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A billionaire explains the middle class
On 1/2/2015 12:52 PM, jim wrote:
David R. Birch wrote: On 1/2/2015 8:59 AM, wrote: On Thursday, January 1, 2015 8:57:27 PM UTC-5, F. George McDuffee wrote: We mandate safety glass, 4 wheel brakes, seat belts and air bags in cars, and we prohibit, or severely restrict lead, mercury and asbestos in consumer products, so why not a few "safety enhancements" in the financial sector? Why is there no government mandated "crash test" of financial products? Why no evaluation of their safety and efficacy comparable to FDA drug screening? -- Unka' George Because the rule is " Let the buyer beware ". The individual or company is responsible for determining the risk in an investment. As the last few years have shown, even those with degrees in finance have trouble tracking market manipulations and other chicanery. There was a misplaced level of trust in the banking industry to not screw the depositor/investor. The money that was driving house prices upward came from private investors that were looking for high rates of return from high risk investment. Odd that the ones who ended up with upside down mortgages were NOT those private investors, but rather those who the private investors took advantage of. People trusted by those who lost their homes. The govt doesn't prevent investors from gambling with their own money. And other peoples money, as well. Before the bubble and after the bubble almost 100% of mortgages were financed by either in-house loans from deposit taking facilities or by government sponsored loan guarantees and pass troughs. During the bubble there were about $6 trillion in loans that were not financed in this traditional way. The money for those loans came from private investors who were looking for high-risk high-return investments. Also looking for someone else to bear the burden when those risks turned out badly. Most of the reckless lending was funded by those private investors. How do we know they funded most of the bad loans? because that is where most of the loan losses were. According to Moody's analytics the actual realized loan losses from 2006-2012 a Fannie $77 Bn Freddie $51 Bn Privately backed $713 Bn https://www.economy.com/mark-zandi/d...on-of-RMBS.pdf If you want an investment that is government guaranteed, buy U.S. Bonds. Oddly, that was seldom recommended by the banksters. It was recommended to anyone seeking a low risk investment. Recommended by reputable investment advisers, but we aren't talking about them, are we? The cost of analysing the risk of all investments is way beyond what the government can do. Yet you seem to expect it to be within the ability of individuals. Are you saying free markets don't work? They work well for those at the top, not so much for those with the most to lose. Are you saying the invisible hand is bull****? Maybe not for Ricky Jay, but Adam Smith expected a higher level of ethical behavior than the banksters understood. To do that would require a new government agency many times larger than the IRS. There seem to be a lot of people nowadays who think that it is govt's job to be the investor's nanny. Few investors expect to be preyed upon just because they trust ones who care only for lining their own pockets first. There are many legal ways to become very, very rich. The number of honest ones is very much smaller. David |
A billionaire explains the middle class
On 1/2/2015 1:27 PM, pyotr filipivich wrote:
Or a "gig" in "the field". I'm starting to realize that I soon may be starting to be getting too old for the factory floor gig to be a viable option much longer. Sigh Deep sigh. -- pyotr filipivich By 1996, I'd gotten to the point when my back was no longer able to support my making parts on a machining center. I found a job programming CNC LASERs and that's served me well. Al least until the end of March when I become a full time Gentleman of Leisure. VBG!! David |
A billionaire explains the middle class
David R. Birch wrote:
As the last few years have shown, even those with degrees in finance have trouble tracking market manipulations and other chicanery. There was a misplaced level of trust in the banking industry to not screw the depositor/investor. The money that was driving house prices upward came from private investors that were looking for high rates of return from high risk investment. Odd that the ones who ended up with upside down mortgages were NOT those private investors, but rather those who the private investors took advantage of. People trusted by those who lost their homes. Nobody was forced to take a loan and considering most of the loans required no down payment, what was lost was mostly imagined wealth. Many people who lost their homes were also gambling. They were buying much bigger homes than they could afford. They were gambling that appreciation in price would pay for a large chunk of the loan. They knew the loan would be unaffordable if prices went down. The majority of the loans financed by private investors were second liens where the borrower was trying to cash in on the price increase. Those borrowers could have figured out that if you extract the equity on your house and spend it and then the price goes down your mortgage will be under water. The govt doesn't prevent investors from gambling with their own money. And other peoples money, as well. Investors paid people to gamble with their money. That doesn't absolve the investor of responsibility. Before the bubble and after the bubble almost 100% of mortgages were financed by either in-house loans from deposit taking facilities or by government sponsored loan guarantees and pass troughs. During the bubble there were about $6 trillion in loans that were not financed in this traditional way. The money for those loans came from private investors who were looking for high-risk high-return investments. Also looking for someone else to bear the burden when those risks turned out badly. Who else would bear the burden? Most of the reckless lending was funded by those private investors. How do we know they funded most of the bad loans? because that is where most of the loan losses were. According to Moody's analytics the actual realized loan losses from 2006-2012 a Fannie $77 Bn Freddie $51 Bn Privately backed $713 Bn https://www.economy.com/mark-zandi/d...on-of-RMBS.pdf There seem to be a lot of people nowadays who think that it is govt's job to be the investor's nanny. Few investors expect to be preyed upon just because they trust ones who care only for lining their own pockets first. Investors knew or should have known they were gambling. The govt provides safe investments for those who wish not to gamble. There are many legal ways to become very, very rich. The number of honest ones is very much smaller. David |
A billionaire explains the middle class
On Fri, 02 Jan 2015 11:20:47 -0500, Ed Huntress
wrote: On Fri, 2 Jan 2015 06:59:17 -0800 (PST), " wrote: On Thursday, January 1, 2015 8:57:27 PM UTC-5, F. George McDuffee wrote: We mandate safety glass, 4 wheel brakes, seat belts and air bags in cars, and we prohibit, or severely restrict lead, mercury and asbestos in consumer products, so why not a few "safety enhancements" in the financial sector? Why is there no government mandated "crash test" of financial products? Why no evaluation of their safety and efficacy comparable to FDA drug screening? -- Unka' George Because the rule is " Let the buyer beware ". The individual or company is responsible for determining the risk in an investment. If you want an investment that is government guaranteed , buy U.S. Bonds. The cost of analysing the risk of all investments is way beyond what the government can do. To do that would require a new government agency many times larger than the IRS. All of that is true, and George's recommendation for "risk testing" is impractical and probably not even desirable.. But let's not forget that much of what was involved in the financial crisis was outright fraud, not financial risk. And much of the rest, while not outright fraud, was a tantamount to fraud. For example, allowing multiple "insurance" claims on the same asset. If we can't detect and deal with fraud, we have a bigger problem. The whole financial system has a problem. USA and the rest of the world needs to learn something from the Canadian banking system |
A billionaire explains the middle class
On Friday, January 2, 2015 11:33:13 AM UTC-5, David R. Birch wrote:
As the last few years have shown, even those with degrees in finance have trouble tracking market manipulations and other chicanery. There was a misplaced level of trust in the banking industry to not screw the depositor/investor. If you want an investment that is government guaranteed, buy U.S. Bonds.. Oddly, that was seldom recommended by the banksters. The cost of analysing the risk of all investments is way beyond what the government can do. Yet you seem to expect it to be within the ability of individuals. I do not think it is within the ability of individuals to analyse the risk of all investments. But I think it is within the ability of individuals to analyse the risks of investments that they have or investments that they are contemplating. If you do not have a clue of the risk, then maybe buying that investment is not a good idea. Or at least not a good idea to put in more money than you can afford to lose. To do that would require a new government agency many times larger than the IRS. And it would be administered by the same sort of bankster who put us in the hole we're in now. So we agree that trying to have the government rate the risks of investments is a bad idea? Dan David |
A billionaire explains the middle class
On Friday, January 2, 2015 12:32:43 PM UTC-5, Ed Huntress wrote:
Existing modelling methods work perfectly well to answer a majority of economics questions, particularly the kinds of narrower questions that businesses will pay to have analyzed. The ones we discuss here on this NG, however, such as where an entire country's economy is going or what's going to happen to people's buying habits as an economy evolves, are much more difficult to model -- maybe impossible, with the tools available today. -- Ed Huntress Another problem is that as soon as you have a good model , every thing changes because you ( and the world ) now have a new idea of what will happen. Dan |
A billionaire explains the middle class
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A billionaire explains the middle class
On Friday, January 2, 2015 4:02:38 PM UTC-5, David R. Birch wrote:
Few investors expect to be preyed upon just because they trust ones who care only for lining their own pockets first. Why would anyone trust a stockbroker? I am not saying that stockbrokers are not honest and trustworthy, but I am saying that investors should do some investigation them selves. Intel not only gave us Moores Law, but also from Andy Grove " Only the paranoid survive. " Dan David |
A billionaire explains the middle class
On Fri, 2 Jan 2015 16:06:56 -0800 (PST), "
wrote: On Friday, January 2, 2015 12:32:43 PM UTC-5, Ed Huntress wrote: Existing modelling methods work perfectly well to answer a majority of economics questions, particularly the kinds of narrower questions that businesses will pay to have analyzed. The ones we discuss here on this NG, however, such as where an entire country's economy is going or what's going to happen to people's buying habits as an economy evolves, are much more difficult to model -- maybe impossible, with the tools available today. -- Ed Huntress Another problem is that as soon as you have a good model , every thing changes because you ( and the world ) now have a new idea of what will happen. Dan Again, it depends on what kind of model you're talking about. Two projects ago, my son worked on a model to streamline and boost the cost efficiency of a military aircraft supply chain. From that, contracts will be set. There isn't a lot that's going to change during the course of the contracts. His last project involved optimizing rates and the overall programs for car loans. That one will change with the evolution of consumer behavior, but the program is being monitored monthy and the variables adjusted as they go. The number of possible variables is very limited. Those are typical econometrics jobs in the consulting business today. There were many billions of dollars involved in each of them, so the margins one obtains with a good econometric model, as a percentage, are fairly small. But the dollars can be huge. In the first, my son's team saved us taxpayers an estimated two billion dollars. -- Ed Huntress |
A billionaire explains the middle class
On Fri, 02 Jan 2015 15:02:14 -0600, "David R. Birch"
wrote: snip Are you saying the invisible hand is bull****? Maybe not for Ricky Jay, but Adam Smith expected a higher level of ethical behavior than the banksters understood. /snip We would all do well to remember that _The Wealth of Nations_ http://tinyurl.com/7xlvy was first published in 1776 , by a researcher who lived in one of the more backward parts of Europe at the time [Scotland], which had just been bailed out of a severe economic collapse http://tinyurl.com/dcr6u4 by political/economic union with England http://tinyurl.com/zebf2 which had assumed the Kingdom of Scotland's debts as part of the deal [which apparently still required *LARGE* bribes for the pact to be ratified http://tinyurl.com/kqel9l5 . The Act of Union of 1707 led to the enclosure movement where the community land which had been used as "commons" for thousands if years, were enclosed by the "leadership," converting these assets to their personal property, and displacing many thousand families from their ancestral lands for the more profitable sheep raising. http://tinyurl.com/jwe3hwh While there were a few large metro areas at that time, most people were rural and most commerce was local. The invisible hand was in large part another name for what is now called "social control," http://tinyurl.com/qxkre whereby a person who refuses to abide by the communities written and unwritten rules is "shunned," which is rapidly fatal for a small local merchant or manufacturer. The conditions of that time, i. e. largely rural Scotland, still a largely homogeneous community, dominated by the strict moral code of The Church of Scotland http://tinyurl.com/58vukf , in which the _Wealth of Nations_ is tacitly embedded, were far different than today's increasingly urban conditions with minimal social control. Where the same social conditions still exist, such as small, tightly knit ethnic communities, Smith's conclusions remain valid, however the further the social conditions differ from those assumed by Smith, the less valid his conclusions are. -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
On Fri, 02 Jan 2015 17:15:34 -0500,
wrote: On Fri, 02 Jan 2015 11:20:47 -0500, Ed Huntress wrote: On Fri, 2 Jan 2015 06:59:17 -0800 (PST), " wrote: On Thursday, January 1, 2015 8:57:27 PM UTC-5, F. George McDuffee wrote: snip If we can't detect and deal with fraud, we have a bigger problem. The whole financial system has a problem. USA and the rest of the world needs to learn something from the Canadian banking system A most reasonable and prudent point!!!!! I would suggest an even more through survey to determine the overt and implicit banking policies worldwide and their apparent effects, both good and bad, e. g. Malta. This is what business does in their "best practices" surveys, which seem to have had a beneficial effect. Canada seems to have done well in avoiding the asset bubble "busts" by not allowing bank funds to be used to inflate the asset bubbles in the first place. Although there are a limited number of banks in Canada http://tinyurl.com/yhvjzro, and these are closely regulated, most communities appear to be adequately "banked," and the Canadian financial system appears to have adequate liquidity. -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
On Fri, 02 Jan 2015 12:52:55 -0600, jim
" wrote: David R. Birch wrote: On 1/2/2015 8:59 AM, wrote: On Thursday, January 1, 2015 8:57:27 PM UTC-5, F. George McDuffee wrote: We mandate safety glass, 4 wheel brakes, seat belts and air bags in cars, and we prohibit, or severely restrict lead, mercury and asbestos in consumer products, so why not a few "safety enhancements" in the financial sector? Why is there no government mandated "crash test" of financial products? Why no evaluation of their safety and efficacy comparable to FDA drug screening? -- Unka' George Because the rule is " Let the buyer beware ". snip There seem to be a lot of people nowadays who think that it is govt's job to be the investor's nanny. Why are the savings we will rely on for retirement or our childrens' education any less of a public health problem than the food we eat? In most areas of the US, we have restaurant inspections to minimize food born illness, and at the national level we have the FDA to limit injurious additives, and force recalls in significant cases of Ecoli, salmonella and listeria contamination, as well as periodic inspection of our food processing plants, which have resulted in criminal prosecution. http://tinyurl.com/mtkayh3 http://tinyurl.com/lxu9zs8 While the FDA and USDA are not perfect [and IMNSHO should be expanded], they are much better than nothing. -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
On Fri, 2 Jan 2015 06:59:17 -0800 (PST), "
wrote: On Thursday, January 1, 2015 8:57:27 PM UTC-5, F. George McDuffee wrote: We mandate safety glass, 4 wheel brakes, seat belts and air bags in cars, and we prohibit, or severely restrict lead, mercury and asbestos in consumer products, so why not a few "safety enhancements" in the financial sector? Why is there no government mandated "crash test" of financial products? Why no evaluation of their safety and efficacy comparable to FDA drug screening? -- Unka' George Because the rule is " Let the buyer beware ". The individual or company is responsible for determining the risk in an investment. If you want an investment that is government guaranteed , buy U.S. Bonds. The cost of analysing the risk of all investments is way beyond what the government can do. To do that would require a new government agency many times larger than the IRS. Dan Why do you feel it would be necessary to annalize *ALL* investments? For many years the Pareto Principal of "the vital few and the trivial many" has been widely known and taught in Quality Control, and should be applied to the financial markets. History clearly shows which areas are a serious danger. One example is "auction rate securities." Given the catastrophe these caused for many municipalities, and the widely available alternatives, why are these still allowed, or at the very least, why is the interest income still exempt from federal taxes? http://tinyurl.com/3doaer http://tinyurl.com/nz2ybhu We do not have to prevent every possible scam before we act, enough is known now to minimize/eliminate the major scams. If we wait for perfect information and complete solutions, we will never act. -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
On Fri, 02 Jan 2015 12:32:27 -0500, Ed Huntress
wrote: But most of the paying work in econometrics is not of that type. Continuing problem in many professions. Is the person paying a customer that gets what they *WANT*, or a patient that gets what they *NEED*? -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
On 02 Jan 2015 12:48:09 -0400, Mike Spencer
wrote: Ed Huntress writes: On 31 Dec 2014 00:57:14 -0400, Mike Spencer wrote: Dang. Well, no shame in that. Kauffman isn't an economist. :-) Just ask him if complexity catastrophe or complexity theory or anything along those lines enters into his econometric models. Not his, which are mostly business applications, but he says there is a lot of academic research in applying complexity theory to econometric models. He touched on it in grad school but he doesn't use it. Equilibrium models are the basis for business applications, and Real Analysis is the highest-level math that's ordinarily called for. Huh. Brian Arthur [1], who is much smarter than I am (and who *is* an economist) has described models with multiple equilibria, path dependence, positive feedback and other features pretty much in direct contradiction to the current wisdom (or dogma). I think he may be much excoriated in venues where egos or careers are dependent on genuflecting before the corrent wisdom. - Mike [1] Quotes, excerpts and squibs: http://en.wikiquote.org/wiki/W._Brian_Arthur ================== Try to find the terms for "rent seeking" and "market manipulation" in the standard economic models. Where's the row and column for the Mafia in the Input/Output matrix? -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
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A billionaire explains the middle class
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A billionaire explains the middle class
On Fri, 02 Jan 2015 04:05:00 -0800, mike wrote:
On 1/1/2015 4:41 AM, John B. Slocomb wrote: On Wed, 31 Dec 2014 19:44:59 -0800, Gunner Asch wrote: On Tue, 30 Dec 2014 01:34:06 -0800, mike wrote: I suspect that question is how much longer can the U.S. maintain its current levels of income as more and more jobs move overseas. The current unemployment rate in the U.S. is, I believe, 5.8% and it is being bragged about. Thailand, on the other hand is 0.7. http://portalseven.com/employment/un...nt_rate_u6.jsp 11.4% for US unemplyment However...some places its at 4%..many others its still over 20% If all the socialistic give away's were stopped, I wonder what the unemployment rate would be? Where I grew up, in some segments of the population, the primary industry was producing babies so you could get a bigger welfare check. I believe there should be a big building somewhere with a one-way door. When you can no longer provide for your own support, you'd be invited thru the door...which might lead to a cascade of your progeny being invited. Would be a self-limiting process. Marx stated "From each according to his ability, to each according to his need" and although the concept actually originated with an earlier writer, Ătienne-Gabriel Morelly (1717 - 1778), nowhere have I read anything that left out the first part of the quote :-) -- Cheers, John B. |
A billionaire explains the middle class
F. George McDuffee wrote:
On Fri, 02 Jan 2015 12:52:55 -0600, jim " wrote: David R. Birch wrote: On 1/2/2015 8:59 AM, wrote: On Thursday, January 1, 2015 8:57:27 PM UTC-5, F. George McDuffee wrote: We mandate safety glass, 4 wheel brakes, seat belts and air bags in cars, and we prohibit, or severely restrict lead, mercury and asbestos in consumer products, so why not a few "safety enhancements" in the financial sector? Why is there no government mandated "crash test" of financial products? Why no evaluation of their safety and efficacy comparable to FDA drug screening? -- Unka' George Because the rule is " Let the buyer beware ". snip There seem to be a lot of people nowadays who think that it is govt's job to be the investor's nanny. Why are the savings we will rely on for retirement or our childrens' education any less of a public health problem than the food we eat? If the savings are held in a government regulated bank or invested in govt backed securities your money will be safer than the food you eat. But investors wanted to gamble in the hope of getting big fat returns on investment. The idea was the more risky the investment the fatter the returns. Are you proposing that the govt outlaw all risk in investment? Should the govt outlaw anything that has the slightest whiff of being a gamble? |
A billionaire explains the middle class
On Fri, 02 Jan 2015 21:14:28 -0600, jim
" wrote: snip Are you proposing that the govt outlaw all risk in investment? /snip Where did I suggest the government outlaw all risk in investment, speculation, or anything else? What is suggested that the issuers of a security be forced to back up their claims and meet the conditions of the security. While it is true that depositors in an FDIC insured bank in insured accounts are "safe," it is only because the losses are spread. In other cases, the depositors were flim-flammed into putting their money in non-FDIC/FSLIC insured instruments sold by an insured institution [savings and loan] and lost everything when the S&L cratered. http://tinyurl.com/pou58se http://tinyurl.com/5ambhg http://tinyurl.com/lnnqols -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
"David R. Birch" wrote in message
... I wouldn't mind a system where the banksters have as much to lose as those they exploit. If the investor takes a bath because of chicanery, the bankster shouldn't get a multimillion dollar bonus. David After the mid 80's crash: "I talked with my broker today. I said "Hey, Waiter!" |
A billionaire explains the middle class
"John B. Slocomb" wrote in message
... Marx stated "From each according to his ability, to each according to his need" and although the concept actually originated with an earlier writer, Ătienne-Gabriel Morelly (1717 - 1778), nowhere have I read anything that left out the first part of the quote :-) -- Cheers, John B. Didn't you experience that yourself in the Air Force? When the State owns you it can define your needs and your abilities to its own advantage. -jsw |
A billionaire explains the middle class
On Friday, January 2, 2015 9:46:07 PM UTC-5, David R. Birch wrote:
Many misplace their trust in stockbrokers simply because learning enough to invest wisely is a job in itself, one the stock broker is supposed to do. One thing I learned was that I would never been able to do well by myself without devoting more time than I could spare. David When you buy something using cash and you get change back, do you count the change? I think that most people do count their change. Not because we think the vendor is out to get us, but because it is a prudent thing to do. The same applies to stock brokers. Do you blindly accept the brokers recommendations , or do you try to determine if the advice is good. I think trying to determine if the advice is good is the prudent thing to do. It is not hard to do well in the stock market, and does not really take a lot of time. The book that has what I think is the best on investing is " A Random Walk on Wall Street ". Another book that is probably lighter reading is Jonathan Clements Money Guide 2015 . I have not read it , but I used to read Clements columns in the WSJ and found them excellent. Dan |
A billionaire explains the middle class
On Friday, January 2, 2015 11:44:07 PM UTC-5, F. George McDuffee wrote:
What is suggested that the issuers of a security be forced to back up their claims and meet the conditions of the security. Unka' George Sounds good , but companies that issue stocks do not make any claims beyond that if you buy the stock , you own part of the company. And that is how is should be. The company is in the business of making or selling things. It is not in the business of providing investment opportunities. Granted on the initial stock offering, they do provide information about the company, but are very careful to state that things can change. Dan |
A billionaire explains the middle class
F. George McDuffee wrote:
On Fri, 02 Jan 2015 21:14:28 -0600, jim " wrote: snip Are you proposing that the govt outlaw all risk in investment? /snip Where did I suggest the government outlaw all risk in investment, speculation, or anything else? When did you write anything else? What is suggested that the issuers of a security be forced to back up their claims and meet the conditions of the security. Where is your evidence that did not happen with private label mortgage backed securities sold to private investors? Here is the story of one investor who did read the prospectus and determined that the securities were guaranteed to fail at a certain point in time and he made billions on this knowledge that was lying in plain sight for everyone to see. http://www.vanityfair.com/business/f...xcerpt-201004# While it is true that depositors in an FDIC insured bank in insured accounts are "safe," it is only because the losses are spread. It is not just that they have insurance protection, deposits are safe because they are set up exactly the way you outlined a safe investment needs to be. A depository institution is required to have sufficient capital to cover losses. If the capital falls below the required level the regulators liquidate the facility and the owners lose everything. In addition deposit taking facilities are severely limited in what they can do to risk deposit money. In other cases, the depositors were flim-flammed into putting their money in non-FDIC/FSLIC insured instruments sold by an insured institution [savings and loan] and lost everything when the S&L cratered. http://tinyurl.com/pou58se http://tinyurl.com/5ambhg http://tinyurl.com/lnnqols Keating and others went to jail for the fraud they committed 30 years ago. After the 2008 debacle private investors have had little luck in the courts because it was the investors that were clamoring for the riskiest loan backed securities. The investors haven't had much luck convincing the courts that the issuers of the securities lied. The only successful prosecutions have been for bad loans sold to Freddie and Fannie. That is because F&F required that the loans they purchase or guarantee be warranted to meet their rigorous standards. The securities sold to private investors are a different matter. The private investors were seeking out the securities that contained the riskiest loans because that is where the biggest financial gains could be made. There was no reason for the securitizers to misrepresent the quality of the loans, because loans made to people with no down payment, no income and bad credit scores was a much sought after feature not a flaw. Those were the loan tranches that were producing record profits as long as house prices were increasing. |
A billionaire explains the middle class
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A billionaire explains the middle class
On Saturday, January 3, 2015 7:11:07 AM UTC-5, Jim Wilkins wrote:
"John B. Slocomb" wrote in message ... Marx stated "From each according to his ability, to each according to his need" and although the concept actually originated with an earlier writer, Ătienne-Gabriel Morelly (1717 - 1778), nowhere have I read anything that left out the first part of the quote :-) -- Cheers, John B. Didn't you experience that yourself in the Air Force? When the State owns you it can define your needs and your abilities to its own advantage. To the degree that higher ranking officers don't go on the record to disagree or interfere, yes. |
A billionaire explains the middle class
On Friday, January 2, 2015 7:27:17 PM UTC-5, Ed Huntress wrote:
On Fri, 2 Jan 2015 16:06:56 -0800 (PST), " wrote: On Friday, January 2, 2015 12:32:43 PM UTC-5, Ed Huntress wrote: Existing modelling methods work perfectly well to answer a majority of economics questions, particularly the kinds of narrower questions that businesses will pay to have analyzed. The ones we discuss here on this NG, however, such as where an entire country's economy is going or what's going to happen to people's buying habits as an economy evolves, are much more difficult to model -- maybe impossible, with the tools available today. -- Ed Huntress Another problem is that as soon as you have a good model , every thing changes because you ( and the world ) now have a new idea of what will happen. Dan Again, it depends on what kind of model you're talking about. Two projects ago, my son worked on a model to streamline and boost the cost efficiency of a military aircraft supply chain. From that, contracts will be set. There isn't a lot that's going to change during the course of the contracts. His last project involved optimizing rates and the overall programs for car loans. That one will change with the evolution of consumer behavior, but the program is being monitored monthy and the variables adjusted as they go. The number of possible variables is very limited. Those are typical econometrics jobs in the consulting business today. There were many billions of dollars involved in each of them, so the margins one obtains with a good econometric model, as a percentage, are fairly small.. But the dollars can be huge. In the first, my son's team saved us taxpayers an estimated two billion dollars. Well that's a demand-side leftist social-worker-friendly explanation of it. A *good republican* supply side view would be that some unknown excective(s) of some corporation getting a related contract would, as a result, be denied incentive/bonus payments from those billions because of that research.. |
A billionaire explains the middle class
On Sat, 3 Jan 2015 05:59:36 -0800 (PST), "
wrote: On Friday, January 2, 2015 9:46:07 PM UTC-5, David R. Birch wrote: Many misplace their trust in stockbrokers simply because learning enough to invest wisely is a job in itself, one the stock broker is supposed to do. One thing I learned was that I would never been able to do well by myself without devoting more time than I could spare. David When you buy something using cash and you get change back, do you count the change? I think that most people do count their change. Not because we think the vendor is out to get us, but because it is a prudent thing to do. The same applies to stock brokers. Do you blindly accept the brokers recommendations , or do you try to determine if the advice is good. I think trying to determine if the advice is good is the prudent thing to do. It is not hard to do well in the stock market, and does not really take a lot of time. The book that has what I think is the best on investing is " A Random Walk on Wall Street ". Another book that is probably lighter reading is Jonathan Clements Money Guide 2015 . I have not read it , but I used to read Clements columns in the WSJ and found them excellent. Dan ===================== Two other books that I found helpful were http://tinyurl.com/ntuxdkj Mandelbrot gives insight into why most economic/investment models are wrong because these are based on assumptions that overly simplify calculations and understate volitility/risk. and most any of John C. Bogle's books. I particularly like his _The Battle for the Soul of Capitalism_ http://tinyurl.com/oswnkng -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
On Saturday, January 3, 2015 11:00:31 AM UTC-5, F. George McDuffee wrote:
On Sat, 3 Jan 2015 05:59:36 -0800 (PST), " wrote: On Friday, January 2, 2015 9:46:07 PM UTC-5, David R. Birch wrote: Many misplace their trust in stockbrokers simply because learning enough to invest wisely is a job in itself, one the stock broker is supposed to do. One thing I learned was that I would never been able to do well by myself without devoting more time than I could spare. David When you buy something using cash and you get change back, do you count the change? I think that most people do count their change. Not because we think the vendor is out to get us, but because it is a prudent thing to do. The same applies to stock brokers. Do you blindly accept the brokers recommendations , or do you try to determine if the advice is good. I think trying to determine if the advice is good is the prudent thing to do. It is not hard to do well in the stock market, and does not really take a lot of time. The book that has what I think is the best on investing is " A Random Walk on Wall Street ". Another book that is probably lighter reading is Jonathan Clements Money Guide 2015 . I have not read it , but I used to read Clements columns in the WSJ and found them excellent. Dan ===================== Two other books that I found helpful were http://tinyurl.com/ntuxdkj Mandelbrot gives insight into why most economic/investment models are wrong because these are based on assumptions that overly simplify calculations and understate volitility/risk. and most any of John C. Bogle's books. I particularly like his _The Battle for the Soul of Capitalism_ http://tinyurl.com/oswnkng I remember seeing something about index traded funds over time being preferable (risk wise) to the more popular exchange traded funds. |
A billionaire explains the middle class
On Sat, 03 Jan 2015 09:04:16 -0600, jim
" wrote: wrote: On Friday, January 2, 2015 11:44:07 PM UTC-5, F. George McDuffee wrote: What is suggested that the issuers of a security be forced to back up their claims and meet the conditions of the security. Unka' George Sounds good , but companies that issue stocks He is not talking about stocks. He is talking about Asset Backed Securities (ABS). The difference between an ordinary corporate security and ABS is that when a corporate bond fails the issuer of the bond is a loser along with the investors. In the case of ABS the issuer of the security has no skin in the game and that is what George thinks is some sort of scam. The fact is the nature of ABS is well understood by investors (i.e. is well explained to investors). The fact that the investor is directly connected to an income stream of a pool of assets is the selling feature of this type of investment. ====================== From a theoretical perspective, this is indeed how it was "S'POZED" to work." The one small detail that turned what may well have been a useful addition to the family of investments, was that these novel instruments were rated AAA on non-existant historical experience and opaque/arcane data [at best, as much of the information appears to have been deliberatly misleading] to the largely unqualified raters at the Nationally Recognized Statistical Rating Organizations (NRSROs). IMNSHO it is unreasonable to expect the average, or indeed professional, investor to conduct in-depth due dillagance on every investment they make, to verify/validate the rating organization valuations http://tinyurl.com/oxhw2ah. Indeed, in many cases the securities broker/financial advisor was the advisor who suggested an investment in ABS [asset backed securities -- CDOs], CDS [credit default swaps] or interest rate swaps, based on *THEIR* understanding AT THE TIME. -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
On Sat, 3 Jan 2015 08:11:41 -0800 (PST),
wrote: snip I remember seeing something about index traded funds over time being prefer= able (risk wise) to the more popular exchange traded funds. Indeed, and the so called synthetic ETF funds, which track but do not own the actual stocks or other assets such as FX, may well prove to be a new problem as there are no underlying assets. http://tinyurl.com/kuxq8lt http://tinyurl.com/nbksq8z -- Unka' George "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves" -Norm Franz, "Money and Wealth in the New Millenium" |
A billionaire explains the middle class
F. George McDuffee wrote:
On Sat, 03 Jan 2015 09:04:16 -0600, jim " wrote: wrote: On Friday, January 2, 2015 11:44:07 PM UTC-5, F. George McDuffee wrote: What is suggested that the issuers of a security be forced to back up their claims and meet the conditions of the security. Unka' George Sounds good , but companies that issue stocks He is not talking about stocks. He is talking about Asset Backed Securities (ABS). The difference between an ordinary corporate security and ABS is that when a corporate bond fails the issuer of the bond is a loser along with the investors. In the case of ABS the issuer of the security has no skin in the game and that is what George thinks is some sort of scam. The fact is the nature of ABS is well understood by investors (i.e. is well explained to investors). The fact that the investor is directly connected to an income stream of a pool of assets is the selling feature of this type of investment. ====================== From a theoretical perspective, this is indeed how it was "S'POZED" to work." The one small detail that turned what may well have been a useful addition to the family of investments, was that these novel instruments were rated AAA on non-existant historical experience and opaque/arcane data [at best, as much of the information appears to have been deliberatly misleading] to the largely unqualified raters at the Nationally Recognized Statistical Rating Organizations (NRSROs). The investors were not interested in who was on the other end of the loan contract. As far as the investors were concerned, as long as there was real property backing the loan then anybody with a pulse could be given the loan. IMNSHO it is unreasonable to expect the average, or indeed professional, investor to conduct in-depth due dillagance on every investment they make, to verify/validate the rating organization valuations http://tinyurl.com/oxhw2ah. The way capitalism is supposed to work is the investor does the work making investments. That is the job he is being paid to do. Like anyone else if he doesn't do his job, he doesn't make money. The govt doesn't protect other jobs like you want the govt to protect investors. If the govt is to make the world safe for investors no matter how incompetent they are, that would be crony capitalism. The govt already provides an overabundance of safe places to park money. Every new investment that you make safe will produce just more of the same lower yield investments. That is not going to stop people from looking elsewhere for high risk high yield investments. The govt would have to devise a way to outlaw risk taking to keep investors in only safe investments. Indeed, in many cases the securities broker/financial advisor was the advisor who suggested an investment in ABS [asset backed securities -- CDOs], CDS [credit default swaps] or interest rate swaps, based on *THEIR* understanding AT THE TIME. |
A billionaire explains the middle class
On Sat, 03 Jan 2015 11:40:26 -0600, F. George McDuffee
wrote: On Sat, 03 Jan 2015 09:04:16 -0600, jim " wrote: wrote: On Friday, January 2, 2015 11:44:07 PM UTC-5, F. George McDuffee wrote: What is suggested that the issuers of a security be forced to back up their claims and meet the conditions of the security. Unka' George Sounds good , but companies that issue stocks He is not talking about stocks. He is talking about Asset Backed Securities (ABS). The difference between an ordinary corporate security and ABS is that when a corporate bond fails the issuer of the bond is a loser along with the investors. In the case of ABS the issuer of the security has no skin in the game and that is what George thinks is some sort of scam. The fact is the nature of ABS is well understood by investors (i.e. is well explained to investors). The fact that the investor is directly connected to an income stream of a pool of assets is the selling feature of this type of investment. ====================== From a theoretical perspective, this is indeed how it was "S'POZED" to work." The one small detail that turned what may well have been a useful addition to the family of investments, was that these novel instruments were rated AAA on non-existant historical experience and opaque/arcane data [at best, as much of the information appears to have been deliberatly misleading] to the largely unqualified raters at the Nationally Recognized Statistical Rating Organizations (NRSROs). IMNSHO it is unreasonable to expect the average, or indeed professional, investor to conduct in-depth due dillagance on every investment they make, to verify/validate the rating organization valuations http://tinyurl.com/oxhw2ah. Indeed, in many cases the securities broker/financial advisor was the advisor who suggested an investment in ABS [asset backed securities -- CDOs], CDS [credit default swaps] or interest rate swaps, based on *THEIR* understanding AT THE TIME. And most understand a WHOLE lot more now!!! |
A billionaire explains the middle class
An investment is a vehicle with underlying value that will produce a return under foreseeable conditions AND has some intrinsic value. May not be a physical asset, but has intrinsic value...like the name and market base of Coca-Cola. There is risk. Gambling is taking a risk that you'll loose it all in search of BIG gains. The house always wins. The problem happens when Gambling is dressed up as an investment vehicle to lure unsuspecting "investors" and raking in a commission. The broker wins. Sometimes the investor wins...sometimes. People are lured to put their money in places that are totally inappropriate for their life objectives. Anything that rakes in money without also producing something or transporting something or facilitating something is not an investment. The futures market was a means to stabilize farming. What is it now? Sell a contract on something you don't have to somebody who couldn't take delivery. "Hey dad, there's an oil tanker in the front yard." |
A billionaire explains the middle class
On Sat, 3 Jan 2015 07:12:01 -0500, "Jim Wilkins"
wrote: "John B. Slocomb" wrote in message .. . Marx stated "From each according to his ability, to each according to his need" and although the concept actually originated with an earlier writer, Ătienne-Gabriel Morelly (1717 - 1778), nowhere have I read anything that left out the first part of the quote :-) -- Cheers, John B. Didn't you experience that yourself in the Air Force? When the State owns you it can define your needs and your abilities to its own advantage. -jsw I think that you are confusing "needs" and wants. Needs are food, clothing, lodging and medical care. And the Air force feed, clothed, and housed me and supplied free medical care when necessary, and demanded that I perform "work" in compensation. Which is, amazingly, just how communism worked in the so called "Eastern Block". -- Cheers, John B. |
A billionaire explains the middle class
On Sat, 3 Jan 2015 06:14:31 -0800 (PST), "
wrote: On Friday, January 2, 2015 11:44:07 PM UTC-5, F. George McDuffee wrote: What is suggested that the issuers of a security be forced to back up their claims and meet the conditions of the security. Unka' George Sounds good , but companies that issue stocks do not make any claims beyond that if you buy the stock , you own part of the company. And that is how is should be. The company is in the business of making or selling things. It is not in the business of providing investment opportunities. Granted on the initial stock offering, they do provide information about the company, but are very careful to state that things can change. Dan But the publicly listed companies file 10-K report that are public information and they are required to make share holders aware of significant plans for the company. -- Cheers, John B. |
A billionaire explains the middle class
On Sunday, January 4, 2015 12:10:03 AM UTC-5, John B. Slocomb wrote:
But the publicly listed companies file 10-K report that are public information and they are required to make share holders aware of significant plans for the company. -- Cheers, John B. That is true, but the 10k report has a lot of qualifying statements. Dan |
A billionaire explains the middle class
"John B. Slocomb" wrote in message
... On Sat, 3 Jan 2015 07:12:01 -0500, "Jim Wilkins" wrote: "John B. Slocomb" wrote in message . .. Marx stated "From each according to his ability, to each according to his need" and although the concept actually originated with an earlier writer, Ătienne-Gabriel Morelly (1717 - 1778), nowhere have I read anything that left out the first part of the quote :-) -- Cheers, John B. Didn't you experience that yourself in the Air Force? When the State owns you it can define your needs and your abilities to its own advantage. -jsw I think that you are confusing "needs" and wants. Needs are food, clothing, lodging and medical care. And the Air force feed, clothed, and housed me and supplied free medical care when necessary, and demanded that I perform "work" in compensation. Which is, amazingly, just how communism worked in the so called "Eastern Block". -- Cheers, John B. Communism is how armies have always worked. They can because they are composed of healthy young men and are not complete self-supporting societies. Their ability to bring along dependents has always been limited in peacetime and impractical in war zones. The Army made the difference between Wants and Needs very clear. Initially we didn't have any more than we could carry, like primitive nomads but without the animals or women to bear the burdens. -jsw |
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