The Doomsday Cycle in the US financial system

  • metta

    Posts: 39107

    Feb 24, 2010 6:25 PM GMT
    http://www.voxeu.org/index.php?q=node/4659
  • metta

    Posts: 39107

    Feb 24, 2010 6:28 PM GMT
    Wallstreet's Bailout Hustle
    "Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash"
    http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/print
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    Feb 24, 2010 6:51 PM GMT
    Wall St. is determined to make the world end by 2012.
  • curve

    Posts: 668

    Feb 24, 2010 6:54 PM GMT

    i live by this rule: CASH IS KING! (with some gold on the side, and a lot of bottled water)
  • irishkcguy

    Posts: 780

    Feb 24, 2010 6:59 PM GMT
    Bill Maher asked this question during the first round of bailouts and I think it's a very valid question: where is the rioting? Why isn't the public taking to the street and demanding reform in the financial system?
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    Feb 24, 2010 8:07 PM GMT
    That is a really hysterical article. There is one big scary look chart that gives no indication of whether or not (I suspect not) it is weighted for relative monetary values.

  • Sparkycat

    Posts: 1064

    Feb 24, 2010 8:12 PM GMT
    Why bother? It's going to end anyway from unnatural causes.


    McGay saidWall St. is determined to make the world end by 2012.
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    Feb 24, 2010 9:00 PM GMT
    curve said
    i live by this rule: CASH IS KING! (with some gold on the side, and a lot of bottled water)


    TOTALLY!!!
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    Feb 24, 2010 10:52 PM GMT
    Sparkycat saidWhy bother? It's going to end anyway from unnatural causes.


    McGay saidWall St. is determined to make the world end by 2012.


    I.e., Sarah Palin and the abominable Tea Baggers
  • barriehomeboy

    Posts: 2475

    Feb 25, 2010 2:21 AM GMT
    Canada is doing just fine financially, plus we have gay marriage, legal pot smoking, and lots of room for runaway gay bois from the "states." Welcome Y'all!
  • dannyboy1101

    Posts: 977

    Feb 25, 2010 4:20 AM GMT
    barriehomeboy saidCanada is doing just fine financially, plus we have gay marriage, legal pot smoking, and lots of room for runaway gay bois from the "states." Welcome Y'all!


    Careful what u wish for. I'm not sure you'd want a bunch of illegal immigrants coming from the south to take your jobs and services in return for absolutely nothing but a smile and a nod... Wait, that sounds familiar...
  • mustangd

    Posts: 434

    Feb 25, 2010 7:20 AM GMT
    as i've mentioned in other threads, the earth is an enclosed system as far as we humans are concerned. yes, if we were able to colonize other planets, we could exploit the riches we could find there, but, face it, we have exploited most of the riches of planet earth, that is, in relationship to population, technology, and consumption.

    because the days of westward expansion are over, and resources like gold, silver and oil, are at, near, or past peak, again in relationship to population, we have begun a global cycle of cannabalism, our appetites know no bounds, we now feed on credit and derivatives, things that are artificial. worse, we now depend on them.

    we have built a house of cards.

    if anyone has a means that we can remedy this crisis, and maintain the spirit of the constitution, " ...life, liberty, and the pursuit of happiness" while not leaving millions of people to fend for themselves without social security and medicaid, and lest we not forget, jobs, i'd like to hear, it, PLEASE.
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    Feb 25, 2010 7:55 AM GMT
    metta8 saidWallstreet's Bailout Hustle
    "Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash"
    http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/print


    The entire bailout bill is a giant financial scam which, as of July 2009, had put the US at risk of having bailed out the banks at $23.7 trillion dollars.

    No regulations have gone in place, nothing has been done to discipline the banks or stem and stop speculation and regulate or better yet, END, derivatives trade. In fact, all these problems are worse: the derivatives market has rebounded back to over $450 trillion as of September 2009, while the banks have consolidated the industry through the crisis, become much bigger, and thus, much more dangerous, while the governments gave them control over the Treasury and handed them a blank check.

    Speculation still runs rampant, derivatives are up, the banks are bigger, bubbles continue to grow (commercial real estate for example), and the bailout(s) around the world have exposed governments and populations to significant risk.

    Now Greece is the starting point for the global sovereign debt crisis. It will spread to Portugal, Spain, Ireland, all the way to America. Since speculation has not been halted or regulated, nor have derivatives, global banks and multinational corporations will be able to speculate against national currencies and debt loads, thus plunging them into an economic collapse; it is a self-fulfilling prophecy.

    What was done to Mexico in 1994, East Asia in 1997, Russia in 1998, and Argentina in 2000 and 2001, is going to be done on a global scale. Through the unfolding sovereign debt crisis, the big banks will further consolidate and reap enormous profits through speculation and other weapons of financial mass destruction.

    When this economic crisis is written about in history books, what we have gone through thus far, will fit nicely in the first chapter.

    The 'recovery' is nothing but an illusion.

    http://www.realjock.com/gayforums/842891
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    Feb 25, 2010 8:11 AM GMT
    Fascinating article. Is it also saying that the rich get richer and the everyone else gets poorer? It kinda seem that way to me.
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    Feb 25, 2010 9:03 AM GMT
    I agree! It's really, really sadicon_sad.gif

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    Feb 25, 2010 10:21 AM GMT
    Derivatives have existed since the dawn of economics, and were used extensively by bankers during the Renaissance. These aren't new things, but I agree there should be a derivatives clearinghouse that would make the market a lot more transparent.

    I'm curious how you're coming to the $23.7 trillion number. I mean US GDP is $14.3 trillion in 2009.

    Also, if you want to look for somewhere to really take your pitchforks and torches, I suggest Fannie Mae and Freddie Mac, which have not repaid their aid, and can't. The US taxpayer will be supporting FMFM to the tune of $800 billion - $1 trillion, over a period of ten years (this is per CBO estimates - so the reality is likely worse). Compare with the fact that two private banks were forced to take TARP funds they didn't require, and almost all have repaid their TARP funds.

    I would also like to highlight that this is what happens when we have decades of loose monetary policy, which creates asset bubbles like housing in the first place. You're seeing the same phenomenon in China right now. It isn't the market's fault that absurdly low interest rates keep pushing dollars into the system endlessly - that money has to go somewhere or it becomes worth less, and it often gets invested in assets as part of a speculative bubble (which then crash). The increased frequency of market crashes over the past few decades has everything to do with this fact.

    So blame a lack of Austrian school economists in government, because this whole mess was caused by too much money (whether it be M1 or M2) in the system, and there's only one person to point that finger at - our central bankers.

    MeOhMy said
    metta8 saidWallstreet's Bailout Hustle
    "Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash"
    http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/print


    The entire bailout bill is a giant financial scam which, as of July 2009, had put the US at risk of having bailed out the banks at $23.7 trillion dollars.

    No regulations have gone in place, nothing has been done to discipline the banks or stem and stop speculation and regulate or better yet, END, derivatives trade. In fact, all these problems are worse: the derivatives market has rebounded back to over $450 trillion as of September 2009, while the banks have consolidated the industry through the crisis, become much bigger, and thus, much more dangerous, while the governments gave them control over the Treasury and handed them a blank check.

    Speculation still runs rampant, derivatives are up, the banks are bigger, bubbles continue to grow (commercial real estate for example), and the bailout(s) around the world have exposed governments and populations to significant risk.

    Now Greece is the starting point for the global sovereign debt crisis. It will spread to Portugal, Spain, Ireland, all the way to America. Since speculation has not been halted or regulated, nor have derivatives, global banks and multinational corporations will be able to speculate against national currencies and debt loads, thus plunging them into an economic collapse; it is a self-fulfilling prophecy.

    What was done to Mexico in 1994, East Asia in 1997, Russia in 1998, and Argentina in 2000 and 2001, is going to be done on a global scale. Through the unfolding sovereign debt crisis, the big banks will further consolidate and reap enormous profits through speculation and other weapons of financial mass destruction.

    When this economic crisis is written about in history books, what we have gone through thus far, will fit nicely in the first chapter.

    The 'recovery' is nothing but an illusion.

    http://www.realjock.com/gayforums/842891
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    Feb 25, 2010 10:36 AM GMT
    First off, this derivatives trade of the "shadow economy" or "virtual economy" is something entirely new.

    Speculation is a destructive practice. These "financial instruments" are destructive and dangerous.

    I agree that the central bankers are also to blame. But they work for the banks, anyway. It is collusion that is the cause of crisis.

    And the $23.7 trillion figure comes from the investigation into the TARP program: http://www.bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM

    And that was back in July of 2009, so just imagine where the figure is at today.

    The banks were given a blank check, total control over the Fed and US Treasury, and then it is charged to the US taxpayer.

    That is collusion and criminality between the banks, the Treasury, and the Fed.

    The bailout bill was not $700 billion... that number is just a "rolling" number. One treasury official literally said that there was no meaning to the number, "they just wanted to pick a really big number". And that is the amount that can be leant out "at any one time."

    In short, the bailout had "no limits" to the amount it could give away to banks. The fine print also pointed out that it could be used to bailout foreign banks as well as domestic banks.

    The bailout is a massive scam. Period. And it is creating the conditions for a future crisis.
  • jrs1

    Posts: 4388

    Feb 25, 2010 11:42 AM GMT
    * completely out of my element, comfort zone, and the like but am going to push myself to write it as I see it *

    in the spirit of all that is understanding. we come to know information in various ways. the method to procure such information is just as important as how we come to express what we've ' learned. '

    first, let us begin with what MeOhMy is talking about. ' bailout. '

    the library of congress has its own definition:

    " A bill to provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, to amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes. "
    http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.01424:

    and then there is the actual experiential definition:

    " In October 2008, the mainstream media and politicians of the Western world were warning of an impending depression if actions were not taken to quickly prevent this. The problem was that this crisis had been a long-time coming, and what’s worse, is that the actions governments took did not address any of the core, systemic issues and problems with the global economy; they merely set out to save the banking industry from collapse. To do this, governments around the world implemented massive “stimulus” and “bailout” packages, plunging their countries deeper into debt to save the banks from themselves, while charging it to people of the world. "
    http://globalresearch.ca/index.php?context=va&aid=17736

    moreover ... in terms of how we come to interpret need is also something that needs to be explored. ben bernanke interpreted need in this such way:

    " ... our American economy’s arteries, our financial system, is clogged, and if we don’t act, the patient will surely suffer a heart attack, maybe next week, maybe in six months, but it will happen ... "
    - the Economist 2008

    speaking on derivatives alone, there are several interpretations of their appropriated use and their application(s) to the current recession/ante-depression:

    1. the derivative market is unstable and institutions are taking on more risk than they are capable of handling:

    " The Chief Economist of the BIS warned that the derivatives market poses 'major systemic risks' in the international financial sector, and that, 'The danger is that regulators will again fail to see that big institutions have taken far more exposure than they can handle in shock conditions.' The economist added that, 'The use of derivatives by hedge funds and the like can create large, hidden exposures.' "
    http://www.globalresearch.ca/index.php?context=va&aid=15501

    2. the derivative market is not a game and therefore should not be handled through muddled vision - U.S. Gov't/Fed. Reserve Bank Fail:

    " The financial market is not a game of chance. You enter into contracts and transactions with full consideration of the factors affecting your contracts. This is not purely guessing and a game of chance. You consider all your actions to be able to get the most out of financial derivatives. There is no room for guessing because real risks and real money is involved. "
    http://www.derivativesinvesting.com/myths-and-misconceptions-about-financial-derivatives.php

    what I am missing in these current reports, as a citizen disinterested in nested mendacity, is the truth. I can study finance, economics, and the like and yet utilization of the scientific method inherent in both of the aforementioned disciplines is missing.

    a minor albeit elementary search can yield informatics that can lead to a more informed decision, hence:

    " Financial derivatives, by reducing uncertainties, make it possible for corporations to initiate productive activities that might not otherwise be pursued...To ensure that productive activities are pursued, corporate finance and treasury groups should transform their operations from mundane bean counting to activist financial risk management. "
    http://www.cato.org/pubs/pas/pa-283.html

    yet the political elements and hidden agendas tied into the financial market make it a formidable research topic. I can sooner find more ' lucid ' information on Jesus of Nazareth than when compared to the perhaps clandestine ideology within the financial market; who is trustworthy ... especially if institutions and financiers are interconnected through some elite pipeline?

    e.g.,

    " In May, the information that leaked from the meetings regarded the main topic of conversation being, unsurprisingly, the economic crisis. The big question was to undertake 'Either a prolonged, agonizing depression that dooms the world to decades of stagnation, decline and poverty ... or an intense-but-shorter depression that paves the way for a new sustainable economic world order, with less sovereignty but more efficiency.'

    Important to note, was that one major point on the agenda was to 'continue to deceive millions of savers and investors who believe the hype about the supposed up-turn in the economy. They are about to be set up for massive losses and searing financial pain in the months ahead.' "
    http://www.globalresearch.ca/index.php?context=va&aid=15501
  • MikemikeMike

    Posts: 6932

    Feb 25, 2010 11:45 AM GMT
    no worries Obama will save you all- Hahahahaha lmfao!!!!!!!!!!!!icon_lol.gif
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    Feb 25, 2010 12:56 PM GMT
    MikemikeMike saidno worries Obama will save you all- Hahahahaha lmfao!!!!!!!!!!!!icon_lol.gif


    Spoken like a true cocksucker.
  • jetzenpolis

    Posts: 36

    Feb 25, 2010 8:06 PM GMT
    "MONEY, MARKETS, AND THE STATE: SOCIAL DEMOCRATIC ECONOMIC POLICIES SINCE 1918" (Ton Notermans)

    Ton Notermans, a Norwegian political scientist who has studied in Berlin and Massachusetts, examined European twentieth century economic history since the end of the First World War in five countries: Britain, Germany, the Netherlands, Norway, and Sweden. He finds that a general economic crisis in the capitalist economy can be summarized as either one of two events:

    1.) a flight "into money" (deflation)
    2.) a flight "out of money" (inflation)


    Depression & Deflation
    In a depression, when the economy slows down, there is a downward spiral of lost employment that results in declines in consumer spending. As consumer spending drops, there is another round of shrinking business investment, employment loss, and still less consumer spending.

    Unlike the mid-twentieth century British economist, John Maynard Keynes, Notermans says there is no eventual slowdown in this downward economic spiral. The economy can completely fall apart. German unemployment, for example, stood at an astonishing 43% in 1933. It was the most important reason for Nazi election success and Hitler's assumption of political power as German chancellor that year.

    Depression is always made worse by a tight money supply and restraint in government spending. Tight money encourages deflation. As prices for goods and services drop, the same money becomes ever more valuable.

    Of course, as people hang onto their money, even less is spent on consumer goods and services. In turn, business investment also falls.

    Deflation is a financial disaster for the economy. Business and consumer households find it ever more diffficult to repay loans - at a fixed rate - as prices and wages continue to decline.

    Extensive government intervention in the economy is required to set things right for a return to economic growth. Government expenditures can make up for the loss in business investment and consumer spending.

    Lower interest rates from banks encourage business investment and consumer spending, too.

    Rising government deficits are a necessity to correct the economy. When Franklin D. Roosevelt attempted to cut federal government deficit spending mid-way through the Great Depression, there was what has come to be called a "double dip" in the economy. Cutting government spending made the American economy worse at that time not better.

    Of course, continued government spending during a depression results in ever larger budget deficits. But the size of government budget deficits must be weighed against the "opportunity costs" of lost production, jobs, economic growth, and innovation (lower funding for research & development, education, etc.) that come with a depression.


    Economic "Bubble" Booms & Inflation
    The flip side of economic crisis is an "overheated" economy. A moderate degree of inflation is tolerable - as long as money flows into productive investment and innovation. The problem usually starts with what Alan Greenspan, the Federal Reserve Chairman under the Reagan, G. H. W. Bush, Clinton, and G.W. Bush presidential administrations, called "irrational exuberance."

    It might be the stock market that sees a frenzy of buying and ever higher prices. It could be the commodities markets in which the price of such commodities as gold or oil see a sudden rise (beyond what seems necessary to meet any sort of production demand). Or it could be real estate. Or it could be anything else, including tulips, which was what happened in Holland's famed "tulip mania" bubble economy in the 1630s.

    During an economic bubble, money rapidly pours into speculative "financial" investments. It is a "flight out of money." People no longer wish to hold onto cash.

    If government is unable or unwilling to control the amounts of money going into overheated speculative markets, prices rise. A general inflation results throughout the economy.

    Eventually, as a last resort, governments have historically raised interest rates. This results in job loss and slowed economic performance but it brings prices back under control.


    Inflexibility in Government Economic Policies
    Ton Notermans explains that once governments have changed course on economic policies they have a difficult time reversing themselves. However, circumstances change. Once again, the economic situation calls for a complete reversal in the direction of government policy.

    But governments often stubbornly cling to inappropriate economic policies. They stick with what they are most familiar with.

    For example, the German hyperinflation of 1923 led to a complete economic breakdown. This came at the point when people stopped using money to obtain goods and services (because the value of money fell so rapidly). The German mark fell from a value of 8.9 marks per U.S. dollar in 1918 to 4.2 trillion marks per U.S. dollar at the height of the hyperinflation in November 1923.

    Corrective measures were taken to stop the hyperinflation. But the lessons were learned too well. When the Great Depression began, Germany remained committed to a continued policy of fight inflation.

    It was precisely the wrong policy in response to economic depression and deflation. Germany's democratic political parties were still worried about the dangers of inflation when their new electoral popularity led the Nazis to surge to election victory in 1933.


    "Money, Markets, and the State: Social Democratic Economic Policies Since 1918"
    (Ton Notermans)
    http://www.amazon.com/Money-Markets-State-Democratic-Comparative/dp/0521033268/ref=sr_1_4?ie=UTF8&s=books&qid=1267118968&sr=8-4



  • jetzenpolis

    Posts: 36

    Feb 25, 2010 9:17 PM GMT
    MeOhMy said...Now Greece is the starting point for the global sovereign debt crisis. It will spread to Portugal, Spain, Ireland, all the way to America. Since speculation has not been halted or regulated, nor have derivatives, global banks and multinational corporations will be able to speculate against national currencies and debt loads, thus plunging them into an economic collapse; it is a self-fulfilling prophecy...


    Would you agree, MeOhMy, that the problem for Greece is that it must remain within European Central Bank (ECB) guidelines for the limiting the level of the Greek government's national debt - since it now uses the Euro Dollar as its currency? Greece no longer has control over monetary policy because it is the ECB that now controls monetary policy for all countries using the Euro as their currency.

    Because it uses the Euro as its currency, Greece can no longer reduce the value of its currency in order to lower the expense of its exports and increase the expense of its imports. Cheaper exports would benefit Greek businesses and industries that export goods abroad. More expensive imports would benefit other Greek industries and businesses that have to compete against incoming imported goods.

    The flexibility permitted by having its own national currency would allow Greece to use the devaluation of its currency to improve its economy.

    In addition, the Greek government could run a higher national debt than what it might otherwise be permitted under European Central Bank (ECB) guidelines. (The ECB is very influenced by Germany's historic and continuing economic fear of inflation since Germany is the largest European economy.)

    This would allow the Greek government to better avoid the political turmoil that has resulted from the cut in government expenditures on many benefits provided to the Greek people.
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    Feb 25, 2010 11:40 PM GMT
    jetzenpolis said

    Would you agree, MeOhMy, that the problem for Greece is that it must remain within European Central Bank (ECB) guidelines for the limiting the level of the Greek government's national debt - since it now uses the Euro Dollar as its currency? Greece no longer has control over monetary policy because it is the ECB that now controls monetary policy for all countries using the Euro as their currency.


    In short, yes, I would agree.

    This is the great folly of regional currencies, of which the world is being split into. However, the proposed solution from the Eurocrats to this problem, is that there was an economic and monetary union where there was not a political union, in the sense that Brussels controlled interest rates, but not taxation. So the "solutions" Europe will propose will be "deeper integration" along the political level (as outlined by the Lisbon Treaty, which is a "Constitution" for Europe).

    The reality is that Greece, and all European countries, should abandon the euro completely and return to national or better yet, local, currencies which they can better control.

    The fundamental issue at heart, which makes this a global problem, not a Eurozone issue, is the debt loads. It just so happens that the eurozone economy exacerbated this issue and so it hits here first, and is more apparent in countries like Greece and Portugal, who are suffering due to ECB policies. But central banks around the world have ravaged their own economies into debt spirals from which they can never return.

    The "Greek Crisis" will come to America in time.
  • jrs1

    Posts: 4388

    Feb 26, 2010 12:14 AM GMT
    DOGSHIT said
    jetzenpolis said
    MeOhMy said

    Give that meomy another drink to shut his ass up finally!

    notes from the underbelly ... of the hidden and/or deleted member. lovely.
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    Feb 26, 2010 12:15 AM GMT
    jrs1 said
    DOGSHIT said
    jetzenpolis said
    MeOhMy said

    Give that meomy another drink to shut his ass up finally!

    notes from the underbelly ... of the hidden and/or deleted member. lovely.


    Maybe she's on her period.