I have a question for those of you smarter than me about the economy...

[cbirch2]

A lost decade can be looked at two different ways. If you have near zero growth in a ten year period then yes, that could be a lost decade, but that scenario seems somewhat unlikely to me.

However, if you consider the past ten years and exclude the growth we had towards the middle of the decade that later got wiped out. If you consider the fact that today the stock market is at the same level as a decade ago, that home prices are down to their 2000 level, that non-farm payrolls are at the same level as ten years ago - then we've already had a lost decade in a sense.

Then again, if we get to 2016 or 2017 and the economy is still slow then we really would have had a lost decade similar to the first case that I mentioned above.

You could definitely say that.

Weve already lost a decade. Anything else is just icing on the cake.

 

[cbirch2]

GE, or any company, does not keep a large amount of its assets in a bank. And they should be able to monitor the bank for soundness. In fact, if they don't they are negligent.
You harp on fractional deposits because you don't know any better.

The point is that many accounts in an investment bank are over 250k. You cant just keep creating accounts with max 250k in them. Should someone worth $10 million just create 40 accounts? Thats hardly realistic.

Im not sure what you mean by "harping on fractional deposits". Im not opposed to the system if thats what you think, its very beneficial. But it is vital to the discussion of liquidation of banks. Thats why i keep coming back to it. Assets are recovered but deposits arent....

And even if deposits are insured theyre still lost. it just means the government is on the hook for the losses.

Do you think someone worth 10M keeps his money in bank accounts? Seriously?

OMFG LEARN WHAT THE FUCK AN INVESTMENT BANK IS!!!

an investment bank does not have simple checking accounts. you could not just open a personal checking account at an investment bank.

But if you own a security, say a stock or a bond, you dont physically have that security. Your broker has it, and in reality your broker actually keeps it at an investment bank.

To the bank, that becomes both an asset and a liability. An asset (your stock), and a liability (the responsibility to give it back to you). It leverages that, makes more investments, gets more assets, leverages those, and so on until it has reached the legal limit of its leverage.

This is the same fractional reserve banking model that i explained before. The depositors, people that own stocks and bonds (not personal checking accounts with an investment bank), do not recover all of the money they have in their deposits when the bank is liquidated.

But its the same fucking principle.

If a leveraged institution collapses you cannot recover that wealth. It is gone.

 

[The Rabbi]

You understand that an "investment bank" is not a bank, right? Some banks might have investment banks as part of their operation, but it is separate from the bank. Thus there is no "fractional lending" going on with one.
No, you dont understand that. You don't understand a thing you're talking about. You prove it with every post.

 

[EdwardBaiamonte]

Do those of you working in the economic side see a turn around anytime soon? What are the true indicators I should be watching? I don't want partisan bullshit, I need real ideas and thoughts.

As you may know liberals are anti-business; so if you see more of them elected you can expect the worst.

 

[EdwardBaiamonte]

A lost decade can be looked at two different ways. If you have near zero growth in a ten year period then yes, that could be a lost decade, but that scenario seems somewhat unlikely to me.

This is more complicated than it appears. Growth is usually measured in terms of GDP but real growth is measured in terms of innovation. We got from the stone age to here with innovation and innovation has continued in large part even during Japans so called lost decade or two.

 

[EdwardBaiamonte]

Eventually if we spend too much yields will rise, but were far from that point right now.

Actually we're $15 trillion in debt and BO is still in the Whitehouse. Do you think $20 or $40 trillion would be too much,.....to pay back. You do know it has to be paid back-right?

 

[likeabird03]

A lost decade can be looked at two different ways. If you have near zero growth in a ten year period then yes, that could be a lost decade, but that scenario seems somewhat unlikely to me.

This is more complicated than it appears. Growth is usually measured in terms of GDP but real growth is measured in terms of innovation. We got from the stone age to here with innovation and innovation has continued in large part even during Japans so called lost decade or two.

That is true, but I think in this thread we are talking about economic growth. The US is still innovating, but I think that continues regardless of what's going on with the economy. I couldn't picture a scenario where innovation actually heads backwards.

 

[likeabird03]

Eventually if we spend too much yields will rise, but were far from that point right now.

Actually we're $15 trillion in debt and BO is still in the Whitehouse. Do you think $20 or $40 trillion would be too much,.....to pay back. You do know it has to be paid back-right?

Good point. CBirch has over and over pointed to the fact that yields are so low, but they can increase three fold in a matter of weeks or months, much like we've seen with some european countries over the past 18 months.

Yes, yields are about 2% right now, but I bet my bottom dollar that if the govt came out today and said they were going to nationalize 3, 5, 10 trillion dollars worth of private debt like CBirch is proposing you would see those yields reverse very very quickly. We would be screwed pretty much, if we aren't already that is.

 

[william the wie]

I see at least two problems with CB/Rabbi argument:

The majority of banking does not involve banks. Most lending is done by money market funds, LBO funds, to a lesser degree hedge funds and some odds and sods of financial intermediaries. Banks as such are critical for keeping track of payments. There are various attempts online to track payments, do diversified loan brokerage and all of the other banking functions this has been squeezing real margins for more than a decade. Given the oddities of financial accounting and the tendency to overstate profits I doubt anyone knows the actual health of the banking system.

If either the EU or the Far East go under it will make the meltdown look like a tea party and no president regardless of ideology will be able to do diddly squat about that. If the stock market goes up tomorrow instead of less than 1% down that means stimulus is going full bore and that in turn means that the Fed is trying to prevent systemic failure. A slight retrenchment even as little as 0.01% (-1.1 on the Dow) would be a good sign because that means the wall of worry is still there.

I'll check back in tomorrow when I have some facts to determine what is going on.

 

[cbirch2]

You understand that an "investment bank" is not a bank, right? Some banks might have investment banks as part of their operation, but it is separate from the bank. Thus there is no "fractional lending" going on with one.
No, you dont understand that. You don't understand a thing you're talking about. You prove it with every post.

ARE YOU FUCKING STUPID???!?!?!?!?

Lemhan Brothers was leveraged at 33:1 when it collapsed.

How the fuck could a bank have leverage it its not using the fractional reserve deposit system????

Idiot!!!!!

 

[cbirch2]

Eventually if we spend too much yields will rise, but were far from that point right now.

Actually we're $15 trillion in debt and BO is still in the Whitehouse. Do you think $20 or $40 trillion would be too much,.....to pay back. You do know it has to be paid back-right?

Good point. CBirch has over and over pointed to the fact that yields are so low, but they can increase three fold in a matter of weeks or months, much like we've seen with some european countries over the past 18 months.

Yes, yields are about 2% right now, but I bet my bottom dollar that if the govt came out today and said they were going to nationalize 3, 5, 10 trillion dollars worth of private debt like CBirch is proposing you would see those yields reverse very very quickly. We would be screwed pretty much, if we aren't already that is.

The government has already fucking done that!

Interest rates on US treasuries have dropped as the deficit has risen. Not only in the recent years, but since the late 70's.

 

[The Rabbi]

You understand that an "investment bank" is not a bank, right? Some banks might have investment banks as part of their operation, but it is separate from the bank. Thus there is no "fractional lending" going on with one.
No, you dont understand that. You don't understand a thing you're talking about. You prove it with every post.

ARE YOU FUCKING STUPID???!?!?!?!?

Lemhan Brothers was leveraged at 33:1 when it collapsed.

How the fuck could a bank have leverage it its not using the fractional reserve deposit system????

Idiot!!!!!

Using big type does not make your post more believable. Actually less. Much less.
We can start with, Lehman Bros was not a bank but a brokerage. We can continue that they borrowed against their equity to purchase assets, then borrowed against those assets to purchase other assets, etc. So no depostis were involved. Please show which depositors were wiped out by their bankruptcy.
Yeah, none.
You are a fucking ignoramus of continental proportions.

 

[kowalskil]

GE, or any company, does not keep a large amount of its assets in a bank. And they should be able to monitor the bank for soundness. In fact, if they don't they are negligent.
You harp on fractional deposits because you don't know any better.

The point is that many accounts in an investment bank are over 250k. You cant just keep creating accounts with max 250k in them. Should someone worth $10 million just create 40 accounts? Thats hardly realistic.

Im not sure what you mean by "harping on fractional deposits". Im not opposed to the system if thats what you think, its very beneficial. But it is vital to the discussion of liquidation of banks. Thats why i keep coming back to it. Assets are recovered but deposits arent....

And even if deposits are insured theyre still lost. it just means the government is on the hook for the losses.

Do you think someone worth 10M keeps his money in bank accounts? Seriously?

Suppose I win 10 M. What would I do with this? I would put it into several bank account and would start looking for something better. That would take time, considering the state of our economy. I suspect that a lot of people keep money in the banks now. But an increase in the inflation rate can change this. People would start spending, before it is too late.
.

 

[EdwardBaiamonte]

How the fuck could a bank have leverage it its not using the fractional reserve deposit system????

1) leverage can come from many sources. Goldman for example can get huge loans or sell bonds based merely on its investment expertise.

A firm can buy stock on margin or it can buy options, with the same cash, worth many times the value of the stock

 

[The Rabbi]

The point is that many accounts in an investment bank are over 250k. You cant just keep creating accounts with max 250k in them. Should someone worth $10 million just create 40 accounts? Thats hardly realistic.

Im not sure what you mean by "harping on fractional deposits". Im not opposed to the system if thats what you think, its very beneficial. But it is vital to the discussion of liquidation of banks. Thats why i keep coming back to it. Assets are recovered but deposits arent....

And even if deposits are insured theyre still lost. it just means the government is on the hook for the losses.

Do you think someone worth 10M keeps his money in bank accounts? Seriously?

Suppose I win 10 M. What would I do with this? I would put it into several bank account and would start looking for something better. That would take time, considering the state of our economy. I suspect that a lot of people keep money in the banks now. But an increase in the inflation rate can change this. People would start spending, before it is too late.
.

How many people win 10M lotteries, genius?

 

[william the wie]

You understand that an "investment bank" is not a bank, right? Some banks might have investment banks as part of their operation, but it is separate from the bank. Thus there is no "fractional lending" going on with one.
No, you dont understand that. You don't understand a thing you're talking about. You prove it with every post.

ARE YOU FUCKING STUPID???!?!?!?!?

Lemhan Brothers was leveraged at 33:1 when it collapsed.

How the fuck could a bank have leverage it its not using the fractional reserve deposit system????

Idiot!!!!!

It borrowed generally at 111-125% collateral in the repo market, issued bonds and on treasuries they got down to 105% collateral. There were a variety of other minor sources of leverage.

 

[cbirch2]

You understand that an "investment bank" is not a bank, right? Some banks might have investment banks as part of their operation, but it is separate from the bank. Thus there is no "fractional lending" going on with one.
No, you dont understand that. You don't understand a thing you're talking about. You prove it with every post.

ARE YOU FUCKING STUPID???!?!?!?!?

Lemhan Brothers was leveraged at 33:1 when it collapsed.

How the fuck could a bank have leverage it its not using the fractional reserve deposit system????

Idiot!!!!!

Using big type does not make your post more believable. Actually less. Much less.
We can start with, Lehman Bros was not a bank but a brokerage.

" Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA (behind Goldman Sachs, Morgan Stanley, and Merrill Lynch)" - Lehman Brothers - Wikipedia, the free encyclopedia

"Lehman Brothers was founded in 1850 by two cotton brokers in Montgomery, Ala. The firm moved to New York City after the Civil War and grew into one of Wall Street's investment giants. On Sept. 14, 2008, the investment bank announced that it would file for liquidation after huge losses in the mortgage market and a loss of investor confidence crippled it and it was unable to find a buyer." - Lehman Brothers Holdings Inc. News - The New York Times

"A year ago today, the venerable investment-banking firm Lehman Brothers filed for bankruptcy protection" - Three Lessons of the Lehman Brothers Collapse - TIME

Those are just the first three links on google you fucking idiot. Lehmans was a investment bank you moron.

We can continue that they borrowed against their equity to purchase assets, then borrowed against those assets to purchase other assets, etc. So no depostis were involved. Please show which depositors were wiped out by their bankruptcy.
Yeah, none.

Are you fucking serious? Your hanging up on the word deposits? Jesus i was trying to make this easier for you.

The principal of leverage and how that applies to liquidation is absolutely no different. If you liquidate any sort of bank, and lehman brothers is an investment bank, you wont recovery some of that wealth.[/quote]

You are a fucking ignoramus of continental proportions.

Just because you insult someone with big words doesnt mean your actually intelligent. Seriously? You've just been perpetually wrong

 

[cbirch2]

How the fuck could a bank have leverage it its not using the fractional reserve deposit system????

1) leverage can come from many sources. Goldman for example can get huge loans or sell bonds based merely on its investment expertise.

A firm can buy stock on margin or it can buy options, with the same cash, worth many times the value of the stock

ok sorry, i usually dont get down to specifics when debating idiots like MR Rick Perry here. Anything that increases assets without increasing equity proportionally increases leverage, yea.

But the point was about bankruptcy and liquidation. You shouldnt just assume any bank that would naturally fail should. That just leads to the pointless destruction of wealth. You dont just get the money back entirely with the liquidation of the assets. If that government can make short term loans to solvent but temporarily illiquid companies, it should.

 

[The Rabbi]

ARE YOU FUCKING STUPID???!?!?!?!?

Lemhan Brothers was leveraged at 33:1 when it collapsed.

How the fuck could a bank have leverage it its not using the fractional reserve deposit system????

Idiot!!!!!

Using big type does not make your post more believable. Actually less. Much less.
We can start with, Lehman Bros was not a bank but a brokerage.

" Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA (behind Goldman Sachs, Morgan Stanley, and Merrill Lynch)" - Lehman Brothers - Wikipedia, the free encyclopedia

"Lehman Brothers was founded in 1850 by two cotton brokers in Montgomery, Ala. The firm moved to New York City after the Civil War and grew into one of Wall Street's investment giants. On Sept. 14, 2008, the investment bank announced that it would file for liquidation after huge losses in the mortgage market and a loss of investor confidence crippled it and it was unable to find a buyer." - Lehman Brothers Holdings Inc. News - The New York Times

"A year ago today, the venerable investment-banking firm Lehman Brothers filed for bankruptcy protection" - Three Lessons of the Lehman Brothers Collapse - TIME

Those are just the first three links on google you fucking idiot. Lehmans was a investment bank you moron.

We can continue that they borrowed against their equity to purchase assets, then borrowed against those assets to purchase other assets, etc. So no depostis were involved. Please show which depositors were wiped out by their bankruptcy.
Yeah, none.

Are you fucking serious? Your hanging up on the word deposits? Jesus i was trying to make this easier for you.

The principal of leverage and how that applies to liquidation is absolutely no different. If you liquidate any sort of bank, and lehman brothers is an investment bank, you wont recovery some of that wealth.

You are a fucking ignoramus of continental proportions.

Just because you insult someone with big words doesnt mean your actually intelligent. Seriously? You've just been perpetually wrong[/QUOTE]

Wow. Just wow. You have been totally humiliated here, proving you don't have a clue what you are talking about. And now you want to compound that by showing that you cannot distinguish an "investment bank" from a commercial bank. Then you want to claim that the leverage is "no different."
So we're back to "depositors were wiped out" which is your absurd claim. There were no depositors. Only investors were wiped out, which is fine. That's capitalism.

 

[cbirch2]

Using big type does not make your post more believable. Actually less. Much less.
We can start with, Lehman Bros was not a bank but a brokerage.

" Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA (behind Goldman Sachs, Morgan Stanley, and Merrill Lynch)" - Lehman Brothers - Wikipedia, the free encyclopedia

"Lehman Brothers was founded in 1850 by two cotton brokers in Montgomery, Ala. The firm moved to New York City after the Civil War and grew into one of Wall Street's investment giants. On Sept. 14, 2008, the investment bank announced that it would file for liquidation after huge losses in the mortgage market and a loss of investor confidence crippled it and it was unable to find a buyer." - Lehman Brothers Holdings Inc. News - The New York Times

"A year ago today, the venerable investment-banking firm Lehman Brothers filed for bankruptcy protection" - Three Lessons of the Lehman Brothers Collapse - TIME

Those are just the first three links on google you fucking idiot. Lehmans was a investment bank you moron.



Are you fucking serious? Your hanging up on the word deposits? Jesus i was trying to make this easier for you.

The principal of leverage and how that applies to liquidation is absolutely no different. If you liquidate any sort of bank, and lehman brothers is an investment bank, you wont recovery some of that wealth.

You are a fucking ignoramus of continental proportions.

Just because you insult someone with big words doesnt mean your actually intelligent. Seriously? You've just been perpetually wrong

Wow. Just wow. You have been totally humiliated here, proving you don't have a clue what you are talking about. And now you want to compound that by showing that you cannot distinguish an "investment bank" from a commercial bank. Then you want to claim that the leverage is "no different."
So we're back to "depositors were wiped out" which is your absurd claim. There were no depositors. Only investors were wiped out, which is fine. That's capitalism.[/QUOTE]

Ive been humiliated?? You didnt even know lehmans was an investment bank you fucking idiot.

The point is that liquidation doesnt recovery all the wealth that the investors thought they had invested with the bank....Thats been my claim from the beginning.

I used deposits to simplify you this for you. Jesus christ i try to simplify things for you and then somehow im wrong because of it. OMfg.