The Gold Standard and the Great Depression

[Neubarth]

OBVIOUSLY, You are not diversified enough if the housing collapse or derivative losses can cause bankruptcy.

No, it is not "diversified enough." It's not "reserved enough."

The division that brought down AIG was a small part of their business. Derivatives were a small part of Citigroup. Without the investment bank, Citi would have been fine.

You need to look up the definition of diversified.

Reserved enough? Humnmm? When you deversify, you spread your investments (or business activities) out so that not one catestrophic loss can wipe you out.

"Reserved" speaks to me of proper Victorian manners. I smiled when I read that.

 

[Toro]

OBVIOUSLY, You are not diversified enough if the housing collapse or derivative losses can cause bankruptcy.

No, it is not "diversified enough." It's not "reserved enough."

The division that brought down AIG was a small part of their business. Derivatives were a small part of Citigroup. Without the investment bank, Citi would have been fine.

You need to look up the definition of diversified.

Reserved enough? Humnmm? When you deversify, you spread your investments (or business activities) out so that not one catestrophic loss can wipe you out.

"Reserved" speaks to me of proper Victorian manners. I smiled when I read that.

There is no more diversified financial institution in the world than Citigroup. There is no more diversified insurer in the world than AIG.

Financial institutions by their very nature are risky institutions. Only 5%-10% of their capital is in equity. That means a drop in their net worth of 5%-10% can wipe them out. When home prices drop 30% across the country, that is going to put tremendous strains on the entire financial system.

 

[Neubarth]

No, it is not "diversified enough." It's not "reserved enough."

The division that brought down AIG was a small part of their business. Derivatives were a small part of Citigroup. Without the investment bank, Citi would have been fine.

You need to look up the definition of diversified.

Reserved enough? Humnmm? When you deversify, you spread your investments (or business activities) out so that not one catestrophic loss can wipe you out.

"Reserved" speaks to me of proper Victorian manners. I smiled when I read that.

There is no more diversified financial institution in the world than Citigroup. There is no more diversified insurer in the world than AIG.

Financial institutions by their very nature are risky institutions. Only 5%-10% of their capital is in equity. That means a drop in their net worth of 5%-10% can wipe them out. When home prices drop 30% across the country, that is going to put tremendous strains on the entire financial system.

I guess derivatives are not equity. Their derivative losses were enough to wipe them out regardless of equity.

The moral to the story is that they should not have been playing with bets. Grandma told them not to gamble like their uncle Will. He ruined himself back in 1930 with that foolishness that the recession was over.

 

[Mike Mitrosky]

You need to look up the definition of diversified.

Reserved enough? Humnmm? When you deversify, you spread your investments (or business activities) out so that not one catestrophic loss can wipe you out.

"Reserved" speaks to me of proper Victorian manners. I smiled when I read that.

There is no more diversified financial institution in the world than Citigroup. There is no more diversified insurer in the world than AIG.

Financial institutions by their very nature are risky institutions. Only 5%-10% of their capital is in equity. That means a drop in their net worth of 5%-10% can wipe them out. When home prices drop 30% across the country, that is going to put tremendous strains on the entire financial system.

I guess derivatives are not equity. Their derivative losses were enough to wipe them out regardless of equity.

The moral to the story is that they should not have been playing with bets. Grandma told them not to gamble like their uncle Will. He ruined himself back in 1930 with that foolishness that the recession was over.

DOnt worry. all those derivatives have winners as well.. AIG was the loser, Goldman Sachs was the winner.. All that money we bailed out AIG with... went right to pay off Goldman

 

[The Rabbi]

You need to look up the definition of diversified.

Reserved enough? Humnmm? When you deversify, you spread your investments (or business activities) out so that not one catestrophic loss can wipe you out.

"Reserved" speaks to me of proper Victorian manners. I smiled when I read that.

There is no more diversified financial institution in the world than Citigroup. There is no more diversified insurer in the world than AIG.

Financial institutions by their very nature are risky institutions. Only 5%-10% of their capital is in equity. That means a drop in their net worth of 5%-10% can wipe them out. When home prices drop 30% across the country, that is going to put tremendous strains on the entire financial system.

I guess derivatives are not equity. Their derivative losses were enough to wipe them out regardless of equity.

The moral to the story is that they should not have been playing with bets. Grandma told them not to gamble like their uncle Will. He ruined himself back in 1930 with that foolishness that the recession was over.

Buffet called derivatives "weapons of mass financial destruction" for a reason.
Yes, they should not have been playing with it. Banks in the 1980s should not have been lending petrodollars to 3rd world countries. There are lots of things banks shouldn't be doing in retrospect but at the time it looked like a sure bet.
You can't control or eliminate that without eliminating all risk. And eliminating all risk means eliminating all reward as well.
The answer is that the market is or should be self policing, with bankruptcy and failure the result of poor business decisions. That is creative destruction.

 

[The Rabbi]

There is no more diversified financial institution in the world than Citigroup. There is no more diversified insurer in the world than AIG.

Financial institutions by their very nature are risky institutions. Only 5%-10% of their capital is in equity. That means a drop in their net worth of 5%-10% can wipe them out. When home prices drop 30% across the country, that is going to put tremendous strains on the entire financial system.

I guess derivatives are not equity. Their derivative losses were enough to wipe them out regardless of equity.

The moral to the story is that they should not have been playing with bets. Grandma told them not to gamble like their uncle Will. He ruined himself back in 1930 with that foolishness that the recession was over.

DOnt worry. all those derivatives have winners as well.. AIG was the loser, Goldman Sachs was the winner.. All that money we bailed out AIG with... went right to pay off Goldman

Can you show that on Goldman's financial statements? They should have had a windfall but I dont recall reading that.

 

[Toro]

AIG owed Goldman $10-$12 billion as a counterparty and were only able to pay it once the government bailed out AIG.

 

[Neubarth]

AIG owed Goldman $10-$12 billion as a counterparty and were only able to pay it once the government bailed out AIG.

That speaks volumes about where the power sits on wall street. Everybody on the street bows to Goldman and the bank of last resort is the Fed.

 

[Charles Stucker]

Paper ain't money. I'm not so hung up on Gold as I am commodity currency. You can't print prosperity.

I tend to agree. Gold is a generally poor choice in the modern era as the cost is susceptible to change with major finds or new technologies which reduce extraction costs as well as bouts of shortages brought on by exhausting veins or speculation in metal markets.

 

[editec]

Gold bugs.

What part of a growing economy chasing the same amount of gold inevitably causes deflation do you people not understand?

Money has no value, says you?

Wake up, kids.

Gold has no value, either, until we give it value.

 

[Mike Mitrosky]

Gold bugs.

What part of a growing economy chasing the same amount of gold inevitably causes deflation do you people not understand?

Money has no value, says you?

Wake up, kids.

Gold has no value, either, until we give it value.

but deflation is a good thing.. with sound money deflation is a constant ongoing thing.. prices tend to go down as productivity increases...best way i know for everybody to get a pay raise

 

[The Rabbi]

Gold bugs.

What part of a growing economy chasing the same amount of gold inevitably causes deflation do you people not understand?

Money has no value, says you?

Wake up, kids.

Gold has no value, either, until we give it value.

but deflation is a good thing.. with sound money deflation is a constant ongoing thing.. prices tend to go down as productivity increases...best way i know for everybody to get a pay raise

That worked so well for Japan, right?

 

[Mike Mitrosky]

Gold bugs.

What part of a growing economy chasing the same amount of gold inevitably causes deflation do you people not understand?

Money has no value, says you?

Wake up, kids.

Gold has no value, either, until we give it value.

but deflation is a good thing.. with sound money deflation is a constant ongoing thing.. prices tend to go down as productivity increases...best way i know for everybody to get a pay raise

That worked so well for Japan, right?

It sure did. And it's worked well for America too.

 

[Toro]

but deflation is a good thing.. with sound money deflation is a constant ongoing thing.. prices tend to go down as productivity increases...best way i know for everybody to get a pay raise

Deflation is no more a good thing than inflation.

Deflation can be extremely harmful because it can cause people to delay spending. Why spend now when the price is going to be lower later? This reduces the monetary velocity in the economy.

It can also be very harmful when there is a lot of debt in the economy. It can lead to a deflationary spiral that can lead to depression. Just as rapid inflation can wipe out the middle class, so can rapid deflation.

 

[Paulie]

I guess derivatives are not equity. Their derivative losses were enough to wipe them out regardless of equity.

The moral to the story is that they should not have been playing with bets. Grandma told them not to gamble like their uncle Will. He ruined himself back in 1930 with that foolishness that the recession was over.

DOnt worry. all those derivatives have winners as well.. AIG was the loser, Goldman Sachs was the winner.. All that money we bailed out AIG with... went right to pay off Goldman

Can you show that on Goldman's financial statements? They should have had a windfall but I dont recall reading that.

Here you go challenging the AIG/Goldman situation again, which rests squarely on the shoulders of the man who had not only the most authority in deal, but ironically, the most conflict of interest... Hank Paulson.

Toro steps in and confirms it, and of course you shut right the fuck up.

That's your M.O. Someone shoves shit in your face and you zip it up so as not to look any more stupid.

So now we have this:...

You don't know Fed shareholder structure, as that was proven and then you shut your trap afterwards, and you also don't know that Goldman was the primary beneficiary of the AIG bailout. And you also don't have a single fucking clue about Keynes' position on interest rates and how they affect an economy via their impact on investment demand.

And you have the mother fucking audacity to call someone out on their economic educational background.

There's a subforum here on arts and crafts which I think would be perfect for you. Not only does hardly anyone post there, but being wrong on ANYTHING in there is almost impossible to be embarrassed about.

 

[The Rabbi]

Are you still running your ignorant foul mouth on this forum? If you can show that Goldman made all that money, do so. If you can show that Paulson benefitted personally from it, do so.
Otherwise shut the fuck up and go back to the library so you don't sound like the half-wit you are.

 

[Paulie]

Are you still running your ignorant foul mouth on this forum? If you can show that Goldman made all that money, do so. If you can show that Paulson benefitted personally from it, do so.
Otherwise shut the fuck up and go back to the library so you don't sound like the half-wit you are.

It's common knowledge at this point that Goldman received repayment from AIG's bailout, to the tune of ~$12.9 billion.

But since you need proof because your face is redder than your last tampon, here's some for you just because I'm a nice guy:

Goldman, Merrill Collect Billions After Fed's AIG Bailout Loans - Bloomberg.com

Goldman's share of AIG bailout money draws fire | Politics | Reuters

As far as Paulson "benefitting" from it, I never once made that claim. I only claimed a conflict of interest because he brokered the deal which benefitted Goldman during a time when Goldman's balance sheet was floating in the toilet you dropped that tampon in, and Paulson wsa an ex CEO there.

This is where Paulson's conflict of interest comes into play (from my other thread about the conflict of interest)

When the time for TARP came about, Paulson placed another member of the executive board of Goldman Sachs, Stephen Friedman, in charge of the money.

However, it is illegal for an exec to hold stocks in that company while he holds the government position. Paulson, a former exec of Golman Sachs, issues him a waiver which allows him to keep his stocks. Not only did this exec keep his stocks, but he bought 52,000 more shares of it while holding his goverment position in charge of TARP.

If you don't recognize the conflict of interest here, you're probably the only one left in the country who doesn't.

 

[Neubarth]

Pauli, looks like you are right. Even the Rabbi keeps on saying so. Everytime I look, he endorses what you have posted right in your own post!

 

[Mike Mitrosky]

Are you still running your ignorant foul mouth on this forum? If you can show that Goldman made all that money, do so. If you can show that Paulson benefitted personally from it, do so.
Otherwise shut the fuck up and go back to the library so you don't sound like the half-wit you are.

How about Paulson benefitting just from him being treasury secretary.. His $500 million in goldman stock profits being tax free (Just like good ole NJ Governor Jon Corzine) from him being in public office...

 

[Mike Mitrosky]

Are you still running your ignorant foul mouth on this forum? If you can show that Goldman made all that money, do so. If you can show that Paulson benefitted personally from it, do so.
Otherwise shut the fuck up and go back to the library so you don't sound like the half-wit you are.

It's common knowledge at this point that Goldman received repayment from AIG's bailout, to the tune of ~$12.9 billion.

But since you need proof because your face is redder than your last tampon, here's some for you just because I'm a nice guy:

Goldman, Merrill Collect Billions After Fed's AIG Bailout Loans - Bloomberg.com

Goldman's share of AIG bailout money draws fire | Politics | Reuters

As far as Paulson "benefitting" from it, I never once made that claim. I only claimed a conflict of interest because he brokered the deal which benefitted Goldman during a time when Goldman's balance sheet was floating in the toilet you dropped that tampon in, and Paulson wsa an ex CEO there.

This is where Paulson's conflict of interest comes into play (from my other thread about the conflict of interest)

When the time for TARP came about, Paulson placed another member of the executive board of Goldman Sachs, Stephen Friedman, in charge of the money.

However, it is illegal for an exec to hold stocks in that company while he holds the government position. Paulson, a former exec of Golman Sachs, issues him a waiver which allows him to keep his stocks. Not only did this exec keep his stocks, but he bought 52,000 more shares of it while holding his goverment position in charge of TARP.

If you don't recognize the conflict of interest here, you're probably the only one left in the country who doesn't.

And lets not forget the GM bailout, where the previously untouched GM pension plan was socked for $6 Billion by the government and given to the big banks (like JP Morgan) so they could get repaid 100 cents on the dollar for their outstanding loans to GM. Pretty nice deal when nobody else got that kind of a deal.