The Second Great Depression?

[Divinus Arma]

The Dow fell below 10,000 today. On the NYSE, 98 stocks rose and 3,114 dropped. No single investment bank remains in its historical form, all having failed or in the process of converting to commercial status. Fannie, Freddie, AIG, WaMu...

Asian Markets are tumbling.

European banks are failing.


Are we seeing the entrance to a second great depression? Or is this a recession? Or something in between?

[KukriKhan]

Something in-between, I think.

Unless employment drops dramatically. Then yeah, the big one returns.

Right now, everybody from Joe Sixpack to Bank of America is cutting back on spending, which includes spending on investment (stock mkt plunges), until we see what Treasury is gonne do with the $700bn credit card we gave them, and come to either trust them and their decisions, or give up on them, convert to cash, and horde food and ammo.

In my opinion. :bow:

[Vladimir]

Good thing we passed that $1 Trillion bailout bill. :juggle2:

(Actually ~850 billion but who's counting?)

[Louis VI the Fat]

I'm still not sure just exactly what it is we're witnessing now.

But it'll be one for the history books, that much seems certain.

[Crazed Rabbit]

No.

Only a few banks are falling; the whole foundation isn't crumbing, as back in the stock market crash.

Funny how that 700bn did nothing. :wall:

CR

[Hooahguy]

i think were somewhere in between.....
all we can do is pray....

[TevashSzat]

I don't think so because unlike back then, the politicians will at least try to do something about the economy regardless of whether it is wise or not compared to President Hoover(is that right?) and his general inaction

[Crazed Rabbit]

Roosevelt's actions caused the depression to drag on for much longer than it would have otherwise. Keynesian economics are bull.

Unfortunately, the trend seems to be thinking the government has to try to solve every problem.

CR

[Koga No Goshi]

Roosevelt's actions caused the depression to drag on for much longer than it would have otherwise. Keynesian economics are bull.

Unfortunately, the trend seems to be thinking the government has to try to solve every problem.

CR

Wow. Just wow.

[Don Corleone]

Unemployment is hovering around 6.25% in the U.S., with localized pockets as high as 8%, such as Detroit.

At the height of the Great Depression, unemployment hit something like 28%, so I don't think we're there yet.

However, as others have wisely pointed out, everyone is trying to throttle back on spending. Graduallly raising the savings ratio is a good thing for a society, but rapidly doing it can be very painful. It remains to be seen how the current fiscal crises (plural) will play out. I don't expect unemployment to drop any time soon, not with housing prices still dropping. But whether we're talking current malaise, or even passing the 10% mark remains to be seen.

I know one thing. If you have a lot of cash around and you were thinking you needed to make a large purchase, give it 4 months and you'll be amazed at what you'll be able to get for a given price, so long as you're paying cash.

[TevashSzat]

Roosevelt's actions caused the depression to drag on for much longer than it would have otherwise. Keynesian economics are bull.

Unfortunately, the trend seems to be thinking the government has to try to solve every problem.

CR

So.....had President Hoover been allowed another 2/3 terms we would have been better off? :laugh4::laugh4::laugh4::laugh4::laugh4:

[Hooahguy]

Roosevelt's actions caused the depression to drag on for much longer than it would have otherwise. Keynesian economics are bull.

Unfortunately, the trend seems to be thinking the government has to try to solve every problem.

CR

amen! small government FTW!:smash:

[yesdachi]

If we were where we are today without the trillion dollar infusion I would say we were headed for a lot of trouble (depression) but I think a lot of the stock market woes are people pulling their money and holding it somewhere safer until the market evens out after this trillion gets divided up. There is a lot of money in there and it all didn’t just disappear, people are taking it out and putting it in their mattresses until it is safe again.

We are still in a bad place financially but not as bad as we would be if we were loosing jobs at the same rate the market is falling.

The entire situation is a big mess and it is all thanks to government pressure and greed. I think the bailout is bad and that the gov should butt out and the market should be allowed to correct itself. There are thousands of enterprising people out there ready and willing to step in and pick up the shattered pieces of the big companies and make something good from it, they should be allowed to. But by throwing money at it the gov is encouraging a broken system with the same broken players. :thumbsdown:

[Koga No Goshi]

amen! small government FTW!:smash:

If this had been the predominant philosophy at the time of the New deal, we'd still be there. "Yes, President Rockefeller?"

[yesdachi]

I know one thing. If you have a lot of cash around and you were thinking you needed to make a large purchase, give it 4 months and you'll be amazed at what you'll be able to get for a given price, so long as you're paying cash.

I couldn’t agree more. People around here are able to get screaming deals on houses around here, course if you are the seller you may not be real happy but for someone with cash in their hand now (or in 4 months) is a good time to buy.

Personally I think I am upside down on my house but I am not planning on selling anytime soon. :shrug:

[Evil_Maniac From Mars]

We're not going to hit another Great Depression unless something gets much, much worse.

[Rhyfelwyr]

Keynes was better than the White plan...

[AlexanderSextus]

amen! small government FTW!:smash:

This is one of those rare times that i agree with hooah...


:yes:

oh, and Keynesian economics FTL, Austrian School of Economics FTW!!!!!

[JAG]

Roosevelt's actions caused the depression to drag on for much longer than it would have otherwise. Keynesian economics are bull.

Unfortunately, the trend seems to be thinking the government has to try to solve every problem.

CR

haahahahahahahah What a pile of rubbish you just came out with, ahahahah. The fact you really believe this crap amazes me everytime I see you type such a silly post. Amazing.

Anyway, yeah SMALL GOVT FOR THE WIN!! Its not like it has got us into this situation or anything!?!?!!!! NOES!!

[ICantSpellDawg]

This is the natural re-distribution of wealth from globalization. The disappearing 2.5 trillion was just a few of the many that we overvalued our societies by on an increasingly more level playing field. It was never going to be pretty, but in the end the developing world will be better off from it. We will be worse off and regressing. Parity could have been us pulling them up or them pulling us down. It seems as though the latter is the road we have taken through our economic policies. Everyone outside of industrialized financial nations just became a little richer in relation to the rest of us.

We've lied to ourselves and overestimated our national net worth.

Oh well, back to the drawing boards.

[Divinus Arma]

haahahahahahahah What a pile of rubbish you just came out with, ahahahah. The fact you really believe this crap amazes me everytime I see you type such a silly post. Amazing.

Anyway, yeah SMALL GOVT FOR THE WIN!! Its not like it has got us into this situation or anything!?!?!!!! NOES!!

That's right. Because a centralized economy has been very successful in communist countr... oh. damn. They're capitalizing, huh? Uh Oh. Never mind.

[CountArach]

In-between. This is definitely worse than things we have seen in quite a while, but ultimately it is no great depression.

But it could be turned into one without too much trouble.

[JAG]

That's right. Because a centralized economy has been very successful in communist countr... oh. damn. They're capitalizing, huh? Uh Oh. Never mind.

Im not a communist nor have ever been one and have never truly argued for a complete command economy. There is a difference between state action and regulation and a 'small' state. Gah forget it, I am just a commie in disguise and should be ignored!!!! Dam those social democrats knowing what is best and all. :(

[Koga No Goshi]

People who think it started and ended with the housing market, or even with deregulation for that matter, are missing the larger picture. I believe Tuff somewhat indirectly hit upon it here. Why was the housing market so inflated? Why was home equity such a "big business" and why were so many people both trying to tie their money up in properties, and also get money out of the equity of properties? Because, IMHO, housing was the last big bulwark holding up our economy and backing up the value of people's worth and credit. And by extension of doing that, it held up the whole economy in general because people could take money out of their houses to buy all sorts of things they didn't have the money for and it was basically "free money" because the jumps in housing values would cover up whatever they took out of their house after awhile. And banks doing refinances, subprime mortgage loans, and everything in between made big money off the commissions and such. So it was happy times all around... for awhile.

The big picture is, we don't produce. We shove debt and paper around. We have magical values assigned to things with no domestic production value or promise of future goods to back it up or stand as collateral. Our economy is service based. What that means is people pushing around stock portfolios, lines of credit, mortgages, equity loans, credit cards and debt to make the economy keep moving just as if we were a producing, surplus-exporting boomer. So the housing market was going to crash, sooner or later. Yes plenty of hands helped it inflate and pop along the way because it was a way to make money. But the fact that people were cannibalizing the roof over their head to maintain economic growth and accumulation of equity and security against retirement (ultimately) was even a point of question because of how badly we have undergutted our economy.

My forty-nine and a half cents.

Oh and, if I am correct, it's not going to bounce back. There is nothing to make it bounce back, unless it's just in the form of a flush of foreign investment coming in and us slinking more and more into debt. Short of completely revamping our economy with new industries and probably a significantly large government hand in helping to incentivize and push such a change along, we are on a downhill incline.

[ICantSpellDawg]

People who think it started and ended with the housing market, or even with deregulation for that matter, are missing the larger picture. I believe Tuff somewhat indirectly hit upon it here. Why was the housing market so inflated? Why was home equity such a "big business" and why were so many people both trying to tie their money up in properties, and also get money out of the equity of properties? Because, IMHO, housing was the last big bulwark holding up our economy and backing up the value of people's worth and credit. And by extension of doing that, it held up the whole economy in general because people could take money out of their houses to buy all sorts of things they didn't have the money for and it was basically "free money" because the jumps in housing values would cover up whatever they took out of their house after awhile. And banks doing refinances, subprime mortgage loans, and everything in between made big money off the commissions and such. So it was happy times all around... for awhile.

The big picture is, we don't produce. We shove debt and paper around. We have magical values assigned to things with no domestic production value or promise of future goods to back it up or stand as collateral. Our economy is service based. What that means is people pushing around stock portfolios, lines of credit, mortgages, equity loans, credit cards and debt to make the economy keep moving just as if we were a producing, surplus-exporting boomer. So the housing market was going to crash, sooner or later. Yes plenty of hands helped it inflate and pop along the way because it was a way to make money. But the fact that people were cannibalizing the roof over their head to maintain economic growth and accumulation of equity and security against retirement (ultimately) was even a point of question because of how badly we have undergutted our economy.

My forty-nine and a half cents.

Oh and, if I am correct, it's not going to bounce back. There is nothing to make it bounce back, unless it's just in the form of a flush of foreign investment coming in and us slinking more and more into debt. Short of completely revamping our economy with new industries and probably a significantly large government hand in helping to incentivize and push such a change along, we are on a downhill incline.

I agree. Basically our entire economy is smoke and mirrors.

[ICantSpellDawg]

Im not a communist nor have ever been one and have never truly argued for a complete command economy. There is a difference between state action and regulation and a 'small' state. Gah forget it, I am just a commie in disguise and should be ignored!!!! Dam those social democrats knowing what is best and all. :(

I'm pretty sure that you leaned pretty heavily towards communism when you used to post more often. I cant quite recall, but I was almost positive that you were a Communist, and I don't charge people with that too often.

I think that we've all seen you swing somewhat to the right over the years. I guess there wasn't much room on the left for you to grow, eh?:clown:

[Koga No Goshi]

I agree. Basically our entire economy is smoke and mirrors.

Sad times when friends and enemies say the same thing, and it's bad news. ;)

[JAG]

I'm pretty sure that you leaned pretty heavily towards communism when you used to post more often. I cant quite recall, but I was almost positive that you were a Communist, and I don't charge people with that too often.

I think that we've all seen you swing somewhat to the right over the years. I guess there wasn't much room on the left for you to grow, eh?:clown:

Not really, I used to describe myself as a socialist and to a great degree I still am, but describing yourself as that often doesn't really represent your views properly. I was never a communist who believed in command economies, people here simply give you those opinions if you are not hand in hand with the free market. I am a liberal - real liberal - social democrat, in the true sense of the word.

Been reading Noami Klein's latest classic, 'The Shock Doctrine' and she has to a large extent predicted this economic crisis and the 'shock' which is going on at the moment to further push through the extreme capitalist agenda - people should read the book, it is englightening.

Public institutions > Private. Private companies debt > Public.

[Productivity]

The big picture is, we don't produce.

This is a highly pesimistic view of the American economy - certainly numerous industries in the US have been hammered over the last two decades and are hardly viable except as a niche (take car manufacturing for example), but there are plenty of other industries which the US is perfectly competitive in. Sure there has been a significant issue with the balance of exports to imports recently, but that doesn't mean the economy is fundamentally broken - it just needs restructuring. Produce what you're good at producing, not what the rest of the world is good at producing. Stop trying to build cars when it's been obvious for the last two decades that East Asia builds better mass produced cars and Europe has a much better grip on luxury cars. Decades of wastage and money has been kept trying to keep Detroit going only to finally see it collapse into a pile of non-viable industry and service industries.

[Hooahguy]

for the first time that i can remember, i agree with you on something... :clown:
but ya, our economy is in chambles.
the only thing that can bring us our is a giant war, like WWII brought us outof the great depression*looks towards iran.....* (jk) :beam:

[Don Corleone]

Koga et. al.,

I think you're confusing manufacturing for producing. We don't actually manufacture a lot of the goods that we used to, you're correct. But then, we also don't have everyone growing their own food. At one time, 80% of Americans were farmers. When we industrialized, was it a bad thing that that number dropped to 10%? Not really, because the loss in wealth of crops was made up for in gains in income in the new manufacturing jobs.

Globalization produces a similar 'labor evolution'. We've transitioned our economy from a manufacturing based economy to an IP based economy, sometimes referred to as the 'service economy', but since 'service' makes people think of wait-staff, I don't like using that term.

It's not that our economy is in a shambles and the American people missed all their true wealth being ported overseas. It's more a matter of the educational programs to transition our workforce into the new economy have been lacking. This is one thing I actually agree with Obama on and commend him for properly calling. He's not talking about bringing all manufacturing back to the US by executive fiat. Even he knows that's a bad idea.

What's causing the pain is 2 things: 1) the rate of transition is too fast and 2) our labor pool is not receiving the proper skills training to allow them to transition in a timely fashion.

Trust me, a nation of engineers and accountants has a better economy than a nation of press-operators. Any day of the week.

[ICantSpellDawg]

The real issue is that people around the world are becoming more intelligent. Their nations are becoming more secure in many areas as well. They are harder working on average, just as intelligent and will work for peanuts without a belief that they are entitled to anything; and they know how to live on a shoestring. You can't honestly believe that people are inherently equal and still hold on to the notion that we are somehow better "just because".

We squander life savings on sub-par education that teaches our children very little. We buy or lease cars that make us feel like we are better than other, but we can't afford them so they make us worse. Many of us pay 30% on every dollar we borrow or 4 dollars every time we go to a non-bank ATM. We spend $2.50 on bottles of tap water and $60 or more on shirts. Our health care has skyrocketed because we treat it like everyone else - have someone else be in charge of the prices you pay and never even look at them. Real world gas prices have finally come to our shores as well

We have gone insane and burned our advantage in a national bonfire.

A national correction is not the worst thing that could happen now - further travel down this delusional path is. We need to work harder, expect less and fight for the things that are most important to us while marginalizing the others.

[PanzerJaeger]

No.

This hysteria is ridiculous.... I can't believe some of the seemingly rational people that are currently stockpiling guns and ammo over a dip in the markets. :no:

As I've said, every institution left holding the bag on the bad loans is going to take a hit. Some will and have failed, and some will make it. All the investment banks failed or were forced to commercialize because they all dealt in this securitized bad debt. After these loans - in whatever form they've taken - have done their damage and make it out of the system, the fundamentals of the market and economy will remain.

So calm down. Spreading unwarranted fears of another depression will just drive your 401Ks lower. If you know what you're doing, there can be a lot of money made in this type of situation. Ask Banquo. ~:P

[ICantSpellDawg]

No.

This hysteria is ridiculous.... I can't believe some of the seemingly rational people that are currently stockpiling guns and ammo over a dip in the markets. :no:

As I've said, every institution left holding the bag on the bad loans is going to take a hit. Some will and have failed, and some will make it. All the investment banks failed or were forced to commercialize because they all dealt in this securitized bad debt. After these loans - in whatever form they've taken - have done their damage and make it out of the system, the fundamentals of the market and economy will remain.

So calm down. Spreading unwarranted fears of another depression will just drive your 401Ks lower. If you know what you're doing, there can be a lot of money made in this type of situation. Ask Banquo. ~:P

Some people will always make money. I'm talking about the average Joe who will be hit hard. I've been hearing "unwarranted fears" so often that I don't know what it means anymore. When would fears be warranted?

We have serious problems that we need to look into - I hope you aren't arguing that status quo is the way forward? No one seems to understand how we will make promises happen, both in the public and private sectors. That concerns me. We don't have workable financial models in either segment, people have very little faith in their congressional or private sector leaders. We are a nation of debt who has gambled too much of the money that we do have in an overvalued system with cooked books.

Things always get worse around election time, but that doesn't mean that concerns aren't real.

[yesdachi]

What's causing the pain is 2 things: 1) the rate of transition is too fast and 2) our labor pool is not receiving the proper skills training to allow them to transition in a timely fashion.

The only part I really disagree with you on is 2) our labor pool is not receiving the proper skills training to allow them to transition in a timely fashion. The labor pool can not wait for someone to train them for the next hot job/career. If some of the labor pool that lost their jobs when GM left Flint would have used some of their over inflated wage* to go to college they could have prepared for the future. The labor force is… the labor force and the companies like GM don’t want to smarten them up and the government can’t be held responsible for them not being forward thinking. The labor force needs to be responsible for themselves but in many cases they don’t seem motivated enough until it is too late.

*if the wage wasn’t over inflated GM wouldn’t have had to leave. Which is where I think the housing mess started. Let me explain, jobs went away (southern US, Mexico, china, etc.) and the jobless or people with jobs that didn’t pay as well were forced to compromise their lifestyle. Banks and lenders saw that as the (government encouraged) opportunity to make a buck off downtrodden people who wanted to live like they were but didn’t have the means. They lowered their standards for loan approvals and the next thing you know everyone has the house they want that is just barely in their affordable range then the economy slumps and all of a sudden Joe sixpak (a wink at Palin) is spending $40 more a week on gas and another $20 on groceries and so on. So they start using their credit cards and wham-bam-thank-you-mam, default on their mortgage. The labor pool is not bright, big companies want to keep them that way and the government encouraged predators to take advantage of them. I could chain that back to the unions cutting the manufacturers too deep, or back to the fat cat manufacturers treating the labor pool lousy encouraging the growth of unions, or back to my head exploding. :dizzy2:

Got a little carried away there, sorry Don. :bow:

[Goofball]

Oh and, if I am correct, it's not going to bounce back. There is nothing to make it bounce back, unless it's just in the form of a flush of foreign investment coming in and us slinking more and more into debt. Short of completely revamping our economy with new industries and probably a significantly large government hand in helping to incentivize and push such a change along, we are on a downhill incline.

People say that every time there is any kind of economic crisis. And you know what? They have been wrong every time.

[ICantSpellDawg]

People say that every time there is any kind of economic crisis. And you know what? They have been wrong every time.

It isn't that bad yet and will probably bounce back eventually. The great depression did to, but not without some introspection.

I'm not fan of inevitability. I assume we've all had something similar to this happen: the incredibly kind, healthy, industrious, bright, independently wealthy friend; who if you had to bet that one person you knew would succeed -it would be him- mysteriously gets sick one day and dies 3 days later because of an undressed illness that he himself didn't realize was such a serious problem. Ironically it happened 1 1/2 years ago when he just got a job at Lehman as an analyst.

Hope for the best, but don't just expect it. Sometimes the best of us are out for the count.

[drone]

This hysteria is ridiculous.... I can't believe some of the seemingly rational people that are currently stockpiling guns and ammo over a dip in the markets. :no:

Hey, I don't need to use a dip in the markets as an excuse to stockpile guns and ammo! ~D

[Xiahou]

Hey, I don't need to use a dip in the markets as an excuse to stockpile guns and ammo! ~D

Investment advice (https://www.youtube.com/watch?v=qsMc-IswG3w). :beam:

[ICantSpellDawg]

Investment advice (https://www.youtube.com/watch?v=qsMc-IswG3w). :beam:

hahaha. When will the mogwai market return?

[Proletariat]

No.

This hysteria is ridiculous.... I can't believe some of the seemingly rational people that are currently stockpiling guns and ammo over a dip in the markets. :no:

As I've said, every institution left holding the bag on the bad loans is going to take a hit. Some will and have failed, and some will make it. All the investment banks failed or were forced to commercialize because they all dealt in this securitized bad debt. After these loans - in whatever form they've taken - have done their damage and make it out of the system, the fundamentals of the market and economy will remain.

So calm down. Spreading unwarranted fears of another depression will just drive your 401Ks lower. If you know what you're doing, there can be a lot of money made in this type of situation. Ask Banquo. ~:P

Yeah, the chicken little routine is baffling to me as well. When I stop seeing people buying thousand dollar flat screen TVs two at a time from Costco along with their 80 packs of bottled water maybe I'll be able to better understand the '2nd Great Depression is looming!' angle.

:strawman1:

[Koga No Goshi]

People say that every time there is any kind of economic crisis. And you know what? They have been wrong every time.

I'm not talking about piddly four year bouncebacks and a new industry to inflate and then pop. I'm talking long-term, big picture. I stated that explicitly. If we get into all kinds of new exportable, profitable and forward-geared industries, we will bounce back. If not, we won't. But I did also state that I don't believe any such traumatic change to the status quo loving free market will happen without considerable government-created incentive.

I think people who say "bah, this happens every 10 years or so" are really rose-shading how much we've undergutted the economy in a way that wasn't true 20, 40, 60 years ago.

[PanzerJaeger]

We have serious problems that we need to look into - I hope you aren't arguing that status quo is the way forward?

Actually, I am.

The fundamentals of the market economy work just fine.

The sole reason for the current mess was the bubble created through bad lending practices. As with all bubbles, it has to burst at some point. This one was especially bad because it directly affected the financials.

The market is the ultimate school of hard knocks. If we just let it work, it will punish bad behavior and lessons will be learned.

After this "crisis" passes, banks will be far more vigilant in their lending practices - just as business people now know to do solid research before investing in tech industries.

As with every bubble, sound market principles will always prevail. Just as it should have been obvious that throwing money at techs that consisted of little more than a website was a bad idea, it should have been obvious that giving people with bad credit scores credit was a bad idea. Sometimes, though, it takes a major correction to reinforce those principles and teach people that the market cannot be cheated.

[Goofball]

I'm not talking about piddly four year bouncebacks and a new industry to inflate and then pop. I'm talking long-term, big picture. I stated that explicitly. If we get into all kinds of new exportable, profitable and forward-geared industries, we will bounce back. If not, we won't. But I did also state that I don't believe any such traumatic change to the status quo loving free market will happen without considerable government-created incentive.

I think people who say "bah, this happens every 10 years or so" are really rose-shading how much we've undergutted the economy in a way that wasn't true 20, 40, 60 years ago.

But it was true 20, 40, 60 years ago.

This is nothing different.

[Koga No Goshi]

Actually, I am.

The fundamentals of the market economy work just fine.

The sole reason for the current mess was the bubble created through bad lending practices. As with all bubbles, it has to burst at some point. This one was especially bad because it directly affected the financials.

The market is the ultimate school of hard knocks. If we just let it work, it will punish bad behavior and lessons will be learned.

After this "crisis" passes, banks will be far more vigilant in their lending practices - just as business people now know to do solid research before investing in tech industries.

As with every bubble, sound market principles will always prevail. Just as it should have been obvious that throwing money at techs that consisted of little more than a website was a bad idea, it should have been obvious that giving people with bad credit scores credit was a bad idea. Sometimes, though, it takes a major correction to reinforce those principles and teach people that the market cannot be cheated.

Let me preface by saying that I think this mythos is just as fantasy-based as a pure application of socialism. In the sense that, in theory, either would work. But in practice, neither do. The free market or rather the "smart" parts of it, are constantly striving to make the market unfree, either through monopoly, or favorably influencing politics and laws to benefit one industry or hurt a competitor, or what have you. The free market wet dream assumes everyone will play by the rules, even though at the same time it argues to have as few rules as possible, and that this will somehow work. And that idea deserves every bit as much incredulousness as the idea that people will ever eliminate greed and be purely socialist and create utopia.

Now, I don't believe in the U.S. anyone is truly dedicated to the free market. I honestly don't. I really do think as Naomi Klein says that we have crybaby capitalism and that even the most dedicated anti-tax, anti-regulation free market right-wing conservative ideologues suddenly like the idea of a bailout once they've screwed up their industry. That's happened time and again. And I think as long as big corporate money funneled into lobbying can have this strong of a political effect on the market, there will never be anything close to a free market. Other examples would be companies getting together to pass through legislation (with the happy approval of the administration) to stop people's ability to file class action suits for fraud or any other abuse, or get out of credit card debts when filing bankruptcy-- even though that's more or less PRECISELY what credit industries can do as a matter of course either by filing corporate bankruptcy or getting bailouts.

I know you're just an ideologue, Panzer, so I am not expecting anything but a canned answer. But given America's economic and political and legal landscape, I do not understand how you can think a free market system could even exist or work for more than five seconds, let alone get to the point of self-correction and self-regulation.

[Koga No Goshi]

But it was true 20, 40, 60 years ago.

This is nothing different.

No, it wasn't. I'm sorry but this is not correct information. ;)

[Goofball]

No, it wasn't. I'm sorry but this is not correct information. ;)

Asian flu, tech bubble, Savings & Loan panic, overnight rates at 20%...

Those have all happened within the past 28 years. And there were those every time who thought that there would be no recovery.

There will always be a recovery, but no recovery is ever permanent.

[Strike For The South]

The government made these loans profitable and then proceeded to deregulate the system. So while the deregulation spurred this on. It was the making of unprofitable loans profitable that did this and if you cant see that I will never talk to you again.

[Koga No Goshi]

Asian flu, tech bubble, Savings & Loan panic, overnight rates at 20%...

Those have all happened within the past 28 years. And there were those every time who thought that there would be no recovery.

There will always be a recovery, but no recovery is ever permanent.

Small picture Goof. You're talking about various sudden bursts or pops of speculation.

My point is, the only real thing still driving the economy is speculation. It doesn't really matter if you're talking about tech, oil or housing.

[Goofball]

Small picture Goof. You're talking about various sudden bursts or pops of speculation.

My point is, the only real thing still driving the economy is speculation. It doesn't really matter if you're talking about tech, oil or housing.

Erm... That's exactly why the current crisis is no different from any that I have mentioned.

The market economy follows a set pattern. Recession, followed by cautious return to capital markets, followed by increased confidence and venture, followed by over-exuberant greed/speculation, followed by crash. Lather, rinse, repeat...

Cripes, during the end of the tech bubble none of our financial analysis models for valuing companies worked anymore, because they were all based on the rather old-fashioned idea that a company's value should be based on some sort of present value calculation of the cash flows they would generate. During that time, companies were considered a good deal if their daily burn rate was at least sustainable via further stock issues...

The current crisis was brought about by the same sort of speculative insanity. It is no different.

[Strike For The South]

Im going to start a depression survival store and suck all of you dry.

[Koga No Goshi]

Erm... That's exactly why the current crisis is no different from any that I have mentioned.

The market economy follows a set pattern. Recession, followed by cautious return to capital markets, followed by increased confidence and venture, followed by over-exuberant greed/speculation, followed by crash. Lather, rinse, repeat...

Cripes, during the end of the tech bubble none of our financial analysis models for valuing companies worked anymore, because they were all based on the rather old-fashioned idea that a company's value should be based on some sort of present value calculation of the cash flows they would generate. During that time, companies were considered a good deal if their daily burn rate was at least sustainable via further stock issues...

The current crisis was brought about by the same sort of speculative insanity. It is no different.

I'm not arguing it's different from a similar speculation bubbleburst 10 or however many years ago.

I am not sure you are grasping my point yet. My point is, what is the value of the U.S. dollar? What backs it up? What is the promise of its value in the future?

Another speculation bubble? That will hold up exactly for as long as it takes for someone to call in foreign debt.

[yesdachi]

Now, I don't believe in the U.S. anyone is truly dedicated to the free market. I honestly don't. I really do think as Naomi Klein says that we have crybaby capitalism and that even the most dedicated anti-tax, anti-regulation free market right-wing conservative ideologues suddenly like the idea of a bailout once they've screwed up their industry. That's happened time and again. And I think as long as big corporate money funneled into lobbying can have this strong of a political effect on the market, there will never be anything close to a free market. Other examples would be companies getting together to pass through legislation (with the happy approval of the administration) to stop people's ability to file class action suits for fraud or any other abuse, or get out of credit card debts when filing bankruptcy-- even though that's more or less PRECISELY what credit industries can do as a matter of course either by filing corporate bankruptcy or getting bailouts.

Well Koga, you make some good points but only if you ignore the “small business” portion of the free market. The big guys are the ones that push for the legislative changes and the bailouts and cause all the problems and do all the cry-babying. The small businesses like $25 million and under, with less than 100 employees are the ones that ride the free market like a rodeo cowboy. Even here in Michigan where the economy sucks there are still thriving small businesses all over the place. I think that sometimes we are focused on the big headline making businesses when there is probably a dozen or more small businesses that we passed while in our car on our way to work or school today that are doing just fine and laugh and call the big guys fools for collapsing in on themselves.

[Banquo's Ghost]

No.

This hysteria is ridiculous.... I can't believe some of the seemingly rational people that are currently stockpiling guns and ammo over a dip in the markets. :no:

As I've said, every institution left holding the bag on the bad loans is going to take a hit. Some will and have failed, and some will make it. All the investment banks failed or were forced to commercialize because they all dealt in this securitized bad debt. After these loans - in whatever form they've taken - have done their damage and make it out of the system, the fundamentals of the market and economy will remain.

So calm down. Spreading unwarranted fears of another depression will just drive your 401Ks lower. If you know what you're doing, there can be a lot of money made in this type of situation. Ask Banquo. ~:P

Good post PJ. :bow:

I think there is some risk, but mainly of talking ourselves into a significant turn down. If liquidity can be restored (admittedly quite a challenging "if") the fundamentals are actually quite strong in both the US and Europe. This is a moneylender's crisis.

As for your last point, I like Warren Buffett's philosophy: "Be fearful when others are greedy, and greedy when others are fearful." There's a lot of bargains out there for longer term returns.

Off on a tangent Koga; as an accountant, what is your view of changing back away from "mark to market"? I think a lot of the panic has been created by this change over the last few years - which seems sensible (it's the practice for those who don't know, of valuing a company's assets at current immediate market value, so when the markets tank, in theory so do all the assets) but has proven very destructive. If we went back to future marks, would that stabilise the banks without needing $700bn?

[Koga No Goshi]

Well Koga, you make some good points but only if you ignore the “small business” portion of the free market. The big guys are the ones that push for the legislative changes and the bailouts and cause all the problems and do all the cry-babying. The small businesses like $25 million and under, with less than 100 employees are the ones that ride the free market like a rodeo cowboy. Even here in Michigan where the economy sucks there are still thriving small businesses all over the place. I think that sometimes we are focused on the big headline making businesses when there is probably a dozen or more small businesses that we passed while in our car on our way to work or school today that are doing just fine and laugh and call the big guys fools for collapsing in on themselves.

Are you telling me that small business owners don't take advantage of small business loans, small business tax incentives, or other various incentive structures where they exist, if they are available?

Free market always seems to translate into = I want all the things that help me, and none of the things that hurt me or make me meet standards of quality/pay/confidence/whaever.

[yesdachi]

Are you telling me that small business owners don't take advantage of small business loans, small business tax incentives, or other various incentive structures where they exist, if they are available?

Free market always seems to translate into = I want all the things that help me, and none of the things that hurt me or make me meet standards of quality/pay/confidence/whaever.

Of course they take advantage of many of the incentives and loans and tax breaks but how often are cities bending over to lure a small business into their area or to keep them in their area? Or legislators listening to the needs of a company that’s entire sales for the year isn’t enough to pay for their next reelection campaign. I bet if you add up all the small business loans they wouldn’t equal the top 5 bankruptcy cases.

Small business success is based on their quality/pay/consumer confidence and whatever. Blow a job because of poor quality or loose a couple key employees due to poor pay and the company could struggle or even fall. The upside is that if they do fall they can’t fall far and there is always another small company there in the wings, ready to take over. :bow:

[Koga No Goshi]

New Question regarding OP Topic.

Has anyone else noticed the.... I don't know what to call it.... air of romanticism floating around about depression? I'm not talking about here, specifically. I hear it every single day at work, with all these various financial people and clients calling in. There seems to be almost a longing for something like that to happen.

What do you guys think the reason for that is? Just people feeling fed up with the corruption and b.s.?

[TinCow]

Has anyone else noticed the.... I don't know what to call it.... air of romanticism floating around about depression? I'm not talking about here, specifically. I hear it every single day at work, with all these various financial people and clients calling in. There seems to be almost a longing for something like that to happen.

What do you guys think the reason for that is? Just people feeling fed up with the corruption and b.s.?

I think it's because we like Rocky Road ice cream (http://en.wikipedia.org/wiki/Rocky_road_ice_cream) so much.

[PanzerJaeger]

I know you're just an ideologue, Panzer, so I am not expecting anything but a canned answer.

Well then, guess what? You won't get one at all. ~:pissed:



As for your last point, I like Warren Buffett's philosophy: "Be fearful when others are greedy, and greedy when others are fearful." There's a lot of bargains out there for longer term returns.

You must have made a killing after the first big selloff when the markets rebounded for a couple of days. :2thumbsup:

[Lemur]

Good article from the Economist (http://www.economist.com/opinion/displaystory.cfm?story_id=12341996) this week:

World on the edge

Oct 2nd 2008

Whatever happens in Congress, the crisis is now global; that means governments must work together

AMERICA’S Congress is not used to being second-guessed. But as lawmakers wrestled in the Capitol, world stockmarkets have been giving real-time odds on the Bush administration’s $700 billion bail-out becoming law. After the plan’s thrashing by the House of Representatives on September 29th, spurred on by voters’ loathing of “casino capitalism”, investors panicked. Yet as The Economist went to press, they were optimistic that, after winning the Senate’s approval on October 1st, the plan would pass.

Even if it does, that should not be a cause for optimism. Look beyond the stockmarkets, especially at the seized-up money markets, and there is little to see except bank failures, emergency rescues and high anxiety in the credit markets. These forces are drawing the financial system closer to disaster and the rich world to the edge of a nasty recession (see article). The bail-out package should mitigate the problems, but it will not avert them.

The crisis is spreading in two directions—across the Atlantic to Europe, and out of the financial markets into the real economy. Governments have been dealing with it disaster by disaster. They have struggled to gain control not just because of the speed of contagion but also because policymakers, and the public they serve, have failed fully to grasp the breadth and depth of the crisis.

What’s the Icelandic for “domino”?

Step forward, Peer Steinbrück, Germany’s finance minister, who rashly declared on September 25th that America was “the source…and the focus of the crisis”, before heralding the end of its role as the financial superpower. Within days, the focus shifted and Mr Steinbrück and his officials were obliged to arrange a €35 billion ($51 billion) loan from German banks and the German government to save Hypo Real Estate, the country’s second-biggest property lender.

The hapless Mr Steinbrück is not alone. European banks were collapsing at a dizzying pace even as Christian Noyer, governor of the Bank of France, declared that “there is no drama in front of us.” Hypo Real Estate was just one of five banks in seven European countries bailed out in three days. Belgium, Luxembourg and the Netherlands carved up Fortis, a big bancassurer; Britain nationalised Bradford & Bingley; Belgium, France and Luxembourg saved Dexia; and Iceland rescued Glitnir. Separately, Ireland took €400 billion of contingent liabilities onto the national balance sheet, when it stood behind the deposits and debts of its six large banks and building societies. You have to wonder what Mr Noyer regards as dramatic.

By some measures, many European banks look more vulnerable than their American counterparts do—and that is saying quite something, given the past week’s forced sale of Washington Mutual, America’s biggest thrift, and Wachovia, its fourth-biggest commercial bank. In America, outside Wall Street, the banks have lent 96 cents for each $1 of deposits. Continental European banks have lent roughly €1.40 for each €1 of deposits. They have to borrow the rest from money-market investors, who are not especially confident just now. Some Europeans, including the British, Irish and Spanish banks, have housing busts of their own. And they must contend with the toxic American securities they bought by the billion, as well as their own slowing economies.

Western Europe is not the limit of this: the panic has also struck banks in Hong Kong, Russia and now India. And it is not just the geographical breadth of this crisis that is alarming, but also its economic depth. Because it is rooted in the money markets (see article and article), it will feed through to businesses and households in every economy it hits.

Take a deep breath

Most of the time nobody notices the credit flowing through the lungs of the economy, any more than people notice the air they breathe. But everyone knows when credit stops circulating freely through markets to banks, businesses and consumers. For almost a year the markets had worried about banks’ liquidity and solvency. After the bankruptcy of Lehman Brothers last month, amid confusion about whom the state would save and on what terms, they panicked. The markets for three-, six- and 12-month paper are shut, so banks must borrow even more money overnight than usual.

Banks used to borrow from each other at about 0.08 percentage points above official rates; on September 30th they paid more than four percentage points more. In one auction to get dollar funds overnight from the European Central Bank, banks were prepared to pay interest of 11%, five times the pre-crisis rate. Astonishingly, rates scaled these extremes even as the Federal Reserve promised $620 billion of extra funding.

Bankers have always earned their crust by committing money for long periods and financing that with short-term deposits and borrowing. Today, that model has warped into self-parody: many of the banks’ assets are unsellable even as they have to return to the market each day to ask for lenders to vote on their survival. No wonder they are hoarding cash.

This is why those politicians who set the interests of Main Street against those of Wall Street are so wrong. Sooner or later the money markets affect every business. Companies face higher interest charges and the fear that they may one day lose access to bank loans altogether. So they, too, hoard cash, cancelling acquisitions and investments, in order to pay down debt. Managers delay new products, leave factories unbuilt, pull the plug on loss-making divisions, and cut costs and jobs. Carmakers and other manufacturers will no longer extend credit (see article) and loans will become elusive and expensive. Consumers will suffer. Unemployment will rise. Even if the credit markets work well, the rich economies will slow as the asset-price bubble pops. If credit is choked off, that slowdown could turn into a deep recession.

Financial markets need governments to set rules for them; and when markets fail, governments are often best placed to get them going again. That’s pragmatism, not socialism. Helping bankers is not an end in itself. If the government could save the credit markets without bailing out the bankers, it should do so. But it cannot. Main Street needs Wall Street; and both need Washington. Politicians—and President George Bush is the most culpable among them (see article)—have failed to explain this.

Governments need not just to communicate, but also to co-ordinate. Past banking crises show that late, piecemeal rescues cost more and work less well. Ad hoc mergers work for a while, but demands for help tend to recur. Inconsistency sows uncertainty. Cross-border banking can make one country’s policies awkward for the neighbours: the Irish government’s guarantee of all deposits threatens to suck in money from poorly protected British banks. France’s suggestion on October 1st that Europe’s governments should work together was a good one; Germany’s rejection of it was wrong.

Central banks have co-ordinated their liquidity operations. Now that oil prices have plunged and worries about inflation are receding, interest-rate cuts are possible. They would be more powerful if co-ordinated. But it is not only central banks that need to combine. Whatever America’s Congress does, governments should work together on principles to stabilise and recapitalise banks—not just to stem panic but also to save money. Even if, as the Europeans claim, the crisis was made in America, it now belongs to everyone.

[AlexanderSextus]

Honestly I think if you pull back far enough, the fact is, the entire system of economics the US uses is the problem. it's inherently flawed. We need an economy based on Austrian School Economics. It wouldnt fix everything, but it would help.


Austrian economists maintain that inflation is always and everywhere simply an increase of the money supply (i.e. units of currency or means of exchange), which in turn leads to a higher nominal price level, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer assets and goods and services.

Given that all major economies currently have a central bank supporting the private banking system, almost all new money is supplied into the economy by way of bank-created credit (or debt). Austrian economists believe that this bank-created credit growth (which forms the bulk of the money supply) sets off and creates volatile business cycles (see Austrian Business Cycle Theory) and maintain that this "wave-like" or "boomerang" effect on economic activity is one of the most damaging effects of monetary inflation.

According to the Austrian Business Cycle Theory, it is the central bank's policy of ineffectually attempting to control the complex multi-faceted ever-evolving market economy that creates volatile credit cycles or business cycles. By the central bank artificially "stimulating" the economy with artificially low interest rates (thereby creating excessive increases in the money supply), they themselves induce inflation (often focused in asset or commodity markets) and speculative investment, resulting in "false signals" going out to the market place, in turn resulting in clusters of malinvestments, and the artificial lowering of the returns on savings, which eventually causes the malinvestments to be liquidated as they inevitably show their underlying unprofitability and unsustainability.

Austrian economists therefore regard the state-sponsored central bank as the main cause of inflation, because it is the institution charged with the creation of new currency units, referred to as bank credit. When newly created bank credit is injected into the fractional-reserve banking system, the credit expands, thus enhancing the inflationary effect.

Accordingly, many Austrian economists support the abolition of the central banks and the fractional-reserve banking system, and advocate instead a return to sound money such as a 100 percent gold standard, or, less frequently, free banking.

Money could only be created by finding and putting into circulation more gold under a gold standard. This would constrain unsustainable and volatile fractional-reserve banking practices, ensuring that money supply growth (and inflation) would never spiral out of control. Dr. Alan Greenspan asserts that economic liberty and Ludwig von Mises asserts that civil liberties would be protected.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.

If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold.

Deficit spending is simply a scheme for the confiscation of wealth.

Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.


...just my $2.22, adjusted for inflation.

[Koga No Goshi]

Well then, guess what? You won't get one at all. ~:pissed:




You must have made a killing after the first big selloff when the markets rebounded for a couple of days. :2thumbsup:

*Shrug*

[Spino]

Honestly I think if you pull back far enough, the fact is, the entire system of economics the US uses is the problem. it's inherently flawed. We need an economy based on Austrian School Economics. It wouldnt fix everything, but it would help.


Austrian economists maintain that inflation is always and everywhere simply an increase of the money supply (i.e. units of currency or means of exchange), which in turn leads to a higher nominal price level, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer assets and goods and services.

Given that all major economies currently have a central bank supporting the private banking system, almost all new money is supplied into the economy by way of bank-created credit (or debt). Austrian economists believe that this bank-created credit growth (which forms the bulk of the money supply) sets off and creates volatile business cycles (see Austrian Business Cycle Theory) and maintain that this "wave-like" or "boomerang" effect on economic activity is one of the most damaging effects of monetary inflation.

According to the Austrian Business Cycle Theory, it is the central bank's policy of ineffectually attempting to control the complex multi-faceted ever-evolving market economy that creates volatile credit cycles or business cycles. By the central bank artificially "stimulating" the economy with artificially low interest rates (thereby creating excessive increases in the money supply), they themselves induce inflation (often focused in asset or commodity markets) and speculative investment, resulting in "false signals" going out to the market place, in turn resulting in clusters of malinvestments, and the artificial lowering of the returns on savings, which eventually causes the malinvestments to be liquidated as they inevitably show their underlying unprofitability and unsustainability.

Austrian economists therefore regard the state-sponsored central bank as the main cause of inflation, because it is the institution charged with the creation of new currency units, referred to as bank credit. When newly created bank credit is injected into the fractional-reserve banking system, the credit expands, thus enhancing the inflationary effect.

Accordingly, many Austrian economists support the abolition of the central banks and the fractional-reserve banking system, and advocate instead a return to sound money such as a 100 percent gold standard, or, less frequently, free banking.

Money could only be created by finding and putting into circulation more gold under a gold standard. This would constrain unsustainable and volatile fractional-reserve banking practices, ensuring that money supply growth (and inflation) would never spiral out of control. Dr. Alan Greenspan asserts that economic liberty and Ludwig von Mises asserts that civil liberties would be protected.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.

If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold.

Deficit spending is simply a scheme for the confiscation of wealth.

Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.


...just my $2.22, adjusted for inflation.

For years (hell, decades) anyone who even hinted that we ought to get rid of the Federal Reserve (an 'independent' central bank in its own right), fractional reserve banking and go back to the gold standard has been viewed as a being crazy as a moonbat. The populist view (supported enthusiastically by most of our elected leaders) is that the Fed has served as a bulwark against disaster, not a facilitator. Take a look at how Ron Paul was received by his fellow Republicans during the debates... they all cast him those 'nutty as a moonbat' looks when he brought the subject up.

[Lemur]

This is amusing:


https://img.photobucket.com/albums/v489/Lemurmania/2921978491_ee7318951c.jpg

[Alexanderofmacedon]

I'll sum up my views instead of making you all read a lot.

We're in trouble. We've brought others into this trouble as well. :2thumbsup:

[AlexanderSextus]

For years (hell, decades) anyone who even hinted that we ought to get rid of the Federal Reserve (an 'independent' central bank in its own right), fractional reserve banking and go back to the gold standard has been viewed as a being crazy as a moonbat. The populist view (supported enthusiastically by most of our elected leaders) is that the Fed has served as a bulwark against disaster, not a facilitator. Take a look at how Ron Paul was received by his fellow Republicans during the debates... they all cast him those 'nutty as a moonbat' looks when he brought the subject up.



Just because they thought he was crazy doesnt mean he actually was crazy. Hell, they're Neocons, they want us to give up as much freedom to them as we can. After all, like I said,


Dr. Alan Greenspan asserts that economic liberty would be protected and Ludwig von Mises asserts that civil liberties would be protected.

They dont want that to happen.

And as for the Democrats,


The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold.

They dont want it to happen either.

Read this part again:

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.

[Koga No Goshi]

Just because they thought he was crazy doesnt mean he actually was crazy. Hell, they're Neocons, they want us to give up as much freedom to them as we can. After all, like I said

Neocons are pretty much bat-crazy. I think of them as elite businessmen with delusions that they can follow in the footsteps of Charlemagne. Except Charlemagne actually put funding into education didn't he? :) Of course, some people simply call them as close as you can get to an openly fascist party in the U.S. That works too.

[Incongruous]

Neocons are pretty much bat-crazy. I think of them as elite businessmen with delusions that they can follow in the footsteps of Charlemagne. Except Charlemagne actually put funding into education didn't he? :) Of course, some people simply call them as close as you can get to an openly fascist party in the U.S. That works too.

Or just the stupid Republican form of Democratic hawks?

[Koga No Goshi]

Or just the stupid Republican form of Democratic hawks?

The only Dem anywhere near bad enough to blend in with them is Lieberman.

[Papewaio]

Gold standard isn't actually a standard.

The worth of gold fluctuates based on emotion more so then most currency. Just look at how the gold price shot up after 9/11 and the wars that followed.

Gold isn't 100% non-useable for anything else. Gold can have a value other then arbitrary because it does have uses other then jewelry. It can be used in industry and as such its value can change with demand.

Not only can golds value change because of demand it can be supplied by other means then just from a bank. You can mine it, and as such all you are swapping is currency supplied by a government for currency supplied by a mine site. Not much of an improvement if any.

Now that is just looking at gold in the ground. If we get fusion going then we can filter the seas of the world for far more gold then we have mined yet. Add in space exploration and we can have so much gold that we could all be housed in it.

Gold has value because it is rare. In time that rarity only gets less and less. As such the gold standard is subject to the same inflationary pressures on a system as money.

Wishing for the gold standard is wishing for old times.

[Don Corleone]

The problem with the gold standard and the theory of sound money is that it constrains the power of wealth generation.

How is wealth generated?
Taxation? Nope, that's just a transfer of wealth.
Government spending? Ditto.
Wages? Ditto.
Creation of goods and services? Ditto.

At the end of the day, there is only one economic activity that actually creates wealth. That is the flow of capital investment. In an economic system where specie is based off faith in the monetary and fiscal policies, one need only be a member to participate in this system.

But in a system where specie is based off of some tangible good, like gold, access to that gold controls access to the credit system.

Let me give you an example of what might happen if we returned to the gold standard.

A few banks, like Morgan-Chase, maybe Citi-group, maybe Goldman would rush out and buy every last ounce of whatever the value-backing commodity is. They would then control access to said currency. If they find it more profitable to hoard it rather than flowing it around, they simply stop lending. Think about that for a second... Morgan Chase can decide that too many people own houses in this country and the very next day, they've dried up the money supply. In fact, this very phenomenon used to happen. Do you think "Potterville" is a fantasy creation of Hollywood in "It's a Wonderful Life"?

I understand the allure of 'sound currency theory', but in fact, instead of being controlled by the federal government, you're turning the power of your financial system over to those large enough and moneyed enough to purchase a stake in it.

You, me and everyone else with less than $50 million of assets is left out in the cold. It doesn't prevent tyranny, it shifts its source from an elected government to a few autonomous tycoons.

[ICantSpellDawg]

The only Dem anywhere near bad enough to blend in with them is Lieberman.

Lieberman isn't a Dem.

[drone]

I suppose this is the best thread for this one:
Not enough digits on the debt clock. (http://www.cnn.com/2008/US/10/09/national.debt.clock.ap/index.html)

[Strike For The South]

I suppose this is the best thread for this one:
Not enough digits on the debt clock. (http://www.cnn.com/2008/US/10/09/national.debt.clock.ap/index.html)

So we can claim victory? NO MORE DEBT!!!!!!!!!!!!!!!!!!!!!

[PanzerJaeger]

Neocons are pretty much bat-crazy. I think of them as elite businessmen with delusions that they can follow in the footsteps of Charlemagne. Except Charlemagne actually put funding into education didn't he? :) Of course, some people simply call them as close as you can get to an openly fascist party in the U.S. That works too.

Nobody told me that we were just making stuff up now. :laugh4:

Neoconservatism is a valid and well thought out ideology. What exactly is bat-crazy about it? Or fascist?

In any event, you do know many of them used to be democrats, don't you?

[Spino]

The only Dem anywhere near bad enough to blend in with them is Lieberman.

I don't want to burst your bubble but Bopa Magyar & PanzerJaeger hit the nail on the head. The Neo-Con movement within the Republican party can be directly attributed to the migration of Cold War era hawkish Democrats & like minded intellectuals to the Republican Party during the 80s & 90s. It was the total mismanagement & incompetency of the leadership of Johnson & McNamara during the Vietnam War and subsequent fallout that led directly to the creation of the modern Democratic party that you identify with. The fact that Lieberman, an archetypical Democrat in the Truman/Kennedy/Johnson mold, has become a virtual outcast within his own party shows you just how much the Democratic party has changed over the last 40 years.

[Crazed Rabbit]

Wow. Just wow.

A revelation for you?


If this had been the predominant philosophy at the time of the New deal, we'd still be there.

So very wrong. Roosevelt's high tax and high regulation policies stunted economic growth. The protectionism of nations also served to delay the whole world's recovery.

But go on with your fantasy world that ignores economic scholarship and history of the Great Depression. How you can ignore the fact that Keyne's theories kept us in the depression until the outbreak of world war 2 is fascinating.

It's also amusing how you sulk like the economy won't recover because we won't have new industries when the dems and socialists support the high taxes and regulations that make it so difficult to start new companies.


haahahahahahahah What a pile of rubbish you just came out with, ahahahah. The fact you really believe this crap amazes me everytime I see you type such a silly post. Amazing.

Anyway, yeah SMALL GOVT FOR THE WIN!! Its not like it has got us into this situation or anything!?!?!!!! NOES!!

Another socialist type with no real knowledge of what happened. But I guess it's hard to come up with a rational response when all your favorite socialists tell you the government solves everything and the depression was such a glaring example of that being complete bullocks.

Question: If Keyne's crap theories were so great, why did they do nothing to bring the US out of the depression?

Oh, but that'd involve facts, wouldn't it?

CR

[Fragony]

Take a look at how Ron Paul was received by his fellow Republicans during the debates... they all cast him those 'nutty as a moonbat' looks when he brought the subject up.

What a loss he is not being the one running for president for the republicans. Bit too low on fanfare and hallelujah which are sadly too important in US elections which is a real shame. Can we have him?

[yesdachi]

What a loss he is not being the one running for president for the republicans. Bit too low on fanfare and hallelujah which are sadly too important in US elections which is a real shame. Can we have him?

Ron Paul has some interesting ideas and wouldn’t make a worse president than the candidates we have except for the fact he acts like he is nutty as a moonbat. You can act all kinds of ways except nutty as a moonbat. :laugh4:

[Koga No Goshi]

I don't want to burst your bubble but Bopa Magyar & PanzerJaeger hit the nail on the head. The Neo-Con movement within the Republican party can be directly attributed to the migration of Cold War era hawkish Democrats & like minded intellectuals to the Republican Party during the 80s & 90s. It was the total mismanagement & incompetency of the leadership of Johnson & McNamara during the Vietnam War and subsequent fallout that led directly to the creation of the modern Democratic party that you identify with. The fact that Lieberman, an archetypical Democrat in the Truman/Kennedy/Johnson mold, has become a virtual outcast within his own party shows you just how much the Democratic party has changed over the last 40 years.

Ha ha, well, if we go back far enough, it was the Democrats defending slavery and the Republicans who wanted to end it. But trying to draw some illusory similarity between present-day Democrats and present-day Neoconservatives is really thin. And I am not sure how the party affiliation of some of these people back in 1954 would have any bearing on my statement that neocons are bat-crazy today.

On a more "on topic" note, would the crashes in the stock market serve as sufficient reason for any of the free market ideologues out there to change their mind about social security and/or privatization of all retirement programs? I mean, if you're 40, yeah, you can probably ride this out. But what about the people who are 68 today and had a lot of their money "responsibly" invested and have lost 25% of it in three months?

[yesdachi]

On a more "on topic" note, would the crashes in the stock market serve as sufficient reason for any of the free market ideologues out there to change their mind about social security and/or privatization of all retirement programs? I mean, if you're 40, yeah, you can probably ride this out. But what about the people who are 68 today and had a lot of their money "responsibly" invested and have lost 25% of it in three months?

If you are 68 today and didn’t have your money in a secure place you almost deserve to have lost 25% of it.

I would much rather be in control of my SS than letting the gov put it in the “lockbox”.

[drone]

If you are 68 today and didn’t have your money in a secure place you almost deserve to have lost 25% of it.

I would much rather be in control of my SS than letting the gov put it in the “lockbox”.

True. I know the money I'm paying in isn't going to any safe location. It's being used to fund this bailout, or the next one, or the one after that. Any GenX'er who expects to see his/her Social Security payout is in for a real shock.

[KukriKhan]

I suppose this is the best thread for this one:
Not enough digits on the debt clock. (http://www.cnn.com/2008/US/10/09/national.debt.clock.ap/index.html)

I know that quoting this is 'so this morning - teh old'... but I still remember when we hit a trillion in debt. And I was an adult then!

[Xiahou]

True. I know the money I'm paying in isn't going to any safe location. It's being used to fund this bailout, or the next one, or the one after that. Any GenX'er who expects to see his/her Social Security payout is in for a real shock.Absolutely! If I could invest even half of my SS taxes somewhere that the government can't get their hands on it, I'd be thrilled. :yes:

It's not going to happen though. Any attempts at meaningful entitlement reform are always shot down using the same tired old scare tactics....


...just my $2.22, adjusted for inflation.I hear what you're saying, but I still dont think the gold standard is a good idea. Surely there are other alternatives?

[Koga No Goshi]

If you are 68 today and didn’t have your money in a secure place you almost deserve to have lost 25% of it.

I would much rather be in control of my SS than letting the gov put it in the “lockbox”.

This is so CIRCULAR.

"You can do better privately with your money than SS can."

"Privatize savings"

"You lost everything? Personal responsibility."

"Privatize retirement"

"Your retirement investment company wiped? Personal responsibility."

Please direct me to the nearest "secure place" to invest money, Yesdachi. No one who actually works in money has been saying there is such a place at the moment, just likely guesses of what will remain somewhat stable. Still gambling, in other words. Everyone is saying "don't invest, cash will be king." That's fine by me ,but I'm a "young guy." What if I were 68 today?

[Crazed Rabbit]

Koga, show me one 30 year period since SS started when investing in the stock market would have yielded a worse return than SS payments.

And divesting of risk in the last five years before you retire is pretty straightforward.


Please direct me to the nearest "secure place" to invest money, Yesdachi.
http://www.wellsfargo.com/
Or any FDIC insured bank.

CR

[Koga No Goshi]

Koga, show me one 30 year period since SS started when investing in the stock market would have yielded a worse return than SS payments.

And divesting of risk in the last five years before you retire is pretty straightforward.


http://www.wellsfargo.com/
Or any FDIC insured bank.

CR

Putting money in a bank =/= money in the stock market.

And what the 30 year trend looks like is utterly irrelevant if you happen to be 68 at the moment when the stock market tumbles precipitously. But, if we privatized everything, then those "casualties" who happened to be beyond working age and the ability to wait out a 10 or 15 year recovery stretch and see their assets fully recover will just be blamed for their "poor choices."

I don't consider that a better system for universal retirement solutions.

[AlexanderSextus]

I hear what you're saying, but I still dont think the gold standard is a good idea. Surely there are other alternatives?

Silver Maybe? um, it might not even have to be a metal, it could simply be a valuable commodity we have in abundance.

[AlexanderSextus]

Ron Paul has some interesting ideas and wouldn’t make a worse president than the candidates we have except for the fact he acts like he is nutty as a moonbat. You can act all kinds of ways except nutty as a moonbat. :laugh4:

he acts nutty as a moonbat by saying that maybe we need to get rid of keynesian economics?



oooooooookaaaaaaay.....:inquisitive:

McCain acts nutty as a moonbat all the damn time!

Ron Paul would make a much better Prez than either candidate.

[AlexanderSextus]

What a loss he is not being the one running for president for the republicans. Bit too low on fanfare and hallelujah which are sadly too important in US elections which is a real shame. Can we have him?

NO! WE NEED HIM REALLY BAD!!!!!:sweatdrop:

[PanzerJaeger]

Putting money in a bank =/= money in the stock market.

A smart investor would do both, varying the percentages based on how much risk he wants to take on.

I think the inarguable point is that intelligent investment of the funds we're forced to put into SS would be far more beneficial. Especially considering SS payments will run out soon! You can't really use some idiots who had everything in the markets recently as examples of why we need government sponsored retirement plans. Is the government responsible for idiots?

[Koga No Goshi]

A smart investor would do both, varying the percentages based on how much risk he wants to take on.

I think the inarguable point is that intelligent investment of the funds we're forced to put into SS would be far more beneficial. Especially considering SS payments will run out soon! You can't really use some idiots who had everything in the markets recently as examples of why we need government sponsored retirement plans. Is the government responsible for idiots?

401(k)'s are where "idiots" put money? Since when?

Since the market failed, and we always blame the victims of sudden crises in the U.S.?

[PanzerJaeger]

401(k)'s are where "idiots" put money? Since when?

Since the market failed, and we always blame the victims of sudden crises in the U.S.?

If you have all, or even a majority, of your savings wrapped up in the stock market... well.. :shrug:

[Koga No Goshi]

If you have all, or even a majority, of your savings wrapped up in the stock market... well.. :shrug:

If this is the best defense of sudden crashes in the private savings and investment market I'll stick with government run ones as at least a backup for people who get wiped out after "being responsible" their whole life. Nice commercial though. :)

[PanzerJaeger]

If this is the best defense of sudden crashes in the private savings and investment market I'll stick with government run ones as at least a backup for people who get wiped out after "being responsible" their whole life. Nice commercial though. :)

I don't think you're getting it.

Lets say over the course of your lifetime you're forced to pay $500,000 into SS. You don't think you could do better investing that yourself? Do you have that little faith in yourself? Even putting it all in CDs would generate a higher yield than the paltry SS payouts people are getting now.

[Koga No Goshi]

I don't think you're getting it.

Lets say over the course of your lifetime you're forced to pay $500,000 into SS. You don't think you could do better investing that yourself? Do you have that little faith in yourself? Even putting it all in CDs would generate a higher yield than the paltry SS payouts people are getting now.

That isn't the point. No one is immune to sudden crashes, wipeouts, or whatever. Calling anyone who ever loses money in the private sector "stupid and irresponsible" is a simplistic and unrealistic viewpoint from which to build a platform of how to create a stable society.

That is my problem with the "personal responsibility" argument. It gets applied to the poor, the downtrodden, and people who are down and out on your luck. If you pay on time every month into your insurance and it kicks you when you get cancer, your fault. You should have done more research, take some personal responsibility. You invest your money "wisely" according to all advice at the time, and the market crashes and you lose 25, 40, 50% of your savings, your fault. If you do everything right and you suddenly get laid off and it causes you to lose both your insurance and your house, your fault. Take personal responsibility.

That's a vindictive selfish little anti-compassionate mindset which kicks the idea of the common good, and is unbefitting a value system that would seek to create a progressive, stable society.

People WILL get sick. People WILL wipe out in private investments. (The investment companies will probably get bailed out in some fashion, but the people who put money in won't, same with people losing their pensions after a lifetime of work when a company goes bellyup.) A realistic system needs to take that into account, even if it doesn't maximize the potential for personal, individual gains. A safety net needs to be for everyone, including the people who aren't personal investment portfolio gurus and upper middle class enough to have all kinds of diversified financial support options for the future.

We have had the "personal responsibility" before. It looked like soup kitchens and elderly people dying homeless in the street. But that is okay if Panzer's investments are doing fine.

[Redleg]

That isn't the point. No one is immune to sudden crashes, wipeouts, or whatever. Calling anyone who ever loses money in the private sector "stupid and irresponsible" is a simplistic and unrealistic viewpoint from which to build a platform of how to create a stable society.

Now I beleive PJ was actually saying something else. The placing of one's retirement fund into only one type of market is a poor choice. For instance if the 401K has multiple choices (which most do) one should place part in stocks, part in bonds, and part in cash account (normally earns a very small % on interest.) This would protect the investor regardless of how small his investment is from taking a loss that is to severe, unless of course the whole finicial market crashes completely.



That is my problem with the "personal responsibility" argument. It gets applied to the poor, the downtrodden, and people who are down and out on your luck. If you pay on time every month into your insurance and it kicks you when you get cancer, your fault. You should have done more research, take some personal responsibility. You invest your money "wisely" according to all advice at the time, and the market crashes and you lose 25, 40, 50% of your savings, your fault. If you do everything right and you suddenly get laid off and it causes you to lose both your insurance and your house, your fault. Take personal responsibility.

So people should not take any responsiblity at all for where they invest their money and savings? Now my postion is that people need to take responsibility for what they had control of and could of done something about.




That's a vindictive selfish little anti-compassionate mindset which kicks the idea of the common good, and is unbefitting a value system that would seek to create a progressive, stable society.

So are you advocating that people take no responsiblity for their lives? If so that is an extremely weak positon.




People WILL get sick. People WILL wipe out in private investments. (The investment companies will probably get bailed out in some fashion, but the people who put money in won't, same with people losing their pensions after a lifetime of work when a company goes bellyup.) A realistic system needs to take that into account, even if it doesn't maximize the potential for personal, individual gains. A safety net needs to be for everyone, including the people who aren't personal investment portfolio gurus and upper middle class enough to have all kinds of diversified financial support options for the future.

If you think Social Security is all that - it was once, but as we all know the government has been robbing from this cookie jar.




We have had the "personal responsibility" before. It looked like soup kitchens and elderly people dying homeless in the street. But that is okay if Panzer's investments are doing fine.

And why did this happen? Was it because of a world wide economic collaspe in the 1920's that no country was actually prepared for?

[Koga No Goshi]

Now I beleive PJ was actually saying something else. The placing of one's retirement fund into only one type of market is a poor choice. For instance if the 401K has multiple choices (which most do) one should place part in stocks, part in bonds, and part in cash account (normally earns a very small % on interest.) This would protect the investor regardless of how small his investment is from taking a loss that is to severe, unless of course the whole finicial market crashes completely.

Agreed. But this still doesn't address people who don't invest wisely, or don't have the money to significantly diversify meaningfully, or save up just enough for retirement on their low income job and can't survive a 15 or 20% dip in the market, even if it only hits part of their investment.


So people should not take any responsiblity at all for where they invest their money and savings? Now my postion is that people need to take responsibility for what they had control of and could of done something about.

People who gamble absolutely should take responsibility for what happens to their money. That's what the stock market is, gambling. There is no guaranteed return on your investment. That is why it should not be the system everyone is forced to participate in and take their chances at wiping out or being impoverished at retirement age. And why this is not a good system to propose for everyone on the national level and just hope that all the people on the street "taking personal responsibility" for their mistakes or bad luck doesn't translate into a crime wave, the return of all kinds of squalor condition diseases, or rioting.


So are you advocating that people take no responsiblity for their lives? If so that is an extremely weak positon.

This claim is a complete invention on your part.


If you think Social Security is all that - it was once, but as we all know the government has been robbing from this cookie jar.

So the solution is to force everyone to have no option but to put their money in the private market, where a lot of private interests were robbing and defrauding the cookie jar?


And why did this happen? Was it because of a world wide economic collaspe in the 1920's that no country was actually prepared for?

There were no homeless problems or crime and disease problems from impoverished populations in the U.S. except in the 1920's? All those people should have just taken personal responsibility and died quietly in a gutter somewhere.

[Redleg]

Agreed. But this still doesn't address people who don't invest wisely, or don't have the money to significantly diversify meaningfully, or save up just enough for retirement on their low income job and can't survive a 15 or 20% dip in the market, even if it only hits part of their investment.

those who don't invest what they have wisely - are those who are doomed to failure with their investments. A fine examble is our own government.

Now there are people who by their environment can not hope to make enough money to get beyond survival income. I don't believe they should be thrown out with the morning bathwater, but I also believe that they also have some personal responsiblity to do what they can.

Does that equate to believing that social security does not apply to them - hell no. But then again if that individual expects the government to solve his issues - he is not demonstrating personal responsiblity.




People who gamble absolutely should take responsibility for what happens to their money. That's what the stock market is, gambling. There is no guaranteed return on your investment. That is why it should not be the system everyone is forced to participate in and take their chances at wiping out or being impoverished at retirement age. And why this is not a good system to propose for everyone on the national level and just hope that all the people on the street "taking personal responsibility" for their mistakes or bad luck doesn't translate into a crime wave, the return of all kinds of squalor condition diseases, or rioting.

So an individual can not decide to invest his money in a Certificate of Deposit with a bank that is insured by the government through FDIC? Is this not personal responsiblity also?

Or does investment only mean in the stock market.




This claim is a complete invention on your part.


Actually its not. It is the logical conclusion when one speaks out against personal responsiblity. Hince it was asked as a question to determine what your position truely is. Or did you miss the ? that was at the end of the sentence?



So the solution is to force everyone to have no option but to put their money in the private market, where a lot of private interests were robbing and defrauding the cookie jar?

No the solution is to allow those who wish to invest in the private market to do so if they are willing to take the personal responsiblity that comes with it. But then I also disagree with forcing me to give my funds to the government for a retirement fund also, where the same crooks are also robbing and defrauding the bigger cookie jar.



There were no homeless problems or crime and disease problems from impoverished populations in the U.S. except in the 1920's? All those people should have just taken personal responsibility and died quietly in a gutter somewhere.

Try again - you have confused yourself on what the question is.

[Oleander Ardens]

DJ 8600 - 5 year low. DAX - 3 year low, Nikkei down 10% under 9000 now....

AIG needs another 30 or so billions to finance itself. We are throwing billions around as we would toss dollars.
The USA to NATIONALIZE some banks partly. I raise my toast to comrade Poulsen.
Iceland going under, too much liquidity around that small island.

We are entering now a PANIC period. I get now really interested in stocks.

OA

[Koga No Goshi]

Actually its not. It is the logical conclusion when one speaks out against personal responsiblity. Hince it was asked as a question to determine what your position truely is. Or did you miss the ? that was at the end of the sentence?

No. Saying that I do not believe "take your chances" with the understanding in advance that some will fail or hit hard times or totally wipe out on medical bills and loss of income from illness doesn't mean I believe no one is responsible when they commit a crime, or has an affair, or doesn't sign a pre-nup before marrying a 18 year old Playboy bunny. I do not believe it is in the national interest to foster a vindictive petty system of "only those who were financially savvy deserve not to be homeless and impoverished as elderly people" just for, apparently, the desire of some to see others punished for not being as rich, fiscally savvy, or lucky.

BTW, no, your question did not logically follow anything. It was as grasping for straws as "I don't believe marijuana should be criminalized" and you saying "WHAT, so there should be no laws?"


No the solution is to allow those who wish to invest in the private market to do so if they are willing to take the personal responsiblity that comes with it. But then I also disagree with forcing me to give my funds to the government for a retirement fund also, where the same crooks are also robbing and defrauding the bigger cookie jar.

Those who have lots and do well have to pay some into the system for the benefit of those who struggle and can't put in enough. Otherwise you might as well scrap every single public service including education (which you probably already feel should be the case given your pure constitution ideology) because there is no point if all the wealthy people can opt out and use private everything and only the poor will be taxfarmed for substandard funds for substandard services. But the difference is, I believe in the general welfare and maintaining some minimums of progress for all. Not just for Redleg and Panzer and whoever else believes they are smart or rich and doesn't need any safety net.

You have basically admitted, that under the system you would like to see, some people are going to bomb out. But, they will deserve it. I do not see how that is a good proposal for the nation overall. It is only a good proposal for people of sufficient wealth and means to profit a lot personally by being able to opt out of things like SS and public education (the school voucher crap) and medicare.

[Crazed Rabbit]

Putting money in a bank =/= money in the stock market.

You asked for a secure investment, and its a lot more secure than the long term future of social security.


And what the 30 year trend looks like is utterly irrelevant if you happen to be 68 at the moment when the stock market tumbles precipitously. But, if we privatized everything, then those "casualties" who happened to be beyond working age and the ability to wait out a 10 or 15 year recovery stretch and see their assets fully recover will just be blamed for their "poor choices."

I don't consider that a better system for universal retirement solutions.

No, you miss the point entirely. Even if you are 68 when the market tumbles and you're about to retire, I believe you'd still make more with your money in the stock market for 30 years instead of a social security account. The 30 year trend is of paramount importance because that's how long people invest for, and that time cancels out these drops.

30 years ago the Dow Jones was about 860. (http://finance.yahoo.com/echarts?s=^DJI#chart14:symbol=^dji;range=19731006,19831015;indicator=volume;charttype=line;crosshair =on;ohlcvalues=0;logscale=on)

Now, if I did my calcs right, that's an interest rate of over 7.6%, right after one of the biggest falls in history, and still far above what social security will give. (http://www.heritage.org/Research/socialsecurity/CDA98-01.cfm#2)


The USA to NATIONALIZE some banks partly.

Bah!

CR

[yesdachi]

CR is right on the Money! :yes:


From CR’s article: …Social Security's inflation-adjusted rate of return is only 1.23 percent for an average household…

Anyone could do better than that in their local banks saving account! You could literally have double you’re retirement if individuals were allowed to invest for themselves. OR if the gov would just do a better job of managing our money. If a local bank could do it why the heck cant they?!?

Edit: Old peoples prescription prices and medical bills wouldn’t be as big an issue if they had double their retirement!

Koga, you are a bright guy, why are having such a difficult time understanding this? Whey you are young you invest in aggressive (big win, big loss) funds and as you get older and during a period of prosperity (big win year) you begin switching a percentage of your aggressive investment into more secure funds and as you get closer and closer to retirement you move more and more of your investment into safer, low risk funds, like money market funds which are a transferable 401K option and about as safe as you can get. It is not a difficult process and only requires a phone call or a few clicks every year to keep maintained. There is no excuse for being 68 and having your 401K invested in a high-risk fund that crashes durring your retirement party. :bow:

[drone]

CR is right on the Money! :yes:



Anyone could do better than that in their local banks saving account! You could literally have double you’re retirement if individuals were allowed to invest for themselves. OR if the gov would just do a better job of managing our money. If a local bank could do it why the heck cant they?!?

Edit: Old peoples prescription prices and medical bills wouldn’t be as big an issue if they had double their retirement!

Koga, you are a bright guy, why are having such a difficult time understanding this? Whey you are young you invest in aggressive (big win, big loss) funds and as you get older and during a period of prosperity (big win year) you begin switching a percentage of your aggressive investment into more secure funds and as you get closer and closer to retirement you move more and more of your investment into safer, low risk funds, like money market funds which are a transferable 401K option and about as safe as you can get. It is not a difficult process and only requires a phone call or a few clicks every year to keep maintained. There is no excuse for being 68 and having your 401K invested in a high-risk fund that crashes durring your retirement party. :bow:

And in a FDIC insured bank, your money is safe from politicians looking for cash and votes, unlike SS accounts. ~:rolleyes:

When you start up a 401(k), one of the first things you get from the investment firm is a brochure on investment strategy. As yesdachi says, you start agressive, as you get older you start moving the money into less aggressive funds, bonds, and money market accounts. For those of us with 20+ years to go, now is the time to really start cranking money into the market. The whole "buy low, sell high" thing. If you are selling stocks now you are crazy (unless the company is going under). If you don't sell, you don't lose anything.

[LittleGrizzly]

I thought the problem with SS was the goverment just uses it as spending money for the moment and not future retirement cheques.... or is this 1.?? return after the goverment re-invests the money it spends ?

[Koga No Goshi]

Koga, you are a bright guy, why are having such a difficult time understanding this? Whey you are young you invest in aggressive (big win, big loss) funds and as you get older and during a period of prosperity (big win year) you begin switching a percentage of your aggressive investment into more secure funds and as you get closer and closer to retirement you move more and more of your investment into safer, low risk funds, like money market funds which are a transferable 401K option and about as safe as you can get. It is not a difficult process and only requires a phone call or a few clicks every year to keep maintained. There is no excuse for being 68 and having your 401K invested in a high-risk fund that crashes durring your retirement party. :bow:

I get it, but it undermines the whole point of a safety net against unforeseeable catastrophes in the market if you give people total control to absolutely not invest anything in retirement, or invest it unwisely. If the proposal is simply "let people completely opt out of the system altogether", I'm against it because everyone above the line right in the middle of middle class will do so, leaving the system gutted like the public school system. And some of those people will wipe themselves out anyway and wind up on some sort of government roll anyhow.

If, instead, the proposal is FDIC savings accounts in a direct deposit fashion, put in by your employer, which you may not remove or transfer until retirement age, then we are getting somewhere. Although I do not share the blind faith that this system is corruption proof and that if such a great store of money was sitting in private banks that we wouldn't see a lot of temptation to pull some funny business or "creative" accounting of how far the banks holding it are stretching their luck with crazy investments or even mortgages again. And if the banks screwed it up and they were FDIC then the Feds wind up bailing it all out with taxpayer money anyway, so that's a lose-lose if it happens and leaving it in SS will have looked like a good idea by comparison.

But to my knowledge, this is not the sort of thing people are proposing. It always seems to be a proxy issue of "cut my taxes, I don't want to pay in."

[yesdachi]

I would be happy with any change that would allow me a return that was better than 1%.

As a side benefit, think of what an infusion to the market (even the secure market) 25% of the SS dollars would do to the world of finance. Come on big gov, if you aren’t going to be my sugar daddy then let me control at least a little of my investment money!

[Redleg]

No. Saying that I do not believe "take your chances" with the understanding in advance that some will fail or hit hard times or totally wipe out on medical bills and loss of income from illness doesn't mean I believe no one is responsible when they commit a crime, or has an affair, or doesn't sign a pre-nup before marrying a 18 year old Playboy bunny. I do not believe it is in the national interest to foster a vindictive petty system of "only those who were financially savvy deserve not to be homeless and impoverished as elderly people" just for, apparently, the desire of some to see others punished for not being as rich, fiscally savvy, or lucky.

Did I say take your chances, it seems to me that once again you leap to an assumption that was not in evidence. Personal responsibility applies to everything, one must accept responsiblity for their behavior, their lifestyle, and yes even their health. To attempt to claim that "personal responsiblity" is this nubelous "take your chances" stance is an illogical leap.




BTW, no, your question did not logically follow anything. It was as grasping for straws as "I don't believe marijuana should be criminalized" and you saying "WHAT, so there should be no laws?"


Incorrect again. You are claiming that personal responsibility equates to "take your chances" again did I say that or did I say something else. So again, in a slighlty different format, does an individual have a personal responsiblity in regrads to their health care? Does an individual have a personal responsibility to do what they can to save for their own retirement?



Those who have lots and do well have to pay some into the system for the benefit of those who struggle and can't put in enough. Otherwise you might as well scrap every single public service including education (which you probably already feel should be the case given your pure constitution ideology) because there is no point if all the wealthy people can opt out and use private everything and only the poor will be taxfarmed for substandard funds for substandard services. But the difference is, I believe in the general welfare and maintaining some minimums of progress for all. Not just for Redleg and Panzer and whoever else believes they are smart or rich and doesn't need any safety net.

Ah putting words in my mouth once again. Again point out where I said that a safety net wasn't necessary, or that education should be scraped. Or even that taxes should not be paid, to insure the public welfare? I am willing to bet that you can not find any such statement, since part of individual responsility is to indeed pay the required taxes, both income and property.

As before here is the statement. "No the solution is to allow those who wish to invest in the private market to do so if they are willing to take the personal responsiblity that comes with it. But then I also disagree with forcing me to give my funds to the government for a retirement fund also, where the same crooks are also robbing and defrauding the bigger cookie jar."

Kindly point out where that refers to me being smart, rich, or doesn't require a safety net. I find the arguement very weak and false since my statement did not imply such a stance.



You have basically admitted, that under the system you would like to see, some people are going to bomb out. But, they will deserve it. I do not see how that is a good proposal for the nation overall. It is only a good proposal for people of sufficient wealth and means to profit a lot personally by being able to opt out of things like SS and public education (the school voucher crap) and medicare.

Sure people fail all the time, does that mean attempting to solve your own problems and issues is the incorrect thing to do?

As before what is wrong with personal responsiblity in assuming the management of your own retirement funds? Now find where I said someone can opt out of their property tax which funds the public education system for almost every county in the United States? Where did I state to discontinue paying your tax into Medicare? I have stated that I would perfer to invest my own retirement monies into a fund of my own choice, not because I am smarter, richer, or anything else over anyone else in the world, only that I prefer control over my own future and finances.

Your attempting a false arguement once again concerning my position.

[Koga No Goshi]

Did I say take your chances, it seems to me that once again you leap to an assumption that was not in evidence. Personal responsibility applies to everything, one must accept responsiblity for their behavior, their lifestyle, and yes even their health. To attempt to claim that "personal responsiblity" is this nubelous "take your chances" stance is an illogical leap.

Well since every single response basically amounted to "what, people should be responsible for nothing?", I'm not sure what other conclusion I was supposed to leap to.


Incorrect again. You are claiming that personal responsibility equates to "take your chances" again did I say that or did I say something else. So again, in a slighlty different format, does an individual have a personal responsiblity in regrads to their health care? Does an individual have a personal responsibility to do what they can to save for their own retirement?

Let's not play games. Get to the point. There was no need for four paragraphs of "AH AN ASSUMPTION!" State what you mean the first time around instead of posing rhetorical questions about responsibility and then going "nah nah you thought I was asking x when I was saying y."


As before here is the statement. "No the solution is to allow those who wish to invest in the private market to do so if they are willing to take the personal responsiblity that comes with it. But then I also disagree with forcing me to give my funds to the government for a retirement fund also, where the same crooks are also robbing and defrauding the bigger cookie jar."

You think those people are not going to head to the county office when they're 70 and have nothing, if they wipe out?


Kindly point out where that refers to me being smart, rich, or doesn't require a safety net. I find the arguement very weak and false since my statement did not imply such a stance.

That was my own statement. There are only going to be two types of people who opt out, people who are risky gamblers and people who believe they're smarter and will survive whatever the market may throw at them, and profit more regardless. And both types stand the risk of wiping out and are going to come back to the government anyway if they do. And since it does not behoove the state to have a 5 or 8% increased homeless rate and a 10% increase in crime, they will do something about it.


Sure people fail all the time, does that mean attempting to solve your own problems and issues is the incorrect thing to do?

No. But it also has no bearing on whether or not there should be a safety net to prevent a return to tenement housing or 20 million people a year needing gov't and charity funded food services.


As before what is wrong with personal responsiblity in assuming the management of your own retirement funds? Now find where I said someone can opt out of their property tax which funds the public education system for almost every county in the United States? Where did I state to discontinue paying your tax into Medicare? I have stated that I would perfer to invest my own retirement monies into a fund of my own choice, not because I am smarter, richer, or anything else over anyone else in the world, only that I prefer control over my own future and finances.

What's wrong with it is that it won't work, people are still going to fail, and it doesn't benefit anyone but an obsessively vindictive person to say "okay good, they will be on the street and take their lumps." I'm amazed though at your faith in the private sector and the ability on the mass level of people to manage money and savings wisely, in light of recent events. You are much more of an optimist than I am. Or, you just wish to see people crash out and be on the street.

[Redleg]

Well since every single response basically amounted to "what, people should be responsible for nothing?", I'm not sure what other conclusion I was supposed to leap to.

thought is required when discussing anything. Leaping to conclusions will lead you down a false path, which happens to be the path you have elected to go down. I believe you have a false assumption about what personal responsiblity means.




Let's not play games. Get to the point. There was no need for four paragraphs of "AH AN ASSUMPTION!" State what you mean the first time around instead of posing rhetorical questions about responsibility and then going "nah nah you thought I was asking x when I was saying y."


Actually I havent been playing a game, I just dont happen to have a partisan talking point on this in the way you have. So again what level of personal responsibility do people have for their own finances and health care? It seems to me that instead of answering the question its you that is playing games.




You think those people are not going to head to the county office when they're 70 and have nothing, if they wipe out?

Did I say that I wouldn't support them through my tax dollars or my own charity?




That was my own statement. There are only going to be two types of people who opt out, people who are risky gamblers and people who believe they're smarter and will survive whatever the market may throw at them, and profit more regardless. And both types stand the risk of wiping out and are going to come back to the government anyway if they do. And since it does not behoove the state to have a 5 or 8% increased homeless rate and a 10% increase in crime, they will do something about it.

And there is a third that your missing - the investors who will have a diverse investment structure that places their money in savings accounts, bonds, stocks, money markets, and yes even real estate to attempt to maximize their returns. Using your own arguement the government is currently at risk of being wiped out, so all of the current social security funds are at a greater risk then the money I have in my savings and checking accounts. And then again point out where I stated that one should avoid their personal responsiblity to pay their taxes?




No. But it also has no bearing on whether or not there should be a safety net to prevent a return to tenement housing or 20 million people a year needing gov't and charity funded food services.


Again where did I state where people do not pay their taxes? Where did I say that a safety net should not be inplace to help those who need it. The difference is your making an assumption that my desire to control my own finances means that social security will inheriently fail because of that.




What's wrong with it is that it won't work, people are still going to fail, and it doesn't benefit anyone but an obsessively vindictive person to say "okay good, they will be on the street and take their lumps." I'm amazed though at your faith in the private sector and the ability on the mass level of people to manage money and savings wisely, in light of recent events. You are much more of an optimist than I am. Or, you just wish to see people crash out and be on the street.


Who says it wont work? You do realize the safety net your talking about is currently expected to fail because of much of the same type of corruption that is going on in the private sector. The Social Security Trust Fund has been used by the government for other purposes then insuring that people have a safety net to fall back on. Then there is the issue that as the baby boomers age, less money will be going in then what is being paid out. I have more faith in my ability to provide for my future then I have in the government taking care of me when I decide to retire.

But then I know several retired middle income couples who have managed thier finances well enough to have a comfortable retirement, using their investments, pensions, and merger social security payments. By the way social security in itself doesn't provide for a large safety net, only for an existance.

But to answer your question - no I dont want to see people crashing out on the streets, I want to see everyone be successful in the lawful paths that they wish to take.

[Mangudai]

People who think it started and ended with the housing market, or even with deregulation for that matter, are missing the larger picture. I believe Tuff somewhat indirectly hit upon it here. Why was the housing market so inflated? Why was home equity such a "big business" and why were so many people both trying to tie their money up in properties, and also get money out of the equity of properties? Because, IMHO, housing was the last big bulwark holding up our economy and backing up the value of people's worth and credit. And by extension of doing that, it held up the whole economy in general because people could take money out of their houses to buy all sorts of things they didn't have the money for and it was basically "free money" because the jumps in housing values would cover up whatever they took out of their house after awhile. And banks doing refinances, subprime mortgage loans, and everything in between made big money off the commissions and such. So it was happy times all around... for awhile.

The big picture is, we don't produce. We shove debt and paper around. We have magical values assigned to things with no domestic production value or promise of future goods to back it up or stand as collateral. Our economy is service based. What that means is people pushing around stock portfolios, lines of credit, mortgages, equity loans, credit cards and debt to make the economy keep moving just as if we were a producing, surplus-exporting boomer. So the housing market was going to crash, sooner or later. Yes plenty of hands helped it inflate and pop along the way because it was a way to make money. But the fact that people were cannibalizing the roof over their head to maintain economic growth and accumulation of equity and security against retirement (ultimately) was even a point of question because of how badly we have undergutted our economy.

My forty-nine and a half cents.

Oh and, if I am correct, it's not going to bounce back. There is nothing to make it bounce back, unless it's just in the form of a flush of foreign investment coming in and us slinking more and more into debt. Short of completely revamping our economy with new industries and probably a significantly large government hand in helping to incentivize and push such a change along, we are on a downhill incline.



You hit the nail on the head that time. Our economy has been growing only because of debt. That had to end eventually, and now is as good a time as any. It's going to be painful.

We gave away all our technological advantages, and we will have to compete with developing economies in manufacturing. Lower standard of living here we come.

Almost everyone in power has been telling us that consumption drives the economy. Something about that seems fundamentally flawed to me. When we consume (use up) resources we are poorer afterward. I prefer to look at it through the lens of the 2nd law of thermodynamics. Everything will decay, but at different rates. The course of economic growth is one where value is created faster than it naturally decays. For example, stone buildings decay very slowly compared to the human lifespan, so this is a type of asset that represents real economic growth.

[Koga No Goshi]

Actually I havent been playing a game, I just dont happen to have a partisan talking point on this in the way you have. So again what level of personal responsibility do people have for their own finances and health care? It seems to me that instead of answering the question its you that is playing games.

I have already explained my pragmatic view on the matter several times. Re-read it if you feel that you did not yet receive an answer. No matter how much you preach on about personal responsibility, both corporations and individuals run to the government when they get in trouble.


And there is a third that your missing - the investors who will have a diverse investment structure that places their money in savings accounts, bonds, stocks, money markets, and yes even real estate to attempt to maximize their returns. Using your own arguement the government is currently at risk of being wiped out, so all of the current social security funds are at a greater risk then the money I have in my savings and checking accounts. And then again point out where I stated that one should avoid their personal responsiblity to pay their taxes?

If you advocate letting anyone opt out of safety net systems, even though those same people will try to use those systems if they bomb out or invest poorly or the market crashes, then that is what you are proposing. Look at health insurance, if that will illuminate my point. People can opt out and simply not buy insurance and have a job that doesn't offer it. Those people wind up in the emergency room on state tax dollars. Get the point?


Again where did I state where people do not pay their taxes? Where did I say that a safety net should not be inplace to help those who need it. The difference is your making an assumption that my desire to control my own finances means that social security will inheriently fail because of that.

Argh, stop being a broken record. Where did *I* say that you said people shouldn't pay taxes? If you let people opt out of SS and Medicare taxes, though, and invest that money in private investments, that is in effect what you are proposing. If you think there should be some form of safety net but you also think people should be able to opt out of it then what is the point?


Who says it wont work? You do realize the safety net your talking about is currently expected to fail because of much of the same type of corruption that is going on in the private sector.

And a lot of money invested in the private sector crashed out because the private sector went and made a bunch of bad mortgages .... so..... if you are trying to convince me that the private sector will handle it with less corruption and risk of abuse, I'm waiting to hear the argument.


But then I know several retired middle income couples who have managed thier finances well enough to have a comfortable retirement, using their investments, pensions, and merger social security payments. By the way social security in itself doesn't provide for a large safety net, only for an existance.

But to answer your question - no I dont want to see people crashing out on the streets, I want to see everyone be successful in the lawful paths that they wish to take.

I know many such people too. But, they're not everyone. Safety nets aren't supposed to be there just for the people who did very well.

[Redleg]

I have already explained my pragmatic view on the matter several times. Re-read it if you feel that you did not yet receive an answer. No matter how much you preach on about personal responsibility, both corporations and individuals run to the government when they get in trouble.

So because they run to the government you wish to preach that it doesn't work. There are companies that fail all the time that do not get government assistance.




If you advocate letting anyone opt out of safety net systems, even though those same people will try to use those systems if they bomb out or invest poorly or the market crashes, then that is what you are proposing. Look at health insurance, if that will illuminate my point. People can opt out and simply not buy insurance and have a job that doesn't offer it. Those people wind up in the emergency room on state tax dollars. Get the point?

A portion indeed will fail and will have to use government services and funds. The point you continue to miss is that fact that I continue to state that taxes must be paid for the government to fund projects and programs that benefit the general welfare of the people.

So do you see the point yet there?



Argh, stop being a broken record. Where did *I* say that you said people shouldn't pay taxes? If you let people opt out of SS and Medicare taxes, though, and invest that money in private investments, that is in effect what you are proposing. If you think there should be some form of safety net but you also think people should be able to opt out of it then what is the point?


The broken record must continue since I never said anyone should opt out of Medicare taxes, in fact I have stated one must pay their taxes. So here is the point - social security is a different program then medicare. In fact they are two seperate types of taxes currently. The safety net is the programs that the government has alreadly establish to take care fo the general welfare of the people.



And a lot of money invested in the private sector crashed out because the private sector went and made a bunch of bad mortgages .... so..... if you are trying to convince me that the private sector will handle it with less corruption and risk of abuse, I'm waiting to hear the argument.

You have missed the arguement entirely - I said both are equally corrupt in the way they are being handled




I know many such people too. But, they're not everyone. Safety nets aren't supposed to be there just for the people who did very well.

Which is why there are a whole host of programs established for people. Ever heard of the program ran by the department of argiculture?

[Papewaio]

Silver Maybe? um, it might not even have to be a metal, it could simply be a valuable commodity we have in abundance.

Money has to have the following attributes:

Confidence. Probably the most important attribute. Without confidence in the money you might as well go to bartering.
Portability.
Durability.
And a certain amount of rarity. Too much and you kill off the portability component. No one wants to carry a backpack full of money to buy a loaf of bread.
Not valuable in of itself. Money should not have a use outside of money. To be a valuable commodity links its value not only as an arbitrary exchange for goods and services but it then would tie its value to some sort of commercial product line and in a implicit form creates a barter economy for the money.

IMDHO the best form of money is the bits and bytes form.