Markets up - Tilted Forum Project Discussion Community

Tully Mars · 03-24-2009, 03:31 AM

Quote:

Stock markets staged a massive rally yesterday, soaring as much as 7 percent after the Treasury Department unveiled a plan to help banks purge their balance sheets of toxic assets and home sales made a surprising rebound.

Story here

So the markets went rally big time yesterday. I turn on the news this morning and suddenly a bunch of talking heads are telling me it's the beginning of the end of the crisis.

My thoughts-

First of all one day and it's "we're back baby!" Seems silly to me.

Second where do people think these purged toxic assets are going? Seems to me like they're being removed from the privately held banks to the US tax payer. It's almost like "hey you're bank is in good shape, you're screwed... but your bank will be fine. Somehow I don't feel better.

Third no of what's being done seems to be addressing the underlying issues. All these moves seem to be made in an effort to keep doing stuff the way we've always done stuff. The way we've been doing things got us in this mess to begin with, right?

Baraka_Guru · 03-24-2009, 05:25 AM

Anytime you see an emotional reaction to markets, beware. A rational approach will usually tell a different story. There are some who have been talking about a secular bear market for months now (even before the crisis) that should last for another couple of years at least.

If anything, the handing of these toxic assets will stabilize markets. Think: manageable bear. But this is just one factor of many that are affecting the market. What about world markets?

Don't expect a bull market anytime soon. We're likely to see ups and downs for the next while.

When people start talking about "rays of hope," always assume it could be a false omen.

roachboy · 03-24-2009, 06:06 AM

Quote:

Financial Policy Despair
By PAUL KRUGMAN

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

This is more than disappointing. In fact, it fills me with a sense of despair.

After all, we’ve just been through the firestorm over the A.I.G. bonuses, during which administration officials claimed that they knew nothing, couldn’t do anything, and anyway it was someone else’s fault. Meanwhile, the administration has failed to quell the public’s doubts about what banks are doing with taxpayer money.

And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.

It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

Let’s talk for a moment about the economics of the situation.

Right now, our economy is being dragged down by our dysfunctional financial system, which has been crippled by huge losses on mortgage-backed securities and other assets.

As economic historians can tell you, this is an old story, not that different from dozens of similar crises over the centuries. And there’s a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books.

That’s what Sweden did in the early 1990s. It’s also what we ourselves did after the savings and loan debacle of the Reagan years. And there’s no reason we can’t do the same thing now.

But the Obama administration, like the Bush administration, apparently wants an easier way out. The common element to the Paulson and Geithner plans is the insistence that the bad assets on banks’ books are really worth much, much more than anyone is currently willing to pay for them. In fact, their true value is so high that if they were properly priced, banks wouldn’t be in trouble.

And so the plan is to use taxpayer funds to drive the prices of bad assets up to “fair” levels. Mr. Paulson proposed having the government buy the assets directly. Mr. Geithner instead proposes a complicated scheme in which the government lends money to private investors, who then use the money to buy the stuff. The idea, says Mr. Obama’s top economic adviser, is to use “the expertise of the market” to set the value of toxic assets.

But the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.

The likely cost to taxpayers aside, there’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different. This is starting to look obsessive.

But the real problem with this plan is that it won’t work. Yes, troubled assets may be somewhat undervalued. But the fact is that financial executives literally bet their banks on the belief that there was no housing bubble, and the related belief that unprecedented levels of household debt were no problem. They lost that bet. And no amount of financial hocus-pocus — for that is what the Geithner plan amounts to — will change that fact.

You might say, why not try the plan and see what happens? One answer is that time is wasting: every month that we fail to come to grips with the economic crisis another 600,000 jobs are lost.

Even more important, however, is the way Mr. Obama is squandering his credibility. If this plan fails — as it almost surely will — it’s unlikely that he’ll be able to persuade Congress to come up with more funds to do what he should have done in the first place.

All is not lost: the public wants Mr. Obama to succeed, which means that he can still rescue his bank rescue plan. But time is running out.

http://www.nytimes.com/2009/03/23/op...n.html?_r=1&em

i think krugman is far closer to right than i'd like him to be. i think he has the rationale for this move pegged and is about the only mainstreamed voice in the states who seems to understand what's at stake in this move on the part of the administration to buy up trash assets even before the audit that was put into motion a few weeks ago has been carried out.

at this point, i do not understand why anyone would lend anything beyond self-referential value to what the stock market does.
what you can learn from its fluctuations is that it is fluctuating.

Cynthetiq · 03-24-2009, 06:22 AM

For some reason when I read manageable bear, I hear some coworker who was upset that the trained dolphins were "acting like wild animals" and was so surprised.

I think the same thing for the stock markets.

First, everyone is trying to not be the one holding the bag once the party music stopped. It's almost like the police arrived at a pot party and no one wants to be caught with the bong, but when the popo aren't looking someone is trying to take another hit.

I am really upset about this whole thing. $1,000,000,000,000.00 to bail the bad securities. WTF?????? look at all those fucking zeros. I look at that and can't even fathom it. I have not even played a pinball machine that gave out such ridiculous scores.

Let the cards fall in some fashion. In AA rooms of Texas they talk about an easier softer way to sobriety and that's a bullet.

aceventura3 · 03-24-2009, 07:01 AM

There have been some subtle positive economic indicators in the past couple of months. The nation is beginning to focus on the positives rather than the doom and gloom/worst recession in the history of universe type stuff. The stock market is a forward looking indicator. My biggest concern now is what to expect several years down the road when we have to start paying for current deficit spending. And before everyone jumps on Bush's tax cuts, remember taxes collected went up after his tax cuts and the budget deficit was getting smaller by the end of his second term.

roachboy · 03-24-2009, 07:26 AM

something that baffles me, and which i've been hearing in various publick houses and reading here from more conservative folk, is this idea that what's happening economically is somehow really a matter of attitude---so there's no real problems---rather people are just getting bummed out by some bizarre decision on the part of unnamed but somehow pervasive Forces of Opinion Management to focus on bummer information---the flip of that is the "argument" that if we all just put on a happy face, that everything would fix itself.

behind this is what i take to be an illusion: that once everything "fixes itself" the world will return back to the way it was before.

i don't buy it.

i think krugman has been consistently closest to the mark on what's happening, much more than any other figure who operates in any way inside the ideological vacuum of the dominant american press. if that's the case, then this happy-face business is nothing more and nothing less than denial.

i can understand the appeal to some extent, though--after decades of simple-minded happyface capitalism, folk get used to it.

but still, if krugman is anywhere near correct, it seems to me obvious that there'll be hell to pay at the micro-level if geithner's bush administration redux strategy does not work. it seems to me that happyface in this case is an acrostic for paralysis. that can't be good.

tisonlyi · 03-24-2009, 07:45 AM

The markets are running away with themselves on the back of the recent announcements from ponyville: We're giving it all away! It's exactly the same story as December time when the FED announced it's first tranche of QE, etc.

There'll be some euphoria for a while, but eventually it'll come back down... Germany's Commerzbank(?) revised its GDP prediction for The Fatherland yesterday: -7% for 2009, down from -3% a couple of months ago. 2nd half recovery baked-in there.

November to February the markets rebounded 27% from the lows. I think we're already up towards 30% from the recent lows. Moves like this just aren't rational.

I heard something from Dr Faber over the last few days, talking about the eventuality of a period of base-building near a bottom, a period of years, which would then be the potential basis of a return to bull or bullish conditions... Looking at the NASDAQ's relative stability over the past 6 years as an example of a multi-year base building period.

Willravel · 03-24-2009, 08:23 AM

Quote:

Originally Posted by roachboy

something that baffles me, and which i've been hearing in various publick houses and reading here from more conservative folk, is this idea that what's happening economically is somehow really a matter of attitude

I don't see it as anything more than an a lack of familiarity with economics. Most of us normal folk only have a few college classes that taught outdated or oversimplified econ and maybe some investing experience. That doesn't amount to a hill of beans in this crazy world. Someday you'll understand that.

Here's looking at you kid.

Cynthetiq · 03-24-2009, 08:25 AM

Quote:

Originally Posted by roachboy

something that baffles me, and which i've been hearing in various publick houses and reading here from more conservative folk, is this idea that what's happening economically is somehow really a matter of attitude---so there's no real problems---rather people are just getting bummed out by some bizarre decision on the part of unnamed but somehow pervasive Forces of Opinion Management to focus on bummer information---the flip of that is the "argument" that if we all just put on a happy face, that everything would fix itself.

as a fiscally conservative individual, I don't subscribe to the head in the sand mentality of "just be cheery and put on a happy face."

I see that there's some deep trouble when looking at the mechanisms and situations that are being posited just based on the simple numbers that are announced.

roachboy · 03-24-2009, 08:29 AM

yeah well who knows about anything, really? we all just make stuff up as we go, using the tools we happen to have available and wading through a mountain of infotainment.

it occurs to me though that this whole happy-face "interpretation" could be just a huge misunderstanding of what a crisis of confidence is--so that in some way it becomes something like this interaction from "full metal jacket"

Quote:

Pogue Colonel: Marine, what is that button on your body armor?
Private Joker: A peace symbol, sir.
Pogue Colonel: Where'd you get it?
Private Joker: I don't remember, sir.
Pogue Colonel: What is that you've got written on your helmet?
Private Joker: "Born to Kill", sir.
Pogue Colonel: You write "Born to Kill" on your helmet and you wear a peace button. What's that supposed to be, some kind of sick joke?
Private Joker: No, sir.
Pogue Colonel: You'd better get your head and your ass wired together, or I will take a giant shit on you.
Private Joker: Yes, sir.
Pogue Colonel: Now answer my question or you'll be standing tall before the man.
Private Joker: I think I was trying to suggest something about the duality of man, sir.
Pogue Colonel: The what?
Private Joker: The duality of man. The Jungian thing, sir.
Pogue Colonel: Whose side are you on, son?
Private Joker: Our side, sir.
Pogue Colonel: Don't you love your country?
Private Joker: Yes, sir.
Pogue Colonel: Then how about getting with the program? Why don't you jump on the team and come on in for the big win?
Private Joker: Yes, sir.
Pogue Colonel: Son, all I've ever asked of my marines is that they obey my orders as they would the word of God. We are here to help the Vietnamese, because inside every gook there is an American trying to get out. It's a hardball world, son. We've gotta keep our heads until this peace craze blows over.
Private Joker: Aye-aye, sir.

FuglyStick · 03-24-2009, 08:55 AM

The country needs to redefine it's ideas of what "capital" is. What got us into the mess in the first place is investing in "numbers," rather than in "product." The shell game of swapping numbers from one column to another in the pursuit of wealth, rather than investing in actual goods, was doomed to fail because there was never any actual product coming from all the money being flung around. Unless investors start putting their money towards actual production, any recovery by the stock market will be doomed to fail again.

flstf · 03-24-2009, 10:18 AM

I don't know about the stock market but the housing market may be getting close to a bottom. I read somewhere that average prices are now about 2.9 times average annual income. Two houses close to my land have sold in the last couple of weeks. One was on the market for 3+ years at $565K and sold for $300K, the other on the market for 2 years just closed yesterday so I don't know the price yet.

Even though many have lost considerable net worth recently, there are millions still putting money into their 401Ks and eventually a large percentage will wind up in the stock market.

Cynthetiq · 03-24-2009, 10:23 AM

Quote:

Originally Posted by FuglyStick

The country needs to redefine it's ideas of what "capital" is. What got us into the mess in the first place is investing in "numbers," rather than in "product." The shell game of swapping numbers from one column to another in the pursuit of wealth, rather than investing in actual goods, was doomed to fail because there was never any actual product coming from all the money being flung around. Unless investors start putting their money towards actual production, any recovery by the stock market will be doomed to fail again.

I don't think it is a simple as "capital." It boils down to simpler terms like "invest" and "asset". The other situation is that the country moved away from an asset building country to an information and service based country. Something that other countries with fewer people and money can also do. Industry takes resources. Service and information? practically nothing....

Quote:

Originally Posted by flstf

I don't know about the stock market but the housing market may be getting close to a bottom. I read somewhere that average prices are now about 2.9 times average annual income. Two houses close to my land have sold in the last couple of weeks. One was on the market for 3+ years at $565K and sold for $300K, the other on the market for 2 years just closed yesterday so I don't know the price yet.

Even though many have lost considerable net worth recently, there are millions still putting money into their 401Ks and eventually a large percentage will wind up in the stock market.

I don't think you can do anything with your 401k but put it into the stock market in some fashion.

aceventura3 · 03-24-2009, 12:23 PM

Quote:

Originally Posted by roachboy

something that baffles me, and which i've been hearing in various publick houses and reading here from more conservative folk, is this idea that what's happening economically is somehow really a matter of attitude---so there's no real problems---

The reason you are baffled is because you mischaracterize what people are saying. I don't know anyone who has the position that the economy is not in a recession. A recession is a problem. The issue is to the degree that it is a problem. Just like the common cold or the flu is a problem, a recession is a problem. Just like the common cold or flu can lead to a more serious medical issue, a recession can lead to a more serious issue. On the other hand just like the common cold or the flu will pass, so will a recession. The attitude part has to do with people pretending that the common cold or flu means you are on your death bed. We don't need the drama and the hysteria.

flstf · 03-24-2009, 01:04 PM

As long as the roots are not severed, all is well and will be well.....

YouTube - Being There clip 1

roachboy · 03-24-2009, 01:40 PM

Will the Geithner Plan Work? - Room for Debate Blog - NYTimes.com

i think you can access this, but if not, you can sign up for the times and it's free so far.
this outlines the main positions on the state of the banking system as a whole, the idea behind geithner's rehashing of paulsen's plan, and the problems that attend this throwing of the dice. i'm more inclined toward krugman's position than anyone else's. what do you think?

Cynthetiq · 03-24-2009, 01:42 PM

I believe in #2.

Quote:

Since the beginning of the crisis, there have been two views of what’s going on.

View #1 is that we’re looking at an unnecessary panic. The housing bust, so the story goes, has spooked the public, and made people nervous about banks. In response, banks have pulled back, which has led to ridiculously low prices for assets, which makes banks look even weaker, forcing them to pull back even more. On this view what the market really needs is a slap in the face to calm it down. And if we can get the market in troubled assets going, people will see that things aren’t really that bad, and — as Larry Summers said on yesterday’s Newshour – the vicious circles will turn into virtuous circles.

View #2 is that the banks really, truly messed up: they bet heavily on unrealistic beliefs about housing and consumer debt, and lost those bets. Confidence is low because people have become realistic.

The Geithner plan can only work if view #1 is right. If view #2 is right – if the banks are really in deep trouble that goes beyond lack of confidence — subsidizing investor purchases of toxic assets, many of which aren’t even held by the most troubled banks, has no real chance of turning things around.

As you can guess, I believe in view #2. We had vast excesses during the bubble years, and I don’t think we can fix the damage with the power of positive thinking plus a bit of financial engineering.

roachboy · 03-24-2009, 01:46 PM

interesting--that's krugman's basic assumption and from that it follows, as he's been arguing, that nationalization is more or less the only way out and that it's better sooner than later.

what i'm surprised at really is the fact that this plan was announced *before* the auditing that was such a big deal in the last round of hearings on a "plan for the banking system" was carried out. so even if i thought 1 was the case, i'd still be uneasy about the move because there's no way of knowing what the move will entail. and the bet itself could be on the wrong horse.

ratbastid · 03-24-2009, 01:55 PM

The stock market is fundamentally an irrational and emotional critter. It's a poor indicator of The Economy at Large, but it's SOMETHING, and it's a loud and dramatic and easily-tracked something. And I think it's fair to say that starting a several weeks ago and ending a few weeks after that, the Obama administration failed to sweet-talk the market, it was all about how serious the problems are, and the lurching market we saw was a see-saw rollercoaster reaction to that.

Not that it means anything really, but it becomes an easy target for those who want to exploit the new administration's mistakes.

Anxst · 03-24-2009, 05:10 PM

I've personally always seen the stock market as a basic trust based market. When trust in the overall economy goes up, so does the market.

While trust is good, I do not feel that it can help with the fundamental errors made by the banking industries that led us to this economic state. Deregulation and lack of oversight (OTS, anyone?) let the bank run giant bets without having to back any of them, and now the entire economy owns it all.

As we are bailing out these financial institutions, we as taxpayers are picking up all the penalties. I'm not an economist, but I don't see why we're not (temporarily!) nationalizing our banking system, breaking it back up into the smaller institutions it once was (before gross debt hedging allowed them to buy and merge with all their competition) and stabilizing the thing. Then, if any money was made, it could pay us back, and we could sell the resulting companies off to whomever wanted them.

Still, that's for another thread. What it really comes down to is that though a recovering stock market shows trust in the economy overall, it doesn't necessarily mean anything is fixed. Just that people think it's not going to get much worse.

Tully Mars · 03-24-2009, 05:20 PM

Quote:

Originally Posted by FuglyStick

The country needs to redefine it's ideas of what "capital" is. What got us into the mess in the first place is investing in "numbers," rather than in "product." The shell game of swapping numbers from one column to another in the pursuit of wealth, rather than investing in actual goods, was doomed to fail because there was never any actual product coming from all the money being flung around. Unless investors start putting their money towards actual production, any recovery by the stock market will be doomed to fail again.

See this makes sense to me. And nothing being done right now addresses, in my mind, the numbers swapping, shell game behavior that got us here to begin with. People weren't investing in a company because they thought the company was of capital value, they bought it hoping it's stock would go up so they could sell it... sell it soon. Make a profit at any cost.

I have friends who bought and sold stock based, partly, on how many lay-offs a company would issue when ownership transfered. The logic being the company would be able to squeeze more profit out of less costs. Thus the stock would rise and they'd sell. Great! But what about the saps that got laid off? what happens when it's your company being bought and sold? After you're laid off will you buy stock in your old company? How long can an economy continue to squeeze more out of less?

aceventura3 · 03-25-2009, 06:51 AM

Quote:

Originally Posted by roachboy

Will the Geithner Plan Work? - Room for Debate Blog - NYTimes.com

i think you can access this, but if not, you can sign up for the times and it's free so far.
this outlines the main positions on the state of the banking system as a whole, the idea behind geithner's rehashing of paulsen's plan, and the problems that attend this throwing of the dice. i'm more inclined toward krugman's position than anyone else's. what do you think?

He gave nothing to support his view. And, his view is vague - "banks messed up" - that is a pretty meaningless comment. On the other hand there is clear empirical evidence that most "banks" are functioning and are healthy.

---------- Post added at 02:51 PM ---------- Previous post was at 02:49 PM ----------

Quote:

Originally Posted by ratbastid

The stock market is fundamentally an irrational and emotional critter.

Over the long term the stock market reflects the true value of companies publicly traded.

Cynthetiq · 03-25-2009, 06:58 AM

While you may think that most banks are okay, many are not. Just look at how many per year have been going under these past few years.

2008 2007 2006 2005 2004 2003 2002 2001

Quote:

View: Bank Failures & Assistance
Source: Fdic
posted with the TFP thread generator

Bank Failures & Assistance
2009

The list of Bank Failures and Assistance Transactions is updated through March 20, 2009. Please address questions on this subject to the Customer Service Hotline (telephone: 888-206-4662).

March

TeamBank, National Association, Paola, Kansas, with approximately $669.8 million in assets, was closed. Great Southern Bank, Springfield, Missouri, has agreed to assume all deposits (approximately $492.8 million). (PR-46-2009)

Colorado National Bank, Colorado Springs, Colorado, with approximately $123.5 million in assets, was closed. Herring Bank, Amarillo, Texas has agreed to assume all deposits (approximately $82.7 million). (PR-45-2009)

FirstCity Bank, Stockbridge, Georgia, with approximately $297.0 million in assets and approximately $278.0 million in deposits was approved for payout by the FDIC Board of Directors. (PR-44-2009)

Freedom Bank of Georgia, Commerce, Georgia, with approximately $173.0 million in assets and approximately $161.0 million in deposits, was closed. Northeast Georgia Bank, Lavonia, Georgia has agreed to assume all deposits. (PR-37-2009)

February

Security Savings Bank, Henderson, Nevada, with approximately $238.3 million in assets, was closed. Bank of Nevada, Las Vegas, NV has agreed to assume all non-brokered deposits (approximately $175.2 million). (PR-32-2009)

Heritage Community Bank, Glenwood, Illinois, with approximately $232.9 million in assets, was closed. The MB Financial Bank, National Association, Chicago, Illinois has agreed to assume all deposits (approximately $218.6 million). (PR-31-2009)

Silver Falls Bank, Silverton, Oregon, with approximately $131.4 million in assets was closed. Citizens Bank, Corvallis, Oregon has agreed to assume all deposits (approximately $116.3 million). (PR-24-2009)

Pinnacle Bank of Oregon, Beaverton, Oregon, with approximately $73.0 million in assets was closed. Washington Trust Bank, Spokane, Washington has agreed to assume all deposits (approximately $64.0 million). (PR-23-2009)

Corn Belt Bank and Trust Company, Pittsfield, Illinois, with approximately $271.8 million in assets and approximately $234.4 million in deposits, was closed. The Carlinville National Bank, Carlinville, Illinois has agreed to assume all non-brokered deposits. (PR-22-2009)

Riverside Bank of the Gulf Coast, Cape Coral, Florida, with approximately $539.0 million in assets and approximately $424.0 million in deposits, was closed. TIB Bank, Naples, Florida has agreed to assume all non-brokered deposits. (PR-21-2009)

Sherman County Bank, Loup City, Nebraska, with approximately $129.8 million in assets was closed. Heritage Bank, Wood River, Nebraska has agreed to assume all deposits (approximately $85.1 million). (PR-20-2009)

County Bank, Merced, California, with approximately $1.7 billion in assets was closed. Westamerica Bank, San Rafael, California has agreed to assume all deposits (approximately $1.3 billion). (PR-19-2009)

Alliance Bank, Culver City, California, with approximately $1.14 billion in assets and approximately $951.0 million in deposits was closed. California Bank & Trust, San Diego, California has agreed to assume all deposits. (PR-18-2009)

FirstBank Financial Services, McDonough, Georgia, with approximately $337.0 million in assets was closed. Regions Bank, Birmingham, Alabama has agreed to assume all deposits (approximately $279.0 million). (PR-17-2009)

January

Ocala National Bank, Ocala, Florida, with approximately $223.5 million in assets and approximately $205.2 million in deposits, was closed. CenterState Bank of Florida, Winter Haven, Florida has agreed to assume all non-brokered deposits. (PR-14-2009)

Suburban Federal Savings Bank, Crofton, Maryland, with approximately $360.0 million in assets was closed. Bank of Essex, Tappahannock, Virginia has agreed to assume all deposits (approximately $302.0 million). (PR-13-2009)

MagnetBank, Salt Lake City, Utah, with approximately $292.2 million in assets and approximately $282.8 million in deposits was approved for payout by the FDIC Board of Directors. (PR-12-2009)

1st Centennial Bank, Redlands, California, with approximately $803.3 million in assets and approximately $676.9 million in deposits was closed. First California Bank, Westlake Village, California has agreed to assume the non-brokered insured deposits. (PR-7-2009)

Bank of Clark County, Vancouver, Washington, with approximately $446.5 million in assets and approximately $366.5 million in deposits was closed. Umpqua Bank, Roseburg, Oregon has agreed to assume the non-brokered insured deposits. (PR-6-2009)

National Bank of Commerce, Berkeley, Illinois, with approximately $430.9 million in total assets and $402.1 million in total deposits, was closed. In addition to assuming all of the failed bank's deposits, Republic Bank of Chicago, Oak Brook, Illinois agreed to pay a discount of $44.9 million, and will purchase approximately $366.6 million of assets. The FDIC will retain the remaining assets for later disposition. (PR-5-2009)

roachboy · 03-25-2009, 07:02 AM

ace--krugman's been developing the arguments consistently in his columns and elsewhere for months.
i posted the link to provide a sense of what the positions are and who holds them regarding geithner's "plan"--which is a recycle of the paulsen "plan"---so we're still in the la la land of neoliberal assumptions and actions.

so the link is.....you know..........context.

if you want the demonstrations for krugman's position specifically, it's not hard to find---just search his name on the nytimes and read some of the writing. this isn't rocket science, ace.

aceventura3 · 03-25-2009, 07:15 AM

Quote:

Originally Posted by Cynthetiq

While you may think that most banks are okay, many are not. Just look at how many per year have been going under these past few years.

2008 2007 2006 2005 2004 2003 2002 2001

At the end of the day or at the end of this "crisis" what percentage of "banks" will have failed? I don't know (I will look it up later), but I bet less than 1%. Then if we compare that percentage to the S&L crisis in the 80's or the Depression, I bet the current percentage will be trivial compared to those events. So, like I posted the emperical evidence does not support the premise held by Krugman.

roachboy · 03-25-2009, 07:17 AM

ace you haven't shown any empirical data, nor do i have any reason to believe that you have access to any empirical data, nor do i have any reason to believe that you'd know what to do with it if you did have access---your positions are that absurd.

but go ahead, post what you've got and let's see.

aceventura3 · 03-25-2009, 07:20 AM

Quote:

Originally Posted by roachboy

ace--krugman's been developing the arguments consistently in his columns and elsewhere for months.
i posted the link to provide a sense of what the positions are and who holds them regarding geithner's "plan"--which is a recycle of the paulsen "plan"---so we're still in the la la land of neoliberal assumptions and actions.

so the link is.....you know..........context.

if you want the demonstrations for krugman's position specifically, it's not hard to find---just search his name on the nytimes and read some of the writing. this isn't rocket science, ace.

Yes, details on his position are hard to find. What I have seen has been vague general opinions he holds. If you have something detailed, please share.

tisonlyi · 03-25-2009, 07:22 AM

The FDIC are telling the world they're currently expecting around 200 banks to fail this year. I think Ms Bair even mentioned that on the 'stay calm everybody' puff-piece on 60 minutes a few weeks ago... I think it's up to 19 so far this year? Nothing of real significance yet, even though the big 19 are all worth less than $0 in reality, because they haven't been allowed to fail as yet... If they were allowed or forced to fail, that'd be somewhere around 70% of the US's banks (by market share) gone overnight.

The FDIC is asking for a $500bn line of credit from congress as we type...

Sleep tight.

Oh, and just for some context on bear market rallies:

November 1929 - April 1930: +48%

June 1930 - September 1930: +12%

December 1930 - February 1931: +21%

May 1931 - June 1931: +27%

October 1932 - November 1931: +35%

July 1932 - September 1932: +72%

aceventura3 · 03-25-2009, 07:24 AM

Quote:

Originally Posted by roachboy

ace you haven't shown any empirical data, nor do i have any reason to believe that you have access to any empirical data, nor do i have any reason to believe that you'd know what to do with it if you did have access---your positions are that absurd.

but go ahead, post what you've got and let's see.

I have several bank accounts (business and personal), several investment accounts, I have a mortgage, line of credit, credit cards, auto loan, etc. There has been no material impact on any of these things on me. How has the "crisis" affected you?

ratbastid · 03-25-2009, 07:29 AM

Quote:

Originally Posted by aceventura3

Over the long term the stock market reflects the true value of companies publicly traded.

Only the same way the atomic clock in Denver "reflects" the passage of time. But the fact is, a second as we define it hasn't actually passed until that clock says so.

The stock market DEFINES the value of companies. To say it "reflects" something in the real world beyond the emotional gut-level hunches of those engaged in it is absurd.

Plus, those who are watching the market closely right now for signs of economic indication aren't AT ALL looking at it in the long term.

aceventura3 · 03-26-2009, 07:46 AM

Quote:

Originally Posted by ratbastid

Only the same way the atomic clock in Denver "reflects" the passage of time. But the fact is, a second as we define it hasn't actually passed until that clock says so.

The stock market DEFINES the value of companies. To say it "reflects" something in the real world beyond the emotional gut-level hunches of those engaged in it is absurd.

Plus, those who are watching the market closely right now for signs of economic indication aren't AT ALL looking at it in the long term.

The key difference is that time is an objective measurement. Value is subjective. People will measure value in different ways and even individuals will put higher or lower values on items that constitute a company. However, long term, risk adjusted returns clearly get reflected in the market. When anomalies develop in risk adjusted returns, market participants will move in to exploit those anomalies. As more and more market participants exploit the anomalies the anomalies go away, bringing us back in to balance. Nature seek balance, markets seek balance.

roachboy · 03-26-2009, 07:53 AM

the point i think the other rb was making is exactly the opposite of that, ace.

time is what the system of marking stages it as being: the function of the atomic clock is not to measure anything: the point is "to produce the same event over and over" (this from the official definition of the clock, the official explanation for what it does)---so what the clock does is **produces** the events that you take it as **measuring**....there's a world of difference between the two terms.

value then is not that different--it's a set of relations. value isn't simply "subjective"---it's relational.

a "market" is not an object, nor is it a system--it's a cluster of relations. as such, a market doesn't "tend" toward anything, doesn't "seek" anything. your position on this is metaphysics, a religious assumption, a matter of faith, nothing more.

stock market fluctuations refer to themselves. that it's been an article of faith for some time that they refer to the broader economy has been of a piece with the more debilitating assumption that what matters is the movement of capital and not the relations of market-oriented activity to other forms of social life---like production, say.

it's this entire way of seeing the world, ace--everything about your position--that's in serious trouble in the transition we're moving through.

tisonlyi · 03-26-2009, 11:42 AM

Even folks who normally shout the gospel of rational markets are, currently, expressing the opinion that said markets are not entirely rational at the moment.

The truth is, they never were. The truth is, we have no control other than the power to open and close said markets.

The truth, in terms of political economy, is that we're all David Hume's man born into a box.

Blind, deaf, scentless, ignorant. The world we're grasping around in for comforting narratives offers us none. In such circumstances it's better to accept the unsettling, rather than grasp something, almost at random, and hold it up to the sun as divine.

aceventura3 · 03-26-2009, 11:53 AM

Quote:

Originally Posted by roachboy

a "market" is not an object, nor is it a system

True, but the term "market" is used in the context of grouping "objects" or participants within a "system".

Quote:

--it's a cluster of relations. as such, a market doesn't "tend" toward anything, doesn't "seek" anything.

However, market participants do "trend" toward certain things. Market participants show historic tendencies regarding what they "trend" to. For example there are clear patterns in the relationships between corporate earnings yields and treasury securities yeilds. When there is excessive deviations in these relationships, there are corrections. The problem with predicting these changes is a short-term problem not a long-term one.

Quote:

your position on this is metaphysics, a religious assumption, a matter of faith, nothing more.

Let's not leave out luck.

Quote:

stock market fluctuations refer to themselves.

Not to the objects traded in the stock market. At some point real value is revealed.

Quote:

that it's been an article of faith for some time that they refer to the broader economy has been of a piece with the more debilitating assumption that what matters is the movement of capital and not the relations of market-oriented activity to other forms of social life---like production, say.

it's this entire way of seeing the world, ace--everything about your position--that's in serious trouble in the transition we're moving through.

Are you a "market" participant, or are your views based upon theory?

tisonlyi · 03-26-2009, 12:02 PM

After all you've seen of the past 12 months, the past 10-30 years even, you still cling to efficient or rational market gospel as truth?

aceventura3 · 03-26-2009, 12:11 PM

Quote:

Originally Posted by tisonlyi

Even folks who normally shout the gospel of rational markets are, currently, expressing the opinion that said markets are not entirely rational at the moment.

When people who make money exploiting something in the market that they "discovered" and then they start to loose money on that "discovery" they are generally the ones shouting about how irrational the market has become. What I do, is ask those people some questions about how they cam to that view. It is usually pretty revealing.

Quote:

The truth is, they never were. The truth is, we have no control other than the power to open and close said markets.

Market participants have complete and total control over what they do. If a person is a passive investor, they are not a market participant in my view. When parties with equal experience/training/knowledge or access to knowledge participate with each other in a free market how could it be anything other than rational? I think your views must be based on "lambs playing with lions".

---------- Post added at 08:11 PM ---------- Previous post was at 08:02 PM ----------

Quote:

Originally Posted by tisonlyi

After all you've seen of the past 12 months, the past 10-30 years even, you still cling to efficient or rational market gospel as truth?

In the long-term, yes.

Many predicted the dot com bubble bursting, long before it burst. Remember Greenspan comment about irrational exuberance. Personally I got burned because I got greedy and let emotion get in the way. The "market" has no emotional failings and it corrected, this correction was clearly predictable and after studying the issue after the fact I can clearly see what the "market" was telling everyone. The "market" was being very rational, and effectively/efficiently communicated information to everyone, especially in this age of access to information.

Also, many predicted the housing bubble bursting.

Many predicted the "banking crisis".

And now many are predicting a fiscal crisis from government spending and the government amassing massive debt. we know taxes will go up, we know high inflation is around the corner. We know standards of living will decline.

tisonlyi · 03-26-2009, 12:14 PM

This world view based on game theory needs, as a prerequisite, absolutely rational actors making absolutely rational decisions without cooperation between players.

Unfortunately, people do not enter markets with rational intentions. They do not enter the market with anything approaching rationality. People, aside from economists, psychopaths and the autistic/aspergers will always find ways to cooperate rather than engage in cut-throat competition. No matter what the market, no matter what is being traded.

Even Nash, he who refined these theories to exalted levels, does not now accept that his theories can be applied to any human endeavour. We're not wired that way.

Wolf and sheep, lambs and lions. Ubermensch and untermensch... With knowledge comes the realisation of a lack of understanding, with understanding comes a realisation of a lack of knowledge.

The world is not black and white, superior and inferior, right and wrong.

aceventura3 · 03-26-2009, 12:27 PM

Quote:

Originally Posted by tisonlyi

This world view based on game theory needs, as a prerequisite, absolutely rational actors making absolutely rational decisions without cooperation between players.

Unfortunately, people do not enter markets with rational intentions. They do not enter the market with anything approaching rationality. People, aside from economists, psychopaths and the autistic/aspergers will always find ways to cooperate rather than engage in cut-throat competition. No matter what the market, no matter what is being traded.

Even Nash, he who refined these theories to exalted levels, does not now accept that his theories can be applied to any human endeavour. We're not wired that way.

Wolf and sheep, lambs and lions. Ubermensch and untermensch... With knowledge comes the realisation of a lack of understanding, with understanding comes a realisation of a lack of knowledge.

The world is not black and white, superior and inferior, right and wrong.

The world pretty much is black and white. You live, you die. You make money on a deal or you don't. Your wife is pregnant or she is not...

But, I diverge. I currently need people like you in the "market". People who believe the market is not rational give opportunity to those who do. Lately, I have been using a simple option trading strategy of buying a call and buying a put at the same/similar strike prices and expiration dates, pretty much betting on big swings in the market from those extreme views of market value of major indexes. Now that the "market" is in a clear up trend this trade is no longer as effective as it was, but that was predictable too.

tisonlyi · 03-26-2009, 12:38 PM

Greenspan should have known about the irrational exuberance, he created it by flooding the world with cheap credit. The Asian crisis, Russian collapse and fall of LTCM should have been followed by global recession. Greenspan inflated out of that, quite deliberately, hence the insanity that followed in the stock markets.

It's been the same story since 1987, and since stocks really started to take off in the early 80's based on this efficient/rational market theory markets have been pushing ever higher... when they go down, the Greenspan/Bernanke puts come into play for re-inflation.

That can't work now. Doesn't work now. There's no more debt to create in the system.

The theory was always nonsense. Mandelbrot PROVED its lack on credibility at its inception back in the 50's, by looking back at cotton exchange data.

Literally, and i've seen them make this argument, confronted with the evidence that these models and theories (portfolio theory, rational/efficient markets) do not work, economists say "Oh yes they do, except for when they don't.".

The other argument is even better: "We need a model to work with and these are the best we've got, even though we know they're wrong."

The events which cause irrational markets are historically commonplace. Over the last 30 years we've had the crisis of the early 80's(killing inflation), '87(based on nothing, really), early 90's(soviet union's collapse, s&l crisis, etc), 97'(asian crisis, russian collapse and the fall of LTCM), 2001-3(global equities crash) and now, 2007-present.

Every one of those crises has been inflated away, dismissed as freak occurances 'one in a billion' type events. why?

BECAUSE THE UNDERLYING THEORY AND ASSUMPTIONS OF PORTFOLIO THEORY AND EFFICIENT MARKETS DO NOT APPLY TO THE REAL WORLD.

---------- Post added at 09:29 PM ---------- Previous post was at 09:28 PM ----------

You've been betting on volatility. Well done. Just look at the VIX.

---------- Post added at 09:38 PM ---------- Previous post was at 09:29 PM ----------

Hang on.

You lost your shirt in the last bubblecrash because you were greedy, irrational. You're actually trading through an incredible period of volatility now and calling yourself rational?

You don't see the obvious there?

aceventura3 · 03-26-2009, 01:41 PM

Quote:

Originally Posted by tisonlyi

BECAUSE THE UNDERLYING THEORY AND ASSUMPTIONS OF PORTFOLIO THEORY AND EFFICIENT MARKETS DO NOT APPLY TO THE REAL WORLD.

First to be clear. Efficient Market Theory or Portfolio Theory are different than saying the market is rational.

Second. One of the arguments used against the "rational" market is that a random act, like throwing darts at a stock chart to pick stocks or a monkey picking stocks can frequently out perform the "market" in general. There is a simple and rational explanation for this phenomenon. It is simply the fact that in a trending stock market generally 7 out of 10 stocks traded will follow the trend. So, there is by definition a greater than 50% probability that picking any basket of stocks short of all of them will lead to positive returns trending with the market - even if picked randomly. Money managers who manage money by looking at the past rather than the future will have the odds against them out performing the market. Those who understand this clear function of the market will have the odds in their favor.

Quote:

You lost your shirt in the last bubblecrash because you were greedy, irrational. You're actually trading through an incredible period of volatility now and calling yourself rational?

I did not loose my shirt. But like most things in life, you pay for your education one way or the other. Continuing education and not making the same mistakes over and over is in fact rational in my mind.

Quote:

You don't see the obvious there?

Interesting point here. I think looking at the "market" is like looking at French Impressionist art.

If you look to close you will fail to see what is rational, you will fail to see the obvious, you will fail to see the beauty.

03-24-2009, 05:25 AM	#2 (permalink)
Baraka_Guru warrior bodhisattva Super Moderator Location: East-central Canada	Anytime you see an emotional reaction to markets, beware. A rational approach will usually tell a different story. There are some who have been talking about a secular bear market for months now (even before the crisis) that should last for another couple of years at least. If anything, the handing of these toxic assets will stabilize markets. Think: manageable bear. But this is just one factor of many that are affecting the market. What about world markets? Don't expect a bull market anytime soon. We're likely to see ups and downs for the next while. When people start talking about "rays of hope," always assume it could be a false omen. __________________ Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot

03-24-2009, 06:22 AM	#4 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	For some reason when I read manageable bear, I hear some coworker who was upset that the trained dolphins were "acting like wild animals" and was so surprised. I think the same thing for the stock markets. First, everyone is trying to not be the one holding the bag once the party music stopped. It's almost like the police arrived at a pot party and no one wants to be caught with the bong, but when the popo aren't looking someone is trying to take another hit. I am really upset about this whole thing. $1,000,000,000,000.00 to bail the bad securities. WTF?????? look at all those fucking zeros. I look at that and can't even fathom it. I have not even played a pinball machine that gave out such ridiculous scores. Let the cards fall in some fashion. In AA rooms of Texas they talk about an easier softer way to sobriety and that's a bullet. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

03-24-2009, 07:01 AM	#5 (permalink)
aceventura3 Junkie Location: Ventura County	There have been some subtle positive economic indicators in the past couple of months. The nation is beginning to focus on the positives rather than the doom and gloom/worst recession in the history of universe type stuff. The stock market is a forward looking indicator. My biggest concern now is what to expect several years down the road when we have to start paying for current deficit spending. And before everyone jumps on Bush's tax cuts, remember taxes collected went up after his tax cuts and the budget deficit was getting smaller by the end of his second term. __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

03-24-2009, 07:26 AM	#6 (permalink)
roachboy Super Moderator Location: essex ma	something that baffles me, and which i've been hearing in various publick houses and reading here from more conservative folk, is this idea that what's happening economically is somehow really a matter of attitude---so there's no real problems---rather people are just getting bummed out by some bizarre decision on the part of unnamed but somehow pervasive Forces of Opinion Management to focus on bummer information---the flip of that is the "argument" that if we all just put on a happy face, that everything would fix itself. behind this is what i take to be an illusion: that once everything "fixes itself" the world will return back to the way it was before. i don't buy it. i think krugman has been consistently closest to the mark on what's happening, much more than any other figure who operates in any way inside the ideological vacuum of the dominant american press. if that's the case, then this happy-face business is nothing more and nothing less than denial. i can understand the appeal to some extent, though--after decades of simple-minded happyface capitalism, folk get used to it. but still, if krugman is anywhere near correct, it seems to me obvious that there'll be hell to pay at the micro-level if geithner's bush administration redux strategy does not work. it seems to me that happyface in this case is an acrostic for paralysis. that can't be good. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

03-24-2009, 07:45 AM	#7 (permalink)
tisonlyi Nothing	The markets are running away with themselves on the back of the recent announcements from ponyville: We're giving it all away! It's exactly the same story as December time when the FED announced it's first tranche of QE, etc. There'll be some euphoria for a while, but eventually it'll come back down... Germany's Commerzbank(?) revised its GDP prediction for The Fatherland yesterday: -7% for 2009, down from -3% a couple of months ago. 2nd half recovery baked-in there. November to February the markets rebounded 27% from the lows. I think we're already up towards 30% from the recent lows. Moves like this just aren't rational. I heard something from Dr Faber over the last few days, talking about the eventuality of a period of base-building near a bottom, a period of years, which would then be the potential basis of a return to bull or bullish conditions... Looking at the NASDAQ's relative stability over the past 6 years as an example of a multi-year base building period. __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--

03-24-2009, 08:55 AM	#11 (permalink)
FuglyStick WHEEEE! Whee! Whee! WHEEEE! Location: Southern Illinois	The country needs to redefine it's ideas of what "capital" is. What got us into the mess in the first place is investing in "numbers," rather than in "product." The shell game of swapping numbers from one column to another in the pursuit of wealth, rather than investing in actual goods, was doomed to fail because there was never any actual product coming from all the money being flung around. Unless investors start putting their money towards actual production, any recovery by the stock market will be doomed to fail again. __________________ AZIZ! LIGHT!

03-24-2009, 10:18 AM	#12 (permalink)
flstf Easy Rider Location: Moscow on the Ohio	I don't know about the stock market but the housing market may be getting close to a bottom. I read somewhere that average prices are now about 2.9 times average annual income. Two houses close to my land have sold in the last couple of weeks. One was on the market for 3+ years at $565K and sold for $300K, the other on the market for 2 years just closed yesterday so I don't know the price yet. Even though many have lost considerable net worth recently, there are millions still putting money into their 401Ks and eventually a large percentage will wind up in the stock market.

03-24-2009, 01:40 PM	#16 (permalink)
roachboy Super Moderator Location: essex ma	Will the Geithner Plan Work? - Room for Debate Blog - NYTimes.com i think you can access this, but if not, you can sign up for the times and it's free so far. this outlines the main positions on the state of the banking system as a whole, the idea behind geithner's rehashing of paulsen's plan, and the problems that attend this throwing of the dice. i'm more inclined toward krugman's position than anyone else's. what do you think? __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

03-24-2009, 01:46 PM	#18 (permalink)
roachboy Super Moderator Location: essex ma	interesting--that's krugman's basic assumption and from that it follows, as he's been arguing, that nationalization is more or less the only way out and that it's better sooner than later. what i'm surprised at really is the fact that this plan was announced before the auditing that was such a big deal in the last round of hearings on a "plan for the banking system" was carried out. so even if i thought 1 was the case, i'd still be uneasy about the move because there's no way of knowing what the move will entail. and the bet itself could be on the wrong horse. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

03-24-2009, 01:55 PM	#19 (permalink)
ratbastid Darth Papa Location: Yonder	The stock market is fundamentally an irrational and emotional critter. It's a poor indicator of The Economy at Large, but it's SOMETHING, and it's a loud and dramatic and easily-tracked something. And I think it's fair to say that starting a several weeks ago and ending a few weeks after that, the Obama administration failed to sweet-talk the market, it was all about how serious the problems are, and the lurching market we saw was a see-saw rollercoaster reaction to that. Not that it means anything really, but it becomes an easy target for those who want to exploit the new administration's mistakes.

03-24-2009, 05:10 PM	#20 (permalink)
Anxst Condensing fact from the vapor of nuance. Location: Madison, WI	I've personally always seen the stock market as a basic trust based market. When trust in the overall economy goes up, so does the market. While trust is good, I do not feel that it can help with the fundamental errors made by the banking industries that led us to this economic state. Deregulation and lack of oversight (OTS, anyone?) let the bank run giant bets without having to back any of them, and now the entire economy owns it all. As we are bailing out these financial institutions, we as taxpayers are picking up all the penalties. I'm not an economist, but I don't see why we're not (temporarily!) nationalizing our banking system, breaking it back up into the smaller institutions it once was (before gross debt hedging allowed them to buy and merge with all their competition) and stabilizing the thing. Then, if any money was made, it could pay us back, and we could sell the resulting companies off to whomever wanted them. Still, that's for another thread. What it really comes down to is that though a recovering stock market shows trust in the economy overall, it doesn't necessarily mean anything is fixed. Just that people think it's not going to get much worse. __________________ Don't mind me. I'm just releasing the insanity pressure from my headvalves.

03-25-2009, 07:02 AM	#24 (permalink)
roachboy Super Moderator Location: essex ma	ace--krugman's been developing the arguments consistently in his columns and elsewhere for months. i posted the link to provide a sense of what the positions are and who holds them regarding geithner's "plan"--which is a recycle of the paulsen "plan"---so we're still in the la la land of neoliberal assumptions and actions. so the link is.....you know..........context. if you want the demonstrations for krugman's position specifically, it's not hard to find---just search his name on the nytimes and read some of the writing. this isn't rocket science, ace. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

03-25-2009, 07:17 AM	#26 (permalink)
roachboy Super Moderator Location: essex ma	ace you haven't shown any empirical data, nor do i have any reason to believe that you have access to any empirical data, nor do i have any reason to believe that you'd know what to do with it if you did have access---your positions are that absurd. but go ahead, post what you've got and let's see. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

03-25-2009, 07:22 AM	#28 (permalink)
tisonlyi Nothing	The FDIC are telling the world they're currently expecting around 200 banks to fail this year. I think Ms Bair even mentioned that on the 'stay calm everybody' puff-piece on 60 minutes a few weeks ago... I think it's up to 19 so far this year? Nothing of real significance yet, even though the big 19 are all worth less than $0 in reality, because they haven't been allowed to fail as yet... If they were allowed or forced to fail, that'd be somewhere around 70% of the US's banks (by market share) gone overnight. The FDIC is asking for a $500bn line of credit from congress as we type... Sleep tight. Oh, and just for some context on bear market rallies: November 1929 - April 1930: +48% June 1930 - September 1930: +12% December 1930 - February 1931: +21% May 1931 - June 1931: +27% October 1932 - November 1931: +35% July 1932 - September 1932: +72% __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--

03-26-2009, 07:53 AM	#32 (permalink)
roachboy Super Moderator Location: essex ma	the point i think the other rb was making is exactly the opposite of that, ace. time is what the system of marking stages it as being: the function of the atomic clock is not to measure anything: the point is "to produce the same event over and over" (this from the official definition of the clock, the official explanation for what it does)---so what the clock does is produces the events that you take it as measuring....there's a world of difference between the two terms. value then is not that different--it's a set of relations. value isn't simply "subjective"---it's relational. a "market" is not an object, nor is it a system--it's a cluster of relations. as such, a market doesn't "tend" toward anything, doesn't "seek" anything. your position on this is metaphysics, a religious assumption, a matter of faith, nothing more. stock market fluctuations refer to themselves. that it's been an article of faith for some time that they refer to the broader economy has been of a piece with the more debilitating assumption that what matters is the movement of capital and not the relations of market-oriented activity to other forms of social life---like production, say. it's this entire way of seeing the world, ace--everything about your position--that's in serious trouble in the transition we're moving through. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

03-26-2009, 11:42 AM	#33 (permalink)
tisonlyi Nothing	Even folks who normally shout the gospel of rational markets are, currently, expressing the opinion that said markets are not entirely rational at the moment. The truth is, they never were. The truth is, we have no control other than the power to open and close said markets. The truth, in terms of political economy, is that we're all David Hume's man born into a box. Blind, deaf, scentless, ignorant. The world we're grasping around in for comforting narratives offers us none. In such circumstances it's better to accept the unsettling, rather than grasp something, almost at random, and hold it up to the sun as divine. __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--

03-26-2009, 12:02 PM	#35 (permalink)
tisonlyi Nothing	After all you've seen of the past 12 months, the past 10-30 years even, you still cling to efficient or rational market gospel as truth? __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--

03-26-2009, 12:14 PM	#37 (permalink)
tisonlyi Nothing	This world view based on game theory needs, as a prerequisite, absolutely rational actors making absolutely rational decisions without cooperation between players. Unfortunately, people do not enter markets with rational intentions. They do not enter the market with anything approaching rationality. People, aside from economists, psychopaths and the autistic/aspergers will always find ways to cooperate rather than engage in cut-throat competition. No matter what the market, no matter what is being traded. Even Nash, he who refined these theories to exalted levels, does not now accept that his theories can be applied to any human endeavour. We're not wired that way. Wolf and sheep, lambs and lions. Ubermensch and untermensch... With knowledge comes the realisation of a lack of understanding, with understanding comes a realisation of a lack of knowledge. The world is not black and white, superior and inferior, right and wrong. __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--

03-26-2009, 12:38 PM	#39 (permalink)
tisonlyi Nothing	Greenspan should have known about the irrational exuberance, he created it by flooding the world with cheap credit. The Asian crisis, Russian collapse and fall of LTCM should have been followed by global recession. Greenspan inflated out of that, quite deliberately, hence the insanity that followed in the stock markets. It's been the same story since 1987, and since stocks really started to take off in the early 80's based on this efficient/rational market theory markets have been pushing ever higher... when they go down, the Greenspan/Bernanke puts come into play for re-inflation. That can't work now. Doesn't work now. There's no more debt to create in the system. The theory was always nonsense. Mandelbrot PROVED its lack on credibility at its inception back in the 50's, by looking back at cotton exchange data. Literally, and i've seen them make this argument, confronted with the evidence that these models and theories (portfolio theory, rational/efficient markets) do not work, economists say "Oh yes they do, except for when they don't.". The other argument is even better: "We need a model to work with and these are the best we've got, even though we know they're wrong." The events which cause irrational markets are historically commonplace. Over the last 30 years we've had the crisis of the early 80's(killing inflation), '87(based on nothing, really), early 90's(soviet union's collapse, s&l crisis, etc), 97'(asian crisis, russian collapse and the fall of LTCM), 2001-3(global equities crash) and now, 2007-present. Every one of those crises has been inflated away, dismissed as freak occurances 'one in a billion' type events. why? BECAUSE THE UNDERLYING THEORY AND ASSUMPTIONS OF PORTFOLIO THEORY AND EFFICIENT MARKETS DO NOT APPLY TO THE REAL WORLD. ---------- Post added at 09:29 PM ---------- Previous post was at 09:28 PM ---------- You've been betting on volatility. Well done. Just look at the VIX. ---------- Post added at 09:38 PM ---------- Previous post was at 09:29 PM ---------- Hang on. You lost your shirt in the last bubblecrash because you were greedy, irrational. You're actually trading through an incredible period of volatility now and calling yourself rational? You don't see the obvious there? __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}-- Last edited by tisonlyi; 03-26-2009 at 12:32 PM..