Back to Boom and Bust?

[LegendKiller]

Can't form union, company security and state if need be will bust heads. Can't open a biz w/o party saying okay and a few well placed bribes. They steal everything that moves. In fact you don't know what you're talking about.

He's a Schiff and Rogers acolyte. Don't mind the idiocy, they suck at advising their own clients, how do you expect any different from their zealots?

 

[Darwin333]

It has pretty much been proven that in Capitalist systems the economy will go thru a Boom period followed by a Bust, about every 10 to 20 years.
You can see this in the Panic of 1873 and the Panic/Depression of 1893 and the Panic of 1907 and the Great Depression of 1929. The First World War seems to have put off a Panic/Depression by a few years.
http://en.wikipedia.org/wiki/Panic_of_1873
http://en.wikipedia.org/wiki/Panic_of_1893
http://en.wikipedia.org/wiki/Panic_of_1907

If you type Panic of in Wiki you will see whole list of them.

The Busts that occurred every 10-20 years are amazingly similiar to the Great Recession we are currently in. Housing prices collapsing, markets crashing, etc.
Of course since the New Deal we have had a system in place to moderate the Booms and Busts, and it did a pretty good job of keeping the current Recession from becoming a Depression.

When FDR came into office his economic advisors realized that the Boom and Bust was killing the creation and sustainment of a middle class. Most everyone would lose everything every 10-20 years. The very wealthiest would use the Bust to cheaply buy out businesses, and property.

So, the New Deal put into place safeguards to prevent the Busts. One thing that almost always happened to cause a Bust was overheated markets built on credit or speculation.

As each of the Busts occured they were becoming larger as more and more people depended on salaries for income.

Now the Republicans want to disamantle the protections against the Boom and Bust cycles.

Do you think this is a good idea?

Clinton signed the bill that removed the largest safeguard we had. The democrats have not reinstated it and the republicans won't either.

Both sides are in on the fraud and it is very obvious to anyone who is actually looking.

 

[LegendKiller]

Clinton signed the bill that removed the largest safeguard we had. The democrats have not reinstated it and the republicans won't either.

Both sides are in on the fraud and it is very obvious to anyone who is actually looking.

Sorry, but this whole thing wouldn't have happened without leverage. The two biggest things that helped with that were the commodities modernization act and Paulson lobbying Bush to allow far higher leverage.

 

[halik]

It has pretty much been proven that in Capitalist systems the economy will go thru a Boom period followed by a Bust, about every 10 to 20 years.
You can see this in the Panic of 1873 and the Panic/Depression of 1893 and the Panic of 1907 and the Great Depression of 1929. The First World War seems to have put off a Panic/Depression by a few years.
http://en.wikipedia.org/wiki/Panic_of_1873
http://en.wikipedia.org/wiki/Panic_of_1893
http://en.wikipedia.org/wiki/Panic_of_1907

If you type Panic of in Wiki you will see whole list of them.

The Busts that occurred every 10-20 years are amazingly similiar to the Great Recession we are currently in. Housing prices collapsing, markets crashing, etc.
Of course since the New Deal we have had a system in place to moderate the Booms and Busts, and it did a pretty good job of keeping the current Recession from becoming a Depression.

When FDR came into office his economic advisors realized that the Boom and Bust was killing the creation and sustainment of a middle class. Most everyone would lose everything every 10-20 years. The very wealthiest would use the Bust to cheaply buy out businesses, and property.

So, the New Deal put into place safeguards to prevent the Busts. One thing that almost always happened to cause a Bust was overheated markets built on credit or speculation.

As each of the Busts occured they were becoming larger as more and more people depended on salaries for income.

Now the Republicans want to disamantle the protections against the Boom and Bust cycles.

Do you think this is a good idea?

There were credit driven booms and busts every 15 before the FED was created, then the period got quite a bit longer.

Read Kindelberger's Panics, Manias and Crashes - History of financial crisis
http://www.amazon.com/Manias-Panics-Crashes-Financial-Investment/dp/0471389455

 

[halik]

Biggest cause of boom and bust cycle...
http://www.federalreserve.gov/

http://en.wikipedia.org/wiki/Austrian_business_cycle_theory

Only counter to all empirical evince.

Even the original post references panics before the FED was established - how you don't experience any sort of cognitive dissonance is completely beyond me.

 

[halik]

So, we had boom/busts before the Fed and any boom bust after is the Fed's fault?

Fuck, beat me to it. You kids and your CFAs (incidentally finishing the last L1 book tonight )

 

[LegendKiller]

Fuck, beat me to it. You kids and your CFAs (incidentally finishing the last L1 book tonight )

lol. I am getting a bit bored these days. Thinking of applying to NYU and/or Columbia for an MFE. CFA is so 2006....

 

[halik]

lol. I am getting a bit bored these days. Thinking of applying to NYU and/or Columbia for an MFE. CFA is so 2006....

That would be a peculiar combo along with that MBA.

Although CLOs are all the range for institutional money now, so an MFE might be handy if you want some sort of a formal quanty background. We've got a physics doctor, myself and an math phd drop out pricing structured stuff.

Just wait till we start putting all your past work back to you at par, you'll get busy quick

 

[First]

Biggest cause of boom and bust cycle...
http://www.federalreserve.gov/

http://en.wikipedia.org/wiki/Austrian_business_cycle_theory

/facepalm

China is much more economically free these days.

/double facepalm

 

[Docnasty]

Yet China's economy isn't booming at all?

It has less to do with social policy than it does with being in the right place at the right time. China right now is transitioning from a raw materials to commodity goods to technological goods economy. The thing is they're still straddling all three sectors and exporting the shit out of everything they can, bolstering their economy and stealing jobs away from the traditional places (like the US).

The US is so full of itself policing the world and getting fat on the last 100 years of economic superiority that we've lost our way. Right now China simply has a better economic policy and a favorable global economic climate, hence they go boom. In the meantime, us lazy-ass self-entitled Americans can't figure out why we go bust.

Yeah, I'm sure it's great economic policy for the Chinese people when they get paid $40 dollars a week to make our shit while fatass Americans can make $300/week on unemployment. China is a slave labor nation because their currency is manipulated to not be worth shit - central banking FTW.

 

[Docnasty]

/facepalm



/double facepalm

/facepalm

 

[Generator]

Boom and bust, its the only way the American knows how to do it. Americans are barely capitalists, its more so they're greedy fucks. The willful amnesia once entangled in greed will forever be with us.

Listen to this and understand psyche of deranged American greed. http://www.youtube.com/watch?v=EcBs3vYJpqw

 

[LegendKiller]

Boom and bust, its the only way the American knows how to do it. Americans are barely capitalists, its more so they're greedy fucks. The willful amnesia once entangled in greed will forever be with us.

Listen to this and understand psyche of deranged American greed. http://www.youtube.com/watch?v=EcBs3vYJpqw

It's the way humans know how to do it. Simple psychology.

 

[bamacre]

So, we had boom/busts before the Fed and any boom bust after is the Fed's fault?

There were definitely big booms/busts before the Fed, that's because the gov't was doing the Fed's job before the Fed. The power to print money out of thin air, it's just so damn tempting.

 

[bamacre]

Can't form union, company security and state if need be will bust heads. Can't open a biz w/o party saying okay and a few well placed bribes. They steal everything that moves. In fact you don't know what you're talking about.

LOL, I didn't say they were a capitalist's wet dream. I mere pointed out they are more economically free than before. That's not debatable.

 

[LegendKiller]

There were definitely big booms/busts before the Fed, that's because the gov't was doing the Fed's job before the Fed. The power to print money out of thin air, it's just so damn tempting.

Ahhh, yes, the Austrian's temptation. Blame everything on the government/Fed and not realize that humans (individual investors) are the ones who cause bubbles.

Libertopians...lol.

 

[LegendKiller]

LOL, I didn't say they were a capitalist's wet dream. I mere pointed out they are more economically free than before. That's not debatable.

What. The. Fuck.

They are not economically more free. The government controls all facets of the economy, utterly. The communist party says lend, banks lend. The communist party tells the military, which runs all of the factories, to make shit, they make shit.

It's a command economy you fucking dolt.

The only "free" part of it is the relative lack of consumer protection regulation. This is why things like the melamine or poison paint issues exist there more than anywhere. It's also why there is far more pollution.

But, of course, that's your wet dream.

 

[bamacre]

Ahhh, yes, the Austrian's temptation. Blame everything on the government/Fed and not realize that humans (individual investors) are the ones who cause bubbles.

Libertopians...lol.

No, it's you who can't see the forest from the trees. What you are referring to is called malinvestment, caused by false market signals, caused by the expansion of credit and money supply.

 

[bamacre]

What. The. Fuck.

They are not economically more free. The government controls all facets of the economy, utterly. The communist party says lend, banks lend. The communist party tells the military, which runs all of the factories, to make shit, they make shit.

It's a command economy you fucking dolt.

The only "free" part of it is the relative lack of consumer protection regulation. This is why things like the melamine or poison paint issues exist there more than anywhere. It's also why there is far more pollution.

But, of course, that's your wet dream.

Sigh. Would you like to post more straw men? Or rather you could go back and re-read my posts and try harder at understanding them.

 

[halik]

There were definitely big booms/busts before the Fed, that's because the gov't was doing the Fed's job before the Fed. The power to print money out of thin air, it's just so damn tempting.

And you're completely pulling the above from your ass, right? We were on your favorite gold standard that whole time.

There were credit bubbles, some global and some local, every 15 years in the 1800s until the FED was established.

 

[matt0611]

No, it's you who can't see the forest from the trees. What you are referring to is called malinvestment, caused by false market signals, caused by the expansion of credit and money supply.

This. The government prints money, lowers interest rates (turn that dial baby) and wonders why things blow up. :biggrin:
Oh wait, no, its greed, yeah, thats it.

 

[halik]

No, it's you who can't see the forest from the trees. What you are referring to is called malinvestment, caused by false market signals, caused by the expansion of credit and money supply.

Malinvestment is a result of unusually low market price for risk, which expends credit supply and the reflexive dynamics when it comes to lending into a bubble (balance sheet expanding, because the value of the collateral is expanding).

The flip side happened in 08, where corporate debt spreads blew out due to the price of risk (sharpe ratio ), while we saw very few actual defaults. It's the human outlook or sentiment that has much higher voilatility than the actual economic risk of default. We see this both in our proprietary research and the R&D that we pay $1.5M/yr to Moody's


Honestly I don't expect you to understand any o the above and I love that people with absolutely no background in economics or finance are drawn to the Austrian crackpottery. It makes things so simple - market is perfect and government is bad. You do some sort of IT role for living, right?

Either way, compare residential RE prices between US and Canada while having central banks with virtually identical target rates. If you don't see this reality disproves the "fed created the bubble" bullshit, you really must be limited in the cognitive area.

Also I'm still waiting for the Wiemar republic hyperinflation you were screaming about 2 years back.

<- works on a team that manages $60B

 

[bamacre]

And you're completely pulling the above from your ass, right? We were on your favorite gold standard that whole time. There were credit bubbles, some global and some local, every 15 years in the 1800s until the FED was established.

Not a good one, they were still increasing the money supply. A gold standard isn't going to work with a fractional reserve banking system. Governments have a terrible track record for "managing" money.

 

[halik]

Not a good one, they were still increasing the money supply. A gold standard isn't going to work with a fractional reserve banking system. Governments have a terrible track record for "managing" money.

Again instead of youtube videos, pick up a copy of this:
http://www.amazon.com/Manias-Panics-.../dp/0471467146

It's got a recommendation on the cover by Paul Samuelson

 

[bamacre]

Malinvestment is a result of unusually low market price for risk, which expends credit supply and the reflexive dynamics when it comes to lending into a bubble (balance sheet expanding, because the value of the collateral is expanding).

The flip side happened in 08, where corporate debt spreads blew out due to the price of risk (sharpe ratio ), while we saw very few actual defaults. It's the human outlook or sentiment that has much higher voilatility than the actual economic risk of default. We see this both in out proprietary research and the R&D that we pay $1.5M/yr to Moody's


Honestly I don't expect you to understand any o the above and I love that people with absolutely no background in economics or finance are drawn to the Austrian crackpottery. It makes things so simple - market is perfect and government is bad. You do some sort of IT role for living, right?

Either way, compare residential RE prices between US and Canada while having central banks with virtually identical target rates. If you don't see this reality disproves the "fed created the bubble" bullshit, you really must be limited in the cognitive area.

<- works on a team that manages $60B

Yeah, arguing economics with folks like you and LegendKiller is like arguing foreign policy with someone who works in the military industrial complex. I'm not going to change your minds. You have 60 billion reasons why I'm wrong.

Canada's financial sector is much smaller than our own, and much better regulated. And before someone concludes that's an endorsement of financial regulations, let me elaborate. It is, in the sense that if government allows these institutions to run wild with easy credit, then yes, by all means regulate them. But even then, you're dealing with the symptoms rather than the actual disease. And when they fail, damn, let them fail. Bailing out LTCM was a huge mistake, and Bernanke, Mr. "Deflation will never happen on my watch" didn't help either.