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The greater depression.
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greyfaced
Heuristician


Joined: 06 Jun 2008
Posts: 509
Location: Pleroma, Oregon

PostPosted: Sat Dec 05, 2009 8:59 am    Post subject: Reply with quote

I don't think Cyndre understands me.....

It might also be a bad idea to assume that I have no cash in this game.

I'm pretty good at economics even though I don't work for any of those industries that have failed so miserably, yet haven't been allowed to go under because they are too important.

What happened after 9/11 with the market was categorically different from the tanking of the economy over the last 2 years. Any argument to the contrary is absurd.

Entitlements have taken over the budget, as has war spending to say otherwise is weak sauce.

Taxing the wealthy needs to happen, but I doubt it will because we live in a Kleptocracy.

Oh, and if you don't think the government has ever put its own money on the table....well weak sauce read some history.

I'm a bit disappointed, but not surprised now, that Obama hasn't really brought anything to the table in regards to education and public works. I'm afraid that the bifurcated economy will wait until the next presidential election. Unemployment will continue to be a problem for the next 2 years at least, and a government works program would go a long way towards dealing with this issue, but the best program they seem to have is war.

And jut to get this straight, we do not have the best health care in the world....look up some stats for gods sake. There aren't any good solutions because people are stuck in their "how can I profit from other peoples dire situations". Pay for service needs to go in medical care. We cannot simply reward doctors for performing more medical procedures. We do not have a market economy in health care, so drop the capitalism crap. Capitalism needs competition, and we simply don't have that, and in some sectors the only competition is not in innovation and providing service, it is simply a competition of marketing, and that doesn't help anyone. It's cognitive dissonace exploiting market forces masked as capitalism, and it's bullshit.

BAH!
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Cyndre
Demiurge


Joined: 22 Jul 2008
Posts: 189
Location: La Badlandsa - So Nice!

PostPosted: Thu Dec 10, 2009 12:49 am    Post subject: Reply with quote

I actually think a lot of the banks took public money just to prove to their shareholders that they were indeed "too big to fail."

Now that they can prove that they are backed by the government, pretty much anything they do is AAA and they can go back to huge risks and paying out 50% of their profits as bonuses. If they bets go bad again, no worries, Uncle Sam will be there. It's roulette w/ someone else's money, lose and they lose, win and you win.

I'm not aware of any other time in history that the US took an equity stake in multiple corporations. I'd like to hear a discussion of those times. As far as I know, there were some bailouts such as the S&L bailout, the companies went into insolvency, they ceased to exist, and because of some pre-existing regulations, the fed had to bail them out. EDIT - by bail them out, I mean the fed made good on their debts to the stakeholders, not that the fed resurrected the company. I've never ever heard of the fed being a majority stakeholder in a company.

I just think this is pretty much all the same. Market goes up and down. Just like after 9/11, market opened at 8k i think. Wall St makes big bets in order to justify bonuses. Once the fed sank a massive amount of money into the economy, of course it was going to rebound, it's just like when you wasted all your trip money as a kid but mom & dad gave you more on the 2nd day.

I think what happened after 9/11 and what happened now are virtually identical. Overselling due to panic and rapid rebounding. I was a stockbroker at the time, so I think my opinion is valid. I think stating that any other conclusion is absurd is conclusory - why exactly are the market fundamentals different? And the most important element of all - panic - was present.

I don't like the idea of taxing the wealthy at all. It will just encourage them to leave. I don't like the idea of more entitlement programs. I don't like the idea of the government doing much of anything besides building roads and having a police and an army.

Health care is a scarce good and always will be. A society can have 2 of the following 3 things in health care: Broad access, High quality of care, or Low cost. All 3 are not possible. The market's solution is broad access & high quality of care. The government's solution, I believe, will be broad access and low cost, sacrificing quality of care. That's a lot of money to spend for reform that a lot of peopld don't even want.

In the big picture, this is just another market cycle. The only lasting thing that will come of this is a little more market regulation. The health care reform, on the other hand, is actually really of lasting significance. I'm glad the public option is dead again.
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Chickens, page 425 of Wayfarers, is missing a key rule. If you roll a natural 6, you roll again and keep a cumulative total until you do not roll a 6. Rolled a 13 to hit, 19 damage, etc. Helps the trash talk.
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JimmySwill
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Joined: 02 Jan 2008
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Location: Torsche

PostPosted: Thu Dec 10, 2009 8:38 am    Post subject: Reply with quote

I disagree with a bit of what you said, but I'll start with this:
Cyndre wrote:
I think what happened after 9/11 and what happened now are virtually identical.

If by identical you just mean the market went down and it will come up, then I'll give that to you. But I think the market drop in 2008 was caused more by an underlying bubble rather than fear and uncertainty. The CDS market was very different at the two dates:

People were making bets with money that wasn't there. Once a few entities started pulling cash out of US banks really fast back in September, everyone freaked. The freak-out led to a reality check and a big correction. I think 2001 was more a cause of uncertainty rather than a correction for an over-heated market. Also, private debt as a percentage of GDP was much higher in 2008:

I'm sure we can agree that the private debt load can have an effect upon the timing and quality of a market rebound.

Philosophically, I think you and I differ some on what we'd like a government to do. You seem to have a greater skepticism for the government than I, and I probably have a greater skepticism of "good from market forces" than you. -But that's a healthy debate we always should have.

But I think this last drop was different than 2001 for a number of reasons. I know you are talking in terms of the market going down, and then coming up, but I think they are playing out differently. Also if we want to talk about the causes, then I think the 2008 drop was an inevitable correction. I think some sharp TSA dudes might have been able to stop the 2001 drop.

BTW, the government holding an equity stake thing is an interesting point. -I'm going to look into it. I think they've done this in terms of mines and maybe railroads, but I want to see for myself.
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Cyndre
Demiurge


Joined: 22 Jul 2008
Posts: 189
Location: La Badlandsa - So Nice!

PostPosted: Sat Dec 12, 2009 1:04 am    Post subject: Reply with quote

I think it's relatively obvious that the CDS market cap declined. But that's not the point. The problem isn't CDSs themselves, it's the crappy securities that were then given AAA rating. When they got downgraded, the balance sheets fell apart, causing bond covenants to trigger, causing balance sheets to get worse, etc. At one point even the "co-signers" (AIG) had this exact problem - this is what threatened to bring the whole economy down. If the CDSs had been rated properly, it would have been ok.

Once the government indicated that it would step in and save companies, the panic really should have stopped.

I'm extremely skeptical of government. I am a classical conservative (Barry Goldwater).

It was the MBS mortgage-backed securities that triggered the problem. the CDS only became an issue because it made the failures systemic instead of restricted to specific companies. I think that the twin evils of non-existant mortgage vetting and the rubber stamp conversion of any and all collateral backed securities into AAA was going to fall apart at some point.
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Chickens, page 425 of Wayfarers, is missing a key rule. If you roll a natural 6, you roll again and keep a cumulative total until you do not roll a 6. Rolled a 13 to hit, 19 damage, etc. Helps the trash talk.
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greyfaced
Heuristician


Joined: 06 Jun 2008
Posts: 509
Location: Pleroma, Oregon

PostPosted: Tue Dec 15, 2009 8:11 am    Post subject: Reply with quote

Cyndre the things you pointed out are differences in what happened after 9/11 and more recently.

It's fine to be skeptical of government, I am too.

I just happen to be skeptical of capitalism as well.

I mean I think fire departments do a great job, and are an excellent example of how government can perform a task that might easily be considered one that would be better performed if there were competition. I believe that health care situations are often like fires in how they affect people. Disease is like a fire in how it effects our communities. It can be argued that the FDA has made some things worse. Like how they approve drugs, and what they make available for people purchase over the counter, but...well I could digress on that.

I believe there are some things that capitalism doesn't make better. Especially things that are part of everyone's life in our society. I just look at the basic needs, and feel that government has an obligation to meet those needs. I would assume you do not, perhaps that is where we disagree.

It's easy to look at something like whether a person should have a court appointed lawyer. It's very easy to argue that it isn't actually constitutionally mandated that they have one, but I think it's good. If it would help to change the constitution, then I'm all for that, but I'm more interested in justice, than law.

Don't get me wrong, I think our government does a horrible job at all kinds of things, and that companies do all kinds of great things, but they both could use some work and have their place.

I just don't think the FDA, EPA, FTC, FCC, SEC, etc... should be privatized. Hell I'm generally of the opinion, albeit somewhat uniformed, that the federal reserve is a big problem. I wish I understood them better, but it's a lot to wrap ones head around.

It's all about Noblesse Oblige. Markets aren't there to be exploited, they are there to be served. Government needs to do the same.

this whole thing is all rather more complicated than can be dealt with here.

Good luck all.
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Cyndre
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Joined: 22 Jul 2008
Posts: 189
Location: La Badlandsa - So Nice!

PostPosted: Fri Dec 25, 2009 2:52 pm    Post subject: Reply with quote

I see what you are saying, just because we're skeptical of government doesn't mean we should give anything else (i.e. capitalism) a free pass. That's a good point, everything has its problems.

The thing that bothers me about government is that we are all going to have to pay for it when the government decides to step in, and it's not even all that effective (e.g. SEC re: Madoff and re: CDS/securitization problems). The SEC is one of the biggest gov't entitiies, it was repeatedly warned (over 10 years!) about Madoff, and still failed to do anything. Shit, I can do nothing for FREE, you know what I mean?

For example, I think the financial crisis could have been largely averted if the government just limited cash bonuses and made stock options vest over 5-10 years. It's a simple problem (compensation) with a simple solution (no instant gratification).

So, my basic idea is that, since I distrust everyone equally, I'd rather not have government do the task because then at least I don't have to pay for it Smile

So, that's my main complaint with the government, is that too often we pay a whole lot for very little.
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Chickens, page 425 of Wayfarers, is missing a key rule. If you roll a natural 6, you roll again and keep a cumulative total until you do not roll a 6. Rolled a 13 to hit, 19 damage, etc. Helps the trash talk.
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greyfaced
Heuristician


Joined: 06 Jun 2008
Posts: 509
Location: Pleroma, Oregon

PostPosted: Thu Dec 31, 2009 2:51 am    Post subject: Reply with quote

Cyndre....

All of that I can agree with.
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JimmySwill
YOGC Staff


Joined: 02 Jan 2008
Posts: 1390
Location: Torsche

PostPosted: Tue Feb 09, 2010 11:53 am    Post subject: Reply with quote

It's 11:50 AM, 02-09-10. Me thinks the Chinese financial system is about to tank.

That's all.



Actually, I am posting this a bit prematurely. I don't think it will tank for another few months. Maybe late April, early May.

I think this would be bad in the short-term for the US, but good several months out from that.
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JimmySwill
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PostPosted: Tue Jun 29, 2010 9:27 pm    Post subject: Reply with quote

Well, the Chinese market hasn't tanked yet, but I do still think it will.

The DOW was crushed today. We are at 9,870.30.

Debt is bad. So are large private markets and obligations.
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Dag
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Joined: 10 Jun 2008
Posts: 138

PostPosted: Thu Jul 01, 2010 12:24 pm    Post subject: Reply with quote

Are you referring to specific obligations?
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JimmySwill
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PostPosted: Thu Jul 01, 2010 1:13 pm    Post subject: Reply with quote

Dag wrote:
Are you referring to specific obligations?

Mostly CDS obligations. But IMO private or obscure markets don't allow folk to make good bets/investments, and that's antithetical to the best parts of capitalism. I think a lot of these problems were amplified due to ignorance.
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