DDD) you have invested in the company. Let's say you bought 5,000 shares @ $100 a share: $500,000 worth. 5 years later, the selling price for DDD's stock is around $1,000 a share. Your stock is now worth 5,000,000. This is really great. You sell your stock and make a bundle. DDD doesn't get any of that cash.

Why did the stock rise 10 times in value? Because DDD absolutely dominated the dildo market and profits were high? Apparently. it's an indirect relationship. If your initial stock of $500,000 had decreased by 10 times, to $10 a share, DDD wouldn't be out anything, but you would. The stock would probably have fallen because DDD's dildos just didn't do it for its consumers. They wouldn't buy more than 1. The value of the stock might be related to the dividends it didn't pay.

The utility of good sales figures, cash flow, profits, and dividends is that when DDD decides to diversify into lawn mowers, it's 'numbers' and the high value of stock will probably mean that it will be easy for DDD to borrow the money to buy Toro Manufacturing Company (maker of lawn mowers). (The company's new slogan is "Fuck Your Lawn With A Toro.") If all goes well, profits will keep going up, and along with it, the value of your stock. After all, you were at the Stock Holders Annual Meeting and you voted for the acquisition.

Alas, it didn't work. The fickle consumer decided that dildos and grass cutting was not a good match and sales plunged. DDD declared bankruptcy. No more profits, no more dividends. Kaput. And what about your million dollars worth of stock that Jack bought on the stock market at a high press? Well, Jack is shit out of luck, because even though the stock has no immediate connection to the company--DDD doesn't own it, after all--it's now worthless. (Jack is screwed--but that was what DDD was in business to do -- that and grass cutting.)

DDD's stock is worthless because nobody wants it. When people did want it, it's value was high. AND there is that "some sort of" connection to the company's profitability.

But then, look at Amazon. Amazon has been in business for... what, 15 to 20 years? and it hasn't been making a lot of profit. It has cash flow and lots of internal re-investment. Yet, it's stock sells at a great price--something like $600 a share. Why? Because Amazon stockholders expect that when the company get's done building this huge merchandizing infrastructure (tangible and intangible assets) it will be in a position to strangle the competition. Walmart and Target, and every other retailer, beware.

Amazon already sells just about everything, and even if it isn't the cheapest place to buy DDD's Fine Dildos, nobody else is building out the ability to deliver your flying fuck (by way of a drone flying boxcar). Should Target, Walmart, Kmart, Petsmart, Bloomingdales, Walgreens, Ace Hardware, California Porn Shoppes, Exxon, Sony, VW, Gazprom, Jolly Time Popcorn, Alibaba, American Airlines, the Mayo Clinic and the Defense Department all merge into one new giant Multinational Combine, they might be able to head off Amazon.

Otherwise...

DDD doesn't get any of that cash. — Bitter Crank

This is something most people don't understand. They think that "investing" in the stock market capitalizes the business at issue, which can then produce more and hire more people. Of course unless its an IPO (and even that's iffy), the money doesn't go to the company at all. It goes to the owners of the stock who are overwhelming very rich people.

"Investing" in the stock market is like "investing" in a horse race ticket. The "investment" has no impact on who wins.

I'm constantly amazed at how conservative apologists for capitalism either don't know this or pretend not to (like the WSJ does) to foster a false sense that all Americans have a stake in US businesses.

huge swathes of credit provided by banks is tied up in the market. — discoii

Just to gloss this, we have had a credit bottleneck since the Bush Recession. Hardly anybody but the rich can get any credit (except for student loans and we know what that leads to). Consumer lending is at a stand still and has been for years.

So the volatility of the Chinese market isn't going to affect that. It really can't get much worst, which is why most people's income has been stagnant or declined for the past 8 years - except for the superwealthy - and why growth is anemic. Normal people simply can't get capital to start businesses. All the lending is to large corporations, i.e., to the very rich.

You make great points except all your fact are wrong, so really you make horrible points.

Consumer lending isn't at a standstill. Nor is it in the UK. As may be suspected, there has been a rapid rise in consumer loans in China as well.

People's income has been pretty stagnant for over 30 years now in the United States. In capitalism, the day-to-day salvaging factor for most people (however morbid) is people's access to loans, however despicable the loans may be (like pay day loans, which are making more bank now than ever).

Banks need a relatively good credit market to keep making money. It's against their interests to not continue to put us into debt slavery. That's why Fed money has been cheap and banks have been issuing out more loans than ever.

If the market crashed entirely and the rich lost everything, then I welcome it. But I remember it like it was yesterday that the market was crashing entirely and the government saved the rich by giving them hundreds of billions in bail outs. Oh yeah, and I starved. Just like I starved when the 1997 IMF crash happened in Asia. But they didn't.

which is why most people's income has been stagnant or declined for the past 8 years — Landru Guide Us

If only it was for only the last 8 years.

Purchasing power, wages, benefits, and assets (cash, cars, homes -- personal property) of the working class (the vast majority of people) has been on a steady decline since 1973! The Arab Oil Boycott was the most memorable economic event that year, but what happened is that the post WWII boom ended. Booms always end. They can't go on forever. This boom didn't go bust, like the boom of the 20s did in 1929. It just sputtered out. Prices on ordinary consumer goods started a markéd rise that year. Wages did not increase accordingly. The long wage-price squeeze that has been gradually impoverishing the working class was underway.

The decline for the working class parallels stock market declines. Over two years, 1973-1974, the NYSE lost 45% of it's value. There was a decline from 7.2% real GDP growth to −2.1% contraction, while inflation (by CPI) jumped from 3.4% in 1972 to 12.3% in 1974. Pre-1974 conditions in the USA didn't return until August 1993—over twenty years after the 1973–74 crash began. (There were some additional crashes, like the 1987 crash.)

There was another crash in 1999 - the "Dot Com Bubble", then another in 2007, which we all remember. So crashes occur rather regularly. Bull Markets shift to Bear Markets. And throughout the last 40 some years, there have been real economic changes that have been impoverishing the working class. By the 1960s, a lot of manufacturing had moved out of New England to the SE states, where unions were non-existent and wages/benefits were all significantly lower. The next moves in manufacturing were from the USA to the Caribbean. Then to Mexico. Japan had always been a large exporter to the US, and in the 1980s auto imports from Japan expanded, along with other categories. China became a major source of less or lower-skill high intensity manufacturing, displacing Japan in that category. India, Pakistan, Bangladesh, Indonesia, Vietnam, Taiwan, and several other countries became the source of clothing, electronic and automotive parts, and all sorts of household goods. All of the imported goods represented a loss in manufacturing in the United States.

The loss of manufacturing jobs--like job losses in any category--has multiplier effect: unemployed people buy less goods and services, which reduces the income for goods and service companies--cafes, dry cleaners, auto shops, groceries, etc. A closed plant can dry out a community economically, and in many cases, there has been no recovery in 30 years or longer.

Job loss, wage reduction, benefit restrictions, price increases, high credit costs, education costs -- there are a myriad ways that over 100 million working class people have had their share of wealth reduced.

Working people who preceded the post war baby boom (and many of who are now dead), and the older members of that bulge, had a better chance to reach retirement economically intact than younger members of the very large group who have spent more decades in a reduced economic situation.

You need to avoid aggregated information in economic matters. It leads to nonsense (like the Bush tax cuts providing Americans "on average" $1800 of relief). Income quintiles matter. Consumer loans are down down down over the past 8 years for most of us (except the pernicious student loans which are up for obvious reasons and are a burden on working Americans). Only the rich see an increase in access to credit.

http://thefinancialbrand.com/43930/millennial-boomer-banking-loans-data/

http://www.cnbc.com/2014/10/18/banks-are-lending-again-but-mostly-to-rich-people.html

There is no worse mistake (and among conservatives it is not a mistake but a strategy) in economics than to aggregate economic data and then suggest it applies to working Americans. It almost never does. The classic case is "free" trade - good in the aggregate, bad for most working Americans.

I'm well aware of the overall decline in income in the lowest quintile over the past 30 years. The Bush Recession however affected the US economy in other quintiles, a new phenomenon which makes narratives about Americans owning stock and 401(k)s obsolete. And that's my point.

2008 was a genuine crisis, and like all crises for shock capitalism, it was used by conservatives to lock in more systematic ways to transfer more wealth from more working Americans to the top 10% and particularly the top 1%. That is a new phenomenon, or at least, we haven't seen such disparity since the Guilded Age.

The decline for the working class parallels stock market declines. — Bitter Crank

I'm not quite sure what decline here means, but the relationship between unemployment rates and stock prices is well studied. The relationship is complex but no economist believes that falling stock prices produce increased unemployment and many see no correlation whatsoever.

The article linked below surveys the literature for the US, China and Japan. To the extent the OP claims that the recent fall in stock prices predicts higher unemployment in any of these three nations, it is simply contrary to the data.

http://ccsenet.org/journal/index.php/ijef/article/view/25036/15607