Financial Crisis

[Abrak]

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 am impressed you know Elizabeth Warren - she just happens to be one of my heroes - and should be President!!

I fully agree that the fact that people accept it as 'normal' is so very strange.

To me the average person accepts the excesses of capitalism because although they know the rich will get richer and the poor will remain poor, they do believe that it is the best system for the average 'Joe' to make progress in real terms. That's deal isnt it?

Yeah we bail out GS bankers and then let them take home record bonuses. We bail out the banks for being incompetent. We dont even care when their 12 year old daughters wear no knickers as well as present themselves as serious entrepreneurs because of their 'perfume' line.

It all a sad really - falling ROA, falling median incomes, falling sustainable GDP growth rates - and nobody can come up with a better alternative.

[Naam]

I can tell you from personal experience during the last 11 months being without a job, it is not funny at all.

that explains nearly each and everything Alex. even the hallucinations you sometimes presented

[AlexLah]

Heh heh heh Naam, I needed some entertainment and sure got it here.

But I think I might have a solution to clear up some of this mess. Remember we have too many factories that produce all kind of useless garbage like farting teddy bears (seriously) or hamburger phones. I mean just look around you in some stores, it is pathetic. So get rid of factories that produce useless stuff. As a result more people will be unemployed sure but I have a plan for that. It would for sure result in a much cleaner environment and as less energy is consumed there will be less need to build dams that destroy life. So there is plenty of benefits you can figure that out yourself.

OK now here comes the part that requires a bit of a different mindset, there is "The People Problem"

My suggestion to the TV panel is this: All people between10 and 18 and let's say above 50 must be "Processed" and their meat made suitable for consumption.

I know, I know it sounds crazy but think of it.

This plan will wipe out a large part of the population and as a result I expect a shortage of labor available, so company's have to compete for resources by increasing wages. As a result more money will flow into the system. Prices of houses and all other stuff can be inflated again. My model predicts inflation rates between 15 and 20% for about six to seven years.

Think of a few benefits like less cows have to be raised as we have enough human meat for a few years. Less cows means less methane in the atmosphere (cows fart a lot) less water and grain is needed to feed them so there will be plenty of food available to feed the poor in Africa for example. Once the population there is well fed and healthy they can then be employed and start building infrastructure and stuff so they can become developed nations as well.

There is plenty of other benefits but this proposal is just a rough framework that needs some more details and stuff.

As a pilot country we could choose the US as they have a bit of a history of killing so I believe the population would accept this without too much resistance.

What do you guy's think?

[Abrak]

What do you guy's think?

Personally I dont like the idea of eating people (especially the ones over 50)

[12DrinkMore]

Couple of articles on how we got here, and the role government and banking played to get us all in debt.

Here's an old interview with Warren about the usury of the credit card companies and how the middle class is taken to the cleaners.

http://www.pbs.org/wgbh/pages/frontline/sh...ews/warren.html

Way back in 2004 she was hitting the nail precisely on the head.

I wish it were. I went into this research with my finger out and sharpened, ready to say to American families, "Bankruptcies are up because you're spending too much on stuff." ... The problem is, when you look at the data, you really actually look at the numbers ... what were a mom, dad and two kids in the early 1970s spending on clothing compared with what a mom, dad and two kids are spending on clothing today? You know what I found? Adjusted for inflation, today's family is spending 22 percent less than the family a generation ago.

How about food, eating out? Surely families are spending much more today than they did a generation ago. No. What the numbers actually show is that they're spending about 21 percent less than they spent a generation ago. Appliances -- today they're buying microwave ovens and espresso machines. ... Turns out, families today are spending 44 percent less on appliances than they spent a generation ago. We could go through the whole list -- furniture, ... floor coverings, tobacco. ... We spend a little more on alcohol, but all those other things are down, down, down. ...

In other words, families aren't going broke because of ordinary consumption. It's just not what the numbers show. Where are families going broke? The mortgage, that's up about 70 times faster than a man's wages over the last 30 years. Health insurance, also up about 70 times faster. A second car, because now Mom and Dad are both in the workforce, and they're more likely to live in a more distant suburb. Child care ... and after-school care, college tuitions. ... Today's family has put two people into the workforce, but for the medium-earning family, they've got 75 percent more money than their parents had a generation ago. But by the time they make those four basic purchases -- the mortgage, their health insurance, their cars and their child care -- they have less money to spend on everything else than their parents had a generation ago. American families are under the gun financially, but they're under the gun because of big purchases, mortgages, health insurance ... two cars, child care. ... They're not under the gun because they spent too much when they went to the mall. Families are just trying to make it in the heart of the middle class, and expenses have just shot out of the reach of the medium-earning family.

And then housing ownership, the great US and UK dream....

http://online.wsj.com/article/SB1000142405...eTabs%3Darticle

It's time to accept that home ownership is not a realistic goal for many people and to curtail the enormous government programs fueling this ambition

[12DrinkMore]

What do you guy's think?

Maybe you should ease up on the substance abuse.

I realise you are a little euphoric about the new job, and that it will take several months to overcome the TV withdrawal symptoms once you have to be productive in an office rather than post assorted female curvy bits (BTW haven't had one for a while...), but surely you have to think about your future employer from the US? I am not convinced they will be totally enthusiastic over your creative solution to the crisis. Unless, of course, you start trials in Afghanistan or North Korea.

[Abrak]

12Drinkmore,

Read her book(s) some of the stuff is so amazing that I refused to believe it.

I even sent her a couple of emails questioning her figures because I thought she might be using bias statistics because some are too unbelievable (say counting a divorce as one instead of two and a bankruptcy as only one). Her figures were correct.

I wish her every success.

[lannarebirth]

Heh heh heh Naam, I needed some entertainment and sure got it here.

But I think I might have a solution to clear up some of this mess. Remember we have too many factories that produce all kind of useless garbage like farting teddy bears (seriously) or hamburger phones. I mean just look around you in some stores, it is pathetic. So get rid of factories that produce useless stuff. As a result more people will be unemployed sure but I have a plan for that. It would for sure result in a much cleaner environment and as less energy is consumed there will be less need to build dams that destroy life. So there is plenty of benefits you can figure that out yourself.

OK now here comes the part that requires a bit of a different mindset, there is "The People Problem"

My suggestion to the TV panel is this: All people between10 and 18 and let's say above 50 must be "Processed" and their meat made suitable for consumption.

I know, I know it sounds crazy but think of it.

This plan will wipe out a large part of the population and as a result I expect a shortage of labor available, so company's have to compete for resources by increasing wages. As a result more money will flow into the system. Prices of houses and all other stuff can be inflated again. My model predicts inflation rates between 15 and 20% for about six to seven years.

Think of a few benefits like less cows have to be raised as we have enough human meat for a few years. Less cows means less methane in the atmosphere (cows fart a lot) less water and grain is needed to feed them so there will be plenty of food available to feed the poor in Africa for example. Once the population there is well fed and healthy they can then be employed and start building infrastructure and stuff so they can become developed nations as well.

There is plenty of other benefits but this proposal is just a rough framework that needs some more details and stuff.

As a pilot country we could choose the US as they have a bit of a history of killing so I believe the population would accept this without too much resistance.

What do you guy's think?

You've managed to roll up Brave New World, Fahrenheit 451, 1984 and Soylent Green all into one brief post. Well done Alex!

Anyhow, as many of the things that seemed so shocking when those books were first published have already come to pass why not this one?

[AlexLah]

What do you guy's think?

Personally I dont like the idea of eating people (especially the ones over 50)

Dogfood maybe?

Yes 12 I think that is from her lecture she did at some Uni. And I was discussing this a bit with my new employer and yes we agreed that it has got to stop somewhere, this race to always cutting more and more costs by laying off people, outsourcing, relocating factories to more and more cheaper labor countries. This is the road to self destruction. But what then, what is needed to get back jobs and stuff?

Some say the banks need to start lending again but they won't, not the same like a few years ago. It is impossible.

So if you guys do not agree with my previous creative destruction plan and also not with my latest human reduction plan, I believe there is not many other options on the table...........

Edit: Thanks Lana, you know I find it incredible that we hear nothing about this issue of how to solve the unemployment (or not much). It's all about the banks banks and more banks. Why not for example bring agriculture closer to cities so there is less KM's involved in the transportation of food. Why not abandon some cities and concentrate production facilities, stuff like that. There is so much waste of space, fuel and many other things.

Edited August 18, 2009 by AlexLah

[12DrinkMore]

And have the banks been saved or more write offs and bad debts still to come in?

Check out the curves based on the latest data from the FED

http://www.calculatedriskblog.com/2009/08/...in-q2-2009.html

Commercial real estate delinquencies (7.91%) are rising rapidly, and are at the highest rate since the early '90s (as delinquency rates declined following the S&L crisis).

Residential real estate (8.84%) and consumer credit card (6.7%) delinquencies are at the highest levels since the Fed started tracking the data (since Q1 '91).

Those curves look almost vertical.... Must be a lagging indicator of the recovery. :D

But at least GS said recently the economy was recovering, but I now believe GS runs it's own private economy anyway

And over in the UK inflation is still ramping ahead, and guess what? The

Rising costs of games and DVDs created a “large” upward effect on the inflation rate in July, the statistics office said.

What a joke! The rate of inflation is one of the main indicators for government policy decisions, so f%cking GAMES and DVDs are going to be the focus of the government's fiscal policy for the next month. WONDERFUL news! But I suppose it all ties in with keeping the population happy; gaming away and watching films. Can't let the price of entertaining the UK sheeple get out of control can we? So obviously games and DVDs must feature strongly in any useful measurement of inflation...

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

[AlexLah]

Well you gotta do something when your unemployed. Does it state somewhere that the sales of these items also went up or are they just following the Asian sales strategy of when it doesn't sell we increase the price.

Anyway here a great article about the Iceland situation and how the (once) great British empire and close neighbor Holland want their money back.

http://www.counterpunch.org/hudson08182009.html

[12DrinkMore]

Edit: Thanks Lana, you know I find it incredible that we hear nothing about this issue of how to solve the unemployment (or not much). It's all about the banks banks and more banks. Why not for example bring agriculture closer to cities so there is less KM's involved in the transportation of food. Why not abandon some cities and concentrate production facilities, stuff like that. There is so much waste of space, fuel and many other things.

But you answered the question already.

It's about the banks.

All the solutions you suggest simply cost money and are involved in nasty polluting production activities, carbon footprints, employing peeps with all the laws against prejudice, race etc. Come on, that's far too much like hard work.

Nope, the ideal solution has been staring us in the face the whole time. How can you create enormous wealth without actually producing anything including pollution? And indeed, the governments are even as we speak working towards this perfect solution. YES! You've guessed it!

We're going to reinflate the housing market and the stock market! We'll all be rich and finally live that 70's dream of early retirement and easy living....

[Abrak]

This will probably be regarded as a rather geeky chart by many but the US Commerce Department publishes annual projections of the US potential (or sustainable) growth rate. It looks like this. We are now trailing behind its potential but not ahead as in 2007.

The most striking thing is that potential real growth has virtually halved over the last 50 years (I believe this is mostly driven by demographics.) You can see also room for recovery is not that great. Potential growth is seen as below 2.5% in real terms.

[AlexLah]

I don't think people will fall for that one again so easy. There is a lot more awareness now but still not enough to force governments to act in the interest of it's people. Also all the money that came from revaluing houses and borrowing more money against it I believe that practice will be over for a long while. With the trend of lower or stagnating wages and higher/more (future) taxes there is less disposable income, so forget it. But I am very interested to see what will turn the economy this time in the US and other parts of the world. There is a lot of bitching going on but I have not seen many sites that offer solutions. Instead many people look at the stock market and think that it is some kind of indicator of the real economy. Again good example of brainwashing. Or price of oil going up, oh must be the economy picking up, the demand and supply saga.

Anyway, I will be at this economic forum they are organizing in BKK this Friday and there are some real interesting topics on the agenda and there are also some break out sessions planned. So I will try to make some kind of summary of it and post it here.

Found this clippie on YT, have a look it is just about one and half minute.

http://www.youtube.com/watch?v=k2IkQ1l6ldM

[AlexLah]

Abrak thanks for the chart but is this GDP just not another scam/bullcrap just like CPI?

What is the value of goods exported and stuff imported.

How much of the GDP is related to the military adventures overseas. You know blowing up bridges with bombs made in the US and then hire US contractors to rebuild those bridges?

It is insane.

[Abrak]

Abrak thanks for the chart but is this GDP just not another scam/bullcrap just like CPI?

What is the value of goods exported and stuff imported.

How much of the GDP is related to the military adventures overseas. You know blowing up bridges with bombs made in the US and then hire US contractors to rebuild those bridges?

It is insane.

Well yes and no.

There are good reasons for thinking that US potential sustainable GDP has declined. (1) is demographics (2) is the peg to the yuan means capital and growth has been exported to another country that is more competitive (3) ROA and ROE have declined so growth from capital must have also (4) obviously you can boost any given GDP figure by borrowing today at the expense of future growth.

The extent of the decline is highly debatable - in my own opinion the US has no natural growth rate at all (hence no real growth ex MEW between 2000-2006.)

I also do think it is interesting that the US Commerce Department at least recognizes this decline.

So the basic concept that actual sustainable growth is very hard to determine I agree with, but the fact that the sustainable growth rate has fallen considerably over the last 30 years is indisputable.

[AlexLah]

Agree, so the question remains, where is the (real) growth going to come from?

What will be done to give those millions of unemployed people a new job?

Where is that plan?

[Abrak]

Agree, so the question remains, where is the (real) growth going to come from?

What will be done to give those millions of unemployed people a new job?

Where is that plan?

Well I will answer your question, I dont think you will like it.

If you looked at last months unemployment figures you would see that the number of long term unemployed increased by over 500,000 or 10% in one month. That is because he is essentially useless - a worker bee at best. 12 million Americans produce as much as 120 million Chinese workers. Who needs some useless worker bee that you have to pay 5x times as much.

So he is simply not going to get a job. Employment needs to increase 15% to restore NAIRU. It is not going to happen.

The whole point of globalization is that you can profit from rendering useless and overpaid labour by equally useless employees who are prepared to be abused at a lower price.

Unfortunately it doesnt aggregate in that then you have to subsidize domestically your worker bees at a price that might be more expensive than employing them in the first place.

Edited August 18, 2009 by Abrak

[AlexLah]

Abrak again I am asking you and others, where are the jobs going to come from in the US.

[lannarebirth]

Abrak again I am asking you and others, where are the jobs going to come from in the US.

If they come, government sector most likely.

[Abrak]

Abrak again I am asking you and others, where are the jobs going to come from in the US.

Many apologies, I obviously wasted 200 words when I could have simply stated 'he isnt.'

[Naam]

What do you guy's think?

most of us think you are a genius Alex!

[AlexLah]

You think I should have asked for a higher salary?

[Naam]

"Our immediate problem is to get our country back on its feet and flourishing -- 'whatever it takes' still makes sense,"

[Naam]

You think I should have asked for a higher salary?

of course you should Alex! and that they are providing an S-class Mercedes without a company paid driver is a shame. the same goes for that house with maid, cook, gardener but no butler. who is folding your shirts and packs them when you are travelling? who is breaking in your new shoes? who refills your hip flask with the finest french cognac when it is half empty? who keeps track of the fine wines in the wine cellar and reorders when the stock is low? who checks whether the iranian caviar the cook bought at the black market is of good quality and fit for your consumption?

renegotiate!

[AlexLah]

Whoooooaaah, I did not know those benefits were all possible to get, thanks for that Naam, it looks good. But I think I will not ask for the Benz, I love my BMW.

Ok will renegotiate.

Who is that guy from your picture by the way?

His statement: whatever it takes. is a bit uuuuuuurrrrrrrrrrr \0/

[Naam]

Whoooooaaah, I did not know those benefits were all possible to get, thanks for that Naam, it looks good. But I think I will not ask for the Benz, I love my BMW. Ok will renegotiate.

Who is that guy from your picture by the way?

His statement: whatever it takes. is a bit uuuuuuurrrrrrrrrrr \0/

that guy is some sort of poor homeless person. he lives in Omaha, Nebraska under a bridge and buys groceries with food stamps. his name is Warren Buffet.

[AlexLah]

Oooooh I think I heard of him, he is some kind of movie star right.

Nevermind, not important.

Anyway I am a bit excited about Abrak. I mean he had all night and perhaps some part of the day to come up with a solution or at least some rough framework. Curious as to what his mind was able to construct.

[Abrak]

Oooooh I think I heard of him, he is some kind of movie star right.

Nevermind, not important.

Anyway I am a bit excited about Abrak. I mean he had all night and perhaps some part of the day to come up with a solution or at least some rough framework. Curious as to what his mind was able to construct.

Obviously my mind may have come up with serious stupid or unconventional thoughts but for the moment it is concentrating on bedding a serious thai beauty. I would be disappointed if you couldnt see the advantage of this approach. (BTW I will not tell you of its success on the same basis that I dont tell you why I invest in certain stocks.)

'Anyway I am a bit excited about Abrak. I mean he had all night and perhaps some part of the day to come up with a solution or at least some rough framework. Curious as to what his mind was able to construct. :)'

I mean Alexlah if you seriously think that my thoughts are summed up in my posts that you simply think I am an idiot why read them in the first place. It makes far more sense to ignore people you think are idiots than take pleasure in the reality. Surely that is a statistical fact.

[AlexLah]

Huh?

Where do I say you are an idiot? I would say it is quit the opposite I think. Good luck with the Thai lady.