Economic meltdown!

[Enoch]

The problem isn't the bad loans in themselves. They were just the straw that broke the camel's back. The problem is that banks are very reluctant to loan to each other because they can't trust what those other banks have on their balance sheet (due to so many of them being heavily invested in difficult-to-value derivatives and potentially toxic mortgage-backed securities). If banks can't count on overnight lending from other banks to meet their reserve requirements, they are susceptable to runs. And they're sure as heck not going to be making new loans to businesses and individuals.

[Humodour]

Several packets of small damage may be better than one big bash. I know I'd rather have twenty ten volt shocks than one two hundred volt shock. Ditto my business might survive a 5% drop in takings, but a 50% drop is very very bad.

 

I don't know why the US bailout didn't go through. Was it dogma? Was it some a-hole putting impossible riders on it?

 

It was free market dogma mixed with senators from both sides facing re-election in a few weeks and not wanting their name attached to an unpopular bill.

 

That's pretty scary, isn't it? They didn't vote to save the economy because they wanted to be re-elected.

[Enoch]

I don't know why the US bailout didn't go through. Was it dogma? Was it some a-hole putting impossible riders on it?

Here's a pretty good rundown. Essentially, it's a "Wall Street Bailout," and the voter-on-the-street hates Wall Street. Throw in that there's an election in 5 weeks, so the politicians who support it haven't sufficiently put their necks on the line to convince the public that it is in their long-term best interest.

[Walsingham]

*sigh*

 

Well, on the bright side, the fact that the average person can't understand second or third order dynamics means my job is secure at least. Assuming I'm not hunted down and burned as a witch.

[taks]

The problem isn't the bad loans in themselves. They were just the straw that broke the camel's back.

a butterfly effect of sorts.

 

not sure what you're talking about krezack. tell you what?

 

taks

[taks]

just got off the phone with my stockbroker brother... he was wondering if i took this beating well. i don't really own any stocks except for some in my retirement fund, and the stocks in there are the only ones that haven't been losing ground this year (overall down only 9%, but on not much money anyway). his comment: "if you think it's bad, i know a guy that was worth $14M a year ago... $400k today."

 

the deeper your investments, the worse hit i suppose.

 

taks

[taks]

1. The Soviet Union collapsed mainly because of one thing: In their planned economy, there were no transportation costs. Think about it again. The size of the soviets, and transportation costs don't "exist". Yup, it was that easy.

hehe...

 

2. The Austrian school of economics, which closely seems to resemble taks' personal views, are interesting on a couple of things:

yes, that would be me...

 

- They believe that since humans are inherently irrational atleast once in their lifetimes, then no mathematical model will ever suffice for economics. One has to use deductive logic instead.

yes again. it is impossible to model human behavior. it is compounded by the fact that we aren't irrational "at least once," but rather, more often than not. at least, one person's view w.r.t. anothers.

 

- Since the perfect trade needs all the information available for the trader, therefore no trade is without risks (noone can know everything).

that's where i think regulation is appropriate, btw. full disclosure. fraud is a big part of this.

 

- Markets never stay at one equilibrium. They rather float between several ones, ever changing as long as trade is taking place.

nope. this means, btw, that there really is no "equilibrium," rather, the market is chaotic.

 

No matter what Ayn Rand thinks, people will still come together, come to agreements and protect family and the herd whenever needed.

which is also a point in which i differ from ayn rand. i can, and do, think about other people selflessly.

 

This is why there should be a somewhat balance here. The government should not intervene with the capital too much (the bailout), but rather serve the interest of the wellbeing of it's citizens. What do the ordinary joe support? A banking bailout or the creation of a fund for those that really will suffer from the crash?

at this point i'd rather see the government buy up the bad paper. period. don't bail out anybody, let 'em fail. i've heard that it would only take $150B. yeah, i know, socialist mess, but it was a socialist mess that got us into this problem in the first place. ultimately, the system is what it is and we need to do something to save it from collapse, that may be enough. dunno.

 

taks

[Humodour]

*sigh*

 

Well, on the bright side, the fact that the average person can't understand second or third order dynamics means my job is secure at least. Assuming I'm not hunted down and burned as a witch.

 

Wait, wait, you know dynamical systems? Are we talking fluid dynamics here or a full-blown theory of complex systems and optimisation?

 

*shrug* I love that stuff is all. Too few people understand it. Even a solid qualitative understanding would be enough. Alas, alack.

 

That, and I always figured you for either a commerce jock or a military grunt. No offence.

[mkreku]

Wasn't taks the guy who once claimed (in another forgotten thread) that my socialist country (Sweden) would crash and burn because all socialist countries do? Well, we're actually doing quite alright, thank you very much. How about you?

 

It might have been roshan too. I can't separate these right wing nutters.

[Hildegard]

just got off the phone with my stockbroker brother... he was wondering if i took this beating well. i don't really own any stocks except for some in my retirement fund, and the stocks in there are the only ones that haven't been losing ground this year (overall down only 9%, but on not much money anyway). his comment: "if you think it's bad, i know a guy that was worth $14M a year ago... $400k today."

 

the deeper your investments, the worse hit i suppose.

 

taks

 

 

Well something like that. This year stocks where doing bad, it started at the end of last year. Many investors when the stocks went down invested their money with a thought that the prices are going to go only up, that it couldn't be worse then it was in the first and second quarter of this year, guess it can.

I have stocks, but my portfolio isn't anything extra. All in all invested 12 000 Euros and things where going great, the value of my stocks reached 21 000 Euros and I did't sell. When things started going down at the end of last year I thought, tomorrow will be better tomorrow will be better. But it didn't get any better now did it. Today the value of my stocks is 10 000 Euros, 2000 Euros in the red.

Edited September 29, 2008 by Hildegard

[taks]

i think, too, that the people that are the most tied up in the stock market tend also to be the most active w.r.t. trading. the guy that lost that much was probably chasing something down and ended up losing everything.

 

taks

[theslug]

that sucks for that guy

 

but good for me because i'm going to start investing soon. I've been waiting so long for this, I knew it was just a matter of time before the U.S. walked in the middle of the street and was nailed by a speeding garbage truck which sent the body flying into a street performer juggling flaming chainsaws which then cut the power line of a nearby telephone pole exploding into a shower of electrocution which then knocked the pole into an adjacent exotic pet store releasing a pack of viscious animals into the street. But I'll be here to pick up the pieces and hopefully make a decent profit over the next couple of years. Give me financial advice taks. plz best friend

[taks]

Give me financial advice taks. plz best friend

unfortunately, i am incapable of investing wisely. that's why i do not own any stock. i do NOT understand human emotion, which is ultimately what drives everything related to the stock market.

 

my brother did buy one share of disney for my son's 1st birthday, btw. i had to fill out some form for the penny we earned last year. i had to claim it on my taxes, too, and as some of you may recall, our information was in one of the boxes that got lost recently when disney's banker was transferring data from one location to another. for this one share of stock, i had to turn on some credit protection thing. one freaking share, and a penny in dividends. sheesh.

 

taks

[Enoch]

just got off the phone with my stockbroker brother... he was wondering if i took this beating well. i don't really own any stocks except for some in my retirement fund, and the stocks in there are the only ones that haven't been losing ground this year (overall down only 9%, but on not much money anyway). his comment: "if you think it's bad, i know a guy that was worth $14M a year ago... $400k today."

 

the deeper your investments, the worse hit i suppose.

I think it's more like "the greater degree to which your investments are concentrated in the financial sector, the worse hit."

 

Diversify, diversify, diversify.

[Humodour]

just got off the phone with my stockbroker brother... he was wondering if i took this beating well. i don't really own any stocks except for some in my retirement fund, and the stocks in there are the only ones that haven't been losing ground this year (overall down only 9%, but on not much money anyway). his comment: "if you think it's bad, i know a guy that was worth $14M a year ago... $400k today."

 

the deeper your investments, the worse hit i suppose.

I think it's more like "the greater degree to which your investments are concentrated in the financial sector, the worse hit."

 

Diversify, diversify, diversify.

 

Well said.

 

Although that's probably complementary to what taks said - that guy was probably in the middle of some high-risk investment scheme in the first place.

[theslug]

just got off the phone with my stockbroker brother... he was wondering if i took this beating well. i don't really own any stocks except for some in my retirement fund, and the stocks in there are the only ones that haven't been losing ground this year (overall down only 9%, but on not much money anyway). his comment: "if you think it's bad, i know a guy that was worth $14M a year ago... $400k today."

 

the deeper your investments, the worse hit i suppose.

I think it's more like "the greater degree to which your investments are concentrated in the financial sector, the worse hit."

 

Diversify, diversify, diversify.

Enoch! Give me financial advice best friend.

[taks]

I think it's more like "the greater degree to which your investments are concentrated in the financial sector, the worse hit."

 

Diversify, diversify, diversify.

yeah, thanks. i agree... diversify. my retirement stuff is ok diverse, and i haven't lost that much as i noted.

 

yes, krezack, i would assume he was in some high-risk sector. stories like that happen even during good times, however. people are panicky, and the problems get compounded when trying to understand a system that ultimately, cannot be understood (other than that it is chaotic and driven by emotion). that's really why i don't invest. i'd get too hung up on formulaic approaches and lose my arse. i have a built in ability (and desire) to see patterns and could too easily fool myself. no way, better to just avoid the whole mess.

 

taks

[Walsingham]

I told you, Krezzie. I'm a freelance scientist. With guns.

 

My stepfather lost 100k two days ago on some shares. Ouch. That's why I invest in information, and people. And beer, and snacks.

[Humodour]

I told you, Krezzie. I'm a freelance scientist. With guns.

 

Really? Sorry, ADHD, remember - I'm only good at recalling things I care about. Oh snap!

 

*cough* To be honest, though, I probably thought you were kidding. It sounds a bit too much like Gordon Freeman. Man, if you're anything like Gordon Freeman, I top my hat to you, sir.

 

Seriously, though, are you an mechanical or chemical engineer? It'd explain how you know fluid dynamics.

[Atreides]

Seriously, though, are you an mechanical or chemical engineer? It'd explain how you know fluid dynamics.

I think Wals means he's a home brewer with an understanding of that kind of fluid dynamics.

 

Plus more evil capitalist banks fail.

[Xard]

fluid dynamics are totally overrated

 

Huzzah! Rally onwards my proletarian brethen!

Edited September 30, 2008 by Xard

[Xard]

 

 

never mind me, I just leave these here...

Edited September 30, 2008 by Xard

[Atreides]

At least one of them's carrying a bag.

[Meshugger]

I would like to add that i find it funny that Bill Clinton, the "tax & spend" liberal, was the most pro-"free market" of the bunch. And i don't mean within the US borders, he actually opened up the US more to the global economy.

[Walsingham]

Look, I know quite a few bankers (big city bankers) and almost without exception they are total holes. But banking going down the pan is equivalent to our economic system going down the pan. That doesn't make me want to party.

 

If we want to punish bankers for being greedy let's just man up and lynch the buggers. Letting our economy burn down to get them is "I'm holding a thermal detonator" time.