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anon/economy
| | Posted on Sunday, October 05, 2008 - 11:08 am: | |
What is really going on here?
Why We Must Move a Financial Rescue Package Forward
quote:What is really going on here, anyway?
Our people, and our representatives think the financial system rescue plan is about protecting financial institutions from failure resulting from bad judgement about mortgage backed securities.
It is actually about protecting the worldwide supply of money and credit from collapse. This collapse would follow financial "deleveraging" which results from the vanishing value of highly leveraged collateralized debt obligations (CDO) and credit default swaps (CDS) built up out of mortgages and other debt instruments.
If it doesn't kill it will make you strong. This is to a large extent with what happened in this financial crisis of 2008 of world proportions, that the fix to frozen credit markets, especially 'mark-to-market' accounting rule change 157, was devastating when underlying housing prices declined, the asset base on which such credit and their derivative instruments were priced, so the 'pricing mechanism' itself stopped. There was no mark-to-market pricing, it stopped. The rescue is that the 'pricing' which froze up had to be brought back on line, which is what the Paulson place did. Otherwise the downward spiral in the financial systems, exacerbated by the mark-to-market disaster causing unbelievable margin calls and bank failures, would have grinded the financial markets to a standstill, unacceptable and irresponsible.
Congress voted after a week of wrangling, but that pricing mechanism will now be in place, main point. The other features of this treasury plan are to help stabilize the housing market from further collapse. So buying back at distress sales price mortgages in trouble will 'warehouse' them until the troubles pass, and then resold back to the Street at better prices, so the $700 Byn 'invested' may actually yield profit to treasury, and taxpayers. That will make the economy stronger, not weaker. We will know this success is happening if rental prices remains steady, and with them real estate prices stabilize, and with that banking resumes normal lending activity; and with all that we will see the economy right itself stronger than ever. US Treasury Secretary Paulson comes from investment banking, a hands on man, so while economists may whine his plan is faulty, watch them laud him when it is done. If it doesn't kill you...
This was not a bailout plan for Wall Street, but a mechanical fix to pricing in the market exchange so it will work properly, without which markets got frozen and could not perform their natural function of rational pricing. It will make us stronger as an economy with a better pricing mechanism for the whole world's benefit. The alternative, a possible collapse of the world's financial system, was unthinkable and only appealing to our enemies of freedom and western civilization, who want to see us back in the dark ages. They will now be frustrated. We will be stronger than ever before.
anon
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This video states the obvious, that our so-called economy 'experts' are really clueless.
Quantitative Easing Explained
Very enlightening... How do you explain 'stupid'? -2010 |
Ivan/housing bill
| | Posted on Sunday, October 05, 2008 - 02:19 pm: | |
Housing must recover for this to work.
Yours Anon is echoed in this news article today:
For bailout to work, housing market needs to mend
Sunday October 5, 7:28 am ET
By Stevenson Jacobs, AP Business Writer
"Until housing markets improve, banks may stint on lending despite OK of $700 billion bailout."
It appears 'housing stability' is the key to the success of this Treasury plan. The credit wound is deep, a simple bandaid is not all it takes, maybe serious ER efforts are underway. We shall see, now that this bill has been signed into law.
Ivan
This just in, BBC News: Russia 'planned Wall Street bear raid' -Russia wanted to cause housing market/Wall Street havoc? |
anon/damn OPEC
| | Posted on Saturday, October 11, 2008 - 07:11 pm: | |
The leaders understand, I think.
Rescue the Old World Financial Order or Build a New One - DEBKAfile
Clearly economists are clueless on the severity of this economic attack against our markets. But the leaders of G-7 seem to have a better grasp on the matter, so they will act accordingly. Stick it to those who would take us down. We're not that easy, and we will come out of this stronger than ever. Then we come after you, Jihad bastards.
quote:In their statement Saturday, the G7 said that they were working on a rescue package tailored for each country within a common framework that would include recapitalizing banks, ensuring strong deposit insurance to protect savers and restarting frozen credit and mortgage markets.
The mortgage market excesses were in part responsible, plus irresponsible creation of untenable derivatives to drive that excess market, plus the astronomical price of oil (not gas, just oil pushed up to ridiculous levels on the pathetic excuse of China and India growth, bullshit!), plus the aggressive shorting on banks, and the recipe was one for financial disaster. Economists still dream of their 'perfect' market economies without encumbrances by regulations. But this ignores the fact that markets can be attacked too, just like consumer fraud attacks individuals. So the response should be to STOP all abusive market behaviors, and give the market a chance to recover from these abuses, and then we can have a viable economic recovery. The economists be damned, since they can't factor in a financial attack on our markets. The leader, I suspect, know.
Bottom line, knock down oil, and don't help out OPEC. They be damned. Our economies will recover just fine without them. Get off OPEC oil!
anon |
anon/kick start it
| | Posted on Tuesday, October 28, 2008 - 08:42 am: | |
Come'on guys, get this Stock Market engine revving, the economy will follow.
Kick start the damn thing. You got high octane in the bank, petro-prices dropping, but all you get when you kick start it is "kuffr kufffr" and a puff. The mixture is too rich, so choke it back. Drop rates only a quarter point, and watch it catch. Then rev it and have this whole think lift faster than you can say "tiger in the tank!" You're almost there. 
anon |
CAnnon
| | Posted on Sunday, November 23, 2008 - 10:23 am: | |
Charge of the Light Brigade, to victory!
 (Video U Tube)
Tata toot toot tataTataa! Both flanks squeeze those shorts! On the ready, Fire away!
Not though the soldier knew
Some one had blundered:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do and die:
Into the valley of Death
Rode the six hundred.
Cannon to right of them,
Cannon to left of them
Cannon in front of them
Volleyed and thundered;
Stormed at with shot and shell,
Boldly they rode and well,
Into the jaws of Death,
Into the mouth of Hell
Rode the six hundred.
It is our time. To victory!
CAnnon |
annon
| | Posted on Thursday, December 04, 2008 - 09:04 am: | |
The Arabs are richer than God. Jeez Luiz, do something useful. They want to bring God's state on earth. Really bad idea, look at their sad unproductive state. Forget israelis live on one iota of land they think theirs, nothing. Build productive economies with all that God forsaken wealth. Invest wisely, God will be pleased, or oil will never recover.
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World debt problem
| | Posted on Wednesday, October 05, 2011 - 08:33 am: | |
La Forza del Destino -- How world debt problem got out of hand -- and how it could be solved.*
World economics, same as local market economies, are not magic creations of wealth by some miraculous "hand of God" invisible market mechanism. Economies do not deliver wealth automatically like some "cargo cult" of the South Pacific Melanesia islands. Rather, wealth and economic goods are products of focussed human labor and intellect, managed by capable and earnest hands, to produce what the collective market demands through its mechanism of exchange based valuation. What does the market value? And how do we get there? Do we really want this without economic injury or loss, or is what we want doomed to failure? The market in its collective exchange valuations will determine how. But it cannot determine whether or not it succeeds to deliver expectations. The market is totally neutral in its valuation function. The real value of productive economic action is in our hands. Those are the economic realities of creating useful goods and what we then perceive as wealth.
 (interactive)
Cargo Cult plane effigy on Vanuatu
Creative economics found "short cuts" to wealth creation, though in the end they proved disastrous. The clipping of coins in ancient times rendered the money degraded, or near worthless except for reduced metal content. Rampant printing of paper currency in modern times had same disastrous effects of inflation rendering money almost worthless, and in its wake ultimately destroying wealth and capital formation, so economies end up bankrupt. Then if expanded economically with "wealth" creation through unwarranted debt, or with excess debt through creation of "derivative" financial instruments under the cloaked guise of "hedges", the end result is a dramatically inflated economic activity supported by questionable "assets" supporting additional borrowing. But at some point the game is up, because the underlying assets supporting the whole debt derivatives structure start to fall in value, so both sides of the hedge collapse together (no bids), market freezes, which proves disastrous ending in wholesale bankruptcies. That spells economic disaster.
The only reasonable way to avert such debt driven economic disaster is to mind economic productivity. If the economy is growing in a prudent manner through greater productivity, the result of such growth is sustainable over the long run for decades. Economic cycles created by excessive debt, including (or because of) financial derivatives, will generate boom and bust periods naturally; they are a product of human folly in the aggregate; but these cycles can be moderated through the "prudent man rule" that such activity be guided by reasonable, prudent lending and investing. To be prudent in economic activity means all such future driven investments lead to production of actual goods and services demanded by market forces and valuations, i.e., prices. If the market functions are unhindered by burdensome regulatory constrictions, and compliant with fair practice protecting participants from fraud, then such market pricing will realistically dictate production at an efficient productivity level. But if on the contrary, for other than socially desirable imperatives, such as egalitarian welfare of the people or for sustainable ecological preservation to not destroy natural resources (and preserve a natural world for future generations), and the market system is burdened with unfair unsustainable demands from power groups and government lobby driven legislation, then the system fails. There is only so much an economy can afford in its "insurance" policies for the people, i.e., welfare programs, and is determined by that economy's level of efficient productivity. Fail that and no matter how much artificial (inflated) wealth it may generate through expansive debt and derivatives, it will fail in the end. That is what leads a global economy to suffer global bankruptcies, such as we are witnessing today.
The key is "productivity" for economies to function in the long run with sustainable growth to meet the growing needs of the people. The key to productivity is "prudent" market economic activity. The key to prudence is fair play in our supporting legislated laws and contractual agreements. The rest built on this three point foundation is then up to the people, their ingenuity, their economic energy and vision, and their being safeguarded from fraudulent activities or debilitating corruption. Once this is set in motion, wether or not supported by derivatives and bank debt, or financed out of equities, the assets will hold their value; but if debt and derivatives are in excess of productivity, especially government sponsored debt, then this becomes a recipe for economic disaster. Once disaster sets in it is very difficult to undo the damage without tremendous pain and sacrifice. This is where we are now in Europe and the United States, a rolling bankruptcy which may actually have started in Asia two decades ago with the collapse of "land" assets based banking in Japan. Land prices fell, taking down bank debt, and the rest is history.
The good news is that when sustainable growth is achieved through economic productivity then a larger segment of populations gain benefits of growth, so even the very marginal members who are unable to compete as productive members of labor nevertheless benefit. Usually these benefits are dictated by legislative action by creating a kind of "social welfare" safety net. Such welfare is well affordable in a productivity based economy, but will fail in a debt based economy, at times disastrously. If sustainable growth empowered by prudent human ingenuity and fair laws is allowed to flourish, the ceiling on such economy is virtually limitless, constrained only by polluting byproducts of economic activity; where curtailing such damaging byproducts itself becomes a growth industry. The "market" tells us through its pricing aggregates what the people want and need. Unhindered from excessive foolishness of grandiose dreams of creating wealth out of debt and derivatives, but brought back to sanity in all human actions, the market in a fair playing field works very well to meet our economic needs. What does not work is financial instruments that mimic wealth when none is created. Then it is a fool's paradise burdened with abuses and unequal distributions of wealth, which in the end proves socially disastrous.
The egalitarian distribution of wealth is achievable only through egalitarian access to economic productivity. This is two fold: the private market participants through their productive labor, and government participants through a socially acceptable distribution of economic productivity. Add to this mix investment dividends and earned interest, private insurance, charity distributions, and government sponsored social security net; then all these gain increasing benefit with increased productivity; but the converse of financing all these with artificial financial instruments of economic liquidity, i.e., debt, the end product is disastrous. There is no magic short cut to economic productivity through prudent and intelligent human action, all else is financial cleverness or magic "cargo cult". That is the force of destiny: human productivity unchained.
There is no easy fix to bad economic management, alas. It will take work and skill to turn around this world debt problem, and sacrifice.
IDA
Also see Stock market... Fooled you!
and Large Scale Dysfunction - Massive Debt (2015)
*(This short essay was inspired by Domenico De Simone's book - in Italian - titled "Crac!") |
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