If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(The New York Times)   Hey remember how awesome the financial crisis of 1980 was? Let's do that again   (nytimes.com) divider line 69
    More: Scary, crisis, junk bonds, leveraged buyouts, money market accounts, HCA, treasury securities, total return, KKR  
•       •       •

4850 clicks; posted to Business » on 28 Oct 2012 at 7:35 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



69 Comments   (+0 »)
   
View Voting Results: Smartest and Funniest

Archived thread

First | « | 1 | 2 | » | Last | Show all
 
2012-10-28 04:57:16 PM
Remember how we elected a republican president to replace one of least effective presidents to ever serve?

Let's do that again too.

I did RTFA and realize it was about junk bonds, not the double digit unemployment and 18% mortgage rates, but, whatever.
 
2012-10-28 05:00:47 PM
I thought that's what '01 to '08 was for.
 
ZAZ [TotalFark]
2012-10-28 05:22:23 PM
We've already been doing it again. The 2008 financial crisis followed overinvestment in risky securities.
 
2012-10-28 06:01:28 PM

ZAZ: We've already been doing it again. The 2008 financial crisis followed overinvestment in risky securities.



Which is why we need to deregulate the financial sector, and cut taxes for the rich so they have even more money to blow up a securities bubble.
 
2012-10-28 07:49:00 PM

kmmontandon: ZAZ: We've already been doing it again. The 2008 financial crisis followed overinvestment in risky securities.


Which is why we need to deregulate the financial sector, and cut taxes for the rich so they have even more money to blow up a securities bubble.bite the bullet and let the banks farking die for the bad and stupid shiat they did


Regulation is cool. Free reign to ignore regulation isn't. This is our banking world today.
 
2012-10-28 08:01:10 PM
if we can just get Mittens in the White House, we can start this roller coaster up and do it right this time!! it'll make 2008/9 look like child's play!


vote Rmoney!
 
2012-10-28 08:02:20 PM
Just remember America, no matter how many times the Banking System f*cks your sore asshole, the really DO care about you!
 
2012-10-28 08:04:07 PM

kmmontandon: ZAZ: We've already been doing it again. The 2008 financial crisis followed overinvestment in risky securities.


Which is why we need to deregulate the financial sector, and cut taxes for the rich so they have even more money to blow up a securities bubble.



yea, the Freedom to Undermine our way of life must be protected!!
 
2012-10-28 08:04:41 PM
Reimplement Glass-Steagall and break 'em up - using external, neutral agencies - into competing, viable chunks.

/And why the fark is any company floating junk when markets, cash, and retained earnings are at all-time highs?
 
2012-10-28 08:29:15 PM

IamKaiserSoze!!!: Remember how we elected a republican president to replace one of least effective presidents to ever serve?


After the GOP traitors dealt behind his back in Iran then started the policies and decisions that lead to the 80s Recession and later 9/11?
No thanks.
 
2012-10-28 08:39:54 PM
Most of all I'm looking forward to high-collared Izod shirts again. This is also good news for Wang Chung.
 
2012-10-28 08:41:39 PM
This is the Fed's fault:

The Fed print's money (yes I know the don't technically print it) and loan it to the banks at zero percent. the money is burning a hole in the banks pocket. They have to do something with that. They are buying all the treasuries that come out, and they still have money to burn, so, they buy whatever debt is issued practically.

There is no free lunch from free money (well, for the banks there is, but not for the economy as a whole).
 
2012-10-28 08:56:08 PM
Time to get into derivatives and bet that they can't pay back those bonds.
 
2012-10-28 08:57:56 PM

BiffDangler: This is the Fed's fault:

The Fed print's money (yes I know the don't technically print it) and loan it to the banks at zero percent. the money is burning a hole in the banks pocket. They have to do something with that. They are buying all the treasuries that come out, and they still have money to burn, so, they buy whatever debt is issued practically.

There is no free lunch from free money (well, for the banks there is, but not for the economy as a whole).


Funny, that system has been working for a century, a century that saw the United States rise to become the wealthiest nation in the world. Let's change it.
 
2012-10-28 09:11:04 PM

BiffDangler: This is the Fed's fault:

The Fed print's money (yes I know the don't technically print it) and loan it to the banks at zero percent. the money is burning a hole in the banks pocket. They have to do something with that. They are buying all the treasuries that come out, and they still have money to burn, so, they buy whatever debt is issued practically.


It's the Fed's fault that the banks act irresponsibly with the money because nobody told them not to?

You've got to be kidding me.
 
2012-10-28 09:12:19 PM

Kurmudgeon: IamKaiserSoze!!!: Remember how we elected a republican president to replace one of least effective presidents to ever serve?

After the GOP traitors dealt behind his back in Iran then started the policies and decisions that lead to the 80s Recession and later 9/11?
No thanks.


I knew I wasn't the only one who knew about the backroom deals making Mr. Peanut a one term president.
 
2012-10-28 09:14:31 PM
FTA : The hospital company HCA borrowed $2.5 billion on Oct. 16, in part to make payments to its three private equity owners - Kohlberg Kravis Roberts, Bain Capital and Merrill Lynch Global Private Equity.

Now we now exactly why rMoney and his pals are dead set against the ACA
 
2012-10-28 09:33:05 PM

revrendjim: BiffDangler: This is the Fed's fault:

The Fed print's money (yes I know the don't technically print it) and loan it to the banks at zero percent. the money is burning a hole in the banks pocket. They have to do something with that. They are buying all the treasuries that come out, and they still have money to burn, so, they buy whatever debt is issued practically.

There is no free lunch from free money (well, for the banks there is, but not for the economy as a whole).

Funny, that system has been working for a century, a century that saw the United States rise to become the wealthiest nation in the world. Let's change it.


Well, the US rose must faster before that system. It slowed down since then, compared to before it.

Yes, let's change it.
 
2012-10-28 09:36:19 PM

cameroncrazy1984: It's the Fed's fault that the banks act irresponsibly with the money because nobody told them not to?

You've got to be kidding me.


Think about it this way: If you left your liquor cabinet unlocked and the car keys laying out and your teenage son repeatedly took the car and crashed it, would it but your fault? OK, no, it wouldnt.

But what if in response to a punishment your son said "Dad, what you need to do is guarantee my allowance regardless of the situation and leave even more liquor in the cabinet while still leaving the keys out? If you don't the consequence will be really bad"

If you respond with "well that's a great idea son" and then he does it again.. then yes, it is your fault.
 
2012-10-28 09:50:06 PM
1980?
 
2012-10-28 09:52:57 PM
That darn Buuush!!!
 
2012-10-28 10:15:34 PM
An Austrian school economist would (and has) told you that this is the predictable result of central banks holding interest rates below what the market will bear. It creates and excess of cheap money that desperately seeks out a higher return. There is virtually zero risk because the big institutional investors are borrowing the money at 0 interest and on top of that they have an implicit guarantee from the government that they will be protected in the event of a marker crash. So as a result they do what the incentives created by the system tell them they should do. Take huge 0 interest loans and invest it in the items with the highest possible return, with no regard for risk.

Risk is now something only the little people have to worry about.

revrendjim: Funny, that system has been working for a century, a century that saw the United States rise to become the wealthiest nation in the world. Let's change it.


No, that's not the system we've been using. The system we had been using was to have the fed set interest rates that were designed primarily to control the risk of bubbles and inflation, and only secondarily to try to maintain full employment. Shortly after Bush I lost to Clinton on the premise that Bush I hadn't done enough to curtail the early 90 recession, the Fed had become primarily a tool of full employment, to hell with inflation and bubble prevention. That's not the fault of Clinton by the way, or any of the Presidents really. It's the fault of the people for demanding that the government 'create jobs' which is something that government cannot do. As soon as the central bank become subject to the whims of the electorate, you're going to see this kind of "growth before all else" monetary policy from central banks.

It's funny, the same people who decry Wall Street's short shortsightedness by only looking at the next quarter's earnings report no matter what the long term consequences, will demand that the fed take actions that are designed to target the next months unemployment report no matter the long term consequences.

Every economic crisis we've had since the early 90s has been the direct result of the sudden deflation of an inflationary bubble created primarily by loose monetary policy. First the Japanese asset bubble, then the .com bubble, then the housing bubble, and up next probably a bubble in commodities or junk bonds or some other high risk asset that cheap, risk free money from the Fed is flowing into.

We haven't had any real economic growth since the early 90s, it's been almost entirely one series of inflation fueled bubbles after another. But every time 'inflation' rears its head we simply redefine what inflation is in an attempt to make the inflation look like real growth.
 
2012-10-28 10:17:08 PM
Without junk bonds, there would be no cell phone industry. Many of the things you own were originally financed by junk bonds.
 
2012-10-28 10:20:24 PM
I remember 1980. Mortgage rates were frickin sky high. we were all getting screwed at the gas pump for no real reason while being told lots of lies while OPEC folks gave huge kick-backs to the wealthy farks who run & own America (business as usual).

Costs of higher education was going through the roof. It was hard to find a job, and companies were laying off large groups off people regularly, even though it was often just to increase their stockholder profits by mere pennies while regular Moms & Dads lost their source of income and got worried sick over how they could pay the bills and feed their kids, but they tried not to let the kids see them worry because that's just not right.

America car companies produced meh quality vehicles as more and more consumers began or continued to buy well made affordable foreign made automobiles.

Police across the country made newspapers on a daily basis for the incredible violence they doled out on the public at large. Their actions, which was frequently questionable and thug-like, would result in temporary removal from duty while a blue ribbon panel of their peers would review the situation, declare all was on the up and up, and the officer in question was returned to duty with back pay.

Politicians were liars, thieves stole things, school kids smoked dope and frat boys beat hell out of pledges. there were some good movies while some of them really blew.

That was 1980.
 
2012-10-28 10:21:08 PM

BiffDangler: But what if in response to a punishment your son said "Dad, what you need to do is guarantee my allowance regardless of the situation and leave even more liquor in the cabinet while still leaving the keys out? If you don't the consequence will be really bad"

If you respond with "well that's a great idea son" and then he does it again.. then yes, it is your fault


Go look up Dodd-Frank and then tell me if your analogy still works.
 
2012-10-28 10:23:18 PM

DrPainMD: Without junk bonds, there would be no cell phone industry. Many of the things you own were originally financed by junk bonds.


Because something occurred due to in part x does not necessarily mean the event would not occur in the absence x; especially when x is a specific form of business funding procurement.
 
2012-10-28 10:37:15 PM

cameroncrazy1984: BiffDangler: But what if in response to a punishment your son said "Dad, what you need to do is guarantee my allowance regardless of the situation and leave even more liquor in the cabinet while still leaving the keys out? If you don't the consequence will be really bad"

If you respond with "well that's a great idea son" and then he does it again.. then yes, it is your fault

Go look up Dodd-Frank and then tell me if your analogy still works.


I have. There is nothing meaningful in Dodd-Frank. All of the good stuff was kept out of the bill.
 
2012-10-28 10:45:11 PM

Talondel: An Austrian school economist would (and has) told you that this is the predictable result of central banks holding interest rates below what the market will bear. It creates and excess of cheap money that desperately seeks out a higher return. There is virtually zero risk because the big institutional investors are borrowing the money at 0 interest and on top of that they have an implicit guarantee from the government that they will be protected in the event of a marker crash. So as a result they do what the incentives created by the system tell them they should do. Take huge 0 interest loans and invest it in the items with the highest possible return, with no regard for risk.

Risk is now something only the little people have to worry about.

revrendjim: Funny, that system has been working for a century, a century that saw the United States rise to become the wealthiest nation in the world. Let's change it.

No, that's not the system we've been using. The system we had been using was to have the fed set interest rates that were designed primarily to control the risk of bubbles and inflation, and only secondarily to try to maintain full employment. Shortly after Bush I lost to Clinton on the premise that Bush I hadn't done enough to curtail the early 90 recession, the Fed had become primarily a tool of full employment, to hell with inflation and bubble prevention. That's not the fault of Clinton by the way, or any of the Presidents really. It's the fault of the people for demanding that the government 'create jobs' which is something that government cannot do. As soon as the central bank become subject to the whims of the electorate, you're going to see this kind of "growth before all else" monetary policy from central banks.

It's funny, the same people who decry Wall Street's short shortsightedness by only looking at the next quarter's earnings report no matter what the long term consequences, will demand that the fed take actions that are designed to target the next months unemployment report no matter the long term consequences.

Every economic crisis we've had since the early 90s has been the direct result of the sudden deflation of an inflationary bubble created primarily by loose monetary policy. First the Japanese asset bubble, then the .com bubble, then the housing bubble, and up next probably a bubble in commodities or junk bonds or some other high risk asset that cheap, risk free money from the Fed is flowing into.

We haven't had any real economic growth since the early 90s, it's been almost entirely one series of inflation fueled bubbles after another. But every time 'inflation' rears its head we simply redefine what inflation is in an attempt to make the inflation look like real growth.


Interesting. Thanks.

Just read Economix, so now I'm an expert. Or something.
 
2012-10-28 10:49:30 PM

Talondel: An Austrian school economist would (and has) told you


Yeah, that powerhouse Austria is just taking over the world.

Just this morning I spent several hundred dollars on Austrian exports like cuckoo clocks and Hitler.
 
2012-10-28 11:31:21 PM
There's nothing to see here. Actual savings exceeds expected savings, savings are looking for a place to go, they end up in junk bonds due to a lack of quality options, compressing the real and nominal yield curves in the process, as nominal yields can't be negative, and the Fed has yet to force the short end of the real yield curve negative enough to move back to a market clearing equilibrium.

This isn't novel, this isn't terribly exciting. It's an 80 year old problem with solutions in every intermediate level undergraduate macro economics textbook.

//Hicks-Hansen for the win!
 
2012-10-28 11:51:44 PM

demaL-demaL-yeH:
/And why the fark is any company floating junk when markets, cash, and retained earnings are at all-time highs?


Greed. Pure, simple, unadulterated, black-hearted GREED.

Ain't amurrican capitalizm great?
 
2012-10-28 11:57:50 PM

Hector Remarkable: Most of all I'm looking forward to high-collared Izod shirts again. This is also good news for Wang Chung.


Member's Only jackets. I can wear mine without being laughed at again.

/those jackets pulled all the honeys back in the 80's
//one wool, one polyester
 
2012-10-29 12:20:57 AM

cameroncrazy1984: BiffDangler: This is the Fed's fault:

The Fed print's money (yes I know the don't technically print it) and loan it to the banks at zero percent. the money is burning a hole in the banks pocket. They have to do something with that. They are buying all the treasuries that come out, and they still have money to burn, so, they buy whatever debt is issued practically.

It's the Fed's fault that the banks act irresponsibly with the money because nobody told them not to?

You've got to be kidding me.


If the law is changed to make murder legal, it's the person who changed the law and not the murderer who is at fault for causing their victim's death. So wall street just has to act like greedy amoral scumbag assholes because no one told them they couldn't or shouldn't or made a law against it.

This is what FedHaterz actually believe.
 
2012-10-29 12:43:21 AM

Linux_Yes: if we can just get Mittens in the White House, we can start this roller coaster up and do it right this time!! it'll make 2008/9 look like child's play!


vote Rmoney!


No, let's reelect Obama and let him finish what he started! Namely the United States.
 
2012-10-29 12:44:05 AM

jaytkay: Yeah, that powerhouse Austria is just taking over the world.


"Austrian" economics is an economic school of thought so named because it originated in Austria. Not because it's currently practiced in Austria. But thanks for taking the time to point out your own ignorance for the world to see. Next time, at least run the term through Wikipedia before embarrassing yourself.

From Wikipedia:

The Austrian School of economics is a school of economic thought which bases its study of economic phenomena on the interpretation and analysis of the purposeful actions of individuals.
It derives its name from its origin in late-19th and early-20th century Vienna with the work of Carl Menger, Eugen von Böhm-Bawerk, Friedrich von Wieser, and others. Currently, adherents of the Austrian School can come from any part of the world, but they are often referred to as "Austrian economists" or "Austrians" and their work as "Austrian economics".


rewind2846: If the law is changed to make murder legal, it's the person who changed the law and not the murderer who is at fault for causing their victim's death. So wall street just has to act like greedy amoral scumbag assholes because no one told them they couldn't or shouldn't or made a law against it.


Not exactly. When people make decisions that influence the economy, they should do so in light of how people actually respond to incentives, not in some fantastic dreamworld where everyone behaves the way regulators think they should.

The current inflationary bubble (and the last several) were all easily predicted based on known models of how the incentives surrounding holding interest rates below what the market will bare play out. It results in people discounting risk and funneling money into high risk / high interest investments in order to see a return. We continue to ignore this basic tenant of economics at our own peril.
 
2012-10-29 12:53:03 AM

Talondel: The current inflationary bubble


Inflation is high now? Tell us all about that. Don't neglect real estate prices.Those must be skyrocketing. You sound real informed.
 
2012-10-29 12:57:57 AM
snl.jt.org

Remembers the 80s. They weren't that baaaaaaaaaad.
 
2012-10-29 01:10:04 AM
hey failmitter, I think you mean financial crisis of 1989.
 
2012-10-29 01:45:36 AM

jaytkay: Talondel: The current inflationary bubble

Inflation is high now? Tell us all about that. Don't neglect real estate prices.Those must be skyrocketing. You sound real informed.


Inflation is what happens when too much money goes chasing too few assets and drive prices upward beyond what they would be if not for the surplus in the money supply. Sometimes this happens across the all (or at least most) sectors of the economy and sometimes its confined to specific sectors. Currently, the practice of the people who's job it is to measure "inflation" game the system by throwing out the sectors where inflation exists (food, energy, commodities) and including areas where we're currently seeing deflation because the last inflationary bubble is still deflating (housing).

Go out and ask a typical consumer how much more they're spending this year for the same things they bought last year. According to the official government number its 2%. I don't know a single person that isn't spending way more than 2% more to cover their monthly expenses than they were last year. The actual effect of inflation on the average person's budget is more like 8%.

Link

But, even looking at the official government numbers, the inflation rate for September 2012 was .4%, which would be 4.8% if that rate continues for the next year. Anything over 5% is high, so people (like you) who continue to ignore inflation do so at their own peril.

And all that ignores the fact that I'm not talking about system wide inflation, but rather inflationary bubbles in specific sectors of the economy that are driven largely by the fact that institutional investors have access to 0 interest risk free money from the Fed, and all of that money is trying to find its way into places with a return (first stocks, then housing, now commodities and junk bonds).

You can blame the large investment banks for the bubble in housing all you want. They certainly deserve a great deal of blame. But in the end all they were doing was responding to the incentives that the system had put in place. They could borrow money for nothing, and invest it with no regard to risk, and that's exactly what they did. Now we've enshrined that business model into federal law (again, this isn't the fault of one party or the other, they were both happy to do this). Which goes a long way to explaining why corporate profits continue to soar, and the average person continues to suffer. There's no incentive to invest in things that actually benefit people or provide a service that they want. Those are things that require time, effort, and risk to see returns on investment. Far easier to just dump free government money into the market and see where it goes than to loan it to businesses that may or may not ever see a return. Because if the market crashes and everyone goes tits up, those small businesses you loaned money too will be allowed to go out of business without paying you back. But if an institutional investor puts its own ass on the line by making a ton of risky bets on the market, they're guaranteed a government bailout. Now, what do you think the banks that have access to money from the Fed (who are universally the large investors) are going to do with it?
 
2012-10-29 02:06:18 AM
Talondel: You can blame the large investment banks for the bubble in housing all you want. They certainly deserve a great deal of blame. But in the end all they were doing was responding to the incentives that the system had put in place. They could borrow money for nothing,


Everything you've posted in this thread has been based on the notion that interest rates were as low at the height of the bubble as they are now.

Therefore, everything you've posted in this thread is completely wrong.
 
2012-10-29 02:09:21 AM

BiffDangler: This is the Fed's fault:


No it's not.
 
2012-10-29 02:12:34 AM

BiffDangler: Well, the US rose must faster before that system.


That's because it conquered and claimed an entire continent and all the resources in it. It didn't matter what system was in place, expansion of that magnitude will always yield rapid growth. The growth slowed when there wasn't any land left to appropriate.

Banking panics and economic depressions were frequent, severe and catastrophic before the Fed. Trust me: You do not want to return to those halcyon days.
 
2012-10-29 02:14:29 AM
Talondel:

You're conflating inflationary growth with bubbles fueled by cheap credit. There is a HUGE difference.

Inflationary growth is not to be viewed "on average" since average can be drastically skewed (Bill Gates and 100 homeless guys walk into a bar; the AVERAGE drinker is a millionaire), but more appropriately compared to consumer goods vs growth in population relative to demand per capita. A rise in cheap credit is a symptom of excessive liquidity at the top, and can be corrected with more aggressive taxation. When there is too much money, and not enough crap to spend it on, that's a bubble - plain and simple.

When the leveraged capital ratio of major institutions can be ignored with accounting shenanigans (like declaring future payouts of risky mortgage derivatives as present assets to boost lending potential), it's proof of systemic failure at the core - users who want crap but don't want to bear the consequences of said crap. A corporation only exists to make money for its owners, and any regulation must come from the root level because it sure as s**t won't come from the top.

Consumers want more than they could get, and rules were originally set up to protect people from themselves. Those rules were abandoned in place of quarterly dividend reports, in part because the 80s showed us how much fun it is to play fast and loose with credit cards, while the 90s showed that we can always grow our way out of any problem we create. It is the consumer's fault for allowing it on every level.

/NeoKeynesian
//Austrian economics only work when all parties start equal and all labor is fungible
 
2012-10-29 02:16:31 AM

Talondel: An Austrian school economist would (and has) told you


why they are always so habitually wrong about nearly everything?
 
2012-10-29 02:42:34 AM

kmmontandon: Everything you've posted in this thread has been based on the notion that interest rates were as low at the height of the bubble as they are now.

Therefore, everything you've posted in this thread is completely wrong.


It's entirely possible that everything I've posted is wrong, but that's not the reason. The argument isn't based on how high or low interest rates are, but whether or not the rates are being held artificially lower than what demand for money would dictate. We've maintained intentionally low interest rates since the 90s which have fueled these speculative bubbles. Every time the fed tries to allow interest rates to return to normal, it bursts the bubble, creates a crisis, and the fed goes into the only response to a crisis it understands, it lowers interest rates.

Snarcoleptic_Hoosier: You're conflating inflationary growth with bubbles fueled by cheap credit. There is a HUGE difference.


I'm not confusing them. They're not the same thing. But they're driven by the same mechanism. Too much cheap money chasing too few high return assets.

Ishkur: why they are always so habitually wrong about nearly everything?


Austrian economics has its flaws just like every school of economic thought. But they have a heck of a track record at predicting bubbles like the .com bubble and the housing bubble. I'd be happy to post citations for you, but you can google "Austrian school bubble predictions" as well as I can.
 
2012-10-29 02:48:45 AM

Talondel: jaytkay: Yeah, that powerhouse Austria is just taking over the world.

"Austrian" economics is an economic school of thought so named because it originated in Austria. Not because it's currently practiced in Austria. But thanks for taking the time to point out your own ignorance for the world to see. Next time, at least run the term through Wikipedia before embarrassing yourself.

From Wikipedia:

The Austrian School of economics is a school of economic thought which...


From your own link:

Some economists have argued that Austrians are often averse to the use of mathematics and statistics in economics....

Economist Bryan Caplan argues that Austrians have often misunderstood modern economics, causing them to overstate their differences with it....

Economist Paul Krugman has stated that because Austrians do not use "explicit models" they are unaware of holes in their own thinking...

Mainstream economists generally argue that Austrian economics lacks scientific rigor and rejects scientific methods and the use of empirical data in modelling economic behavior...

According to most mainstream economists, the Austrian business cycle theory is incorrect...Hummel argues that the Austrian explanation of the business cycle fails on empirical grounds...

In 1969, economist Milton Friedman, after examining the history of business cycles in the U.S., concluded that "The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false."


Next time, at least read the whole Wikipedia article before embarrassing yourself.
 
2012-10-29 03:05:50 AM

Talondel: Snarcoleptic_Hoosier: You're conflating inflationary growth with bubbles fueled by cheap credit. There is a HUGE difference.

I'm not confusing them. They're not the same thing. But they're driven by the same mechanism. Too much cheap money chasing too few high return assets.


No, inflation is derived from an increase in demand relative to supply of money available to purchase it. When the Fed wants to encourage lending and investment in the private sector, it restricts US Treasuries (open market operations being the most common method - akin to a golfer with only a pitching wedge trying to land a ball inside a 6 inch circle) available for sale to raise the price (and lower the yield to the point of limited profitability). That's the JOB of a federal reserve system. Where you are correct is the push for credit from political forces who only want to preside over a booming economy (yes, both sides do it).

Where you're wrong is the assumption that credit is itself bad. Lower credit is a godsend for the private sectors since research and expansion are much cheaper to handle in fixed 20 year bonds when the times are good. Lower credit requirements for consumers is even better, which spurs growth in high end markets like automobiles and housing or education. Spending $50,000 on an education for a citizen is NOT equivalent to spending $50,000 on luxury anything, and the disparity only grows when the citizen becomes more skilled in the workplace. One is an application of classical Keynesian thought on a microscale (supported by the government - for better or worse - via social engineering) and the other is temporary consumption with limited sustained marginal value past the initial shock.

Whether the government should try to encourage behavior via fiscal policy is an entirely different debate, and I don't think the moderators would approve of such a derail.
 
2012-10-29 03:08:04 AM

Talondel: Austrian economics has its flaws just like every school of economic thought. But they have a heck of a track record at predicting bubbles


Austrian predictions are deliberately vague and unspecified (and data-less) so they can be simultaneously right and wrong about any given event.

Austrian economics consists entirely of ideological catchphrases, talking points and flowing rhetoric deliberately left open to interpretation, has no scientific basis or any practical application, and conflicts with obvious empirical data (the Austrian school is in opposition to empiricism. Its papers use no math, in a subject that is all about math).

One of the most distinguishing characteristics of most followers of the Austrian school is that they often display a gross misunderstanding of modern economics.
 
2012-10-29 05:55:51 AM

BiffDangler: cameroncrazy1984: It's the Fed's fault that the banks act irresponsibly with the money because nobody told them not to?

You've got to be kidding me.

Think about it this way: If you left your liquor cabinet unlocked and the car keys laying out and your teenage son repeatedly took the car and crashed it, would it but your fault? OK, no, it wouldnt.

But what if in response to a punishment your son said "Dad, what you need to do is guarantee my allowance regardless of the situation and leave even more liquor in the cabinet while still leaving the keys out? If you don't the consequence will be really bad"

If you respond with "well that's a great idea son" and then he does it again.. then yes, it is your fault.


You, Sir, are a Republican Party Reptile.
 
2012-10-29 06:28:56 AM

nmemkha: DrPainMD: Without junk bonds, there would be no cell phone industry. Many of the things you own were originally financed by junk bonds.

Because something occurred due to in part x does not necessarily mean the event would not occur in the absence x; especially when x is a specific form of business funding procurement.


If the only way to get funding for risky projects is high-interest bonds, then, yes, it does necessarily mean the event would not occur in the absence of high-interest bonds.
 
Displayed 50 of 69 comments

First | « | 1 | 2 | » | Last | Show all

View Voting Results: Smartest and Funniest


This thread is archived, and closed to new comments.

Continue Farking
Submit a Link »






Report