The debt fueled bubble and the recession that followed

As we had often come back to discussing economic benefits/impact of sports I thought it was about time for an economic discussion forum.
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jayakris
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Re: The debt fueled bubble and the recession that followed

Postby jayakris » Fri Oct 22, 2010 7:51 pm

You wouldn't be censored unless I asked you WTF was WTF and you got trapped into explaining it :) Jay

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Re: The debt fueled bubble and the recession that followed

Postby Atithee » Fri Oct 22, 2010 8:49 pm

Why the Fuss guys? :D

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Re: The debt fueled bubble and the recession that followed

Postby prasen9 » Fri Oct 22, 2010 11:50 pm

gbelday wrote:I do think (and it is quite obvious) that Securitization without proper regulation was the cause of all these issues but getting rid of that process is not the solution.
Securitization may well be necessary and proper regulation may also be necessary. I am a left-leaning independent but I differ with the democrats on their reliance on the ability of regulators to regulate. Time and again, regulators fall asleep at the wheel. Especially, if we are talking about a once in eighty year event. Ideally, philosophically, I prefer the (real) free market where whoever takes the profit also has to take the loss if things go belly-up. Do whatever crap you (not meant at Gautam) want but if you fail, you go bankrupt. I do understand that in this particular case there may be reason for intervention to prevent even further economic mayhem. So, maybe I would prefer regulation that tries to address issues without depending upon regulators to use their judgment actively. For example, breaking up the big banks and not letting big banks to go beyond a particular % of the economy or some other simple to implement structural (not used in any technical sense) limit would be preferable in my eyes.

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Re: The debt fueled bubble and the recession that followed

Postby jayakris » Sat Oct 23, 2010 2:21 am

That was a question I always wanted to ask. How come it is taking this long for capitalism and free-market to figure out that something needs to be done about companies and banks getting too big. There just has to be a mechanism to prevent that in free market. At least there has to be a way that prevents TBTF from happening, without touching the fundamental aspects of free-market capitalism...

I don't know if actively breaking up companies and banks is a way, but if we are in a cunch, that must be done too.

Jay

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Re: The debt fueled bubble and the recession that followed

Postby prasen9 » Sat Oct 23, 2010 4:16 am

jayakris wrote:There just has to be a mechanism to prevent that in free market. At least there has to be a way that prevents TBTF from happening, without touching the fundamental aspects of free-market capitalism...
That mechanism is called legislating. But, when the legislature is but a slave of the industry and have been duly bought and paid for, then the so called-democratic legislations do not happen as they should. Who will bell the cat?

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Re: The debt fueled bubble and the recession that followed

Postby jayakris » Sat Oct 23, 2010 5:35 am

So regulation through legislation rather than through regulators, who would be asleep atthe wheel, is what we want? (Sorry to ask all these silly questions -- I am just trying to develop my own novice's system of postulates on this matter) .. Jay

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Re: The debt fueled bubble and the recession that followed

Postby Peter » Sat Oct 23, 2010 2:24 pm

Jay, The free market is dead. TBTF banks run Washington. The Fed has distorted every market out there.

More words: HFT, Front running, POMO. This is how the big banks are making money. If their assets were marked to market they would all be insolvent. Remember the line, this is not a liquidity crisis. It is a solvency crisis.

Meanwhile the folks who did the right thing (saved money, lived under their means) are getting reamed. Bernanke has made it clear that it will be ZIRP indefinitely. And his steps will destroy the currency. The academic is trapped in his ivory tower.

Here is a handy reference: LMGTFY :)

Gautam, Maybe you can explain the wall street (and government) mindset of heads we win, tails you pay ?

Best wishes to everyone,
Peter

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Re: The debt fueled bubble and the recession that followed

Postby prasen9 » Sat Oct 23, 2010 7:41 pm

jayakris wrote:So regulation through legislation rather than through regulators, who would be asleep atthe wheel, is what we want? (Sorry to ask all these silly questions -- I am just trying to develop my own novice's system of postulates on this matter) .. Jay
Jay, that is my personal position. As you know I am no expert and do not understand things seriously enough to have an expert opinion, but, from a high level that seems what I would support. Regulation can be via legislation that binds the government to do things or via executive decisions in the administrative branch either from the president or from the particular bodies like SEC, etc. Any regulation has to be implemented and a lot of leeway remains from what is written and how strictly it is implemented. I would like simple solutions like a bar on the max size of a bank that seems to me to be regulation that can be implemented. But, I have no clue about whether that will actually make things better or worse.

The financial industry seems to be saying that these things happen once in 70-80 years, just eat it. It may be that the overall benefit of low regulation with a once in a century catastrophe maybe better than stunting growth throughout and not having the benefits but not the catastrophic fall either.

I am too naive to determine which is correct and I am too skeptical of everybody to believe anybody. Except perhaps non-partisan thinktanks or non-partisan academics with lots of data and supporting logic and analysis. Maybe some such studies will come out and the community will converge towards what is the right solution.

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Quantitative Easing - part II Halloween edition

Postby kujo » Thu Nov 04, 2010 9:42 pm

Quantitative Easing - part II Halloween edition
http://www.bloomberg.com/video/63591216/

Free money everyone! yipee!!

It is not over by any stretch of imagination. After all, all good things come in threes right?! QE Trilogy anyone?. Gold is your safe bet.

cheers
kujo

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Re: The debt fueled bubble and the recession that followed

Postby gbelday » Thu Nov 04, 2010 10:56 pm

Print baby print :)

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Re: The debt fueled bubble and the recession that followed

Postby Peter » Fri Nov 05, 2010 12:00 am

Commodities performance over the past 12 months.

Look at what the genuine masters have done to us. Ben has apparently conquered deflation. Except in wages and the ponzi housing market.

How much longer before Ben and Tim get the perp walk?

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Re: The debt fueled bubble and the recession that followed

Postby prasen9 » Fri Nov 05, 2010 12:03 am

Peter wrote:How much longer before Ben and Tim get the perp walk?
Peter-bhai, seems you have not learned your lessons well. From whom? From those that are already bought and sold several times by industry? Who will bell the cat? I do not know about Ben Bernanke, but, Tim Geithner has been generally useless. Average at best in performance and dangerous in his opposition to Elizabeth Warren.

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Re: The debt fueled bubble and the recession that followed

Postby Peter » Fri Nov 05, 2010 12:14 am

Prasen, i do realize that Ben and Tim are actually serving their masters. But there is new awareness of the crooks they are. Even Bill Gross (the biggest bond manager in the world) called QE2 to be the biggest ponzi scheme ever.

Ron Paul to introduce new legislation to end the Fed.

And yes, Ron Paul is now chairman of the monetary policy sub committee. Watch Ben squirm and lie through everything.

i am calling bullshit on the Fed panderers at this forum. You know who you are.

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Re: The debt fueled bubble and the recession that followed

Postby prasen9 » Mon Nov 22, 2010 3:04 am


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Re: The debt fueled bubble and the recession that followed

Postby prasen9 » Mon Nov 29, 2010 5:28 am

Hart-Zingales on improving the reform law: http://www.city-journal.org/2010/eon1123ohlz.html


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