Global Financial Crisis (3 Viewers)

[stazi]

dow looks like it'll fall overnight.

 

[MasterPUA]

Peter Schiff was Ron Paul's economic adviser.


He comes from the same economic school of thought as him.


http://www.youtube.com/watch?v=LfascZSTU4o (funny argument he had in 2006)


http://www.youtube.com/watch?v=4n3g5lUgkWk (talking about dollar collapse)


He has some fantastic analogies he uses.

Probabilistically, a small number of people will always accurately pick future market outcomes.

I have discussed this topic with colleagues on many occasions. If you make a public statement regarding future market events, your payoff structure is as follows:

1. You are correct and everyone subsequently wants you to manage their money.

2. You are incorrect, in which case 99% of other people are incorrect also.

As a money manager, Schiff needed to adopt a long term view on the markets. Thousands of fund managers were bearish. Schiff went another step and focused on credit markets - and for this he deserves tentative applause. His propensity to pick future market outcomes will decide whether he is a true seer.

 

[lawrence.h]

The global economy is going to go into recession if stupid economists and journalists keep saying so.
The only reason respected economists and influential media representatives keep saying that the world is going to shit is just so later they can go "seeee, I told you so!" and that doesn't help anyone.

Confidence needs to be restored in the global economy not just by real figures in spending, but through the media. Because if people think there's going to be a recession because the media says so, they will slow down their spending patterns. And if this happens, the media will say the world is going into recession. And if this happens, people will slow down their spending patterns, and if.....


Bloody capitalist mood swings...

 

[moll.]

Greenspan's taking flak for his failed policies whilst Fed Reserve Chairman:
http://news.smh.com.au/world/greenspan-admits-market-system-is-flawed-20081024-57lc.html
Apparently even he's lost his faith in the free market.
Oops.

 

[youBROKEmyLIFE]

Yeah because Central Banks are such a part of a 'free market'. gggggggREEEENNNSPAN

 

[stazi]

wow this is going to be insane when the US markets open.

Dow futures are at a trading halt, as they're 550pts down, which is the max they can be.

AUD trading at .61USD :s

 

[HalcyonSky]

the market will rally today, im putting all my money into it. I'm going to be rich!

 

[Trefoil]

Yeah because Central Banks are such a part of a 'free market'. gggggggREEEENNNSPAN

Um, you'd rather we didn't have a central bank?

 

[Trefoil]

the market will rally today, im putting all my money into it. I'm going to be rich!

Actually, now is the perfect time to invest. As Warren Buffet puts it - be worried when others are greedy, be greedy when others are worried.

Of course, I know that was sarcasm. It had better be, because like Stazi said, the markets have arguably hit their worst period during the financial crisis yet.

All the US stock markets hit the emergency stop threshold for the first time in the crisis, and the markets in Asia, India, Germany, France, and London all fell about 8% to 12%. OPEC also just reduced oil production by more than 5% which is a real fucking blow to confidence. AIG has already ripped through over $100 billion in government loans to keep afloat and needs more. Gold dropped about 4%. The Russian exchange has halted trading till next week after a 14% drop. And the currency markets are all up the wall globally, which is interesting.

It's going to be a bloodbath tomorrow.

Edit: Yeah the Dow just dropped another 400 points on open. Ouchie.

 

[stazi]

lawlz. watch out for the huge rally on tuesday in oz, though. wish i had my etrade acct already activated foor that time

 

[Trefoil]

The thing is people confuse a stock market rebound with leaving a recession, and leaving a recession with leaving a depression.

It's easy for the stock market to rebound. It's hard to reverse those millions of job cuts. This all compounded when the crisis has spread to every single trade partner you have.

 

[Trefoil]

Oh, to be fair: while all the world's markets were falling between 8% and 15%, the Australian markets, banks and exchanges only fell between 0.7% and 3.1%. That's pretty fucking amazing.

 

[zstar]

You could eliminate central banking.

The Federal Reserve was the result of 12 banking families who tried to lobby congress to pass the Federal Reserve act and many of their moles infiltrated the Democrat party.

America did fine for hundreds of years before the Federal Reserve and past American presidents warned repeatedly against central bankers. In the 1800's their was a central bank before the Fed that was taken out of business.

So the U.S has quite a history of warring against these types of people but it seems every once in while they come back and in 1913 the finally succeeded in passing the Federal Reserve Act, Ironically as soon as they took power the world experienced Depressions, World wars and political, social and economic shifts unlike any other in modern history.

 

[moll.]

You could eliminate central banking.

The Federal Reserve was the result of 12 banking families who tried to lobby congress to pass the Federal Reserve act and many of their moles infiltrated the Democrat party.

America did fine for hundreds of years before the Federal Reserve and past American presidents warned repeatedly against central bankers. In the 1800's their was a central bank before the Fed that was taken out of business.

So the U.S has quite a history of warring against these types of people but it seems every once in while they come back and in 1913 the finally succeeded in passing the Federal Reserve Act, Ironically as soon as they took power the world experienced Depressions, World wars and political, social and economic shifts unlike any other in modern history.

You're honestly comparing the current global economy to that of the 1800's and saying it would work better if reverted back to their system?

 

[Trefoil]

You could eliminate central banking.

The Federal Reserve was the result of 12 banking families who tried to lobby congress to pass the Federal Reserve act and many of their moles infiltrated the Democrat party.

America did fine for hundreds of years before the Federal Reserve and past American presidents warned repeatedly against central bankers. In the 1800's their was a central bank before the Fed that was taken out of business.

So the U.S has quite a history of warring against these types of people but it seems every once in while they come back and in 1913 the finally succeeded in passing the Federal Reserve Act, Ironically as soon as they took power the world experienced Depressions, World wars and political, social and economic shifts unlike any other in modern history.

None of that little tirade was an argument or justification for removing central banks in modern day society.

Edit: and lol @ your inability to distinguish correlation and causation.

 

[youBROKEmyLIFE]

None of that little tirade was an argument or justification for removing central banks in modern day society.

Edit: and lol @ your inability to distinguish correlation and causation.

The actions of central banks tend to have the greatest negative impact on the poorest people in society because they exist to devalue their money.

 

[moll.]

It's cool though cos money has no inherent value.



Neither does gold.

But they do have relative value, something which will never disappear unless humanity itself does.

 

[Trefoil]

The actions of central banks tend to have the greatest negative impact on the poorest people in society because they exist to devalue their money.

Cool. Evidence?

 

[youBROKEmyLIFE]

It's cool though cos money has no inherent value.



Neither does gold.

Yeah but you can't fuckin print gold you unscrupulous bastard

@Slidey: Hayek won a nobel prize for it

EDIT: They obviously don't provide stability otherwise we wouldn't be going through a recession


EDIT1: Ruddkip jumped the shark with guaranteeing any money in Australia, forever?

 

[Trefoil]

@Slidey: Hayek won a nobel prize for it

I don't doubt the mathematics of his idealised systems. I'm sure his work was very helpful to economics. But you simply cannot take it in isolation and say "See, this means central banks are bad."

Checking wikipedia and google, I am given to understand that his Nobel prize work was against centrally planned economies, not central banks, btw.

He also has this to say about laissez faire: "probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rules of thumb, above all of the principle of laissez-faire capitalism".

Moreover, I challenge you to suggest an alternative to the central banking system that is more efficient and not detrimental to stability, if the central banking system is bad for the lower economic classes as you say.

EDIT: They obviously don't provide stability otherwise we wouldn't be going through a recession

False. This is the mistake too many laissez faire champions make. Just because the current system is not perfect doesn't mean that a perfect solution exists. It may well be (and is likely) that we are in fact at or near optimal equilibrium with a central bank and we'll never have a 'perfectly' stable system.

In reality there's no such thing as Pareto efficient markets. It turns out that a central banking system is likely one of the compromises between government regulation and market freedom that produces optimal (but not perfect) efficiency and stability.

Under certain idealized conditions, it can be shown that a system of free markets will lead to a Pareto efficient outcome. This is called the first welfare theorem. It was first demonstrated mathematically by economists Kenneth Arrow and Gerard Debreu. However, the result does not rigorously establish welfare results for real economies because of the restrictive assumptions necessary for the proof (markets exist for all possible goods, all markets are in full equilibrium, markets are perfectly competitive, transaction costs are negligible, there must be no externalities, and market participants must have perfect information). Moreover, it has since been demonstrated mathematically that, in the absence of perfect competition or complete markets, outcomes will always be Pareto inefficient (the Greenwald-Stiglitz Theorem).

EDIT1: Ruddkip jumped the shark with guaranteeing any money in Australia, forever?

I don't think so, no. They should have insured secondary insurance and super as well to begin with, but the move itself was good economic foresight (assuming you believe markets should be stabilised), and I believe time well tell how it pans out.

It's not forever, btw - just as long as necessary, although I believe the bill lasts for a year or something pending renewal. It also only insures up to $1 million I believe. I haven't fully checked the recent bill so my numbers might be off.