So how are you going to vote today?

[Vic]

Originally posted by: LegendKiller

Originally posted by: Vic

Originally posted by: LegendKiller

Originally posted by: Vic
This whole thing is really off-topic to the thread, but the boom of the 20's was actually supported by some solid fundamentals. It was an era of technological advance unprecedented in history. American went from horse-driven outhouse-using farm folks to car-driving radio-listening city dwellers almost overnight. The sudden prosperity put lots of money in the hands of people who had never had it before, didn't know what to do with it, and then did poorly with it, and bad monetary policy from newly-created Fed didn't help one bit.

Amazingly, they said exactly the same thing in 1999. "Old fundamentals don't work, this is the information age!".

Pfft. Fundamentals are just that, fundamental. They rarely changed and are a good measure of the foundations of finance. When a 100+ year average is at 8% or so and in 5 years you return 30% or so, thats a bubble, no matter how you cut it. New, old, aged, nubed, all fundamentals showed that it was hogwash.

It's the exhuberence that causes the boom-and-bust. The fundamentals of advancing technology causing increased productivity are still in effect. Yes, the radio boom of the 20s busted, but look at the media today! Yes, the dot-com boom of the 90s busted, but look at the internet today! That is not hogwash.

I have never disputed the progress that was made, perhaps you misread my posts. I have merely stated that the economy is, yet again, based upon a bubble. Much like 1929, 1989, 1999, that bubble will, and is, bursting.

The 1929 crash can happen again and it was not the fault of the Fed. Considering what I said is grounded in reality and most of it can't be repeated in the stock market (FDIC, SEC, 1934 securities act...etc). However, much of it can be repeated elsewhere, such as the mortgage industry. If immature Fed practices were the cause of the 29 crash and the great depression, then why didn't we have one 30 years ago when the Fed still carried out such practices? Taking both times in isolation, rate shocks do not cause depressions. Massive asset inflation and leveraging do.

30 years ago, we all but did. Those were tough times. The difference IMO was the intangible known as confidence.

 

[LegendKiller]

Originally posted by: Vic

Originally posted by: LegendKiller

Originally posted by: Vic

Originally posted by: LegendKiller

Originally posted by: Vic
This whole thing is really off-topic to the thread, but the boom of the 20's was actually supported by some solid fundamentals. It was an era of technological advance unprecedented in history. American went from horse-driven outhouse-using farm folks to car-driving radio-listening city dwellers almost overnight. The sudden prosperity put lots of money in the hands of people who had never had it before, didn't know what to do with it, and then did poorly with it, and bad monetary policy from newly-created Fed didn't help one bit.

Amazingly, they said exactly the same thing in 1999. "Old fundamentals don't work, this is the information age!".

Pfft. Fundamentals are just that, fundamental. They rarely changed and are a good measure of the foundations of finance. When a 100+ year average is at 8% or so and in 5 years you return 30% or so, thats a bubble, no matter how you cut it. New, old, aged, nubed, all fundamentals showed that it was hogwash.

It's the exhuberence that causes the boom-and-bust. The fundamentals of advancing technology causing increased productivity are still in effect. Yes, the radio boom of the 20s busted, but look at the media today! Yes, the dot-com boom of the 90s busted, but look at the internet today! That is not hogwash.

I have never disputed the progress that was made, perhaps you misread my posts. I have merely stated that the economy is, yet again, based upon a bubble. Much like 1929, 1989, 1999, that bubble will, and is, bursting.

The 1929 crash can happen again and it was not the fault of the Fed. Considering what I said is grounded in reality and most of it can't be repeated in the stock market (FDIC, SEC, 1934 securities act...etc). However, much of it can be repeated elsewhere, such as the mortgage industry. If immature Fed practices were the cause of the 29 crash and the great depression, then why didn't we have one 30 years ago when the Fed still carried out such practices? Taking both times in isolation, rate shocks do not cause depressions. Massive asset inflation and leveraging do.

30 years ago, we all but did. Those were tough times. The difference IMO was the intangible known as confidence.

I certainly agree with that. Once banks started dropping like flies in '29, people lost all confidence. If there is one thing that a capitalist market needs more than money, shares, bonds, or deposits, it's confidence. Once that is lost, the whole system collapses.

 

[SP33Demon]

Looks like the majority of people here in P&N voted for Dem Nationally, not surprising!

 

[Fingolfin269]

Originally posted by: SP33Demon
Looks like the majority of people here in P&N voted for Dem Nationally, not surprising!

If you saw the alternative in TN you would understand...

 

[HombrePequeno]

Originally posted by: LegendKiller

Originally posted by: Vic

Originally posted by: LegendKiller

Originally posted by: Vic
This whole thing is really off-topic to the thread, but the boom of the 20's was actually supported by some solid fundamentals. It was an era of technological advance unprecedented in history. American went from horse-driven outhouse-using farm folks to car-driving radio-listening city dwellers almost overnight. The sudden prosperity put lots of money in the hands of people who had never had it before, didn't know what to do with it, and then did poorly with it, and bad monetary policy from newly-created Fed didn't help one bit.

Amazingly, they said exactly the same thing in 1999. "Old fundamentals don't work, this is the information age!".

Pfft. Fundamentals are just that, fundamental. They rarely changed and are a good measure of the foundations of finance. When a 100+ year average is at 8% or so and in 5 years you return 30% or so, thats a bubble, no matter how you cut it. New, old, aged, nubed, all fundamentals showed that it was hogwash.

It's the exhuberence that causes the boom-and-bust. The fundamentals of advancing technology causing increased productivity are still in effect. Yes, the radio boom of the 20s busted, but look at the media today! Yes, the dot-com boom of the 90s busted, but look at the internet today! That is not hogwash.

I have never disputed the progress that was made, perhaps you misread my posts. I have merely stated that the economy is, yet again, based upon a bubble. Much like 1929, 1989, 1999, that bubble will, and is, bursting.

The 1929 crash can happen again and it was not the fault of the Fed. Considering what I said is grounded in reality and most of it can't be repeated in the stock market (FDIC, SEC, 1934 securities act...etc). However, much of it can be repeated elsewhere, such as the mortgage industry. If immature Fed practices were the cause of the 29 crash and the great depression, then why didn't we have one 30 years ago when the Fed still carried out such practices? Taking both times in isolation, rate shocks do not cause depressions. Massive asset inflation and leveraging do.

What the Fed was shooting for in the late '20s and what the Fed was going for in the late '70s were completely different. In the late 1920s it was the Fed's job to keep us on the Gold Standard. It didn't matter if doing so caused massive unemployment and deflation. Anyways, I agree that the stock market in the late '20s was a bubble but I don't think all the easy money floating around was the cause of the Depression.

The Fed's policy in the 1970s was to shoot for full employment, the outcome of which was stagflation. Milton Friedman predicted that happening a decade earlier.

I'll agree with you: rate shocks by themselves do not cause depressions. But multiple rate shocks coupled with a central bank that fails to act as a lender of last resort sure points us very closely in that direction. I wouldn't even completely blame the Fed for the Great Depression. The Gold Standard was also largely responsible. You can look at several countries and see that as soon as each country relieved themselves of the burden that is the Gold Standard, their economies started to improve. Countries that weren't on the Gold Standard didn't even participate in the Great Depression. That's not to say their economies were spectacular during that period but they weren't in a state of depression.

Yes, a 1929 crash could happen again but I very much that it would cause a depression. Housing prices are slowing down and in some places even reversing. I would be much more worried about fvck ups by the government like our large debt and SS and Medicare/Medicaid liabilities.

 

[shadow9d9]

Originally posted by: LegendKiller

Originally posted by: Rapier

Originally posted by: LegendKiller

Originally posted by: Rapier

Originally posted by: Aisengard
So you'd rather have today's proven terrible Republican party rather than a party who the last time they could affect change was in 2002. Makes sense...

So all change is good, huh. How terrible are things?

1. The stock market is dancing around an all time high,
2. Economy is good,
3. Unemployment is low, etc.

I'm old enough to remember 1980 when Jimmy Carter was leaving office...

1. Stock market doesn't mean squat. All that is happening is irrational exuberance and asset flight from housing to the stock market, driving prices up. P/E ratios are rediculously high and do not reflect fundamentals.

2. The economy is not good. Last time I checked, even the most optimistic numbers erased 30%+ from GDP in the next year as housing continues to slide. This of course, was only housing, but not including the debt spending and equity cash-out the average American has been utilizing to pay for plasmas and new cars. According to most expert estimates, GDP would be in negative territory had this equity cash-out not taken place.

As housing continues to tank, many who utilized equity that was a ghost, paper tiger, or a mirage, will be flipped on mortgages as they become more house-poor, further contracting the economy.

3. Low unemployment isn't spectacular. All it means is that more money is chasing fewer people, resulting in above-normal wages, which causes inflation. Furthermore, as housing and the ancillary markets are affected, this number should go down quite a bit.

The economy of today is no more real than 2000. Both ignored fundamentals, both were based upon irrational exuberance, both ignored potential down-times. What makes this one even worse is that it is not based upon asset sales and realized gains, but based upon leverage, unrealized gains, and mortgages that can reprice.

The last time a broker gave somebody a 1% 300,000 loan with 10% collateral was in 1929. Look what happened there. Now that's what has happened as we have allowed lenders to shrug off oversight.


All of this could have been prevented by moderate talk from the President. However, moderation doesn't win elections or keep your poll numbers up, it makes people wary, something a sitting President doesn't want. Furthermore, "monkey see monkey do" is a perfect analogy, people see him spending like there is no tommorrow so they do the same.

I am voting straight democrat. 6 years ago, when I voted for Bush I would *NEVER* have thought I would do this. Fool me once, shame on you, fool me twice shame on me

(not even the baboon got that one right)

Classic Democrat Response, thanks!! Negitivity and Fear-Mongering ..Doom and Gloom. I'm really surprised you admitted that you voted for bush in 2000 (or was that just a ploy to give your statement some semblance of credibilty?)

I can't say I was around in '29, but most economic experts would agree that the global financial network is far too interwoven these days for depression like in 1929 to ever occur again.

I remember you dems shouting depression-is-a-coming over the huge credit card balances people were carrying in the '80' & 90's. Or course that never happened either. Doom and Gloom ..the sky is falling.

What, no comment on Carter? Lets talk about a dems poster boy here. Everybody wants change ..change is always good, huh. Wiki 1979 - 80 and read about the: economy, double digit inflation, interest rates in the upper teens, housing market hitting bottom and a president that was too wussy to deal with the hositage fiasco in Iran.

1. I am not a Democrat, I only vote it since anything in office now is more liberal than any democrat in the last 20 years. True Republicans are gone, small government, fiscal discipline, and isolationism are dead. 50% greater debt, personal debt at an all-time high, and stupidity is abound. This has nothing to do with "gloom and doom" nor a Democrat response. My job *IS* in the credit area, capital markets related. My whole education (except a psych undergrad) is finance. I work for a top10 bank and securitization and I analyze stocks in my spare time. I also teach finance to undergrads part time, so yeah, you can stick that ignorant pigeonholing response down your pipe and smoke it.

2. I did vote for Bush in 2000, because he promised to revive the economy, be ****FISCALLY RESPONSABLE***** and be moderate in his agenda. 9/11 changed all of that, he became (or always was) a spendster with no domestic agenda and a fearmongering chickenhawk unilateral international agenda.

3. 1929 can happen again and it has nothing to do with the interconnectedness of the global economy. 1989 it got pretty dang close and was only stopped by the speed bumps in the trading systems and increased margin requirements. Irrational exuberance seen in 1929 and prior (tulip bulbs) is still abound. Just take a look at the housing thread I post in.

4. America owes 700 BILLION dollars in credit cards. Even adjusted for inflation, that number is 3x higher than *ANY* number in history. Most of that is funded by secondary marketed bonds (securitization) sold to investors, many of whom are international. Added to that, we owe *MUCH* more in secured debt than any time in history.

Compound that with the fact that most of that borrowing was secured by inflated housing which is now crashing.

My comparison to '29 was to highlight that back then, people would borrow on margin a few hundred dollars to buy stocks, which almost collapsed the country. Now, we are handing people 300,000 with low credit, low rates, and either 10% or 0% down and letting them gamble that they can pay *AND* the house will appreciate.

5. Inflation hit double digit due to, yet again, irrational exuberance in the market (albeit a bit less) and the fact that monetary policy set by the fed was stupid. Massive rate shocks and going off of the normal standard combined with the energy shocks created massive problems, all of which had nothing to do with Carter per se.

You can tout your King/President all you want and how great he is. You can *CLAIM* that the economy is awesome. However, borrowing from the present is only a tax on future revenue. You are taking income from the future and bringing it to today. Thus, tomorrow you will have to pay for it.

We already have sovereign debt that went from 6T to 9T. We have an economy that is leveraged to death and is about to tank (borrowed time), and we are stuck in a quagmire war where the President was too wussy to deal with it properly (or not at all).

Reality sucks, get used to it because your choices are going to end up hurting everybody.

Well said.