On 2008-10-10, Ed Huntress wrote:
I'm not trying to measure inflation here so much as to show that the idea
Ron Paul is promoting, that a lack of "sound" (i.e., gold-backed) money
somehow led to our present fix. That isn't where these bubbles come from.
They come from an excess of credit and borrowing. You can have such an
excess with gold-backed money just as well as with fiat money. It's mostly
caused by things that go on in the banking industry, not the Treasury.

This is correct.

And the reason for this happening, is that with the new financial
structures, derivatives etc, there are many players that act like
quasi-banks, borrowing money and lending it, without being subject to
reserve restrictions. So during the growth years, all of that stuff
ballooned, leveraged up and expanded.

Now we are seeing banks insolvent due to drops of prices of assets
that they carry, due to this rapid de-leveraging. The assets of the
banks are below their liabilities.

Banks being insolvent (negative equity), there is no surprise that
bank lending cannot take place.

I cannot see how government can quickly put together a machine (loan
officers, attorneys, computer stuff) to make business loans. I doubt
that this will go very far and they should know it too.

So, then, a plan is to put forth to invest money into insolvent
banks. In other words, replenish their assets by giving them money
comparable to what they lost. This is not something that a private
investor would normally do. In any case, a question is just how much
money is needed to make the banks solvent. The amount may be very
large.

If I can offer a diagnosis of what happened, I would say that for a
large part this is due to reckless people managing "other people's
money". So they took risks that their investors would not ordinarily
take if they were informed.

These outsize risks were masqueraded by funky accounting because
exotic securities that they owned never had a market with quotes. So
they marked to theoretical values that they were free to assume with
wide latitude. As a result, 1) they got big bonuses and 2) a lot of
losses were hidden.

Growth is available money supply encouraged profligacy, public and
private. So at this point we are a country with huge public debt, huge
private debt, deficits, and inability to reduce both.

This is largely a result of republican philosophy to get rich quickly,
and squandering public money, which I despise. I want to get rich
slowly in a stable financial system.

The solution is not gold standard, but it must involve abandoning
profligacy, greater regulation of lending and activities leading to
creation of money, and stricter accounting standards.

--
Due to extreme spam originating from Google Groups, and their inattention
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"Ignoramus18712" wrote in message
news
On 2008-10-10, Ed Huntress wrote:
I'm not trying to measure inflation here so much as to show that the idea
Ron Paul is promoting, that a lack of "sound" (i.e., gold-backed) money
somehow led to our present fix. That isn't where these bubbles come from.
They come from an excess of credit and borrowing. You can have such an
excess with gold-backed money just as well as with fiat money. It's
mostly
caused by things that go on in the banking industry, not the Treasury.

This is correct.

And the reason for this happening, is that with the new financial
structures, derivatives etc, there are many players that act like
quasi-banks, borrowing money and lending it, without being subject to
reserve restrictions. So during the growth years, all of that stuff
ballooned, leveraged up and expanded.

If you look at M3 versus M2 in that graph to which I posted a link earlier
in this thread, you can see it happening. It's no wonder the government no
longer reports M3. It makes it look like the money supply is out of control.
'Can't have that, being monetarists and all...


Now we are seeing banks insolvent due to drops of prices of assets
that they carry, due to this rapid de-leveraging. The assets of the
banks are below their liabilities.

Banks being insolvent (negative equity), there is no surprise that
bank lending cannot take place.

I cannot see how government can quickly put together a machine (loan
officers, attorneys, computer stuff) to make business loans. I doubt
that this will go very far and they should know it too.

So, then, a plan is to put forth to invest money into insolvent
banks. In other words, replenish their assets by giving them money
comparable to what they lost. This is not something that a private
investor would normally do. In any case, a question is just how much
money is needed to make the banks solvent. The amount may be very
large.

If I can offer a diagnosis of what happened, I would say that for a
large part this is due to reckless people managing "other people's
money". So they took risks that their investors would not ordinarily
take if they were informed.

Easy come, easy go. When you're leveraging 30:1 and you have that "1" hedged
six ways to Sunday, who cares?


These outsize risks were masqueraded by funky accounting because
exotic securities that they owned never had a market with quotes. So
they marked to theoretical values that they were free to assume with
wide latitude. As a result, 1) they got big bonuses and 2) a lot of
losses were hidden.

Growth is available money supply encouraged profligacy, public and
private. So at this point we are a country with huge public debt, huge
private debt, deficits, and inability to reduce both.

This is largely a result of republican philosophy to get rich quickly,
and squandering public money, which I despise. I want to get rich
slowly in a stable financial system.

The solution is not gold standard, but it must involve abandoning
profligacy, greater regulation of lending and activities leading to
creation of money, and stricter accounting standards.

Ahhhahahmennnn...

--
Ed Huntress

On 2008-10-10, Ed Huntress wrote:
And the reason for this happening, is that with the new financial
structures, derivatives etc, there are many players that act like
quasi-banks, borrowing money and lending it, without being subject to
reserve restrictions. So during the growth years, all of that stuff
ballooned, leveraged up and expanded.

If you look at M3 versus M2 in that graph to which I posted a link earlier
in this thread, you can see it happening. It's no wonder the government no
longer reports M3. It makes it look like the money supply is out of control.
'Can't have that, being monetarists and all...

So here comes the corollary.

More entities than banks participated in lending and creation of money
(such as hedge funds buying mortgages on credit using leverage, etc).

And now, besides banks per se, these entities are also suffering from
losses and forced liquidations.

So, obviously, bailing out banks would not restore lending capacity of
these other entities. So the money contraction cannot be prevented by
bailing out banks.

Therefore, do expect an interesting ride ahead.

i

I appreciate that you take the time to respond to my whining, Ed.


Ed Huntress wrote:

You may find this strange, but I've never, ever thought of electing a
president in terms of what they're going to do in my best interest. It's
always been the country's best interest, and I assume we'll all be better
off when that's what they do.

Ok, so looking back, was that a valid assumption?

IS the country better off?

Is it good for the country to have such a great difference between the
rich and the poor?

And what about the shrinking "middle class".
It's not shrinking because more of them are getting rich.

We had a great run for a while, but are we really better off?


Maybe that's why I find both of our current candidates acceptable. I believe
they're both pursuing the country's best interest as they see it. McCain
doesn't bother me because I don't think he's a doctrinaire, ideological
conservative. And Obama most certainly is no doctrinaire liberal. They both
have a pragmatic, one-problem-at-a-time approach, to greater or lesser
degrees.


I think it's the "as they see it" part that bothers me most.

I would doubt anyone who thinks he has answers to today's problems.
Most people still wonder what the questions are...


So I can't identify what you wish you had here, in terms of choices, and
what you find objectionable about the candidates we have. If you're
suggesting you want some more choices, I suggest you look first at Italy and
Israel to see what that implies. My opinion about that has been shaped by a
year of studying comparative politics in Europe more than by the sketchy
history we have of multiple parties in the US, but my conclusion is that
real multi-party politics inherently stinks to high heaven. It's all a
matter of coalitions ganging up on other coalitions, broad national
interests be damned.


BINGO.

And, pardon my high school education, but wasn't the original idea to
PROTECT the individual from the whims of the masses?

AND from the whims of our government?!


As for big business having an excessive amount of political power in this
country, yes, during most of our lifetimes. We have four important elites in
this country -- business/professional, academic, military, and political.
They're all pretty open meritocracies, compared to the elites of most other
countries. Fortunately the military elite remains subservient. The academic
elite, which ruled during Kennedy's and Johnson's administrations, and part
of Carter's, are not held in very high esteem these days. So the political
and business/professional elites are in charge. And an elite necessarily
will be in charge. There is no successful alternative.


Why?

Because they want to be?

Because they would rather tell me what to do than allow me to tell them
what to do?

Seems a self serving idea at the least.


We may be near the end of the business/professional's reign of power;
they're currently regarded about the same as the way we regarded the
academic elite around 1966 - 1978. They're now regarded as failures in terms
of governance, as any individual elite will be if their expertise is
interpreted too broadly or for too long. The popular impression now is that
their interests are not really the country's interests.

Now we're expecting the political elite to put it all in perspective and to
rise to the top, keeping business and academic elites' ideas in check to
serve the interests of the country. That's a big order, since we've allowed
the business elite to acquire so much power, and for its tentacles to reach
into every corner of society.



You can't expect high-level politicians to turn it all around at once. We've
been too acquiescent in the process ourselves. I look for the apparent
motivations of the candidates and the likelihood that they'll put elite
ideas in perspective, and that they'll find a way to implement some shifting
of power towards the ideal political, the politics as Aristotle described
it, by using power to undermine power. At the same time, I'm looking for
real intellegence and popular support for a leader so they'll be able to
make some positive things happen.

That doesn't feel to me like a self-interest focus, although, in the end,
I'm talking about my own ideas of how things should be, so I guess that's
self-interest. It isn't narrow economic self-interest.

Yep.
But neither are my concerns.

Does that sound alien to you? Or are you thinking of something similar,
without going to so much length to describe it? g


No, actually, I think you have touched on some of the things that bother
me most.


Elitism will always be with us.
And always be our curse.

I don't have your faith in politicians.
I think I once did. But no longer.

It comes back to motives.

Business wants money.
Politicians want to stay in power.
Academics want to grade us.
Evangelist want to save us.

Who, of all the groups on earth, can help us live together?


--
Ed Huntress




--

Richard

(remove the X to email)

F. George McDuffee wrote:

snip

Don't confuse moral outrage with the sudden realization that you
have been lied to and have been had big time, although one
frequently results in the other.

In many, but not all, cases the people are getting out of what
they now preceive to be a rigged game, with all the cards stacked
against them.

Ahem, Ed, are you reading this?
HERE is MY political problem - exactly.

As I indicated in other posts, the foundational financial problem
appears to have been the gross proliferation of megalomaniacs in
charge of increasingly powerful institutions rather than any
criminal cabals or plots.

WoW!

However this was possible only because of the general acceptance
of societies's myths and legends such as the unquestioning belief
in Santa Claus, the Easter Bunny, the Tooth Fairy, the Great
Pumpkin, etc. that brings toys to all the "good" little boys and
girls, i.e. the reality of the existence of a cornucopia or "horn
of plenty," that [only] the megalomaniacs know how to operate. A
second "assumption of facts not in evidence," but widely assumed,
is that the cornucopia operators will share the bounty generated.


Does that include voting for a fellow who tells you what he thinks
you want to hear - then does the opposite when elected?

This paragraph seems to say that We, The People are to blame for
believing what we hear from our candidates.


It should be obvious that a critical reexamination/reevaluation
of the basic beliefs about the way the economy/society works by a
large number of citizens, possibly a majority, will be
"destabilizing," to say the least.



--

Richard

(remove the X to email)

"Buerste" wrote in message
...

"John R. Carroll" wrote in message
...

"Buerste" wrote in message
...

"Ignoramus19789" wrote in message
...
At least your Social Security money was not used to "play with
stocks", as Bush and McCain wanted.
snip


Reap = sow. I'm hiring, and have already added 5 new jobs this year and
plan at least 2 more. Too bad you have to wait in a food line, try to get
some meat...meat's good! Can we help? Maybe take up a collection for you
so you can buy your meds. My people and I are always glad to help the
less fortunate.

Hey Tom.
You do indeed reap what you sew but then you are the one selling scrap as
first goods.
The statement I posred was from an editor at the Cleaveland Plain Dealer and
it's a reflection of you and yours.
Yopu have managed in your lifetime to turn a silk purse into a sowes ear.
You "people" can't even help yourselves and I'm not surprised. You all want
something for nothing.

Those five jobs you added weren't anything on your payroll. I've added
thousands to mine by your measure, and buying scrap metal to build an order
from isn't anything America ought to aspire to as a productivity
enhancement. It's a return to a barter system. In fact, it's the Chinese
business model in spades.

You have won in the great race to the bottom.
Monday next, 10/13/2008, I'll begin to reverse the insanity in this country
in my own small way. My group has ponied up, and we have gotten three to one
leverage on, thirty million of our own dollars. Excluding my property in
Costa Rica, I'll be all in. As the managing partner I won't get a thin dime
unless our long term goals are met. Should this effort go to hell, so will
I.

You Tom, would be horse laughed out of an exploratory talk about leverage. I
got a six percent LOC and an interest in allowing that funding source to
trade along side us. They would like to front run me but that would be
illegal.
I've known and done business with each of them for more than two decades
Tom. We turned a couple hundred grand into five million dollars on
Northridge.

Having sewn and sown well and reaped, we will once again cast aside the
broken parochial model you thrive on and make a future for the generation we
spawned that doesn't include mounds of debt - on them - to pay for our
excercise.



JC

Ed Huntress wrote:

And the reason for this happening, is that with the new financial
structures, derivatives etc, there are many players that act like
quasi-banks, borrowing money and lending it, without being subject to
reserve restrictions. So during the growth years, all of that stuff
ballooned, leveraged up and expanded.


If you look at M3 versus M2 in that graph to which I posted a link earlier
in this thread, you can see it happening. It's no wonder the government no
longer reports M3. It makes it look like the money supply is out of control.
'Can't have that, being monetarists and all...




Ed, as a favor, would you mind including the link rather than refering
to it as "earlier" or "in another thread".

It would sure be easier to follow when coming in late...

Richard

"cavelamb himself" wrote in message
...
Ed Huntress wrote:

And the reason for this happening, is that with the new financial
structures, derivatives etc, there are many players that act like
quasi-banks, borrowing money and lending it, without being subject to
reserve restrictions. So during the growth years, all of that stuff
ballooned, leveraged up and expanded.


If you look at M3 versus M2 in that graph to which I posted a link
earlier in this thread, you can see it happening. It's no wonder the
government no longer reports M3. It makes it look like the money supply
is out of control. 'Can't have that, being monetarists and all...




Ed, as a favor, would you mind including the link rather than refering
to it as "earlier" or "in another thread".

It would sure be easier to follow when coming in late...

Richard

Sorry, Richard. I forget that other people might be so bored that they're
reading this. g

This is the best one. It includes an explanation of M1, M2, etc., plus the
graph showing how it's been increasing. Search on M1 and it will get you to
the right spot:

http://en.wikipedia.org/wiki/Money_supply

--
Ed Huntress

"John R. Carroll" wrote in message
...
snip
I've never posted a nasty word to anyone unless I feel maliciously insulted.
You have triggered some bile-like verbiage from me when you do this. And,
for this I am truly sorry. (I know, it's infantile to say "well, you
started it.") I will no longer do that, as I no longer care about
insulting, disingenuous, misleading, phony or provocative statements from
anybody. You may post whatever strikes your fancy but, I will no longer
react in kind. I've decided that it's beneath my dignity.

Now, can you explain the difference between 12 ga. x 2" x 36" stainless
strip and "scrap" having the same grade and size? I have plenty of "scrap"
carbon steel strip that is obsolete for me yet I carry it in inventory and
have sold plenty of it at a discount to other companies that can use
it...for making new parts. Your whole argument about this was just silly
because I know that you know better.

On Thu, 09 Oct 2008 14:41:18 -0500, Ignoramus19789
wrote:

At least your Social Security money was not used to "play with
stocks", as Bush and McCain wanted.

In 2006, McCain voted for the Social Security Reserve Fund. The
proposal would shift Social Security's annual surpluses into a
reserve account that would be converted into risky private
accounts. [SCR 83, Vote #68, 3/16/06; SCR 83, Vote #68, 3/16/06]


Iggy. I think that was an option that individuals could select.
People weren't going to be forced into taking market risk. The risk
with social security as it is today for those of us with good incomes
is that we aren't going to collect. In retirement we're going to
continue to subsidize other people. No matter what we do, the
politicians keep bleeding us. Term limits is one of the ways to keep
politicians from becoming entrenched and making government their
career.

We've never had a choice for president of "None of the Above" That's
who I'd vote for this year if I had the choice. I can't say I've
heard any really good ideas from any of the candidates this time
around.

RWL

On 2008-10-11, GeoLane at PTD dot NET GeoLane wrote:
On Thu, 09 Oct 2008 14:41:18 -0500, Ignoramus19789
wrote:

At least your Social Security money was not used to "play with
stocks", as Bush and McCain wanted.

In 2006, McCain voted for the Social Security Reserve Fund. The
proposal would shift Social Security's annual surpluses into a
reserve account that would be converted into risky private
accounts. [SCR 83, Vote #68, 3/16/06; SCR 83, Vote #68, 3/16/06]


Iggy. I think that was an option that individuals could select.
People weren't going to be forced into taking market risk. The risk
with social security as it is today for those of us with good incomes
is that we aren't going to collect. In retirement we're going to
continue to subsidize other people. No matter what we do, the
politicians keep bleeding us. Term limits is one of the ways to keep
politicians from becoming entrenched and making government their
career.

We've never had a choice for president of "None of the Above" That's
who I'd vote for this year if I had the choice. I can't say I've
heard any really good ideas from any of the candidates this time
around.

They would not be forced, yes, so they would voluntarily lose their
money and then, guess what, another bailout of imprudent old retired
people by prudent people.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

Ed Huntress wrote:
"cavelamb himself" wrote in message
...

Ed Huntress wrote:


And the reason for this happening, is that with the new financial
structures, derivatives etc, there are many players that act like
quasi-banks, borrowing money and lending it, without being subject to
reserve restrictions. So during the growth years, all of that stuff
ballooned, leveraged up and expanded.


If you look at M3 versus M2 in that graph to which I posted a link
earlier in this thread, you can see it happening. It's no wonder the
government no longer reports M3. It makes it look like the money supply
is out of control. 'Can't have that, being monetarists and all...




Ed, as a favor, would you mind including the link rather than refering
to it as "earlier" or "in another thread".

It would sure be easier to follow when coming in late...

Richard


Sorry, Richard. I forget that other people might be so bored that they're
reading this. g

BSEG!


This is the best one. It includes an explanation of M1, M2, etc., plus the
graph showing how it's been increasing. Search on M1 and it will get you to
the right spot:

http://en.wikipedia.org/wiki/Money_supply

--
Ed Huntress



Thanks Ed,
I'll dig into it.

--

Richard

(remove the X to email)

On Fri, 10 Oct 2008 19:24:50 -0500, cavelamb himself
wrote:

F. George McDuffee wrote:

snip

Don't confuse moral outrage with the sudden realization that you
have been lied to and have been had big time, although one
frequently results in the other.

In many, but not all, cases the people are getting out of what
they now preceive to be a rigged game, with all the cards stacked
against them.

Ahem, Ed, are you reading this?
HERE is MY political problem - exactly.
Let me expand that. Not only are the decks stacked, all the
cards are marked, all the dice are loaded, all the wheels rigged,
and all the slots fixed, and the sheriff has a half interest in
the Casino.

As I indicated in other posts, the foundational financial problem
appears to have been the gross proliferation of megalomaniacs in
charge of increasingly powerful institutions rather than any
criminal cabals or plots.

WoW!
A backup study.
http://www.sciencedaily.com/releases...1007155100.htm
Note that these people more or less self select for these
positions, which then reinforce the egomania tendencies. Most
likely very helpful/adaptive in hunter/geatherer tribal societies
with short individual life spans, but now very
maladaptive/counterproductive. This also should help explain why
the application of criminal statutes will not be, and have not
been, particularly effective.

However this was possible only because of the general acceptance
of societies's myths and legends such as the unquestioning belief
in Santa Claus, the Easter Bunny, the Tooth Fairy, the Great
Pumpkin, etc. that brings toys to all the "good" little boys and
girls, i.e. the reality of the existence of a cornucopia or "horn
of plenty," that [only] the megalomaniacs know how to operate. A
second "assumption of facts not in evidence," but widely assumed,
is that the cornucopia operators will share the bounty generated.


Does that include voting for a fellow who tells you what he thinks
you want to hear - then does the opposite when elected?

This paragraph seems to say that We, The People are to blame for
believing what we hear from our candidates.
To the extent that a record exists and you can see what the
candidate did or did not do, and you chose to believe what they
say because you like that better than what they have historically
done, that is indeed the case.

There is however the case where the "paper trail" has been
carefully erased and the story has been "spiked" by the media
management. This is far more common than you might think in
large organizations of all types.

With the expansion of the WWW/internet this is becoming more
difficult. Look up the voting records to see how the gas bags
voted on the repeal of Glass-Steagall and the exemption of
derivative oversight. This is not a matter of opinion but of
public record.

It should be obvious that a critical reexamination/reevaluation
of the basic beliefs about the way the economy/society works by a
large number of citizens, possibly a majority, will be
"destabilizing," to say the least.

This is how New York will look in 10 years?

http://www.ukimagehost.com/uploads/368fadcfd6.jpg

"Buerste" wrote in message
...

"John R. Carroll" wrote in message
...
snip
I've never posted a nasty word to anyone unless I feel maliciously
insulted. You have triggered some bile-like verbiage from me when you do
this. And, for this I am truly sorry. (I know, it's infantile to say
"well, you started it.") I will no longer do that, as I no longer care
about insulting, disingenuous, misleading, phony or provocative statements
from anybody. You may post whatever strikes your fancy but, I will no
longer react in kind. I've decided that it's beneath my dignity.

Now, can you explain the difference between 12 ga. x 2" x 36" stainless
strip and "scrap" having the same grade and size? I have plenty of
"scrap" carbon steel strip that is obsolete for me yet I carry it in
inventory and have sold plenty of it at a discount to other companies that
can use it...for making new parts. Your whole argument about this was
just silly because I know that you know better.


I've spent the last hour organizing my mail client Tom.
Our exchanges lately certainly have portrayed me in a poor light and are an
embarassment.
We seem to have reached similar conclusions at nearly the same time.

I'd like to apologize for my posts both to you and the group.

I don't think there is anything more to say .

JC

"cavelamb himself" wrote in message
m...
I appreciate that you take the time to respond to my whining, Ed.

It looks more like frustration than whining.



Ed Huntress wrote:

You may find this strange, but I've never, ever thought of electing a
president in terms of what they're going to do in my best interest. It's
always been the country's best interest, and I assume we'll all be better
off when that's what they do.

Ok, so looking back, was that a valid assumption?

It's hard to tell. I've voted for the winner less than half the time. g
But I can't imagine living in this country and voting for a narrow, personal
interest that might help me but which wouldn't be good for the country as a
whole. It's just not in my makeup.

On the other hand, they usually aren't in conflict.


IS the country better off?

I guess the question is, better off than what? Or, would we have been better
off if my candidate always won? I really don't know. That's a question too
big for me to answer.


Is it good for the country to have such a great difference between the
rich and the poor?

Definitely not. That's bad news, and it needs to be addressed...but very
carefully. If I knew how to do this I might be somebody's economic
consultant right now. g


And what about the shrinking "middle class".
It's not shrinking because more of them are getting rich.

That's a reflection of the issue you just listed above. We're gravitating
toward something closer to a natural equilibrium of laissez-faire
capitalism, with the percentages breaking down very closely to the ratios we
had in 1929. The natural equilibrium, as we have to keep re-learning, needs
to be bent a bit and a new equilibrium established, closer to what we had in
the '50s and '60s, in order to have social harmony and to satisfy our sense
of justice. I'm afraid that means a bit of social engineering. It requires
some compromises.


We had a great run for a while, but are we really better off?

Well, that's a philosophical question, which I generally try to avoid. My
short answer is, no. But it's not purely based on material considerations. I
don't like the mood right now; we're out of big projects and national goals.
We need some.


Maybe that's why I find both of our current candidates acceptable. I
believe they're both pursuing the country's best interest as they see it.
McCain doesn't bother me because I don't think he's a doctrinaire,
ideological conservative. And Obama most certainly is no doctrinaire
liberal. They both have a pragmatic, one-problem-at-a-time approach, to
greater or lesser degrees.


I think it's the "as they see it" part that bothers me most.

Hey, we're electing people, not computer programs. They all have ideological
beliefs to some extent, and ideologies are always wrong.

I favor the leaders who combine intelligence, pragmatism, a genuine
willingness to listen, and as much evidence of wisdom and reason as can be
had. Especially pragmatism and wisdom.


I would doubt anyone who thinks he has answers to today's problems.
Most people still wonder what the questions are...

Well, I don't agree completely. I think there are plenty of economists who
know exactly what's going on, for example. They just don't know how people
are going to react to one corrective program or another. That's always the
big unknown.



So I can't identify what you wish you had here, in terms of choices, and
what you find objectionable about the candidates we have. If you're
suggesting you want some more choices, I suggest you look first at Italy
and Israel to see what that implies. My opinion about that has been
shaped by a year of studying comparative politics in Europe more than by
the sketchy history we have of multiple parties in the US, but my
conclusion is that real multi-party politics inherently stinks to high
heaven. It's all a matter of coalitions ganging up on other coalitions,
broad national interests be damned.


BINGO.

The coalitions I'm speaking of are the ones you see in multi-party,
parliamentary systems. Two-party systems tend to form their coalitions at
the party level. By the time they get into government, they're forced to
compromise. Some multi-party systems NEVER involve compromise. It's all a
case of carving up the beast to satisfy one narrow interest or another. The
key example in modern times is Italy. In contrast, the US government usually
operates on compromise. This has gotten a little battered lately, but it's
the natural tendency of two-party politics.


And, pardon my high school education, but wasn't the original idea to
PROTECT the individual from the whims of the masses?

That's one of the original ideas. But the other side of it was to allow the
majority to decide what government is going to do. Balancing the two is the
ultimate challenge for democratic, individual-rights-based constitutional
systems.


AND from the whims of our government?!

You are the government. But you have only one vote. The same applies to
everyone else. If it's running on whims, we're the ones who put it in place.
All of us.



As for big business having an excessive amount of political power in this
country, yes, during most of our lifetimes. We have four important elites
in this country -- business/professional, academic, military, and
political. They're all pretty open meritocracies, compared to the elites
of most other countries. Fortunately the military elite remains
subservient. The academic elite, which ruled during Kennedy's and
Johnson's administrations, and part of Carter's, are not held in very
high esteem these days. So the political and business/professional elites
are in charge. And an elite necessarily will be in charge. There is no
successful alternative.


Why?

Because they want to be?

Because they're the only ones capable doing the job. They win elections
because people like them better for high office than run-of-the-mill
citizens. "Elite" means the best, the educated, the well-brought-up, the
intelligent, the ambitious, the most ethical. Those are the ones I vote for.
I don't want second-rate preppies who got C averages in college, like Bush.
I don't want Joe Sixpack with a beer in one hand and the red button in the
other. I don't want a half-educated dingleberry like Palin, with the
maturity and judgment of a high school sophomore, just a heartbeat from the
presidency.


Because they would rather tell me what to do than allow me to tell them
what to do?

This is a representative democracy. You don't get to tell them what to do.
You pick one out and put him or her in charge.


Seems a self serving idea at the least.

Every society in history that's had any success at all has chosen most of
its leaders from one of those four elites I mentioned.



We may be near the end of the business/professional's reign of power;
they're currently regarded about the same as the way we regarded the
academic elite around 1966 - 1978. They're now regarded as failures in
terms of governance, as any individual elite will be if their expertise
is interpreted too broadly or for too long. The popular impression now is
that their interests are not really the country's interests.

Now we're expecting the political elite to put it all in perspective and
to rise to the top, keeping business and academic elites' ideas in check
to serve the interests of the country. That's a big order, since we've
allowed the business elite to acquire so much power, and for its
tentacles to reach into every corner of society.



You can't expect high-level politicians to turn it all around at once.
We've been too acquiescent in the process ourselves. I look for the
apparent motivations of the candidates and the likelihood that they'll
put elite ideas in perspective, and that they'll find a way to implement
some shifting of power towards the ideal political, the politics as
Aristotle described it, by using power to undermine power. At the same
time, I'm looking for real intellegence and popular support for a leader
so they'll be able to make some positive things happen.

That doesn't feel to me like a self-interest focus, although, in the end,
I'm talking about my own ideas of how things should be, so I guess that's
self-interest. It isn't narrow economic self-interest.

Yep.
But neither are my concerns.

Does that sound alien to you? Or are you thinking of something similar,
without going to so much length to describe it? g


No, actually, I think you have touched on some of the things that bother
me most.


Elitism will always be with us.
And always be our curse.

I'd like to know what you think "elitism" is. Until the election of 1968,
most people recognized we were voting for the elite of our society. It was
Richard Nixon in that campaign who turned it into a code word for something
bad. It was a part of the same program that gave us the Southern Strategy,
in which "state's rights" was code for leaving the southern states alone to
continue racist policies.


I don't have your faith in politicians.
I think I once did. But no longer.

Faith isn't the right word. I think I recognize the inherent limitations of
our system of government. But it's the best one I can think of.


It comes back to motives.

Business wants money.
Politicians want to stay in power.
Academics want to grade us.
Evangelist want to save us.

Who, of all the groups on earth, can help us live together?

That's a good question, Richard. I don't think you'll find the answer in
"groups." I think you'll find it in individuals.

--
Ed Huntress

"Ignoramus18712" wrote in message
...
On 2008-10-10, Ed Huntress wrote:
And the reason for this happening, is that with the new financial
structures, derivatives etc, there are many players that act like
quasi-banks, borrowing money and lending it, without being subject to
reserve restrictions. So during the growth years, all of that stuff
ballooned, leveraged up and expanded.

If you look at M3 versus M2 in that graph to which I posted a link
earlier
in this thread, you can see it happening. It's no wonder the government
no
longer reports M3. It makes it look like the money supply is out of
control.
'Can't have that, being monetarists and all...

So here comes the corollary.

More entities than banks participated in lending and creation of money
(such as hedge funds buying mortgages on credit using leverage, etc).

Right.


And now, besides banks per se, these entities are also suffering from
losses and forced liquidations.

Well, commercial banks are suffering (probably) *because of* the losses and
forced liquidations of the "shadow banks."


So, obviously, bailing out banks would not restore lending capacity of
these other entities. So the money contraction cannot be prevented by
bailing out banks.

I suspect that money contraction, at least at the M3 level, would be
impossible to stop. At the M2 level it still will be somewhat contracted.
But whether it's going to have a long-term effect on M1 is questionable.

Much of M2 and M3 is really ethereal stuff, which exists mostly in the form
of claims by one institution upon other institutions, much of it out of
connection to the system that provides real liquidity to the real economy.
Now we're going to find out if its existence has irreversible consequences
to the economy that produces goods and services. Recent comments by a couple
of Chicago School economists say they don't think so. The answer to that is
'way over my head, but I can imagine a scenario in which the government
intervenes at a point that cuts off that ethereal money and lets it
disappear, while providing liquidity and enabling the credit system that
operates for the real economy to continue.

That's all an abstraction, of course.

--
Ed Huntress

On Fri, 10 Oct 2008 22:25:56 -0500, Ignoramus18712
wrote:

At least your Social Security money was not used to "play with
stocks", as Bush and McCain wanted.

In 2006, McCain voted for the Social Security Reserve Fund. The
proposal would shift Social Security's annual surpluses into a
reserve account that would be converted into risky private
accounts. [SCR 83, Vote #68, 3/16/06; SCR 83, Vote #68, 3/16/06]

========================

On 2008-10-11, GeoLane at PTD dot NET GeoLane wrote:

Iggy. I think that was an option that individuals could select.
People weren't going to be forced into taking market risk. The risk
with social security as it is today for those of us with good incomes
is that we aren't going to collect.

==============
On Thu, 09 Oct 2008 14:41:18 -0500, Ignoramus19789
wrote:

They would not be forced, yes, so they would voluntarily lose their
money and then, guess what, another bailout of imprudent old retired
people by prudent people.

===============

Iggy. That's really what's going on now with our current social
security system. It's a Ponzi scheme with an IOU from the government,
and with our aging population, you and I are going to be left holding
the bag.

Further off topic. One of the comments I heard growing up was that
Roosevelt didn't get us out of the depression, World War II did. With
the current lack of a response to interventions our by government,
it's adding some credence to that allegation. I'm not implying that
we need a war to get us out of this. It's just an interesting
observation.

RWL

"cavelamb himself" wrote in message
m...
F. George McDuffee wrote:

snip

Don't confuse moral outrage with the sudden realization that you
have been lied to and have been had big time, although one
frequently results in the other.

In many, but not all, cases the people are getting out of what
they now preceive to be a rigged game, with all the cards stacked
against them.

Ahem, Ed, are you reading this?
HERE is MY political problem - exactly.

Yeah, I'm reading it. And I'm thinking about all those people who are really
in the game, with $1 million or more, who couldn't care less. They care
about what's happening to their money, period. The outrage is going on
mostly among those of us who don't have that much money in the first place.

--
Ed Huntress

Ed Huntress wrote:


Who, of all the groups on earth, can help us live together?


That's a good question, Richard. I don't think you'll find the answer in
"groups." I think you'll find it in individuals.

--
Ed Huntress



There is one we can for sure agree on!


--

Richard

(remove the X to email)

On Thu, 09 Oct 2008 14:41:18 -0500, Ignoramus19789
wrote:
snip
By the way, the real issue with banks is that they have negative
equity due to fall in values of the securities that they hold
(mortgages) and high leverage.

So they are insolvent, in more simple terms.

Lending to them would not address this as it would not increase their
equity.
snip
=====================
Two insolvent companies with financial exposure [GMAC and
Chrysler Finance] to combine and ask the FRB for a direct loan
[of tax payer money]?
-----------------
"GM, Chrysler in merger talks: source
Sat Oct 11, 2008 2:48am EDT
DETROIT/NEW YORK (Reuters) - General Motors has had talks with
smaller rival Chrysler LLC about a merger that would combine the
No. 1 and No. 3 American automakers at a time when both are
struggling to cut costs and shore up cash, according to a source
briefed on the matter.
snip
Finally, Barron's reported that GM was preparing to approach the
U.S. Federal Reserve about borrowing money from the central
bank's discount window because of the logjam in credit markets
that has shut it out of other kinds of borrowing.
snip
----------------------------
Are these two organizations more like vampires or zombies?
for the complete article click on
http://www.reuters.com/article/newsO...081011?sp=true

FWIW -- Anyone else notice how much Henry "Bazooka" Paulson looks
like [and sounds/acts like] Daddy Warbucks [Little Orphan Annie]?

On 2008-10-11, Ed Huntress wrote:

"Ignoramus18712" wrote in message
...
On 2008-10-10, Ed Huntress wrote:
And the reason for this happening, is that with the new financial
structures, derivatives etc, there are many players that act like
quasi-banks, borrowing money and lending it, without being subject to
reserve restrictions. So during the growth years, all of that stuff
ballooned, leveraged up and expanded.

If you look at M3 versus M2 in that graph to which I posted a link
earlier
in this thread, you can see it happening. It's no wonder the government
no
longer reports M3. It makes it look like the money supply is out of
control.
'Can't have that, being monetarists and all...

So here comes the corollary.

More entities than banks participated in lending and creation of money
(such as hedge funds buying mortgages on credit using leverage, etc).

Right.


And now, besides banks per se, these entities are also suffering from
losses and forced liquidations.

Well, commercial banks are suffering (probably) *because of* the losses and
forced liquidations of the "shadow banks."

A part of it.


So, obviously, bailing out banks would not restore lending capacity of
these other entities. So the money contraction cannot be prevented by
bailing out banks.

I suspect that money contraction, at least at the M3 level, would be
impossible to stop. At the M2 level it still will be somewhat contracted.
But whether it's going to have a long-term effect on M1 is questionable.

Keep in mind that M2 is also expanded by these "non-bank banks".

Here's a good graphic showing how this bear market compares to
historical ones (Great Depression, 70s, etc).

It looks very scary.

http://www.nytimes.com/interactive/2...ARKETS.html?hp

Much of M2 and M3 is really ethereal stuff, which exists mostly in the form
of claims by one institution upon other institutions, much of it out of
connection to the system that provides real liquidity to the real economy.
Now we're going to find out if its existence has irreversible consequences
to the economy that produces goods and services. Recent comments by a couple
of Chicago School economists say they don't think so. The answer to that is
'way over my head, but I can imagine a scenario in which the government
intervenes at a point that cuts off that ethereal money and lets it
disappear, while providing liquidity and enabling the credit system that
operates for the real economy to continue.

This is a point where many bifurcations are possible, including
flooding the economy with money to cause inflation and effectively
erase all debts. What is not possible is to return to the pre-crisis
times quickly.

I think that ultimately, we, as a whole, were misled about how wealthy
we really were. Much of that wealth was self delusion and
borrowing. So in the end we will wake up and realize that in fact we
are collectively only 1/2 or 1/3 as wealthy.

Check out the above graphic.

It is very scary.

i

That's all an abstraction, of course.




--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

On 2008-10-11, GeoLane at PTD dot NET GeoLane wrote:
Iggy. That's really what's going on now with our current social
security system. It's a Ponzi scheme with an IOU from the government,
and with our aging population, you and I are going to be left holding
the bag.

That's what Wall Street, Bush and McCain wanted you to believe in
order to allow Wall Street to play with your social security money.

There are some differences between Social Security and a Ponzi scheme
(check out Wikipedia's article on Ponzi scheme).

1) Ponzi schemes are voluntary and thus are subject to eventual
investor flight. Social security is not voluntary and is funded by
mandatory payments.

2) Ponzi schemes make promises that are very unrealistic

3) The majority of money in Ponzi schemes is stolen.

4) It is very easy to keep Social Security solvent, which is to lower
benefits or raise retirement age.

Further off topic. One of the comments I heard growing up was that
Roosevelt didn't get us out of the depression, World War II did. With
the current lack of a response to interventions our by government,
it's adding some credence to that allegation. I'm not implying that
we need a war to get us out of this. It's just an interesting
observation.

We already have two wars going on, and they are not helping matters
very much.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

"Ignoramus18605" wrote in message
...
On 2008-10-11, Ed Huntress wrote:

"Ignoramus18712" wrote in message
...
On 2008-10-10, Ed Huntress wrote:
And the reason for this happening, is that with the new financial
structures, derivatives etc, there are many players that act like
quasi-banks, borrowing money and lending it, without being subject to
reserve restrictions. So during the growth years, all of that stuff
ballooned, leveraged up and expanded.

If you look at M3 versus M2 in that graph to which I posted a link
earlier
in this thread, you can see it happening. It's no wonder the government
no
longer reports M3. It makes it look like the money supply is out of
control.
'Can't have that, being monetarists and all...

So here comes the corollary.

More entities than banks participated in lending and creation of money
(such as hedge funds buying mortgages on credit using leverage, etc).

Right.


And now, besides banks per se, these entities are also suffering from
losses and forced liquidations.

Well, commercial banks are suffering (probably) *because of* the losses
and
forced liquidations of the "shadow banks."

A part of it.


So, obviously, bailing out banks would not restore lending capacity of
these other entities. So the money contraction cannot be prevented by
bailing out banks.

I suspect that money contraction, at least at the M3 level, would be
impossible to stop. At the M2 level it still will be somewhat contracted.
But whether it's going to have a long-term effect on M1 is questionable.

Keep in mind that M2 is also expanded by these "non-bank banks".

Sure. That's why I said "somewhat contracted."


Here's a good graphic showing how this bear market compares to
historical ones (Great Depression, 70s, etc).

It looks very scary.

http://www.nytimes.com/interactive/2...ARKETS.html?hp

Yeah, it does, until you think about the fact that when the stock market
goes down, it always comes up. This market is so quick to move, with trades
coming in so fast from every point of the globe, that it's not a surprise
that it's hyper-volatile compared to previous tankings.


Much of M2 and M3 is really ethereal stuff, which exists mostly in the
form
of claims by one institution upon other institutions, much of it out of
connection to the system that provides real liquidity to the real
economy.
Now we're going to find out if its existence has irreversible
consequences
to the economy that produces goods and services. Recent comments by a
couple
of Chicago School economists say they don't think so. The answer to that
is
'way over my head, but I can imagine a scenario in which the government
intervenes at a point that cuts off that ethereal money and lets it
disappear, while providing liquidity and enabling the credit system that
operates for the real economy to continue.

This is a point where many bifurcations are possible, including
flooding the economy with money to cause inflation and effectively
erase all debts. What is not possible is to return to the pre-crisis
times quickly.

I think that ultimately, we, as a whole, were misled about how wealthy
we really were. Much of that wealth was self delusion and
borrowing. So in the end we will wake up and realize that in fact we
are collectively only 1/2 or 1/3 as wealthy.

Iggy, a couple of years ago I was reading some background material for a
trade article and I kept being hit by the fact that 40% of US corporate
profit was coming from the financial sector. Then I looked at the dollar
numbers in the financial sector and said to myself, "self, what the hell
does all this 'money' represent? Where is it? Where did it come from"?

Self said, it seems to represent nothing but a circle of obligations; it
exists on hard disks; and it fell from the sky. Of course, I look at these
things from an economics point of view, with very little understanding of
finance. But I think I recognize an economic circle-jerk when I see one.

I never thought we were remotely as wealthy as the numbers suggested. I
still believe that Adam Smith had it right, and by no stretch of the
imagination could these financial "services" be labelled honestly as things
of value. They were tricks of multiplication.

So I'm not surprised. I don't claim prescience, but the whole thing has
stunk, from my point of view, for at least a couple of decades. Sooner or
later there would be a reckoning. When Warren Buffet said, in the mid-'90s,
that he didn't understand any longer how this market was working, I knew we
were in trouble.

I'm shrugging a lot these days. I have no idea where it's going, but I'm not
surprised about where we are.


Check out the above graphic.

It is very scary.

Yes. But it will go up again.

--
Ed Huntress

On Sat, 11 Oct 2008 13:13:03 -0500, Ignoramus18605
wrote:
snip
Keep in mind that M2 is also expanded by these "non-bank banks".
snip
--------
Was just watching one of the talking heads stock market shows and
one of the panelists made a telling point, which caused the other
panelists to have a "hissyfit."

Basically he observed that although the FRB is injecting
liquidity into the M1/M2 money pools with several fire hoses, the
Treasury department is using a high speed sump pump on the other
end of the M1/M2 money pool to drain liquidity into Treasury
securities such as T-bills/notes and bonds. This liquidity is
then transferred to the FRB.

A classic case of the government standing [hard] on both the
brakes and gas and wondering why the speed is not changing,
although the motor is roaring and smoke is billowing.

Explains two things:

First why the outrageous sums being injected into M1/M2 are
having no overt effect [M1/M2 money supply and bank (under)
capitalization remains about the same], and Second, why they just
had to add two digits to the national debt clock....


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

"John R. Carroll" wrote in message
...

"Buerste" wrote in message
...

"John R. Carroll" wrote in message
...
snip
I've never posted a nasty word to anyone unless I feel maliciously
insulted. You have triggered some bile-like verbiage from me when you do
this. And, for this I am truly sorry. (I know, it's infantile to say
"well, you started it.") I will no longer do that, as I no longer care
about insulting, disingenuous, misleading, phony or provocative
statements from anybody. You may post whatever strikes your fancy but, I
will no longer react in kind. I've decided that it's beneath my dignity.

Now, can you explain the difference between 12 ga. x 2" x 36" stainless
strip and "scrap" having the same grade and size? I have plenty of
"scrap" carbon steel strip that is obsolete for me yet I carry it in
inventory and have sold plenty of it at a discount to other companies
that can use it...for making new parts. Your whole argument about this
was just silly because I know that you know better.


I've spent the last hour organizing my mail client Tom.
Our exchanges lately certainly have portrayed me in a poor light and are
an embarassment.
We seem to have reached similar conclusions at nearly the same time.

I'd like to apologize for my posts both to you and the group.

I don't think there is anything more to say .

JC



Well, hurray for us!

On Sat, 11 Oct 2008 15:36:05 -0400, "Ed Huntress"
wrote:
snip
Iggy, a couple of years ago I was reading some background material for a
trade article and I kept being hit by the fact that 40% of US corporate
profit was coming from the financial sector. Then I looked at the dollar
numbers in the financial sector and said to myself, "self, what the hell
does all this 'money' represent? Where is it? Where did it come from"?

Self said, it seems to represent nothing but a circle of obligations; it
exists on hard disks; and it fell from the sky. Of course, I look at these
things from an economics point of view, with very little understanding of
finance. But I think I recognize an economic circle-jerk when I see one.

I never thought we were remotely as wealthy as the numbers suggested. I
still believe that Adam Smith had it right, and by no stretch of the
imagination could these financial "services" be labelled honestly as things
of value. They were tricks of multiplication.
snip
========
Indeed, now follow through.

When we consider the Financial and the "real" economies as
separate although overlapping entities, it becomes useful to
consider that they may have different currencies/"money of
account."

This leads to a useful conjecture. It appears that both units
are called US Dollars, but other than this highly misleading
name, there is little connection. We can call one $USR [for
real] and the other $USV [for virtual] but to insure clarity I
use the term "spondulick"
[http://www.urbandictionary.com/defin...rm=Spondulick]

Within the Spondulick economy there is the additional
complication that a "standard" Spondulick does not exist, but
rather a number of Spondulicks issued by every financial firm,
and as Ed and several other people have noted, when the major US
corporations are evaluated by their sources of net operating
profit and free cash flow, they are all financial operations,
with some sidelines such as making cars, appliances, retail
sales, etc. In this, the Spondulick economy resembles the US
"real" economy during the period of "Free Banking" [1837-1863]
when every bank issued its own bank notes against the specie
[gold and silver], which they may [or may not] possess.
http://en.wikipedia.org/wiki/Free_banking
http://unenumerated.blogspot.com/200...nking-era.html
http://www.federalreserve.gov/BoardD...8/19980502.htm

If closely intertwined $US/Spondulick economies are assumed,
several apparent contradictions that occur when a single
economy/currency are posited disappear.

Note there is a significant conversion fee between US$ and
Spondulicks, charged by the banks and brokerages.

The current economic problems become more understandable if these
are regarded as exchange rate problems between the US$ and
Spondulicks, amplified by the historical problems of "free
banking" among the various Spondulicks.

The exchange rate problems appear to parallel those of the 60s
when the Bretton Woods fixed exchange rates began to break down.
http://en.wikipedia.org/wiki/Bretton_Woods_system
http://www.canadianeconomy.gc.ca/Eng...ton_woods.html

With the collapse of Lehman and the examination of the "real" set
of books, it has become possible to establish a clear exchange
rate between the "Lehman Spondulick" and the US$ as determined by
public auction.
1 Lehman Spondulick = 0.0825$US.
http://www.marke****ch.com/news/story/lehman-derivatives-auction-described-smooth/story.aspx?guid={A5ACF291-FC4D-478D-845D-8713E50448B3}&dist=msr_4
snip
Roughly $400 billion will be paid out on Lehman CDS, but, once
all positive and negative positions are "netted" out, about 2% of
that money will actually change hands, Pickel estimated. Payments
are due on Oct. 21 to settle Lehman CDS in cash, he said.
snip
==
Of concern to the other Spondulick issuers is that Lehman was
thought to have issued about 225-250 Billion Spondulicks, but in
actuality issued 400 billion Spondulicks against actual assets of
about 32 billion $US. This greatly alarmed the other Spondulick
based organizations, and has seriously impacted Spondulick
denominated trade in the Spondulick zone.

The US Federal Reserve Bank and to a lesser extend the US
Treasury can influence TO A DEGREE the value of the $US, but have
minimal influence on the internal value and exchange rates of the
Spondulicks, indicating that their efforts to correct problems in
the Spondulick economy will have minimal results [and maximum
costs].

Note that the FRB/Treasury task is enormously complicated by the
ability of literally thousands of organizations to issue and
recall effectively unlimited amounts of Spondulicks at their
whim.

It should also be noted that nominally denominated Sterling,
Euro, Yen, etc. Spondulicks also exist, with all the valuation
and exchange problems this implies.

The small first step of controlling the US Spondulicks economy by
requiring the use of the US$ as "money of account" for asset
valuation through the "Mark to Market" requirement of
Sarbanes-Oxley is widely blamed to causing much of the current
economic distress and huge market break [crash].

The Spondulick $USV denominated economy appears to dwarf the real
$USR economy. The real GDP is estimated at 13+ trillion [10^12]
$USR per year, while the Spondulick economy is estimated to total
over 10 times that amount [c. 170 trillion [10^12] "$USV"]

John, Ed, and everyone else -- comments?


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Sat, 11 Oct 2008 14:06:51 -0500, Ignoramus18605

Further off topic. One of the comments I heard growing up was that
Roosevelt didn't get us out of the depression, World War II did. With
the current lack of a response to interventions our by government,
it's adding some credence to that allegation. I'm not implying that
we need a war to get us out of this. It's just an interesting
observation.

We already have two wars going on, and they are not helping matters
very much.

I'll agree with you on that one; they are a drain on the economy. ;-)

RWL

Treasure trove of European thought on global credit crunch and
stock market break.
http://voxeu.org/

Enjoy


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

Some keen insight from a Brit economist [Liam Halligan] (and a
shot of cold p**s to the heart).

=========
snip
What the world now needs is stability. That will stem from
governments standing behind massively over-exposed Western banks
while more collapse, others prevail, and the system is
reconfigured. That requires deep, deep reserves – and, after
decades of profligacy, the Western coffers look bare.

==For all its posturing, the G7 has only 20 per cent of the
world’s currency reserves. Four emerging markets – Brazil,
Russia, India and China – account for 40 per cent. And then
there’s the Middle East.==
snip
==========
for complete article click on
http://www.telegraph.co.uk/finance/c...sub-prime.html

Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

And no, we aren't all responsible for this mess.
Bull ****.
We all vote.

JC


No we don't!

Hawke

"F. George McDuffee" wrote in message
...

snip

The Spondulick $USV denominated economy appears to dwarf the real
$USR economy. The real GDP is estimated at 13+ trillion [10^12]
$USR per year, while the Spondulick economy is estimated to total
over 10 times that amount [c. 170 trillion [10^12] "$USV"]

John, Ed, and everyone else -- comments?

The "Spondulick" numbers are the enormous ones that have people alarmed, but
I have to wonder what happens when someone tries to "withdraw" or cash out
those paper values and they can't be cashed, because there's nothing behind
them except the defaulted mortgage or whatever and some small margin of
reserves. I haven't thought too much about it but it appears to me that most
of it exists in the form of bonds and other real securities that simply have
lost their value, plus CDS's that are actually insurance that some real
asset will be recovered if there is a default on the real securities. From
what I can see, CDS's in themselves don't result in deposits that can be
drawn upon, like loans from a bank, so the "money" that they add to the
economy is completely ethereal. They may serve as collateral but I don't see
how; the original security may be collateral and the CDS is just something
that insures its value. But the CDS doesn't seem to add value beyond
decreasing the interest one might have to pay because of the risk of the
original security. They are supposed assets but they don't, as far as I can
tell, actually add the amount of their face value to the money supply.

But, again, I haven't tried to follow the interconnections of these
financial devices with any thoroughness. It looks to me like a lot of people
could lose their shirts but the decline in assets that affect the money
supply can only equal the original dollar amount that was invested, not the
Spondulick numbers.

However, the subject is so complicated that trying to pull it apart at this
late date is futile for a non-specialist like me, so I'm not going to try to
learn one piece at a time when you can only understand the implications of
all of these securities and transactions by understanding the whole system.
Even the specialists seem to be having trouble with that, themselves. d8-)

--
Ed Huntress

for what it's worth, I'd hate to have socked everything I could spare
into gold recently.

Ouch!
http://www.kitco.com/images/live/gold.gif

On 2008-10-12, cavelamb himself wrote:
for what it's worth, I'd hate to have socked everything I could spare
into gold recently.

Ouch!
http://www.kitco.com/images/live/gold.gif

So far, everything is very consistent with everyone wanting to hoard
cash in various forms.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

"Hawke" wrote in message
...

And no, we aren't all responsible for this mess.
Bull ****.
We all vote.

JC


No we don't!

Hawke

Yes you do, whether you cast a ballot or not. If you don't cast a ballot,
you're voting to let someone else rule your life. You're voting to be a
serf.

--
Ed Huntress

On Sun, 12 Oct 2008 02:19:02 -0400, "Ed Huntress"
wrote:
snip
The "Spondulick" numbers are the enormous ones that have people alarmed, but
I have to wonder what happens when someone tries to "withdraw" or cash out
those paper values and they can't be cashed, because there's nothing behind
them except the defaulted mortgage or whatever and some small margin of
reserves.
snip
=========
Indeed, and it is at this point that the typical "FX" problems,
caused by a "dirty float," kick in. As long as there was at
least an equal amount of $USR-$USV as there was $USV-$USR no
problem. This is no longer the case and the classic "current
accounts trade deficit problem," with the $USV:$USR ratio being
driven continually down, results.

The violent reaction to the very mild enforcement [actually more
of meek request] of the US legal/tax code mandates that all
accounts must be kept in $USR, as implemented by Sarbanes-Oxley
"mark to market," shows how fragile the Spondulick economy is.

"AGIO" is a word sometimes encountered in crossword puzzles, but
it has been and will be the source of considerable wealth for the
$USV-$USR conversion specialists.
http://www.answers.com/topic/agio-1

The smart money boys may have devised another way to get a 1:1
exchange rate. The rumors continue to swirl that GM is on the
verge of trading the 49% of GMAC they still own to Cerberus for
Chrysler. This would convert Cerberus Capital Management [a PC
and hedge fund, via the GMAC bank] into a one bank holding
company with direct access to FRB and Treasury funds, and
GMC+Chrysler into an industrial organization that might be "too
big to fail" (at least until after the elections and possibly the
January distribution of executive "performance" bonuses at GM).
http://www.businessweek.com/magazine...0/b3953149.htm
http://www.businessweek.com/magazine...0/b3953110.htm

Of course, the US taxpayer takes it in the shorts coming and
going with this "reorganization."

Any thoughts on this?


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

"F. George McDuffee" wrote in message
...
On Sat, 11 Oct 2008 15:36:05 -0400, "Ed Huntress"
wrote:
snip

The Spondulick $USV denominated economy appears to dwarf the real
$USR economy. The real GDP is estimated at 13+ trillion [10^12]
$USR per year, while the Spondulick economy is estimated to total
over 10 times that amount [c. 170 trillion [10^12] "$USV"]

John, Ed, and everyone else -- comments?

Couple of things wrong here George.
First, the auction was totally bogus. Nothing more is indicated by the
"benchmark" than the fact that nobody really wanted these things AT ALL.
Losses on credit default swaps are unlikely to exceed three or four percent
even in the worste case without intervention.
Three very reputable auction designers have been working for the last couple
of weeks to model an auction for these assets.
I've seen one of them. In the end, there may never be an actual reverse
auction at all.
Second, none of these derivatives ever created money. Any valuation will be
done the way you would value an insurance policy but in this case there
aren't any reserves to back them up. Not really anyway. There isn't and
probably won't be a market for these products because they simply are not
tradeable securities. They aren't actually coupled directly to an asset.
They are all risk and have the same value that Enron weather futures did.
Third, at worste, the probable loss/liability that they represent as class
is about 2.4 trillion dollars absent government intervention.

In spite of all of the running around like headless chickens claiming this
is some sort of secular event, it isn't.
This happened twice in the last century and while the work out took a little
time and lead to consolidations of the weak and strong players, the world
didn't end then and won't now.

All of this subteranian stuff need to be dragged out into the light -
kicking and screaming if necessary. That sort of transparency isn't going to
happen until the financial institutions involved have a credible assurance
from the regulatory agencies that they won't be "Lehman'd" when they fess
up. THE CURRENT ADMINISTRATION DOES NOT HAVE THE CREDIBILITY TO MAKE SUCH A
REPRESENTATION. They have not, and can't, articulate a policy that is any
more coherent that our ignorant boob of a President, Mr. Bush.

As a practical matter, this is a seperate issue economically.
The downturn in consumer spending that is underway is the real problem.
It isn't the "Spondulick economy".

It's a little odd to be faced with an election that represents a clear
choice between two models but it is exactly that way.
McCain/Palin is a vote for Phil Graham at Treasury and a year from now we
will be looking at the DOW at 5500 with 15 percent unemployment. Graham will
run around buying up toxic vapours with the expectation that saving the
Spondulick economy will trickle down. Golden Shower economics, if you will
and the US will go through whtat JAPAN went through for a decade or more..
The gap between rich and poor will only widen and that's the real
manifestation of what's been going on. People that actually spend money have
been MAKING less and less of it. They have been operating and living on
borrowed money.People that DON'T spend what they earn have been making more
and more. No credible economist on the planet will rell you that trickle
down works today. Not one. Neither will anyone telling the truth in finance.
It didn't work for Reagan, hasn't worked for Bush and sure as hell never
worked for the vast majority of Americans. The results, were there ever any
real doubt, are in.

Obama Biden, OTOH, is a vote for one of the sharpest groups on the planet
at the financial helm and their stated goal is to put money into the pockets
of the middle class- where it will be spent - at the expense of the holders
of all of the shadow Spondulick owners.
The entire regulatory structure of both America and the world will be torn
up and rewritten to reflec current reality.BooHoo.

Their model will lead to the DOW at about 10,000 a year or so from now, nine
percent unemployment trending down and the biggest public infrastructure and
energy development project project ever undertaken by man. This kind of
public investment is what we have forgone for DECADES and in the end I guess
that's a good thing. A great deal of both public and private money will be
spent but unlike the good money that has gone before and yielded NO VALUE,
we will get a tremendous return on every new dollar invested.Tremendous
numbers of new high paying jobs will be created in the middle class and that
is the basis for a robust and stable economy. It will also have the
advantage of rebuilding America's tax base. It's a self licking ice cream
cone George.

The Spondulick economy will pass like a bad fever and that's sort of what it
is, an infection that transfers wealth from those that create it to those
that don't.

JC

"F. George McDuffee" wrote in message
...
On Sun, 12 Oct 2008 02:19:02 -0400, "Ed Huntress"
wrote:
snip
The "Spondulick" numbers are the enormous ones that have people alarmed,
but
I have to wonder what happens when someone tries to "withdraw" or cash out
those paper values and they can't be cashed, because there's nothing
behind
them except the defaulted mortgage or whatever and some small margin of
reserves.
snip
=========
Indeed, and it is at this point that the typical "FX" problems,
caused by a "dirty float," kick in. As long as there was at
least an equal amount of $USR-$USV as there was $USV-$USR no
problem. This is no longer the case and the classic "current
accounts trade deficit problem," with the $USV:$USR ratio being
driven continually down, results.

The violent reaction to the very mild enforcement [actually more
of meek request] of the US legal/tax code mandates that all
accounts must be kept in $USR, as implemented by Sarbanes-Oxley
"mark to market," shows how fragile the Spondulick economy is.

"AGIO" is a word sometimes encountered in crossword puzzles, but
it has been and will be the source of considerable wealth for the
$USV-$USR conversion specialists.
http://www.answers.com/topic/agio-1

The smart money boys may have devised another way to get a 1:1
exchange rate. The rumors continue to swirl that GM is on the
verge of trading the 49% of GMAC they still own to Cerberus for
Chrysler. This would convert Cerberus Capital Management [a PC
and hedge fund, via the GMAC bank] into a one bank holding
company with direct access to FRB and Treasury funds, and
GMC+Chrysler into an industrial organization that might be "too
big to fail" (at least until after the elections and possibly the
January distribution of executive "performance" bonuses at GM).
http://www.businessweek.com/magazine...0/b3953149.htm
http://www.businessweek.com/magazine...0/b3953110.htm

Of course, the US taxpayer takes it in the shorts coming and
going with this "reorganization."

Any thoughts on this?

Not now. Maybe after I peel all these apples we just picked.

--
Ed Huntress

On Sun, 12 Oct 2008 05:16:05 -0700, "John R. Carroll"
wrote:
snip
Couple of things wrong here George.
First, the auction was totally bogus. Nothing more is indicated by the
"benchmark" than the fact that nobody really wanted these things AT ALL.
Losses on credit default swaps are unlikely to exceed three or four percent
even in the worste case without intervention.
snip
===============
Indeed, but these were the Lehman Spondulicks, i.e. Lehman
Spondulick denominated bonds, or at least a significant subset of
them, on which the CDSs were written, and a $USR value had to be
established, as the holders of the CDSs wanted "coin of the
realm" and not more Spondulicks on other institutions which *MAY*
be as good as $USRs[and then again may not].

=========
snip
That's because derivatives traders, using an auction Friday, set
the price of Lehman's bonds at 8.625 cents on the dollar. The
amount of insurance--in the form of credit default swaps--written
to protect bond holders is estimated at $400 billion. Buyers of
the insurance will collect the full face value of their holdings
from the sellers of the insurance.

Of course that also means the banks, funds and insurance
companies that sold it are out $365 billion, which is the
difference between the price of Lehman's bonds as set in the
auction and the remaining 91.375 cents in face value.
snip
=========
for complete article click on
http://www.forbes.com/business/2008/...10auction.html

This establish at least a working exchange rate of about 0.0875
$USR = 1.00$USV(Lehman Spondulick) when all the BS was stripped
out and the amount of Spondulicks issued is netted against the
amount of $USR assets actually available to back these up.

Note that this does not include the value of the Lehman Spodulick
"money of account" denominated accounts payable, unsecured loans,
utility payments, deferred compensation, etc. that just vanished.

Also "missing in action" are huge amounts of negotiable
securities, some denominated in Spondulicks [various issuers] and
some in $USR, that were being held by Lehman as collateral.
These now appear to have been used by Lehman as collateral for
their obligations with other institutions. In many cases, this
"collateral" is reported to have already been sold, sometimes at
a steep discount, to cover the Lehman obligation. If this is
indeed the case, as it appears to be, it is a serious felony
called "wrongful conversion." It also indicates that the widely
reported Lehman "leverage" of 30:1 was a "best case" paper number
and the actual leverage was in excess of 100:1, when the total
amount of "borrowed" funds is considered.

As serious as Lehman's bankruptcy is, the more critical item is
how many more Lehman's are out there, and there appears to be a
large number.

In addition to all the known risks there was the
$USR---Spondulick exchange rate risk.

Don't take any Spondulicks....


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Sat, 11 Oct 2008 22:46:58 -0400, GeoLane at PTD dot NET GeoLane at
PTD dot NET wrote:

On Sat, 11 Oct 2008 14:06:51 -0500, Ignoramus18605

Further off topic. One of the comments I heard growing up was that
Roosevelt didn't get us out of the depression, World War II did. With
the current lack of a response to interventions our by government,
it's adding some credence to that allegation. I'm not implying that
we need a war to get us out of this. It's just an interesting
observation.

We already have two wars going on, and they are not helping matters
very much.

I'll agree with you on that one; they are a drain on the economy. ;-)

RWL

As far as wars go, neither amount to a hill of beans economy wise