Turmoil in financial markets, FED cuts 3/4 in emergency move

[Onkel Neal]

Well, things on the economic front are getting interesting. US is slipping into recession, and world markets react with large losses. Today the Fed cut federal fund rates by 3/4 a percent and may follow with another cut at the next meeting. We're going down and we're taking you with us! :lol: The media certainly loves to employ colorful terms to describe this mess; panic, free fall, bloodbath, fear...

http://online.wsj.com/article/SB120100837976106391.html?mod=special_coverage (http://online.wsj.com/article/SB120100837976106391.html?mod=special_coverage)


http://www.cnn.com/video/#/video/business/2008/01/22/market.meltdown.roundtable.cnn (http://www.cnn.com/video/#/video/business/2008/01/22/market.meltdown.roundtable.cnn)

http://www.foxbusiness.com/markets/article/fed-slices-rate-075-possible-sign-panic_445564_2.html (http://www.foxbusiness.com/markets/article/fed-slices-rate-075-possible-sign-panic_445564_2.html)

http://www.cnn.com/2008/BUSINESS/01/22/markets.plunge.asia/index.html (http://www.cnn.com/2008/BUSINESS/01/22/markets.plunge.asia/index.html)

[sonar732]

With having a family of 5, I'm looking forward to seeing what the president and congress come up with regarding their economic stimulus plan.

SHOW ME THE MONEY!!

[XabbaRus]

Well from everything I have been reading this shouldn't be happening. The US govt knows the situation, Bush signed of on a package of measures the other day which should do some good, but it seems the investment market has assumed it won't happen which it has, ignored it and sold off.

So I say buy some stocks sit tight and things will be better in a couple of months.

[JSLTIGER]

I liked the CNN graphic this morning that read "Market Meltdown." Puh-leaze... it's pretty minor right now, especially if you want to compare it to the likes of the Great Depression.

[AVGWarhawk]

This was a long time coming. No matter, Bush will give out $700.00 checks to everyone and all will be well:roll:.

[SUBMAN1]

Hmm. Might be a good time to buy some preperty to those who might be interested. Cheap rates! You might make a boatload if you hang on to it for a few years at little expense to yourself! :D

-S

[STEED]

According to our great leader http://www.langkawi.dk/midis/181.gif Gordon Brown we are in the green and looking good to ward of any recession.

So people of Great Britain stand by for a cut in the interest rates and spend your money like crazy, just like you did under Tony Blair.

BTW if you go in the red make sure it's over £75,000 and your debt will be a write off.

[GlobalExplorer]

Worldwide growth rates of 2-10% every year .. this cannot go on forever. If judas brought his 30 silver coins to the bank and received 5% interest rate, after 2000 years he would own 7,17 e+43 or
7173306613840656827838347127298700000000000 coins. I think this way mathematics can invalidate the concept of constant growth (that the current system is based upon). It could mean that a big crash is necessary from time to time, maybe roughly every 100 years.

I don't think this is the big crash, but there are signs that it might come in the next decades.

[SUBMAN1]

Worldwide growth rates of 2-10% every year .. this cannot go on forever. If judas brought his 30 silver coins to the bank and received 5% interest rate, after 2000 years he would own 7,17 e+43 or
7173306613840656827838347127298700000000000 coins. I think this way mathematics can invalidate the concept of constant growth (that the current system is based upon).I don't agree. You forgot to factor in inflation, which would rise at a faster rate considering everyone invested like that. Problem is, only a few invest like that, so inflation need not rise to accomidate. This invalidates your mathmatics.

-S

[August]

So you're saying that 30 pieces of silver just doesn't buy what it used to? :p

[SUBMAN1]

So you're saying that 30 pieces of silver just doesn't buy what it used to? :pYeah - back in the day, you could get a house for that.

-S

[GlobalExplorer]

So you're saying that 30 pieces of silver just doesn't buy what it used to? :pYeah - back in the day, you could get a house for that.

-S

Inflation or no inflation, do you know of a house that costs 7173306613840656827838347127298700000000000 silver coins?

[SUBMAN1]

So you're saying that 30 pieces of silver just doesn't buy what it used to? :pYeah - back in the day, you could get a house for that.

-S
Inflation or no inflation, do you know of a house that costs 7173306613840656827838347127298700000000000 silver coins?The value of a silver coin from back then is much different than now, as well as economic markets since that type of interest doesn't work. Metal prices will be where your 30 silver pieces hit a brick wall. This is of course going to hold a different value based on a collector of the period of course.

Anyway, lets analyze a single dollar if it existed in that period. This is a more accurate assesment of where you would be since it is a current currency. If you were to take a single dollar from that period, and compare it to now, your mathmatics would work out to it being worth about the same at around 5% interest. It actually would be worth a bit more, but basically, its value falls off the scope of my calculator. I will find a bigger calculator since its value is near non existant anymore. To be continued.....

Need to find something that will take 2 to the power of 100 to be able to calculate this.

-S

[mookiemookie]

Dow fell 128 today. Not a "meltdown". The best advice I ever got from a money manager I used to work for was that the financial media is trying to sell headlines as much as anyone else, and if it bleeds, it leads. It's never as bad as they say it is and it's never as good as they make it out to be.

I'm not sure what the Fed is thinking on this one. It's certainly going to put their backs against the wall on Tuesday. Some of our traders are hearing rumblings of another 25 bp cut tomorrow and then another on Tuesday. It'll certainly be interesting to watch.

Financial armageddon? No, don't be silly. Recession and panic? Most likely. But remember, the sun will come up tomorrow, kids. :know:

[GlobalExplorer]

So you're saying that 30 pieces of silver just doesn't buy what it used to? :pYeah - back in the day, you could get a house for that.

-S
Inflation or no inflation, do you know of a house that costs 7173306613840656827838347127298700000000000 silver coins?
The value of a silver coin from back then is much different than now, as well as economic markets since that type of interest doesn't work. Metal prices will be where your 30 silver pieces hit a brick wall. This is of course going to hold a different value based on a collector of the period of course.

Anyway, lets analyze a single dollar if it existed in that period. This is a more accurate assesment of where you would be since it is a current currency. If you were to take a single dollar from that period, and compare it to now, your mathmatics would work out to it being worth about the same at around 5% interest. It actually would be worth a bit more, but basically, its value falls off the scope of my calculator. I will find a bigger calculator since its value is near non existant anymore. To be continued.....

Need to find something that will take 2 to the power of 100 to be able to calculate this.

-S


Windows calc.exe can do these calculations if you switch to "Scientific".

For instance, to calculate the said interest rate of 5% for 2000 years you only take 1.05 to the power of 2000 and multiply with the amount you had at the start. If you want to calculate backwards you of course need a logarithm, something I don't want to rack my head with at this hour

Anyway, you correctly point out that my calculation is theoretic and naive, but it still cannot be passed over, because even if the result is wrong with a magnitude of 100 it is still astronomic figure.

[Skybird]

The Fed'S cut of interest rates is only trying to hide the sympt0m, but does not go fpor curing the cause. So, those 0.75% is not of lasting importance at all. what must be done is first to stop printing dollars like crazy, and second cure the ill finances of america and get the budget as well as the trade balance right again. And both will not happen soon since it would mean to give up some global privileges one got used to, and to admit that the economical "developement" of the past years was just on tick. No "patriotic" politician will easily dare to say that, fearing that he will be called a pessimist and a weakling. that's why the mortage crisis will be intentionally and knowingly given much more time to unfold it's negative consequences on more and wider sectors of the american finances and economy, and global finance markets as well.

I expect a certain solid consolidation of the financial turmoils not before second half of this year, and first American and then global economy running by a state of recession, which then again will enflame the finacial troubles again in the forseeable future. Unemployement went already up by 0.5%, which many economists agree to be a reliable indicator for a recession unfolding.

Don't buy stocks, guys - better earn your money in an honest and respectable way! ;)

If america really wants to do the global economy a favour, it needs to fix it deepley rotten state finances, baölance it's trade deficits, stop pushing inflation, and fighting globalisation instead of exporting it's jobs into "offworld" nations. What we see now, gentlemen, is the logical conseqeunce of a.) too easy credits which enabled Americans to spend more than they could afford, and b.) the globalisation which was once pushed and propagated by america itself. If this can be stopped and reversed, is qauestionable, because the economic keyplayers are no longer attached to nations, but act independantly and internationally now, avoiding the legislation and responsibility towards nations that once has brought them up. they are no longer linked to one or a few nations, but now have established themselves as a second entitity beside nations and their international orgnaisations, independant from nations and their national control mechanism. Such corporations are able to keep states and governments in dependence and thus make policies in favouir of themselves, and absuing nation'S and people'S interests. that is nothing you should complain about, if you argue in favour of a capitalistic order - capitalistic economies do not know nationalistic sentiments. This tred was forseeable, and should and could have been known in advance, when the term "globalization" was started to be propagated. Instead, those warning of these things were called pessimists, and were laughed about. Today, nobody laughs anymore. So, we are just sufferign the consequences of our own misdeeds, and we suffer them well-deserved.

Several dozen billion dollars have already been annihilated in the past 8 weeks. Several hundred billions more will follow in the next 6 months. Switch on the money printing machines will not do any good, just make things worse by pushing inflation even more. While there will be a superficial calming of financial markets in the next weeks, and while one also must see that today's troubles were also a needed correction of the hyped stock markets in Asia and especially china, the principle problems of america affecting all the globe's economy remain. It is here were one has to start with the major efforts to adress things, and it is crucial to do so, because as I see it we are walking on the borderline of probably the gbreatest recession since the crisis of 1929. such corrections wil affect americans, yes. But they will also affect citizens around the globe, and their nation's economies. Economical growth as we have seen it in the imminent past will pause for a longer time to come - with all the social and communal conseqeunces coming from this.

[Ducimus]

I have a feeling more "tax breaks" are forthcoming from Junior. Yeah, like thats going to help. :roll: Lame.

[Stealth Hunter]

I'm giving it 3 more months. If we get on the very edge of total failure, screw this. I'm going to Germany until things pick up (my brother, Massut, lives there; I'll stay with him in Berlin).

[GlobalExplorer]

I'm giving it 3 more months. If we get on the very edge of total failure, screw this. I'm going to Germany until things pick up (my brother, Massut, lives there; I'll stay with him in Berlin).

Yeah it's a nice town and we can put up refugee camps over here when they are all coming ;)

[JSLTIGER]

I'm giving it 3 more months. If we get on the very edge of total failure, screw this. I'm going to Germany until things pick up (my brother, Massut, lives there; I'll stay with him in Berlin).
Yeah it's a nice town and we can put up refugee camps over here when they are all coming ;)

Just keep in mind that if the US economy collapses, the rest of the world will follow shortly...that's the nature of globalization...

[Skybird]

I'm giving it 3 more months. If we get on the very edge of total failure, screw this. I'm going to Germany until things pick up (my brother, Massut, lives there; I'll stay with him in Berlin).
Yeah it's a nice town and we can put up refugee camps over here when they are all coming ;)

Just keep in mind that if the US economy collapses, the rest of the world will follow shortly...that's the nature of globalization...
Yes. Why do you think china and europe are so angry about America not fixing it's problems, instead continuin to live on tic? It is our money you are pulverizing, and it is our economies you pull into the abyss along with you.

So far many people thought the great crisis would come when China starts to abandon it's dollar reserves (what they alrerady have started in silence). That they would abandon their dollar reserves because there is a crisis and they do not see why they should be expected to accept the loss of hundreds of billions of dollars in value - is a relatively new thought. In Germany we are so far now that the American crisis again starts to effect our employment rates, and tax expectations and growth rates get reduced for this year as a conseqeunce from the turmoils.

I don't know if this is the beginning of the great crisis that I am expecting since two or three year to come sooner or later, but I understand that it is a crisis that will stay with us for a longer time to come. If somebody thinks "just three more months and then we are through", he better starts thinking twice. Even when the markets stabilize a bit in the imminent future (and they will), it does not mean that it is over: the basic problems so far are almost totally untouched.

Also this: http://www.spiegel.de/international/business/0,1518,druck-530416,00.html


But it's also becoming clear serious trouble is brewing in Europe's own backyard. From rising labor costs in Germany, to precarious housing markets in Spain, to a painful credit crunch in Britain: "There's a serious weakening of the European economy...going on, independent of what's happening in the US," says Laurent Bilke, a London economist at Lehman Brothers.

Ominous signs are everywhere. The euro zone inflation rate hit a six-year high of 3.1 percent in December, and German unions are negotiating hefty wage increases that could send it still higher. After a prolonged property boom, Britain is now struggling with its own version of the US subprime crisis. "Exactly the same [kinds of] mortgages were sold to British investors, and that will start to hurt the financial-service sector," says Ian Harnett, managing director for European strategy at Absolute Strategy Research in London.

Old World corporate earnings look set to slide, too. Goldman Sachs is forecasting profits at European companies will drop 5.5 percent this year as they struggle with inflation, tight credit, and the strength of the euro, which cuts deeply into the competitiveness of European exports.


Financial troubles in the US have exacerbated these problems. The subprime crisis has clobbered Europe's financial sector, with banks such as Switzerland's UBS and Britain's Barclays and Royal Bank of Scotland taking huge writedowns in recent months The US also has allowed the euro to rise relentlessly against the dollar -- and the Fed's rate cut could fuel an additional rise. Every 10 percent rise in the euro's value against the dollar knocks 3 percent off euro zone corporate earnings growth, Goldman Sachs estimates.

[Skybird]

Morgan Stanley's Steven Roach:


Will the Fed rate cut work?

Posted by: Stephen Roach, Chairman, Morgan Stanley Asia
Timing is everything, I guess. No sooner had I arrived in Davos, when my Blackberry started chirping with alarms over an emergency 75 basis point Fed rate cut (http://www.ft.com/cms/s/af07c6ac-c8bb-11dc-b14b-0000779fd2ac.html). No new news on the state of the US economy was evident. The only breaking development was a swoon in global equity markets that was likely to be reflected in the form of a similar plunge in the US. And so the Fed jumped into action. Borrowing a page from the market-friendly script of the Greenspan Fed, Bernanke & Co. offered up a market-friendly action of its own.
Will it work? That’s undoubtedly the question that will be hotly debated this year in Davos – a question that I certainly plan to tackle at the opening session on the global economy tomorrow (Wednesday) morning.
The answer lies in the unique character of this recession. There are two triggers - a bursting of the US house price bubble and a bursting of the credit bubble. I do not believe that aggressive Fed rate cuts will resolve the extreme imbalance between supply and demand in the US property market that will be pushing housing prices lower for some time. Nor do I believe that recent Fed actions will restore the functioning of credit markets to their pre-crisis state. As a result, pressures are likely to remain intense on housing - and credit-dependent US consumers - a sector that accounts for a record 72% of US real GDP.
In essence, the Fed is "pushing on a string" here - unable to stop the recessionary dynamic now unfolding. But there will be consequences in the next recovery. Unfortunately, the US central bank can’t seem to break out of the market-friendly trap it fell into nearly a decade ago Panicking over the possibility that yet another bubble is bursting, the Fed is once again injecting liquidity into an asset-dependent US economy. That won't arrest the recessionary dynamic now unfolding but it could well set the stage for the next asset bubble in America's bubble-prone economy. Have we learned anything from the mess of the past seven years?


01/22/2008
worth some readers' comments:
http://blogs.ft.com/davosblog/2008/01/will-the-fed-ra.html

Agreed, that guy is not liked for having a reputation of being a pessimist. But what is pessimism for some, is realism for others. I myself do not read him often in German press, but when I do, I have learned it is worthy to listen closely. He is right - damn often.

And while we are at this guy, and since globalisation has a lot to do with your economic problems, this, from the same site:


Dcoupling or globalisation - but not both (http://blogs.ft.com/davosblog/2008/01/decoupling-or-g.html)

Posted by: Stephen Roach, Chairman, Morgan Stanley Asia
Dreams of decoupling danced in the air on this first official day of meetings at Davos. Decoupling, of course, is the latest macro fad - a scenario where the world no longer sneezes when the US catches a cold. The decoupling enthusiasts were out in full force at the kick-off session on the global economy on Wednesday morning. As a long-standing panelist in this session - with the exception of last year, when only optimists were invited - I didn’t offer much support for this view.
My case is relatively simple. Developing Asia - where the growth dynamic is the strongest and the hopes of resilience are the deepest - remains very much an externally-dependent economy. For the region as a whole, exports hit a record high of 46% of GDP in 2007 - more than double the 19% share of 1980. At the same time, private consumption fell to a record low of 48% of pan-regional GDP in 2007 - down sharply from the 66% reading in 1980. If the fast growing economies of East Asia were truly decoupled, these trends would be the opposite - exports would be falling and domestic consumption would be rising.
The decoupling crowd also dreams of alternative sources of global consumption arising from Asia’s two new giants - China and India - that would be more than sufficient to offset a shortfall in US consumption. Don’t count on it. The US consumed over $9.5 trillion in 2007 - fully six times the combined consumption totals for China ($1 trillion) and India ($650 billion). It would be almost mathematically impossible for "Chindia" to fill the void that is likely to be left by a consolidation of the American consumer. For externally-led Developing Asia, the proverbial sneeze in the face of a US cold is more likely than not. Maybe that’s what the recent sharp correction in Asian equity markets is all about.
In the Q & A part of the session, howls of protest came from representatives of Latin America, Central Europe, and even Asia. The European decoupling advocates accosted me in the halls outside the session. Yet globalization, long the mantra of Davos, is all about increased integration of the global economy through trade and capital flows. As I said to one of the more hopeful: "You either believe in decoupling or globalization - but not both."

[mookiemookie]

The subprime debacle is working its way through the system. I've always believed that situations like this, the bankruptcy of Orange County in 1994, Enron in 2001/2002, et. al. need to happen in order to reform things. In the wake of these events come increased accountability, oversight and regulation that ultimately make the system stronger. It's the nature of the financial markets to find a loophole and exploit it...it's endemic and will never change as it owes much to human nature. But as I said, it serves to highlight the weaknesses in the system so that they can be addressed.

The dollar is what it is. Just a few short years ago there was much hand wringing about the strength of it. Now the worm has turned. And you can thank the mahoosive deficit spending that Bush has initiated for that. It's an elementary economic fact: a budget deficit will lead to downward pressure on a country's currency. It's neither sudden nor unexpected. I think we'll see a rebound in the dollar when the budget is balanced and we reign in spending. Almost certainly not going to happen under this administration, but it will happen.

China has a vested interest in the dollar. Not just because the yuan is pegged to it, but because we are one of their largest export markets. If they enact a mass dumping of their dollar reserves, it will be cutting off their nose to spite their face as their exporters will be the ones to feel the pain. I seriously doubt that they'd be willing to take that sort of hit to their GDP in order to prove a point or declare economic war. They have their wagon hitched to us just as much as are hitched to them. When you hear of Chinese officials grumbling about dumping dollar reserves, take it with a grain of salt. Many of the ones making these comments are in no position to set China's monetary or reserve policy.

[Skybird]

I think we'll see a rebound in the dollar when the budget is balanced and we reign in spending.
Budget balanced? Today they announce the latest budget - with a deficit of 250 billion, after 163 billion last year. And Bush already wanted another additional 140 or 150 billion for suspicious tactics to fuel economic growth - this money even is not included in the deficit so far.

Not to mention the state's debts of over 9 TRILLION.

[mookiemookie]

I think we'll see a rebound in the dollar when the budget is balanced and we reign in spending. Budget balanced? Today they announce the latest budget - with a deficit of 250 billion, after 163 billion last year. And Bush already wanted another additional 140 or 150 billion for suspicious tactics to fuel economic growth - this money even is not included in the deficit so far.

Not to mention the state's debts of over 9 TRILLION.

I never said it would be easy. ;) We had a balanced budget before Georgy boy took office....it can be done.

[SUBMAN1]

...Don't buy stocks, guys - better earn your money in an honest and respectable way! ;)....Dumbest idea I've heard out of you yet.

Analyze your mutual funds. You will find some dating back through the Great Depression and still averaged 13% to 14%.

I can see that you will live your life a poor man forever, based on your philosophy's and ideas. One day, maybe you will wake up out of your doom and gloom mindset.

-S

PS. Saving money the old fashioned way as you describe is the path of the poor. Just a little clue for you. :know:

[Peto]

Definition of Economic Stimulous Package: Something US Politicos create months after realizing the need for it.

They're trying to close the barn door but many of the cattle (the smart ones) are already grazing in another pasture. And the rest of the herd is hitting the exit at a run. It'll take more than a gaggle of beurocrats to shut this door.

Economic Stimulus "checks" won't be in the mail until June "at the earliest" (IRS quote). And if everybody got a 1000 bucks, they'd spend it and it would be gone. That "might" help the economy--for about 1 month.

To fix the problem, it is necessary to get to the root of it--devaluation of the dollar and looking outside our borders for an inflow of cash o bail out our eroding banking institutions. Outside currency may float the bank for a while but it ultimately serves to further devalue the dollar and destabalize our economic structure. It's a means of selling the rights of your home loan to a foreign investor.

The financial track we (and I mean all of us) are on is a spiral heading down.

I'd like to blame all of this on GW but the current problems are more the result of social and cultural behaviors. Society has gravitated toward "instant gratification". If you want it and can't afford it then charge it. It'd be cool to own my own home so I'll sign that floating interest rate loan and worry about what it means as I meet foreclosure. With the average household credit card debt being so high and always rising, it was just a matter of time before the rug slipped out from beneath us.

Living on credit means you are dependant that your lender can remain financialy solvent. When those institutions slide, they sell off their debt to another entity. Each step in the cycle takes more control away from you being able to do anything about it. Demands for payment increase causing further stress on an already tremulous situation. And it all spins down to a growing percentage of people who can't pay their bills which forces financial insitutions to more desperate measures to stay solvent. Round and Round. And each time around it sinks a bit further.

Spending trillions on unnecessary war that was supposed to be paid for by somebody else' oil revenue hasn't done much to help the situation. The inept handling of the US economy in the last few years has served very well to polish our economic frailties and push us closer to the edge of the cliff. There is a tipping point between recession and depression. Don't think it can't happen again.

History does repeat itself.

[SUBMAN1]

Yawn. Sliding dollar is good in my book. Fixes many problems in the US.

All economic signs are stable, so most of this is hyped up media BS.

Housing market is at a foreclosure rate of what? 0.5% increase out of all loans? More media hyped up BS.

I guess all this sells papers.

I do agree that Ben Bernenke is an idiot as a Fed Chairman since he is not only as predictable as he is reactionary. Greenspan was a genius by comparison and totally pro-active. Bernenkes reactionary and predictable style allows wall street to predict what he is going to do, and expect him to bail them out when they screw up. Greenspan forced them to stand on their own two feet.

Anyway, all the above except for Bernenke will have no affect on the economy. Bernenke however is where you might see a disaster start. He has the capability to cause a recession or worse based on poor performance.

-S

[Peto]

Yawn. Sliding dollar is good in my book. Fixes many problems in the US.

All economic signs are stable, so most of this is hyped up media BS.

-S

Dreamer.

This said by a person who said that 3500 killed soldiors is great and a drop in the bucket. And then didn't have the balls to retract even a part of your statement.

Join the human race and I may think of you as something above the bigot you appear to be.

EDIT: However, I will agree with you that Greenspan was a Genius. He also has said we're heading for serious economic problems.

[JSLTIGER]

A weak US$ can be very dangerous...

[SUBMAN1]

Dreamer.

This said by a person who said that 3500 killed soldiors is great and a drop in the bucket. And then didn't have the balls to retract even a part of your statement.

Join the human race and I may think of you as something above the bigot you appear to be.

EDIT: However, I will agree with you that Greenspan was a Genius. He also has said we're heading for serious economic problems.Get the hell off your high horse. Your only counterpoint is to point is an unrelated statistic? Intelligence level with you seems to be lacking.

And yes, for a war, only 3500 killed is unbelievable. That is nothing compared to any other conflict in history. THis has nothing to do with the dead themselves - that is a great tradgedy, but a minor one compared to any other point in history itself.

Your pathetic, and an idiot.

-S

[GlobalExplorer]

Yes. Why do you think china and europe are so angry about America not fixing it's problems, instead continuin to live on tic? It is our money you are pulverizing, and it is our economies you pull into the abyss along with you.

This is really not their problem. If Germany and China are living so much from their US exports, we should only be thankful that the Americans seem to like our products. Instead of blaming them we have to do something on our own.

[GlobalExplorer]

And yes, for a war, only 3500 killed is unbelievable. That is nothing compared to any other conflict in history. THis has nothing to do with the dead themselves - that is a great tradgedy, but a minor one compared to any other point in history itself.

Your pathetic, and an idiot.

-S

Surely you'd say it's a gross overstatement of the p.c. and communist media that 500.000 upwards Iraqis have been killed as well? Death is a small price to pay for enduring freedom.

You make me sick. Sitting on your sofa feeling entitled to belittle the death of hundred thousands for your foolish ideas. It's not that hard to understand why Peto dislikes you.

[Peto]

Get the hell off your high horse. Your only counterpoint is to point is an unrelated statistic? Intelligence level with you seems to be lacking.



Not sure about what statistic you're referring to as I didn't put any out there. Maybe it's about Greenspan though.

http://www.nytimes.com/2007/09/17/business/17greenspan.html



And yes, for a war, only 3500 killed is unbelievable. That is nothing compared to any other conflict in history. THis has nothing to do with the dead themselves - that is a great tradgedy, but a minor one compared to any other point in history itself.

I don't disagree with that statement. In fact--I agree with it. History will reveal whether or not their deaths were necessary or if their sacrifice helped improve the world.



Your pathetic, and an idiot.

-S

Fair enough ;). I took a shot at you I should expect you to return fire :hmm: .

And I've been called worse :yep:.

[Zayphod]

[quote=GlobalExplorer][quote=SUBMAN1][quote=August]
Need to find something that will take 2 to the power of 100 to be able to calculate this.
-S

Try using an Excel spreadsheet. I don't think that even a Windows calculator will go out that far.

[Skybird]

...Don't buy stocks, guys - better earn your money in an honest and respectable way! ;)....Dumbest idea I've heard out of you yet.

Analyze your mutual funds. You will find some dating back through the Great Depression and still averaged 13% to 14%.

I can see that you will live your life a poor man forever, based on your philosophy's and ideas. One day, maybe you will wake up out of your doom and gloom mindset.

-S

Don't need clues, I'm happy - without stocks and without getting guilty of exploiting my next. The system simply stinks, and that cannot be changed. For materialists and consuming capitalists, this of course is no obstacle that gives their conscience any worries. Pure capitalism does not know conscience, or other non-material implications. It only knows greed for more.



PS. Saving money the old fashioned way as you describe is the path of the poor. Just a little clue for you. :know:

And what is the old-fashioned way that according to you I should have described? :hmm:

If an apple costs one thaler, and you have three apples: how many apples can you buy? You can make it very complicated a calculation and write complete libraries about it, you can make debts and live on tic and call that your wealth, you can spend more than you can earn, and write numbers on notes that have no value, and you can certainly consume everything for yourself and leave nothing for others, or future generations, and the mess you leave behind you can leave for those who survive your own death and need to adapt to the mess you created. sure, you can do that, it is jungle's law. See where it has led the world to. See the mess your nation's and the whole West's finances are.

will you ever pay back your debts on federal, state and communal level? Those famous 9 trillion? You know the answer as well as I do : it will never happen. You even do not care. You call the status quo the wealth of your nation, for you benefit from it not being changed. I call it life on tic. But in an economic computer sim, this would be called the "unlimited money" cheat, or the "God mode". I played Sim City like that, caused it did not hurt anyone. In reality, it is something different with that thing of "not hurting anyone".

what is clever on small, private scale, cannot be that wrong on greater scale. I hardly if ever use a credit card (why should I?), and do not spend mor emoney than I have. that I can expect to have more money available in the future does not chnage the fact that I have not avaiulable the money right now. so I am careful with my spending. That way I may not have a golden ring on my finger and a golden clock around my wrist - but I also have no debts, and nobody being able to point finger at me. And that is a much better feeling than just a golden ring and a golden clock! ;)

[Skybird]

Yes. Why do you think china and europe are so angry about America not fixing it's problems, instead continuin to live on tic? It is our money you are pulverizing, and it is our economies you pull into the abyss along with you.

This is really not their problem. If Germany and China are living so much from their US exports, we should only be thankful that the Americans seem to like our products. Instead of blaming them we have to do something on our own.
It is not exports I was poiunting at. It is international funds and ridiculous sums of money being soaked up by america - and dissappearing there. And some mo nths ago somebody was posting that China should be penalised and declared war on if they ever dare to no longer following that system and abandoning the dollar in order to avoid loosing billions themselves. that certainly makes a lot of sense: first causing somebody billions in losses by economic laissez-faire policies that constantly degreded the trade bilance and exported jobs, and then complaing and threatening war if that somebody dares to protest about his losses.

But I agree that Japan and Germany are very fragile economies due to their heavy dependency on exports. china is something different. They are self-supporting and in all vital production areas they are autark. They must not export, but they do since it raises their soft power, and gives them the luxury of additonal finances. their monumental dollar reserve and the threat it poses to the US is obvious evidence for the efficiency of a strategy aiming at "soft power".

[malkuth74]

Breaking News Stock market up 300 points today. The recession is over!!!:rotfl:

Seriously if you guys would send me 1 dollar for everytime the dumb media tried to scare you (and they do a good job) I would be a billionare!! :rock:

The only thing huring america is the oil prices. And eventually the market will fix that.

[Peto]

Breaking News Stock market up 300 points today. The recession is over!!!:rotfl:

Seriously if you guys would send me 1 dollar for everytime the dumb media tried to scare you (and they do a good job) I would be a billionare!! :rock:

The only thing huring america is the oil prices. And eventually the market will fix that.

I'll give you a point for that comment about sending you a dollar :lol:! But you won't get my dollar! I'm not scared of the financial turmoils because I don't have enough money to be scared about. What "concerns ;)" me most this time is even GW is taking action. I suppose it could be an attempt on his part to control the media since nothing else has worked out for him :hmm:.

[malkuth74]

Breaking News Stock market up 300 points today. The recession is over!!!:rotfl:

Seriously if you guys would send me 1 dollar for everytime the dumb media tried to scare you (and they do a good job) I would be a billionare!! :rock:

The only thing huring america is the oil prices. And eventually the market will fix that.
I'll give you a point for that comment about sending you a dollar :lol:! But you won't get my dollar! I'm not scared of the financial turmoils because I don't have enough money to be scared about. What "concerns ;)" me most this time is even GW is taking action. I suppose it could be an attempt on his part to control the media since nothing else has worked out for him :hmm:.

Well, if he would leave the market alone it might settle itself. Instead they lowered the interest rate (which if you think about it is what caused the Housing Market problem in the first place, whith people buying Low Vairable rate homes that they could not otherwise afford at the normal rate). And it will also lower the dollar yet again. Sooner that nut gets out the better. Starting to think that we should have 4 year term limits instead of 8. Its pretty ovious that no sane man can take that job for 8 years.

They will also send us maybe 800 bucks. Which is nothing considering if I get it during the winter its going to fill the oil tank for heat. Or it will pay off dept. Which brings me back to original point. If oil prices did not almost triple in 5 years like they did we would not be in this mess.

[Skybird]

Some people's awareness span seems to be stuck at 8 hours. Mind you that none of the basic problems causing the mess of the past months is solved - not a single one.

[August]

Need to find something that will take 2 to the power of 100 to be able to calculate this.
-S
Try using an Excel spreadsheet. I don't think that even a Windows calculator will go out that far.

I didn't say that. Please be extra careful when making multiple quotes

[August]

It is not exports I was poiunting at. It is international funds and ridiculous sums of money being soaked up by america - and dissappearing there. And some mo nths ago somebody was posting that China should be penalised and declared war on if they ever dare to no longer following that system and abandoning the dollar in order to avoid loosing billions themselves. that certainly makes a lot of sense: first causing somebody billions in losses by economic laissez-faire policies that constantly degreded the trade bilance and exported jobs, and then complaing and threatening war if that somebody dares to protest about his losses.

Somehow I doubt the person who said that had anything at all to do with "laissez-faire" policies, but then again you knew that right?

Strawman argument.

[Stealth Hunter]

I'm giving it 3 more months. If we get on the very edge of total failure, screw this. I'm going to Germany until things pick up (my brother, Massut, lives there; I'll stay with him in Berlin).
Yeah it's a nice town and we can put up refugee camps over here when they are all coming ;)

Just keep in mind that if the US economy collapses, the rest of the world will follow shortly...that's the nature of globalization...

Then I'll go with my father-in-law to Tehran.

[Yahoshua]

If I were you people I'd be more worried about a mass panic among the populace.

Recalling how the Great Depression actually came about was by panic-mongering and the people's overreaction actually caused the stock market to crash. While buying stocks and bonds are all great and wonderful, it'd be worthwhile to also keep some more flexible currency with you; namely gold.

Gold is an undisputed trading standard for the world market and while it may lose some value in a market crash (or gain value, I'm not sure), it is guaranteed to be worth SOMETHING more than a piece of green cotton-paper.

[Peto]

If I were you people I'd be more worried about a mass panic among the populace.

Recalling how the Great Depression actually came about was by panic-mongering and the people's overreaction actually caused the stock market to crash. While buying stocks and bonds are all great and wonderful, it'd be worthwhile to also keep some more flexible currency with you; namely gold.

Gold is an undisputed trading standard for the world market and while it may lose some value in a market crash (or gain value, I'm not sure), it is guaranteed to be worth SOMETHING more than a piece of green cotton-paper.

Yep. You're spot on Yahoshua. And the roller-coaster ride the stock market has been on lately only serves to exacerbate those fears. Or perhaps is more a sign that they already are following more of an emotional track than a pragmatic one.

As for the gold, I was losing sleep because it made my matress too lumpy ;). Or maybe I couldn't afford it in the first place :hmm:.

[sonar732]

Well, here's the latest from CNN (http://www.cnn.com/2008/POLITICS/01/24/economic.stimulus/index.html)on the tax rebates. $300 extra per child, $600 for individual's, $1200 for families. Granted, the democrats had to give up the increased food stamps and unemployed benefits to be continued, but got the money to go to anyone who pays Social Security taxes.

[STEED]

Panic over the stock markets are back up, happy days are here again. :D

[Skybird]

Gold is an undisputed trading standard for the world market and while it may lose some value in a market crash (or gain value, I'm not sure), it is guaranteed to be worth SOMETHING more than a piece of green cotton-paper.
Totally agree. That'S why my small emergency reserve is some real gold for sure, not just buying options, or other "papers". Paper is cheap, but gold weighs heavy.

[SUBMAN1]

Don't need clues, I'm happy - without stocks and without getting guilty of exploiting my next. The system simply stinks, and that cannot be changed. For materialists and consuming capitalists, this of course is no obstacle that gives their conscience any worries. Pure capitalism does not know conscience, or other non-material implications. It only knows greed for more.Nothing wrong with it. You have three choices in life, invest and make money, or borrow and lose money, or save and lose money. The people starving in Germany during its massive inflation in the past were of your mindset.


And what is the old-fashioned way that according to you I should have described? Saving. Saving is a losing proposition since you don't keep up with inflation. Investing however gives cash infusions to your infrastrusture, resulting in increased output and profits which then is given back to you in increased wealth. SImple logic.

If an apple costs one thaler, and you have three apples: how many apples can you buy? You can make it very complicated a calculation and write complete libraries about it, you can make debts and live on tic and call that your wealth, you can spend more than you can earn, and write numbers on notes that have no value, and you can certainly consume everything for yourself and leave nothing for others, or future generations, and the mess you leave behind you can leave for those who survive your own death and need to adapt to the mess you created. sure, you can do that, it is jungle's law. See where it has led the world to. See the mess your nation's and the whole West's finances are.Hahahaha! No mess is left. That is a pretty funny response though. Not quite sure you know where you were going with it because it fails to give anyone a point.

will you ever pay back your debts on federal, state and communal level? Those famous 9 trillion? You know the answer as well as I do : it will never happen. You even do not care. You call the status quo the wealth of your nation, for you benefit from it not being changed. I call it life on tic. But in an economic computer sim, this would be called the "unlimited money" cheat, or the "God mode". I played Sim City like that, caused it did not hurt anyone. In reality, it is something different with that thing of "not hurting anyone". Sim CIty is your economic background? Why am I even talking to you on the subject? Our National debt is not a problem like you make it out to be, if you understand anything about economics. In 40 years, it will only be worth 5 cents on the dollar - a much easier sum to pay back, but you wouldn't know that because Sim City does not teach this to you. I've tried to tell you this point several times now, but you still don't get it I see.

what is clever on small, private scale, cannot be that wrong on greater scale. I hardly if ever use a credit card (why should I?), and do not spend mor emoney than I have. that I can expect to have more money available in the future does not chnage the fact that I have not avaiulable the money right now. so I am careful with my spending. That way I may not have a golden ring on my finger and a golden clock around my wrist - but I also have no debts, and nobody being able to point finger at me. And that is a much better feeling than just a golden ring and a golden clock! ;)As I said, not investing and what you save will dwindle to nothing. This is how we pay our National debt - its a rollercoaster that is purely a downhill proposition - and it will take you with it - what you save that is. WHomever told you to save your pennies should have their head checked. Prior to the 1940's, this may have worked, but it does not work in todays world. Invest, or you will become increasingly poor. That is your future.

-S

[Skybird]

Needless to point out that i am not impressed at all. And after the next 1929-style recession has come and passed, let's see who is better off - you with your 5000 dollars previously being spent for then worthless investement papers (an imoral practice anyway, always), or me with previously having spent my 5000 dollars in solid gold coins.

I just need to ask my grandparents to know the answer. Oh, I forgot - I did years ago. They said that gold served them better.

If you want to earn honest money, work yourself, Subman, or lease your services for a rent. That way you must not feel like a rogue! Maybe you will not make ten million that way, but when you die , that money will not be of use for you anyway. But the state of your conscience will.

What you see as the strength of our economic system - constant speeding-up, constant movement - others see as the source of troubles and the constant detoriation of life quality. It's only a logical consequence that stock exchange markets seem to have turned into casinos, then. And we all know who is winning in casinos - and that usually is not the players. And when the roulette wheel turns to fast, first you get dizzy, and then it breaks.

[SUBMAN1]

Needless to point out that i am not impressed at all. And after the next 1929-style recession has come and passed, let's see who is better off - you with your 5000 dollars previously being spent for then worthless investement papers (an imoral practice anyway, always), or me with previously having spent my 5000 dollars in solid gold coins.

I just need to ask my grandparents to know the answer. Oh, I forgot - I did years ago. They said that gold served them better.

If you want to earn honest money, work yourself, Subman, or lease your services for a rent. That way you must not feel like a rogue! Maybe you will not make ten million that way, but when you die , that money will not be of use for you anyway. But the state of your conscience will.

What you see as the strength of our economic system - constant speeding-up, constant movement - others see as the source of troubles and the constant detoriation of life quality. It's only a logical consequence that stock exchange markets seem to have turned into casinos, then. And we all know who is winning in casinos - and that usually is not the players. And when the roulette wheel turns to fast, first you get dizzy, and then it breaks.
Gold is a form of investment, though not a good one. It has roller-coaster rides that makes the stock market look flat. Its average is around 4% return too - barely keeping up with inflation.

Suit yourself, but I really think you should be helping out your country by investing in its companies. It will make your country stronger, and you will make money off it in the longrun.

A little thing you seem to forget - these investors do not have to invest..... Nor do they have to invest in their own country....

What you propose however is a dark ages if every thinked like you. Good thing they don't.

-S

[Skybird]

You don't buy gold to invest. You buy gold to install a reserve for times of emergency. In economical critical times, the gold price goes up. In times of inlation - the gold price goes up. In ntimkes of war - the gold price goes up. Currently, the gold price is at a record height. Demand in real metal cannot be satisfied. But if you buy options for gold only, you just buy worthless paper. at least paper that will be worthless if the fiancial system collapses. Better by real gold, for that simple reason. It's not an investement. It is a reserve.

Else, it goes up and down, yes, but in case of a crash gold is more worth than any printed paper. In the past 500 years, european nations saw repeated times when their finacial system totally broke down and the state finances were FUBAR, almost always excessive military spending and exhausting wars with their galloping costs were the cause for it - and exactly the same trend, the very same trend you see in the US today - state finances messed up, high debts, high inflation - but still excessive military spending. Austria-hungary saw that. Spain. France. Sweden. Italy. The german kingdoms. To some degree even Britain, before the financial "revolutions" during the napoleonic wars. They all have been there, they all suffered the same fate. Examples enough by which to learn not to make the same mistakes once again. But no... fools today think they are something better - and step into the same trap. It's the same kind of fools like over the past centuries.

Gold/jewelry and land property were the only values that had a value indeed in the following times of rebooting the nation, and reorganizing the economy and the tax system. but often the nation needed to reboot in even greater dependency from creditors, and/or banks. The Spanish'S and Habsburger's relation to the Dutch traders is a good example.

Obviously, the present has not learned anything from the past, although this mistake has been made over and over and over again - always with the same miserable outcome.

Man does not learn. Man clings to bad habits. Must be some rotten Gen. Just always calculate with man being unable to resist the temptation of quick and easy wealth - and your calculation will never faill. :cry:

[SUBMAN1]

Yep - fairly convinced that you will never get it.

Here is your roller coaster - Its been this high before, and it will be that low again. CHew on it. Then buy yourself a good mutual fund instead. Much more reliable. I forgot to mention - that $850 price in 1975 would be worth close to $3500 in todays dollars. $800 a ounce is nothing. Hasn't gained any value in years.

-S


http://www.lewrockwell.com/thornton/18chart3.gif

[Skybird]

Your graph ends 2000. Gold just some days ago hit the 900-mark.

And the way the graph tries to make a projection is ridiculous, btw. Don't tell me you take such nonsense serious!

I hold a small reserve in gold, so you can rest assured that I take care of what's happening. In can expect a better monthly income in the future, and will spend even more ressources into stockpiling some real metal then, as a reserve. If possible I will wait for a slightly better time to buy, though.

[SUBMAN1]

Your graph ends 2000. Gold just some days ago hit the 900-mark.

And the way the graph tries to make a projection is ridiculous, btw. Don't tell me you take such nonsense serious!

I hold a small reserve in gold, so you can rest assured that I take care of what's happening. In can expect a better monthly income in the future, and will spend even more ressources into stockpiling some real metal then, as a reserve. If possible I will wait for a slightly better time to buy, though.Try 2004 that is where the chart ends. You could have made a quick buck if you bought in 2003. Now it is a waste of time.

The graph show that if you held on to your gold for 30 years, you would have taken a massive loss. It is an accurate yearly gold price.

At 900 an ounce, it is just barely more worth than it was at $400 an ounce in 1995. Pathetic. It is hardly keeping up with the times.

-S

[SUBMAN1]

Just so you have numbers to compare here - $400 between 1995 to present. Gold went from $400 to $900 since 1995. If you found yourself a decent Mutual fund at 14% for the same period for your $400 and didn't touch it, your money would be worth about $2,200 in the same period.

This means I would outperform you by $1,100 to your $0 in the same period.

Gold is pathetic.

-S

[Skybird]

Just so you have numbers to compare here - $400 between 1995 to present. Gold went from $400 to $900 since 1995. If you found yourself a decent Mutual fund at 14% for the same period for your $400 and didn't touch it, your money would be worth about $2,200 in the same period.

This means I would outperform you by $1,100 to your $0 in the same period.

Gold is pathetic.

-S
Read again what I said on "reserve for emergnecy", and "investement". when your econmic sytem or the fiannce markets seriously collapses, you eventually will get one pound of butter for your hundred thoiusand buck investements and shares. but gold in such times always had remained some considerable value - more than printed money or shares.

Investements are a gamble, and a lot of private investors have lost more money in the recent two months than they have won in the past ten years. More than 200 billion dollars have been vaporized, disappeared, vanished, are gone, are lost. Several hundred billion more will follow in the next six months. Banks are still hesitent to admit to what degree they are affected by having lost billions and dozens of billions by investing in foul US credits, hoping for cheap and quiock profits. There will be many more confessions in the months to come, and shocking losses. Yes, stock markets are fun and are exciting, invest, people, invest into the ride of your life! If you are ruined at the end, never mind - at least you had some fun.

And i also made ethical arguments in the past, and indicated them shortly here again. If you demand a company to pay you a regular reward for nothign else than to lend a certain ammount of money, and then workers there must work all their life just to mplease their "owner", then this is not good or right or just or fair. It is parasitic behavior, and a modern interpretation and hiding strategy of slavery-like dependency.

and in the modern present, it is even worse: hedge fonds, amongst other investement fonds, mercylessly ruin healthy companies by making them to pick up credits even if they are not needed, take the income from these as profit, and then sell the whole company, leaving behind a once healthy company that now is a ruin and must be compensated by foreign taxes. This has become an pandemic plague worldwide. Also, investment fonds specialise in buying debt contracts from banks were a houseowner for example has signed a credit contract over let's say 20 years, and then demand him to pay back the leased money immediately instead paying back in rates over the remaining let's say 15 years. Many people cannot do that (that's why the took a credit...), and loose their house and /or company, with enormous and ruinous consequences from which families often never recover, and a total loss of past investements anyway. Again, this has become a major plague - and we are even just at the beginning. In germany, currently 60 such finds are operating. around 450 plan to become active soon, and 2000 others are slowly rallying at the starting line.

no concern for you. Most important is that you get your investement profits althoug not moving the smallest finger for it and do not any work yourself - yu let others work for you, and they must even pay for that priilege. Manna from heaven, that's how you see it. Sucking blood and leave the corpus behind - that's how i see it.

In Islam, such business methods are simply forbidden: no interest deals. One of the extremely rare opportunities when I agree with Islam on something. If going into it en detail I could argue that you also will not get support for such business from Jesus' or buddha's teachings. but for capitalistic materialists rejecting any non-material value, that is no concern, of course.

In two finance conferences last year, it were the US in both cases that prevented any international control and cutting back of hedge fonds, and prvented any counter c ontrol to this criminal, unethical, inhumane practices. Becasue the vast amjority of such investement banks - come from america, and so the system means damage for others, and profits for the US. No matter how the profit gets raised.

Quick profit, no matter at what cost, no matter how m peopple pay for it with their existence. - That is so stinking poor.

[Skybird]

You could have made a quick buck if you bought in 2003.

A quick buck. Exactly that is the mental problem here. "Quick buck".

You do not buy gold to make a quick buck. You buy gold to form an emergency reserve that does not suffer that dearly from breakdowns of the finacial system, inflation, or economic collapse or war.

Yes, I made a little profit from my gold reserve, if you think that is why I sell it know, you are wrong. That is not the goal of this exercise. It is about a reserve being present when i desperately need it. Shares at the stockmarket cannot give me that confidence - if it becomes dramatic, they could become worthless over night.

Profit-yearning and quick bucks - it is like a nasty virus including man's mind, infesting his brain and starting to eat there, until nothing is left than an empty hole, and all brain is gone.

Stability and reasonably economizing would be enough. And mabye modern life would not be ever accelerating, and not be so hectic and headless.

[SUBMAN1]

Let me put it this way, the type of collaspse you speak of means no more BMW, Mercedes, VW, Nothing! Your bag of gold will be worth about the same as my stocks - nothing since you will not be able to 'BUY' my bread or butter no matter how much gold you have! I'm am gonna eat it. In the end, you will have a shiney trinket that won't do a damn thing to feed you.

In the meantime, I will have enough to eat if that were to ever happen since I can afford to buy it now.

As I said - you still don't get it.

-S

[August]

You do not buy gold to make a quick buck. You buy gold to form an emergency reserve that does not suffer that dearly from breakdowns of the finacial system, inflation, or economic collapse or war.

........

Shares at the stockmarket cannot give me that confidence - if it becomes dramatic, they could become worthless over night.

I have to agree with this. A stock, bond or even paper money have no intrinsic value. Neither does gold for that matter, but it does have a proven ability to retain its value in spite of economic and social upheaval. Land is the same way although it's rather more difficult to hide.

Can your mutual funds do that Subman?

[Yahoshua]

Just having mutual funds doesn't mean you'll have a reliable cash source to depend on. When the stock market suddenly began crashing on Black Tuesday, all the banks closed their transactions and the people were unable to withdraw funds. When transactions resumed again the money was already worthless. I still remember photographs of people burning money to start their log stoves during the great depression.

That isn't to say that gold will not be just as dangerous a commodity to trade in. After all, that dictator Roosevelt banned the ownership of gold from the populace with Executive Order 6102.

[August]

That isn't to say that gold will not be just as dangerous a commodity to trade in. After all, that dictator Roosevelt banned the ownership of gold from the populace with Executive Order 6102.
"Dictator" Roosevelt? Kinda harsh don't you think?

In any case it's not like they just took the gold, an equivalent amount of money was exchanged for it.

Also, unless the government intends to do a house to house search there is nothing that would stop someone from secreting it away until it is needed. One would think if in the future we were so bankrupt that all of Subs mutual funds were worthless the power of the Federal government to prevent local bartering in privately held gold reserves (and other precious metals) would be severely limited.

[Skybird]

I read this essay by george Soros in German, searched for the English orginal text, and found it here:

http://boards.fool.com/Message.asp?mid=26308964

Amazing for me to read someone who is an insider himself, and sees the same longtime changes in the system like I do in my opinion. Outsider that I am i nevertheless cannot be so wrong with my reasoning, I think. :)

The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.

However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.

Boom-bust processes usually revolve around credit and always involve a bias or misconception. This is usually a failure to recognise a reflexive, circular connection between the willingness to lend and the value of the collateral. Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available. A bubble starts when people buy houses in the expectation that they can refinance their mortgages at a profit. The recent US housing boom is a case in point. The 60-year super-boom is a more complicated case.

Every time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy. That created a system of asymmetric incentives also known as moral hazard, which encouraged ever greater credit expansion. The system was so successful that people came to believe in what former US president Ronald Reagan called the magic of the marketplace and I call market fundamentalism. Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves. Nevertheless, market fundamentalism emerged as the dominant ideology in the 1980s, when financial markets started to become globalised and the US started to run a current account deficit.

Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced. The US current account deficit reached 6.2 per cent of gross national product in 2006. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.

The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.

Everything that could go wrong did. What started with subprime mortgages spread to all collateralised debt obligations, endangered municipal and mortgage insurance and reinsurance companies and threatened to unravel the multi-trillion-dollar credit default swap market. Investment banks’ commitments to leveraged buyouts became liabilities. Market-neutral hedge funds turned out not to be market-neutral and had to be unwound. The asset-backed commercial paper market came to a standstill and the special investment vehicles set up by banks to get mortgages off their balance sheets could no longer get outside financing. The final blow came when interbank lending, which is at the heart of the financial system, was disrupted because banks had to husband their resources and could not trust their counterparties. The central banks had to inject an unprecedented amount of money and extend credit on an unprecedented range of securities to a broader range of institutions than ever before. That made the crisis more severe than any since the second world war.

Credit expansion must now be followed by a period of contraction, because some of the new credit instruments and practices are unsound and unsustainable. The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves. Until recently, investors were hoping that the US Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realise that the Fed may no longer be in a position to do so. With oil, food and other commodities firm, and the renminbi appreciating somewhat faster, the Fed also has to worry about inflation. If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an end.

Although a recession in the developed world is now more or less inevitable, China, India and some of the oil-producing countries are in a very strong countertrend. So, the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.

The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse"

Needless to point out how very much I agree with the man. Although his mentioning of "resulting political tensions" in the last sentence is an understatement indeed. There will be wars, that's it.

George Soros is multi-billionaire, insider of the stock markets, and often is described as an america-hurting liberal by conservatives, and a cheating investement-banker and arch-capitalist by liberals. He was sentenced once for unallowed insider-deals, avoided legal stockmarket supervision by according company foundings, founded several investement banks and accordings offices, and in recent years gained attention for expressing doubts on the capitalist system, saying that it now has become a greater threat to "free market" than communism ever was. One could say that in his old days he has become a capitalist with a conscience. He propagates a free open gloabl society, and directly funds oppostions in easteuropean countries, as well as many civil rights movement organisations.

Since some time I am following his writings here:

http://www.project-syndicate.org/search?page=1;languageid=1;search_string=George%20 Soros;submit=submit;rm=search

[Yahoshua]

"Dictator" Roosevelt? Kinda harsh don't you think?.....In any case it's not like they just took the gold, an equivalent amount of money was exchanged for it.


http://i202.photobucket.com/albums/aa306/apollo8353/government.jpg

Not at all.



Banning the posession of a commodity that would very much keep food on the table for your family, forcing you to sell it to the government, and then devaluing that piece of paper by at least 40% is not consistent with actions in a free society, it is directly akin to a dictatorship. And yes, the governmen would storm your house in a Gestapo-style raid and take your gold if they knew you were in posession of "inordinate amounts" of gold. It wasn't until the 1980s' that gold became legal for the common citizen to own in large quantities again.


(link to photo of woman burning her money) http://en.wikipedia.org/wiki/Image:Inflation-1923.jpg

Doesn't that fact just make your head spin? It does for me. http://i86.photobucket.com/albums/k84/yahoshua/thfunth_1539.gif

Secondly, the man wasn't all that great when it came to human and civil rights. He interned hundreds of thousands of German, Italian, and Japanese-Americans in prison camps solely for the fact that they were born of parents from those nations. Gee wasn't the FBI and the OSS supposed to do the task of finding spies? (Oh, well I guess we'll just lock 'em all up until the war is over because it's easier for us to violate their constitutional rights than it is for us to do our job.)

Oh and I shouldn't forget to mention that while FDR was ecstatic to Admit English children into the U.S. during the london bombings, but I guess Jews just weren't for his taste ala SS St. Louis in 1939.

And contrary to popular opinion, Roosevelts' "New Deals" didn't help much at all, and I believe that his "New Deals" actually prolonged the depression. He raised taxes and expanded the welfare state and of all things created a program that was based on an already failed pogram in Germany (here it comes): SOCIAL SECURITY. How do you expect those programs he enacted to pay for themselves and create more jobs? Certainly not by bond drives, nope, no way. He'll just force the Supreme court to make his programs "constitutional" by threatening to expand SCOTUS by up to 15 judges on the bench.

(My joyride of admiration for this guy ended right around here)

http://i86.photobucket.com/albums/k84/yahoshua/windowsmashmotorcycleuq9.gif

Oh yes, and we can't forget his blacklisting of his critics, namely John T. Flynn, and Garet Garrett. Along with his pressure on teh media to produce pro-Soviet films and propaganda (willfully turning a blind eye to Soviet spying at the time). And last but not least, was his "War on Crime." It seems somebody didn't learn anything from the failure of Prohibition, and decided to federally mandate the registration (and subsequent confiscation) and make criminal by posession or ownership the machine gun or sawed-off rifle and shotgun. Way to go.:damn:

http://i108.photobucket.com/albums/n4/RobertOak/traitor.jpg

Nowhere in the constitution is the Federal government allowed to mandate anything like this that is binding to all 50 states, nor is it legal or constitutional. But hey, SCOTUS never really gave an answer on its' constitutionality and lo and behole, they now have to give an answer (and it doesn't look good for us citizens either).



And to sum up the current political situation (in case anyone cared):

http://i202.photobucket.com/albums/aa306/apollo8353/sotrue.jpg


If you'll excuse me I need to go ice my fingertips.......

[Konovalov]

Hot off the London Times press. (http://business.timesonline.co.uk/tol/business/economics/article3277475.ece)


Wall Street economists warned Ben Bernanke, the Chairman of the US Federal Reserve, today that equity markets would "tank" if the central bank failed to cut interest rates by half a percentage point.

Their forecast followed latest official statistics showed the US economy had ground to a halt.

US GDP in the fourth quarter of 2007 grew at 0.6 per cent — half the pace of Wall Street's expectations and the slowest rate for five years.

The numbers fuel fears that America is set to slide into a recession.

Doomsayers indeed. :hmm:

Does not a recession now in the US appear almost inevitable?

[Brag]

What everyone seems to be neglecting to mention is the huge expenditure on armaments and never mind the cost of two wars. Enough to ruin any economy.

[Skybird]

Does not a recession now in the US appear almost inevitable?
Yes. And some people say this since weeks and months. It was forseeable what the likely outcome would be.

Knowing the obvious truth is not so difficult. It just takes time to admit to oneself that one already knows it.

[August]

If you'll excuse me I need to go ice my fingertips.......

Right. He was such an evil constitution destroyer that FDR is considered to be one of the most beloved chief executives in our history. That's why the poor oppressed American people voted for him FOUR times.

Look, the man was human, just like any other President, and like a human he made mistakes. His leadership kept this nation together through some very hard times and you'll excuse me if I take your attempt at character assasination (colorful though it is) with a rather large grain of salt.