Puppeteers of the economy - Speedzilla Motorcycle Message Forums
Reply
 
LinkBack Thread Tools Display Modes
post #1 of 62 (permalink) Old 12-06-2008, 02:39 AM Thread Starter
Dr. Carbon
 
20_RC51_00's Avatar
 
Join Date: Nov 2005
Posts: 2,973
Puppeteers of the economy

I came across this link that I found pretty intersting. Of course there is some opinion mixed in with the information but I was rather surprised with how relatively fragile the system is that most of the major economic determinants of our( the people) general livelyhood depends on.

Sure you can argue that the driving force behind all of this is the perverse quest for ever increasing returns on our investments etc. but most people don't actually know the intricate workings of the systems when they are investing. Rather we believe that the trusted companies, investment banks and other institutions which do the work behind the scenes do so in a prudent and reasonably risk balanced manner. Unfortunately they don't, they have information that we don't and wouldn't necessairly agree with had we known the possibilities. While there is a place for the mechanisms that were so eagerly used and abused, it seems like a few many had too much riding on it that could effect things that arent theirs...

While the link I attached was about oil and not necessairly the single factor behind of what has gone down but has also gone down with it, I just found it interesting. The way I see it was that a very small minority within the USA were getting too greedy and not covering their tracks, I don't think that this was the result of something the general majority brought on themselves, but ended up bringing the majority down with them...

There really seems like there is an loophole in the economy in that very few meddle in things to their liking with the majority of the gain not trickling down but the disastrous consequences effecting everybody.

Having heard of how this has effected a lot of people it really breaks my heart. Most people majority of people are content with getting up in the morning, going to work, doing an honest days worth and then going back home. Making money for yourself with the realistic notion of one day enjoying the fruits of your labor, but not the intent of immediate wealth... Whether you work for yourself or for others it made no difference. Hopefully everyone will fare with only minor bruises...


This kind of developed into more then what I had intended.... I just wanted to post the link that I found interesting. Having a bit of economics/businss as a background this has always facinated me Hopefully some find it interesting.

What Caused the Big Slide in Oil Prices - TIME


so if you are intent of just flaming for no reason or calling this gay or lame save your energy.
20_RC51_00 is offline  
Sponsored Links
Advertisement
 
post #2 of 62 (permalink) Old 12-06-2008, 12:10 PM
Panigaliscious
 
sburns2421's Avatar
 
Join Date: Sep 2005
Location: SW MO
Posts: 9,103
I watched it go up, and now have watched it overshoot down. This summer the speculators claimed that it wasn't their doing that was driving the price up.

BS. BS a thousand times.

It is obvious now, by whom has been wiped out, that speculation was BY FAR the biggest factor in the price of oil. Demand hasn't slipped that much since July, the world is certianly no safer five months later. Israel is ever closer to attacking Iran, Nigeria is nearly in a state of civil war, and Russia invaded another country as the price has collapsed and nothing stopped its decline.

The sad thing is that as soon as "they" figure out the rules of this new world post-banking apocalypse, the price will begin to be manipulated again.

Who exactly "they" is is somewhat murky to me though: traders bid it up based on fears of future supply shortages, while Iran had dancing girls in the streets with enriched uranium vials, and Chavez threatened to cut off the US from Venezuelan oil. I'm not sure if it was the tail wagging the dog or not.

1985 Honda VF1000R, 1990 Ducati 851, 2008 YZ450F
sburns2421 is offline  
post #3 of 62 (permalink) Old 12-06-2008, 12:26 PM
Panigaliscious
 
sburns2421's Avatar
 
Join Date: Sep 2005
Location: SW MO
Posts: 9,103
If you want some comforting bedtime reading check this link out.

World stability hangs by a thread as economies continue to unravel - Telegraph

1985 Honda VF1000R, 1990 Ducati 851, 2008 YZ450F
sburns2421 is offline  
 
post #4 of 62 (permalink) Old 12-08-2008, 07:04 PM
Thud
 
Mashuri's Avatar
 
Join Date: Jul 2003
Location: Los Angeles, CA
Posts: 1,436
Send a message via AIM to Mashuri
People focus on oil and come up with conspiracy theories but it was all commodities that went up and down in unison. Oil, copper, silver, corn, even dirt all peaked in July and crashed together. The true underlying cause is the same one that has caused all of our unsustainable speculative bubbles: An artificial inflation of our money supply due to easy-money central banking. If we want to reign this in we need to completely privatize our banking system and legally separate deposit banking, which should have 100% reserves, and loan banking. The Federal Reserve has to go.
Mashuri is offline  
post #5 of 62 (permalink) Old 12-08-2008, 07:08 PM
Thud
 
Mashuri's Avatar
 
Join Date: Jul 2003
Location: Los Angeles, CA
Posts: 1,436
Send a message via AIM to Mashuri
Quote:
Originally Posted by sburns2421 View Post
If you want some comforting bedtime reading check this link out.

World stability hangs by a thread as economies continue to unravel - Telegraph
That article makes the same fallacious assumptions as the MSM in general: That a lack of regulation caused this problem. In fact, it was government involvement that caused this problem in the first place. Why ask for more of the same poison to cure our illness?
Mashuri is offline  
post #6 of 62 (permalink) Old 12-08-2008, 07:23 PM
Panigaliscious
 
sburns2421's Avatar
 
Join Date: Sep 2005
Location: SW MO
Posts: 9,103
Quote:
Originally Posted by Mashuri View Post
That article makes the same fallacious assumptions as the MSM in general: That a lack of regulation caused this problem. In fact, it was government involvement that caused this problem in the first place. Why ask for more of the same poison to cure our illness?
Ambrose Evans-Pritchard is probably the most pessimistic of all the columnists I read these days. I don't really agree with him, but the way he lines up the dominoes and then tells how they fall is interesting.

Charlie Rose - A conversation about economics with Nassim Taleb
If you have 20 minutes, this guy makes a lot of sense.

1985 Honda VF1000R, 1990 Ducati 851, 2008 YZ450F
sburns2421 is offline  
post #7 of 62 (permalink) Old 12-08-2008, 07:25 PM
Panigaliscious
 
sburns2421's Avatar
 
Join Date: Sep 2005
Location: SW MO
Posts: 9,103
Quote:
Originally Posted by Mashuri View Post
People focus on oil and come up with conspiracy theories but it was all commodities that went up and down in unison. Oil, copper, silver, corn, even dirt all peaked in July and crashed together. The true underlying cause is the same one that has caused all of our unsustainable speculative bubbles: An artificial inflation of our money supply due to easy-money central banking. If we want to reign this in we need to completely privatize our banking system and legally separate deposit banking, which should have 100% reserves, and loan banking. The Federal Reserve has to go.
So are you saying that speculation had nothing to do with oil's rise?

Many of the other commodities have a portion of their price tied to energy costs, so as oil rose, so did they.

1985 Honda VF1000R, 1990 Ducati 851, 2008 YZ450F
sburns2421 is offline  
post #8 of 62 (permalink) Old 12-08-2008, 07:42 PM Thread Starter
Dr. Carbon
 
20_RC51_00's Avatar
 
Join Date: Nov 2005
Posts: 2,973
Quote:
Originally Posted by sburns2421 View Post
So are you saying that speculation had nothing to do with oil's rise?

Many of the other commodities have a portion of their price tied to energy costs, so as oil rose, so did they.

I think he is just saying that it's not the only factor and couldn't have happened alone.

good links guys
20_RC51_00 is offline  
post #9 of 62 (permalink) Old 12-08-2008, 08:57 PM
Panigaliscious
 
sburns2421's Avatar
 
Join Date: Sep 2005
Location: SW MO
Posts: 9,103
To get back to oil. IMO drivers in the US have permanently changed their habits regarding the purchase of cars from here forward. After some period of time this financial crisis will have passed. Oil will be somewhere between $40-200/barrel, and gas $1.40-4.50. Doesn't really matter though.

The events of this summer, paying $100 to fill up your car because you were afraid next week it would be $120, leaves a lasting impact on people. SUV's are as good as dead (I know domestic sales are not suffering as bad as cars percentage-wise, but look at their insane incentives just to move iron). Full-size trucks will be bought by people that really need them. Smaller trucks with hybrid powerplants might be viable, but F-150's will be bought by contractors and farmers only.

Smaller cars will be the norm here, anything that gets less than 30 mpg will be considered a "gas guzzler". It wouldn't surprise me at all if 2007 ended up being the peak year for gasoline usage in the US for all time, regardless of prices in the future.

I am also of the opinion that for the forseeable future it will become somewhat fashionable to appear frugal in one's daily life. Maybe not to the level of sewing your own clothes or having a rooftop vegetable garden, but choosing ostentatious luxury items over sensible purchases will be heavily frowned on by societal "peer pressure". So people buy that Toyota Yaris rather than a IS300, even if they can afford the Lexus.

Would be interested in what anyone thinks of this theory.

1985 Honda VF1000R, 1990 Ducati 851, 2008 YZ450F
sburns2421 is offline  
post #10 of 62 (permalink) Old 12-08-2008, 09:41 PM
Nice Member
 
robfromsc's Avatar
 
Join Date: Sep 2007
Posts: 1,669
Quote:
Originally Posted by sburns2421 View Post
To get back to oil. IMO drivers in the US have permanently changed their habits regarding the purchase of cars from here forward. After some period of time this financial crisis will have passed. Oil will be somewhere between $40-200/barrel, and gas $1.40-4.50. Doesn't really matter though.

The events of this summer, paying $100 to fill up your car because you were afraid next week it would be $120, leaves a lasting impact on people. SUV's are as good as dead (I know domestic sales are not suffering as bad as cars percentage-wise, but look at their insane incentives just to move iron). Full-size trucks will be bought by people that really need them. Smaller trucks with hybrid powerplants might be viable, but F-150's will be bought by contractors and farmers only.

Smaller cars will be the norm here, anything that gets less than 30 mpg will be considered a "gas guzzler". It wouldn't surprise me at all if 2007 ended up being the peak year for gasoline usage in the US for all time, regardless of prices in the future.

I am also of the opinion that for the forseeable future it will become somewhat fashionable to appear frugal in one's daily life. Maybe not to the level of sewing your own clothes or having a rooftop vegetable garden, but choosing ostentatious luxury items over sensible purchases will be heavily frowned on by societal "peer pressure". So people buy that Toyota Yaris rather than a IS300, even if they can afford the Lexus.

Would be interested in what anyone thinks of this theory.
no bout look at the rest of the world, how many people in the world us a Excursion to goto the store and get eggs? or drive a dually as a daily driver? either things will be fixed or they will kinda fix themselves. either way couldnt go one for ever:twocents

fast, cheap, reliable.... pick 2
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.





To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.




To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
robfromsc is offline  
post #11 of 62 (permalink) Old 12-08-2008, 10:37 PM
Thud
 
Mashuri's Avatar
 
Join Date: Jul 2003
Location: Los Angeles, CA
Posts: 1,436
Send a message via AIM to Mashuri
Quote:
Originally Posted by sburns2421 View Post
So are you saying that speculation had nothing to do with oil's rise?

Many of the other commodities have a portion of their price tied to energy costs, so as oil rose, so did they.
I'm saying reckless speculation is one of the symptoms of the Fed's easy-money policy. It encourages malinvestments that become unsustainable and need to liquidate.
Mashuri is offline  
post #12 of 62 (permalink) Old 12-09-2008, 01:01 AM Thread Starter
Dr. Carbon
 
20_RC51_00's Avatar
 
Join Date: Nov 2005
Posts: 2,973
Quote:
Originally Posted by sburns2421 View Post
To get back to oil. IMO drivers in the US have permanently changed their habits regarding the purchase of cars from here forward. After some period of time this financial crisis will have passed. Oil will be somewhere between $40-200/barrel, and gas $1.40-4.50. Doesn't really matter though.

The events of this summer, paying $100 to fill up your car because you were afraid next week it would be $120, leaves a lasting impact on people. SUV's are as good as dead (I know domestic sales are not suffering as bad as cars percentage-wise, but look at their insane incentives just to move iron). Full-size trucks will be bought by people that really need them. Smaller trucks with hybrid powerplants might be viable, but F-150's will be bought by contractors and farmers only.

Smaller cars will be the norm here, anything that gets less than 30 mpg will be considered a "gas guzzler". It wouldn't surprise me at all if 2007 ended up being the peak year for gasoline usage in the US for all time, regardless of prices in the future.

I am also of the opinion that for the forseeable future it will become somewhat fashionable to appear frugal in one's daily life. Maybe not to the level of sewing your own clothes or having a rooftop vegetable garden, but choosing ostentatious luxury items over sensible purchases will be heavily frowned on by societal "peer pressure". So people buy that Toyota Yaris rather than a IS300, even if they can afford the Lexus.

Would be interested in what anyone thinks of this theory.
I don't think peoples attitudes will change. In all honesty Americans spending habits will only be effected by the state of the economy long enough to weather the storm. The per capita debt of this nation is astonishing and is the sole example of it in the world. American spending will continue as it had , as soon as it can.... I would be surprised if anything will be learned from this to be honest, once things start to get rolling again nice and slowly it will be back to business as usual... From the great depression humanity learned the micro and macro economic principles, we can only hope that something can be learned from this and those in position won't cloud it with political bullshit...

When I say "American" I'm referring to the people as a whole not necessairly pointing a finger at an individual...
20_RC51_00 is offline  
post #13 of 62 (permalink) Old 12-09-2008, 02:25 PM
Panigaliscious
 
sburns2421's Avatar
 
Join Date: Sep 2005
Location: SW MO
Posts: 9,103
One fear I have is that by firing up the dollar printing presses to churn out north of a trillion dollars (first $700B bank bailout, new Obama $570B infrastructure program, $25B auto bailout) the currency will be further diluted. In the short term we might be able to avoid deflation (more on that later), but in the long term see high inflation that will be hard to stop without other consequences. The trick would be to put enough cash into the system to kickstart it, but then get most of it back out of circulation through taxes quickly enough to avoid inflation. Tricky business, and I doubt they will get it exactly right or completely wrong. Somewhere in the middle as usual.

Some "experts" use the term hyperinflation, but that seems too extreme. If hyperinflation is defined conservatively by the doubling of prices every 3 years, or 26% per year, I don't see that happenning. Maybe 10% per year for a year or two. Interest rates will rise, hopefully curbing inflation but almost certainly also retarding growth.

Considering how far in the toilet (compared to the US) most of the world is right now as well, the dollar will remain the safe haven. I don't see a huge global flight to the Euro, Yen, or Yuan anytime soon.

Back to the possibility of deflation, I wonder if the instant gratification aspect of many uberconsumers will help to fight deflation. The theory of deflation is that people will delay buying because they think it will be cheaper tomorrow. What this doesn't account for is the irrational need to buy for many people. And they want it RIGHT NOW. As long as they have money (or room on their credit card), they will buy. This would lessen the chance or severity of deflation.

The irony of our situation is that the "wise" consumers would pare back their spending to keep a reserve for possibly darker days ahead, while hoping the rest of the suckers in the malls keep buying. But if there were too many wise consumers then the process falls apart and deflation is inevitable.

I try not to be too rosy nor an extreme pessimist. But IMO, when this is over in a year or so, you will see permanent changes in the banking system and the general outlook of many people. Industry that actually makes things will be valued in the US. The rest of the world's economies will be weakened and start to rebuild with possible new winners and losers. The US will not be as rich as it was, or at least as rich at it appeared to be. But we might be better off in the long run because of it.

1985 Honda VF1000R, 1990 Ducati 851, 2008 YZ450F
sburns2421 is offline  
post #14 of 62 (permalink) Old 12-09-2008, 04:55 PM
Thud
 
Mashuri's Avatar
 
Join Date: Jul 2003
Location: Los Angeles, CA
Posts: 1,436
Send a message via AIM to Mashuri
Quote:
Originally Posted by sburns2421 View Post
One fear I have is that by firing up the dollar printing presses to churn out north of a trillion dollars (first $700B bank bailout, new Obama $570B infrastructure program, $25B auto bailout) the currency will be further diluted. In the short term we might be able to avoid deflation (more on that later), but in the long term see high inflation that will be hard to stop without other consequences. The trick would be to put enough cash into the system to kickstart it, but then get most of it back out of circulation through taxes quickly enough to avoid inflation. Tricky business, and I doubt they will get it exactly right or completely wrong. Somewhere in the middle as usual.
Deflation is a "paper tiger" demonized by Keynesian economists and pro-inflation government (more on that later). Deflation is a good thing when it's needed, so long as it doesn't happen at a very high rate. You're right about the inflation part. Our overall money supply has shot up 90% since this crisis began. Right now it's sitting in reserves but, if they manage to open the credit floodgates, inflation will become a very serious problem.

Quote:
Some "experts" use the term hyperinflation, but that seems too extreme. If hyperinflation is defined conservatively by the doubling of prices every 3 years, or 26% per year, I don't see that happenning. Maybe 10% per year for a year or two. Interest rates will rise, hopefully curbing inflation but almost certainly also retarding growth.

Considering how far in the toilet (compared to the US) most of the world is right now as well, the dollar will remain the safe haven. I don't see a huge global flight to the Euro, Yen, or Yuan anytime soon.
It really does depend on whether the Chinese and Japanese continue to value our treasury bills. If they decide (and rightly so) that their large stocks are holding them back and dump them, we'll see the dollar hyperinflate and become totally worthless.

Quote:
Back to the possibility of deflation, I wonder if the instant gratification aspect of many uberconsumers will help to fight deflation. The theory of deflation is that people will delay buying because they think it will be cheaper tomorrow. What this doesn't account for is the irrational need to buy for many people. And they want it RIGHT NOW. As long as they have money (or room on their credit card), they will buy. This would lessen the chance or severity of deflation.
Precisely why deflation is not so bad like so many economists like to say. People will still buy but they will have a greater tendency to save, which is something our economy badly needs. Inflation is our government's dirty secret tax on society that hits the wage earners and retired / benefits recipients the hardest. When any extra money is first produced, it still has the purchasing power of the previous supply. As it circulates and dilutes into the system the prices adjust for it. By the time that extra money supply finally filters to the wage earners, they have already been paying for the extra inflation and, as a result, keep falling behind the curve. Inflation is how governments "skim off the top" and finance a lot more than they actually collect in taxes.

Quote:
The irony of our situation is that the "wise" consumers would pare back their spending to keep a reserve for possibly darker days ahead, while hoping the rest of the suckers in the malls keep buying. But if there were too many wise consumers then the process falls apart and deflation is inevitable.
One can only hope. As explained above, deflation would be a nightmare for our government as they would have to really cut their spending.

Quote:
I try not to be too rosy nor an extreme pessimist. But IMO, when this is over in a year or so, you will see permanent changes in the banking system and the general outlook of many people. Industry that actually makes things will be valued in the US. The rest of the world's economies will be weakened and start to rebuild with possible new winners and losers. The US will not be as rich as it was, or at least as rich at it appeared to be. But we might be better off in the long run because of it.
The way we're going now with Keynesian "spend into prosperity" politics, we may get out of this mess in 5-10 years but our financial system is doomed to failure on an unsustainable inflationary policy. The house of cards has to collapse eventually. I see our governments taking this opportunity to seize more power and move to a One World Currency, allowing them to burden most of the world with an inflation tax and laugh all the way to the bank -- which they would own anyway.
Mashuri is offline  
post #15 of 62 (permalink) Old 12-14-2008, 03:10 AM Thread Starter
Dr. Carbon
 
20_RC51_00's Avatar
 
Join Date: Nov 2005
Posts: 2,973
One of the few individuals out there with a voice that actually understands what is going on is Schiff, but nobody seems to "get" him. He had made pretty much every forecast that has come true and everythign that America is faced with. You should see others try and ridicule him and make jokes during interviews, the funny thing is he doesn't take it personal, he takes it like a gentle man because he knows that all these "intellectuals" out there taking jabs at him have it pretty wrong and will be in the poor house... funny at times.
20_RC51_00 is offline  
post #16 of 62 (permalink) Old 12-17-2008, 05:05 PM
Thud
 
Mashuri's Avatar
 
Join Date: Jul 2003
Location: Los Angeles, CA
Posts: 1,436
Send a message via AIM to Mashuri
Quote:
Originally Posted by 20_RC51_00 View Post
One of the few individuals out there with a voice that actually understands what is going on is Schiff, but nobody seems to "get" him. He had made pretty much every forecast that has come true and everythign that America is faced with. You should see others try and ridicule him and make jokes during interviews, the funny thing is he doesn't take it personal, he takes it like a gentle man because he knows that all these "intellectuals" out there taking jabs at him have it pretty wrong and will be in the poor house... funny at times.
I agree that Schiff has the fundamentals down. He knew our economy was on shaky ground and couldn't sustain itself. However, I think he overestimates the soundness of overseas markets and, as a result, I don't necessarily follow his investment advice. FWIW, for 2009 I am short on treasuries and the dollar and long on gold, energy and commodities.
Mashuri is offline  
post #17 of 62 (permalink) Old 12-17-2008, 06:58 PM
Panigaliscious
 
sburns2421's Avatar
 
Join Date: Sep 2005
Location: SW MO
Posts: 9,103
Maybe just wishful thinking?

I had a thought about the current situation over lunch today. Is it possible that several at the top in the US (Paulson, Bernanke, Bush et al) realized that the house of cards were going to collapse, and are now acting to end up with the US in the best place possible considering the circumstances?

If you look at what truly is a worldwide crisis, you see that other countries, basically everyone else, is being hurt even more than the US. Despite a large portion of the responsibility for the mess being layed at the feet of the US, most of the world is still buying treasuries because we are still the safest place for foreign currency. Would China Inc choose someday to dump US bonds and move to say, Japanese securities? Probably not. Would they stick their money in Arab dictatorships? Nope. Socialized Europe who seems to be imploding as we watch the nightly news? No again. They don't have many desirable alternatives.

The price of oil also had me thinking of this thread topic of manipulation. A barrel of oil was bid up dramatically this year, and fell even more quickly to 2004 levels. Oil producing countires (OPEC nations plus Russia) have based their budgets on the price being much higher than $40. Their leaders' power base is contingent on them being able to provide a basic standard of living to their citizens, or at least having enough muscle to keep the masses in line. Having your government's budget cut in half because you planned on $80 oil makes that a challenge either way.

I am not a conspiracy enthusiast but will play one for another paragraph or two. So imagine for a minute that Paulson/Bernanke etc realize it is all going to come crashing down. Our US lifestyle is going to take a hit regardless of what is done, but perhaps depending on what steps the government takes we could come out of it somewhere between impoverished to just knocked down a few notches. We go from a Lexus to a Chevy, instead of a Lexus to a bicycle. I think you get my meaning.

So what if as the crash happens, they play up the crisis to once-in-a-century proportions. Get a huge $700B chunk of newly printed cash to do with as they please. This means they can control the market to the downside. None have explicitly done it, but with one public sentence either Bernanke or Paulson (or Bush) could send the stock market into another 3000 point dive. They also get to choose which marginally viable companies get to live and who are allowed to die.

Rather than fighting amongst ourselves, people in the US realize their position and how dependent they are on imported goods and more importantly, imported energy. A movement to restore the US manufacturing base and have clean energy independence by 2020 takes hold. This would be Obama's job, and I hope he pushes it. He has the opportunity to be one of our best Presidents if he can communicate this to the people.

The rest of the world goes in the tank, governments which have propped up their industries for decades (Airbus?) suddenly are cash-strapped. Oil-rich countries become oil-broke as they run huge deficits to keep power. The EU effectively disbands as each country goes back to its own currency, in hindsight the nationalism of each was discounted. In good times they can hold their noses and put up with each other, but now in bad times they protect their own kind.

Russia and China are weakened, and more importantly their real areas of weakness are exposed throughout this trying time. That leaves the US, bloodied and battered, poorer but not bankrupt, as the overwhelming lone superpower in the world. Energy independent, with strong manufacturing and financial services. But most importantly, the attitude of the citizens of the US has changed to not expect something for nothing. Ironically, the US as a whole adopts an attitude more like the Asian immigrants I have encountered: busting your ass and frugality are the best way to financial security.

1985 Honda VF1000R, 1990 Ducati 851, 2008 YZ450F

Last edited by sburns2421; 12-17-2008 at 08:44 PM.
sburns2421 is offline  
post #18 of 62 (permalink) Old 12-17-2008, 10:49 PM Thread Starter
Dr. Carbon
 
20_RC51_00's Avatar
 
Join Date: Nov 2005
Posts: 2,973
Quote:
Originally Posted by Mashuri View Post
I agree that Schiff has the fundamentals down. He knew our economy was on shaky ground and couldn't sustain itself. However, I think he overestimates the soundness of overseas markets and, as a result, I don't necessarily follow his investment advice. FWIW, for 2009 I am short on treasuries and the dollar and long on gold, energy and commodities.

I'm not so sure that he as much overestimates the other markets but on a relative scale the rest of the world is much better off. Nowhere else is there printing of money, and lowering of the interest rate like here. I think the rest of the world is trying to do much of the same that the US is, that is stimulate a bit, but the difference imo is that the rest of the world is doing it little at a time so as not to stimulate too much and then have the whole thing turn and overshoot... which will undoubtadly be even worse.

Inflationary monetary policy never worked, when the economy doesn't respond to the traditional injections of cash and incentive or the interest rate, you just farther compound the problem by sticking to it... take a look at examples such as Argentina, Post WWI germany, post WWII Hungary, and Zimbabwe, all the same story, but here the US also has the added headache of the housing bubble and crash of wallstreet (that is tied into the housing bubble) to coumpund the problem. IMO a clear cutting of wall street would have done more good... at least investors would have known what they can trust in and bank on... there is little transparancy with the actions that the Fed has taken, and when you have a central bank that can't be trusted there is little hope that the international community (investors) will feel safe with...

One thing is for sure, there are far too many variables at play for there to be one single right answer, but I'm confident that some are more on base then others.... I guess we'll see
20_RC51_00 is offline  
post #19 of 62 (permalink) Old 12-17-2008, 10:51 PM Thread Starter
Dr. Carbon
 
20_RC51_00's Avatar
 
Join Date: Nov 2005
Posts: 2,973
Quote:
Originally Posted by sburns2421 View Post
I had a thought about the current situation over lunch today. Is it possible that several at the top in the US (Paulson, Bernanke, Bush et al) realized that the house of cards were going to collapse, and are now acting to end up with the US in the best place possible considering the circumstances?

If you look at what truly is a worldwide crisis, you see that other countries, basically everyone else, is being hurt even more than the US. Despite a large portion of the responsibility for the mess being layed at the feet of the US, most of the world is still buying treasuries because we are still the safest place for foreign currency. Would China Inc choose someday to dump US bonds and move to say, Japanese securities? Probably not. Would they stick their money in Arab dictatorships? Nope. Socialized Europe who seems to be imploding as we watch the nightly news? No again. They don't have many desirable alternatives.

The price of oil also had me thinking of this thread topic of manipulation. A barrel of oil was bid up dramatically this year, and fell even more quickly to 2004 levels. Oil producing countires (OPEC nations plus Russia) have based their budgets on the price being much higher than $40. Their leaders' power base is contingent on them being able to provide a basic standard of living to their citizens, or at least having enough muscle to keep the masses in line. Having your government's budget cut in half because you planned on $80 oil makes that a challenge either way.

I am not a conspiracy enthusiast but will play one for another paragraph or two. So imagine for a minute that Paulson/Bernanke etc realize it is all going to come crashing down. Our US lifestyle is going to take a hit regardless of what is done, but perhaps depending on what steps the government takes we could come out of it somewhere between impoverished to just knocked down a few notches. We go from a Lexus to a Chevy, instead of a Lexus to a bicycle. I think you get my meaning.

So what if as the crash happens, they play up the crisis to once-in-a-century proportions. Get a huge $700B chunk of newly printed cash to do with as they please. This means they can control the market to the downside. None have explicitly done it, but with one public sentence either Bernanke or Paulson (or Bush) could send the stock market into another 3000 point dive. They also get to choose which marginally viable companies get to live and who are allowed to die.

Rather than fighting amongst ourselves, people in the US realize their position and how dependent they are on imported goods and more importantly, imported energy. A movement to restore the US manufacturing base and have clean energy independence by 2020 takes hold. This would be Obama's job, and I hope he pushes it. He has the opportunity to be one of our best Presidents if he can communicate this to the people.

The rest of the world goes in the tank, governments which have propped up their industries for decades (Airbus?) suddenly are cash-strapped. Oil-rich countries become oil-broke as they run huge deficits to keep power. The EU effectively disbands as each country goes back to its own currency, in hindsight the nationalism of each was discounted. In good times they can hold their noses and put up with each other, but now in bad times they protect their own kind.

Russia and China are weakened, and more importantly their real areas of weakness are exposed throughout this trying time. That leaves the US, bloodied and battered, poorer but not bankrupt, as the overwhelming lone superpower in the world. Energy independent, with strong manufacturing and financial services. But most importantly, the attitude of the citizens of the US has changed to not expect something for nothing. Ironically, the US as a whole adopts an attitude more like the Asian immigrants I have encountered: busting your ass and frugality are the best way to financial security.

IMO it would be exactly the same for every argument you just made... but that's just my opinoin. I think the US is worse off in every way, and that the EU is more stable.... There in general is tighter fiscal frugality and prudence in Europe especially Germany then the US, jsut look at consumer savings, and govt spending over time... which would be more confidence inspiring to have a EU denominated global currency
20_RC51_00 is offline  
post #20 of 62 (permalink) Old 12-18-2008, 12:15 AM
Panigaliscious
 
sburns2421's Avatar
 
Join Date: Sep 2005
Location: SW MO
Posts: 9,103
I don't know if you read it today, but Deutsche Bank failed to redeem a bond issue worth about $1.4B today. Germany expects the greatest economic contraction there since WWII. -2%.

Standard & Poor's also said they estimate 20% of all lower-rated businesses in mainland Europe and the UK will do bankrupt in the next 24 months.

The Pound is collapsing, nearing parity with the Euro.

At the same time, the dollar is also dropping from its recent rise in value. The yen is higher than it has been in 13 years. The extreme drop in interest rates are cited, but I wonder if there is more than that. Could the US be de-valuing its currency without actually saying that is what they are doing?

1985 Honda VF1000R, 1990 Ducati 851, 2008 YZ450F

Last edited by sburns2421; 12-18-2008 at 02:44 AM.
sburns2421 is offline  
Sponsored Links
Advertisement
 
Reply

Quick Reply
Message:
Options

Register Now



In order to be able to post messages on the Speedzilla Motorcycle Message Forums forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.

User Name:
Password
Please enter a password for your user account. Note that passwords are case-sensitive.

Password:


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:
OR

Log-in









Human Verification

In order to verify that you are a human and not a spam bot, please enter the answer into the following box below based on the instructions contained in the graphic.



Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page
Display Modes
Linear Mode Linear Mode



Posting Rules  
You may post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On

 
For the best viewing experience please update your browser to Google Chrome