Financial Crisis

[sokal]

I think you gotta do some homework Naam. Here will spoon feed you again: http://money.cnn.com/2009/08/14/news/compa...sion=2009081500 I think you are mixing up some things.

And I have read that the FDIC is now out of money, have to beg for some more. But hey it is peanuts and there are 8000 more banks so there is nothing to worry about. Or is there?

why should i worry Alex? because of the few thousand dollars i hold in two U.S. bank accounts? or do you think i have invested in the FDIC? are 8000 banks needed for ~300mm people who (according to the economic experts of Thaivisa) are dirt poor because the equity in their homes is negative and who are up to their necks in credit card debt? then who, pray tell, are those depositors which cleaned out the FDIC? and please tell me one valid reason why i should worry.

of course the real reason that i don't worry is you are doing already an excellent worrying job.

The status of the worlds reserve currency tends to effect everyone. If you got an explenation on why Germany is so safe then I would like to hear it, then I can just load up on crout assets.

[Naam]

I think you gotta do some homework Naam. Here will spoon feed you again: http://money.cnn.com/2009/08/14/news/compa...sion=2009081500 I think you are mixing up some things.

And I have read that the FDIC is now out of money, have to beg for some more. But hey it is peanuts and there are 8000 more banks so there is nothing to worry about. Or is there?

why should i worry Alex? because of the few thousand dollars i hold in two U.S. bank accounts? or do you think i have invested in the FDIC? are 8000 banks needed for ~300mm people who (according to the economic experts of Thaivisa) are dirt poor because the equity in their homes is negative and who are up to their necks in credit card debt? then who, pray tell, are those depositors which cleaned out the FDIC? and please tell me one valid reason why i should worry. of course the real reason that i don't worry is you are doing already an excellent worrying job.

The status of the worlds reserve currency tends to effect everyone. If you got an explenation on why Germany is so safe then I would like to hear it, then I can just load up on crout assets.

what's your problem Sokal? hallucinations? what explanation? when did i say something about Germany being safe? what does FDIC insured cash have to do with kraut assets? does the austrian school of economics teach that? true, the status of the world's reserve currency does indeed affect everyone... everyone who has not taken the necessary steps to protect his assets.

do you have an explanation why you are ridiculing yourself with pointless questions which have no bearing to discussed topics? is it that you just have fun picking on me? if the latter applies, let me assure you that academically i swallow smartbutt wannabees like you before breakfast without a single burp

[sokal]

I think you gotta do some homework Naam. Here will spoon feed you again: http://money.cnn.com/2009/08/14/news/compa...sion=2009081500 I think you are mixing up some things.

And I have read that the FDIC is now out of money, have to beg for some more. But hey it is peanuts and there are 8000 more banks so there is nothing to worry about. Or is there?

why should i worry Alex? because of the few thousand dollars i hold in two U.S. bank accounts? or do you think i have invested in the FDIC? are 8000 banks needed for ~300mm people who (according to the economic experts of Thaivisa) are dirt poor because the equity in their homes is negative and who are up to their necks in credit card debt? then who, pray tell, are those depositors which cleaned out the FDIC? and please tell me one valid reason why i should worry. of course the real reason that i don't worry is you are doing already an excellent worrying job.

The status of the worlds reserve currency tends to effect everyone. If you got an explenation on why Germany is so safe then I would like to hear it, then I can just load up on crout assets.

what's your problem Sokal? hallucinations? what explanation? when did i say something about Germany being safe? what does FDIC insured cash have to do with kraut assets? does the austrian school of economics teach that? true, the status of the world's reserve currency does indeed affect everyone... everyone who has not taken the necessary steps to protect his assets.

do you have an explanation why you are ridiculing yourself with pointless questions which have no bearing to discussed topics? is it that you just have fun picking on me? if the latter applies, let me assure you that academically i swallow smartbutt wannabees like you before breakfast without a single burp

You have not given any reasons for hating gold. No Reasons, just smartass comments. Most gold bugs are not 100% in metal BTW.

[BEENTHEREDONETHAT]

According to Suzi Orman (where I get all my financial advice ) the US social security will survive the big crunch. So how long do all the gurus here feel it will survive??

[Naam]

You have not given any reasons for hating gold. No Reasons, just smartass comments. Most gold bugs are not 100% in metal BTW.

yawwwwwwnnnnnnn... more unjustified remarks. when/where did i say that i hate gold? when/where did i claim that most goldbugs are 100% in metal? fact is i love gold and platinum... when Mrs Naam wears these metals

[Abrak]

.... Phuket should be written Pucket or Phi Phi as Pee Pee...

12Drinkmore, I may have mild disagreements with you over certain matters but over this one issue, I feel that you are absolutely wrong.

I think it would strongly be against the interests of Phi Phi to rename itself 'Pee Pee'

[flying]

How do you like this recovery? Pretty good, huh?

Except for the jobs, of course.

And except for the retail sales.

And except for the foreclosures…and house prices. And incomes. And consumer prices. And business profits.

It’s like a female impersonator…just like a real woman in every way, except for the essential ones.

http://dailyreckoning.com/the-consumer-has-dug-in-his-heels/

[Naam]

.... Phuket should be written Pucket or Phi Phi as Pee Pee...

12Drinkmore, I may have mild disagreements with you over certain matters but over this one issue, I feel that you are absolutely wrong.

I think it would strongly be against the interests of Phi Phi to rename itself 'Pee Pee'

but wouldn't it go nicely with Phuket being renamed Poo Poo?

Edited August 16, 2009 by Naam

[Naam]

How do you like this recovery? Pretty good, huh?

Except for the jobs, of course.

And except for the retail sales.

And except for the foreclosures…and house prices. And incomes. And consumer prices. And business profits.

It’s like a female impersonator…just like a real woman in every way, except for the essential ones. :D

http://dailyreckoning.com/the-consumer-has-dug-in-his-heels/

it's all a matter of perspective Flying. if you look at your personal holdings and they are down it means "no recovery", if they are UP it means " recovery". as simple as that.

Edited August 16, 2009 by Naam

[flying]

it's all a matter of perspective Flying. if you look at your personal holdings and they are down it means "no recovery", if they are UP it means " recovery". as simple as that.

Sad but true.

But at what cost long term?

Yet my mouth tends to have the same reaction as if a lemon is being squirted in it when someone claims we are in a recovery.

Dollars in your pocket aside of course.

[12DrinkMore]

On the cause of the crisis

http://hnn.us/articles/55614.html

That consumer-led pattern of economic growth was the hallmark of the postwar boom—the heyday of “consumer culture.” It lasted until 1973, when steady gains in median family income and nonfarm real wages slowed, and even ended. Since then, this stagnation has persisted, although increases in labor productivity should have allowed commensurable gains in wages. Thus a shift of income shares away from wages and consumption, toward profits, has characterized the pattern of economic growth and development over the last twenty-five years.

This is presumably why now, in order to make ends meet, both parents have to go to work, whereas 40 years ago the father could afford to bring up the family. When I was at school it was the rare exception that a mother would have a job. she was always there for the kids. Now it seems to be the norm.

And in order to appear at least as 'wealthy' and 'successful' as their parents were, debt is used to boost the household expenditure on cars/holidays etc.

We don’t need Paul Krugman or Robert Reich to verify the result—that is, the widening gap between rich and poor, or rather between capital and labor. Two arch-defenders of free markets, Martin Wolf and Alan Greenspan, have repeatedly emphasized the same trend. For example, last September, Greenspan complained that “real compensation tends to parallel real productivity, and we have seen that for generations, but not now. It has veered off course for reasons I am not clear about.” (FT 9/17/07, p. 8) A year earlier, Wolf similarly complained that “the normal link between productivity and real earnings is broken,” and that the “distribution of US earnings has, as a result, become significantly more unequal.” (FT 4/26/06, p. 13)

Leading to the rich accumulating massive wealth, which will never be spent on stuff, because no single person can conceivably use or consume a billion Dollars of stuff, or even 100,000,000 Dollars of stuff in a lifetime. And the money does not head into investment in factories, because running production is a hassle, employees, marketing, sales, accounting. Nope, far better to play on the rich man's roulette wheel, where wealth creates even more wealth without the slightest benefit for the economy.

The solution?

The responsible fiscal policy for the foreseeable future is, then, to raise taxes on the wealthy and to make net contributions to consumer expenditures out of federal deficits if necessary.

So there we go, Abrak. I wonder if we'll see a responsible fiscal policy.

Edited August 16, 2009 by 12DrinkMore

[AlexLah]

I think you gotta do some homework Naam. Here will spoon feed you again: http://money.cnn.com/2009/08/14/news/compa...sion=2009081500 I think you are mixing up some things.

And I have read that the FDIC is now out of money, have to beg for some more. But hey it is peanuts and there are 8000 more banks so there is nothing to worry about. Or is there?

why should i worry Alex? because of the few thousand dollars i hold in two U.S. bank accounts? or do you think i have invested in the FDIC? are 8000 banks needed for ~300mm people who (according to the economic experts of Thaivisa) are dirt poor because the equity in their homes is negative and who are up to their necks in credit card debt? then who, pray tell, are those depositors which cleaned out the FDIC? and please tell me one valid reason why i should worry.

of course the real reason that i don't worry is you are doing already an excellent worrying job.

Naam you know I am way to busy with "The Master Plan" I don't have time to look into some of the details of a small money investor.

Edited August 16, 2009 by AlexLah

[Abrak]

12Drinkmore,

I have no idea to what extent you were taking my arguments seriously but there are a few things I would like to add.

1) Inequality of wealth over the last ten years has as much to do with irresponsible monetary policy as fiscal. To the extent there is excess monetary growth there will be a rise in asset prices which will be to the benefit of the rich v the poor.

2) When it comes to taxing it is also important to consider 'wealth' as much as 'incomes'. If a guy is paid US 3million dollars it is presumably because he adds that sort of value, very much more then the person earning US 20k. So taxing incomes over a certain extent may be counter productive. Taxing wealth is far more logical. Plus between 1998 and 2007 average wealth of the top 10% increased 80% while for the bottom 50% the increase was minimal.

3) Your point about the rise in job participation of both husband and wife is very important. It has resulted in a rise in household income but because say childcare costs rise too, post tax discretionary income has fallen in real terms. With two employees now a family bankruptcy risk has risen because the possibility of unemployment has now doubled. Hence the 8 fold increase in personal bankruptcies in 30 years. The middle class cant afford to pay for the crisis.

4) Finally people talk of say the US being bankrupt. There are US 60 trn of household assets, US$14trn of household debt (maybe US$1.5trn that has gone bad) that doesnt point to bankruptcy merely that the distribution is not efficiently allocated.

[flying]

4) Finally people talk of say the US being bankrupt. There are US 60 trn of household assets, US$14trn of household debt (maybe US$1.5trn that has gone bad) that doesnt point to bankruptcy merely that the distribution is not efficiently allocated.

There are many types of Bankruptcy but for now.......... If the US is doing well & the wealth to default ratio is so small...Why is the FDIC going broke as of 8/14/09 & will need a injection next week? Why does the FED feel the need to place shills at Treasury auctions? Can bankruptcy be avoided if none buy the debt?

It is one thing to say US has this & that in assets but if the valuation is total bs then what? If the strength of the currency it is valued in is bs then what? If citizens decide or through no other choice continue to default in numbers none can now imagine then what? Daily we see it & yet I must admit the US media machine is good at what they do.

Edited August 16, 2009 by flying

[Naam]

it's all a matter of perspective Flying. if you look at your personal holdings and they are down it means "no recovery", if they are UP it means " recovery". as simple as that.

Sad but true.

But at what cost long term?

Yet my mouth tends to have the same reaction as if a lemon is being squirted in it when someone claims we are in a recovery. Dollars in your pocket aside of course.

as i mentioned "recovery" has different meanings and they all depend on specific perspectives. i tried to limit the perspectives to only two. but in reality dozens (plural) exist. most "anals" see a recovery when one time period is slightly better than the previous one and that no matter how extremely bad the previous one was. others shout RECOVERY when the amount of shit that hits the fan is slightly less than before. of course, none of the millions who will still lose their jobs (seen globally) will talk about recovery even though thousands of bankers will cash in hundreds of millions soon again and a bunch of them face the difficult decision "new Ferrari or new 48' yacht?" and tell their neighbours "crisis? what crisis?"

[flying]

as i mentioned "recovery" has different meanings and they all depend on specific perspectives. i tried to limit the perspectives to only two. but in reality dozens (plural) exist. ..........

none of the millions who will still lose their jobs (seen globally) will talk about recovery even though thousands of bankers will cash in hundreds of millions soon again and a bunch of them face the difficult decision "new Ferrari or new 48' yacht?" and tell their neighbours "crisis? what crisis?"

Again Sad but True

For many recover = return to original state

That may never happen....Then again I am old enough to know

"never say never"

But your last sentence did make me smile...again sad but true

[ray23]

I have nothing to offer but a question. I'm certianly not happy about the bad an even less happy seeing the big bonus programs coming back before we are out of this mess.

What would have happened had the Fed and Treasury had not stepped in?

What would have worked better?

Edited August 17, 2009 by ray23

[sokal]

I have nothing to offer but a question. I'm certianly not happy about the bad an even less happy seeing the big bonus programs coming back before we are out of this mess.

What would have happened had the Fed and Treasury had not stepped in?

What would have worked better?

The same thing happend in Asia in 1997. They let the system collapse and then just rebuilt it from the ground up.

The system will collapse in the US, they have just posponed it again. If you throw a ball up in Asia it falls back down and it is no different when you are standing in the US.

It would have worked better to let the system collapse because it will collapse anyway.

[teletiger]

In 1999 Donald Trump had the same idea as Abrak and suggested a one off "wealth tax" on the top 10%. He would have imposed a 15% charge (possibly spread over 3 years) which would have brought in revenues of $5.7 Trillion. His idea was to pay off the National debt. Very noble of the man, as he stood to lose the most.

The idea is good as a pressure valve, but doesn't approach the problem of why the boiler is overheating in the first place.

Regards.

[Naam]

In 1999 Donald Trump had the same idea as Abrak and suggested a one off "wealth tax" on the top 10%. He would have imposed a 15% charge (possibly spread over 3 years) which would have brought in revenues of $5.7 Trillion. His idea was to pay off the National debt. Very noble of the man, as he stood to lose the most.

The idea is good as a pressure valve, but doesn't approach the problem of why the boiler is overheating in the first place.

Regards.

very noble indeed. multiple bankruptcies of his companies, never paid a single penny to the creditors out of his own pocket. Trump = crook²!

[flying]

. Trump = crook²!

Crook + bad hair

Seriously with all the $$ could he get better plugs than that sorry comb over

Ever see him at a windy interview?

[flying]

are you aware that most of the time you are not referring to banks but mosquitoshitsize archaic financial institutions which wanted to go for a piss with the big dogs but couldn't lift a leg?

Also left out were the 19 lenders that underwent the Treasury’s stress tests in May; they were deemed “too big to fail” and told by regulators that government capital was available to keep them in business. Excluding the stress-test list, banks with nonperformers above 5 percent had combined deposits of $193 billion, according to Bloomberg data. That’s almost 15 times the size of the FDIC’s deposit insurance fund at the end of the first quarter.

http://bloomberg.com/apps/news?pid=2060108...id=aTTT9jivRIWE

This is part of the problem I have when reading these failures....

It just seems to me the banks that were deemed too big too fail are the very ones that should have. Instead these banks that have much clout with the govt are not only bailed out they are given preferential treatment.

These banks are the same that hold the securitized assets the sliced & diced toxic assets that are impossible to sort & do not need to be marked to market as their true amounts owed. The smaller banks were said to hold their smaller toxic assets as whole loans so present a much smaller risk. So of course the bigger banks continue while the smaller not playing by the same accounting rules fail.

But what really makes me wonder is...this process is no better than what Hank Paulson did with Lehman & Stearns. They are effectively killing all the competition & lowering options of the future to the Too Big Too Fail few. Just seems like the ones that caused the bulk are being rewarded. Lastly what tastes the worse is their telling us how we need to deal with these toxic assets. They created the 700B to pay that off at Paulsons request to do just that. After approval he did the bait & switch & said no we will put it directly in the banks instead which is where 350B went. The don't ask don't tell money. In reality today the too big too fail are underwater if their toxic assets are truthfully priced in. So whats next after the small fish who are healthier are all shut down? Is that when we are next told we now need to deal with this?....Again? Except this next time we will not be told they are too big too fail. We will be told we have to save them as they are all we have.

Remember we have not even touched the commercial mortgages yet. They all come due in 2010-2011. Let me guess who holds the majority of those

Edited August 17, 2009 by flying

[AlexLah]

It is so funny Fly, I told about this a long time ago and some people just said I am/was a nutcase, or something like that.

I told about the destruction of the middle class and nobody understood what I was talking about.

I think it is getting more clear now which is good, in some way.

I said we are being told lies when they first told about the economic crisis, again people said I am crazy.

I mentioned that the big banks would be sucking up the smaller ones when the "Crisis" was announced, just look what is happening.

Just prepare for the next stage that is coming.

Alex

[Abrak]

It is so funny Fly, I told about this a long time ago and some people just said I am/was a nutcase, or something like that.

I told about the destruction of the middle class and nobody understood what I was talking about.

I think it is getting more clear now which is good, in some way.

I said we are being told lies when they first told about the economic crisis, again people said I am crazy.

I mentioned that the big banks would be sucking up the smaller ones when the "Crisis" was announced, just look what is happening.

Just prepare for the next stage that is coming.

Alex

Alex,

You are very wrong if you believe this is not a widely recognized problem.

Elizabeth Warren, Economics Professor at Harvard wrote a very detailed book about it 'ALL YOUR WORTH THE ULTIMATE LIFETIME MONEY PLAN and THE TWO-INCOME TRAP: WHY MIDDLE CLASS MOTHERS AND FATHERS ARE GOING BROKE.'

Marc Faber wrote 'Wealth inequity has been a major contributor to the crisis.'

Where people disagree is about the 'next stage'. Noone seriously believes they are going to get off their asses to do anything about it - so nothing will be done. The rich and powerful will continue to rule and become more rich and powerful.

Where I believe people are wrong is that I do believe that the rich and powerful want to help the middle classes and the poor and would happily give up some of their wealth. If Donald Trump is prepared to do it why shouldnt most others? It is the poor who believe the rich deserve to be rich not the rich.

[Naam]

It is so funny Fly, I told about this a long time ago and some people just said I am/was a nutcase, or something like that.

I told about the destruction of the middle class and nobody understood what I was talking about. I think it is getting more clear now which is good, in some way. I said we are being told lies when they first told about the economic crisis, again people said I am crazy. I mentioned that the big banks would be sucking up the smaller ones when the "Crisis" was announced, just look what is happening. Just prepare for the next stage that is coming.

you are not a nutcase Alex! you are just a busybody with the supernatural gift of "prophecy" compelled by a slight paranoia to publish your "forecasts" however i have strong doubts that your prophecies put a single additional Dollar/Euro/Baht in your pocket or the pockets of those who read your "prophecies". personally i am looking forward to hear about the "master plan" (Bilderbergs? Illuminati? Aliens?) you are chasing and interesting postings from you such as "next stage 17-92-21" and "watch out for 12-39-62".

[midas]

If Obama and his cronies cant even organise the one bright spot in the US economy

- god help those that will be relying on public healthcare ?

Dealers wait for 'cash for clunkers' payments

Some consider dropping out of program

http://www.jsonline.com/business/53229787.html

[midas]

It appears the expected commercial property crisis for 2010 is

already starting to take effect and not just in USA ...............

Distressed sales increase worldwide, says RICS

Over 75% of countries surveyed by the Royal Institution of Chartered Surveyors have seen a rise in distressed sales in the commercial property market.

Those markets at the forefront include Italy and the UK, with Germany, US, Hungary, Spain and Ireland closely behind. One obvious reason for current interest must undoubtedly be the scale of property price declines which have occurred in some of these markets since the onset of the credit crunch drawing bargain hunters in.

"Falling rents and rising corporate bankruptcies are likely to increase the incidence of distressed properties in the coming quarters as problems for landlords in meeting income covenants pick up and refinancing costs remain elevated

http://www.mortgagestrategy.co.uk/cgi-bin/...h=401&f=402

[12DrinkMore]

We have been sold a lemon

http://www.bloomberg.com/apps/news?pid=206...id=a_IZywsbozWg

Deflation may be bad for particular interest groups, which happen to be very powerful. It is bad for chief executives. It is easier to keep your profits rising in a mildly inflationary environment. You can just jack up your prices a bit, and you can often cut workers’ wages by stealth by holding wages steady.

The banking industry, which has come to rely on inflation to make highly leveraged loans sustainable, also dislikes deflation. Likewise, it is bad for governments, which use inflation to reduce the value of their debts.

On the other hand, deflation is good news for savers, who get richer just by hanging on to their cash. And it is beneficial for consumers, who get cheaper prices. It is usually good for workers as well, as they can generally hold the value of their wages, even while prices fall.

There are winners and losers, just as there are from most economic developments. The important point is that the people who lose are more powerful than the people who gain. That might explain why we hear about the dangers of deflation, and not about its advantages. It still doesn’t make them right.

Yep, that about sums it up.

[AlexLah]

Abrak, I did not know Miss Warren wrote even a whole book about it. I have posted that lecture of her a while ago and there is enough info available on the internet. Thing is, it seems that the majority of people have just accepted it as being normal. I find it interesting as there are so many things connected to why all this has happened. The big question is how are we going to get out of this mess?

I don't really believe that giving all that cash to financial institutions has been the right answer as it did not do much to structurally improve economies. In all those countries with high unemployment numbers, what will be done or what could be done to get people back to work?

Or maybe the problem is that there are too many people?

Another thing I find a bit disturbing is that here and there new articles pop up suggesting that those people on unemployment benefits are very capable of working, they just choose not to. I am sure there are a few but not all. I can tell you from personal experience during the last 11 months

being without a job, it is not funny at all. But hey I am gonna start working again next month for one of those big evil US corporations, ha ha!

And Naam yes I actually did make some money but not from the stock market as I don't like casinos and my goal in life is not to make as much money as I can. I can assure you not so long ago I made lot's and lot's of it, but I like spending it, not hoarding.

But I am happy to see you like my more interesting postings of women bum and some strange numbers that could be read as some kind of prediction, who knows?

Oh yeah, me nose.

[Abrak]

I agree there is a tendency to think that one thing say 'deflation' or even 'inflation' is essentially good for one party and probably equally bad for another. Certainly though many economists see deflation as essentially a 'destructive' force. Someone may be able to explain this concept better than I can.

It really comes down largely to 'the paradox of thrift'. At its simplest this say 'as savers benefit' they save more, this doesnt necessarily mean that savings rise as consumption, GDP and savings themselves will fall. When deflation occurs governments cant resolve this situation by cutting interest rates which are already at zero (to boost investment), so despite the rise in savings, investment does not increase (it is more likely to fall) with high real rates. Consumption is delayed because prices are likely to fall relative to cash. And this means that GDP and hence incomes have to fall so much that when people try to save more, the nation actually ends up saving less.

This is before considering the state of the banking. Concepts like consumers will benefit because they will hold their wages when prices fall just dont work - companies invest less if real wages go up (along with the rise in real interest rates), GDP falls, unemployment rises. If real wages do not adjust then almost by definition it is bad for economic growth.

The whole point really is that with deflation the saver is happy, the investor pays back his loans and sits on his cash, nobody spends because you can buy cheaper next year and there is no economy. Yes there are winners and losers but it is only really a bigger slice of a smaller cake.